Poland: Reductions and costs, at what prices will units in new developments be offered?
Andrzej Oślizło, CEO, Develia S.A..
If everything is getting more expensive by nearly 20 percent, then housing prices should increase proportionally. The prices of general contracting and construction materials have increased significantly since the outbreak of the conflict in Ukraine, but for the past few months we have seen a slight correction of these changes and stabilization. The resultant impact of rising energy and fuel prices and lower levels of construction investment is an unknown.
Due to rising financing costs and slower sales, many developers are cutting back on new investments. It is worth remembering that the current supply is largely sold out, and there will be fewer new projects. With shrinking supply, we see no chance of property price declines. Once credit customers' demand returns, prices should return to previous rising trends.
Andrzej Gutowski, vice president, sales director of Ronson Development
In the current economic situation, maintaining the company's liquidity is more important than margin levels. In the last six months we have not seen an increase in construction costs. They are stable, and there is an expectation on the part of developers to negotiate with general contractors, rather than creating pressure to raise prices. We do not assume increases, only minor adjustments between stages of successive investments, resulting mainly from the availability of the most popular meters chosen by buyers.
Angelika Kliś, Atal S.A. board member.
The situation in the real estate market is not conducive to increasing apartment prices. As a developer, we bear this risk that the contracted price of an apartment is fixed for the customer, and the cost of construction is variable. To the extent that it is market-acceptable, increased construction costs are reflected in apartment prices, which have become more expensive over the past 2 years. Despite the impact of many unfavorable factors, we are maintaining margins at a good level.
Zuzanna Należyta, commercial director at Eco Classic
The decline in sales has stopped the increase in apartment prices. If the situation does not change, the projects currently under construction will be terminated, as they were contracted a year or two earlier. Developers will halt production to an even greater extent than a few months ago due to lack of profitability. By January to October 2022, construction had started 14 percent fewer units than at the same time in 2019, the last quiet year before the pandemic and conflict in Ukraine. We expect further restrictions on housing production, which will keep prices at current levels. And when the trend changes and demand returns to previous levels, we anticipate a sharp increase in prices due to their limited availability.
Joanna Chojecka, sales and marketing director for Warsaw and Wrocław at Robyg Group
We are trying very hard to control costs so that the prices of apartments for customers remain attractive. However, it is necessary to assume price increases in line with inflation. Many building materials as well as labor costs are rising even faster than inflation. Therefore, there is no way to keep prices unchanged.
Marcin Michalec, CEO of Okam
At the moment, we do not feel a decline in interest in our projects. Due to their strengths, attractive locations and numerous amenities for buyers, sales remain fairly steady. The prices of the units we are delivering or will soon deliver are no different, or only minimally different, from those we launched in previous months. What is important here is that we guarantee buyers a high standard of finish, as well as a package of additional amenities and pro-environmental solutions in all projects under development.
Janusz Miller, director of sales and marketing at Home Invest
We are all seeing a decline in demand for apartments, but we are also seeing supply constraints. As a result, there is no indication that housing prices are set to fall. Rather, we expect price increases due to the higher land rates at which they have been bought in recent years. On top of that, higher prices for materials and workmanship must be taken into account. If the economic calculus doesn't add up, investments will be postponed.
Mariola Zak, director of sales and marketing at Aurec Home
Observing the index of the average price per square meter of November 2022 compared to December, one could see an upward trend. In Warsaw, the average price was PLN 13,334/sqm. (+0.08 percent mdm), in Krakow it was PLN 12,138/sqm. (+1.05 percent mdm), and in Gdansk - PLN 11,990/sqm. (+3.67 percent mdm). Other cities recorded slight declines, Wrocław - PLN 11,800/sqm. (-0.79 percent mdm) and Poznań - PLN 10,158/sqm. (1.84 percent mdm). The cheapest city is Łódź, where the price per meter is PLN 8,578/sqm, down 6.83 percent.
Source: The poll was prepared by the real estate website dompress.pl.
