Looking up for the regions
Indeed, prices are likely to follow a similar growth pattern to that which was experienced by earlier EU entrants, such as Ireland and Spain. In the next few years, it is expected that real estate prices will increase by 30 percent on average, but their growth will be very unevenly distributed throughout the country and will depend on factors such as location, levels of unemployment and local purchasing power.
Whilst major southern cities, such as Kraków and Katowice, should witness a marked increase in commercial real estate prices over the next few years, smaller towns in that region may only experience moderate growth. The eastern part of Poland, with its very high unemployment and the predominance of agriculture, may benefit the least from any increase, even though prices there are at the moment very low. Now Poland has joined the EU, the development of transport infrastructure, which will be financed from cohesion funds (and replace the ISPA program), may alter this situation in the long run, but the difference in property prices will remain.
Tomasz Trzósło, associate director of Jones Lang LaSalle Capital Markets, anticipates fruitful times for the office, commercial and warehouse sectors, as EU governing mechanisms will inevitably lead to greater political and economic balance in Poland. The increased stability of the Polish zloty will also decrease the exchange rate risk when Poland eventually joins the Eurozone, which will probably occur around 2009. Trzósło stressed, however, that commercial property prices have already been affected by the EU-accession factor to some extent, and any further growth would strongly depend on the potential increase of rents, as rental levels are the key driver of potential development. According to a post-integration feasibility study, conducted by the International Advisory Search for Trade & Finance (IAS & TF), the Eurozone will not make any major impact on real estate prices because by the time Poland enters it, the biggest wave of new investors will have already arrived.
Cities such as Poznań, Wrocław and Gdańsk may attract the majority of new investors coming to Poland, and the number of commercial properties there may increase by between 30-35 percent over this period. According to a survey conducted in Ireland by IAS & TF in March 2004, 15 percent of large Irish companies were interested in moving their operations to Poznań and its outer-lying areas after Polish accession. However, one of the obstacles limiting the development of the real estate market in the regions is the lack of a secondary market for mortgage loans.
According to Arkadiusz Nowosad, a real estate analyst from Wrocław, if Polish cities are to gain access to EU regenerative funds, revitalization legislation for cities will need to be passed so that Polish law is compatible with EU standards. But Wiesław Szczepański, deputy infrastructure minister, announced recently that any such law will be passed no sooner than the third quarter of 2004. Until then, Polish cities will have to look for other opportunities to develop themselves.
The inevitable harmonization of legislation, tax systems and employment rights will improve conditions for conducting business in Poland and give home-grown companies unlimited access to EU markets, but the strength of the Polish economy will be in the hands of Polish politicians. Provided that the current five percent growth in GDP can be sustained over the next few years and is propelled by new investment instead of exports, the real estate market will be among the greatest beneficiaries of EU membership. Should this happen, a 30-40 percent increase in commercial property prices is most likely to occur in Poznań, Wrocław and Gdańsk. Reduced unemployment and sensible legislation on revitalization should also contribute to the long-term growth of the whole real estate market in the regions.
Whilst major southern cities, such as Kraków and Katowice, should witness a marked increase in commercial real estate prices over the next few years, smaller towns in that region may only experience moderate growth. The eastern part of Poland, with its very high unemployment and the predominance of agriculture, may benefit the least from any increase, even though prices there are at the moment very low. Now Poland has joined the EU, the development of transport infrastructure, which will be financed from cohesion funds (and replace the ISPA program), may alter this situation in the long run, but the difference in property prices will remain.
Tomasz Trzósło, associate director of Jones Lang LaSalle Capital Markets, anticipates fruitful times for the office, commercial and warehouse sectors, as EU governing mechanisms will inevitably lead to greater political and economic balance in Poland. The increased stability of the Polish zloty will also decrease the exchange rate risk when Poland eventually joins the Eurozone, which will probably occur around 2009. Trzósło stressed, however, that commercial property prices have already been affected by the EU-accession factor to some extent, and any further growth would strongly depend on the potential increase of rents, as rental levels are the key driver of potential development. According to a post-integration feasibility study, conducted by the International Advisory Search for Trade & Finance (IAS & TF), the Eurozone will not make any major impact on real estate prices because by the time Poland enters it, the biggest wave of new investors will have already arrived.
Cities such as Poznań, Wrocław and Gdańsk may attract the majority of new investors coming to Poland, and the number of commercial properties there may increase by between 30-35 percent over this period. According to a survey conducted in Ireland by IAS & TF in March 2004, 15 percent of large Irish companies were interested in moving their operations to Poznań and its outer-lying areas after Polish accession. However, one of the obstacles limiting the development of the real estate market in the regions is the lack of a secondary market for mortgage loans.
According to Arkadiusz Nowosad, a real estate analyst from Wrocław, if Polish cities are to gain access to EU regenerative funds, revitalization legislation for cities will need to be passed so that Polish law is compatible with EU standards. But Wiesław Szczepański, deputy infrastructure minister, announced recently that any such law will be passed no sooner than the third quarter of 2004. Until then, Polish cities will have to look for other opportunities to develop themselves.
The inevitable harmonization of legislation, tax systems and employment rights will improve conditions for conducting business in Poland and give home-grown companies unlimited access to EU markets, but the strength of the Polish economy will be in the hands of Polish politicians. Provided that the current five percent growth in GDP can be sustained over the next few years and is propelled by new investment instead of exports, the real estate market will be among the greatest beneficiaries of EU membership. Should this happen, a 30-40 percent increase in commercial property prices is most likely to occur in Poznań, Wrocław and Gdańsk. Reduced unemployment and sensible legislation on revitalization should also contribute to the long-term growth of the whole real estate market in the regions.
