Banks stay conservative

Banks continue to use conservative lending criteria, which has resulted in alternative forms of financing becoming more popular. During the ‘Investing in Real Estate’ debate, which took place in the Polish Business Roundtable Club, bank representatives stated that they had not turned off the real estate money taps, but not everyone could be assured of financing. Among the companies that still receive loans are experienced developers in both the retail and the office market with high quality projects in promising locations. Warsaw is no longer a very good location, particularly in regard to the office market. Marek Koziarek, the director of the real estate financing department at Pekao worries that after taking into consideration the absorption level and the new supply on the market, the owners of office buildings in the capital can expect problems with filling their properties with tenants: “Not everyone will be able to start new projects and the owners of existing buildings are under pressure from decreasing rent rates. In these conditions, large players with solid funding will be at an advantage,” he argued. The financing market could heat up with the coming of new players, particularly those from Germany, who have serious plans concerning Poland. “German banks have app. EUR 3 bln which is earmarked for financing properties in Poland, they are mostly interested in the best properties in central locations,” claims Piotr Kaszyński, director of the capital markets department at Cushman & Wakefield. It is much harder to obtain financing in the regions, although it is slightly easier on the retail market. In the office market, only the largest cities in Poland are of interest (e.g. Kraków, Wrocław and Poznań), which might explain why (after taking into account the low interest rates) financing with corporate bonds has become quite popular among developers. However bonds are most often issued for relatively short terms (three to four years) in comparison with the usual length of the construction process, so they cannot serve as a basic form of project financing. “We mostly finance the purchase of land and equity through bonds,” explained Grzegorz Iwański, the director of the financing department in Echo Investment, during the debate.