Increases in debts in the commercial real estate market

One of the first most visible signs of the pandemic was empty commercial premises, offices and closed businesses. The changes brought by Covid-19 in the commercial real estate market have also become visible in the finances of companies serving this segment, including those who rent out business premises. As indicated by the National Debt Register Economic Information Bureau (KRD BIG), from March 2020 their debt has increased by almost a quarter (24 percent) to PLN 207.6 million. They also have over PLN 96.5 million to recover from their contractors.

In the real estate market, there are companies dealing with the rental and management of real estate for the purposes of running a business, as well as the purchase, sale and real estate brokerage. In total, all representatives of this industry entered into the KRD, i.e. 3,263 entities, are in arrears in the amount of PLN 207.6 million. Most of these are financial liabilities to banks, energy and heat suppliers and secondary creditors. Advisory, consulting and leasing companies are next in line for the payment of receivables.

The smallest entities do not regulate their payments to a similar extent – sole proprietorships (PLN 69.8 million of debt) and limited liability companies (PLN 64.8 million).

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“In the last years before the coronavirus, the increase in the value of debt in the corporate real estate market was very stable and did not exceed a few percent per year. The pandemic changed that. From the beginning of March 2020 to the end of July this year, the total debt in this sector increased very significantly, as by a quarter,” Adam Łącki, President of the Board of the KRD, said.

The largest arrears for real estate companies are in Mazovia (PLN 71.7 million). It is in this voivodeship, and above all in the capital, that the commercial real estate market is the largest. Many offices, commercial and service premises were deserted during the pandemic. Apart from Mazovia, the largest debts affect the industry in the Śląskie (PLN 40.8 million) and Łódzkie (PLN 26.6 million) provinces.

(WBJ)

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