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EBRD supports residential property development in Poland
€30 million for the construction of affordable housing
The emergence of Warsaw's modern skyline does not alter the fact that demand for modern and affordable housing in the Polish capital is still strong. To support the development of new residential property in and around Warsaw, the European Bank for Reconstruction and Development is lending up to €30 million to Dom Development S.A., a medium-sized private Polish real estate development company. The money will be made available in two equal tranches for new developments.
The project represents the EBRD's first direct investment in residential real estate development, and will employ innovative "mezzanine" finance not widely available today to medium-sized Polish borrowers. The financing, unsecured and subordinated to the senior debt, will equip the company with a stronger capital base and more permanent funding.
At a joint press conference in Warsaw, the Bank's Board Director for Poland, Jan Krzysztof Bielecki, praised the deal as a showcase project: Bearing in mind how big the social needs are, the project is of critical importance, Mr Bielecki said. Indeed, Poland has only an average of 310 housing units per 1,000 inhabitants, compared with 385 in Hungary, 397 in the Czech Republic and 450 in western Europe. The situation may well worsen because of demographic changes and the ageing of the existing housing stock.
Established in 1996, Dom is one of the largest residential suppliers in greater Warsaw with more than 3,200 units built over the past six years. At present Dom is building another 2,100 flats, mainly in popular residential districts. While popular-price segment market projects are its core business, the company is aiming to expand to cover a broader spectrum of housing types. Dom manages all aspects of the development cycle in-house and with the so-called Ksiazeczki Mieszkaniowe or Building Booklet (until 1990 the only vehicle for the population to save for the purchase of a flat) has developed an attractive costumer financing scheme.
"Our mission is to develop flats that are attractive - and affordable - to young families with average income," Dom's President, Jaroslaw Szanajca, said at the press conference. "We are aware that the first major problem of young people in Poland is finding a job. But the second challenge is finding a flat for the family. We are continuing to develop our typical offer, improving its physical and financial aspects. We believe that today for many purchasers the dream of a nice and cosy flat can really be achieved."
The EBRD finance will help Dom finance its expansion and growth. The mezzanine finance provided is unique for the Warsaw market and will send a strong signal to the investment and capital markets in Poland.
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