Commuterville horror?

The question when looking for a new home is whether to live near the city centre or outside, with all the bother of commuting. Central and Eastern European developers are still preferring not to take the risk and are building apartments. but there has been a clear surge in buyers for single-family houses

Zuzanna Wiak, Mladen Petrov

In the largest Polish urban centres, estates with single-family houses are mainly to be found on the outskirts of the city or in districts where no growth was expected a few years ago. Where there were once just fields, there now remains only islands of open land between new developments. Warsaw’s Białołęka district is one such location, where Dom Development has decided to develop 88 semi-detached and terraced houses, alongside 17 three-storey multi-family buildings. The company is also selling homes in the Wille Laguna 2 estate in Ursynów district, but is not planning any more housing estates in the near future.

Radosław Bieliński, Dom Development’s communications and marketing specialist remarks that: “We keep a close eye on the market and take decisions to invest in new projects whenever the market justifies this. The greater part of what we offer consists of apartments, with houses rather being a second choice.” Katarzyna Kuniewicz, a senior consultant at REAS, claims that the only houses being built in central Warsaw districts are private developments on small plots. Developers are still focusing mainly on the peripheries of Warsaw, where such projects are not finding a ready market as the credit crunch continues. Admittedly, the per sqm prices demanded for houses are much below those of apartments, but when the overall price is taken into account, stand-alone properties are much more expensive.

In the current economic realities, developers are only opting to start new projects when at least the majority of buildings in earlier schemes have been sold. As with everyone else, residential developers are having to cope with the lack of available finance, whereas small companies, which have never had to use bank loans to finance their projects (and still avoid recourse to them), are in a much more favourable position. These are usually companies developing a smaller number of homes on smaller plots. By using their own capital they spend less on construction, i.e. without bank interest costs, achieve better profit margins on their projects but also sell somewhat cheaper than the largest market operators. Such investors also pay less for building sites for smaller projects, since they may be of non-standard dimensions and situated in less attractive locations.

How to build and sell with a profit

The major headache which residents in the largest Polish metropolises have to cope with is huge traffic jams, which is why good road infrastructure giving convenient access to the city centre will have the greatest impact on the growth of the housing market. Katarzyna Kuniewicz puts strong emphasis on this particular aspect: “Poznań is a city surrounded with estates of small houses, where an increasing number of people are moving outside the city due to the small distance to the centre and convenient commuter access. Projects are often carried out by groups of individuals, creating their own ‘enclaves’; while on the other hand there are those wanting to return to the city to exchange houses for apartments, so they can save time travelling to and from work, kindergartens and schools.” But for a house to find a buyer it must be much better designed than an apartment. A buyer who usually has a million złoty or more to spend wants to avoid the problems that he or she has encountered living in apartment blocks. Their typical requirements include a separate dressing room, boiler room and larder. 
   Mirosław Bednarek, board president of ING Real Estate Development, makes the following distinctions: “Customers for single-family houses differ from apartment buyers. Their residences do not have to be next to an underground railway station – something that Warsaw citizens frequently look for. Price is not the overriding factor for such buyers – the surrounding area, neighbours, finishing standard, project and size of plot are much more important.” Together with its partner Terra Casa, ING is developing the Parkowe Wzgórze estate on a 15-ha plot in Mogilane near Kraków. The first stage will have a total of 52 houses, to be followed by another 47 in the second stage and 54 in the final phase. ING Real Estate Development’s boss is sure that, despite the complex situation on the housing market, interest in the Kraków project is growing. Mirosław Bednarek highlights recent successes: “We have just sold another three houses. An interesting fact is that we also have more customers in the summer.”

Developers are deciding more often to link house projects with additional services. Włodarzewska chose this approach for Sobienie Królewskie Golf & Country Club in Sobienie Szlacheckie, an estate of around 80 single-family houses about 40 km from Warsaw, together with a professional golf course, spa centre and small private airfield. The houses, of around 317 sqm to 342 sqm in size, will be priced at between PLN 950,000 and PLN 1.5 mln. Marta Drogosz of Włodarzewska’s sales office comments that: “It is not the best time to sell houses, but our Sobienie Królewskie Golf & Country Club development is not for the standard customer looking for a home in Warsaw’s commuter belt. The comprehensive infrastructure and location mean that buyers who want to settle here are those who see the crisis as an excellent time to invest money in property with profit-generating potential.” She adds that, despite all its many attractions, Włodarzewska has not yet found buyers for all its homes. It has to be remembered, however, that the exhibition house has been open for less than two months and already the first reserve contracts for houses situated on the golf course have been signed.

Having said that, it is the case that price is the most important factor for a buyer, after the location and the project. And prices have fallen. Paweł Jurkiewicz of Creative Development, which is building a number of semi-detached houses in the Kabaty district of Warsaw, admits that “prices have fallen by around 20 pct. Initially, a 284 sqm house cost PLN 2.95 mln, and all of these where finding purchasers until recently. Even so, I concede that the initial prices were exaggeratedly high in early 2008, and now the construction costs paid by developers are much lower than those of 2008.”
 ING Real Estate Development is planning a response to the situation, as Mirosław Bednarek explains: “We are adapting our offer in the Parkowe Wzgórze project to market conditions. Since we are currently witnessing a fall in execution costs, we can gain a lot of satisfaction from making our offer more customer-attractive.” Construction companies, afraid that their portfolios of contracts in years to come will be empty, are using price in their struggle for contracts, leading to building costs being lowered by 10 pct and even more.

House prices

The gap between house prices in the Warsaw region is substantial, varying between around PLN 3,750 and 6,200 per sqm in such locations as Piaseczno and Nadarzyn. But these figures are somewhat different in Warsaw proper. The price per sqm in Białołęka district starts at around PLN 3,770, while in Wilanów the base rate is PLN 9,800. Also, in the latter district houses have a set top price of PLN 13,000. A Globe Trade Centre project being developed on the boundary between Warsaw and Konsancin-Jeziorna has also reached such a high unit price, with house prices there averaging between PLN 10,000 and 11,000 per sqm. The company has already developed 206 buildings in three stages and is planning another 57. Ober-Haus is forecasting that new house prices in Warsaw may reach as much as PLN 15,000 per sqm, although those same data reveals that much more expensive houses can be found in Kraków, where prices start at PLN 2,900, and have a possible maximum value of PLN 21,000. Should Cracovians be guided by the need to make savings, they can buy houses on the secondary market where prices do not exceed PLN 12,900 per sqm. Houses command much lower prices in the TriCity, where the price of 1 sqm in a