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The Warsaw Voice » Real Estate » January 26, 2012
Residential and Luxury Apartment Market
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Growing taste for luxury
January 26, 2012   
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Last year saw a revival on the Warsaw housing market. Developers resumed some of the projects they had put on hold during the crisis. This was accompanied by increased sales of finished apartments. Foreigners have contributed to the recovery on the market by stepping up their investment in housing, including premium apartments, in Warsaw and other Polish cities.

According to the Warsaw City Report – Q3 2011 by real estate services company Jones Lang LaSalle, in the third quarter of last year just over 2,800 housing units were sold and over 3,200 were launched onto the market in new projects in Warsaw. The number of transactions decreased slightly compared with the previous quarter, while the number of units newly launched onto the market was visibly lower than a quarter earlier. However, the overall number of units on offer increased again and reached the highest level in the history of the residential development market in the Polish capital.

In total, slightly over 14,500 units were launched for sale by developers and housing cooperatives in Warsaw in the last four quarters. The volume increased to a level of about 18,800 dwellings. Units priced between zl.6,000 and zl.9,000 per sq m, which are also those that are bought most often, predominate. In Q3 2011, no new projects in the upper market segments were launched for sale.

According to analysts at REAS, a company that provides advice to those planning and carrying out housing projects, developers are delivering an increasing number of apartments to the market and at the same time are trying to expand the number of potential buyers and better adapt their products to the financial capabilities of buyers. The prices of newly launched apartments per square meter have been falling steadily for several quarters, but, in an equally important trend, the size of the newly built premises is decreasing, leading a reduction in the average prices of housing.

Foreigners investing in Warsaw
Warsaw has long been the main housing market in Poland. The city is also where foreigners are buying the largest number of dwellings. According to the Polish Ministry of Internal Affairs, from 2006 to 2010, foreigners bought housing with a total area of 950,000 sq m in Poland. This means that they own about 19,000 housing units in this country. This is as if they bought all the apartments that were delivered to the market by developers across Poland in the first half of 2011 (18,700). In practice, investment by foreigners in the Polish housing market may be even greater than suggested by official statistics, because the ministry’s data do not cover purchases of apartments from housing cooperatives. Nor do the data include transactions involving investment funds, which are responsible for a large part of the housing purchases made by foreigners in Poland, according to the Lion’s House company.

What locations do foreigners choose the most often? Invariably, they continue to focus on large cities, showing a particular interest in Warsaw. The Warsaw market is the most liquid, making it easy to buy, sell and rent an apartment. This is probably the reason why 42.5 percent of the housing purchased by foreigners is located in Mazovia province—most of it in Warsaw and vicinity. Ma這polska province is the runner-up. It accounts for 12 percent of the total area of housing bought by foreigners in Poland in the past five years.

According to the Ministry of Internal Affairs, British buyers have purchased the most apartments in Poland since 2006. The total area of the premises they purchased during the last five years is almost 154,000 sq m. This is roughly 3,100 dwellings in all considering that the average size of a housing unit available for purchase today is 50 sq m. The Irish are second with 110,000 sq m of housing purchased, corresponding to more than 2,200 50-sq-m flats. A similar result was noted in the case of German buyers, who purchased 109,000 square meters of housing during the analyzed period.

The preferences of foreign buyers vary. Everything depends on the purpose for which they acquire the property. Today they usually buy housing in Poland for their own needs. In previous years, purchases for investment purposes were far more frequent. According to Lion’s House, for over a year now not many foreigners have been looking for real estate for investment purposes. When buying housing for themselves, they usually choose large properties in prime locations. The basic criterion is the prestige of the location and of the property itself. They buy both pre-owned and new housing. Due to their relatively poor familiarity with the market, foreigners often use the services of real estate agents.

A wide range of standard apartments
Those interested in buying an apartment in Warsaw, both Poles and foreigners, cannot complain about a lack of opportunities. At the end of last year, developers offered nearly 4,000 completed housing units for sale and several times more were under construction.

The boom on the Warsaw market is reflected by the excellent results of leading Warsaw developer Dom Development SA, which sold 454 housing units—in net terms—in the third quarter of 2011 alone, over 42 percent more than in the same period last year.

Dom Development still has the highest share in the Warsaw market among developers (estimated at 15.0 percent). The company had 3,367 dwellings under construction at the end of the third quarter of 2011, while offering 2,061 flats for sale. At the moment, Dom Development is in the process of carrying out 17 investment projects: Osiedle Saska (two phases of stage 2), Adria (stage 2), Klasyk闚 (stage 2), Derby 14 and 20 as well as V, stage 6 of the Miasteczko Regaty estate, Opera B, the Przy Ratuszu estate, the Wilno estate (two phases of stage 1, first phase of stage 2 as well as stage 3), the Akropol estate, and stage 1 and 2 of the Oaza estate in Wroc豉w.

The Marvipol company has also reported excellent results on the Warsaw market. In the first half of 2011 alone, it managed to sell 200 housing units in projects it is in the process of carrying out. Since 2009, Marvipol has steadily increased the number of housing projects carried out, planning to reach a stable level of 600 units sold each year from 2012 to 2016.

In 2010, the company bought attractive land in Warsaw where it has launched new residential developments. The projects under construction are Osiedle Zielona Italia in Nowe W這chy with almost 900 units, Apartamenty Mokot闚 Park, and the Hill Park Apartments luxury home estate in M這ciny, where around 470 premium apartments will be constructed.

In turn, Bouygues Immobilier Polska in January began selling apartments in its new investment project, La Cascade, in Warsaw’s Bielany district. The 13-story building will have 109 apartments ranging from 25 sq m to 87 sq m in size. Construction work will begin this year, with completion planned for 2013.

