Cautious optimists

The property market was the first victim of the credit crunch when the stream of the bank finance was suddenly interrupted. But now it seems that developers’ difficulties are slowly being consigned to history. Does the market feel healthier after the shock therapy of late 2008 and early 2009? How have companies adjusted to the new conditions? Can we expect more stable growth than three or four years ago?

The participants of our roundtable discussion:

Zbigniew Wojciech Okoński

president of the management board of Robyg. The company has been operating on the Polish market since 2000. The beginnings of the developer’s operations are connected with Warsaw, where it completed the following projects: Dom na Ursynowie, Osiedle Szczęśliwy Dom Ochota, five stages of Nowa Rezydencja Królowej Marysieńki and the first stage of Osiedle Zdrowa, which is part of the Miasteczko Wilanów project. Apart from the Warsaw projects, the company also has two projects in Gdańsk.

Andrzej Szornak

vice-president of the management board at Gant Development, a holding of companies that have been operating in the financial sector since 1991 and starting from 1998 also in the development sector. The developer sold 403 apartments in H1 this year. The company’s annual plan involves the sale of 994 apartments. Gant Development is present in six cities: Wrocław, Opole, Kraków, Poznań, Gdańsk and Warsaw.

Michał Kubicki

president of the management board of Volumetric MK Polska, a joint venture company created in March 2006. Its majority shareholder is Grup Volumetric SL with its registered office in Mataró in Catalonia, while the Polish shareholder is Michał Kubicki. The company has completed 300 apartments so far and it is planning to build another 600 by the end of 2011.

Ireneusz Ignaciuk

member of the board and financial department director of Budimex Nieruchomości, which is part of the Budimex construction group. The company has been present on the construction market since 1968. It is active in three of the biggest Polish cities: Warsaw, Poznań and Kraków. The developer has completed over 5,000 apartments since the beginning of its activities in Poland.

Patrick Wojtulewicz

development department director of SGI Baltis, a Szczecin-based company involved in the development of apartments and office buildings in cooperation with Invest Komfort and Porta Drzewi. It belongs to Grupa Kapitałowa Baltis Investment, which has been in operation since 1990. The company is present on the markets of Szczecin, Słupsk, Łódź, Gorzów Wielkopolski, Międzyzdroje and Warsaw. SGI Baltis has equity with a value of over PLN 350 mln.

Eugeniusz Chwesiuk

head of investment of Dolcan, which was established in 1991. The founder and 
president of the supervisory board of the company is Sławomir Doliński. Dolcan carries out most of its projects in Warsaw, Ząbki (near Warsaw), Lublin, Częstochowa, Kozienice, Bydgoszcz and Szczecin.

Dariusz Szczypiński

financial director of the Poznań-based development company Nickel Development, which has been present on the market since 1998. The developer has completed projects with a combined residential area of more than 86,000 sqm (over 1,500 apartments).

Paweł Sztejter

managing partner of consulting company REAS, which offers consultancy on the planning and completion of residential projects in Poland and the CEE region. REAS was established in 1997.

Robert Chojnacki

president of the management board of RedNet Property Group. The group made its debut in April 2001 as a small team by introducing the tabelaofert.pl internet real estate service. Nowadays, it offers to a number of companies services such as local market analysis, managing properties, finishing interiors and supporting every stage of the sales process, among others.

Marek Koziarek

commercial real estate finance department director of Bank Pekao. The bank, which is currently part of the Italian UniCredit Group, has 80 years of tradition. It is one of the biggest banks in Central Europe and the biggest bank in Poland in terms of market capitalisation.

Ewa Andrzejewska, ‘Eurobuild Central & Eastern Europe’: A few days ago, REAS published data on newly started development projects. According to the report, the construction of 31,500 residential units started in H1 this year, which is 67 pct more than in the first six months of 2009. However, according to the experts from this company, the optimism 
of developers is somewhat imprudent. 
At the same time, a residential sales summary prepared by RedNet shows that there were 4,800 apartments sold in Warsaw in H1, which is 50 pct more than a year ago. A revival can also be seen on the Kraków and TriCity markets. How do you assess the situation?

