After Cavatina Group S.A. separated the residential development business from the entity responsible for the construction and management of a portfolio of PRS projects, with Resi Capital S.A. and Cavare S.A. taking over respective roles, the latter company is preparing to launch its first investments. The company announces its presence primarily in the markets of Warsaw, Wrocław, Gdańsk, Kraków, and Poznań, a secured pipeline of circa 1.6k units.
Despite the headwinds in the market, currency and interest rate volatility, we see renewed interest from international investors into the sector, and we are one of the only platforms that can offer a fully integrated build to rent offer with a fixed price turnkey delivery, from land to lease, with investment & operational management solutions provided via Cavatina International”,
says Jason Drennan, CEO of Cavatina International from Cavatina Group.
Polish rental market overview
Due to higher interest rates, new build is significantly down, as is new institutional investment into the PRS market. Higher rents have been an unwanted consequence of this, which of course affects affordability negatively. Overall vacancy in the entire market was 1-2% by end of 2022. This is the opportunity we see at Cavare in launching multiple projects all over Poland’s cities”,
says Jason Drennan, CEO of Cavatina International from Cavatina Group.
Investors perspective
Emerging markets such as Ireland & the UK, comparable to some extent to Poland, have attracted investors quicker probably because of more certainty on currency, and now have more operational history than Poland. That said each of those markets now has its own headwinds, construction cost inflation & regulation in Ireland for example, so in my opinion Poland offers more reward per unit of risk and ability to scale quicker under a well-funded business plan. Overall sentiment is positive as investors understand there is a chronic shortage of modern comfortable housing generally across the market, and an under-supply of institutionally managed rental housing”,
states Jason Drennan.
Reliable development partner key to investors’ trust
New build presents more risk for investors, especially in light of recent inflationary pressures here. But investors can de-risk this by working with strong development companies such as Cavare under what’s called forward purchase contracts. Here, investors can influence unit mix, design and specifications under a fixed price contract. And at Cavare this is our focus. And for investors who will want exposure to the sector but do not want to create an operational platform, we offer such fully integrated support via Cavatina International,”
says Jason Drennan.
