Desirable residence
Due to its location and proximity to the western border, Poznań, with its population of 577,000, has become extremely attractive for logistics and manufacturing companies. As one might expect, many of them come from Germany, such as Volkswagen and Beiersdorf. The capital of the Wielkopolskie region can also boast a significant contribution to increasing business ties with Western Europe through its developed banking sector, trade gatherings (including the Poznań International Fair) and transport facilities such as the international Ławica airport and the immense railway junction Franowo. The highly absorbent market of over 800,000 inhabitants in the city and surrounding areas creates attractive investment opportunities in all real-estate sectors.
Bread and circuses
"In our high schools we have more than 130,000 students. The question is what to do to keep these young, highly educated people in Poznań. In ancient Rome, people needed bread and circuses and I think nothing has changed. Young people need bread, but when you say bread now you mean new flats, with attractive [mortgage] offers from banks," the Deputy Mayor of Poznań, Jerzy Stępień, told WBJ at MIPIM 2006. Investment opportunities in Poznań's local residential market were presented through a detailed report on the sector. "We wanted to present Poznań in a pragmatic and detailed way. That is why we prepared a thorough residential market report," explains Janusz Krysiak from the city's department of promotion.
"We need more than 4,000 residential units in the next five years, which means about 20,000 flats," estimates Stępień. Due to the fact that 60 percent of Poznań's students were born outside the city and need to find a place to live locally, it is estimated that around 5,000 students plan to buy a flat. Indeed, specialists say that due to the significant supply deficit, the residential market has the biggest potential of all the city's real-estate sectors.
Price picture
Recently Poznań has seen a steady growth in average transaction prices on the residential market. Interestingly, prices differ as to the attractiveness of the apartment's location more than as to its standard. The most expensive dwellings can be found in such districts as Jeżyce and Grunwald, whereas Wilda is the cheapest location. The highest price recorded on Poznań's residential market was zł.5,000 per sqm, whereas the cheapest flats were available for zł.2,568.
Krysiak says that Poznań has attractive locations for residential investment, particularly in the suburban areas such as Strzeszyn and Szczepankowo, as well as in the northern part of the city.
Although the residential market in Poznań offers excellent opportunities, especially due to unsatisfied demand and easy access to financing resources, the local authorities admit that some problems cannot be avoided. Among them are a low level of competition on the market and lack of spatial development plans.
In bloom
Poznań's retail market is one of the fastest developing retail markets in Poland. A number of shopping centers in Poznań have a surface area of over 15,000 sqm, such as Stary Browar, Poznań Plaza and King Cross Marcelin. At the end of 2005 the total modern retail stock in Poznań was 428,000 sqm. In 2005 the new supply reached the highest level since 1994 and was 110,000 sqm, the majority - 86,000 sqm - concentrated in two major projects: King Cross Marcelin and Poznań Plaza.
King Cross Marcelin opened in April 2005 and is now the biggest retail center in Poznań. Developed by Casino Group and Poznań Żonkil, it is located in the western part of the city on ul. Bukowska. Now the center is fully leased with rents at EUR 30-35 (zł.119-139) per sqm a month. Poznań Plaza in turn, which opened in May last year, is the first third-generation shopping center (combining shopping and leisure) in the region. With nine cinema rooms and an Imax theater, the project cost EUR 60 (zł.237) million and was sold as part of Plaza Center's portfolio to the French Company Klepierre at a yield of eight percent. With high market saturation (1.22 sqm per capita) Poznań's retail sector remains less attractive than the residential market as far as investment prospects are concerned.
The weakest link
The office space market is Poznań's Achilles' heel. A few years ago the city was the second-fastest developing office market in the country, but since 2003, when supply was at record-breaking levels, no more modern office buildings have been completed. Specialists claim that investors seem to be waiting for demand growth and the introduction of new local planning. CB Richard Ellis predicts that demand for office space in Poznań might grow in the future due to the wave of business process offshoring (BPO) operators interested in investing in the region. Stępień also sees a chance in the high-technology service centers. "We have spoken with many very famous firms that have service centers in London, in Brussels, in Copenhagen, and we talk about how to move them from these cities to Poznań because we have highly-educated multilingual young people. It is our chance to keep the young people in Poznań, who give us new connections with the West with their high quality work," he says.
In all, Poznań's representatives at MIPIM had 62 meetings with companies potentially interested in investing in the city. "These were mainly representatives of the construction sector, advanced technologies, hospitality, leisure and logistics," reports Krysiak, pointing out that investors are now less interested in developing shopping centers.
"We presented 14 offers from Poznań and the whole urban area," Krysiak adds, explaining that it is not the presentation of detailed offers that is important, but making investors realize that opportunities are waiting for them in Poznań.
