Two Reasons Why The Credit Crunch is Good News for Polish Property?

Wherever we turn stories of the global credit crunch are edged with gloom but, even though I work in the property business and have a real estate portfolio, this could be one of the best events of modern times. No where more is this true than Poland.

Polish lenders have always been extremely prudent when it came to loans secured against property and so the tightening criteria for borrowing in other countries has passed without notice here. Those who could not get a loan two years ago, still can’t get one today.

Furthermore, the government’s strict permit system (which stops foreign buyers purchasing more than one apartment or house) means prices have risen but not been overheated by a large scale ‘gold rush’ as has been the case in countries such as Bulgaria.

The result is that those who have already purchased in Poland have seen the value of their property remain generally static over the last 6 months with a smattering of decreases and increases here and there. For those who are considering an investment the stability of the market compared to other countries is making the Polish choice extremely attractive.

But wouldn’t I really have preferred it if prices had just carried on rising? The simple truth is no. All ‘good time’ markets attract cowboy firms whether they be estate agents, fit out firms or developers.

They over borrow themselves, drive down margins and profits of legitimate organisations and their fly-by-night level of service give entire sectors and countries bad names that they do not always deserved.

As the volume of business decreases, one by one they go to the wall. Unfortunately they often take people’s money with them but only those who did not carry out their own due diligence before taking the plunge.

The companies who plan and budget well are those that survive and actually end up with more clients and a better bottom line.

For a while the press will continue to interview the owners of businesses closing down and print their woes as they blame the credit crunch. It is obviously nothing to do with their planning, budgeting and cash flow management.

For my company, and many like it, we have a great deal to be thankful for. The credit crunch has shown how attractive the Polish real estate market is and it is quietly getting rid of a lot of companies that shouldn’t be there.