Luxury real estate segment remains immune to turbulence

Covid-19 pandemic did not have a large impact on the premium real estate market, which has been characterized by high stability and resistance to market turmoil for years. On the other hand, it is favored by a number of factors, such as the annual increase in the number of Poles who can afford to buy such real estate, as well as record low-interest rates and rising inflation, which makes it unprofitable for investors to keep cash in bank accounts or deposits. Importantly, in Poland, investment in luxury real estate is still much cheaper than in Western European markets.
The Covid-19 pandemic translated into declines in apartment sales but did not shake the premium real estate segment. For the richer group of Poles, these are a lucrative investment that does not lose its value. The market has developed dynamically in recent years, and the prices per square meter of luxury residences and apartments have also been steadily increasing.
"The mood in the industry is average due to high uncertainty. However, the transactions are still quite good and the current situation does not directly affect customers' purchasing decisions," Małgorzata Nowodworska, sales and marketing director at Angel Poland Group said.
As she emphasized, luxury real estate is resistant to recession. Their prices have been growing successively for years and do not succumb to market turbulences. In addition, they are bought by people with a wealthier wallet who do not want to keep cash on their account and invest it in real estate, without using bank loans.
"This market is immune to economic fluctuations because it is safe. Investing in real estate has been recognized as the safest capital investment for many years. Besides, we know very well that the most valuable assets are kept the longest, are sold last and their value increases the most. This means that this market has always been stable," Małgorzata Nowodworska added.
 According to the KPMG report The luxury goods market in Poland, last year the premium real estate market could be worth from PLN 1.4-3.8 billion, depending on the adopted definition of such property. Although this segment records good results on regional markets such as Tri-city and Kraków, Warsaw remains the most attractive in the eyes of investors. Last year, the capital market grew by 7-8 percent on an annual basis.
The average price per square meter of luxury real estate in Warsaw hovered around €6,500. Despite the dynamic development of the market, it is still significantly less than in Western European countries. For comparison, a square meter of a premium investment in Madrid costs €7,000, in Berlin €9,000, in Paris €15,000, and in London €18,000. This makes premium real estate in Poland attractive also from the point of view of foreign investors.
(Newseria)