Paweł Sztejter, REAS: According to the latest information from the Regional Statistical Office in Warsaw developers have started the construction of over 6,800 apartments, whereas there have been fewer than 4,000 building permits issued. So it looks like projects that had already received building permits are coming back on the market.

Ewa Andrzejewska: As a developer have you seen any sign of green shoots?

Andrzej Szornak, Gant Development: We are selling. But is that enough to say there is a recovery? It’s hard to say.

Ewa Andrzejewska: I have in front of me your press release entitled: ‘Gant Will Sell As Much As It Wants’. Is this really going to happen?

Andrzej Szornak, Gant Development: We are selling as many apartments as we planned to at the beginning of the year, that is, 400 in the first half. We do not know whether this is a sign of the returning optimism of potential buyers, because it could just be the result of our offer being better suited to their expectations.

Ewa Andrzejewska: Will your plan to sell nearly 1,000 apartments this year be accomplished?

Andrzej Szornak, Gant Development: We have not changed our forecasts. We do believe that we have a chance to sell that many apartments.

Paweł Sztejter, REAS: One thing that could dampen the optimism is the fact that in Q2 this year less apartments were sold than in the first three months of the year in the six biggest cities monitored by us, and the number of transactions has fallen for the second quarter in a row. Developers assumed that after the good last quarter of 2009 and the decent first one this year, that the second quarter would be even better – especially taking into consideration the fact that it is usually the second, spring quarter that is one of the two best periods of the year with regard to sales.

Robert Chojnacki, RedNet Property Group: However, comparing quarterly results reveals that sales in the seven largest conurbations, including Łódź and Katowice, are 5,700 to 6,050. Although this is rather modest, the growth is still there.

Ewa Andrzejewska: Have the sales of Robyg grown in the last few months?

Zbigniew Wojciech Okoński, Robyg: We are currently developing nearly 940 apartments, mainly in Warsaw – in Miasteczko Wilanów and in the Żoliborz district. Some of them, around 180, are in Gdańsk projects. Comparing our sales in the last few years it turns out that in 2008 we signed only 90 contracts having 450 apartments on offer, while 299 sales were finalised in 2009, and the result after the first six months of this year is 300 contracts. So the progress is substantial. Increased sales have enabled us to launch the next stages of certain projects. I was wondering why this is the case. 2008 was a time of reacting to the crisis – clients expected that the economic climate would worsen, the risk of losing your job increased, and as a consequence there would be problems with the repayment of loans. Moreover, banks became increasingly reluctant to grant mortgages and investment loans for the construction of new projects. This lasted throughout the whole of 2008 and practically the whole of 2009. A year and a half ago, when we met up with Robert Chojnacki and were saying that there would be a revival, nobody believed us. Analysts believed that things would only get worse. However, things have been different. And now we believe that the situation is going to improve slightly. It is with such an assumption that we expect sales for the whole of 2010 to amount to around 550 apartments. The environment shows that you can be cautiously optimistic as a developer. It is clear that buyers have reacted to the changes and that is why smaller apartments, i.e. with 2-3 rooms, are more popular now.

Ewa Andrzejewska: Is the head of Volumetric MK Polska a cautious optimist, too?

Michał Kubicki, Volumetric MK Polska: I share the opinion of Mr Okoński. Despite the effect of the collapse of Lehman Brothers, our sales have grown exponentially, a result of the fact that we first put apartments on sale at the end of 2008 and so were late climbers of the so-called ‘peak’. Our best months were July and August. Then sales continued to fall away. We have also observed that the banks have changed their approach to developers, and in June last year we closed the financing for our Jagiellońska project with the Kielce branch of PKO BP. Apart from the margin and the commission rate, the other conditions were normal. We launched the sale of a new project in Mokotów district at the end of 2009. And we are continuing to sell out our finished apartments and can see sales growing – apart, that is, in Q2. However, we should remember that Q2 also includes the catastrophe of the presidential plane crash on April 10th. Nobody knew how this would translate into sales – in our case it actually amounted to zero maybe we managed to find a buyer for just one apartment in all four projects. April was also dead according to other companies in the Polish Association of Developers. May was weak because the period of mourning had a longer influence on the climate for spending – people do not make their decisions in a few days. In addition there was the long May and Corpus Christi weekends. But in June the market bounced back. There is a slight growth trend, so I am a cautious optimist with regard to sales but not when it comes to prices.

