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The Warsaw Voice » Real Estate » July 30, 2012
Residential and Luxury Apartment Market
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Luxury Apartments: Homes for Millionaires
July 30, 2012   
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Interest in luxury apartments has grown in Poland in recent years. They are bought as a home or investment not only by well-to-do Poles, but also by foreigners.

The market for luxury apartments started to develop in Poland in the late 1990s. Initially, developers carried out luxury residential projects only in Warsaw. Then they moved into other large cities, like Cracow, Wrocław and Gdynia, and into Polish vacation resorts like Sopot, Jurata, Międzyzdroje and Zakopane. Apartments in resort towns serve both as an investment and a second home where the owners can spend vacations in comfortable conditions tailored to their specific needs. After the vacation, the properties may be rented out on a commercial basis.

The financial crisis and the resulting economic uncertainty have had a significant impact on the Polish residential market, especially when it comes to premium housing. In 2009 and 2010, developers put on hold many luxury apartment projects, focusing on less expensive homes of a lower standard instead. In the last two years, the situation has improved steadily. As the economy gained momentum with each quarter in 2011, developers began to gradually resume the luxury apartment projects that they put on hold during the crisis, especially those in the best urban locations.

The market for luxury apartments has become a demanding one—a big change from several years ago when developers often dictated the terms and demanded payment for a significant part of the premises before they even began their construction projects. Today, customers willing to spend millions of zlotys on a premium apartment expect to be provided with something extraordinary in return. In addition to high standard, top-quality materials, they expect attention to detail and a prime location.

Buildings with premium apartments should have a central location and good access and be exceptional in other ways. Therefore, most such residences are offered in the central districts of cities, for example in Warsaw’s ¦ródmie¶cie district and in the Old Towns in Cracow and Wrocław. Today, to encourage buyers, in addition to an exceptionally attractive location, developers must offer amenities that were not available just a few years ago. One example is the increasingly common concierge service, or the constant presence in the building of a person combining the functions of a receptionist, butler, advisor and secretary.

Although there is no official definition of a luxury apartment, there are several features such an apartment must have. The most important ones are attractive location, excellent workmanship and attractive architecture. Customers who buy luxury apartments think first about their surroundings—they tend to choose locations in the city center, close to the Old Town, or in an expensive and fashionable district. Also important is the architecture of the building. It is best if the building has been designed by famous architects and in keeping with the latest trends. And top quality materials should be used to construct it. Luxury apartments are provided with air-conditioning and modern mechanical and electrical equipment controlled by a Building Management System (BMS) or a similar system. It is assumed that a luxury apartment should not be smaller than 70 sq m, though the minimum size differs depending on the market. A luxury apartment should be at least 2.8 meters from floor to ceiling. Another feature of luxury apartments is open space, which makes it possible to divide the apartment into a private part with bedrooms and a part where guests are received. Apartment buildings may be provided with a swimming pool, spa facilities and a gym. The occupants’ security is ensured by an around-the-clock security and surveillance service.

Expensive luxury
Experts say luxury apartments account for no more than 2-3 percent of all apartments offered on the Polish market. This may seem little, compared with countries such as Britain, France and Germany, but it is necessary to remember that the Polish market for luxury apartments is relatively young and still expanding.

Warsaw ranks first on the Polish market for luxury apartments in terms of prices. The city is where the largest number of such apartments is built and sold. But there are wide variations in luxury apartment prices in Warsaw—they range from zl.11,000-12,000 per square meter to over zl.40,000. In the southwestern city of Wrocław and the coastal Tricity of Gdańsk, Gdynia and Sopot, it is possible to find luxury apartments costing zl.10,000 per square meter. In the southern city of Cracow, you have to pay around zl.13,000. But there are apartments in these cities whose prices exceed zl.25,000 or even zl.30,000 per square meter. In the midwestern city of Poznań and the central city of ŁódĽ, where demand for luxury apartments is relatively low, the price per square meter may be lower than zl.10,000.

As far as the prices of the most expensive apartments are concerned, Warsaw leaves other cities far behind. According to real estate services company Emmerson SA, at the end of last year, the new housing market in Warsaw included apartments that cost more than zl.8 million. In Cracow, the most expensive newly built apartment was priced at around zl.6.5 million. In Wrocław, the most expensive unit was priced at more than zl.3 million. In each of these cities, there were plenty of apartments in the zl.2-3 million price range.

