Green residential projects

Yareal's strategy envisions obtaining green certificates for all new housing schemes

STRONG FUNDAMENTALS

Poland’s residential property market is still defined by stable demand. Pro Urba Group, the developer of the 19. Dzielnica large-scale project in Warsaw, is now looking at new investment opportunities in the sector, says management board member Jacek Putaj

INTERVIEW BY ADAM ZDRODOWSKI

WBJ: What made the Spanish investors behind Pro Urba enter the Polish market?

Jacek Putaj: Following its accession to the EU, Poland became increasingly interesting for Spanish investors. The country was already at that time perceived as an attractive market with lots of future development potential allowing foreign investors to diversify and expand their European real estate portfolios.

A number of other Spanish investors and developers withdrew from the Polish market after the outbreak of the global financial crisis…

Correct. Only a handful of Spanish investors present in the Polish market prior to the crisis still run their businesses here locally. In my opinion, the disappearance of many Spanish companies was not entirely caused by the crisis itself, which did not severely impact the Polish economy and the Polish real estate market. I would point to some poor business decisions made at that time, such as ill-considered, expensive and irrational land purchases as well as the lack of support from local professionals, coupled with the lack of knowledge of the local planning procedures and a mismatch between the market expectations and those companies’ offers.

One could come up with many more reasons. In my view, other factors leading to the lack of success of the Spanish developers and investors in question included their attempts to implement the Spanish business model in the Polish reality, which has its own specificity, and their remote investment management processes, conducted at the Spanish headquarters level, which often led to the blocking of the decision-making process.

Poland’s residential market continues to be defined by large supply and sales volumes. How long will the boom last?

Demand in the housing market is still large and the market itself is developing steadily. Provided that no major macroeconomic problems occur, apartment sales levels should remain stable in the coming years.

Will apartment prices continue to grow?

The price increases that we are witnessing now are mainly the result of the fact that ongoing projects are being built on expensive land plots purchased by developers in recent years. Additionally, the shortage of qualified employees in the construction sector and the growing prices of building materials are contributing to the already high and continuously growing construction costs. It is worth noting that despite the general apartment price increases, the margins earned by developers remain at the same level. This shows that it is these external factors, rather than developers’ thirst for profits, that are driving prices up.

What do you see as the main risks that could threaten the further growth of the market?

When it comes to the demand side, any limitations imposed by financial institutions regarding the granting of mortgage loans might be treated as a risk factor. As for the supply side, one of the risk factors could be the potential tightening up of regulations and the introduction of the so-called Developer Guarantee Fund – any costs associated with such changes would be passed on to the buyers, which would lead to further apartment price increases and could, potentially, limit demand.

Your flagship project – 19. Dzielnica in Warsaw’s Wola district – has already helped revitalize a sizable portion of previously neglected land in the city and has been widely acclaimed. What is the idea behind the scheme and how was it born?

It is thanks to the implementation of as significant a project as 19. Dzielnica that we became a recognizable brand The acquisition by a single company of a large plot of land located in the city center, lying adjacent to a major transport and office hub, allowed for the development of a well-designed, architecturally harmonious neighborhood in a post-industrial area. One could simply not miss such an opportunity! The project is important from the perspective of the whole city of Warsaw – it comprises over 1,700 apartments, has created new urban fabric with cozy local streets, ground-floor commercial units, publicly accessible fountains, attractive street furniture and green patios for the apartment owners to use. We contracted the acclaimed JEMS architectural studio to design this scheme – the result of this cooperation is excellent buildings that have won numerous architectural awards in recent years. Further proof of our success is the many satisfied residents who recommend our estate to their friends and also often decide to buy their next apartment here.

What are your investment plans in Poland as far as new residential projects are concerned?

Although the availability of land is becoming more limited, we are currently looking for interesting plots that will allow us to implement further investments.

How has Pro Urba changed over the last 15 years?

We started with much smaller projects in Warsaw’s Wilanów and Mokotów districts, but it is thanks to the implementation of a project as significant as 19. Dzielnica that we have become a recognizable brand. The company has grown, but the important thing is that the same people who have worked with us for years are behind it. This is a team of great professionals who identify with the company and form its solid base.