‘Old’ is the new ‘new’

as developers enter this market niche with increasing enthusiasm. Adapting an old building for residential purposes is sometimes more profitable than renting it to businesses

  Palace bought by chance

Radosław Sieroń, president of WWG Management’s board describes how this investment began: “We had arranged a meeting with the publishers’ senior staff on quite a different matter, but in the end we found ourselves buying a palace.” The tender for the sale of the property took place in 2005, with the transaction being finalized in the summer of 2006. But PWN will not be rapidly moving out of this very attractive location, and so its employees will have until the summer of 2008 to feast their eyes on a view “worth a million dollars”, i.e. of the Royal Castle, which is just a stone’s throw away.

The Magnus Group company (previously Maripol) has also been waiting for a considerable time to start work on restoring an early 20th-century tenement building in the heart of Warsaw, as Paweł Arabas, the Magnus Group’s sales and marketing manager, explains: “We have been working on the project on ul. Wspólna since 2000, when we started taking over individual flats, some of which we purchased from private individuals, others from the council. This took a long time, but we have put that behind us and are presently at the construction stage, with the whole job due to be finished this March.”

When old meets new

The ul. Wspólna residence comprises two buildings – one is the restored tenement building (15 apartments), the second is a newly built annexe (25 apartments). Though the prices asked for the apartments are certainly substantial, rising as the work proceeds and presently amounting to around PLN 16,000 per sqm, the Magnus Group is having no trouble in finding parties willing to pay. Only 2 apartments in the main building and a few in the annexe are still waiting for owners.

Prices hit a ceiling

Orco Property Group, by announcing the prices for what is now known as the Libeskind Sail – the ul. Złota 44 project (average price EUR 7,000 per sqm) – has also set something of a price limit for exclusive apartments in historic valuable buildings, on which basis future developers will set their price thresholds. This, at least, is what Radosław Sieroń, the head of WWG Management thinks.

Revitalizing tenements

But activity on the Warsaw market is clearly increasing. Universal Properties is refitting the former Hortex building on ul. Warecka for use (amongst other purposes) as apartments, while the Berken group is adapting the 3,000 sqm tenement at ul. Flora 3 into 16 apartments. Ghelamco’s property portfolio includes a building on ul. Foksal that it intends to restore; while in the first quarter of the year, Orco Property Group will be starting work on a tenement at ul. Mokotowska 59, to contain 12 future apartments in this old building. For its part, one of the first projects to be tackled by Reinhold of Sweden will be the modernization of a tenement building on ul. Nowy Świat.

This is a fund connected with the Saudi Arabian royal family, with its attention mainly focused on Wrocław. It is currently involved in two such investments: on ul. Rzeźnicza (a tenement) and on ul. Pretficza (a historic villa). The investor has also purchased two tenement buildings from the city on ul. Piwna for PLN 4.4 mln. A statement sent to us from Verity Development’s representatives declares that: “Verity Development regularly invests in the renovation of historically valuable buildings due to  our fascination with their unique shape and respect for architectural tradition. At present we are searching for other buildings of historic value in Kraków, Warsaw, Poznań and Łódź among other cities.”

 In the opinion of Artur Pietraszewski: “Obviously, much depends on the price being asked for a property, but where deluxe apartments in old interiors are concerned, developers’ profit margins are greater than for cheaper apartments. Project and material costs are higher, though not by much, than for standard apartments. The overriding factor for such projects is the concept and the unique and uniform style in which the interiors are to be furnished.”

Old but still attractive

However, before you are in any position to boast, you have to find a suitable building and then buy it, which means developers are constantly on the look out for opportunities. Apart from its investment in the palace (they have just received the permission required for changing its function from offices to residences), WWG Management has also purchased a post-war building at ul. Jasna 26, which was built on the foundations of the former Victoria hotel. WWG Management also has its eye on Łódź as an investment market.

Artur Pietraszewski sums up the present situation in these words: “A very few years ago, when there was not much office space to be had in modern ‘A’-class office buildings, the prestige of many a company was determined by the office having an address in a building of historic value in the city centre. But today the office space market is well developed and tenements restored a dozen or so years ago are no longer a luxury. So better to have them transformed into apartments, after which tenants can be found with very little difficulty.”