Property News: In the rain of investment, Higasa spreads the umbrella over the investor
Higasa Properties invites individual investors to invest capital in commercial real estate. The rates start from 200,000 zł. – We offer simple investment mechanisms, perfectly functioning in the Wester Europe. Revenues from retail parks are regular and supported by long-term lease agreements with top brands in the food, cosmetics or electronics. In addition to the indexation of the rental rate along with the increase in inflation – explains Michał Ciapka, a board member of Higasa Properties in the Property News portal. Below we publish a full interview…
Higasa – this word in Japanese means umbrella. An appealing name, but above all the quintessence of the company’s philosophy…
Marcin: We are impressed by Japanese lifestyle and thinking. After all, this country is identified worldwide with conscientiousness, work culture, devotion to the cause, commitment, and even bravery, and clearly defined, honourable principles. These are good examples that are worth following when, for example, creating your own company. And so we did. “Higasa” in Japanese means “umbrella”, an object that protects us. From our point of view, this is a synonym of security provided to clients, protection of assets, invested capital, and often life savings. It’s a big responsibility. We also put a lot of emphasis on minimising risks, which we have been doing quite well so far. The confirmation of these words are returning customers, or in other words – customers who are always with us.
Investments in commercial real estate is a relatively new trend in Poland. Experienced investors have been using this solution for some time. However, let us bring this tool closer to those less familiar with the ropes of investing because one of the company’s assumptions is to enable also people with less capital to obtain a high return on investment.
Michał: Indeed, this trend has recently gained in popularity in mass awareness. Because institutional investors, i.e. investment funds, insurance companies and other business entities with a large amount of money, have been involved in investing in this way for several years now. Now, however, there are solutions that bring the business model closer to individual investors. The goal of Higasa Properties is to provide them with the opportunity to invest in a market that they did not have access to or even about which they did not know. We have a comprehensive offer that is more accessible than most people would expect. It is worth noting that the amounts that enable investing in commercial real estate start from PLN 200,000.
What makes investing safer than bonds, buying a flat for rent, or even condo hotels?
Marcin: Bonds allow you to raise capital from the market regardless of the purpose – there are different types of bonds. They are not always secured, and even if there is investor capital hedging, it may be based on quite complicated procedures. These are described in the prospectus, which you need to read in detail to find out how the capital is secured and whether it really protects investors. The document is several dozen, usually several hundred pages long. You cannot afford a superficial analysis, although these documents are written in the industry language. Apartments? Currently, they are very expensive, which makes the rents highly overvalued. In addition, the potentially high tenant turnover, burdened with the costs of, for example, renovations, translates into a low rate of return and higher investment risk. Market analyses show that only in Gdańsk, Wrocław and Warsaw, the profit exceeds 5%. In other large cities, this is even less.
Michał: The above methods have been known for years, but there are also newer ones, such as condo hotels. Contrary to appearances, they are quite a complicated form of investing and again note – you should immerse in the details of the contract. It determines the conditions and also indicates how the profit is generated and how it is calculated. Not always the profit promised in the advertisement will actually go to our account. It all depends on the contract with the operator – is it a reputable network, for how long is the commitment, what are the options for exiting the investment for the operator? Many people are unaware of the basic threat of this type of investment, because the exit of the operator may automatically block passive revenue. Even with the ownership of the “apartment” we will not find buyers willing to purchase it, because without the operator a hotel or apartment block simply ceases to function. What we propose is simple investment mechanisms, perfectly functioning in the West. They are associated with a real property with an address. Income from retail parks is regular, supported by long-term lease agreements with top brands in the food, cosmetics or home appliances industry, in addition to the indexation of lease rates along with rising inflation.
Higasa Properties has recently become a strategic partner of EDS Retail Park. A peculiar business perpetual motion machine was formed…
Marcin: We emphasise this at every step and we believe it deeply: we value the risk minimisation and the safety of our clients, hence the decision to form a partnership with EDS, which supports us. Both in the construction and development industries as well as in terms of searching for the best locations in Poland for commercial facilities and through the baggage of experience resulting from the presence on foreign markets. In the “construction” industry the biggest problem at the moment is the reliability of a construction company. EDS solves this threat because there is a construction company in the group.
Clients of Higasa Properties include seafarers – it is a difficult profession, often burdened with stress, with great responsibility… Compensation is high earnings. Who else is your client?
Michał: Indeed, many sailors have appeared among our clients, especially at the beginning of our activity. Poles are prominent specialists, enjoying recognition in the world. The Tri-City, where the seat of our company is located, has always been associated with the maritime industry, here also professionals are educated. However, over the years, the profile of our clients has become very diverse, ranging from specialised companies (TFI), to institutions looking for tax optimisation, entrepreneurs wishing to invest financial surpluses in a secure business, to individuals looking for a place where they can safely place their savings. Among them are also people from abroad, accustomed to the high standard of services to which we have to adapt and so we did. However, this only increases our strengths and attractiveness on the market.
The Office of Competition and Consumer Protection is conducting an intensive campaign warning against risky investing. But a popular number lottery (totolotek) is also associated with very high risk…
Marcin: At the beginning, we mentioned our “Japanese” principles – honour and honesty are one of them. Entities that feed on the lack of customer awareness should end up with a ban on their business. That is why we strongly support the campaign of the Office of Competition and Consumer Protection.
Michał: We must also remember that investing always involves risks and is inherent in finances. A good example is the mentioned lottery. Millions of Poles invest in bets every day, with the hope of profit. And probably hardly anyone thinks that the risk is actually much greater than, for example, on the stock market. What is the key to success in investing is to minimise risks. At Higasa Properties, from day one of our operation, we set ourselves this aspect as the ultimate goal. How do we achieve it? Through our experience and reliability and cooperation with reliable partners in the field of commercial real estate.
Marcin: A moment ago, we have mentioned residential property investments. They are extremely popular. Although they are also subject to risks. The market is subject to long-term fluctuation cycles. The price of apartments may fall, as it did, for example, in 2007. We only see a return to prices from before that breakdown now, more than a decade later! The investments that we offer together with EDS Retail Park are valued using the income method, and their price depends on the income they generate, which completely changes the risk calculation.
In the past year, you have accomplished your goals. What are you planning for the next 12 months?
Michał: We are in the process of expanding the sales network. We are currently focusing strongly on the Pomeranian and Kujawsko-Pomorskie voivodeships, with the main branch in Gdańsk. On the other hand, we are increasingly interested in other cities in Poland. In our case, the famous recruitment slogan “in connection with the dynamic development of the company” is very true. We approach the entire process professionally, focusing on the highest quality possible. We analyse every aspect. We create a comfortable working environment, with convenient work tools, such as premium-class business cars or a unique bonus system. We plan the entire system of training, support for employees and associates. Here, too, we follow the example of Western methods.
At the end, an optimistic forecast – the commercial real estate market in the West is doing quite well. Is there a good chance to repeat this success in Poland?
Marcin: Definitely yes! The environment of low interest rates along with the qualification of Poland by some rating agencies to the group of developed markets has attracted the attention of large, international players from, for example, Western Europe, the USA and Asia. The increase in the demand for high-class commercial real estate will increase its value, as happened with our western neighbours.
Michał: Our company focuses only on modern commercial buildings, paying attention to urbanised areas that generate large pedestrian and vehicular traffic, which in turn will ensure interest from retail chains for years. Together with our strategic partner EDS Retail Park, we look to the future, turning our eyes to our southern and eastern neighbours.