News Article Avison Young Poland PRS residential
by Property Forum | Residential

The prolonged conflict in Ukraine (the refugee wave) and the significantly reduced credit scores increase the demand for renting apartments and thus, affect the development of the PRS market in Poland. The institutional rental sector will also grow due to the changing perception of homeownership by young people, who value mobility and do not necessarily need to own a home. According to Eurostat data from 2021, about 30 percent of the population in the European Union live in rented apartments, while in Poland this number amounts to only about 13 percent. Paulina Brzeszkiewicz-Kuczyńska, Research and Data Manager at Avison Young Poland, summarises this sector's current situation. 

Among the factors creating a good background for the development of the PRS sector, Avison Young also mentions the supply gap in Poland. About 35 percent of people live in overcrowded apartments, while in the EU this figure is estimated at 17% (Eurostat 2021).

It is confirmed by investors' statements that PRS sector is to develop in Poland. Projects with 20-25 thousand apartments for rent are to be delivered. Avison Young advisers add that due to the early stage of development of this sector, Polish market is attractive to both domestic and foreign investors, who can obtain higher rates of return on investment in Poland than in Western European markets.

Warsaw vs. regional cities

According to the latest Avison Young report, at the end of 2022, there were over 9.4 thousand units in the pool of apartments for institutional rent in Poland, and another 13 thousand flats were under construction. About 75 percent of PRS projects currently under construction belong to four investment funds, that is Heimstaden Bostad, Echo Investment / Griffin Real Estate (Resi4Rent), TAG Immobilien (Vantage Rent) and Cavatina Holding (Resi Capital).

Interestingly, according to investors' statements, smaller regional cities, such as Szczecin and Zielona Góra, will soon appear on the PRS map.

About 40 percent of all existing PRS premises are located in Warsaw. There are over 4,000 more apartments in this formula under construction in the Warsaw market. Warsaw is the largest PRS construction site in Poland, while regional cities are responsible for the largest number of new PRS projects - the number of apartments under construction in regional cities already exceeds their existing stock. This shows how much demand and interest in this sector exists also in the regional cities, not only in the capital.

On the other hand, the leader in terms of the share of PRS premises in the existing housing stock of the city is Wroclaw with a result of 4.2‰; followed by Warsaw (3.6‰) and Cracow (3.6‰). It is clear, however, that these are still marginal shares, well below 1%. For comparison, in Berlin, the share of PRS in the total housing stock is 30%. If we look at the numbers, there were almost 3,800 apartments for institutional rent in Warsaw at the turn of the year, around 1,550 in Cracow and Wrocław, around 1,100 in the Tri-City, over 700 in Poznań, and 550 in Łódź.

Wroclaw is right behind the capital

Wroclaw is currently the second largest market after the capital, in terms of PRS housing stock – both existing and scheduled combined - in Poland. At the end of 2022, the number of apartments offered on the Wroclaw market in the PRS formula exceeded 1,500, and another 3,100 were under construction. Wroclaw has a 16 percent share in the functioning national stock of flats for rent. Since 2020, the number of PRS premises commissioned in the city has doubled.

The offer of apartments for institutional rent in Wroclaw is concentrated mainly in the city centre. Currently, it is also slowly expanding towards the northwest, the vicinity of Popowice, Nadodrze and Legnicka Street, where many residential estates with apartments for rent are being built, due to its attractive location.

Avison Young draws attention to an interesting enclave of apartments for rent, which was created in Wojszyce, in the south of Wroclaw - the dynamic development of this area attracts not only individual but also institutional investors. Vantage Rent delivered 150 PRS units in 2021, and later Life Spot brought another 244 units to the market.

The leading PRS operator in Wroclaw is Resi4Rent with a 37 percent share in this market, and also responsible for more than 40 percent of apartments under construction. An active investor in this location is also TAG Immobilien (Vantage Rent), which owns over 30 percent of the Wrocław PRS market under construction. Heimstaden Bostad also has expansion plans in Wrocław. The company bought a portfolio from Budimex in 2021, including a part in Wrocław.

Vantage Rent project is a good example of how great the interest in PRS apartments in Wrocław really is. All apartments in the investment were rented within a few months from the launch of the offer on the market in mid-2021. The resources of Fundusz Mieszkań na Wynajem fund were distributed just as quickly, with no more available premises. While about 10 apartments out of the 570 units offered by Resi4Rent were available at the end of 2022.

Also at the end of 2022, the average rental rate for a one-room apartment in the Resi4Rent project at Zakładowa Street in Wroclaw was gross PLN 2,400, and PLN 2,900 at Mieszczańska Street. In the case of two-room apartments, rents ranged from PLN 3,400 to PLN 3,900, and for three-room apartments, they ranged between PLN 4,600 and PLN 4,900. However, these rates are also rising, driven by inflation and rising operating costs.

The analysis of Avison Young's market data shows that institutional apartments in Wrocław are characterized by approx. 5% lower prices per square meter compared to the offers of private owners, which, on the other hand, are larger on average. It should be mentioned that PRS units, unlike private apartments, offer additional services, such as 24-hour security, amenities in the common areas, professional management and operator’s support.