From rags to riches

With this in mind, developers have begun investing in old tenements or post-industrial areas and transforming them into new, posh apartments located in the heart of the city.

Already very popular abroad, especially in large European cities such as Paris and London, where the supply of empty plots in the city center is very limited, the revitalization of old tenements and post-industrial areas is making a splash in Polish cities. Developments such as Rezydencja Foksal, Mokotowska 59, Złota 44, Rezydencja na Wspólnej in Warsaw, and U Scheiblera in Łódź are just a few examples of the latest building fashion.

Across Poland there are areas with old, frequently deserted tenements that scar the cities' landscapes. Towns have much to gain from such redevelopment projects, as they revitalize downtown areas that over the years have lost their glamor and sometimes even their good reputation. Now, many such buildings have been fully refurbished and restored to their former glory. By renovating old tenements, developers get access to a prime location. Usually the refurbished complexes offer a small number of apartments, but there are also projects such as U Scheiblera, which will provide about 400 luxurious lofts.

Difficult operation

Buildings with individual historic charm have their admirers everywhere, but it takes a hefty chunk of both time and money to complete these revitalization projects. The ownership structure of an old building is often very complicated (if it's in private hands) and there may also be claims registered on such properties (if they belong to the city).

"It's not easy to purchase such buildings [because there are] many legal complications. Old houses usually have tenants that need to be relocated before you really start the construction works. You never know what surprises are hidden below the old plaster, so you must budget for large 'unexpected' costs. The buildings are often listed or under the supervision of the conservator's office, so there are certain architectural restrictions. It's very difficult to organize a construction site in the crowded and often narrow streets of a city center," says Meir Stambler, the president of Maripol.

Jacek Żurawski from Yareal says that the developer has to take into account the fact that frequently works are done next door to existing tenements, and not on a large plot. Joanna Napieraj-Berlińska from Opal Property Developments (OPD) adds that such works have to meet additional security requirements.

"Before the construction is launched the investor  has to carry out historical and architechtural explorations, then it is obliged to act according to the advice given by the conservator's office. Finally, the developer has to use materials and technologies that will not destroy the structure of the historical building. These non-standard solutions bring additional costs," says Napieraj-Berlińska.

Jeroen van der Toolen, managing director at Ghelamco, believes it's cheaper to build a new building than to renovate and renew an existing building, which also takes more time. Jean-Claude Moustacakis from Orco Group says that luxury projects need to provide a luxurious standard, as expected by future tenants. All this makes such investments more expensive than developing budget-standard investments.

Urban lifestyle

Cities, especially in this region of Europe, are developing very quickly. People are becoming more active, more mobile, and they also expect more from a city's architecture.

"Such complexes perfectly fit the lifestyle of today's city dwellers and that is why we believe they can only be seen in a positive way. People like to live in buildings with character in nice locations," says Ghelamco's van der Toolen.

He adds that such historic projects are popular because they often provide excellent quality amenities, such as swimming pools, small gyms and parking, which are difficult to find in many current city-center projects. Therefore, developers do what they can to provide the largest number of facilities. In such complexes, prospective residents can take advantage of a whole range of benefits offered by the city, including having parks, restaurants and the trendiest clubs in close proximity.

Expensive tastes

"The typical customer [for such apartments] has a very active lifestyle, travels a lot and is focused on his or her career. Therefore, in private life, our potential customer wants to be surrounded by high quality, luxury goods and high-standard amenities to make his or her private life comfortable. He knows exactly what he expects, and we are aware of the fact that we need to provide top quality to meet his or her expectations," says Orco Group's Moustacakis.

U Scheiblera has already attracted over 500 prospective buyers, including artists, architects, managers, politicians and university professors, although the sale of apartments won't start until July. Some customers are buying the apartments as an investment, and some are just attracted by the impressive, downtown address. Other, such as lawyers, intend to use the apartments as offices.

Baby steps

Kazimierz Kirejczyk, president of REAS Consulting, says that this niche market is still too small compared to new developments. "It is such a narrow market, we aren't analyzing it yet. So far it was about 200 apartments per year. Whether it will change depends on the specific city," adds Kirejczyk.

Ghelamco's van der Toolen agrees that there are not many such developments existing in Warsaw, but sees growth. "Five years ago people wanted to live in new, modern buildings. Now more and more people are looking for historic buildings with character," says van der Toolen.

Maripol's Stambler says it is still too early to talk about a new trend: "This segment will become more and more interesting both for the developers and for the customers, because the available downtown locations are shrinking every day. Besides, there is a growing group of wealthy customers who are looking for something unique."