Ewa Andrzejewska: Does this mean that prices will not grow?

Michał Kubicki, Volumetric MK Polska: We are selling apartments in projects that were contracted out before the credit crunch, when construction prices were astronomical – but there has since been a slump in home prices by app. 20 pct. It’s a good thing the margins were sufficiently high at the time, because now competitive apartments are entering the market, which have been built for at least PLN 1,000 per sqm cheaper, as well as projects built on land bought for PLN 1,500 per sqm of usable and residential space. The optimism is also visible in the behaviour of land owners in our meetings with them when they start negotiating conditions, knowing that tomorrow they can go to another meeting with an investor and then another one... I think that 2010 will be a good year, whereas the situation in 2011 will depend on the mood across Europe. Some Swiss bankers I am friends with predict that what is happening in Greece and is expected to happen soon in Portugal is nothing compared to what is in the pipeline for the US. One of these bankers predicts that the USD to EUR ratio at the end of 2011 will be 2 to 1. We should therefore expect a collapse on the world financial markets, which always translates into the situation in our backyard, especially in the banking environment.

Ewa Andrzejewska: Is Bank Pekao’s assessment of the situation similar?

Marek Koziarek, Bank Pekao: We have continued to grant loans, even in 2009. Perhaps we require a slightly higher own contribution and higher margins, but we were and are still present on the market. According to our own monitoring of home sales, I could see a clear bounce at the end of 2009, a very good Q1 and then a fluctuation. There has also been some stratification of the market – the sale of apartments in the budget sector looks very good, while it is much worse in the case of apartments of a higher standard and those bigger than 80 sqm, which have sold particularly well with mortgages denominated in Swiss francs in the past. My forecasts? Utilisation of production capacity is at a very low level in Europe, so it is hard to expect that the demand for loans will be high. Poland remains a green island of growth, but the factors behind the growth have now gone, such as exports and the internal demand. Company deposits are growing and the utilisation of production capacity in Poland amounts to 70 pct, so there is no point in accruing debts from new projects. What is now driving the economy are the infrastructural projects supported by EU funds, however such projects are not the fundamental basis of any economy. We are being quite careful with our forecasts. We believe that the demand for mortgages will be lower, which should translate into fewer opportunities for starting new projects, and so the demand for construction services will also be lower. May was a record month in terms of the mortgages granted, perhaps these mortgages will not go mainly to the secondary market. Only 20 pct of mortgages taken out under the ‘Rodzina na swoim’ (Family’s Own Home) programme are for apartments on the primary market. Is price the decisive factor? A total of 83,000 mortgages were granted by the end of May this year. If we compare this to the 12,000 apartments sold in H1 this year in the biggest cities – these are the numbers quoted by analysts – the data speak for themselves.

Robert Chojnacki, RedNet Property Group: That is true – sales are growing, but the market is inconsistent. According to our data, sales in the seven biggest conurbations (Warsaw, Wrocław, Poznań, Katowice, Kraków, the TriCity and Łódź) totalled 11,966 – growing in Warsaw by 54 pct, but falling in Wrocław by 17 pct and in Poznań by 18 pct; whereas in Kraków sales grew by 12 pct and in the TriCity by 30 pct. After analysing the markets in Poznań and Wrocław, where there was a slump in sales, it turned out that no projects had been launched in the two cities that would be attractive in terms of prices. At the same time, sales in Warsaw’s Praga Południe district have soared because Dom Development started selling its Saska estate with relatively low prices. There are many such examples. I think that developers could sell app. 15,000-16,000 apartments in the capital city because this is the absorption capacity of the market, but potential buyers are not looking for expensive apartments that were designed to sell as many square metres and have the lowest construction costs possible. There are still apartments being sold in the primary market that are no longer included in developers’ brochures. We estimate that app. 1,500 apartments came back onto the market from a number of funds in the last 12 months because transactions were not finalised, and these are being offered at good prices. When it comes to prices it is enough to recall the success of the Murano project developed in Warsaw by Budimex Nieruchomości. But I think Mr Ignaciuk here can tell you all about it himself.

