Due to the circumstances, we moved the business breakfast concept to the online environment and, together with experts in financing, development and real estate, discussed the situation after the “blackout”. The second part of the June discussion was devoted to finance from different perspectives – how do banks react to the situation? What will happen to mortgages, will the expected decline in real estate prices come?
Mortgages will be a reflection of the market
Financing the purchase of residential real estate is significantly linked to the provision of mortgage loans. Banks are more cautious in this respect both in the field of project financing and in mortgage financing.
However, Vladimír Lakatoš from Tatra Banka reassured that there is no segment or industry whose employees would have a “stop” in mortgage financing in the bank. ,, The bank must be prudent, but that does not mean that waiters, for example, cannot get a mortgage. Many restaurants have adapted to the situation and found alternative ways to sell their products. In such a case, there is no reason for their employees to be deprived of the opportunity to obtain a loan to finance their housing, ” explains V. Lakatoš. However, he acknowledges that a number of clients may have difficulty accessing mortgages. ,, Bank financing and mortgage financing will be a reflection of the market. We are still interested in providing mortgages. It is a standardized product for us and within loans for individuals it is the product with the lowest level of risk,” V. Lakatoš explained.
Banks will continue to be prudent and money more expensive
The bank’s project financing rules will not be relaxed. According to Lakatos, it would be a road to hell. ,, Banks need to be careful when financing. If we started wasting money headlong and cutting losses from unsuccessful projects, we would not help the economy or the developers “, says V. Lakatoš. Of course, the bank is not interested in creating a loss and would then reduce it at the expense of other projects. Financial houses will continue to support projects that are well thought out, rational, and bring to market a product that is in demand. ,, It simply came to our notice then. Therefore, I do not expect any changes in financing in this regard, except for the above-mentioned increase in interest rates. “
Project funding remains unchanged
Vladimír Lakatoš considers the residential development market to be mature and does not assume that the interest of Slovaks in owning an apartment will change in a short time. The residential market as a segment of commercial real estate will probably be one of the least affected by the crown. We do not expect the market to overheat, nor are we afraid that no one will buy apartments. ,, The situation is changing, but we also drew negative scenarios during positive development. We have always counted on an increase in construction work and materials and a decrease in the selling price. This is how we look at every project, in the past and today “, explained V. Lakatoš, adding that he does not expect a significant tightening of conditions. There may be a slight increase in prices due to an upward shift in the interest rate curve.
Special assistance for the residential segment is not ready. Banks are helping segments such as retail and services that have been significantly affected by the crisis. “We have forgiven repayments and possibly interest beyond the law,” V. Lakatoš explained. He also mentioned the guarantee programs for financing the operating costs of commercial real estate, which are agreed and their details are being fine-tuned with the government. However, even this aid will not affect residential development, as there is no institutional rental market in Slovakia.
Real estate will not be cheaper
Before apartments can reach buyers, they must be designed and scaled. In Atrios, the crisis did not affect this area, which Matej Jelínek justified by the fact that Atrios and most experienced developers do not solve projects headlong: ,, Because of which we want to make projects sustainable and feasible until the end. And finally, we also protect ourselves, as we are significantly involved in all projects. “
However, by default, developers also anticipate worse scenarios during projections and are therefore able to face a possible downturn. “We made some slight adjustments to the calculations, and in one project we adjusted the composition of the flats. I perceive it more that we quickly adapted to the situation that occurred on the market “, explained Matej Jelínek. Martin Šimurda also confirmed that there were no significant changes in the structure of development projects. The “king of demand” since 2008 are 2-room apartments in good equipment. For some time, the interest of buyers has shifted to larger apartments, but currently, the situation is returning to the trend of 2-bedroom apartments with a good layout.
The situation in the area of the construction itself quickly adjusted, when it returned to normal after a short break. “We expect a stabilization in the area of construction prices, as we have witnessed a slight increase,” thinks M. Šimurda. Filip Žoldák sees a change in the structure of buyers. Whereas in the past, first-time buyers under the age of 30 played, today more and more buyers are in the category of 35 to 45 years. He also perceives a change in preferences. Buyers are increasingly preferring 3-room apartments, while younger buyers are increasingly interested in 1 – 1.5 room apartments. According to Filip Žoldák, this is a logical consequence caused by the increase in apartment prices, when a 1-room apartment costs as much as a 2-room apartment 3 years ago.
Will there be changes in the prices of construction work?
The market did not significantly affect the market for the construction of the crown. “We had contracted construction work prices from last year. We do not want to bring uncertainty among our contractors and therefore we guarantee them the price of the work “, explained M. Šimurda. People today are happy to have a robot and contractors no longer have a reason to come up with a demand to increase the cost of work. Šimurda expects the same development in the prices of building materials.
Róbert Pátek from the construction company Metrostav also took part in the discussion, who in the short term sees room for lower prices. It also sees uncertainty about how many projects will be implemented, as well as a reduction in the number of tenders that have been canceled or postponed. Rather, he considers the possibility of a repeat of the scenario that occurred in 2017-2018, when there was the highest increase in the price of labor due to the lack of construction capacity, to be a risk.
The future of development in modern technology
Filip Žoldák perceives Slovak buyers as very conservative. Their interest in 3D presentations and virtual tours is still very low. They want to see the apartments with their own eyes before buying. He perceives online tools, visualizations, and 3D inspections as tools that allow the broker to acquire a portfolio of apartments. “Thanks to these tools, we relieve the seller of a large number of inspections,” he explains.
In Atrios, on the other hand, online tools have experienced a boom. “New possibilities have opened up for us, which we did not use before,” admitted M. Jelínek, “we started working with virtual reality, augmented reality, and 360-degree property inspections. These tools allowed us to introduce people to projects in more detail and clarity. Thanks to virtual reality, we can show the inside of projects, and augmented reality is a great tool for putting a project into the environment and showing it to them from a distance of 100-200 meters. “
In Atrios, they were the first in Slovakia to present to the public a new project at Zátišie through an online presentation. It was more comfortable for the people and more experts joined the discussion. Peter Kysela from Atrios recommends this form and considers it one of the tools through which Atrios will communicate with the public in the future.
According to most assumptions, a significant two-month slowdown to almost everything was supposed to cause significant changes in the way we build cities, sell flats and finance housing or projects. However, according to experts, the changes are not as radical as we thought. Mortgage financing will adapt to the market, developers are learning to quickly adjust their plans with regard to investors and buyers. According to several, it is currently crucial to keep up the pace and try to live in the current situation as much as possible.