Budner takes a leap in new ventures

Today a lot of apartments and offices are being delivered on the market so it is natural that you need to be prepared for a bit of shortness of breath, probably for the next two or three years. Extending our profile is our priority now. For this reason we established Budner Infrastruktura, which will bring us an engineering work expertise. We believe that this market sector will be on the rise for the next five or six years, thanks to the inflow of EU funds, among others. We have already hired engineering specialists and we are now conducting negotiations over our first engineering deals. This is where we will be looking for a niche for ourselves in the first place.

What will you look for next?

Apartments for lease are going to be increasingly needed on the Polish market. This is a huge segment in other countries. If you looked at, for instance the German market, you will see that there are large corporations such as Vitter which buy several thousand apartments and make profit on leasing them out. In Poland there is still a lack of that sort of business but the first few harbingers are here. They include BGK Nieruchomości, for example. We know that international funds that could potentially be interested in investing in this sort of projects are now also emerging. Globally, there is a lot of equity that wants to be accumulated somewhere, and bank margins are currently exceptionally low, so properties are an interesting investment alternative. We also hear about Polish entities which have similar investment plans. We have signed one contract with BGK Nieruchomości as for now. We sold the Mokotów City project on ul. Samochodowa in Warsaw. The 116-apartment development has already been launched. Although the residential development margin is lower compared to retail investment but you need to remember that we are also a contractor, so we can generate a good margin here. There are two more projects ahead of us: in Gdańsk and Kraków. In the case of the former, we have already bought a plot which could house app. 100 apartments. Meanwhile, we have secured a plot in Kraków. To put it short, in such cases we use the synergy effect.

Another direction is...

We are also thinking about expanding internationally. Our people are well prepared for taking up construction projects in, say, Berlin. Why Berlin? Because it is the fastest growing European metropolis and it happens to be located close to Warsaw. We want to focus on one city in Germany because we are a relatively small company. Besides, I believe that Warsaw and Berlin are similar. But in terms of market trends, Germany’s capital city is overtaking Warsaw by a dozen or so years. Our operations in Germany will be our second limb. So we are looking for future development partners there. Another market segment we are interested in Germany is senior housing. The legal situation in the country is stable and regulated. Besides, demand for this kind of projects is very high there. We see a chance for the construction of even more than a dozen of such projects over the next few years. We aim to enter the market together with a German partner and perhaps return to Poland in a few years in order to use the experience we should have by then here. I would like to stress one more time that we are not a huge company which could compete for large contracts on the market so we will be looking for niche projects.

Is student housing also a niche?

That is right. We have already prepared a dorm project in Warsaw. We will soon apply for a building permit. It is to be built near the Słodowiec metro station. I know that the demographics are not on our side now but we are talking with universities and we know that Poland is an attractive European country for students who use Erasmus exchange programme. Students from Asia, for example from China, or African countries are also interested in studying in Europe. Of course Great Britain is their first choice, followed by Germany and France, but Poland also has some valuable assets. Coming back to Słodowiec: the first stage will involve the construction of 420 superior rooms. This is the first of many similar projects we plan. We want to create a chain of private student houses, for the Dwell Well company was established for that. Another dorm project will be built on the other side of the Vistula River. We are securing a plot on ul. Grochowska and working on the design now. Both buildings are planned to be launched in the summer of 2018. They will be student-friendly halls of residence. They will feature a supermarket on the ground floor, we also plan to open a fitness club, a bar and some meeting places within.

Do you consider other Polish cities?

We are securing a plot in Kraków. We are also interested in Wrocław, Poznań, Gdańsk, Rzeszów and Lublin.

Will there be more housing projects?

We are looking for opportunities from the so-called ‘boutique’ project sector at all times.

How will you finance the projects you mentioned?

With the help of banks. We also have our own funds from profits we have generated.

Will they also come from listing the company on the Warsaw Stock Exchange?

When the time is right, probably in three, four or five years’ time we will float the company on the stock market. In order to do this we will try to first extend our operations, increase our growth potential and diversify our portfolio. It is not the right time for us to debut on the WSE.