IS IT A GOOD TIME TO INVEST IN POLISH REAL ESTATE?

This article may be suitable for kindergarten children but not serious property
property investors, its high time people stopped thinking in terms of zl per square metre, this method was used in the communist times but it has no relevance today. Every property is unique, ie location, type of local structure, and type of neighborhood etc,

You might have two property the same size but prices could be totally different.

Tadeusz2007
Today, 03:56

Tadeusz2007

An article for all you guys:

How to value Polish real estate or any other real estate

Basically the rule of thumb is this. Take the average netto income in any country you live and this is what the cost of a flat should be per square meter. If in Krakow the average is 2000 pln a month. A flat should cost 2000 pln a square meter. Poland has the biggest difference between average wages and prices of flats in the EU. The average person in in the Polish market can only afford a flat with little money down. Speculators are pulling out of the Polish real estate market for greener pastures, i.e. rising price real estate markets, for example Bulgaria and other new land rushes. Now Poland is a hot economy and will stay strong for many reasons, however, the real estate market is a a bubble of ridiculous proportions.

And what if the Land and build cost is, say, 2,500 PLN (excluding any profit for the developer or the 7% VAT which the Government takes), who will build these apartments?

According to your theory, Toyota will be selling new cars for 10,000 PLN.

As much as you would like it, nobody is going to produce anything at less than cost price, that includes the food you eat. Ask the french dairy farmers how this system works.

Land cost is hugely overvalued also, so the price of land will also be going crashing down.

I see all replies here who say different than the reality of prices crashing down about 50% at least, are just people who are pis*ed of cause they bought properties in Poland for speculation, they got fooled by the real estate agents who always say prices will go up to the sky, and now they regret very much what they did.

Did you guys even see how many parks and green spaces have Berlin?

Krakow has just ONE big PARK. For such a big industrial town, to have just one park is purely
a CRIME.

Where can you breathe fresh air in Krakow? In Nowa Huta ?
:)

There building all over the parks in Wroclaw too, thats Poland for you. Somebody high up is getting a back hander (bribe) i think.

Tadeusz2007

What the hell have the parks in Berlin got to do with Polish real estate?

You still have not addressed the problem of producing goods for less than cost price?

The present Polish government was elected on certain mandates, one of which was to provide 3,000,000 new apartments/houses over a period of their term in office, this was to be new housing and replacement of exisiting defective stock. I suggest you look at the construction figures for the past 4 years and see what was actually built. If you factor in the Luxury end of the market, you will find that only a small amount of "affordable" housing has been constructed.

The only two positive initiatives brought in by this government have been the "one family" scheme which helps first time buyers with deposit and 50% interest payments for the first 8 years.

The second scheme could be a potential disaster. Allowing people to buy their rented flats in the old communist blocks is not such a bargain as it seems. The blocks were poorly constructed and are suffering from "concrete cancer", whereby the reinforcing bars are rusting and causing large cracks in the concrete slabs used in construction. Fixing insulation or cladding to the outside is only a short term solution. The UK has already started pulling down these tower blocks and constructed new dwellings to replace them. Where are you going to house the existing tennants if this has to be done in Poland?

The one true help that the Polish goverment should have given, would have been to abolish VAT on new build houses/apartments, as in the UK. This would encourage both private builders and developers, create jobs and improve the housing stock.

As very little is being built at the moment, the loss of revenue from VAT would be offset by the taxes paid from the new jobs created and the Polish people would benefit from having decent homes to live in, not to mention the ecological aspect of savings made from better constructed housing which should keep the EU happy regarding "carbon emmissions"

I think everyone is overlooking the fact that 4-6 millions poles went to work abroad,
and probably will never return to poland, meaning there is an

actual excess of 2-3 million houses/apartments that are for sale and noone is buying... ;)

Blindness, greed, how much it takes to fool yourself that the polish real estate bubble will not explode in the very near future and prices will drop down dramatically?

Are you saying around 20% of the population work abroad? and that they will probably never return to live? You would have to expect that atleast half of them will come back, especially with the financial climate in the UK and Ireland. You may also expect that many of these returning expats would want to buy their own properties.

I think the point was that Krakow is a joke of a city, at some hugely bubble inflated prices,
while Berlin, which is a true modern european capital, has real estate prices 50% lower and wages 200% higher...

Ok, I'm actually living in Wroclaw. Tell me exactly in which park did you see any building site? In fact I can't think about anything like that in past ten years...


You are certainly right. But take into consideration that in bubble years 50% profit was normal thing for developers in Poland. They will not do anything for free for sure, but they certainly will take 15% profit...


Farmers have subsidies which artificially keeps floor in that market.
Polish real estate market has "familily on their own" (nickname: "family on mine" :-) )
which is subsidy for interests on mortgage, which artificially keeps floor in real estate market. The problem is that due to budget deficit goverment plan is to limit that program in the next year.

Don't get me wrong, I don't say that there will be some big crash or something. I'm saying that it is highly unlikely to see another bubble growth in next two/three years.

Do you know where the Sky Tower is being built in Klecina? that is replacing an exisiting tower block, But the park North of that is zoned off for development by an Italian company. I believe the road is Powstansow Slaskich. South of The Orbis Hotel Wroclawia.

It is not true. On that mandate (3,000,000 new apartments/houses over a period of their term) was elected the past Polish government of PiS. That government was voted out of office in the middle of their 4-year term in 2007. The present government, although it promised "miracles" in a very vague sense of the word, did not promise anything of the sort of 3.000.000 apartaments/houses.

