Property : Pole in one
Plenty of development activity, a fast-growing tourism industry and cool new cities are all reasons to take a good look at Poland
BY SHANE MCGINLEY
Since Poland joined the EU in 2004, Poles have been crossing borders to find work, travel and see the world. Polish communities have become commonplace across Ireland, Britain and most of western Europe. But what most of us don’t know, is that Poland itself has become the fifth most-popular holiday destination on the Continent, after France, Spain, Italy and the UK, generating nearly €30 billion in tourist revenue. By 2012, Poland’s Institute of Tourism expects annual visitor numbers to top 20 million.
Incredible beaches along the Baltic coast, ski slopes in the Carpathian Mountains, Unesco
World Heritage Sites and buzzing cities are proving the big attractions for European tourists. The majority of these are German, which is not surprising as average incomes in Poland are about a fifth of Germany’s – making the country a bargain break destination that is also close by.
Poland will get a further boost in 2012 when, along with Ukraine, it will host the UEFA European Football Championship. Games are expected to take place in Chorzów, Warsaw, Poznan, Wroclaw, Gdansk and Krakow. Hosting such an event requires major development in infrastructure, and the EU has promised to pump €55 billion into the Polish economy between 2007 and 2013.
This EU support, combined with strong economic growth and direct foreign investment, has seen the Polish property market become one of the most dynamic in Europe. The UK’s Royal Institution of Chartered Surveyors (RICS) found that prices for new apartments in Warsaw and the major cities soared by 2.3 times their value during the first three years after Poland joined the EU.
However, the latest RICS report found that while overall price growth was 28% in 2007, the first part of the year was characterised by the normal high growth, whereas demand during the latter part of the year was hit by the changing global market and a slowing of growth. Polish agent Mamdom reported that in the first quarter of 2008 this readjustment was evident, and prices dropped by between 0.5% and 1.7% in the big cities, except for Gdansk where prices rose 1.3%.
The adjustments are down to an increase in stock in the big cities. A Knight Frank report found that supply increased by 70% in Krakow, 59% in Wroclaw, 38% in Warsaw, 22% in Poznan, and remained stagnant in Gdansk. However, the report also showed that there is still a shortfall of as many as 1.5 million units, and the latest RICS report also found that the situation very much depends on the type of property. The RICS found that apartments have seen the bulk of the readjustment, but houses are proving a better bet because they are still in short supply. For instance, house prices in Poznan actually rose by almost 11%.
In terms of the global credit crunch affecting the housing market the world over, the impact on Poland has not been as severe as many had feared. Polish lenders have always been prudent with their lending, and a University of Lodz analysis found that only 14% of Poles used mortgages. For those that do buy, smaller units of up to 60m2 have always been the most popular – something that will likely continue to be the case as interest rates rise.
However, economic activity is still strong in Poland, and new office and retail developments continue to be built in the big cities, creating more employees who in turn need accommodation. Some 62% of new office space was located in Warsaw, with Krakow and Wroclaw following on. While the capital opened one of the most prestigious shopping centres in Eastern Europe last year, Wroclaw saw the strongest growth with three massive new centres being built.
As with residential property, the trend with retail developers is to move out towards the smaller Polish cities and towns with populations of between 100,000 and 250,000. Developments are underway in towns such as Bialystok, Bielsko-Biala, Bydgoszcz and Lublin.
In Warsaw, agents at property developer Ober-Haus report that for the buy-to-let market, city centre areas like Mokotów and Ursynów are popular, while Wilanów is the most prestigious. In Krakow, locations outside the city, such as Bronowice and Krowodrza, are proving the best sellers.
However, while retail and office developments and migration to major cities like Warsaw and Krakow is ongoing, determined high growth will slow down from the extraordinarily high levels maintained since 2004. The smart investment is to look to new and up-and-coming Polish cities such as Poznan, Lublin, Katowice and Lodz. The latter, Poland’s second-largest city and the closest major city to Warsaw, is ideally situated at the crossroads where the A1 and A2 pan- European motorway systems intersect.” There is also an international airport there, served by Ryanair.
Ultimately, Poland remains an attractive prospect for the savvy investor and a popular destination for property, especially in the coastal resorts and in new, up-and-coming cities. It won’t net you a quick buck, but it will recoup any investment.
Facts & Figures
POPULATION: 38.5 million
CURRENCY: Zloty (PLN)
HOUSE PRICES: Apartments rose by 28% last year, but this year they are down in the lower single digits.
RENTAL YIELDS: In Warsaw, a 50m²–60m² city centre flat rents for about €690–€1,390 a month, and yields are about 4%–6%.
AGENTS: It is more common to deal directly with the seller, but the Polish Real Estate Federation also lists reputable agents. Visit www.pref.pl for more information.
BUYING TIPS: In Poland, not only are most new properties sold unfurnished but they are also sold as a shell, often with no internal walls. So it is best to check this out, as it may require extra expense.
TAXES: Rental income tax bands vary from 17.4%–19.7%, capital gains tax is 10% (but only applies if the property is sold on after less than five years, or the profit is reinvested in Poland within two years), and there is a property tax with bands varying depending on the type and use of the property.
AVERAGE PRICES: Properties are on average €3,292 per m², making Poland the 18th mostexpensive country in Europe.