The approach to Slovak banks in financing new real estate projects has not changed much since 2008 and since the arrival of the financial crisis banks have retained consistently tight lending conditions for developers.

“An investor who does not have at least 30 percent of the needed resources and at least 30 percent of the project pre-leased, does not even need to bother visiting a bank,” Pavel Bartošík from the office department of Jones Lang LaSalle, a global real estate services firm specialising in commercial property, told the TASR newswire.

Mike de Mug from the Ballymore Properties developer agreed that obtaining financing from a bank for a real estate project in Slovakia is very difficult, adding that even though national governments have re-capitalised banks in eurozone countries, the banks are still not willing to start lending again.

The low interest rates set by many national banks have not led to higher amounts of lending because banks have dramatically increased their margins, TASR wrote, meaning that only developers with the best projects with few risks can be successful in obtaining funding from banks.

“I do not think that banks will change their approach this year,” added de Mug, saying that it would be beneficial if new banking houses entered the Slovak market and ‘shuffled the cards’.

Oliver Galata, the head of the office space department at CBRE, a company active in real estate services, said that construction of speculative projects, i.e. those without pre-lease contracts, cannot be expected to start this year because the banks’ strict requirements will not change during 2012.

“Banks only support projects of high-quality, with a high perspective for their occupancy, and with pre-lease contracts,” Galata told TASR.

Bartošík also does not expect a positive change in 2012, especially because of worrisome signals about the global economy.

Caption: Developers find it difficult to get bank financing for real estate projects in Slovakia.

Photo: Jana Liptáková