Residential: Enjoying the view, permits aside
Players in the residential sector, however, knew that things for them were certainly about to get worse before they improved after May 1, with sales falling by around 15-20 percent after accession.
The reason for this isn't particularly disturbing, however: home buyers simply made the reasonable calculation that apartment prices would shoot up after accession and therefore rushed to buy before the historic date. A temporary slump now is only to be expected.
In the longer term, some insist that the residential market, especially in Warsaw, is the one sector that will enjoy rapid growth in the coming years. A more stable economy, lowering interest rates and higher disposable income will encourage increasing numbers of people to invest in property for the first time. Compared to other European countries, there is also a lot of ground to make up, according to Peter Gage Morris, managing director of agents Ober Haus, because the total of outstanding mortgage loans in Poland, as a percentage of GDP, is only three percent. In the EU as a whole, that figure is 50 percent, and even in the nearby Czech Republic it is higher at five percent.
Changing attitudes towards borrowing, with Poland's maturation as a market economy, will also boost home ownership and so, perhaps more crucially, will the lighter financial burden that will accompany mortgage-lending. The low level of home-buying in this country was thought "to be because Polish people don't like to borrow," says Gage Morris, "but the real reason was because until a year ago, interest rates were 17 or 20 percent, and I wouldn't borrow at that rate either. Interest rates have dropped to five percent and that's pumping liquidity into the market."
If there is one hindrance to this potential growth, however, it's the difficulty developers in this sector currently experience when applying for building permits. They complain that the lack of a city-wide plan for Warsaw means that permits are often being issued on an ad hoc basis and are anyway taking far too long to process. The genuine concern of local officials is to prevent buildings that dwarf their surroundings from going up, but developers argue that this principle is applied inconsistently. "When we want to get building permission," says Paweł Rewis, director of the real estate division of developer Marvipol, "we of course have to consider the neighbourhood where we want to construct the project. On land close to ours, for example, there might be a building which is as tall as the one we want to build, but elsewhere nearby there is a small house and it is simply because of that that permission is often refused." He believes that this situation is so grave that, "in six months, there won't be any new apartments in Warsaw, and in a year and a half there could be a catastrophe on the market."
The building permit dilemma will become evermore pressing, it would seem, because in Warsaw there is growing demand for apartments with panoramic views, a richly ironic trend when we consider that during the largely unmissed Communist period, people had no choice but to live in high rise-blocks. Legoland areas, such as Ursynów or Białęka, are becoming increasingly popular among buyers, and a common view is that the equally vertical Żoliborz will attract money in the next few years to come. During the Cold War period, "living on the top floor was a problem," says Rewis, "because the lifts didn't work and there was no real difference in quality between the apartments on the lower and higher floors. Now, [in private developments] apartments on the top storeys are of the best standard and there are also working lifts and security. People are beginning to think about the view they can enjoy as well. If you can see the whole city from the highest floor in Ursynów, it's wonderful."
Rewis doesn't, however, believe that Warsaw can be described as a buyers' market just yet. "There are very few ready apartments on the primary market," he says, "and a number of developers still sell apartments in buildings which haven't yet been constructed." Insisting that Marvipol is not one of these, saying, "We don't sell apartments before we get building permission, because there's always the risk that this can take longer than expected," he adds that there are some projects in the city which have sold 80-85 percent of their space before the first brick has been laid. He maintains, however, that this somewhat unethical practice will have to come to a halt now that Poland is a member of the EU and will be forced to implement tighter regulations.
The reason for this isn't particularly disturbing, however: home buyers simply made the reasonable calculation that apartment prices would shoot up after accession and therefore rushed to buy before the historic date. A temporary slump now is only to be expected.
In the longer term, some insist that the residential market, especially in Warsaw, is the one sector that will enjoy rapid growth in the coming years. A more stable economy, lowering interest rates and higher disposable income will encourage increasing numbers of people to invest in property for the first time. Compared to other European countries, there is also a lot of ground to make up, according to Peter Gage Morris, managing director of agents Ober Haus, because the total of outstanding mortgage loans in Poland, as a percentage of GDP, is only three percent. In the EU as a whole, that figure is 50 percent, and even in the nearby Czech Republic it is higher at five percent.
Changing attitudes towards borrowing, with Poland's maturation as a market economy, will also boost home ownership and so, perhaps more crucially, will the lighter financial burden that will accompany mortgage-lending. The low level of home-buying in this country was thought "to be because Polish people don't like to borrow," says Gage Morris, "but the real reason was because until a year ago, interest rates were 17 or 20 percent, and I wouldn't borrow at that rate either. Interest rates have dropped to five percent and that's pumping liquidity into the market."
If there is one hindrance to this potential growth, however, it's the difficulty developers in this sector currently experience when applying for building permits. They complain that the lack of a city-wide plan for Warsaw means that permits are often being issued on an ad hoc basis and are anyway taking far too long to process. The genuine concern of local officials is to prevent buildings that dwarf their surroundings from going up, but developers argue that this principle is applied inconsistently. "When we want to get building permission," says Paweł Rewis, director of the real estate division of developer Marvipol, "we of course have to consider the neighbourhood where we want to construct the project. On land close to ours, for example, there might be a building which is as tall as the one we want to build, but elsewhere nearby there is a small house and it is simply because of that that permission is often refused." He believes that this situation is so grave that, "in six months, there won't be any new apartments in Warsaw, and in a year and a half there could be a catastrophe on the market."
The building permit dilemma will become evermore pressing, it would seem, because in Warsaw there is growing demand for apartments with panoramic views, a richly ironic trend when we consider that during the largely unmissed Communist period, people had no choice but to live in high rise-blocks. Legoland areas, such as Ursynów or Białęka, are becoming increasingly popular among buyers, and a common view is that the equally vertical Żoliborz will attract money in the next few years to come. During the Cold War period, "living on the top floor was a problem," says Rewis, "because the lifts didn't work and there was no real difference in quality between the apartments on the lower and higher floors. Now, [in private developments] apartments on the top storeys are of the best standard and there are also working lifts and security. People are beginning to think about the view they can enjoy as well. If you can see the whole city from the highest floor in Ursynów, it's wonderful."
Rewis doesn't, however, believe that Warsaw can be described as a buyers' market just yet. "There are very few ready apartments on the primary market," he says, "and a number of developers still sell apartments in buildings which haven't yet been constructed." Insisting that Marvipol is not one of these, saying, "We don't sell apartments before we get building permission, because there's always the risk that this can take longer than expected," he adds that there are some projects in the city which have sold 80-85 percent of their space before the first brick has been laid. He maintains, however, that this somewhat unethical practice will have to come to a halt now that Poland is a member of the EU and will be forced to implement tighter regulations.