Ireneusz Ignaciuk, Budimex Nieruchomości: I would like to come back for a moment to the issue of demand, which is generated by the availability of loans. I disagree with Mr Koziarek that the loan conditions are the same in the past. They have been tightened and the bar has been raised. The worst thing is that the change surprised a few people. Despite the negative birth rate and the so-called “singles phenomenon”, the number of households has been growing and that means there is still demand for apartments. Fortunately we do not have the problems that Spain is facing, where too many homes have been built. The annual number of units built in Poland is more or less constant according to the Central Statistical Office – just over 100,000, so nothing has taken place that could shake the foundations of the market. H1 this year is definitely better than the whole of 2009, but this is a result of our sales and pricing policies. Price corrections were only made at the end of 2009; and then there was February, March, April, May – in these months the number of apartments sold exceeded the results of our best periods ever. If this tempo is sustained in H2, we will actually sell all the homes in our finished projects.

Ewa Andrzejewska: Are sales on the Kraków market as satisfactory as in the capital city?

Ireneusz Ignaciuk, Budimex Nieruchomości: In Kraków we have just started the construction stages of a number of projects. In the case of one small project – the third stage of the Nad Wilgą estate (70 apartments), it turned out that reservations for the apartments exceeded 50 pct within a month. The second project – Myśliwska, which is more affordable, so the prices are also different – has had too low advance sales to allow us to get the loan.

Zbigniew Wojciech Okoński, Robyg: And what price is that?

Ireneusz Ignaciuk, Budimex Nieruchomości: The average price is 5,000 per sqm. And coming back to Q2 and the slump in sales, there was also the issue of the flood. Suddenly, prospective buyers started to ask whether a project was located within a flood zone. Now there is no swing with regard to projects that would be comparable to 2006 and 2007, but we are not hankering after the high prices. The crisis made it possible for us to build apartments at the price of 5,000 per sqm, with a decent margin, low construction costs and cheap land. And from the financing point of view – when we compare the same amount of residential space we had then with now, it turns out that in the past we would apply for a loan of PLN 40-50 mln. Now only half of that amount is enough for us.

Ewa Andrzejewska: You mentioned a decent margin. What percentage of margin do you consider decent?

Andrzej Szornak, Gant Development: After updating the costs it turns out that this is a profitable business, but not as much as some people imagine. And coming back to the subject of plots it is true that we have missed some transaction opportunities, but we decided that we would not repeat the mistakes that some companies made in 2007, when plots were being auctioned off for astronomical prices. We have strict rules with regard to prices and the land cost ratio needed to build one sqm of residential space. If a plot is to cost as little as 10 pct more then we do not buy it, for this simple reason: we do not know whether we will be able to sell apartments built on it for 10 pct higher prices in two years’ time. We are very conservative when formulating our revenue assumptions. We know what the prices are like nowadays, but we do not know what they will be like in two years time and so we are assuming that they will not grow.

Patrick Wojtulewicz, SGI Baltis: Land prices have fallen by app. 30 pct in the last two years. The lower demand has forced sellers to be more flexible, which has allowed us to consider future purchases. SGI does not intend to buy huge plots of land for mass projects. We do not want to be the biggest developer because the biggest one always has problems with quality. We are satisfied with the position of quality leader.

Ewa Andrzejwska: What is the correct assumption then – I mean, what should be the ratio of the cost of land to the price of an apartment?

