ZŁOTA 44 records further increase in transaction values

Increased interest in the luxury real estate market among investors during the pandemic proves that the segment is resistant to crises. The segment's flagship, ZŁOTA 44, has recorded further increases in the value of apartments sold. In the second quarter of 2021, that value increased by 28 percent compared to the previous maximum in the fourth quarter of 2020. ZŁOTA 44 closed the first half of 2021 with a result that was 83.5 percent higher than during the same period in 2020. Only about a dozen apartments remain available. 

Compared to other European capitals, the cost of a luxury apartment in Warsaw is still much lower. Although Warsaw is catching up with Prague, the supply in Poland remains limited. The share of luxury apartments is only about 1 percent and is shrinking rapidly.

According to JLL data, there has been a noticeable increase in the price of luxury apartments since 2015. Since the first quarter of that year, the average price of apartments sold on the Warsaw market increased by 79 percent. Over the last year alone, the average price of apartments in the luxury real estate segment in Warsaw increased by about 4 percent. The average price per square meter of apartments sold at Złota 44 also increased, and in the second quarter of 2021, this was 8 percent higher compared to the same period in 2020.

Price increases did not deter buyers. In recent years, even the most expensive apartments have found new owners. There is a growing group of Polish HNWI (high net worth individuals) and wealthy entrepreneurs, who have maintained or increased the value of their businesses during the pandemic. They are all looking for appropriate investments that will preserve capital and maintain their value during periods of rising inflation.

“In Poland, the demand for luxury real estate still comes from within the country. Our international experience shows that the next stage in the development of this segment may be the entry of foreign investors. In European capitals, most apartments are bought by foreign investors, who contribute significantly to the number of buyers. This stage is still ahead of us, as confirmed by JLL data. In the future, the scale of such a phenomenon may be revolutionary and result in a shift in the balance of power on the Polish investment market in the luxury real estate segment. Polish buyers are aware of this and are investing their capital now, while the price of a luxury property is still quite low and demand continues to come from within,” Clemens Lehr, Head of AMSTAR Europe, said.

According to an analysis conducted by JLL in 2020 using the Case-Shiller index methodology, the value of luxury real estate has grown on average by 6.2 percent per annum, and sometimes this increase has even exceeded 10 percent in a single year. The analysis drew upon data about transaction prices of selected properties on the secondary market compared with prices on the primary market. This stable increase in prices of luxury apartments on the Warsaw market has encouraged investment. Investors are choosing Warsaw over other Western European capitals because it is still a cheaper market.

"Currently, we are facing limited availability when it comes to luxury real estate products," Michał Skotnicki, President of the Management Board of BBI Development and Złota 44, said. 

"The demand for luxury goods is growing, and with it a group of affluent and very rich buyers, who carefully invest their capital. After Złota 44 is fully sold out, a comparable luxury investment may not be built for quite some time. It takes several years to develop a luxury apartment building, and each new investment will face rising costs in building materials. For example, the price of steel has already risen by 150 percent since last August. The construction of a residential tower demands a suitable location that meets the luxury criteria. It is no secret that land is limited in the center of Warsaw, and prices are rising,” Michał Skotnicki added.

(WBJ)