Zeitgeist. The icon of the new times.

March 2021

By the end of next year, Zeitgeist wants to double its our institutional rental offer. Within five years, the company plans to have several hundred apartments in each of the seven main Polish cities. The basis for this is the experience gained on the Czech market and additional financing for Polish projects in the amount of EUR 70 million.

As befits a Czech-German investor, actions are quickly followed. Zeitgest AM entered our market in 2016 as a pioneer in the institutional market. Thanks to its large financial background, it has taken a difficult, but lucrative niche, i.e. the purchase of historic properties located in top locations. It most willingly buys entire building complexes in order to co-create a new urban fabric after renovation and reconstruction. Such projects are real estate in Warsaw, such as Długa 44/50, Solec 22 or Nowogrodzka / Św. Barbara and Krakowskie, e.g. the historic building of the Main Post Office bordering the Planty Park. Today, the company's portfolio includes nearly 800 apartments.

"The fact that we are renovating old tenement houses does not mean that we are targeting premium customers." - says Michał Okoń, managing director of Zeitgeist Asset Management Polska. "In our two locations in Warsaw, for example, there are halls of residence, and others are allocated to medium-standard rental apartments." Thanks to this approach, the company can freely expand the scale of operations, including implementation of development projects. In Poland, there are no ready-made real estate of good quality that could be bought and immediately included in the rental offer. If you want a good product, but possible quickly, you have to create it yourself.

Institutional lease also in the Tri-City

The first Zeitgeist AM development project in Poland is the Czyżewskiego 34 estate in Gdańsk-Oliwa. The investment consists of four residential buildings with an underground garage and premises with areas ranging from 36 to 65 square meters. The standard of the apartments includes finishing to enable tenants to quickly move to ready apartments. The estate will be launched on the market in spring 2022 under a new brand - Home by Zeitgeist - which includes serviced premises available for long-term rental.

“Home by Zeitgeist is a completely new concept, ensuring safe rental, without commission or the involvement of third parties. All apartments, including the service, will be offered directly by the owner of the building. " - emphasizes Peter Noack. Such a solution may be attractive in particular to corporate clients who need housing for contract workers. They are provided with professional housing service and a signed document with one partner. This translates into the security of the contract as well as the simplicity and stability of mutual relations.

“We predict that the institutional rental offer in Poland will increase at least six times over the next five years. This is related to the increasingly difficult access to home loans and income uncertainty, especially during the recession. " - adds Peter Noack. “Our offer is a response to the needs of mobile, open to changes young people for whom flexibility and investing in their own competences are more important than the sense of ownership. We are also trying to interest the generation of people 60+ looking for good quality serviced apartments."

The pandemic is helping to develop the institutional rental sector. Many hotel operators or owners of older office buildings are now putting them up for sale as a result of liquidity problems. This is a favorable situation for investors, because they can quickly expand their portfolio with premises that are almost ready for lease or require renovation that do not interfere with the building structure.

Hand in hand with the developer

Expansion of the lease offer on the basis of newly constructed buildings requires a special type of agreements between funds and contractors. Today, there is still mutual learning and outreach on both sides. “When entering the Polish market, we faced the concerns of developers who saw us as our competitors. Why build for an outside company when you can get a higher price per square meter with a single apartment sale?" Peter Noack notes.

There are several arguments for cooperation. Of these, the most powerful is the financial one, namely the developer does not need to take out a loan for the entire investment. The contract with the investor can be established in such a way that, firstly - the fund undertook to purchase the building after the completion of construction, and secondly - it would ensure early financing of the various stages of construction. Thanks to this, the contractor only needs to maintain a working capital loan, amounting to approx. 10% of the entire project. “The second argument is the cost of selling the apartments. Usually, to sell 100 units, you need to reach 15,000 people. Having one partner, the developer does not have to pay for the sales office, marketing, hiring people, but also for individual adaptation of the premises for each client. " - adds Michał Okoń.

As a result, contracts based on the pre-financing of construction by an institutional partner are gaining more and more supporters today, although it must be admitted that the pioneers here are large developers with professional analytics. An example of a project implemented in the formula described above, called forward purchase, forward funding, is a housing estate in Gdańsk, developed by Zeitgeist AM, where BMC is the executive partner.

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