Is Poland on the brink of a property securitization boom?
Only one commercial-property backed securitization deal has so far been done in Poland, so what are the prospects for a wider mortgage-backed securitization market taking off? James Featherstone reports.
THE PROPERTY SECURITIZATION market has grown rapidly across Europe in the past few years. A sector that is long established in the US – worth slightly more than $200 billion a year – is now prominent in western Europe. And as consumer credit and commercial property development expands in central and eastern European countries, Poland is at the forefront of a potential new growth area. So far, though, specifically property-based securitizations have not been a feature of the country’s financial landscape.
There is scope for this to change. The residential property market in Poland has taken off in the past three to five years. Annual growth stands at 51%. In its latest global house price index, Knight Frank reported that only the property market in Latvia’s capital, Riga, outperformed Poland in house price growth. At the same time, the level of mortgage debt is still relatively low. Poland’s mortgage-debt-to-GDP ratio stands at just 6%, compared with an EU25 average figure of 47.5%. Yet the annual growth in the mortgage market across the 25 countries of the European Union is only one-fifth of Poland’s. "There is big potential for people to take on debt, and property debt in particular, as a percentage of income," says Maddi Patel, securitization analyst at Barclays Capital.