The promise of three million appartaments was nothing more than a worthless electoral promise which no one at their senses was taking seriously.

I suspected that you will come up with something like that. This area was never intended to be a park. It was just huge square destinated for developmnet. This area had tight development before WWII. You can see that here:

skyscrapercity.com/showpost.php?p=9985395&postcount=23

Unfortunately Russians and Germans themselfs destroyed south Brezlau in 1945. Since 1945 when Brezlau became Wroclaw that part of the city has been an open wound on citys body. So it wasn't a park. Maybe it would be better to make park there. But it was up to inhabitants of that area to lobby city hall. I didn't heard about any coordinated action for that.

PS. Sorry, but not Klecina but Krzyki, not Italian but Spanish. If you like this big empty place then maybe cheer you up that Spaniards seems to be broke now and do not intend to start any construcion there soon.

PS2. more interesting pictures of Wroclaw before WWII here:
wroclaw.hydral.com.pl

Oh well close enough, i did know it was Krzyki, i got mixed up with Klecina.


I dont really care to be honest, it would have been nice to leave it as a park though so close to the city, theres not many recreational areas in the vicinty. I guess in the long term it just means tonnes more dog shite on the pavement for everybody to step in.

jwojcie

"You are certainly right. But take into consideration that in bubble years 50% profit was normal thing for developers in Poland. They will not do anything for free for sure, but they certainly will take 15% profit..."

When you factor in inflation at 4% and bank interest of 6-7% it would not be worth spending a couple of years on a project which would only nett you 5%. No company could work on a business plan like that and the banks would certainly refuse to finance it. You make it sound as if 15% profit is worthwile?, it is if you are selling something over a shop counter!!!!

Do you have any idea of how long it takes to plan a building project, get the necessary permissions, set the financing in place, select the conractors from their bids, deal with the authourities over minor issues, market and sell the flats and then still deal with the clients who want to know why you never included a swimming pool and a helicopter landing pad into the design.

The business's that think they can make 50-100% profits are banks and share dealers, no construction company could plan or build expecting to make these types of margins, there are to many variables that affect the final profit margin, even bad weather can add a lot of unexpected cost to a project.

I would not say that it is impossible to make good profits, but you would need a lot of luck and maybe catch a "boom in prices" after you have started construction. There is no way you could plan it 3-4 years ahead. If you could, you would not build, you would buy shares instead.

But developers did make such profits. It is in their reports for stock exchange.
Your right, meny devs think it is not worth it for 15% and they slowed down with new projects. But there is oversupply for next 2 - 3 years. Mine opinion is: buying now equals to freeze capital... But that is just an opinion...

Yes exactly. Considering all other facts and arguments of the market,
a regular prediction is a fall with between 40% and 60% of the real estate prices

I would wait a bit with the investment - Polish zloty will fall a little more - I think it will reach 4.50 PLN for Euro in the middle of the next year


the 'Rodzina na swoim' programme started by PiS is still running - PiS only envisioned other measures to make it easier to develope new housing areas - some of these were also adapted by PO even if in somehow modified form

By the time they envisaged them, their programme of "3,000,000 new appartments" had unexpectedly turned into a - as the popular saying had it - "three millions for a new appartment" thing, thus tarnishing further their image of a party-which-is-destined-to-be-right.

what is the date of the next elections in Poland, and do you think this will influence the PiS program? Thanks

nytimes.com/2009/11/04/greathomesanddestinations/04gh-househunting.html?_r=1 - Interesting article on housing in Krakow. Be sure to check out the slide show.

What makes you think it will reach 4.50

WARSAW, Nov 3 (Reuters) - The Polish zloty is likely to appreciate over the medium term, a finance ministry official said on Tuesday.

"The volatility is now lower and all the signs are that the zloty will be appreciating in the medium term," Slawomir Dudek deputy head of the ministry's analysis and statistics department, told a panel.

i believe a PF member is quoted in that article. small world..

Isn't it.

Its obvious you don't read newspapers, Poles are NOT returning home even with the global downturn.

Yes exactly , about 3-4 millions polish homes are deserted and will soon be on the market for sale... so expect very soon a collapse in prices, because indeed, poles are not crazy, so they dont return to poland after they are used to salaries of 3000 GBP per month, back to the 1500 zloty in poland...;)

I dont read Polish news papers no, but i do follow other news sources and most of the time they all contradict each other at one time or another. On this particular subject i follow my own predictions. I know of many Poles that have returned and i so believe that half of expat Poles that went to work abroad since 2004 will return home to live at some point. How long they stay is another matter.


Last week you quoted £2000 / month in the UK and 2000 PLN in Poland. Where the hell did you get £3k from?


Nah i dont think so, atleast 70% of the Poles that went abroad for work would not have been home owners in the first place, mostly sons and daughters either scum bags living of their parents or recently out of education. 3-4 million my ass.

I see you can keep your arguments at a level which says everything about you...

Yes, of course, only this category that you said, only them they want to earn 8-15 times more abroad...

I see you can quite easily change from being one poster to another meanwhile defending your bogus claims all the time...Claritaslux.


For apartments in city centres but not for housing.

OK well lets discuss at your level, what kind of Pole goes abroad for work and stays for many years? i didnt say ONLY i said MOSTLY please dont change the words to suit your agenda, please educate me on the above im intrigued.

Ohh and less sarcasm next time we both know im smarter than you by a long shot.

Well guys from trying at this moment in time to buy both an apartment and a plot of land in the Gdansk area, I don’t see a dip in prices and trying to but a decent flat in a decent area is like looking for a needle in a hay stack. That’s the reality in Gdansk!