Experts disagree on whether we are already facing a slump in the Polish residential market or just witnessing its adjustment and normalisation. In fact, sales of new apartments decreased significantly in the second half of 2007. Numerous newspapers are reporting a reduction in apartment prices which would have been unthinkable one year ago. Developers are putting a bold face on it, reassuring us that they will handle this situation and that the market is not about to witness a wave of spectacular bankruptcies.

Two major Polish developers have even declared that they intend to increase their sales in 2008 and break last year’s records. They make the claims even though their share price has been deteriorating. In the last ten months the price of Dom Development’s shares has dropped over PLN 100 from its high of PLN 185. J.W.Construction has recorded a drop of 50% in the value of its stock.

Despite these falls, both giants ended 2007 with very good results. Dom Development’s revenue from sales of apartments amounted to almost PLN 880 million, an increase of over 20% compared to 2006. The company’s net profit exceeded PLN 200 million, an increase of more than 48%. The revenues of J.W.Construction exceeded PLN 780 million in 2007, an increase of 8% compared to 2006. The company’s net profit increased by 12% to PLN 150 million.

This year Dom Development is planning to deliver 2,500 housing units to the market. Analysts expect this will guarantee the company a 20% increase in sales and a double-digit percentage increase in profit. The developer’s latest investment projects include the Róża Wiatrów (Wind Rose) residential estate in Łodygowa Street in Warsaw’s Targówek area. Sales of apartments in the complex, scheduled for completition in the fourth quarter of 2009, have already begun. Four buildings, each of four stories, will be built in the complex. There will be 184 apartments in the developmnet with floor areas ranging from 30.5 to 120 m2.

Apartments can also be purchased in other current projects in Dom Development’s portfolio. Their Derby estate in Warsaw’s Białołęka quarter has 82 apartments ranging 40.4 to 104.9 m2 at prices ranging from PLN 5,790 to 6,820 per m2. Another apartment building the group is developing in the centre of Warsaw contains 287 units. Prices range from PLN 13,000 to 25,500 per m2.

J.W.Construction is planning to sell nearly 3,000 apartments this year. The company expects revenues above PLN 1 billion and a net profit close to PLN 220 million. (These numbers include developments that are not yet under construction but in which most of the apartments have been sold.) Among other developments, J.W. Construction intends to spend for PLN 250 million on construction of a town estate in Ożarów Mazowiecki near Warsaw. The 20-hectare plot will contain around 60 three- and four-storey buildings with a total of almost 2,000 apartments. The estimated price per square metre is in the range PLN 4,000 to 6,000 per m2. Construction of Stage I (350-400 apartments) will end in the last quarter of 2009. The whole town is due for completion in 2010.

Developers optimistically claim that a clear market boom is already visible in the first few months of 2008. They suggest this proves that buyers are no longer waiting for the price reductions that were prophesised by certain analysts. Poles do not seem to be discouraged by another significant barrier – rising interest rates on housing credit. Unfavourable trends in interest rates are being compensated by increasing salaries and an improved standard of living. Buyers seem to be inclined to spend much more on their own apartments than they were last year.