property in Lodz - anyone any experience

I'm also considering the strategy here - in Lodz, what yield from rental income can realistically be expected from even a 6,000 - 7,000 zl m2 property? Is there sufficient appetite in the Lodz rental market for that kind of rental cost? Or are investors only looking at the short term, assuming that the property will quickly increase in value - and this will allow them to sell up within a short time and take their profit?

Hi SEQ,

When looking at price per square metre, 6000-7000zl/m2 in Lodz, you'd be able to get the same price in some areas of Warsaw, for example Bialoleka.

I am seeing some investors wanting to keep to Warsaw, mainly on the basis that it is the capital city, and therefore are looking at the cheaper districts of Warsaw rather than low prices in other cities.

It all depends on the individual investor, and whether their investment strategy is for the short or long term. Remember if you wish to sell within 5 years, and don't invest the funds in another Polish property you'd be liable for tax.

I read somewhere recently, that if investment coming into Warsaw continues at the rate that it is at present, then within 5-6 years Warsaw will be the 6th most important financial capital city in Europe.

Most investors who take out mortgages on their investment property, frequently will not cover their monthly repayments with rental income. This really depends what sort of LTV they get; presently it is definitely a sellers market, and this has the effect of lowering rental yields, and making renting out a property much harder.

When choosing one's investment property , looking forward to see who will be your potential tenant is very important.

Polanglik

Praga Poludnie also has to be taken into consideration as it's not that much more expensive than Bialoleka.

I have friends living in Praga Poludnie ... good place to invest in my opinion.

However, prices for offplan builds are from around the 8000zl/m2 - 9000zl/m2 mark , whereas Bialoleka prices are from around 6500z/m2

As I have said before, I don't think you can go wrong purchasing anywhere in Warsaw at present. Some places are quite expensive already, but I don't see prices going down in near future. There will always be slight fluctuations but overall i see property prices going upwards for the next few years.


Let me know when you hear anything definite about this 44% tax .... there have been many unfounded rumours regarding tax .... :o)

Ok - I'm not trying to convince anyone here. I have been investing in various places for quite a few years and I haven't been wrong yet, of course there is always a first time I except this. I am just giving reason behind my thinking - In the case of Lodz - the right ingredients are there for things to get good in the future. Many people will not see what is happening until it's too late some will never see it. You pay your money and you take your choice. I have paid mine.

Poland has just been named in a recent International Real Estate Survey as the 4th best place (in terms of investment potential) in the world to invest. 30 years ago a dismissed a similar situation in my own town in my country. The same reasoning I am reading here was the same argument that I put forward at that time. It cost me dearly.

These are valid points, all Polish people wanting to buy a house/apartment will have to join the mortgage club and spend the rest of there life paying off the loan, they will in effect be working for the banks.

Money is hard to come across and its interesting that some of our properties advisor's who you would think have done pretty well, are the ones looking for cheap places to eat or hotels (how strange). The bottom line is that the average worker is being cut out of real estate and that being the case who is going to buy all those apartments and house? foreign investors!, maybe in sort after locations.

Currently Polish doctors are on strike wanting a 30% pay rise, the government has made it clear that it has no money to give them, This means its is doubtful if real wages will increase in Poland in the near future (ie government employers/people on pensions etc)

Global warming and increases in fuel and power charges will also ensure a slow down in the Polish property market.
What property investors need to understand when reading the increases in the Polish property market is that the increases are averaged out and are greatly inflated due to sales of new houses. By way of example a house in the polish country side has not gone up very little.

I might also add that a lot of English/Irish/US like to go to Poland because it is still very cheap and a pretty safe , these people will go elsewhere when things go up.

Thats fine Neil - its your money and your choice and I am interested how you get on, but sceptical about Lodz. It just does not have the potential of Warsaw, Krakow and Gdansk since Poles do not consider it a desirable place to live.

But you need to consider fundamental economics and remember that only one bad investment can undo a lot of your good work in other countries.

hi

how much are you paying now approx per square meter in lodz? does this include turnkey?
if i am not polish how do i go about renting the property ?

Hi Reg,

i will be buying a number of off plan properties at the end of this month.I expect to pay no more than 5800zl per m2.There have been a number of new builds just released in lodz that are very over priced ie the new property secrets development that you cannot even reassign.If you are thinking of a off plan new build development you will need to spend another 10-15% to finish it off.It is very easy to get stitched up in this area.Since most of the off plans take 18mts-2yrs before completion the rental situation could change significantly and i would not like to predict the situation at that time.As all my future offplans will be reassignable i would assess the rental situation approx 4 months before completion and then decide.It will obviously make a huge difference whether you have an interest only mortgage or repayment.The majority of Polish developers require stage payments but not all,my advice is to work with someone even though it might cost you a little who knows what they are doing!

Hi Reg & Kneehawk,

I agree that it's important to try and get a good price, as well as a favourable payment plan , and if you can sell before completion it gives you an added option when it comes to deciding whether you want to rent or sell.

I have bought in Poland, and know the hassles one may come across.

