Poland: How do developers finance residential investments

What means do developers use to finance the construction of residential projects and the purchase of land? Do they use alternatives to today's costly bank financing? Do they enter into investment partnerships when developing projects? Which nature of cooperation is the most popular?

Tomasz Kaleta, Sales Department Director, Develia S.A.
We are actively developing cooperation on new projects within joint ventures. In Warsaw, in this model we are currently conducting 2 residential investments together with Grupo Lar Polska. In Wrocław, together with the CEE Student Housing Fund, managed by I Asset Management, we will develop a modern student house with 300 rooms in the PBSA (Purpose Built Student Accommodation) formula. We are preparing another joint venture project in Gdynia, where, together with TFI Rockbridge, Derby Investments and a group of individual investors, we will build a multi-stage housing estate with approximately 1,600 flats and units.

In this type of project we can act as a source of capital, developer or manager of the entire investment process. We are open to cooperation with all entities disposing of attractive land for housing development, optimally with a building permit already issued.

Andrzej Biedronka-Tetla, Atal board member for finance.
We focus on building flats for individual customers. We have not engaged in investment partnerships and have no plans to do so.

We are developing organically, and the foundation for financing our operations is our own funds, funds from the issue of shares, as well as from the issue of bonds on exceptionally good terms for us, and the capital commitment of the dominant shareholder, including his acquisition of part of the aforementioned instruments.

Mariola Żak, sales and marketing director at Aurec Home.
We carry out all investments with our own funds, so we have no need for external financing. Thus, we are not threatened by the loss of liquidity, which is difficult to maintain, for example, in the event of a significant drop in sales. Buyers who choose flats from our investments are guaranteed that they are carried out on time and without any delays.

Zuzanna Należyta, commercial director at Eco Classic.
We are open to different solutions. Land acquisition is difficult at the moment and we have to be flexible.

Małgorzata Ostrowska, Director of the Marketing and Sales Division at J.W. Construction.
When it comes to acquiring land or financing investments, we use a mixed model. We partially finance our next investments with the support of a bank, but many of our projects are developed with our own funds, which allows us to introduce already completed flats for sale. It is worth mentioning here that we also implement alternative solutions to a bank loan for our customers. In the Villa Campina project near Ożarów Mazowiecki, for example, we have introduced instalment sales without going through a bank.

Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at the Robyg Group.
The Robyg Group is in a very good liquidity position. The Group's cash position at the end of 2023 reached nearly PLN 560 million, including funds accumulated on escrow accounts, while our net debt-to-capital ratio was negative, i.e. we had more cash than financial debt at the end of the year.

Such a strong cash position allows us to be optimistic about our ability to acquire new plots of land, and should also translate into attractive service cost levels for new financings.

Yaron Shama, Vice-President and CFO of Ronson Development.
We are constantly looking for alternative financing solutions for land acquisitions. We are open to all partnership deals. We have entered into Joint Venture partnerships on more than one occasion. This is a cooperation model valued by developers as it allows diversification of risk and resources.

We are also considering the possibility of entering into different types of partnerships, such as combined transactions with landowners or any other partnership scenario, if it yields good economic results.

Damian Tomasik, CEO of Alter Investment.
We are not currently using bank financing. We finance ourselves with our own funds and private debt capital. We have also started new joint venture projects, which we intend to develop in the near future. As a further step in the development of our business, we signed our first cooperation agreement with a professional entity to provide advice on raising PLN 15 million. We intend to observe the potential of this cooperation in order to increase our involvement in such a financing model.

Our ambitions for growth are high and the capital needs in our business are practically unlimited, but the most important thing for us has always been to minimise the risks associated with external capital and to pay all our obligations on time, and I must say that we have been doing this to the full extent since the beginning of our operations, of which I am most proud.

Source: dompress.pl
Photo: Szmaragdowy Park, Develia