The real estate industry is in a precarious but transitory situation with the coronavirus pandemic. According to the experts of the Angel Poland Group, companies which for years have worked out solutions to maintain a good and safe financial situation will strengthen on the market. An effective vaccine for the coronavirus turmoil turned out to be, among other things, a cautious approach to financing real estate, largely based on real equity.

The Polish Association of Development Companies, of which Angel Poland Group is a member, stresses that the share of construction in Poland’s GDP is estimated at 16 percent. It is a significant part of the national economy, on which over a million jobs may depend on. The coronavirus pandemic will be a test for many entities and will show who will come out of it with a defensive hand in this difficult time. Specialists stress: the threat of the coronavirus will not disappear overnight. It will be a process to which both developers and customers must get used to.


It should be noted that low-interest rates, combined with other macroeconomic indicators, make real estate still the best form of capital investment. The unstable stock exchange and bond market are currently only a game for customers with strong nerves.


  • We do not anticipate any significant price drops, and there will be temporary price promotions of developers operating based on open trust accounts, who may try to improve their financial liquidity due to lower inflow of funds from these accounts. Sales on the market will be lower, but at the same time supply has been limited – the offices that issue administrative decisions have slowed down their work, and the developers have suspended launching new projects – explains Natalia Sawicka, Sales and Marketing Director – West of Angel Poland Group



Angel Poland Group experts distinguished five factors that influence the stable situation of customers and developers.


  1. Low debt, high capital


Each purchaser of a property should carefully analyze the structure of the debt and the presentation of this ratio as well as the liquidity ratio. These are key values for assessing the condition of a developer.


What distinguishes an entity from its competitors is its low “gearing”, i.e. the ratio of total debt to the value of company assets. Angel Poland Group can boast of a ratio lower than 30 percent. For comparison, other large market competitors maintain this ratio at 65-85 percent. The difference is significant.


  • Compared to our competitors, it turns out that we are probably one of the least indebted developer groups in Poland. At the moment, the group’s equity is over PLN 250 million. We finance our projects from capital contributions from shareholders and loans from large Polish banks. This structure provides us with closed financing, which means that we do not use any other source, including the funds paid by our clients at the construction stage. Additionally, we have available credit lines of over PLN 200 million to finance our investments – says Sylwester Roszewski, Angel Poland Group CFO


  1. Rapid development or better risk management


Companies’ boards are often faced with a dilemma: faster growth and a larger market share, and thus a larger balance sheet total or a smaller scale of operations, but thus the possibility of better management of business risk, without excessive debt. Angel Poland strategically adopted the second business model as safe for customers and business partners. The Group is more focused on comprehensive coverage of the entire investment process than on the development of the scale of operations understood as the number of investments. Angel carefully selects projects for which location is the most important element in the selection process, while ensuring the highest quality architecture and individual approach to customers.


  • Consolidated assets of Angel Poland Holding amount to almost PLN 400 million (without taking into account the group’s non-consolidated assets – worth over PLN 150 million) with the capital of over PLN 250 million. In 2019, sales in the group remained at the level of 300 apartments and high-standard apartments. The average price fluctuated in the range of several dozen, and often several dozen thousand PLN/sqm. – says Tomasz Karpiel.


It is these indicators that place Angel Poland Group among the leading developers developing facilities in the premium sector and, at the same time, among medium-sized entities on the Polish market. At present, the Group has completed or is currently constructing, in Kraków and Wrocław alone, a total of approximately 2,500 luxury or high-standard apartments, of which approximately 500 apartments and suites with a pre-sale level of over 60% are currently under construction.


  1. No problem with the redemption of bonds


Angel Poland Group also does not hold any bonds, which in the current situation allows keeping calm.


  • Since the beginning of our activity, we have excluded this form of financing and we never intended to use it. In the current situation, there are potential risks associated with their redemption, so entities that use this financial instrument may have problems. Some developers will be faced with the necessity to restructure this debt, e.g. an attempt to convert it into a bank loan, provided that they make their contribution and have an appropriate level of pre-sale of the investment. This does not concern us at all– explains Sylwester Roszewski.



  1. Safe capital for buyers through closed trust accounts


  • Bearing in mind the safety of our clients and the adopted business model in the group, we operate only on closed trust accounts in the largest and most stable institutions such as PEKAO or mBank. In times of prosperity, an open fiduciary account is not subject to high risk for the client, as long as we take into account a reliable entity. Differences become apparent in times of sudden market disturbances. Angel Poland Group has a 100% source of project financing so that the liquidity of projects in progress is not threatened as it does not depend on the inflow of client deposits, which may be temporarily limited at the moment – says Sylwester Roszewski.


  1. The developer’s experience and a large land bank


The developer’s experience is important in difficult and uncertain times.


Angel Poland Group has been operating in the real estate market since 2003. During these 17 years of its activity, it has been associated with several experienced professionals, who often have a dozen or so years of experience in real estate market activity. Angel Poland Group is now not only a developer but also since 2018 a general contractor and since April 2020 a company managing apartments for rent in facilities it has built – says Małgorzata Nowodworska, Sales and Marketing Director – South of Angel Poland Group.


From the client’s point of view, land reserves are also important, because it provide continuity of operations for the developer and additional financial security. It is also a guarantee for the clients that the developer will not cease its activity and will not disappear from the market. Thus, it will take care of its reputation, both in times of prosperity and slowdown. Satisfied customers are the greatest  asset of the companies.


  • In our land bank, we currently have over 10 hectares – in total in Kraków and Wrocław. We are at the stage of the transaction, the subject of which is the purchase of another 1 ha of land..We do not use bank financing or support from bond issues or another form of external financing for this purpose. We purchase new plotes using only our own funds. The indicated land translates into an estimated net usable area, about 170 thousand square meters, both residential and commercial. We are in a favorable position, but we are constantly looking for new locations, focusing primarily on Kraków and Wrocław, but we are also considering returning to Warsaw or investing in the Tricity. The land is still difficult to access, but we like locations that are challenges and often require revitalization. We have been specializing in this for 17 years. We are aware of the existing land deficit, so we see our success here as a group – says Tomasz Karpiel.
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