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'Home, sweet home' for more Poles

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Home owners in Malwa, Dom's housing estate of single-family houses, have it all: a peaceful residential neighbourhood and proximity to the capital's city centre.

Dom specialises in building, marketing and selling low-cost and well-designed housing in Warsaw.

Oaza housing estate, one of Dom's many residential developments.

The EBRD supports affordable housing in Warsaw.

After finding a job, what is the most acute problem for millions of young Poles nowadays? Until recently, finding an affordable flat was nearly impossible for many average-income families. In Poland there are, on average, just 310 housing units per 1,000 inhabitants, compared with 450 in western Europe.

Now an EBRD loan of €30 million to Polish real estate developer Dom Development SA will turn the dream of home ownership into reality for over 2,000 Warsaw inhabitants. Dom will use part of the money to build the 18-hectare Park Mokotów project, which will be one of the largest housing developments in Europe.

"This is the first time the Bank is financing residential housing in our region," stresses Tim Norman, the Bank's operations leader on the Dom project. "It's something we have been trying to do ever since the Bank was established. There is no doubt that if you had to pick one form of real estate, the housing market is the one needing the most investment, not only in Poland, but in the entire region."

Polish-UK expertise

As housing property projects tend to be short-lived, part of the Bank's difficulty was finding a competent and experienced housing developer with a long-term interest in residential real estate. In Dom, the Bank has found a perfect combination of western investor expertise and competent Polish management. Dom Poland is 81 per cent owned by the Dutch holding company Dom Development BV; most of the remaining shares are held by Polish staff. The main shareholder in Dom BV is Yves Bonavero, a London-based financier with mortgage and real estate expertise.

Dom specialises in building, marketing and selling low-cost and well-designed housing in Warsaw. Since 1996 Dom has become the second largest developer in Warsaw, selling over 750 apartments per year.

"There is no point for British housing developers to go to the Polish market and build houses for Poles," says Mr. Norman. "Residential housing is a very localised business and you need to have a feel for the market, to be sensitive to what local people want, where they want to live and how much they are willing to pay for a roof over their heads."

So far the company has built over 4,000 relatively low-cost, well-designed housing units. One is the Oaza development, built on a very long strip of 'brown-field' reclaimed land in Warsaw. This development demonstrates the efficient and creative use of very expensive land in the middle of a densely-built city. Dom has turned Oaza into two small double-courtyard projects - real estate of international standard and good value for the money.

Housing shortage

And money does matter to Dom's clients, most of whom are first-time buyers. The developer views them as its core market and believes the chronic shortage of inexpensive housing in Poland will continue to provide the impetus for the company's growth. Dom also hopes to use EBRD 'mezzanine' financing to diversify its product portfolio to include high-end apartments and more expensive single-family houses. Mezzanine financing is 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.

"The combination of UK and Polish expertise was key to Dom's success," explains Mr Norman. "Because Dom's owners have broad experience in the UK residential property market, the company took on many of the sales and marketing incentives from western markets and successfully replicated them in Poland."

But the use of highly trained and motivated sales staff, extensive public relations and advertising campaigns are only part of the company's strategy for success. "Together with a local bank, Dom has developed innovative consumer financing for home buyers," says Silke Katzenmeier, a member of the Bank's project team. "The company also accepts 'housing deposit accounts', also known as 'housing booklets'. For years, Poles paid into these accounts which were, in essence, 'trapped funds' that could only be used to finance properties bought from state-owned housing co-operatives. Accepting these deposits has earned Dom numerous new first time home buyers who wouldn't otherwise be able to get onto the property ladder."

Contact: The EBRD Property, Tourism and Shipping Team

10 April 2003