Andrzej Szornak, Gant Development: Some time ago the banks adopted the model according to which the land should not exceed 20 pct. We can discuss whether it should be one pct more or one pct less, but I think this rule has proven to be sound. There is still the issue of how much residential space is to be built on the land. In the past 100 apartments were built on a given plot of land; now, however, when smaller apartments are being sold, we will build only 100 apartments with an area of 50 sqm, because we have to include one parking space per apartment. So the ratio for the land will be completely different. Moreover, banks are reluctant to finance big projects with over 300 apartments because it can happen that a developer is left with unsold apartments that it has to maintain. And let’s be honest, an apartment that is not sold within a year is a product which is very difficult to sell.

Paweł Sztejter, REAS: This problem is in fact increasing. The number of apartments offered for sale has grown to the level of Q4 2008, which was a record quarter with regard to the number of available, unsold apartments. Because of the low number of new projects, the offer was shrinking until Q2 2010. And the selling of finished apartments is very slow from the previous to the current quarter. Advance sales of apartments finished in H2 2009 grew from 76 pct to 80 pct.

Dariusz Szczypiński, Nickel Development: And have you compared the speed of selling projects now to two years ago?

Paweł Sztejter, REAS: It is hard to compare these periods because apartments sold in the middle of 2008 and in 2010 are completely different – however, generally speaking, the speed of sales is faster. As prices go down, the interest of buyers grows, even though there are a number of projects on offer that are not selling. These are projects that are have not been adjusted to the current market needs: they are too expensive, too intensive, they offer apartments that are too large or their completion is uncertain because of the lack of external funding. Over 50 pct of projects that were launched from Q4 2008 to Q3 2009 and at the end of 2009 have not acquire the necessary finance. It is worth adding that half of the ones that obtained finance were granted loans by PKO BP. In June, a meeting of the Polish Association of Developers (PZFD) held a survey in which app. 50 pct of developers made an assessment of the future economic climate. For the question in which you had to complete the sentence “I expect the sales of apartments built by my company in H2 2010 to be .................compared to H2 2009” as many as 38 pct said “definitely higher”, 33 pct said “slightly higher” and 27 pct used the expression “stable”. At the same time, companies operating in the Warsaw conurbation are more pessimistic than those operating in other markets.

Ewa Andrzejewska: This survey contradicts the data quoted by RedNet, in which it talks about a 50 pct sales growth in the capital city and declines in Poznań and Wrocław.

Robert Chojnacki, RedNet Property Group: I am afraid that the opinions of PZFD are not representative of the industry because these are mostly big Warsaw companies. The housing industry is a very local market. And an interesting thing here is that the company that sold the most apartments last year was not Gant, as is popularly believed, but Grupa Investycyjna Hosa, which operates in the TriCity and sold app. 50 apartments more than Gant.

Andrzej Szornak, Gant Development: You said that there is a slump of 17 pct in Wrocław, but after introducing two projects on the market there we have seen a 150 pct growth in sales.

Ewa Andrzejewska: And moving on to Poznań now. What is the assessment of this city by the representative of a company well-rooted in this market – Nickel Development?

Dariusz Szczypiński, Nickel Development: Last year there were very few new projects launched in this city. At the end of 2009 and in early 2010, we considered launching two completely different projects – one in Poznań city centre and the other in a dormitory suburb of the city. I remember that we were wondering when we would reach the required level of advance sales. In the case of the city centre project that we put on sale in May, we have already exceeded this level after two months. In the second project we will exceed it after app. 6-9 months because it is a different kind of product, not of the investment type.

Michał Kubicki, Volumetric MK Polska: I would also like to turn to the subject of land. There is practically no land for the development of a project with app. 100-150 apartments in Warsaw, and this kind of project is the easiest to finance and manage. Besides, we do not know how the construction costs will change. Since the end of Q1 the costs for construction services have been growing.

Dariusz Szczypiński, Nickel Development: But this only applies to selected services, e.g. reinforced concrete structures...

