The rental apartment market in Poland is attracting more and more developer and investor interest with a number of large projects comprising this kind of units having been announced across the country in recent months. Do long-term institutionalized rentals have a future in the Polish market? Xavier Jongen, a board member at Catella Real Estate – a pioneer in the sector whose portfolio includes No.44-branded rental apartments located in the iconic Złota 44 residential tower in downtown Warsaw – shares his views on the sector’s potential and its prospects for the coming years:
“If we take a look at the real estate map of Europe we will see that in many parts a very substantial percentage of the population prefers the advantages of renting. Of course, Poland follows its own trajectory and has, for historical reasons, privileged ownership, but still renting is already the first choice for about 30% of the Warsaw population. Moreover, the younger generation will gradually change, if not revolutionize, the local housing market. Appreciating freedom, independence and being mobile, they will naturally tend to prefer rental dwellings. In addition, price increases in the housing market will push many over the tipping point to avoid over indebtedness and the risk of wealth depletion when buying into a bubble.
The current private rental sector is not that small, but ownership is extremely fragmented. Therefore, standardization and reliability of rental agreements have not yet evolved to their most competitive proposition and Catella is first wave in to contribute in developing that part of the industry. Catella is indeed the first institutional investor in the Polish residential market; however, our followers will appear very soon. The office market is close to being saturated and it seems it is becoming more and more difficult for the investment funds to allocate into one of Europe’s best performing economies. So there will be additional capital pressure to diversify into the institutional letting market.
Catella has so far invested around €80 million in Poland, having purchased two other attractive projects with a joint venture partner – one is located on ul. Pereca in Warsaw and the other is located near the University of Economics in Kraków. These reflect that we plan to act in all the areas of the Polish residential market, from student housing and affordable first dwellings for young professionals to very well designed family apartments to luxury rental apartments. Present market conditions do favor new investment and we are ready to double the amount of money that we have already invested on the local market.”