A tale of six cities
Wrocław, Łód and Poznań are the fastest-growing residential markets in Poland, and prices in Warsaw and Kraków are rising a bit slower, according to a recent report on the six largest residential markets in Poland, prepared by Reas Konsulting.
With the number of developments accounting for a 42-percent share of the residential market in Poland, Warsaw is still the leader in the number of apartments for sale. This is just a drop in the ocean. Even if they wanted to, developers cannot speed up the construction process. According to Reas' Edward Kozłowski and Artur Pietraszewski, some of the obstacles, such as a lack of spatial-development plans, construction workers and building materials, are impossible to overcome.
The waiting game
On the other hand, as Kozłowski repeats, on the residential market, unlike any other sector, supply creates demand. Some developers are biding their time with new complexes and the law does not encourage them to launch construction works in new locations. Developers say they have plots but since property tax rates are low they don't have to rush to build and many are stockpiling land for future investments. "If you can build fewer apartments and still make good profits, you don't have to try harder. They know they will always find buyers," says Pietraszewski. The minimal profit from a development is around 20 percent.
According to the report, apartments in Warsaw and Kraków now cost up to 70 percent more than last year. Pietraszewski says the growth has slowed down but the trend will continue until at least 2010. "The current prices don't reflect the actual value of the apartment," adds Pietraszewski. This doesn't only refer to the two cities. The situation will soon be similar in Poznań, Łód and Tri-city. According to Pietraszewski, prices in Wrocław, Poznań, Łód, and Tri-city will also continue to grow.
Suburban exodus
The six markets, which include some 80 percent of the total number of apartments completed every year, are already different because the buyers' profile is different. Over 30 percent of people who want to buy apartments in Wrocław treat it as an investment. In Poznań the share amounts to 15 percent. Buyers in Poznań are not looking for expensive apartments and most invest in houses on the outskirts of the city. Unlike other cities, homebuyers in Poznań are not overly concerned with traffic jams because of good transportation solutions.
The Reas experts say that the latest report described the residential market in the six largest cities but investors who are looking for long-term investments should take a closer look at three new markets - Rzeszów, Szczecin and Olsztyn - which so far have been sluggish.
