Plots without houses

POLAND There is one group of future home owners that normally has no contact with developers. Such people buy land themselves to build their own houses. They have always faced a number of challenges, such as ensuring access to electricity, water and sewage facilities and - not least of all - the challenge of traipsing from one government office to another to collect all the necessary permits. However, some developers are now regarding them as potential clients.

Four projects
Rezydencje Leśne in Warsaw's Młociny district is an example of such a project. Situated next to Las Młociński forest near Kampinos National Park, it is a complex of 32 plots, ranging in size from 1,509 sqm to 2,210 sqm. The land, which comes with a ready infrastructure and building designs, is priced from PLN 850 (EUR 215) to PLN 1,280 (EUR 323) gross per sqm. Developer Echo Investment provides all the necessary support, without building the houses. The company also has two other projects where it does not intend to lay many bricks - Osiedle Południowe in Dyminy and Bilcza II. Both projects are near Kielce. In its Osiedle Południowe project Echo is offering 29 plots in the first stage of the development, ranging in size between 761 sqm and 1,639 sqm. The price per sqm is PLN 159 (EUR 40) to PLN 225 (EUR 57) gross. The project also includes 40 plots for terraced housing, which this time Echo will be building. The company's Bilcza II project has plots on offer that range in size between 300 sqm and 4,600 sqm, while the price per sqm is between app. EUR 45 to EUR 60. Echo is not alone in opting for a build-your-own approach. Developers of golf courses are doing the same. One such project is Włodarzewska's Sobienie Królewskie golf and country club, which has recently opened its first nine holes. The plots on offer range from 776 sqm to 990 sqm and all come with pre-arranged building permits. However, buyers are under no obligation to stick to the developer's concept and are welcome to reapply for the necessary permits to build the dream home of their own design, as long as they are given prior approval from the developer for their changes. "The new project must fit in with the nature of the investment and integrate harmoniously with the surroundings," says Bogusław Zawadzki, the CEO of Sobienie Królewskie Włodarzewska Development Group. He points out that offering land without houses is not unheard of on the market. "This solution is uncommon, but it is not really brand new. Sales of such plots take place at other golf courses  in Poland", he says.

Why bother?
The question remains why developers are selling empty land. Echo Investment claims that it is providing a wider range of products and services to its customers. By offering house-less plots, it gives buyers the freedom to make changes according to their whim, and instead of going into battle with Poland's formidable bureaucracy the building work can start almost immediately. The margins for the developer are little different, with the return on the investment in such projects being comparable to a more traditional development. The sales process is, however, much quicker, whereas the construction work on the estate can be undertaken at a more leisurely pace. Moreover, a buyer opting for independent construction can save app. 30 pct. None of this is at all surprising to analysts. However, Echo's current approach may simply have been necessitated by a need for greater cash liquidity. "Another reason is to get invested cash back - or in some cases to pay back a bank loan - as the market has proved to be less promising than expected," says Kazimierz Kirejczyk, the president of consultancy firm REAS. This, he suggests, is especially true of golf course projects. The sport is relatively new in Poland, where many projects were dreamt up before the credit crunch - and then the market collapsed. Developers have therefore been scrambling to sell what they can in whatever state it is in to recoup potential losses.
In fact, the current spate of developers marketing such plots may have been caused by the exigencies of the market and so will always remain just a niche. Nevertheless, developers are likely to be offering empty plots for some time to come.
Alexander Hayes