Property Investment in Poland

Some industry analysts are suggesting that a certain amount of property investment appeal has been drained from the Polish real estate market now that the country is a fully fledged member of the EU and the initial boost of investment that the country received following accession has dwindled away. 

While no one is suggesting that property investment in Poland will make a bad investment choice in the short term, certain key property industry experts are suggesting that the previous strong gains enjoyed in Poland will not be repeated in the next ten years.  Amberlamb takes a closer look…

The current state of the residential and commercial property markets in Poland is that there remains an intense demand for housing and office, industrial, retail and warehousing space – in terms of the residential market for example, there is a deficit of in excess of 1.5 million apartments with over 3 million residential properties in dire need of remodelling and extensive renovation work across the whole of Poland.  This means that there is a strong demand for quality housing which will drive the market for the short term at least and which allows for property investment in Poland to be an interesting proposition for investors and developers alike.

However, experts such as the Chief Economist from CU Investment Management are suggesting that the property price increases that will naturally be derived from the fact that there exists a supply deficit will be nowhere near as impressive as the gains Poland has been enjoying in recent years.  According to Grzegorz Latala who’s the chief economist at CU Investment Management, property price increases in Poland are not sustainable at the current levels for the medium to long term – therefore it is highly likely that the gains of around 25% per annum that have been witnessed since EU accession in the Polish property market will be whittled away to a far more likely and sustainable 8% per annum.

One of the main factors behind Mr. Latala’s analysis is that the initial surge of investment that Poland received into industry, agriculture, infrastructure, business etc., leading up to and immediately following EU accession has slowed right down to a fraction of previous levels enjoyed, and that those who were planning on relocating to Poland or expanding and developing operations in Poland have already done so and so there will be a natural tailing off in terms of demand for both commercial and residential real estate over the next few years.

A second factor that supports the chief economist’s views and findings is that the appeal of Poland is limited – it is not a major draw for tourists, students, professional migrants or retirees which means that there is a ceiling in terms of demand which will ultimately put a ceiling on investment property in Poland and the market for it in terms of price increases, demand and yields.

Having said all that – Poland remains a transportation hub for Europe, it remains a far more affordable country for businesses to operate in, it has a strong level of inward professional migration and property investment in Poland is therefore likely to remain a positive prospect for at least the next decade – if not as positive a prospect as it has in recent years!

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