Dom Development eyes Kraków and Bemowo

The company’s final decision on the purchases will depend on the effects of negotiations and the competitive conditions on the market. As Jarosław Szanajca points out, the developers’ optimism is now great, and this makes buying land much more difficult. Especially since it is quite common these days that a plot is being withdrawn from sales. He admits that a part of the negotiations Dom Development conducted so far were ultimately aborted when they reached the point where the developer would not achieve a satisfying margin of at least 20 pct from such project. Dom Development plans on spending PLN 170 mln in total this year to enlarge its land bank, but the company has only spent PLN 60 mln so far. “This might change by the end of the year,” says Jarosław Szanajca. Dom Development is also carefully watching the plots located in Warsaw’s city centre. “We are mostly interested in the plots housing projects bigger than 100 apartments, but we would also be eager to acquire some plots for luxury projects. In such case a plot wouldn’t have to accommodate more than 20 apartments. Unfortunately, finding such gems is difficult,” he tells ‘Eurobuild CEE’. The company is also considering developing projects beyond the two Polish local markets it already operates on, namely Warsaw and Wrocław. However, after its recent experiences in Wrocław Dom Development is now more cautious about the new frontiers, Jarosław Szanajca says. He admits that although Dom Development’s Wrocław apartments are now being sold barely without generating a margin, so they could be sold off, the market situation in the city is slowly improving and the developer is not giving up on searching for new plots. “We entered Wrocław before the crisis, when land was expensive,” he explains and adds that Dom Development is “also looking at other cities, but rather ‘platonically’ so far." The company’s management admits that if Dom Development was to develop a project somewhere beyond Warsaw now, it would most likely be located in Kraków. “The Kraków market looks absolutely best. It is now the second Polish market for us to think about,” says Jarosław Szanajca. “You need to first ‘get the taste’ of a new city before you start building there,” he stresses. When asked about Dom Development’s financial strategy, Jarosław Szanajca expects the company’s margins to soon start growing again. “We have experienced a good market climate over the last few months, but we are not the only ones to see good sales,” he says. According to Jarosław Szanajca, the residential market is now well-balanced, with neither demand nor supply predominating. In Q3 a total of over 5,000 apartments were delivered to the market and app. 4,000 were sold. As Dom Development points out, low and systematically reduced interest rates positively impact the market. At the same time, the company says that re-launching the ‘Apartment for the Young’ governmental programme has had no impact on their operations, as Dom Development apartments are simply too expensive to meet the programme’s requirements. The developer is currently working on two Warsaw projects: Henryków and Pod Różami (formerly Włodarzewska), which are set to provide a total of 338 apartments. In addition, the next stage of the Wilno estate (250 apartments) is to be marketed soon. The company estimates that the new properties will generate PLN 55 mln of net profit,” says Janusz Zalewski, financial director and vice-president of Dom Development’s management board. “Perhaps it will even be a more, but only a bit,” he adds.