What is the biggest barrier to housing construction in Poland

by   CIJ News iDesk III
2023-09-14   11:44

Demand for new apartments is growing, but their availability on the market is limited. What could effectively motivate development companies to be more active and effectively translate into an increase in supply? What is the biggest obstacle when it comes to the implementation of new housing projects?

Joanna Chojecka, director of sales and marketing for Warsaw and Wroclaw at Robyg Group:
Currently, the biggest challenge for developers is the launch of new projects due to the lengthening time for obtaining building permits. A positive trend is that sales of apartments in the second quarter are comparable to the first quarter. The market situation is good and there is clear demand. Unfortunately, supply is still low - there is a shortage of apartments, especially in Warsaw, where purchase interest is highest. Currently, more than 20 percent of our customers in Warsaw are foreign, a large part of whom are from Ukraine and Belarus. There is already a need for about 300,000-350,000 apartments for people from these countries. It is therefore very important to speed up administrative procedures, i.e. the issuance of permits by local governments. The time for dealing with paperwork has increased a lot since the pandemic. This makes customers have to wait longer for apartments, supply decreases and price pressure increases.

Tomasz Kaleta, director of the Sales Department, Develia S.A.:
The biggest barriers to real estate development activity invariably remain the long time it takes for investments to be processed in government offices and the low availability of land for residential development. Therefore, we support all proposals for changes that could simplify preparatory procedures, streamline the work of offices and increase the supply of land within the administrative boundaries of cities. We appreciate the efforts of the government side, such as the amendment to the Development Law allowing "residential" developments in place of developments with other functions, but they are still insufficient in our opinion.

Boaz Haim, president of Ronson Development:
The real estate industry is unanimous in stressing that a pressing need in Poland is to free up land for development, even if it's in the National Property Stock or land left over from deteriorating office buildings or large-format stores.

The availability of land is worst in the largest cities, where administrative procedures have slowed down sharply. Delays in the issuance of approvals and decisions, and thus high uncertainty in the administrative aspect, directly translates into the level of developer offerings, the cost of carrying out investments and the ability to efficiently launch new projects and release for use apartments.

Małgorzata Ostrowska, director of the Marketing and Sales Division at J.W. Construction.:
Indeed, demand is growing, but we still face a number of barriers in the real estate development industry that are impeding our growth. The biggest issue is still the limited supply of land, which continues to translate into a growing shortage of apartments in the Polish market. We also struggle constantly with administrative barriers, prolonged processing, etc.

Angelika Kliś, Atal S.A. board member:
It's mainly the limited availability of land, bureaucracy and currently high interest rates. Still expensive credit is an obstacle for many developers, as well as for people who do not "catch" the 2% program.

Mariola Zak, director of sales and marketing at Aurec Home:
Every day at the sales office we see that there is a lot of interest in new apartments. Customers are most often looking for compact "twos" and "threes" that meet the criteria for the government's 2 percent loan. More and more people want to buy an apartment as soon as possible for fear that in a month or two it will be more expensive or not available.

The biggest obstacle for developers is the low availability of new land for investment. Some developers, including Aurec Home, have secured a so-called land bank, i.e. plots of land bought earlier that we can now use for investment. However, there are smaller players in the market who buy land for development on an ongoing basis, and this is currently in short supply. In Warsaw, only 40 percent of the area is covered by a zoning plan, confirming the huge problem with developers acquiring land for construction.

Zuzanna Należyta, commercial director at Eco Classic:
The biggest obstacle to increasing the supply of new apartments is the lack of land supply. Agricultural land plots are excluded from residential production - with no possibility of conversion and many such land plots are located within the administrative borders of Warsaw, for example. For years there has been a lack of Local Development Plans, which significantly hinders investment. And the lengthiness of procedures and unpredictability of official decisions and, unfortunately, the law is also not conducive to building apartments.

Dawid Wrona, board member at Archicom:
Without a doubt, we are currently observing a decreasing supply of residential real estate on the market. As a development company, we are doing our best to respond to the demand from potential buyers by shaping our offer. However, the industry as a whole is struggling with the limited availability of attractive, well-connected land for residential development that has a settled legal status. This is a key challenge in the context of launching more developments. The aforementioned characteristics largely include land reserved for the government's extinguished "Housing+" program. Therefore, releasing them and introducing them to the public offer in my opinion would significantly contribute to the increase in supply. Moreover, developers would certainly bring more investments to the market if the course of administrative proceedings, the issuance of any decisions or the adoption of local zoning plans were optimized.

Damian Tomasik, founder of Alter Investment:
Purchases postponed by customers in previous months are now beginning to materialize through increased activity and realized transactions. Certainly, the offer is not sufficient to meet all demand. The main barriers to increased supply are the protracted administrative procedures, which is due, among other things, to the constant changes in regulations and sometimes even different interpretations of them by individual offices or officials. The second major factor not conducive to reducing the supply gap is the lack of availability of land with the desired investment potential.

Janusz Miller, sales and marketing director of Home Invest:
We are very pleased with the return of demand in the housing market, which has translated into record sales for several months. We are constantly striving to keep production in line with the sales pace. So far, we are succeeding in this art, thanks to the company's wise policy. We have a large land bank and we are successively bringing more projects to completion. However, voices are increasingly heard in the development market that the biggest obstacles to starting new projects are the availability of land and lengthy administrative processes.

Source: The poll was prepared by the real estate website dompress.pl
Photo: Lokum la Vida, Lokum Deweloper