That is why we check the respective company’s financial statements over the past three years and than for two years – for that is how long the certificate is valid - and we examine the financial results of the company every six months – says Professor Witold Werner PhD (Eng. Architect), chairman of the “Developer Certificate” chapter at the Institute of Urban Development in an interview for Polish Market.


Q: Professor Werner, how would you describe the entrants to the “Developer Certificate” competition?

A: The entrants vary and no one definite description can be given. The competitors include very big developer enterprises as well as small family companies. Regretfully, a number of very large companies have consistently declined to seek the certificate. The managers explain in private that they do so because they do not wish to reveal their business data, such as the number of contracts and that of homes built, the number of unsold premises and the profit rate. They do not believe that members of the group drawing up expert reports on their performance would keep these date in secret. Indeed, the entrants’ financial liquidity, solvency, capital indices and return period on investments are all examined very thoroughly.

Q: Indeed, the developer companies’ profit rates are sensitive data…

A: For some, the companies’ high profit rate may be shocking but they are running a business and must earn money. Hence the profit rate must be high enough to compensate for the long time it takes the developer to carry out an investment project. It starts with the purchase of land or application for perpetual usufruct of land to the local government and that also entails high costs (25% of the value of the plot). So, from the very start, the developer has to invest millions of zlotys. And it takes often two to three years to obtain a decision on land development conditions. There are other costs as well, such as advertisement expenditures. And it takes up to two years to erect the respective building from start to finish.

In consideration of the above we are frequently calling on banks at various conferences to treat companies – winners of the “Developer Certificate” - with greater leniency with respect to credit terms and conditions when launching an investment. Regretfully, as a result of the world financial crisis, Polish banks have become more rigorous in setting their requirements on matters of financial situation not only of the developer companies but also that of their customers. Many customers have now been refused credits and consequently developer companies are finding it hard to sell homes,

Q: The”Developer Certifica” competition has just been held for the 12th time. Could you tell us how the idea of such a competition was conceived?

A: I’ll say without modesty that it was me who initiated the competition. More than a dozen years ago, the Housing Research Institute sent a letter to more than 100 companies advertising their services in national and local papers proposing that the Institute would promote them without charge provided they would send an answer to a set of questions. It took us three weeks to find the addresses. Ultimately, one third of all the letters sent out had been returned to us with a note saying that the addressee was either unknown, moved to an unknown destination or closed its operations! That was the first signal that something was not right in the sector. We decided to take a closer look at the situation. And that is how the idea of a Developer Certificate was born (its trade mark was registered in the Polish Patent Office). The competition is organized by the Polish Union of Construction Workers (earlier – by the National Chamber of Construction).

I think that the idea caught on. Currently, 36 developer companies - out of the 300 operating in Poland - are entitled to use the mark. Many companies are reluctant to seek such a certificate for reasons I mentioned earlier and additionally also because they can enter the competition only after at least three years of operating on the market...

The “Developer Certificate” is still held by many companies which had won it for the first time in 2000, and then renewed it in subsequent editions of the competition. The latest edition saw two new entrants. Over the years, we have suspended the right of three companies to use the certificate and two companies were deprived of such right. Some developer companies have acted inappropriately. One company, for example, built a residential home consisting of several hundred flats and underground parks. But yielding to customers’ requests it sold the flats without parking lots and since demand in the neighbourhood for underground parking space was almost nil, the underground park stayed empty for quite some time. Yet, costs were borne to build it. Another developer was unable to not sell flats already built due to distortions in the land and mortgage register.

Q: What percentage of applications for entering the competition is being rejected?

A: Companies interested in wining the”Developer Certificate” receive very detailed instruction as to what data should be submitted, so applications are rejected very rarely. Anyhow, it is hard to quote any percentage considering that not more than eight companies enter a successive edition of the competition. The entrants are sometimes asked to provide additional data and our experts are on hand to clear any doubts on the spot. It is not infrequently that we advise companies to enter the next edition.