The dynamic trio
The latest research from King Sturge says that the smart residential money is in Warsaw, Kraków and Wrocław. The three towns have the most dynamic residential real-estate markets in Poland, and with the prospect of a VAT hike on residential purchases, demand is expected to remain strong for the next year.
Warsaw remains the residential market leader in Poland, says the report, and last year saw construction start on 10,300 new units, which is a 23-percent increase on 2004.
The most intensive development is concentrated on the left bank, mainly in the districts of Mokotów, Ursynów and Bemowo, which account for almost half the units currently under construction. However, some areas on the right bank have piqued investors' interest, including Praga Południe, Białołęka and Targówek.
The market was dominated by domestic developers, including Dom Development, JW Construction, Edbud, PIB Ebejot and Pekao Development. The most active foreign residential developers were Bouygues Immobilier, Viterra Development, Ghelamco, Maripol, Iona Investments and Robyg Development.
Perfect size
Small- and medium-sized projects are most in demand, with 40 percent of new developments containing less than 100 units. The 'Warsaw standard' is now almost ubiquitous - some 90 percent of developments come unfinished as standard.
Foreign purchasers are really making their presence felt, and deals involving western European investors buying 20-50 units at a time are now common. In general, prices in the capital grew by 10 to 20 percent, depending on location, while the most significant price jump was 30 percent in ródmiecie and Mokotów. The typical favorite size is from 50-65 sqm in standard developments, while higher standard projects are more popular when they are between 60 and 80 sqm.
Last year the market share of the lowest priced units (up to zł.3,600 per sqm) fell from 56 to 50 percent. An increase in the number of pricier apartments also lifted the average price. The highest net prices of zł.3,450-4,400 per sqm for unfinished units was in developments located in ródmiecie, Mokotów, Ochota, Żoliborz and Wola. In non-central areas the net price was zł.2,000-4,000 per sqm for unfinished apartments.
The jewel of Małopolska
Kraków is also proving a very dynamic market, with 2,900 units delivered in the city in 2005. A further 4,500 were under construction by the end of last year, the vast majority of which are due for completion in 2006.
The most intensive residential activity has been in the west of the city, especially in the Dębniki, Łagiewniki, Pršdnik Biały and Bronowice districts. Local developers dominate the market, and foreign investors are currently buying existing apartments and land plots for future development.
The most sought-after units are of 50 sqm in three to four-storey small developments in ródmiecie, Grzegórzki and Krowodrze. These type of apartments typically sell out at an early stage of construction or even off the plans.
Supply is falling behind demand, which is driving up prices. Last year saw unit prices increase by 10 to 20 percent, and prices are now at zł.2,400-5,100 for unfinished units and zł.3,500-6,000 for finished apartments. Some central locations have been asking for much higher prices of around e2-3,000 (zł.7,700-11,500) per sqm.
The Venice of Poland
Wrocław is also coming on strongly. Last year, some 3,120 new units were started, an increase of almost 70 percent on 2004, and 80 percent of supply was in just two districts: Krzyki and Fabryczna. Again, domestic developers dominate, with foreign investors now sniffing around land plots for residential development.
Wrocław is expected to enjoy a jobs boom in the next few years, which should fuel a surge in demand for housing, and net prices have already ratcheted up by 10-15 percent in the last year. The first high-specification schemes broke ground last year, and are priced at zł.3,700-6,300 per sqm. ródmiecie, Krzyki and Old Town are the most attractive locations.
