Real Estate Leasing Determinants in Poland: A Statistical Analysis

University of Szczecin Faculty of Economics and Management Institute of Econometrics and Statistics 2ND CONGRESS OF POLISH STATISTICS STATISTICAL STUDY OF THE IMPACT OF REAL ESTATE MARKET DETERMINANTS ON THE LEVEL OF DEVELOPMENT OF REAL ESTATE LEASING IN POLAND Authors : Dr hab. Iwona Fory Miros aw G rski, PhD

Research problem Why is financing real estate by means of leasing so rarely chosen by Polish entrepreneurs? Main objective of the research: to evaluate real estate leasing in comparison with other methods of financing and disposing of real estate, as well as to identify and analyze the reasons for the low interest of entrepreneurs in this form of real estate financing.

Research hypothesis The main determinant of low popularity of real estate leasing in Poland is the unfavorable economic and legal environment of the real estate market and the characteristics of a leased asset in physical, economic and legal terms

Assumptions of the empirical study Assumptions of the study: Place the study was carried out in Bydgoszcz; Entities subject to the study economic entities; Study period 2012-2016 Study method sampling. The distinction of the characteristics of the real estate market which are stimulants and destimulants of real estate leasing development, is the basis for both theoretical considerations and surveys of business entities.

Assumptions of the empirical study For the adopted research period, source data on the structure and subject of leasing in Poland was obtained from the current annual reporting of business entities, collected in the public statistics resources by the Central Statistical Office (GUS). Data concerning business entities registered in the REGON register for the city of Bydgoszcz, which were the basis for the construction of the questionnaire survey, was obtained individually with the observance of statistical secrecy.

Assumptions of the empirical study The result tables included information obtained from: 1) the list of entities registered in Bydgoszcz in the REGON register (as of 30 April 2017) ordered for the purpose of the study; 2) an author's questionnaire survey conducted by means of direct telephone interviews. The interviews were conducted in the period from 31 August 2017 to 15 September 2017. The partial survey meets the requirements of the representative method, with random selection of a sample from the finite general group which is a set of all economic entities registered in the REGON system. This allowed for statistical description of a random sample and generalization of the results obtained on business entities registered in Bydgoszcz.

Table 1. Structure of general population economic entities in Bydgoszcz according to REGON GROUP NUMBER OF PERSONS EMPLOYED <9 10-49 50-249 250-999 >1,000 NUMBER OF ENTERPRISES SHARE % STRATUM A B C D E TOTAL 1 2 3 4 5 38,486 1,362 349 47 13 40,257 95.6 3.4 0.9 0.1 0.0 100 The general population consisted of 40,257 economic entities. This population was divided into five strata according to the number of employed.

Table 2. Structure of effective random sample economic entities in Bydgoszcz according to REGON STRATUM NUMBER OF RECORDS NO TELEPHON E NUMBER ACCEPTABLE PERCENTAGE OF NEGATIVE ANSWERS ACTUAL EXECUTION OF THE TEST ESTIMATED NUMBER OF INTERVIEWS TEST COMPLETED PERCENTAGE OF POPULATION (%) 374 63 32 47 13 529 270 10 1 0 0 281 50% 30% 10% 10% 10% 30% 30% 20% 20% 20% 112 19 6 9 3 149 69 43 22 11 4 149 0.18 3.16 6.30 23.40 30.77 0.18 1 2 3 4 5

Chart 1. Main reasons for not using real estate leasing within the last 5 years 4.8% nie wiem 4.7% trudno powiedzie 64.7% nie podejmowali my takich decyzji 2.3% 21.3% inne brak wystarczaj cej informacji o warunkach umowy 4.6% mniej korzystne warunki umowy w por wnaniu z bankami i innymi 2.3% trudno ci w dost pie do us ug finansowych .1% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 NIE TAK, pr by (przynajmniej jedna) zako czy y si sukcesem

Chart 2. Main reasons for the decision not to use real estate leasing nie by o takiej potrzeby 87.1% rodzaj wymaganego ubezpieczenia 1.4% regulacje podatkowe 1.4% regulacje prawne 4.3% brak wystarczaj cej informacji o 5.9% mniej korzystne warunki umowy w 4.3% trudno ci w dost pie do us ug leasingowych 2.8% 0.0% 50.0% 100.0% Przedsi biorstwo nie podejmowa o pr b korzystania z leasingu nieruchomo ci

Chart 3. Weight of the determinants which were the reason for the surveyed companies not to decide to lease real estate zbyt skomplikowane przepisy zwi zane z 8.4 7.0 1.4 83.1 brak porozumienia pomi dzy zarz dem a 3.0 2.8 0.0 94.2 czynniki intuicyjne i preferencje zarz du 4.5 4.3 0.0 91.2 obawa przed zbyt cz st zmian przepis w, co 14.2 8.4 0.0 77.3 obawa przed zmian koniunktury 5.7 1.4 1.4 91.5 zbyt d ugi okres trwania umowy 2.8 4.2 0 93.0 brak zgody udzia owc w 1.48 0.01 0.00 98.50 atwiej jest uzyska inne formy finansowania 12.6 4.4 2.8 80.2 nie widz istotnych korzy ci jakie m g by 15.7 5.7 2.8 75.8 nie s dz , e leasing jest opcj dla innych form 10.0 8.4 2.8 78.8 preferuj w adanie nieruchomo ci poprzez 24.1 5.7 4.2 65.9 lepsze mo liwo ci uzyskania oszcz dno ci 10.0 .0 1.4 88.6 korzystniejsze warunki cenowe mo na uzyska 11.5 5.6 0 82.9 brak wyboru w zakresie nieruchomo ci 4.2 4.2 1.4 90.1 0% 10% 3 - niski 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 - wysoki 4 - bez znaczenia 2 - redni

Chart 4. Barriers to the use of real estate leasing by enterprises in Poland prawo w asno ci nieruchomo ci 11.4 9.9 7.0 71.7 problemy w ocenie wysoko ci cznego 11.2 5.6 8.5 74.6 zbyt ma a wiedza w mojej firmie o leasingu 17.3 7.1 11.2 64.4 mamy w asne rodki i nie musimy 17.1 9.9 5.7 67.4 korzystniejsza, w stosunku do leasingu, 7.1 11.3 5.5 76.0 niekorzystne rozwi zania podatkowe 9.7 11.3 5.5 73.4 zbyt du a biurokracja przy korzystaniu z 13.9 9.8 5.6 70.7 brak oferty produktowej (nie leasinguj 15.4 7.0 5.6 72.0 zbyt wysokie koszty leasingu 19.6 5.7 6.9 67.8 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100% 1 - wysoki 3 - niski 4 - bez znaczenia 2 - redni

Summary of the survey results In the conducted survey there was no correlation between the size of the company and the use of external financing in relation to real estate. The survey did not confirm that the lack of interest in real estate leasing results from low activity of entrepreneurs on the real estate market.

The risk of this form of financing is mainly related to maintaining the value of a leased asset in the long term. In the long run, there is a high probability of changes in legal and fiscal regulations that may occur, and a change in the economic situation is possible. On the other hand, the auxiliary hypothesis that real estate leasing is characterized by a high level of systematic and specific risk inherent in investments in the real estate market was not confirmed from the survey data.

Summary of the survey results None of the premises related to both the reasons for using and not using real estate leasing proved to be so important for entities that it could be considered that they are significant for the low popularity of real estate leasing.

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