Luxury real estate with a good perspective of securing a part of the collected capital.
In the era of turbulence around the world, luxury real estate maintains stable demand. Złota 44, as a flagship example of this type of construction in Poland, noted record sales in the first half of 2020. The success in the first quarter of 2020 and sales of large space apartments in the second quarter directly translated into the high number of closed transactions and record value thereof. Attractiveness of the luxury market for potential buyers is mainly based on its stability and forecasts related to the systematic growth in value in consecutive years. In Warsaw, the offer of premium and luxury segments’ apartments decreased by over 11.6 percent was noted in the first quarter of 2020 (JLL, Report on the housing market for the 1st quarter of 2020) in comparison to the last quarter of 2019.
Post-crisis economic situation
The Citigroup research forecasting the GDP for 2020 implies that the expected decrease will achieve the limit of -5% in Poland and -3.3% in the USA. “The decrease in the GDP is stronger than in 2009, however, central banks have already come to the rescue and it is a significant liquidity support” says Maciej Pietraszkiewicz, the Director of the Counselling and Investment Funds Office of CITI Handlowy. The Polish industry is more diverse than the remaining part of Central Europe with regard to production sectors, allocation of export and sources or raw materials for production and thus, it should be less exposed to trade disturbances - as results from the report of the Emerging Europe Economics (Poland a regional bright spot).
Numerous assistance packages, interest rates’ reductions and loans for entrepreneurs are intended to help in emerging from the crisis. There are several variants. Marek Zuber, economist, financial markets analyst, financial expert and adviser, assesses the current situation: “I believe in the 5th variant of emerging from the crisis, which assumes a dynamic rebound” he says in the webinar organized by Złota 44.
The KPMG’s data indicates that in 2019, 115,000 persons in Poland managed assets worth over $1 million. It shows an almost 40 percent increase year to year. Poles are certainly distinguished with high investment potential, as well as they are characterized with risk aversion. A solution can be provided by the stable market of luxury real estate.
Investment in luxury real estate is calculated for long-term profit
Polish entrepreneurs that want to diversify their investment portfolio search for another opportunities to secure their capital, also those where the risk is minimized. Experts’ predictions assume a large share of luxury real estate in the range of investments.
“Global crises have not strained the market of luxury real estate too much. Evidently, this is the area of limited risk. What favors investment in the market of luxury real estate are certainly very low interest rates, which can remain for a long time, as well as investment attractiveness of the market in Poland and easiness of conducting business, which is confirmed by foreign giants, who chose the capital city as the business center for their investment” says Marek Zuber. As noticed by Paweł Sztejter, the Director of the Housing Department at JLL in 2019, over 4,000 flats more were sold in Warsaw than in London. „It results from the significantly higher purchase ability in comparison with Prague or Berlin in combination with a large deficit of flats” notices Sztejter and adds: “While asking why it is worth investing in luxury real estate in Warsaw, the answer seems to be obvious: in the recent years this segment showed an exceptional stability and purchasers of luxury flats depend on the economic fluctuations to a smaller extent. At the same time, this is a small segment – only approx. 3 percent of flats sold in Warsaw are apartments, including below 1 percent of true high-end luxury apartments of the highest quality and, furthermore, the number of planned luxury investments is significantly dropping.” Michał Skotnicki, the President of the Management Board of BBI Development SA, the President of the Management Board of Złota 44 adds that in the recent years prices for construction services have been dynamically increasing, therefore, new constructions that will be established in few years might be significantly more expensive.
Moreover, JLL analyzed changes in prices of luxury apartments in Warsaw. While applying the methodology of the Standard & Poor’s Case-Shiller index, JLL verified changes in the values of apartments over the last several years and compared transaction prices for specific apartments in the secondary market with the purchase price of an apartment in the primary market. The analysis showed that the value of luxury real estate has been growing in the recent years on average by 6.2 percent a year, and not uncommonly this increase exceeded 10 percent a year. Therefore, it is natural that investment in luxury real estate is calculated for long-term profits and the market is characterized with high stability and resilience to crises.
Quality of finishing works and definition of luxury
A luxury real estate is an interesting alternative investment, yet, it is worth knowing what characterizes true luxury. „This is 
primarily an excellent, central location, which guarantees access to the best schools and universities, common parts available for inhabitants and the highest quality of finishing materials” says Michał Skotnicki. Luxury often has the image of famous architects. In the case of Złota 44 this is the surname of Daniel Libeskind, world-famous designer, as well as Woods Bagot – renowned London workshop responsible for the interior design. Złota 44 spaces are finished with, among others, unique stone Valser from Vals in Switzerland – deposits located only in one place in the world. Common parts at Złota 44, which is the highest only housing building in the European Union, cover 1,400 sqm of roofed and 400 sqm of open terrace with a year-long jacuzzi. In the recreation space there is a 25-metre-long pool, a dry sauna, a steam bath, a massage room, a fully equipped gym, a cinema room with a golf simulator, as well as a business zone with a VIP lounge and conference rooms. Furthermore, a playroom for children is available. Luxury location is favorable for both businessmen and families with children. This is space which will satisfy the need for relaxation and rest, as well as mobilization and business. For entrepreneurs from other cities and towns and their families this can be their second home, a base for managing business and often it is the case. The luxury real estate is also characterized with unusual solutions. Złota 44 provides a cellar for wine aging with a tasting zone. In Europe only a few buildings offer such a service. Luxury likes ecology. The triple glazed façade of Złota 44 decreases energy consumption by 20 percent, electric cars have dedicated charging stations in the garage, air in the apartment building is filtered and water is filtered and treated. Złota 44 is naturally friendly for cyclists and offers a bicycle park. “Home Management System for remote management of the apartment, also from a mobile application, is a standard in luxury real estate. It is also the highest quality HVAC system with which each apartment has dedicated ventilation and air-conditioning ducts. Each apartment has tiltable windows ensuring access to outside air” underlines Michał Skotnicki and adds: “While comparing the region, it should be underlined that prices in Warsaw are lower even by half than in Prague. Investment in the capital city is decidedly an interesting alternative.”
