have been telling forum members for the last 2years that the Polish Real Estate is over priced
I second eleanoroconner on this. Property markets are cyclical. Over the past 2 years all first – third tier cities in Poland have seen increases of 50 -100%. Proclamations of boom and bust are easy. Genius is in the timing.
the housing market in Poland will crash
Crash? Really. I’ll eat my shorts if we see that. A crash would be the result of a gross over-supply of housing units (ex. Ireland, Arizona, Spanish coasts), or a significant number of owners in negative equity that were unable to meet their mortgage payments (US Subprime – Detroit, Ohio, etc). The first instance clearly does not apply to Poland and the second instance is extremely unlikely as Polish lending standards are tight, very few owners are in negative equity positions, and strong wage growth should compensate for rate increases in PLN / EUR / CHF during this period.
lack of money coming in from a depressed US economy
Only 2% of Polish exports are to the US. US FDI is a component of the Polish economy, but not significant. What could be significant is the effect of a US slowdown in tempering the global commodities surge. My sentiment is that the biggest story in regards to the direction of the Polish property market over the next 36 months is the cost of building materials. The Tusk government has already suggested that they will need to start importing cement from China in order to utilize all of the billions of EU funds and to meet Euro 2012 obligations in infrastructure upgrades. Can you imagine being a small developer in Poland in 2 years times trying to get hold of concrete, or iron re-bar?
Without causing a scare campaign some well known property developers are on the verge of bankruptcy
I suspect you are right, but scare campaigns are based on rumours and fear-mongering. Can you name these Developers?
developed structural damage as a result of faulty workmanship and will have to be demolished
There is probably some truth to that. Can you share the names any of these developments?
lot of speculators will have burt there fingers in Polish Real Estate
Indeed. If you take a broad look across the major Polish cities from 4/2007 – 4/2008 you will see a 5% drop in prices. From 4/2008 – 4/2009 I forecast flat prices. From 4/2009 – 4/2010 a few percentage points increase. During that period Poland will have seen 12-15% compounded inflation, IMHO. So a drop of 10 – 15% in inflation adjusted terms. This would be called a “correction”, not a “crash”
heading straight to the cupboard for another stiff drink
No doubt the next few years will be tough on the Polish property market, but good investing is about doing better than the mean. Do your homework, stick to the fundamentals and buy what is undervalued or what you can add value to. If you don’t believe in Poland in the mid to long-term, than get out now. Otherwise keep an eye on inflation, commodities, the zloty, GDP, FDI, wage growth, employment figures and invest accordingly.