Real estate engines
The real-estate sector is a reflection of a country's economy, specialists say. If so, there's good news for Poland's economy. All sectors of the real-estate market in Poland are on the up, with total investment in Poland's real-estate market in 2005 reaching almost EUR 2.6 (zł.10.6) billion.
The biggest transactions have come in the retail market zł.6.5 billion, and the residential market is developing at full tilt, supported, at least to some extent, by initiatives from the government, which used the famous "three million flats in eight years" slogan in its parliamentary election campaign. With almost 380,000 sqm in office transactions in Warsaw alone, the office sector also has great prospects. Although industrial real estate has had somewhat marginal success compared to other sectors, warehouse space is expected to double in the upcoming years.
Despite the rocketing prices on the residential market, Poland still remains the country with the lowest housing property prices in Europe. The growth of real-estate financing in Poland is one of the highest in the world - 2005 saw a 60-percent increase in mortgages granted compared to 2004. The share of real-estate business activity in the country's GDP is considerable, reaching as high as 25 percent in some regions.
As the real-estate market is sensitive to overall economic health, players on the property market should keep a close eye on indicators such as currency risk and interest rates. Lease rates, for example, are settled and paid in foreign currency, and currency rates have substantial influence on mortgage costs. Experts also point to the country's finances as a potential danger to the real-estate market in Poland. "An excess of the budget is being spent on social outlays, including pensions and insurance, as well as agriculture," said the chief economist of PKO BP, Łukasz Tarnawa.
Analysts also advise Polish real-estate investors to view the market on a global scale. "We have to observe what is happening abroad," says Tarnawa. "The scale of price increase on the real-estate market in the US is very big. Should a crisis occur there, it will influence Poland," said Jacek Łaszak, an adviser to the president of Poland's central bank.
The size of the Polish real-estate market, together with low interest rates, have put investors at ease. While office investments are concentrated in Warsaw, other regions are often preferable when it comes to the retail and warehouse markets. Warsaw, however, is also tempting for developers, with flat prices leveling up to EU averages. It is also growing in popularity for foreigners buying apartments for investment and speculation.