Major residential projects under way in Warsaw also include Osiedle Aleja Krakowska, which is being built by the Dolcan company, Kaskada na Woli by Gant Development, and Osiedle 19. Dzielnica by Spanish company Pro Urba.

Luxury in demand
Interest in luxury apartments in Poland has been growing over the past few years. The buyers are not just wealthy Poles but also foreigners, with both groups acquiring such apartments as either homes or investments.

The Polish luxury apartment market began developing in the late 1990s. Initially luxury residential projects were only built in Warsaw. Soon they also began to appear in other large cities as well as major resorts. But the majority of premium housing units are still constructed in the capital.

Experts point out that true luxury apartments account for just 2-3 percent of apartments offered on the Polish market. This might seem very little compared to Western countries such as Britain, France or Germany, but the Polish luxury home market is relatively young and still in the development stage. On the other hand, regardless of the country, the cost of such apartments is high. Luxury comes at a price. Prices of luxury apartments in the Polish capital can vary significantly, however, ranging from zl.11,000 per sq m all the way to zl.40,000 per sq m or even more.

Luxury apartments can be located in an old restored tenement building, in row housing, in old factories but also in skyscrapers. The global fashion for residential towers did not bypass Poland and several projects of this kind were begun some years ago. But the financial crisis modified developers’ plans. Many projects planned before the crisis were abandoned, some were put on hold and others were redesigned to better meet market needs.
Last year, after a hiatus of almost two years, work recommenced on the most luxurious building in Warsaw: Z這ta 44. This tower, a project by Orco Property Group, is scheduled for completion in 2012. It is a luxury building in the heart of Warsaw, in Z這ta Street, and will stand 192 meters (54 stories) tall. It was designed by the world-famous American architect of Polish descent, Daniel Libeskind. The “glass sail” (as Z這ta 44 is popularly referred to) will offer the most luxurious and highest-located apartments in Warsaw. It will have 251 apartments of varying sizes.

Towers are only marginal among luxury apartment projects in Warsaw. Several dozen projects were begun here over the past few years. The latest stage of Dom Development’s small-scale Opera project, next to the historical Saxon Garden in Warsaw, is sure to be counted among the most luxurious apartments. The same developer built Grzybowska 4, a large apartment block nearby.

Grzybowska 4 is an apartment complex comprising 287 apartments, including five penthouses. Sizes range from 38 to 250 sq m. Apart from apartments, the complex has 14 service outlets with a total space of almost 4,000 sq m.

Another interesting proposal for more affluent customers is the Klimt House apartment building in the Mokot闚 district by the Echo Investment company. The building will have 60 air-conditioned apartments ranging from 41 to 190 sq m in size. Residents will have access to 82 parking spaces in an underground garage.

Key projects in the premium segment also include the Mokotowska 59 luxury apartment building constructed by Orco. The building consists of 14 luxury apartments ranging from 58 to 240 sq m in area, with the rooms more than 3 meters in height on average.

Other luxurious and exclusive apartment buildings in Warsaw include Apartamenty Trio constructed by the Eco group on Stawki Street. Thanks to its unusual triangular shape, it is also one of the most eye-catching and original residential projects in the capital. The project’s unquestioned asset and unique feature is the bold, modern and simple shape of the building, unusual for residential premises, comprising three elements of different heights: an 18-story tower and two lower sections, one with eight stories, the other with four. Trio includes 192 functional luxury apartments of various sizes. Residents will also be able to use a two-level underground garage with 290 parking spaces.

Another original project is Woronicza Qbik, Poland’s first soft loft, that will open in 2012. The Woronicza Qbik complex will comprise four buildings with a total of 350 apartments, including 183 two-story lofts and 167 single-level apartments. Prospective residents have a wide choice. The developer offers apartments ranging from 32 to 206 sq m in size.

Other original Warsaw projects include Rezydencja Pi瘯na Nova by the Magnus Group, Restaura G鏎skiego by Restaura, Nowe Powi郵e by Menolly, Pu豉wska 111 by ECC Real Estate, Belgravia Residence by Belgravia Polska, and Rezydencja Foksal by BBI Development.

Apartments for rent
Investors all over the world, including Poland, realized a long time ago that buying an apartment downtown is an excellent long-term investment. Many such apartment owners decide to rent out their acquisitions. Apart from the increased value of the real estate itself, which they will cash in on upon selling the apartment one day, they can count on regular income that is often equal to a high-interest bank deposit.

Penthouses—or luxury, often split-level, apartments, usually located on the upper floors of apartment buildings—can often be found in the central, and consequently most expensive, districts of Warsaw. The largest number of projects including such apartments hit the market in 2008, which means still before the crisis. According to analyses by the Emmerson company, developers are now focused mainly on housing from the so-called popular segment, which explains why the supply of penthouses is not increasing.

Currently, there are some completed projects on the primary, or new housing, market which include unsold penthouses. But in this case, developers prefer to wait a little longer for a buyer instead of immediately reducing the price. Consequently, the prices of penthouses have decreased less considerably recently than dwellings in lower segments. The effective prices of new penthouses depend on the project, but they usually range from several thousand to several tens of thousands zlotys per square meter, which, combined with their large size, means that the cost of such a dwelling may run into several million zlotys.
Premium apartments and penthouses are often treated as a capital investment. Such an investment makes it possible to profit from lease, and in the long term also benefit from an increase in the value of the property. Polish subsidiaries of multinational corporations are often interested in renting such premises. Foreign companies usually provide their senior managerial staff with such top VIP-standard housing.
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