Metro developments
Drawing on lessons learned from the first line of the subway, long-neglected areas of the capital look ripe for development. Not all is certain, however, especially since work continues on the first subway line, more than two decades after it began.
Anywhere in the world, construction of a subway network constitutes an important stimulus to real estate investment and boosts its host city's prestige. The subway stations enhance their areas' attractiveness and lead to a concentration of residential development.
This has proven true in Warsaw's case, as well. Completion of consecutive segments of the city's first subway line has shaped apartment prices and transformed whole neighborhoods. With the second subway line now on the drawing board, new districts are set to experience a faster pace of development.
From farms to flats
Construction of Warsaw's first subway line was started in 1983 and its first section was completed in 1995. The investment had an immediate impact on the residential market in areas neighboring the stations. The scale of change could best be seen in the case of the southern part of the Ursynów district.
Back in the 1980s, Kabaty, which today hosts the southern terminus station of the north-south line, was associated with farmland rather than residential complexes. Since then, the location has seen a flurry of development and evolved into a densely developed middle-class district. According to a report by real estate website Oferty.net, in Q4 2007 Ursynów was among the most expensive locations in Warsaw for renters, with the average monthly rate for a single-room flat amounting to zł.1,504.
Bielany's makeover
A similar process is now expected with regard to the line's northern end. As construction of the subway advances into Warsaw's Bielany district, developers are ramping up efforts in the area. Firms such as Grupo Lar, Lubasa, Volumetric MK Polska and Bukowińska Development have already announced plans to build residential complexes in the vicinity of the Wawrzyszew and Młociny subway stations. Many more investments could spring up soon, as Bielany still offers hundreds of hectares of undeveloped and post-industrial land.
"Developers' interest in the Bielany district has been visible for a couple of years now. New investments are springing up further and further north as the contruction of the subway line progresses and they actually tend to precede the completion of particular subway stations," said Kazimierz Kirejczyk, president of REAS, a consulting company on the CEE residential market.
The subway's arrival in Bielany has also affected the prices of already developed real estate. According to the Oferty.net report, apartment prices on the secondary market in the district increased by 16.44 percent over the last year, compared to 11.45 percent for the whole of Warsaw.
The next success story?
The pattern of development seen in the case of Warsaw's first subway line could be replicated in the case of the second. This time, though, the long-neglected districts of Wola, Praga Północ and Praga Południe are set to receive some attention, as are the more distant areas of Bemowo and Targówek. Although the exact location of the new line's stations is still under discussion, the investment seems certain to have a strong impact on the areas lying along it.
For the relatively poor districts of Wola, Praga Północ and Praga Południe, the projected subway line represents a chance at revitalization and new investments. Although more appealing to businesses and artists in recent years, the districts are still widely associated with their industrial past and poverty. City authorities hope the new line will bring some prestige to those parts of the capital and spur economic development.
Among the outlying areas to receive a new subway station, Bemowo's Chrzanów area in particular has the potential to experience a transformation on par with that of Kabaty. Located near the western end of the projected line, Chrzanów offers plenty of room for investments and could accomodate thousands of new apartments.
"In the longer-term perspective, that part of the Bemowo district could see intensive residential development. In a way, it actually resembles Kabaty, with a large area available for development and easy access to huge green areas," said Krzysztof Jarocki, a property appraiser with consultancy King Sturge. "Better still, Chrzanów lies relatively close to the city center," he added.
According to Kirejczyk, however, construction of the second subway line is coming at a time when the boom on the real estate market seems to be fading, so its exact impact will be harder to assess. Moreover, the development of the Praga districts will also be influenced by other factors, such as the construction of the National Stadium, he pointed out. Nevertheless, as Jarocki stressed, large developers are already taking plots along the projected line into consideration in developing their land portfolios.
At a snail's pace
Any forecast for residential development along Warsaw's subway lines is complicated by the fact that construction has been moving at a snail's pace. The first line has been under construction for over two decades now and is expected to be completed later this year. Nevertheless, investors appear fairly upbeat about the project. As analysts point out, new factors should make construction of the second line considerably quicker.
"Developers do feel some skepticism about the pace at which Warsaw's subway network is being constructed. On the other hand, however, they believe that the city's preparations for the Euro 2012 soccer championships will make it necessary to meet deadlines and that the second subway line is thus bound to be built faster than the first one," said Kirejczyk.
