Bridge to prosperity
The resulting economic growth has made Wrocław the place to be for real-estate investors, and the residential, retail and logistics markets are booming. Now, the hotel market is heating up too, on the back of the city's growing popularity as a tourist destination
At this year's Mipim real-estate forum in Cannes, Wrocław, like other cities, set up its own comprehensive stall of development offers for investors. What made the city stand out however, was the city's concerted effort to maintain its business-friendly image. For example, representatives of city authorities were quick to emphasize their effort to cover more and more of Wrocław with zoning plans - the lack of which is the greatest barrier to real-estate investment in many cities.
"Currently, 36 percent of the city has been covered by zoning plans," said Regina Danek, head of the department for the sale and purchase of real estate at Wrocław City Hall. "Moreover, city authorities are trying to increase this figure, and hopefully even more projects could be carried out. This could also reduce the cost of plots which, in the long term, could contribute to the lowering of apartment prices," she added.
Homes and warehouses
Wrocław is a city where all sectors of the real-estate market are growing rapidly. However, growth in the residential and logistics sectors have seen the biggest boom.
Waldemar Olejnik, associate director at CB Richard Ellis' (CBRE) Poznań office, said that the boom for logistics developments is the result of Wrocław's favorable business environment. This encourages investments in Wrocław, along with its convenient access to Germany and the whole Lower Silesia region, further encouraging the development of more industrial investments.
When it comes to residential investments, Olejnik pointed to the city's economic prosperity as the major factor. "[The number of] new jobs, as well as the city's growing popularity, create a trend for Wrocław which is followed by many young people who decide to move to the city." explained Olejnik. More young workers has translated into an even greater demand for residential space.
Shop till you drop
With its strong economic growth, Wrocław continues to attract many foreign investors from the retail sector. Moreover, as with all regional cities, Wrocław is experiencing dynamic construction activity in the shopping-center sector of the retail market. CBRE prognoses predict that by the end of 2007, Wrocław will experience the highest increase in retail-space density in Poland. The number of square meters per 1,000 inhabitants will nearly double, from around 300 sqm currently, to 520 sqm.
"Wrocław is currently experiencing a high volume of construction activity which will provide the Wrocław retail market with an additional 195,000 sqm of retail space in 2007 and 2008." said Olejnik.
One of the biggest openings this year will be Galeria Legnicka, set to open its doors this autumn. "The opening of Galeria Legnicka is expected to push prime retail rents ahead in 2007," he said.
There are already nine modern shopping centres in Wrocław, totaling 208,000 sqm. To date, one of the most successful shopping centres in Wrocław has been 30,000-sqm Galeria Dominikańska. Two of Wrocław's shopping centers provide in excess of 40,000 sqm. Auchan Bielany Park, which has an area of 56,000 sqm, and the Korona shopping center with 46,000 sqm.
Hotel hot spot
Since the city is a popular tourist destination, Wrocław's authorities are also looking to expand its hotel offer. "We will soon open a tender for a five-star hotel that would be located at ul. Podwale." said Wrocław City Hall's Danek.
She added that the city is also interested in developing boutique hotels, which would serve the tourist sector. "Plots at ul.Włodkowica and at Pl. Katedralny are designed for such development," Danek explained.
Zbigniew Bujak, from the Hotel Market Institute, said that the city of Wrocław's economic development over the past 15 years has been very balanced, leading to plenty of opportunities for all types of hotel operators.
"All kinds of hotel-bed providers can find a market," said Bujak. "There is a place for another hostel, a boutique-style hotel as well as a five-star hotel that would belong to one of the [major] chains." He added that everywhere in Poland except Warsaw, major hotels are independent, and do not belong to any of the international chains.
"Orbis/Accor has the largest number of beds to offer in Wrocław, but its market position becomes weaker every year, so nowadays new projects are supported by independent Polish business." said Bujak, adding that international chains of hotels from the two-, three- or four-star segment have underestimated the Polish market and are now trying to enter the market.
"Next to Kraków, Wrocław is now the main target of those investments," said Bujak. "NH Hotels as well as Warimpex's investment could be the first sign of this market tendency."
Expo expectations
Danek pointed out that the possibility of Wrocław hosting the World Expo event in 2012 means the city will need several new real-estate projects, including hotels. However, exactly what effect it will have on prices is unclear.
"It is difficult to predict influence of Expo on the prices of real estate in Wrocław, however we observe a significant interest over investment and developments areas," said CBRE's Olejnik.
But experts say that the economic boom is more important to investors than one event, even on such a scale as the World Expo, since a business plan cannot be based on a one-time occurrence.
"What is important is how significantly the economy will grow due to such an event," Bujak pointed out, and added that for Wrocław's hotel market, a convention center would be much more valuable.
