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Real Estate Slowing Down in Poland: A Buzz Interview with Bartosz Miszkurka of Solivan

Real Estate Slowing Down in Poland: A Buzz Interview with Bartosz Miszkurka of Solivan

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The new Polish company law shows promise for attracting foreign investors, while the Polish residential real estate market is struggling, according to Solivan Partner Bartosz Miszkurka.

"Significant amendments to the Polish company code – some of the biggest introduced in the last years – came into force on October 13, 2022," Miszkurka begins. "They are supposed to make the Polish legal landscape more attractive to foreign investors, offering more flexibility and control mechanisms for their business needs."

"The recent amendments introduce a new order on the company’s holding law," he notes. "Until now, we didn’t have any special and complex regulation dealing with the relationship between parent companies and subsidiaries. The new law offers a structure for the holding and mutual relationship between those companies." Interestingly, Miszkurka says, "the new law is limited to the private sector and is not applicable to public companies."

"The most important features of the new law include a dominant company’s right to issue binding instructions to dependent companies," Miszkurka points out. "The board members of the dependent companies, on the other hand, are exempted from liability when they follow these instructions and act in the best interest of the holding companies. The dependent companies are also required to submit yearly reports for auditing and accounting purposes." Additionally, Miszkurka says that "the new law also establishes that participation of an auditor is compulsory during the meetings of the supervisory board – aimed at boosting the credibility of the company’s work. There are also a lot of new sanctions dealing with criminal liability."

On a separate note, Miszkurka highlights that there are very interesting developments in the Polish real estate market. "Residential developments registered a significant slowdown, as real estate buyers struggle to get financing from the banks. The cost of loans has increased due to high-interest rates," he notes. "This means that they are not able to finance the acquisition of apartments, and therefore sales have stopped. Undergoing projects will likely complete, however, there is a scant chance of any new ones being started."

According to Miszkurka, the same applies to real estate designed for institutional rentals, for example to students: "the rent proceeds from the lease agreements are not enough to cover the costs toward the bank. Next year, we expect there will be good opportunities to pick up cheap projects from other developers that won’t be able to complete them." Similarly, he says, "if you look at the Polish stock exchange market, many developers have issued bonds. We expect that many of them will not be able to repay those bonds come February or March. They will likely have to file for bankruptcy, refinance, or re-issue bonds. We expect some interesting developments in those areas." Still, Miszkurka believes that there is a light at the end of the tunnel, despite the crisis: "those companies that have their own capital are expanding and investing in projects such as retail parks."

At the same time, the Polish renewables market is booming: "next year we expect Polish state-owned companies to heavily invest in renewable energy, including wind and solar parks," he says. "A lot of new regulations are also expected to liberalize the market. It is inevitable, as we don’t have much time and we cannot be dependent on coal forever," he concludes.