Local companies selling houses in Eastern Europe

BUILDING ON COMMUNISM'S FALL

May 03, 1992|By Audrey Haar TC | Audrey Haar TC,Staff Writer

Go East!

That's the plan for some local homebuilders who are looking to make their fortunes abroad. Tired of waiting for local housing markets to turn around, they're betting on bigger payoffs in Eastern Europe's next building boom.

AmeriDom of Stevensville, for example, recently completed four American-style townhouses in Poznan, about 200 miles west of Warsaw. Quite a departure for a company that a few years ago was building 18th century-style houses priced from $700,000 in the Annapolis area.

And the Ryland Group in Columbia recently announced plans to build houses in Russia, initially in St. Petersburg. Ryland plans to market its houses in Russia to Western business people with hard currency in hand.

AmeriDom hopes its townhouses will appeal to some of the 2.5 million Poles who were on waiting lists for houses when the Communist government fell in June 1989.

But getting ready to do business in a country such as Poland, which is just learning how to cope with a market economy, isn't as simple as getting on the next jet headed east.

American companies have to cope with tangled land ownership claims. They have trouble finding workers skilled in building houses. And it can be difficult to find money, both for financing construction and for mortgages.

Executives at AmeriDom (dom is Polish for home), had plans to build in Poland when they met Pawel Kobylanski, a Polish architect who was touring in the United States last year.

Mr. Kobylanski, president of the Architectural Investment Agency Poznan, helped the AmeriDom group find a building site on privately owned land. The former apple orchard already had sewer and water lines.

Although AmeriDom eventually plans to build a factory in Poland, company President Keith Anthony speeded up production through Liberty Homes, an Eastern Shore factory that produces wall panel sections. Wall sections, and accessories such as windows, appliances, carpeting, and bathroom and kitchen fixtures, are then shipped to Poland from the port of Baltimore.

"It is a classic way of doing things," said Jim Robb, international trade specialist for the U.S. Department of Commerce. "You introduce the product by exporting it, and if it catches on, then you plan to manufacture it closer."

Two weeks ago AmeriDom opened the model houses in Poland to the public, and when the company starts getting orders from buyers, the Liberty Homes plant will gear up. AmeriDom hopes to start another 19 houses this summer.

Even though AmeriDom did its homework, before starting the first model homes there were the inevitable problems. The house foundations, the only Polish-produced construction, were unacceptable to AmeriDom and had to be redone.

Now AmeriDom is negotiating with a Pennsylvania company to complete the foundations until local Polish workers can be trained to do the work. But because of the delays, "We started construction at the worst possible time: in the winter," said Mike Whitehurst, executive vice president for marketing and operations for AmeriDom.

AmeriDom, which built the houses with four American workers and six local Polish workers, also spent time training the Poles. "We had to teach them everything," Mr. Whitehurst said, because "the Poles are not familiar with stick building."

Most urban homes in Poland are likened to concrete bunkers, so the American craftsmen had to teach their Polish counterparts techniques such as drywall and trim work.

The American-style townhouses are selling for $70,000, which is competitive with Polish-built houses, Mr. Whitehurst said. But not too many Poles have that many zlotys stashed away, and there is a limited market for $70,000 homes in a country where the average monthly wage is $200, said Jacek Tomorowicz, economic counselor at the Polish Embassy in Washington.

Still, Mr. Tomorowicz noted that there is an increasing number of wealthy people in Poland. And companies such as AmeriDom that are among the first to start home production in Poland will probably find a market for their products, he said.

Aside from price, the major impediment to overcome in Poland is home mortgages, or rather, the lack of them, says Robert Erwin, executive director of the American Building Products Export/Import Council.

Recent legislation in Poland updated those laws and last month the Polish government approved the first mortgage bank in Poland. Located in Warsaw, the Polish-American Mortgage Bank has $16 million in start-up money and will officially open for business in about six months, but it already is accepting loan applications.

The bank was organized by the Polish-American Enterprise Fund, a private corporation established in 1989 by Congress to provide investment and loans to Polish and Polish-American joint ventures. Of the $16 million in construction and mortgage money, $10 million was provided by Congress and the rest is from a bank and engineering firm in Poland.

Initially the bank in Warsaw will provide construction loans to foreign or local builders constructing single-family homes costing about $50,000, said Frank Strobiszewski of the Polish-American Enterprise Fund in New York.

Homebuilders face other problems in Eastern Europe, too.

The first problem: land ownership. Sorting out ownership isn't as simple as researching a deed. Prior landowners are putting in claims to land that the Communist government confiscated. "Who owns what is beyond being a problem. It's a confusion," Mr. Robb said.

And then there is the money problem.

Builders who think they can work out the details once they are over there should reconsider, Mr. Robb said.

Developers must secure private funding in the U.S. before they leave, because American banks that may be willing to lend money based on land value in Chicago won't be as willing to do it in Warsaw, Mr. Robb added.

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