Kneehawk, it sounds as though you are waiting for the same development in Lodz as I am :o) It should have been released in May but it appears it should be at the end of this month. I was quoted prices of around 5000zl/m2+, but for the better payment plan of 20/80 it is usually an extra 600zl/m2

I would also advise that if someone is thinking of buying in Poland, it is best to work with someone who knows what they're doing, especially if you don't know the language or business culture... and also make sure you have a contract / agreement with the person or company who is assisiting you with your purchase.

After I bought in Poland, I set up a Limited Company which assists non-Poles (as well as Poles) purchase mainly off-plan properties in Poland. I have a number of clients waiting to buy in Lodz presently.

what kind of a company do you run?

can you assist in renting out properties in Lodz?

so what is the going rate per per square meter? 58oo pln ? would that sound about right. and also does that include a turn key system,

can some one give me a guide as to what is a good turn kep price per pln in lodz,
i am also talking about a turnkey job too

how much did you pay per square meter for your properties ?
does that include turnkey ?
how do you go about renting them ?
if you are not polish, can you suggest a rental management company that deal with english speaking people

It will be going back up to 5 years, so doesn't really matter now or in a few months.

Hi Registerdpers,

Usually the developer will handover property in what is called a black finish (developers finish with no floors, non-plastered walls etc), and you then need to put in kitchen, flooring etc...

We have a partner company in Poland which would be able to do this extra work - there are three standards of finish which would be reflected in the price you pay.

Don't forget that you would then need to furnish the apartment, and again the price depends on what standard you want to have.

For the developers finish I believe 5000zl/m2 - 6000zl/m2 is what you should expect to pay, although I know you can pay a lot more as in the new Schleibera Loft buildings;

As for rental, there are a few rental/management agencies we would use to rent out apartments for our clients. We do not rent out/manage apartments ourselves, although this is the direction we see our company taking in the future.

Most of our clients are purchasing offplan, so in two years time when they take possession of thier apartment we hope to have a lettings/management department up and running.

We are seeing that many investors are still concentrating on Warsaw, and purchasing in the lower end districts; eg. Bialoleka, and also Bemowo and Wola are becoming very popular , but prices here start at approx 9000zl/m2. The main reason is that many investors see Warsaw as a better bet when talking about rental yields. Praga Poludnie is also a good investment area , but prices are also in the 8000zl/m2+ .

can you suggest some rental management companies , i have two apartmetns that i need to rent asap, prob like end of July august, and i need furniture too, what rent would should i be looking for, for a three bed apartment ,it is prertty spacious too , like 130 sq meters

check out if Ober-Haus has offices in Lodz ... not sure how good they are at management ... i have found most agencies will find you a tenant (or at least try!) but not do management.

130 sq meters is quite a considerable size .... i think you'll have difficulty letting it out ... unless you get students sharing ...

as for what rent you should ask ... i'll look into this for you.:o)

Second flooding in Lodz
June 15, 2007
Enormous downpour has went through the Lodz city twice in two days time. Heavy rain caused flooding in the city center making it unable for cars to pass through and moreover it paralysed the urban means of transport.

I read this on expats Poland ; just wondered if anyone knows how bad it was ?

who is your company ? thats a lot of flat s to purchase ??

thanks, 130 meter squared , would nt it be easy enough to rent its bigger i mean

also its on i think 4 -5 th floor, but has no lift
i hear its quite common in polant to have stairs only whit no lift
if its only 4 floors
would that be correct ?

well it i dont get it rented easy im sure i can sell it on easy enough

what is the best option when it comes to renting though ?
if you are not polish and dont live there , how is it best to rent ?

hi

can you find some contacts or information about renting out properties in lodz?

No its not common to have no lift unless it is an old "kamienica" from before the war or something put up cheap in the 90s.

I think after 2001 there was a regulation that all buildings over 3 floors had to have a lift.

Remember that with no lift you can not rent to young families or old people, most richer middle aged people would prefer houses so you may be stuck with students.

I am currently investigating several secondary cities in Poland for resi investment. Personally, Lodz's outlook appears rosy. There is a new third passenger terminal being developed, 15km away will be the intersection of the two major road networks in the country, and joining eastern and westner europe, there will be a new hgh speed rail network reducing travel time to Warsaw to just over one hour, the city has comparatively low resi prices per sqm in comparison to other secondary cities, it has a strong student base, a high population (albeit that Lodz does have the lowest salaries out of many of the 'up and coming' secondary cities). in addition to this, Lodz is attracting a significant amount of FDI, and Dells entrance to the region, among other blue chips could potentially generate an additional 40,000 jobs by 2015, so i think that salaries will increase.

the main concern for me is that the popualtion has actually been decreasing since 1999 year on year.

Any more news on this 40% CGT??? Very worrying- will this apply to everyone? Any govt links for this would be nice...

I am in the Sales Letting and Management business for Residential property in Poland - my Company Davidoff Kleeberg & Maresch has offices in Warsaw, Krakow and VERY shortly Lodz. We provide a FULL Lettings and Management service to Poles as well as overseas investors.

