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The Warsaw Voice » Real Estate » July 30, 2008
Residential Market
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Warsaw Residential Market
July 30, 2008   
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The Warsaw metropolitan area continues to dominate the Polish real estate market. The research and analysis department of Emmerson, a Polish real estate services company, estimates that Warsaw and neighboring areas account for about 75 percent of modern office stock in Poland, 60 percent of modern warehouse and logistics space, 30 percent of retail space, and 15 percent of all hotel beds in the country.

This trend is not surprising because the Warsaw region is the most economically developed area in the country. In 2006 Mazovia province generated 22 percent of Poland's gross domestic product. Warsaw accounts for a third of the province's population. Together with adjacent areas, Warsaw forms a metropolitan area with more than 2.5 million residents.

One visible trend in Warsaw is an influx of new residents not just from other areas of Poland, but practically from all over the world. The city's population has been growing continually since the start of the decade. It stood at 1.7070 million at the end of September 2007. GUS forecasts a slight drop, to 1.6780 million, by 2010.

New business and retail centers are being built all around the city, not just in the central districts. There is a natural trend, typical of many large cities, for residents to move beyond the central area to numerous outlying localities. In Western Europe expensive luxury apartment buildings for the wealthiest residents usually dominate city centers. In Warsaw this trend is only beginning.


Residential construction in Warsaw
Warsaw is Poland's largest residential market, dominated by large developers. Foreign developers include companies from Spain, Italy, France, Israel, and Ireland.

There were about 780,000 housing units in Warsaw at the end of 2007, with a total space of 44.5 million sq m. There were 457 units per 1,000 residents, far above the national average of 341 units and more than in other large cities in Poland. Last year was a record one in terms of the number of building permits issued. Permits for the construction of 30,000 dwellings were issued in Warsaw last year, 65 percent more than in 2006.

2006 and the first half of 2007 were a time of an extremely rapid price growth on the Warsaw residential market. Limited supply and strong demand pushed average housing prices up by several dozen percent during this period. Demand weakened noticeably in the second half of last year and the first few months of this year, while supply grew, causing the price growth to decelerate.

One factor reducing demand was the narrowing group of people with a credit rating enabling them to take out a mortgage. Housing prices reached such high levels that fewer prospective buyers wanted to take out loans, especially as interest rates continued to rise.

Prices in Warsaw differ depending on the district. The highest prices are in the Śródmieście, Mokotów, Żoliborz, Ochota and Praga districts. The cheapest apartments are those offered in Białołęka, Wawer, Ursus, Bemowo, and Targówek.


Warsaw districts
Warsaw is divided into a total of 18 districts.

1. Central districts
The most prestigious districts of Warsaw are Śródmieście and Mokotów. There are hardly any new projects in Śródmieście, with the possible exception of a few luxury apartment buildings, while Mokotów has more than 20 projects in progress, most of them residential developments.

Praga is one of the oldest Warsaw districts with preserved tenement houses from the early 20th century and the interwar years (Old Praga). Housing estates were built next to them in the 1950s (New Praga). Praga's pride is the neighborhood of Saska Kępa with typical 1920s and '30s residential architecture.

Wola is a former industrial district with historical roots. Elections of Polish kings were held there in centuries past.

Żoliborz is a district of green areas that are considered to be an ideal location for residential and leisure projects.

2. Northwestern and northern Warsaw
Bemowo, incorporated into Warsaw in 1951, is a rapidly developing district and a major sports and retail center. Next to Wilanów, Białołęka is the district with the greatest number of new residential projects, many of them single- and multi-family houses along exit roads to Białystok, Gdańsk, Ostrołęka, Suwałki and Lake Zegrzyńskie.

Bielany is one of the greenest districts in Warsaw and home to Bielański Wood, Młociński Park, and Bemowo Forest, close to the Kampinoski National Park.

3. Southwestern Warsaw
Ursus is one of the smallest districts in Warsaw, strongly urbanized, with industrial land accounting for 20 percent of its total area. Many industrial lots are currently undergoing redevelopment. Plans are in place for a large residential estate with accompanying infrastructure.

Ursynów, third in terms of area, is one of the Polish capital's biggest dormitory communities with a strongly developing retail and service center market. However, the district was neglected for many years.

Wilanów is the least densely populated district in Warsaw and one that features rapidly developing residential construction as well as the famous palace of King Jan III Sobieski.

Włochy is a district with low-rise and small-scale development and also home to Okęcie Airport, which is being expanded continually.

4. Southeastern Warsaw
Southeastern Warsaw districts are areas of low-rise architecture, mostly single- and multi-family houses. The group includes Warsaw's largest district of Wawer and the smaller Targówek, Rembertów and Wesoła. Wawer includes a lot of forest land, which accounts for 35 percent of the district's area, and single-family houses dominate in the residential sector.

