Commissioning of four housing projects and two office buildings, sale of 399 apartments and handing over 190 to the clients, start of rental process in the second Resi4Rent building in Wrocław and securing the purchase of attractive plots of land on which 4,000 apartments can be built – these are the highlights of Q1 2020 in Echo Investment. During this time, the Group generated over PLN 40 million net profit.
The first quarter of 2020 at Echo Investment was successful. The Group enjoys a stable financial standing and maintains a high cash position: at the end of the first quarter it was over PLN 450 million. A 20% increase in the value of assets compared to the first quarter of 2019 also proves stable development. Currently, their value amounts to PLN 5 billion.
“We are pleased that the value of commercial and residential projects under construction and in preparation increased by 36% compared to the first quarter of 2019. This is in line with our "Strategy of Profitable Growth" that includes strengthening our position as a stable and diversified leader in the development sector,” says Maciej Drozd, CFO at Echo Investment.
In the first quarter of 2020, we sold 399 apartments, compared to 352 in the corresponding period of 2019. Since the beginning of the year we have finished the projects: Widoki Mokotów in Warsaw, Osiedle Jarzębinowe VI in Łódź, Osiedle Jaśminowe IV in Poznań and Ogrody Graua in Wrocław. That, among others, translated into 190 apartments handed over to clients in the first quarter, compared to 23 apartments delivered in the corresponding period of 2019. Restrictions related to the epidemic have caused temporary difficulties in communication with clients and concluding transactions, however, as the economy defrosts, Echo Investment sees a gradual return to normal sales.
“For several years now, we have been investing in modern tools for client communication and remote working. The epidemic has only proved the efficiency of these systems and the rightness of spending money on them. Thanks to digital solutions, like virtual viewings of apartments, our clients can go through almost the entire process of buying an apartment without leaving their home. As a result of the epidemic, in order to strengthen the stability of the company and the sense of safety of our clients, we have also introduced an additional internal presale condition on residential projects before their construction starts,” says Nicklas Lindberg, CEO at Echo Investment.
In the last quarter, Resi4Rent received the occupancy permit for its third building – Kępa Mieszczańska in Wrocław. Now the company has already almost 800 apartments in its offer. All projects have a very good rental rate. With 2.8 thous. apartments under construction and in preparation, Resi4Rent is on the right track to become the largest institutional platform of units for rent in Poland and achieve the strategic goal of managing 7.5 thous. apartments for rent by 2024.
At the end of first quarter of 2020, Echo Investment held office buildings under construction with a total leasable area of 180 thous. sqm. Since the beginning of the year, it has put into operation the first stage of the Face2Face Business Campus complex in Katowice and the Villa Offices building at Warsaw Brewery. The company is conducting advanced negotiations regarding the sale of office buildings that are already put in use or will be commissioned this year.
“All of our construction works proceed without any interruptions, with extra precautions applied,” says Nicklas Lindberg.
CitySpace, operator of flexible serviced offices owned by Echo Investment, in post-epidemic circumstances experiences a noticeable increase in customers' interest in renting desks for days or even hours. Therefore, it introduced new services and makes its offer more flexible to make the most of opportunities offered by the current market situation.
In 2020, Echo Investment will complete construction works in Warsaw Brewery, its flagship, multifunctional investment. The attractiveness of this project for the inhabitants of Warsaw will be enhanced primarily by the excellent restaurant offer created by the Echo Investment’s retail and entertainment centers’ department in cooperation with the best brands. The commercialization of Warsaw Brewery gastronomic and service space is already completed, thanks to i.a. the contract with Robert Lewandowski's restaurant or the Kumpel Group craft brewery.
Of all the sectors where Echo Investment is present, retail real estate has been most affected by the restrictions associated with the epidemic. With further steps to defrost the economy, the functioning of Libero in Katowice and Galeria Młociny in Warsaw returns to normal. This required a lot of effort and partner relations in negotiations with tenants. The developer managed to conclude individual agreements with over 90% of tenants, agreed preliminary conditions with the rest and expects the talks to be completed successfully in the near future.
“The epidemiological situation has shown once again our company's strengths, such as the diversification of business activities into different real estate sectors, the financial stability and having inhouse teams responsible for all basic functions in the development process. Due to restrictions, we focused our efforts on maintaining business continuity: keeping construction sites working, being in contact with clients, as well as ensuring a safe and effective working system for our employees,” comments Nicklas Lindberg.
“We continue to observe the changes in the economy caused by the pandemic and carefully analyze our plans for the coming months. The priority is to maintain a strong financial position and a healthy growth rate,” adds Maciej Drozd.