Over half of Poland’s top 200 residential developers are family-owned firms using domestic capital and most are led by individuals over 50 who lack formal succession plans. According to a JLL Living and Crido report, the frequent absence of a family heir may soon force these owners to sell their businesses.
Two-thirds of Polish family businesses are managed by the first generation, so succession will be a significant challenge for the Polish economy in the coming years, especially since while 85% of patriarchs plan to transfer family businesses to the next generation, no more than 15% of successors are interested in taking them over. This creates enormous risk for the continuity of these companies, but at the same time represents an opportunity for strategic investors.
Analysis of JLL's 200 leading residential developers shows that only 44 have foreign or institutional owners, while as many as 156 are companies with Polish private capital. Signs of ongoing succession processes were observed in only 52 of them. JLL analysts emphasise that 74 development companies are managed by people aged at least 50 and have not revealed official succession plans. This group includes 48 entities owned by people aged 50 to 60 and 26 companies led by owners over 60 years old.
"For many of them, selling the company to a strategic investor will be not only the best, but often the only option to secure the company's future and a favourable exit from business. Succession will be a particular challenge especially for residential developers operating in Wrocław, Warsaw and Kraków, where most companies struggling with this problem operate. Most of them are residential developers with moderate scale of operations, up to around PLN 400 million (€94 million) worth of projects in sales," comments Krystyna Pietruszyńska, Director, Living Investments at JLL Polska.
Currently applicable legal regulations favour succession processes - an example is the introduction of the family foundation, which enables the organisation of ownership issues and management of family assets in a multi-generational perspective, while providing the possibility to benefit from tax preferences. "The family foundation serves many functions that secure business. Above all, it helps preserve the integrity of the company and assets, and also protects against their dispersion whether as a result of inheritance claims or in connection with divorce or family expansion," comments Katarzyna Żółcińska, Counsel at Crido Law Firm.
