Business risk

The Group takes prudent risks in order to increase revenues. The biggest business risks concern entering new markets and segments, managing existing inventories and investments, and fulfilling construction contracts. One of the peculiarities of the construction business is the length of time it takes to execute contracts, which makes the sector inert to changes in the economic environment. Therefore, both negative and positive changes in the economic environment impact the construction segment with a delay of about 12 to 18 months.

Operating in several markets entails the need to know the economic environment of different countries and to pay attention to the cyclical nature of the economy and the legal, cultural and political differences of different countries. The Group’s goal is to grow in the markets where it already operates. When entering new markets, local practices and differences are thoroughly explored before final investment decisions are made to ensure that the environment is stable enough and that we have a competent team in place.

In regard to investments, the main risks are related to the real estate portfolio and the implementation of development projects. We manage real estate development projects as a comprehensive process, which includes all activities from the purchase of plots, procedures related to detailed spatial plans, design and construction to the sale of finished apartments and warranty services. The Group applies common principles for the implementation of real estate development projects to ensure that the best practices accumulated in the Group over the years are put to good use. We constantly analyse our stock of plots with development potential to make sure that there are enough properties in the portfolio for the kind of developments the market needs. Investments in new properties or projects worth up to 3 million euros are generally decided at the level of the subsidiary’s supervisory board, and larger purchases are additionally approved by the supervisory board of the Group.