Poland: Are housing projects taking longer to complete
Statistics say that the average construction process for a new residential building is getting longer and longer. What is the reason for this? How long does it now take to complete projects?
Joanna Chojecka, sales and marketing director for Warsaw and Wroclaw at Robyg Group:
Currently, the biggest challenge for developers is launching new projects due to the lengthening time to obtain building permits. The waiting time to obtain a building permit is now about 1.5 to 2 years, while it used to be 6-9 months. Due to limited access to land, as well as due to the low number of building permits issued, the process of implementing projects has slowed down considerably. Therefore, the state administration, as well as local governments, should make the procedures as easy as possible. So that construction can be carried out as efficiently as possible. This is an area that should certainly improve. A positive trend is that the market situation is good and there is clear demand. Unfortunately, the supply is still low, there is a shortage of apartments, especially in Warsaw, where purchase interest is highest.
Paweł Florczak, technical director of Ronson Development Warsaw:
We assume that the construction of a multifamily building should take 18 to 21 months, and meeting the construction deadline is a priority for us.
The delays noted by the CSO are a market-wide statistic and may be due to poor or no contracting of construction work well in advance, which is heavily influenced by the ever-increasing labor costs. Sometimes general contractors are faced with a situation in which the cost of subcontractor services exceeds the original budget estimates. This, in turn, forces companies to look for subcontractors with more competitive prices, but these companies are often burdened with a large number of implementations, which can directly affect the schedule of a development project. Another factor can be extended lead times for goods, such as passenger cranes, door and window joinery, window ironwork, or locksmith products prepared in workshops by separate subcontractors. Formal matters related to the implementation of development projects, such as electricity, water and sewer connections, as well as the implementation of roads and sidewalks in urban areas, may also have an impact on extended lead times.
Angelika Kliś, Atal board member:
The construction process is influenced by many factors, and individual projects differ in scale, complexity, or dependence on external parameters, such as the road system or connection of the investment to utility networks, among others. If we are talking about multifamily construction, the statistics reported by the CSO must also take into account the more difficult conditions for smaller developers to finance construction, as the cost of money was higher. Often, too, the process of accepting completed investments can extend over time. We usually complete investments in about 2-2.5 years, counting the time from obtaining a building permit to obtaining a building occupancy permit.
Tomasz Kaleta, director of the Sales Department, Develia S.A.:
The last two years have been difficult for the industry. Due to the war in Ukraine, supply chains of many construction materials were broken and their prices rose significantly. General contractors were forced to renegotiate their contracts, both in terms of prices and completion dates. The situation is now returning to normal, although delays may still occur for some companies or projects.
Normally, the construction of an average residential building takes about 18-20 months. We are meeting the completion dates included in this time frame. However, a major problem remains the long time to obtain agreements and decisions on construction permits. All administrative processes to prepare a residential development take about two years. Currently, this is the biggest and most serious barrier preventing developers from increasing the supply of new units. Record low offerings combined with high demand result in further increases in rates for units, which is why we support all initiatives that could speed up the procedure of investments in offices or increase the availability of land on which to start a development project at a fast pace.
Zuzanna Należyta, commercial director at Eco Classic:
The increase in average construction time reported by the CSO relates to the pandemic period and the beginning of the war in Ukraine. At that time there were significant problems with supplies and labor. Currently, we do not observe an extension of the construction process. In the case of our Warsaw investment Moja Północna, we completed the next stage of construction a month earlier.
Unfortunately, what significantly hinders the realization of real estate development investments are official procedures. There is a shortage of officials and you have to wait months for each decision. This, unfortunately, is changing for the worse.
Małgorzata Ostrowska, director of the Marketing and Sales Division at J.W. Construction:
Each investment is different, so it's hard to compare them to each other year to year. The length of implementation depends on the project itself, but also on many other factors. In our case, thanks to the implementation of timber frame and prefabricated technology in selected investments, the execution time of these projects has been significantly reduced. The speed and efficiency of investment implementation is one of the main advantages of the mentioned technology.
Dorota Gdaniec, Land Sales Specialist at Alter Investment S.A.:
Each of our properties has different characteristics and requires individual substantive solutions to obtain a building permit. The time to obtain such a permit varies for each project and ranges from several months to even several years. We confirm that the time to obtain a building permit, which in standard terms accounts for about 60 percent of the time of the entire development process until the apartment is put into use has already lengthened significantly during the pandemic, and recently the problem has not disappeared, but has become even worse. This is due to frequent changes in the law and problems with its interpretation, which also applies to the administrative bodies issuing decisions in this regard, as well as insufficient staffing of these entities, and consequently work overload, which sometimes results in many months of dealing with relatively simple even matters that, according to the law, should be dealt with within 30 days.
Robert Chrzanowski, director of Project Development at Archicom:
From our perspective, the average duration of construction of a new multifamily residential property has actually increased, which is also reflected in the most recent market reports. At the same time, it is important to be aware that the dynamics of the implementation of a given development varies depending on the location and other factors. Most often, the prolongation of the process is conditioned by administrative issues, such as the lack of a zoning decision or a local development plan. In standard circumstances, about 3 years pass from the development of a project to the stage of handing over apartments to buyers. If the legal status of the land is not settled, the completion time extends to 5 years on average.
Mariola Zak, sales and marketing director at Aurec Home:
Developers began building nearly 10,800 new apartments in August this year. This is more than twice as much as in the same period a year ago. The growing number of construction starts shows that investors are doing what they can to encapsulate the offer of apartments for sale. However, the duration of housing construction is getting longer. The time it takes to receive the keys to an apartment varies depending on what stage of construction a customer decides to buy a unit. For years, the trend of buying apartments at early stages of construction has been popular, which is confirmed by our statistics. Most units on offer find their buyers not long after the project's sales launch. Customers who decide to sign a contract at an early stage of construction have to wait many months to receive their apartment.
Source: dompress.pl
Photo: moja Polnocna, Eco Classic
