A bubble bursting?

According to a report on Warsaw's residential market by CB Richard Ellis (CBRE), the skyrocketing prices for new apartments should settle down somewhat this year.

"We expect that the increase in prices of apartments in Warsaw should stabilize this year," said Mikołaj Martynuska, director of residential department at CBRE Polska. He supported this forecast by pointing to the growing supply of new apartments and to a weakening of potential buyers' borrowing power. Martynuska added that speculative investors will look for opportunities in other Polish cities, which should help stabilize prices in Warsaw.

The average gross price for new apartments in the capital in January of this year was zł.7,900 per sqm. The most dynamic increase was noted in the city center, as well as in Praga Północ and the more peripheral districts of Wawer and Bemowo. According to Martynuska, the growth in the center, "was attributable to the emergence of a number of exclusive apartment projects."

The city center remained the most expensive area in Warsaw, with an average gross price for apartment space at the level of zł.18,360 per sqm. Mokotów and Wola followed, with new flats in the districts costing zł.10,090 and zł.8,820 per sqm, respectively.

In January 2007, over 34,000 apartments were under construction in Warsaw in some 230 residential projects, which represented a 13-percent increase year-on-year. The majority of these were in the districts of Białołęka, Bemowo, Mokotów and Wilanów. Martynuska points out that more and more housing construction will be taking place outside the city center.