Residential towers
Luxury apartments may be located in a renovated old tenement building, converted factory, row house, or a high-rise building. Residential towers, popular in other countries, have appeared in Poland as well, with several projects of this kind already started. However, the global crisis has forced many developers to change their plans. Many projects were abandoned, some were suspended and some were redesigned and adapted to changing market needs.

So far by far the best known residential tower in Poland is the 141.6-meter, 36-floor Sea Towers in Gdynia. It was finished more than three years ago and the developer, Invest Comfort, managed to sell the apartments before the market slumped.

The Sky Tower nearing completion in Wrocław is much taller. It is 212 m tall, making it the highest residential tower in Poland. But inside, there will be fewer apartments than initially planned—236 instead of 900—and more office space. Apartments are priced between zl.10,000-41,000 per sq m. The project is scheduled for completion in late 2012.

Recently construction work ended on the most luxurious building in Warsaw: Złota 44. This tower, a project by Orco Property Group, is in the heart of Warsaw, on Złota 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 Złota 44 is popularly referred to, offers the most luxurious and highest-located apartments in Warsaw. It will have 251 apartments of varying sizes.

In May, Orco Property Group completed designing interior arrangements in the building and unveiled the full array of finishing options available to future residents. Each buyer can choose between 15 different styles with matching high-end household appliances from the most expensive brands and companies. The finishing packages and the furnishings are all included in the price.

“Złota 44 is the only high-class apartment building in Poland comparable with the world’s most famous projects of this kind, such as the Trump International Hotel and Tower in Toronto, One Hyde Park in London, Icon Brickell Residences in Miami, MahaNakhon in Bangkok, HSB Turning Torso in Malmo, and One57 in New York,” said Alicja Ko¶ciesza, sales and marketing director at Orco Property Group.

The prices of Złota 44 apartments start at zl.18,000 per square meter, with the average price at zl.32,000 per sq m.

Apart from Złota 44, several other high-rise buildings with apartments are under construction in Warsaw. Twarda Tower, being developed by Hines, will be 160 m tall. Located in the very heart of Warsaw on Twarda Street, it will hold a hotel on the lower floors and apartments on the upper floors.

High-rise buildings, however, account for a small percentage of luxury apartment projects in Warsaw. Over the past several years, several dozen such projects have gotten under way. Among the most prestigious apartments will be those developed by the Dom Development company in the second stage of the Opera estate in the vicinity of Saski Gardens in the center of the city. The developer has also constructed the Grzybowska 4 building in the same neighborhood. Occupants are gradually moving into this large apartment building. Among the most attractive luxury residential projects are also Rezydencja Piękna Nova developed by Magnus Group, Apartamenty Trio by Eco Group, Restaura Górskiego by Restaura Group, Nowe Powi¶le by the Menolly company, Puławska 111 by ECC Real Estate, Belgravia Residence by Belgravia Polska, Rezydencja Foksal by BBI Development, Klimt House by Echo Investment, and Platinum Towers by Atlas Estates.

An interesting option, not only for millionaires, is the CityZen estate being built by Spanish developer Espais in Warsaw’s Mokotów district. In June, two buildings were completed as part of this project, with a combined 99 apartments ranging from 29 sq m to 104 sq m in size. There are also seven service outlets in the buildings. So far the developer has sold more than 70 percent of the flats and most of the service space. “Customers are especially interested in smaller, functional apartments in what is a broader trend on the Polish market,” said Pablo Martinez Zabala, managing director of Espais Polska. “But we also remember those looking for larger premises—we have enabled them to combine smaller flats into large dwellings.”

CityZen is a modern housing estate with interesting architecture. It features a combination of glass, stainless steel and slabs of natural stone. This symbolizes a symbiosis of modernity and nature, the developer says. CityZen is special not only because of its elegant facade, but also its Zen-style patio, which is only accessible to residents.

Meanwhile, Real Management SA and the Capital Park group are building Rezydencje Pałacowa (Palace Residences) in Warsaw’s Wilanów district, billed as Poland’s first smart estate of single-family homes controlled from tablets, smartphones and other Apple devices. An iPhone or iPad application will make it possible to control lighting, curtains, household appliances and radio and television equipment. Additionally, the system ensures remote monitoring of the premises.

