Demanding times for flats
Developers are queuing up to build new apartments and houses, and with demand far exceeding supply, activity in the sector is unlikely to wane.
Judging by the latest analysis of the Polish residential real-estate market by tabelofert.pl, now is a very good time to be a developer here. Its research says that the current shortfall in flats stands at a staggering 1.4 million. This means that in Poland for every flat that comes on the market, there are 3.4 people willing to buy it, which is much more than in other European countries, where the figure typically oscillates between 2.1 and 2.7. By 2020, the population is set to grow by eight percent, and the number of households by 28 percent, meaning that 120,000 flats will have to be built every year just to stop the gap between demand and supply widening even further.
Current new builds are less than half this figure, at 45,000 new flats completed per year. Warsaw is leading the market, with 10,300 flats completed in 2004. Tri-City had 3,069, Poznań had 2,400, 2,096 new apartments came on the market in Wrocław, and 4,477 flats in Krakow, which is the only town that recorded growth on 2003.
The economic situation is pulling in two directions. On one hand, there is a relatively stable economic situation in Poland and a slight increase in gross salaries and easily available loans. On the other, there are serious difficulties in getting construction permits and zoning plans. Gdynia was the worst town for new builds, with just 928 flats built last year, its worst level in seven years.
Even the jumping prices of flats, which are catching up with EU averages, do not deter people from hunting for new homes. In Warsaw, over 2004 the price per sqm grew by 11.5 per cent, and was zł.4,341 at the end of last year. Śródmieście remains the most expensive place to live, with one sqm worth zł.9,414. The cheapest district is Wesoła at zł.2,806 per sqm. At the end of 2004 average prices in other towns in Poland were zł.3,403 in Kraków, zł.3,500 in Poznań, zł.3,003 in Wrocław and zł.2,945 in Tri-City per sqm.
Breaking the market down further, there is a marked difference in demand for different categories of housing. Demand far exceeds supply for the cheapest flats, which sell for up to zł.2,500 per sqm. The most striking gap is in Tri-City, where the demand for flats at this level makes up 36 percent of the total number of buyers, but supply is just 13.5 percent of new buildings. In Warsaw and in Kraków the figures are respectively, 9.7 and 2.9, and five and one percent.
Due to a higher cost of living, and thus better salaries in Warsaw, more people can afford a flat at zł.3,500-4000 per sqm in the capital. Some 19 percent of buyers want a flat at this price, and have a 25.5 percent supply level to choose from. The disparity is much more astounding in other cities, such as Kraków, where the demand is 2.1 per cent and supply is 9.1 per cent, or Tri-City, where there is no demand for flats at this price level.
In Warsaw, most flats offered on the market are priced at zł.3,500-4,000 per sqm. These are also the most desired ones. Cheaper flats also enjoy quite an interest, but their share of supply is only 10 percent. Interestingly, apartments for more than zł.6,000 are more and more popular, and demand in this sector is level with supply not just in Warsaw. In Kraków, half of the newly built flats cost zł.2,500-3,000, and these are also most in demand. It is more and more difficult to buy a flat cheaper than this. This price bracket, however, is still available in Tri-City and flats at this cost are most in demand at the seaside.
The old favorites of Mokotów, Białołęka, and Ursynów continue to be the most popular areas in Warsaw. Wilanów is now the biggest building site in the city, and the supply at 14.9 percent is much higher than the demand (3.8 per cent).
A reverse situation is in Ursynów, which is very appealing to flat buyers, with demand being 19.3 per cent, but does not offer much with a supply of just nine percent. In Kraków, it is Krowodrza and Śródmieście that are most attractive to customers, in Poznań it is Piątkowo and Winogrady, and in Katowice it is Oś. Paderewskiego and Koszutka.
The real-estate market differs from town to town in Poland, with each region offering different conditions and advantages for the investors. Kraków has a robust rental market, as more and more students from abroad are coming to study at the oldest university in Poland.
Clients are also interested in buying old tenements to be repaired and rented. On the contrary, in Tri-City renting flats is not very popular. In Poznań there is a noticeable demand for older flats in bricked houses with convenient connections to the city center.
Warsaw is, indisputably, the leader on the market. The value of foreign capital in the city is estimated at several billion dollars. Some 25 percent of all foreign companies operating in Poland are based in Warsaw. Every fifth investment, out of 2,700 foreign investments exceeding $1 (zł.3.32) billion in Poland, is in the capital. Located in the center of the country, the city occupies first place as to the amount of direct foreign investment in Poland.
Developers will be on a roll in 2007 when the Value Added Tax will increase. For the time being, flats are being sold even in the very initial stage of construction, especially if the price is good and the location attractive.
