Can Poland Continue to Deliver Property Price Appreciation?

According to the Royal Institution of Chartered Surveyors’ European Housing Review, average property prices rose by 33% in Poland in 2006 and 28% in 2005 proving that Poland has been returning more than favourable capital appreciation for investors - but can Poland continue to deliver property price appreciation?

At Amberlamb we can confirm that Poland’s property market is one of the most dynamic in the Central and Eastern European region right at the moment, that it has been particularly attractive since 2004 and that there is still room for significant growth in underlying property prices despite certain areas of the country such as Krakow having witnessed over 50% gains last year.

The one key thing about Poland underpinning its property market’s attraction is the fact that the market in Poland is built on such excellent fundamentals such as a strong economy, mature government, the ability of the nation to attract, and more importantly retain foreign direct investment and broad and diverse demand in both the commercial and residential real estate sectors.

And in addition to this - property prices are still very reasonable indeed even in the most sought after locations. It is highly likely that property in Poland will be an attractive investment choice for at least the next three to five years even in spite of some who have warned that if the UK housing market stagnates there will be a drop off in buy-to-let activity in countries such as Poland. Poland could survive this because Poland’s property market is not being solely supported by overseas investment into residential real estate.

On the residential side of things you also have local demand for housing which is increasing and being supported by an improvement in local affordability brought about both by rising wages and also because of more attractive and accessible mortgage products coming to the market. More Polish citizens than ever are becoming active in their own residential marketplace creating sustainable demand.

On the commercial property side of things the likes of Warsaw, Krakow, Poznan and Wroclaw have all developed active office and retail markets and supply is still some way short of demand countrywide making Poland one of the three most exciting markets in the Central and Eastern European region for commercial property investment as well.

In terms of where investors might like to enter the Polish property market, the Tricity which includes Gdansk, Gdynia and Sopot is well worth looking at throughout 2007. The entire area is educationally strategically important in Poland so there is a huge student base to target, and because of the wealth of educated professionals in the area it is receiving considerable inward investment from companies looking to recruit meaning there is commercial potential as well.

Additional points in the Tricity’s favour include the fact that more direct cheap flights are coming to the region in 2007 thanks to improvements to the airport, furthermore massive investment has gone into infrastructure improvement in this part of Poland, it is an attractive tourism destination, it has a great nightlife, fantastic shopping and it’s a good place for a weekend getaway or as a base from which to explore more of Poland for holidaymakers.

Because Poland is a relatively low risk emerging market it is therefore of interest to a broader base of international investor which also suggests that there is still strong potential for property price appreciation as greater numbers of investors come into the market. Those seeking to compare Poland to many Eastern European countries when looking at whether its market will follow any pattern should know that although its property market started off from a position of zero interest and incredibly low underlying prices like many in the CEE region, it is now head and shoulders above many nations in the region in terms of its overall and broad attraction and also its ability to sustain and maintain a healthy residential and commercial property market for the long term.

Finally, one important consideration that potential investors should bear in mind is that VAT is set to rise from 7% to 22% on all new build property in 2008 and so market entry in 2007 would be preferable.

Source:amberlamb.com