Property forecast 2008

"Real estate agencies are speaking of a standstill, and the difference between offer and transaction prices is growing," said Kazimierz Kirejczyk, president of REAS, a real estate consultancy group. "Developers were surprised not so much by a slowed-down sales pace in the summer, but rather by the lack of clear acceleration occurring in the autumn."

"The average price per sqm across Polish cities is currently zł.7,600," stated Anna Kwiatkowska, head of residential property at Cushman & Wakefield. Kwiatkowska didn't expect this figure to change significantly in 2008.

Stability and caution

The stabilization experienced in most of Poland's major markets has been attributed to an increase of supply last year - the highest level the market has seen in seven years. In 2007, there were 130,000 residential units delivered and up to 170,000 new units will be under construction this year. However, uptake at the end of last year was limited by caution and uncertainty on the part of investors.

Kirejczyk does foresee increased interest in the low-end segment over the next year, as developers find more expensive apartments in non-central locations harder to sell.

"This may result in the expansion of locations near Warsaw, such as Lesznowola, Ożarów or Raszyn, where cheaper offers may appear," said Kirejczyk. While he remarked that an increased market share for the low-end segment could lead to a drop in average price indices, it will not necessarily have an impact on prices in the downtown area of Warsaw.

Optimistic opinions

While the market in the capital shows no signs of reigniting soon, Kirejczyk cited Katowice and Poznań as among the most promising big cities for real estate investment, with promising price indices that exceed zł.8,000 per sqm and are likely to rise further. However, this increase is based in large part on the supply of luxury apartments in those areas. Kirejczyk stated the market is also observing "a certain revival in cities with a population between 100,000 and 500,000," including Olsztyn, Białystok, Bydgoszcz and Lublin.

Recent data from research firm ASM also provided an optimistic forecast for the construction market, predicting growth of up to 11 percent this year.