Michał Kubicki, Volumetric MK Polska: Plasterers have also been putting their prices up. The price increases result from infrastructure projects, among others. In the end we established a joint venture company with a construction company that managed to accumulate considerable funds during the last boom. As a result it wants to invest in property. I also have to draw your attention to the fact that the German labour market is opening up to Poland in January, which will have a bigger impact on the property sector than the opening of the markets in Great Britain and Ireland, which 1.5 mln Poles have left to work in.

Robert Chojnacki, RedNet Property Group: This is not about the bigger purchasing power or emigrants’ higher wages in euros, but the fact that the work force, i.e. construction workers, will drift away, since they have often travelled to Germany and they already have a good reputation there.

Ewa Andrzejewska: How does Dolcan assess the market for construction services, do you agree that prices have been growing?

Eugeniusz Chwesiuk, Dolcan: We launched a few projects in January and February and big companies fought over for the contracts at the time, such as Strabag or Henpol. They even suggested that they would be prepared to pay for the raw state of the building due to banks’ reluctance to finance projects. However, in March all we heard was: please come back to us when you have a building permit or a loan for the whole project – we will consider your offer then. So the change in their approach is obvious. In the period from January until the end of June we have noted a revival in sales and are now selling on average app. 40-50 apartments a month, having 1,200 under construction. There was a small wobble in June, but we are already seeing good results again. Even more homes would have been sold if it wasn’t for the problems with a building permit in Lublin, which we lost and recovered twice.

Michał Kubicki, Volumetric MK Polska: In our case the prices of construction services have grown by 35 pct in the last two years. And they grew because subcontractors put their prices up and there was no competition due to the high emigration. I expect, however, that construction services will become more expensive by the end of 2011, but these will be no more than single-digit growths. Will I transfer these costs onto the client? No, I won’t. I will look, just like Andrzej Szornak, at the price of the plot...

Ewa Andrzejewska: There is one top shelf project in the portfolio of SGI Baltis – in Międzyzdroje. Is there demand for luxury apartments, taking into consideration the opinions expressed here earlier, according to which apartments from the economy sector are selling much better?

Patrick Wojtulewicz, SGI Baltis: Our project in Międzyzdroje is in fact selling superbly. Buyers appreciate the coastal location and the quality of the project. The weather has helped us a lot this year.

Michał Kubicki, Volumetric MK Polska: In Warsaw such projects are indeed not selling, but our apartment building in Kielce is, perhaps because it is a truly unique luxury project – glass, stone, crystals, a view onto a park...

Irenuesz Ignaciuk, Budimex Nieruchomości: I would like to touch upon the subject of houses. Our group includes Budimex Danwood, which produces and sells wooden houses mainly in Germany, but recently also on the Polish market. The contraction in 2010 looks very good. The trend has come from Germany and we can see a considerable improvement in this segment.

Michał Kubicki, Volumetric MK Polska: Opinions can be heard on the market that the house sector has completely stagnated; still we are actually going against the flow with our Nad Brzegiem Czarnej project in Marki. The prices of land near Warsaw for single-family developments have dropped – in the past it used to cost as much as PLN 500 per sqm, but now it can be bought for PLN 350.

Paweł Sztejter, REAS: I had a conversation recently with a big developer from Western Europe, who talked about the necessity to reformulate their strategy because they currently do not have specialists to finish apartment interiors. And adapting this to our local conditions – can developers see any change in buyers’ attitudes to turnkey finished apartments?

Michał Kubicki, Volumetric MK Polska: Out of 300 apartments on offer, buyers were interested in two. I believe that the mentality of the 1970s and 1980s is so deeply ingrained that even people born in 1980s want to finish the interiors of their apartments themselves. Since the beginning of my activity on the property market in 1995, I have been hearing that Warsaw will have four mln inhabitants in five years’ time and that they will be buying turnkey finished apartments. So far neither Warsaw has so many inhabitants nor are they buying such apartments.

Robert Chojnacki, RedNet Property Group: 
A trick conceived by a certain developer turned out to be a hit – by adding a certain percentage of margin to my already decent one, he suggested to his clients that they would be able to receive their apartments at the same time as those with unfinished interiors. And it turned out that 35 pct of the homes in this project were turnkey finished apartments. I estimate that the market for turnkey finished apartments is 10-15 pct of a project.

