Warsaw residential market update
The downward trend observed in residential construction in 2002, continued in 2003 and there was indeed a further decline. Apporximately 13,400 multi-family residential units were delivered to the market, which was over 20 percent less that the record number of 16,200 units built in 2001 and the figures for the last quarter of 2003 suggest that new housing supply is likely to remain at a low but stable level in the short term. Out of approximately 19,700 units currently under construction in Warsaw, 60 percent are scheduled for completion in 2004. Planning issues such as the lack of local plans for many areas of the city may lead to supply shortfalls.
However, there are signs of increased market activity, as the number of building permits granted in Warsaw, from January to September 2003, was 11 percent higher than in the same period of the previous year and Knight Frank research shows that almost sixty schemes were at the advanced planning stage in the fourth quarter of 2003.
Construction has increased in the Białołęka and Ursynów districts of the city, and this accounts for 38 percent of new supply, although this is a declining trend. Next was the Mokotów district, where the market has evolved steadily and this is likely to continue. The Praga and Bemowo areas are also considered attractive.
Developers are increasingly dominating the residential market and the input from housing cooperatives is decreasing. Private developers are expected to deliver almost 74 percent of the projected supply. Large Polish developers and Israeli and German firms dominate the market.
Warsaw has become a buyers' market in the past three years and the imbalance between supply and demand has meant that take-up has often been prolonged to twelve to eighteen months after project delivery, though prices have not been significantly affected. Customers have also become more aware of risk, as far as developers' failures or delays in project completion are concerned, which means that only a small number of units are sold before the shell and core stage. Those units most in demand are either in recently completed schemes or at the final stages of construction.
Demand increases have recently been driven by favorable mortgage conditions. Falling interest rates and the expansion of the letting market and rental decreases in the popular residential market segments, often put mortgage repayments at comparable levels to monthly rents, for units of a similar size. The last six months of 2003 also witnessed more transactions, because of the forthcoming increase in VAT on construction materials from seven to 22 percent in May 2004.
With the exception of high-end buyers, there are no typical customers in the Warsaw residential market, as it is still developing. Units of 45 to 60 square meters are most in demand.
Throughout the first half of 2003, prices remained relatively stable, with some observable growth towards the end of the year. Those apartments being sold at the minimum price of zł.3,564-4,356 ($900-1,000) per square meter, have significantly increased their market share compared to 2002, while that of units costing less than zł.3,564 ($900) per square meter has fallen over 17 percent. The lowest prices are to be found in suburbs such as Białołeka, Ursus and Targówek. Any units going for more than zł.3,960 ($1000) square meter outside the city center, tend to be concentrated in Ursynów. The highest prices - over zł.5,148 ($1.300) per square meter - are located in places such as Mokotów, Śródmieście or Żoliborz.
However, there are signs of increased market activity, as the number of building permits granted in Warsaw, from January to September 2003, was 11 percent higher than in the same period of the previous year and Knight Frank research shows that almost sixty schemes were at the advanced planning stage in the fourth quarter of 2003.
Construction has increased in the Białołęka and Ursynów districts of the city, and this accounts for 38 percent of new supply, although this is a declining trend. Next was the Mokotów district, where the market has evolved steadily and this is likely to continue. The Praga and Bemowo areas are also considered attractive.
Developers are increasingly dominating the residential market and the input from housing cooperatives is decreasing. Private developers are expected to deliver almost 74 percent of the projected supply. Large Polish developers and Israeli and German firms dominate the market.
Warsaw has become a buyers' market in the past three years and the imbalance between supply and demand has meant that take-up has often been prolonged to twelve to eighteen months after project delivery, though prices have not been significantly affected. Customers have also become more aware of risk, as far as developers' failures or delays in project completion are concerned, which means that only a small number of units are sold before the shell and core stage. Those units most in demand are either in recently completed schemes or at the final stages of construction.
Demand increases have recently been driven by favorable mortgage conditions. Falling interest rates and the expansion of the letting market and rental decreases in the popular residential market segments, often put mortgage repayments at comparable levels to monthly rents, for units of a similar size. The last six months of 2003 also witnessed more transactions, because of the forthcoming increase in VAT on construction materials from seven to 22 percent in May 2004.
With the exception of high-end buyers, there are no typical customers in the Warsaw residential market, as it is still developing. Units of 45 to 60 square meters are most in demand.
Throughout the first half of 2003, prices remained relatively stable, with some observable growth towards the end of the year. Those apartments being sold at the minimum price of zł.3,564-4,356 ($900-1,000) per square meter, have significantly increased their market share compared to 2002, while that of units costing less than zł.3,564 ($900) per square meter has fallen over 17 percent. The lowest prices are to be found in suburbs such as Białołeka, Ursus and Targówek. Any units going for more than zł.3,960 ($1000) square meter outside the city center, tend to be concentrated in Ursynów. The highest prices - over zł.5,148 ($1.300) per square meter - are located in places such as Mokotów, Śródmieście or Żoliborz.