Targówek-similar to Wawer on the east bank of the Vistula-comprises two parts: residential (Bródno, Targówek Mieszkaniowy and Zacisze) and industrial (Targówek Fabryczny). Rembertów is another district with low population density and low-rise architecture interspersed with sports and recreational facilities. Due to its unique vegetation, part of the district is a nature reserve (Kawęczyn Reserve). Wesoła is the youngest district of Warsaw, 60 percent covered with forests.

The suburban districts of Wawer and Białołęka are Warsaw's largest districts. The smallest districts are Praga Północ, Ochota, Ursus and Żoliborz, each accounting for about 2 percent of the city's total area.

The most populated districts are Mokotów and Praga Południe, with 227,000 and 184,000 residents respectively. The smallest number of people live in Rembertów, Wesoła and Wilanów, 23,000, 22,000 and 16,000 respectively. Looking at ongoing residential development in Wilanów, this district should see a rapid rise in the number of new residents in the near future.


Residential market
Warsaw's residential market is the largest market for developers in Poland. According to Emmerson's research and analysis department, residential projects currently in progress will ultimately provide almost 44,000 new housing units in the city.

The most new apartments are being built in five districts: Wilanów, Białołęka, Bemowo, Wola, and Mokotów. Almost all the projects in Białołęka and Bemowo are in the mid-level housing segment, while higher-standard and luxury apartments are mostly being built in Mokotów, Wilanów, and Wola.

Emmerson's monitoring of the secondary market in Warsaw reveals that the most homes are put up for sale in Mokotów (17.9 percent of the total on offer), Śródmieście and Ursynów (12.5 and 10.8 percent respectively). On the other end of the spectrum, the fewest homes are offered for sale in Wawer (the largest district in terms of area), Włochy, Rembertów and Wesoła (each with about 1 percent).

Almost one in three apartments offered for rent in Warsaw is in Śródmieście, and one in four in Mokotów. These two districts dominate the rental market. Together with Żoliborz, they also have the highest rents. In all of Warsaw's districts, the average rent and the median of rents is over zl.2,000 per month. The lowest averages and medians are found in the less attractively located districts: Białołęka, Targówek, Wawer, Wesoła, and Rembertów.

Two- and three-room apartments dominate on the Warsaw rental market. Each group accounts for about 35 percent of the total. One in five apartments offered for rent has four rooms, while one-room as well as five-room and larger apartments account for a marginal percentage.

On the primary market, after the rapid price growth of 2006, estimated at 60 percent on average, last year brought a price correction. Though housing prices grew a few more percent in the first half of 2007, the growth halted in the second half of the year, and in some cases developers even reduced their prices.

As a result of the increased supply of housing and weakening demand caused by high prices and increasingly costly mortgages, the start of 2008 was a period of waiting. Mid-year clients are still waiting for bargains and demand is low, while developers are not rushing to reduce prices. Some developers, especially companies that are about to complete their projects and leading market players, are offering promotions and price incentives, but there is no sign of significant price drops. Emmerson estimates that demand for housing will grow in the second half of the year, while developers will maintain prices at their current levels and then gradually raise them, especially for properties in attractive locations.

According to Emmerson's research and analysis department, the highest housing prices are in the most attractive, central districts where luxury apartment buildings dominate-Śródmieście, Wola, Żoliborz, Mokotów, and Ochota. The lowest average prices are found in outlying districts where mid-level housing dominates: Białołęka, Ursus, Targówek, and Wawer.

Location will be an increasingly important factor. Housing in central, attractive locations will stay expensive, while decreases will mostly occur in less attractive locations with a high level of supply. However, price reductions will chiefly apply to the secondary market, especially homes in older buildings.

There is a growing number of new developments in areas around Warsaw. Six local centers can be distinguished where the largest number of projects are being built: areas around Legionowo, Pruszków, Piaseczno and Józefosław, Otwock, Mińsk Mazowiecki, and Wołomin. These are mainly estates of high-standard single-family houses, most of them detached or semi-detached. At the start of the second quarter of this year, there were about 70 projects in progress, most of them built by smaller, local developers.

Construction plots in Warsaw are becoming more expensive, and three groups can be distinguished:
  • the very center of Warsaw, where construction land prices are reaching astronomical levels in Żoliborz, Wola and Ochota. In Bielany, Praga Południe, Mokotów and Śródmieście the average price of land is zl.3,000 per sq m. These districts, except Praga Południe, have the fewest plots on offer. The medians of prices are lower than the averages, which means average prices are being pushed up by a small group of extremely highly priced plots;
  • districts with medium price levels; in Bemowo, Włochy, Ursynów, Targówek, Praga Północ, Wilanów and Ursus average prices range from zl.1,100 to zl.1,900 per sq m, and supply is moderate. In this group as well, the medians of prices are usually several hundred zlotys lower than the averages;
  • the cheapest outlying districts, where the prices of land are below zl.1,000 per sq m-Wesoła, Wawer, Rembertów, and Białołęka. Białołęka and Wawer, the two largest districts, together account for almost half the supply of construction plots in Warsaw.
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