Late bloomer

Now however, this important city - with connections to both Germany and the Baltic - is seeing a massive boom in development

The capital of the Zachodniopomorskie voivodship and one of Poland's largest cities, Szczecin, with its 400,000-plus inhabitants, until recently seemed to be cut off from the success that much of the rest of the country had enjoyed.

For many years the city's authorities tried to distance themselves from Germany, eschewing the natural connections Szczecin has with its western neighbor. While most other large cities gradually developed, Szczecin suffered from a high unemployment rate due to the collapse of the shipbuilding industry, and the city's real estate market remained relatively stagnant. This resulted in a huge exodus as locals left to seek their fortunes elsewhere.

Except for minor investments in commercial and residential space, Szczecin has lacked new construction projects of every kind. Yet despite the undersupply, property prices did not rise.

Winds of change

Over the last two years, however, things have shown signs of changing. Following local government elections in 2006, Szczecin's new authorities made it a priority to raise the city's profile, using its unique location and the large number of plots available for investment, many of which are in the city center. This is leading to a major reconstruction of the city's central space.

"The time for Szczecin has come," said Piotr Krzystek, the mayor of Szczecin.

Katarzyna Pawlak, a valuation and research specialist at real estate consultancy Polish Properties, agreed that the city has potential. "Although Szczecin is similar to Wrocław or Gdańsk in terms of geographical size and population, the property market is not developed and resembles smaller cities like Rzeszów, Tarnów, Olsztyn or Koszalin," she told WBJ.

"Taking into account Szczecin's location - its proximity to Germany, direct ferry lines with Denmark and Sweden - and its demographic potential, we can certainly say that the city has strong economic potential," Pawlak said.

City strategy

To initiate change and improve the situation on the real estate market in Szczecin, the city prepared an urban planning strategy for the whole city. "Thanks to this strategy, it will be clear for everybody what should be built and where," said Mayor Krzystek.

Much of the city is now under construction. The Old Town, which was decimated during WWII, is being restored and revitalized with high-class tenements. In addition, a more-than 40-ha plot on the Oder River will be developed with an aim to create a new "heart" of the city. The value of the long-term project amounts to around EUR 5 (zł.17.9) billion.

"At the moment Szczecin has really low prices on property rental, as there was low demand for real estate and a high capitalization rate compared to other developed regional centers, such as Gdańsk, Wrocław or Poznań," Pawlak said. "A boom on the real estate market is expected to accompany municipal and regional development. Of course, higher prices and a lower capitalization rate will follow," she added. According to Pawlak, Szczecin will be the next large Polish city to see a period of fruitful development and now is the best moment to purchase real estate in Szczecin for future profit.

"Now developers and investors are leaving larger, developed cities in search of new investment areas in other cities where the real estate market is not as developed," she said.

Open for business

According to Mayor Krzystek's plans, the city of Szczecin will become a European service center. To realize this goal, a large amount of investment in office space is needed. According to the city authorities, Szczecin lacks around 135,000 sqm of office space. This is despite the fact that several office projects are currently under construction, like Echo Investment's nine-storey High Technology Center on ul. Malczewskiego and Koncepta's 40,000-sqm Baltic Business Park on ul. 1 Maja.

"Szczecin has great development potential and complies with the city authorities' policy [to develop the city] into a large center of new technologies and business," said Witold Jakubiec, the president of Koncepta, explaining firm's choice of the city.

Special offer

To encourage companies to build more office space in the Szczecin, City Hall has invited investors to apply for inclusion of their plots into the Kostrzyn-Słubice Special Economic Zone (K-SSSE). The offer is directed at those companies which are planning to provide Szczecin with class-A and B+ commercial and office space. "There are several companies interested in locating their accounting, IT, research or call centers in our city. The conveniences afforded by the SEZ will help construction of modern business parks, enabling Szczecin to become a significant service center in Europe," pointed out Krzystek.

Six companies, including Echo Investment and Koncepta, have applied for their projects to be included into the K-SSSE. Some of these projects are located in Szczecin's city center, since SEZs sometimes comprise several geographically distant areas. In order to qualify, a project must create at least 150 work places and/or involve an investment of at least EUR 5 (zł.17.9) million.

City Hall has also mooted the idea of creating a Szczecin Metropolitan Economic Area (SMOG) to expand cooperation with other significant cities near Szczecin. These include: Police, with its Police Chemical Plant; Kołbaskowo, where the border crossing to Germany is located; Stargard Szczeciński, second-largest city in the region; and Świnoujście, a seaport where there are plans for a liquidfied natural gas terminal. Solving problems concerning infrastructure, public transportation and waste management is likely to be easier within the SMOG, while opportunities for residential investment should also improve.

On track

To boost the development of Szczecin, several infrastructure investments are under construction, including a high-speed train connecting the city center with the Szczecin-Goleniów airport in Goleniów and a high-speed train connecting Szczecin with Berlin, which will reduce the journey between the two cities to around an hour. Moreover, the nearby S10 highway will connect the border and the Świnoujście and Szczecin seaports with Warsaw, via Stargard Szczeciński. The first phase of the S10 has already been completed.

Of course, all this makes the outlook for Szczecin optimistic, but city authorities know it won't happen on its own.

"The year 2008 will be crucial for Szczecin, but it will also be a year of really hard work," said Mayor Krzystek.