Judging by the latest analysis of the Polish residential real-estate market by tabelofert.pl, now is a very good time to be a developer here. Its research says that the current shortfall in flats stands at a staggering 1.4 million. This means that in Poland for every flat that comes on the market, there are 3.4 people willing to buy it, which is much more than in other European countries, where the figure typically oscillates between 2.1 and 2.7. By 2020, the population is set to grow by eight percent, and the number of households by 28 percent, meaning that 120,000 flats will have to be built every year just to stop the gap between demand and supply widening even further.
Current new builds are less than half this figure, at 45,000 new flats completed per year. Warsaw is leading the market, with 10,300 flats completed in 2004. Tri-City had 3,069, Poznań had 2,400, 2,096 new apartments came on the market in Wrocław, and 4,477 flats in Krakow, which is the only town that recorded growth on 2003.
The economic situation is pulling in two directions. On one hand, there is a relatively stable economic situation in Poland and a slight increase in gross salaries and easily available loans. On the other, there are serious difficulties in getting construction permits and zoning plans. Gdynia was the worst town for new builds, with just 928 flats built last year, its worst level in seven years.
Even the jumping prices of flats, which are catching up with EU averages, do not deter people from hunting for new homes. In Warsaw, over 2004 the price per sqm grew by 11.5 per cent, and was zł.4,341 at the end of last year. Śródmieście remains the most expensive place to live, with one sqm worth zł.9,414. The cheapest district is Wesoła at zł.2,806 per sqm. At the end of 2004 average prices in other towns in Poland were zł.3,403 in Kraków, zł.3,500 in Poznań, zł.3,003 in Wrocław and zł.2,945 in Tri-City per sqm.
Breaking the market down further, there is a marked difference in demand for different categories of housing. Demand far exceeds supply for the cheapest flats, which sell for up to zł.2,500 per sqm. The most striking gap is in Tri-City, where the demand for flats at this level makes up 36 percent of the total number of buyers, but supply is just 13.5 percent of new buildings. In Warsaw and in Kraków the figures are respectively, 9.7 and 2.9, and five and one percent.
Due to a higher cost of living, and thus better salaries in Warsaw, more people can afford a flat at zł.3,500-4000 per sqm in the capital. Some 19 percent of buyers want a flat at this price, and have a 25.5 percent supply level to choose from. The disparity is much more astounding in other cities, such as Kraków, where the demand is 2.1 per cent and supply is 9.1 per cent, or Tri-City, where there is no demand for flats at this price level.
In Warsaw, most flats offered on the market are priced at zł.3,500-4,000 per sqm. These are also the most desired ones. Cheaper flats also enjoy quite an interest, but their share of supply is only 10 percent. Interestingly, apartments for more than zł.6,000 are more and more popular, and demand in this sector is level with supply not just in Warsaw. In Kraków, half of the newly built flats cost zł.2,500-3,000, and these are also most in demand. It is more and more difficult to buy a flat cheaper than this. This price bracket, however, is still available in Tri-City and flats at this cost are most in demand at the seaside.
The old favorites of Mokotów, Białołęka, and Ursynów continue to be the most popular areas in Warsaw. Wilanów is now the biggest building site in the city, and the supply at 14.9 percent is much higher than the demand (3.8 per cent).
A reverse situation is in Ursynów, which is very appealing to flat buyers, with demand being 19.3 per cent, but does not offer much with a supply of just nine percent. In Kraków, it is Krowodrza and Śródmieście that are most attractive to customers, in Poznań it is Piątkowo and Winogrady, and in Katowice it is Oś. Paderewskiego and Koszutka.
The real-estate market differs from town to town in Poland, with each region offering different conditions and advantages for the investors. Kraków has a robust rental market, as more and more students from abroad are coming to study at the oldest university in Poland.
Clients are also interested in buying old tenements to be repaired and rented. On the contrary, in Tri-City renting flats is not very popular. In Poznań there is a noticeable demand for older flats in bricked houses with convenient connections to the city center.
Warsaw is, indisputably, the leader on the market. The value of foreign capital in the city is estimated at several billion dollars. Some 25 percent of all foreign companies operating in Poland are based in Warsaw. Every fifth investment, out of 2,700 foreign investments exceeding $1 (zł.3.32) billion in Poland, is in the capital. Located in the center of the country, the city occupies first place as to the amount of direct foreign investment in Poland.
Developers will be on a roll in 2007 when the Value Added Tax will increase. For the time being, flats are being sold even in the very initial stage of construction, especially if the price is good and the location attractive.
