The unqestionable leader of the 1990s were companies from building industry that was dynamically developing. Flats in all of the People’s Republic of Poland period was rather deficitient good.The main reason of that was insufficiency of communistic economy, old technology and too high employment. Because of all these components, the cost of builiding was really high and there was not much flats, despite growing demand. It is worth to mention, that builded apartments was made of low quality materials, often hurriedly and carelessly. That is why, after communist regime collapsed, in 1990-1999 builiding production increased almost twice. Average annual increase equaled about 8%, taking fluctuations into consideration. As the main reason of that, we have to mention:
· Increasing number of opportiunities and economy’s tendency to invest (rosnące możliwości I skołonność gospodarki do inwestowania w efekcie utrzymującego się przez wiele lat wzrostu gospodarczego)
· High demand in almost all branches of building as a result of long-term negligence
· Necessity to meeting West building standards
· Inflow of foreign investments as an impulse of development in different branches and factor which was creating a demand for infrastructural and industrial building
Investment processes from 1993 to 1997 was characterized by increasing dynamic of expenditure. From 1996 to 1997 the rate of investment was higher than 20% (w latach 1996-1997 roczne tempo wzrostu inwestycji przekraczało 20%). Unfortunately, in 1998 the investment trend decreased a little bit, which was caused by downturn of Polish economy.
On the graph attached above, we can see that from 1997, when WIG-BUDOW index was invented, it was constantly increasing its value to gain a peak in 2007. Thanks to good economic situation, it was the time when not only building companies was developing, but also enterprises from related branches was getting a favorable financial results. As we can see on the figure, it was good moment to sell shares invested in WIG-BUDOW, because index’s value was 7 times bigger than in the beginning in 1997. Than after some time, WIG-BUDOW started to loose its value, mainly because of financial crisis, that also affected a building sector. Poland as an emerging market, suffered a lot because of it. Interest rate was constantly growing, because of changes in monetary policy and the end of the day make real estate market weaker.. Unfortunately, situation changed a little bit in 2008, when amount of transactions on real estate market was decreasing, because of more restrictive credit politic connected with mortgage credits. It is worth to mention that in 2007 Poland gained the opportiunity to host a football championship in cooperation with Ukraine. At the beginning, this situation was considered as a great chance for building market. Back then, analytics was anticipating big boosts and higher rate of return from investment on building companies. Unfortunetly, as the time was passing by, it occurred that situation is getting more and more difficult. The WIG-BUDOW index in 2012 was 5 times smaller than in the beginning of 2007. Some of smaller building enterprises gone bankruptcy and others, including the biggest one, now have enormous problems. Only one company, which is Budimex protected itself from financial troubles. This seems to be very unpredictable situation, because everybody was expecting rather heyday for building companies. Among the reasons that złożyły się na powstanie takiej sytuacji we have to mention about strong competition between building enterprises, which leaded to situation, when companies offered really low margin in order to get a job. In a mean time, prices of raw materials had grown. Now, the only solution for the companies zagrożonych upadłością is deep restructuring process. However, economic situation after 2007 have been a time of high volatility and this is a problem should be examine in wider perspective. In this chapter I would like to focus more on the period from 1998 to 2007.