Should You Invest?
The 2006 study of potential capital appreciation over the next
ten years conducted on behalf of Channel Four's A Place in the Sun
concluded that Polish real estate could offer returns of 393% and
was ranked second after Romania. Although Poland does present a
good investment opportunity, it is unlikely that this level of
growth is attainable. GDP growth in 2006 was 5.3% and an overall
GDP growth of 50% is expected by 2010.
Major infrastructure improvements are improving access to the
country and air lines are increasing budget flights to popular
areas. Large blue chip companies are beginning to relocate to less
well known areas offering extensive job opportunities for
younger people. A new kind of buyer has therefore emerged and
the demand for new-build property is strong as young Polish
professionals find themselves in a position to buy for the first
time. As such, according to the Emerging Trends in Real Estate
Europe Report released jointly by the Urban Land Institute and
PriceWaterhouseCooper in 2006, Poland should show the largest
increase in residential sales across Europe. Transaction costs are
kept low which further increases Poland's attractiveness to the
potential investor.
- National property price boom in 2006 which saw prices
increasing faster than in any other country.
- Property offering steady capital appreciation of between 10 –
12 %.
- A predicted rise of over 50% in GDP growth by 2010.
- International accessibility simplifying thanks to major
improvements in airports and roads.
- Strong demand for new-build accommodation.
- Large blue-chip companies relocating to less well known areas
creating excellent job opportunities.
- Largest increase in residential sales across Europe .
- Low transaction costs and strong post-transition economy.
Rental Yields
The rule in Poland is either to buy new or old and avoid
anything in between. Large scale building programmes in the 1970s
and 1980s contributed to a massive increase in residential stock
however the quality of build was not high and as a result, over 60%
of the housing stock is now in need of repair.
Instead of investing in these unreliable properties, local
analysts instead suggest buying new build apartments or small
houses in the suburbs of major cities. These properties are
suitable for renting to Poland's growing middle classes and
expatriate communities and can return a reliable rental yield of
6%-7%.
Price History
Prices in Poland have been rising steadily this decade.
According to RICS' European Housing Review, capital appreciation
was close to 20% in 2002 and 2003 whilst prices rose by 10% in
2004. In 2005 growth hit 27% and topped 33% in 2006. Following The
Royal Institute of Chartered Surveyors' survey of 26 European
countries and their rates of house price growth, Poland was the
best performing country. Krakow is a city performing particularly
well and was named Europe's number one property hot spot in
February 2007 after its property prices rose by 58% in 2006.
Luxury apartments in historic buildings in the very centre of
Warsaw can now cost zl.10,000 – zl.20,000 per square metre whilst
studio flats designed for young professionals can be found from as
little as €60,000 (£42,000/$73,000). Three bedroom houses in the
suburbs cost about €145,000 rising to €300,000 for sizeable
properties in very good locations.
The introduction of an increased VAT rate from 7% to
22% levied on new-builds not deemed to be low-cost housing
from January 2008 was expected to create a spike in house prices at
the end of 2007 as people rushed to buy at the lower
prices.
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