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Possible increase of 15% next year

Possible increase of 15% next year

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Today we are seeing situations in the market where the general contractor withdraws from building on certain investments because he knows he can’t afford them at the price for which the contract was signed. This, of course, later translates to real estate investors and buyers – says Przemyslav Andrejjak, president of Royal Cell Investment Group. As it is estimated, the average price is 1 square meter. The number of dwellings in Poland today is about 1-1.5 thousand. Net PLN is higher than last year, and next year you should expect another, about 15%. Lifts.

– For developers, an important element in the implementation of investments is the price of building materials, which have gone crazy in this pandemic time. In particular, the price of steel on the Polish market rose by almost 100 percent. Compared to 2020, wood prices jumped 70-80 percent. These are just two main elements. Prices for polystyrene, gutters and windows rose – all this by an additional 10-20 percent. Compared to 2020 – Newseria Biznes Przemysław Andrzejak says.

In the August analysis, the Polish Economic Institute noted that prices for building materials are currently experiencing a sharp rise, which is not reflected in general statistics. According to GUS data, in July of this year. Construction prices rose 3.9 percent. y / y, i.e. slower than the CPI, but this picture is unreliable according to analysts. Polskie Składy Budowlane (PSB) sales data shows that prices are up 8.3%. y/y, more than twice as fast as the CPI. Prices for steel and wood elements increased further (40% yoy at peak), metal roof elements (12.5%) and fixtures (10.9%).

– Prices in the Polish market did not rise as much as, for example, in the American market. Last year, the price of steel there fluctuated around $ 500, and today it is already 1.5 thousand. Gap. – says the head of the Royal Cell Investment Group.

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PIE points out that the new problem is the lack of polystyrene, that is, the raw material needed to produce polystyrene. Since the beginning of this year’s holiday, construction wholesalers have begun to report problems with sourcing raw materials, which already in July caused a 25% jump in prices for refractory elements.

According to analysts, the sharp increase in the prices of building materials came as a result of changes in global markets. The construction industry reports that it has also been affected by the epidemic, which has led to delays in the supply of semi-finished products from China to Europe, and an increase in energy and fuel prices and the minimum wage.

– The price per square meter of the main apartment building under production by the general contractor was previously in the range of 3.5-4 thousand PLN. PLN network, today it is already about 5 thousand. Clear. I’m talking about the cost of production per se, and not including land, projects and all direct or indirect investment costs – says Przemyslaw Andrejjak. – As a result, in some investments, the general contractor withdraws from construction because he considers that he is unable to afford it at the price for which the contract was signed. This, of course, later translates to investors and property buyers.

The head of the Royal Cell Investment Group notes that the recent increase in housing prices is also affected by inflation (in August it accelerated to 5.4% year on year), which is driving demand for real estate.

According to the data of the consulting company JLL, in the second quarter of 2021, the sale of apartments in the six largest markets of Poland remained at a record level of 19.5 thousand, and in the entire first half of the year it amounted to 39 thousand. . Thus, it was the best first half in the history of the primary market in Poland. As a result, the average price increase was 2%. in Poznan to more than 12 per cent. in Krakow. In Warsaw alone, apartment prices have already exceeded the level of 12 thousand. Polish zloty for an area of ​​1 square meter

– Prices of apartments and real estate have already increased by 10-15% in the past five years, and up to 20% in some markets. Of course, the epidemic has also affected the fact that today these prices are much higher – says Przemyslaw Andrejjak. – The average price is 1 sq.m. The number of dwellings in Poland today is about 1-1.5 thousand. Net PLN is higher than last year.

These increases are also affected by the situation in the investment land market. According to the report of the consulting company JLL (“Investment land market in Poland 2020”), the demand for it increased significantly last year. Especially in the second half of last year. The strong recovery in apartment sales supported developers’ decisions to start new projects and expand the land bank.

Investment land is slowly coming to an end in good locations and big cities such as Warsaw, لودód, Pozna, Gdansk and Krakow. It also affected the prices of this land, which in the past two or three years have increased in some locations by as much as 100 percent. Of course, the pandemic and the massive demand for real estate, especially residential projects, but also retail and small office projects, have had an impact as well. Thus, there is such a significant increase in land prices in the market, which will also eventually affect the price of real estate – says the head of the Royal Seal Investment Group

JLL notes that in Warsaw, which remains the most expensive market, transaction prices for usable floor space (usable floor space for apartments) ranged from PLN 2,000 and above in typical locations for medium-sized investments with prices over PLN 5,000. PLN in the most prestigious neighborhoods, such as Powiśle or Upper Mokotów. On the other hand, in the largest regional cities, the average transaction prices in relation to the usable residential area were at the level of PLN 700 – PLN 2000. zloty.

JLL experts anticipate that the persistent shortfall in areas of investment will encourage developers to get involved in more and more challenging projects, such as the purchase of post-industrial land that requires remediation. The lack of supply and the increase in land prices – which can be seen especially in the six largest markets – will also favor the expansion of developers in new locations.

As the head of the Royal Cell Investment Group emphasized, all these factors mean that in the near future there is nothing to expect of a slowdown in the upward trend in real estate prices. Developers are slowly preparing to raise interest rates, but the next year in the market will be characterized mainly by uncertainty.

– Investors and real estate experts can see that in the coming years, real estate prices will unfortunately become more and more expensive. We are already assuming increases could reach 10-15% next year. y / y – predictions of Przemysław Andrzejak.

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