In the first stage of the project, the first 24 of a total of 48 luxury villas will be completed in the first quarter of 2013. The average size of each will be over 230 sq m together with adjacent private green areas. The estate will be one of the most exclusive as well as most expensive projects on the Warsaw real estate market. Home prices range from zl.2.5 million to zl.3 million.

Waterfront apartments
Warsaw is not the only city with attention-grabbing residential projects. In July, Mill-Yon Sp. z o.o., a member of The Israel Land Development Company Limited (ILDC), completed the first stage of the Aura Gdańsk luxury apartment development in an attractive location on Wyspa Spichrzów (Granary Island) in the center of Gdańsk. According to real estate professionals, the project is attractive because of its location, quiet surroundings and quality finish. These criteria determined the choice of the site—high-quality waterfront apartments are considered to be a good investment all around the world.

In addition, a growing number of Poles can afford to buy apartments in attractive locations as an investment. The prices of luxury apartments at the seaside are still lower than those in Warsaw—a luxury seaside apartment is available from zl.6,900 per sq m gross inclusive of VAT. Additionally, buyers are attracted by the prospect of having access to the sea in the summer and the possibility of profiting from rental: this type of accommodation can be relatively easily rented out if someone does not live there on a permanent basis.

Today wealthy Poles no longer settle for owning a penthouse on the top floor of a skyscraper in the capital. They are buying luxury apartments with a direct view of the sea and a top location. Some even make a profit. Vacation apartments are not only about prestige but are also a good investment. Small elegant flats can be a great hideaway for the owner to spend weekends and vacations, and even hold business meetings. Finished turnkey apartments can also be easily rented out when the owner is not using them. These days it is the in thing among wealthy businessmen to own a second home—a high-standard vacation apartment in a prime location.

One of the most prestigious projects on the Polish coast is under development in Mielno, West Pomerania province. The zl.52 million Dune apartment building being built there will meet the expectations of the most demanding customers. The building is located close to the sea on a dune surrounded by pine trees and small coastal vegetation. There will be direct access to the apartment building from the beach that will be a natural extension of the promenade, the developer says. There will also be a generally accessible terrace and a relaxation area with illuminated swimming pools that will be only accessible to apartment owners and users.

Dune is a high-class apartment building in which all the apartments will be finished on a turnkey basis and furnished with household appliances. Also available to residents will be a spa and wellness area and a café overlooking the Baltic. “I know that many people are asking about the possibility of buying the apartments with a view to renting them out later,” says Stein Christian Knutsen, CEO of the Norwegian company Mielno Holding Firmus Group, which is carrying out the project. “We can see that this is becoming a market trend, and more affluent people are also guided by the fashion for owning a second home near the beach. I’m not surprised. I’m been living in Mielno for several years now and cannot imagine any other view from my window than that of the undulating sea.”

The Dune project has entered its main phase. The walls of the building have been constructed and builders will soon begin installing the roof, doors and windows and then follow up with finishing work. The project will be completed in the fall. More than 60 percent of the apartments have already been sold. The top floor of the Dune building will house six 100-sq-m penthouses with large terraces and optional jacuzzis. The penthouse interiors have been designed by architects from the Matteo Nunziatti studio, while the overall design of the Dune apartment building is by Mellon Architekci.

Michał Witkowski, sales and marketing director at Atlas Estates:
The luxury real estate market is governed by different rules than the so-called popular segment. Unlike the latter, where we have seen prices decline in recent years and months, the cost of high-end real estate per square meter remains at a high level. This is because there is always a group of wealthy people who are interested in buying this type of property, to use it either as a residence or a prestigious company headquarters, an investment or a status symbol. This is exemplified by the recent sale of yet another penthouse—priced at more than zl.4 million—on the top floor of our Platinum Towers in Warsaw.

On the other hand, this is a small market and reaching the right customers is more difficult. It is necessary to remember that sales depend not only on interest but also on customer affluence. Large luxury properties of the highest standard are not cheap, as a result of which they are only affordable to a small group of the wealthiest people.

In this context, projects that attract attention with their magnitude such as residential towers stand a better chance of attracting customers. They also generate interest because there aren’t many of them. Besides smaller projects do not usually offer the possibility of buying an apartment with a spectacular view, and such views often attract customers.

Platinum Towers stand out on the Warsaw market today among the few large-scale projects. It is the only project of this kind in Warsaw that provides the opportunity to purchase exclusive turnkey penthouses with a panoramic view of the city center.
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