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How does the new Developer Act influence the Varsovian real estate market?


English

2013-01-10

There has been a change in the Developer Act in the end of the April of the current year. The main aim of this change is to reduce the financial and law risk of buying real estate on the primary market.  How does it influence the Varsovian real estate market?

 

The latest law changes relation between developers and clients. It protects the main purchaser’s business and it forces developers to particular duties. The act sounds interesting, so how does it influence the real estate market in Warsaw?

 

Mirosława Bisińska, the ex-chairman of the Nadwiślańska Housing Cooperative in the Białołęka district, states it is hard to predict the impact of the new regulation on the apartment prices. The cost of the loans and the loans availability determine prices of the apartments. Bisińska says: "Currently, the largest amount of apartments is bought in the Białołęka district. There is an interest in new apartments, which are bought directly from developers, and also apartments from the secondary market. It is connected with the fact that the prices are relatively cheaper than in the other parts of the Varsovian market. Apart from Białołęka, the cheapest apartment prices can be found in the Praga Północ district. In this part of Warsaw investment activity stays stable. It is hard to state, how the act will influence on demand and supply. But I do not think that the new regulation will limit big companies’ investments on the primary market. Problems may occur with the small companies".

 

The Praga Północ and Białołęka districts still have undeveloped Warsaw administrative areas. This is the reason why these areas are so attractive to developers. Despite this, a low apartment cost tendency and the lack of the infrastructure may inhibit attractiveness of this region. “I expect the new Developer Act will not change the asking prices in the Białołęka district and the other districts in Warsaw. Nowadays, there is a tendency for the price reduction in Warsaw. It concerns mainly apartments from the secondary market, which prices have been inflated,”Bisińskaadds.

 

The primary market in Warsaw will notice the new Developer Act with new investments. Developers will have to provide an escrow account for purchasers then. It does not include these investments which have been started before the amendments. Analysts suggest that the prices of the new apartments will stay in a decreasing tendency. It will depend on three factors such as:  Rodzina na Swoim programme restriction, taking a loan difficulty and labour market instability.

 

These circumstances will also influence the decrease in the apartment prices on the secondary market. The demand for new apartments will be the key factor in investments. Investing process may be drawn-out due to the particular number of clients.

 

"In such situation, the multi-occupancy housing will be less attractive for developers than detached or semi-detached houses. It will be easier to find particular number of clients. It will save time and costs of the investment. This situation may occur while a significant limitation of loans and labour market destabilization appear. As a result, we can expect changes in construction.  It will finish the period of multi-occupancy housing and will introduce detached houses in the suburbs of Warsaw instead. Developers try to optimize profits regardless of the number of estates in the market,"  Bisińska sums up. 

 

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