Ewa Andrzejewska: Let’s talk about prices. What is currently the gap between the offered price and the transaction price? Have you had to lower prices considerably in your companies?

Zbigniew Wojciech Okoński, Robyg: During the crisis, i.e. at the beginning of 2009, we revised our prices by app. 10-12 pct. Next, we changed the structure of apartments. Never before had we given discounts higher than 2-3 pct in individual negotiations. It does indeed happen that on special days, organised by us as promotions, we put up for sale a few selected apartments at a 3-4 pct lower price, but this is not the rule. You can get a discount of 1-1.5 pct in individual negotiations. Our prices are calculated in such a way that I cannot see a lot of room for discounts.

Michał Kubicki, Volumetric MK Polska: We also reviewed our prices when the crisis started. Our sales department has a 1.5 pct limit for possible discounts. These are not high, but symbolic amounts, which may give the buyer a sense of satisfaction in negotiations.

Zbigniew Wojciech Okoński, Robyg: The point for us is balancing the development of this market both on the buyer and vendors side – it is not about gigantic and fast growth, because this is dangerous for both sides.

Michał Kubicki, Volumetric MK Polska: I confirm that we are not interested in high prices, but in a sensible return on the capital employed. I prefer to have a 20 pct margin with a price of PLN 6,000 than with a price of PLN 8,000, because then the apartments are out of reach for the majority of society. We do monitor inflation, so it should be no surprise if apartments are app. 5 pct more expensive next year. For the price of PLN 8,000 per sqm it is possible to have a decent 25 pct margin, which you were asking about earlier, provided you contracted the construction at app. PLN 3,300 per sqm and the land was bought for app. PLN 1,000 per sqm of usable and residential space.

Robert Chojnacki, RedNet Property Group: Although we must admit that it would have been something of a sin not to have increased prices when the market was so heated-up.

Ewa Andrzejewska: Does Dolcan try to tempt buyers with discounts or bonuses?

Eugeniusz Chwesiuk, Dolcan: In my company we also negotiate with our clients by offering them first of all a discount for finishing materials and furniture bought in our warehouses, as well as help with interior finishing. However we do not exclude discounts of a few percent in more expensive locations.

Ewa Andrzejewska: The T-recommendation will come into force in August. Will it contribute to a slowdown of the housing market?

Marek Koziarek, Bank Pekao: Opinions are, as usual, very different. The Polish Financial Supervision Authority concluded that the T-recommendation would not reduce the mortgage market by more than 5 pct and the consumption of loans by more than a dozen or so percent. However, it could influence the stratification of the market, i.e. bring about a growth in the number of clients who will not have any access to loans because they have a minimum income. This is a form of limiting the demand, even though it is rather positive for the market. Some support projects should be introduced at the same time so as to enable people who cannot take out loans to get into an apartment – be it their own or a rented one.

Ireneusz Ignaciuk, Budimex Nieruchomości: It is worth noting that the banks introduced the rules of the T-recommendation before the Polish Financial Supervision Authority issued it.

Dariusz Szczypiński, Nickel Development: According to a report by Deloitte which I read recently, the T-recommendation means in practice that people who want to take out loans of over 300,000-400,000 have to earn app. 50 pct more than they earned before the recommendation was issued. In the case of smaller loans, a buyer must earn app. 18 pct more. This means that the access might be restricted more for people who are better off and often buy more than one apartment.

Marek Koziarek, Bank Pekao: Loans of over PLN 400,000 constituted app. 14 pct of all the mortgages granted in 2009. The percentage was similar in 2008. That is why we do not have to worry about the influence of the T-recommendation because it concerns a narrow group of clients.

Ewa Andrzejewska: The perspectives of a developer, contractor, property manager, financier and analyst. Their opinions on the problems facing the industry are slightly different; but together they provide a panoramic view of the situation in a sector that is picking itself up after the credit crunch and is now hoping for calmer and more stable development.