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The Warsaw Voice » Real Estate » October 29, 2008
ANALYSIS
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First Symptoms of a Bear Market in the Tricity
October 29, 2008   
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Przemysław Szkutnik, analyst at Ober-Haus:

The residential real estate market in the Tricity is a dynamic one. There have been significant changes over the past three years. First there was the bull market of 2006 and the first half of 2007, then came a time of stability (the second half of 2007 and first half of 2008), and now in the second half of 2008 the first signs of a bearish trend. There is still a high demand for apartments in the Tricity, but the high prices of the previous period and banks' increased requirements with regard to buyers' credit ratings have effectively decelerated the market. This is why there are far fewer transactions, both those concluded by real estate agents and those signed by developers' sales offices.

Developers were the first to react to the changes, offering bonuses such as a parking space included in the apartment price, kitchen fittings or even furnishings, or a plasma TV. They ultimately even resorted to the instrument most advantageous for buyers and least desirable for developers-price reductions. This is mainly true of projects whose construction began a year or two ago and whose sales have not ended yet. Wanting to close a project and sell everything, developers are reducing the prices of the last apartments by as much as 15 percent. This affects the prices for other projects, which have also gone down by about 5-8 percent.

The secondary market is the slowest to react to this kind of change. The reductions are small here, 2-4 percent, but vendors are showing an increasing tendency to negotiate. The least sought-after apartments are those in districts dominated by prefabricated concrete projects, such as Gdynia's Chylonia and Grabówek districts, and districts beyond the Tricity's beltway which are as yet poorly urbanized. However, the latter are tempting due to prices much lower than those in central districts.

The most important thing for buyers is the price, and that is what makes them decide to buy, though more affluent clients pay greater attention to location. To them, the most attractive districts include Gdańsk BrzeĽno, Jelitkowo, areas near Gdańsk's Old Town as well as Gdynia's ¦ródmie¶cie, Orłowo and Wielki Kack. Only very special clients set their sights on Sopot, due to the high prices there. I think the prospects for the residential market are not bad, especially since there is still a long way to go before demand is satisfied-in about a year the situation will be stable and the market will develop at its ordinary pace, without any great leaps.
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