Looking at the bigger picture
Perhaps investors in Polish real estate are not as mobile as those in the US, but they seem to have a good nose for an apt investment. The most prosperous ones probably realize that a successful investment is hugely dependent on the current situation and condition of a country's economy. So what are the telling economic factors that cannot be ignored while planning a real-estate purchase?
Ideally, the investor should recognize the economic cycle and adjust his operations to a given phase. Although, as Dariusz Klimkowicz from Certified Commercial Investment Member (CCIM), an industry training and advisory body, says: "In practice, it is impossible to predict market behavior in the long term," it is still better to follow economists' speculations rather than blindly undertake major decisions.
According to Dr. Iwona Foryś from the University of Szczecin, the favorable situation for investment in Poland is reflected in the high rates of return that are at a world level and take no more than 10 years. "I believe that the Polish market had gone over a whole trade cycle. The market was growing until the middle of 1995. In 1997 it faced recession, which lasted until 2002, when the number of transactions dramatically fell down. This was because the Treasury sold almost all of its best-selling real estate. Since that time, the Polish market is ascending again," she speculates.
Out of the four stages of the economic cycle, it is the recession phase that is the most lucrative for speculators. Investors are advised to purchase at low prices during economic downturns and wait for prices to go up again before selling the property for a handsome profit. After an economy reaches its critical low point it climbs up again. Theoretically, prices should go up slowly and empty apartments should gain new inhabitants. However, this is not always the case. "In Warsaw, the real-estate market responded to the recession phase with agitation. The danger that the empty areas would remain uninhabited made the rents go down, which resulted in a price war," says Dariusz Klimkowicz.
The best time for investments lasts until the economy is at its peak. In this period, when prices and rents are still on the rise and a construction boom takes place, it is better to sell what was purchased during the recession period, as prices will most probably fall soon. The peak is followed by a period of over-supply, as there is a lot of surface to be sold, prices are falling, as are the number of transactions. It is too late to sell and too early to buy.
"It is like in the case of the stock exchange. It is best to invest now, when the market is speeding up, not when it is on the top. The more so that as to real estate, the investment cycle lasts about two years," explains Foryś. "The problem with real estate is that we cannot sell it at any time we want, like shares on the stock exchange. We can only sell when somebody is interested," adds Klimkowicz.
Ideally, the investor should recognize the economic cycle and adjust his operations to a given phase. Although, as Dariusz Klimkowicz from Certified Commercial Investment Member (CCIM), an industry training and advisory body, says: "In practice, it is impossible to predict market behavior in the long term," it is still better to follow economists' speculations rather than blindly undertake major decisions.
According to Dr. Iwona Foryś from the University of Szczecin, the favorable situation for investment in Poland is reflected in the high rates of return that are at a world level and take no more than 10 years. "I believe that the Polish market had gone over a whole trade cycle. The market was growing until the middle of 1995. In 1997 it faced recession, which lasted until 2002, when the number of transactions dramatically fell down. This was because the Treasury sold almost all of its best-selling real estate. Since that time, the Polish market is ascending again," she speculates.
Out of the four stages of the economic cycle, it is the recession phase that is the most lucrative for speculators. Investors are advised to purchase at low prices during economic downturns and wait for prices to go up again before selling the property for a handsome profit. After an economy reaches its critical low point it climbs up again. Theoretically, prices should go up slowly and empty apartments should gain new inhabitants. However, this is not always the case. "In Warsaw, the real-estate market responded to the recession phase with agitation. The danger that the empty areas would remain uninhabited made the rents go down, which resulted in a price war," says Dariusz Klimkowicz.
The best time for investments lasts until the economy is at its peak. In this period, when prices and rents are still on the rise and a construction boom takes place, it is better to sell what was purchased during the recession period, as prices will most probably fall soon. The peak is followed by a period of over-supply, as there is a lot of surface to be sold, prices are falling, as are the number of transactions. It is too late to sell and too early to buy.
"It is like in the case of the stock exchange. It is best to invest now, when the market is speeding up, not when it is on the top. The more so that as to real estate, the investment cycle lasts about two years," explains Foryś. "The problem with real estate is that we cannot sell it at any time we want, like shares on the stock exchange. We can only sell when somebody is interested," adds Klimkowicz.