Having been in the property business for over 30 years, the last 7 years in Poland, I am very well aware of the various pitfalls and problems.

I am not aware that there will EVER be a 44% tax on capital gains and this is a worthless scaremongering statement without any foundation.

The fact is, the CGT in Poland is now 19% as of the 1st January 2007 when it was changed for sales of property owned for less than five years. For property owned for a period of 5 years or more, THERE IS 0% Capital Gains Tax.

You simply need to talk to someone who knows what they are doing in Poland and not listen to those with little or NO knowledge at all.

I would be pleased to help or guide anyone interested in the property market in Poland and particular emphasis is placed by our company at present on Lodz as a result of it being declared an economic development Zone.

This is why companies like Dell Computers, Procter and Gamble and others are moving there. This creates thousands of jobs which in turn creates thousands of housing requirements.

I've been offered appartments for 8,000 pln/m2 offplan at UScheiblera .Is this value, it's supposed to be a prime area ?

Too expensive.

Hi Johnny,

I believe your offer is the cotton mill development in Tymienieckiego st.This is at present the nicest development in lodz.You can search and find these flats for around 7200 from Polish investors who brought for short term capitol appreciation and wish to sell before completion.I am not sure however when the final completions are due.I was in Lodz last Friday looking at properties and there are a number of new developments around at about 6000zl .This city area around Tymienieckiego is destined to be the most desirable residential area of central Lodz,so maybe 8000zl may turn out to be a reasonable price in the longer term

Hi , I've been to Lodz and have seen nothing near the quality of Scheiblers lofts. What premium do you reckon it's worth over the general new off-plan developments ?

i started a topic exactly on Scheibler lofts. i also think that it is an extraordinary project. i guess that from the point of view of those interested in revitalisation and architecture nothing of that scale in a form single project has seen the light of the day. it is in my view a monumental project. in that sense lodz being the host is unique but i have the feeling that the word has not been spread out.

you are discussing more in terms of investment, and i do guess its a very good one. yet i cannot see how you can relate these lofts with any single newly built block of flats. there is a numerous clausus in these lofts, no more can be built. yet block of flats are infinite. as for prices in Scheiblers lofts? whatever the owner asks for, i guess!

one thing that must be highlighted is the experience of living in such a monument. i have the feeling from their website that the developer has used this as a selling argument - yet one cannot put it down to just this, it is much more. every living space has a dynamic - i cannot even imagive what the dynamic of these lofts could be, what power would exert on the lives of the inhabitants.

Just reading on a web site (worldwide-tax.com) about CGT in Poland; see below
Capital Gains
# In general, there is no special tax rate for capital gains in Poland. Capital gains are usually added to the regular income of an individual/company and based on the normal tax rates.

# Despite this, if real estate is sold more than 5 years after it was purchased the capital gain is exempt from tax.
# Individual's capital gain from sale of shares is taxed at a final tax rate of 19%.
# In Polan dividend income is taxed at 19% rate.

Based on the tax rates this implies that if you make less than 37k PLN you pay 19% between 37 and 74 K PLN you pay 30% and from 74K PLN and up you pay 40% CGT. Have I got this correct?

No Charlie, at the moment it's a flat rate of 19%. See Michael C post above.
Note also there is a double tax agreement between Ireland and Poland. If you pay 19% CGT tax in poland , it will be credited against your 20% CGT liable in Ireland if you return the money. You will only then have to pay the balance of 1%.

If you wait 5 years in poland before selling , you will be liable for 0% CGT. But on return to Ireland you will pay the full CGT of 20%. Either way it makes no difference you end up paying 20% total anyway.

Of course if you reinvest your gain in poland you avoid CGT, but evenually you will want it back sometime so 20% is the bottom line.


No Charlie, at the moment it's a flat rate of 19%. See Michael C post above.
Note also there is a double tax agreement between Ireland and Poland. If you pay 19% CGT tax in poland , it will be credited against your 20% CGT liable in Ireland if you return the money. You will only then have to pay the balance of 1%.

If you wait 5 years in poland before selling , you will be liable for 0% CGT. But on return to Ireland you will pay the full CGT of 20%. Either way it makes no difference you end up paying 20% total anyway.

Of course if you reinvest your gain in poland you avoid CGT, but evenually you will want it back sometime so 20% is the bottom line.

Thanks Johnny. It has been mentioned that the Polish government are going to introduce a 44% CGT in the future, do you know if there is anything in this?

I think this is just Gregorz's idea to keep foreigners out of Poland.
Seriously, Poland has just updated it's CGT and VAT issues on property and there is no mention of 44% .
Note: if you intend 'flipping' or reassigning properties,there is now a higher rate of VAT of 22%. Get advice, I believe there are ways around it.

Hi johnny,

The vat on resale of any property does not apply to private sellers or investors as they are not registered in the first instance as tax paying for that vat purpose.

It is just like buying a car or a camera which includes vat on the purchase and when you resell, there is no vat to be charged to the buyer. It is a private issue and nothing to do with tax collectors. Their only interest may be in the CGT (gain) you made.