The last two years have not been the best for the European real estate market, including in Poland. However, it seems that the worst is behind us. This is confirmed by the growing interest in Poland from foreign investors. This also applies to investors from the UK, who can still effectively diversify their portfolios on the Polish real estate market. Szymon Mojzesowicz, Member of the Royal Institution of Chartered Surveyors shared his insights on the topic.
The perceptible improvement in Poland's economy, the drop in inflation and the reduction in interest rates are very positive signals sent to the global real estate industry. The Polish market appears to have approached a tipping point where European investors can once again pursue their strategies. In a survey of global investors conducted earlier this year, Poland was ranked third in the top ten countries with the highest expected returns on real estate investments.
Investors are attracted by attractive prices
"We have experienced a rapid increase in real estate prices in recent years, but Poland still offers affordable housing compared to many European countries. In the largest cities, real estate is much cheaper than in Denmark, Sweden, or the UK. We will pay less per meter of apartment than in Prague, Budapest or London. For individual investors, this is good news. For the investment business, it bodes well that prices will not fall soon. And they may even grow", says Szymon Mojzesowicz MRCIS, an expert on the Polish real estate market from the consulting company Lege Advisors.
Rental investments are an opportunity for investors
A very good investment target will be the purchase of residential units for rent. This is influenced by the fact that in Poland the rate of return on rental property is one of the highest in Europe. In turn, the tax cost of renting is one of the lowest. The number of new apartments completed in 2023 in Poland was one of the highest in Europe at 238,000. Last year, just over 14 thousand apartments were placed in the hands of foreigners. The potential seems enormous.
"The UK is outside the realm of EU regulations and exemptions, but last year it was among the top ten nations to buy apartments in Poland, with 12,000 sqm. That number is expected to rise in 2024", says Szymon Mojzesowicz. "Investing in rental property in the UK has become much less popular. This is a result of high interest rates and unfavourable tax changes introduced several years ago. The Polish market therefore offers new opportunities for British investors", adds expert.
What about commercial real estate?
In terms of investing in commercial real estate, for many years we were the leader in the Central and Eastern European region. Unfortunately, a period of pandemonium and subsequent economic and geopolitical turmoil caused stagnation.
"The situation in the Polish commercial real estate market is the result of the world's negative attitude towards investing in this area in general. This is directly reflected in the low level of turnover in our country. In the first quarter of 2024, the volume of investment was at the level of 2010. An improvement in the situation can be expected in the second half of 2024", explains Szymon Mojzesowicz.
The sales value of commercial real estate acquired for investment purposes at the end of Q1 2024 in Poland amounted to about 200 million. Euro. About 31% of this value was for warehouse space, and 37% for office space.
Factors that favor investing in Poland
One of the main advantages of investing in the Polish real estate market is its growth potential. The market has proven time and again that it is also resilient to various types of turbulence. The potential also lies in the large flow of global capital and international emigration. A safe investment in the Polish real estate market is also assured by political stability and regulatory transparency. For British investors looking to enter the market, understanding the legal framework and regulations governing foreign investment is important. But as life shows, they find their way around this reality perfectly.
