Poznań's fortune
When prices for residential property failed to stage a swift revival last fall after the summer slowdown, investors realized that Poland's frenzied residential market had finally begun to settle across many major cities. Forecasts show that Warsaw, Gdańsk and Wrocław shouldn't expect to see more than a five-percent rise in residential prices in 2008, leading investors to look to cities like Katowice and Poznań, which are expected to see growth as high as 10-15 percent over the same period.
While Katowice, the center of Poland's largest agglomeration, is hailed as a strong player in terms of residential and industrial development, a number of industry insiders are banking on Poznań and its potential, both regionally and nationally, as a well-placed residential, business and academic hub.
As Poland's second-biggest financial center after Warsaw, Poznań plays a significant role in the country's economic development. The city is among Poland's top three academic centers, boasting a large student population, and serving as a vital international-trade-fair destination mid-way along the route between Warsaw and Berlin. Its role as one of the host cities for the Euro 2012 soccer championship is another factor that will contribute to increased investment activity in the years leading up the games and beyond.
Shifting focus
"In the first half of 2007, a continued growth trend in prices in the residential sector was observed and Poznań saw the fastest rise in prices - 80-percent growth," remarked Anna Kwiatkowska, head of residential real estate at Cushman & Wakefield. "The second half of the year produced a relative slowdown in growth rates, with prices settling at around zł.7,300 per sqm," she added. Figures from Rednet Property Group reported an average price of zł.7,685 per sqm in October - a five-percent increase on the previous month. In Warsaw, meanwhile, an average price per sqm of zł.8,601 in October indicated a drop of 1.82 percent, m/m.
According to Kwiatkowska, while Poznań is in fourth place in terms of new homes delivered, the high demand for housing in and around the city won't subside for at least another decade.
Paweł Bugajny, chairman of the board at the Polish Association of Development Companies (PZFD) and president of Trust, a Poznań-based development company, believes strongly in Poznań's potential to generate prices comparable to those in Warsaw in as little as two years. "The stability of the market across the country, combined with the imminent saturation of the Warsaw and Wrocław markets, will mean that a substantial portion of new investments will be located in the Wielkopolska region - and Poznań in particular."
Bugajny agreed that the city's large student population provides a strong client base for family housing and pointed to statistics indicating that the majority of Poznań's students end up settling permanently in the city after completing their studies, regardless of where they come from. Most of them live in private studio apartments while they are studying but typically move into a larger high-standard new apartments once they start working full time and planning a family. According to Cushman & Wakefield's Kwiatkowska, 80 percent of prospective home buyers in Poznań are seeking apartments between 46 and 60 sqm.
"Attaining a higher standard of living is part of the changing social model of the family in Poland," remarked Bugajny. "In addition, rising incomes - and the improving credit worthiness associated with them - are driving the property market. Other studies have shown that the Wielkopolska region has quite a positive rating with regard to timely payments, as compared with other regions, which I believe is proof of the good conditions for companies involved in the market overall," he added.
Residential proliferation
New residential projects are springing up all around the city. Poznań's historic Old Town district, for example, will see the development of a number of individual buildings, along with the revitalization of historic townhouses. Kwiatkowska noted that the Marcelin and Naramowice districts are prime areas for larger-scale new development projects. Developer Trust currently has seven high-standard residential projects under development throughout the city, ranging in size from 50 to over 200 sqm in area. These properties are often located outside of the city center, close to green areas such as the Żurawiniec nature reserve.
Among the city's most high-profile projects are City Park and Maraton Gardens. City Park, managed by a special purpose vehicle set up by investment group Konkret, is in the final phases of development. The luxury property comprises three buildings of a revitalized early nineteenth-century property located in a lush park in the city center. Apartments, which range between 40 and 600 sqm, are priced from zł.6,900-8,200 per sqm and are scheduled for delivery by the end of this month.
This past summer, Von der Heyden Group (VdHG) initialized its EUR 15 (zł.54) million residential investment at the crossing of ul. Królowej Jadwigii, ul. Maratońska and ul. Olimpijska. The residential complex will offer 251 apartments in six individual buildings, along with underground parking for 300 vehicles on a plot measuring 22,332 sqm in total.
In June, the entire project was sold to the Spanish developer Restaura. VdHG executives have said they will use the proceeds from the sale to develop subsequent stages of their Pl. Anders project - Andersia Front Office and Andersia Silver - centered around the Andersia hotel and office tower.
Beyond the basics
It's not just the residential and office markets that are seeing an increase in activity. Infrastructure development in and around the city is a top priority for government officials in charge of building all the thousands of kilometers of road which Poland needs so desperately.
Developers still encounter a number of problems when cooperating with local authorities - particularly with regard to developments in unzoned districts of the city where they need to set up their own infrastructure - but companies are more frequently looking towards the European courts for support when the details of fiscal responsibility get murky.
The city will also see a new railway station, with Spanish architect Santiago Calatrava, known for the design of Lyon's main railway station in France, expected to have a hand in the project. But let it be noted that Poznań is concerned with aesthetics as well as infrastructure - Fortis investor Grażyna Kulczyk is involved in creating a project for a new contemporary art museum in the city. Kulczyk has reportedly invited famed Japanese architect Tadao Ando to collaborate on the building's design, which will be located by Fortis' Stary Browar shopping and cultural center.
