In Eastern European terms, Poland is the 500lb gorilla. In terms of population, Poland is as big as all of the other countries that joined the EU in May 2004 put together. It is the 6th biggest country in Europe with a population of just under 40 million.
With Poland being such a huge new market, the clever money was on it quickly becoming the leader of the new Central European countries after independence in 1989 as all of the multi-nationals swept in to stake their claim. Since then, however, Poland has done good, but not great. In some ways it seems a little like a lumbering dinosaur that has been slower to adapt compared to its nimbler, swifter rivals such as the Baltic States and Slovakia.
Due to the fact that the city was practically obliterated in World War II, it doesn’t have the same 'Olde Worlde' appeal of Prague, Budapest or any of the Baltic capitals so the short-term letting market is not so important here. However, the long-term letting market is solid because Warsaw is always going to be one of the region’s most important commercial cities. Prices in the city centre are now very high. Although it looks likely that there is still a fair bit of growth to be had there, investors are advised to look at other parts of the city where prices have not increased as fast so far.
|As one of the major new European capitals (along with Prague and Budapest), there was a flurry of interest in Warsaw from foreign investors in the period prior to EU accession in May 2004 as everyone started looking for the ‘next Dublin’. In the period shortly afterwards, prices plateaued a little, partly because of the lack of good mortgage products on the market. More recently, however, the banks have offered much better conditions which has resulted in prices starting to move again. Fast. Growth of 20% over the past 12 months across Poland as a whole, and 33% in Warsaw alone, makes it one of the fastest growing markets of the moment. Prices are once again some of the highest in Central Europe.|
But property in Warsaw really should be expected to be higher than the majority of other Central European cities due to its importance as capital of the largest country in the region, so it certainly doesn’t look over-priced at all. Knight Frank are predicting slower, but still high, growth of 12.5% for 2007, which sounds very realistic to us.
It was announced in April 2007 that Poland has been chosen to host the Euro 2012 football championship together with Ukraine. Not only does this mean additional prestige for Warsaw, but it also means that the city will be investing a great deal into the city’s infrastructure.
Some areas of the city are likely to benefit more from the event that others. The region of Praga, which is likely to be the location of the new stadium is likely to be one major winner. Other areas that appear to be up-and-coming include Wola plus other areas which will be served by the extensions to Warsaw's underground network.
As well as Warsaw, the other big growth market in 2006 was the tourist's favourite city of Krakow. However, so fast has Krakow risen over the past few years that prices that there doesn't appear to be much room for significant growth any time soon, with the result that prices here are rather static at the moment.
In 2007, the action is with the smaller cities - sometimes referred to as 'third-tier' cities. These include some names that you have probably not even heard of, but are large cities in Poland. The price rises in these cities are driven not so much by international speculators, but by increasingly wealthy Poles. This is always a good sign - there is much less chance of a bubble situation happening when people are buying houses to live in rather than as an investment that they hope to sell on as quickly as possible at a healthy profit.
The big success story for 2007 to date is Poznan, which has seen prices rise by as much as 10% per month throughout much of the earlier part of the year. This has taken the city from being one of the cheapest major cities in Poland to one of the most expensive.
Do you want to achieve that kind of growth? If so, it's time to get your map of Poland out and start looking at some of the medium-sized Polish cities that should be next to get on the fast-track. Fortunately, due to the large amount of Polish workers travelling back and forth between the UK and Poland (who are in a large part responsible for the rapidly increasing property prices themselves) the budget airlines, such as RyanAir, fly to many of the smaller cities in Poland now.
Some cities to take a look at? The gritty industrial city of Katowice still has some of the cheapest property in Poland - that can't stay the same forever. Close by is the city of Gliwice which also looks under-priced, as is the other major city in the south, Rzeszow. Lodz is another city that looks to be still cheap compared to other cities as well.
Alternatively, there is potential for good price increases outside the major cities in Polish tourist destinations. Although the most popular part of Poland's Baltic coast - theTriCity area of Gdansk, Gdynia and Sopot - is already pretty expensive, the less developed part of the coast still has potential. It's also worth looking around the Poles' favourite retreats in the Tatras to the south of the country such as Zakopane. Although there is currently not a great deal of international tourism to this area, as Poland becomes an increasingly wealthy country, prices here can only increase.
In summary, Poland looks like another safe market for property investments. The low-hanging fruit from the obvious markets such as Warsaw and Krakow might not hold so much potential for the same spectacular levels of growth that have been seen to date, but Poland is such a vast country that there are always going to be new property hotspots emerging that are capable of offering some of the best growth potential in Eastern Europe.
Additional Background Information
The above contains our thoughts on the current state of the market. But, like any type of investment, there are no guarantees as prices are always influenced by a huge number of different variables.
You can keep abreast of developments in the market by checking out the articles in our News section where we’ve trawled the Internet for every story connected with property in Poland so you don’t have to. By checking the news reports regularly and thinking through the consequences of each piece of news, you should be able to get a good idea as to how quickly or slowly property prices in the market are going to rise in the near future.
The information in this section only tells half the story, however as only a small proportion of Polish property news is translated in English, which means that the locals are getting a lot more useful information than foreigners are.
Investing in the wrong markets could make the difference between making tens of thousands and losing tens of thousands over the next few years. If you’re seriously considering investing in Poland, then you should think of subscribing to our Premium Service so that you can get all the breaking news from the market at the same time the Poles are hearing it.
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