Overheated homes?

 At the half year point there is no sign that the boom in Poland\\\'s residential market is slowing down. And as long as the supply carries on failing to keep pace with the burgeoning demand, then it should continue for another decade. This is the view of Mikołaj Martynuska, director of CB Richard Ellis\\\'s soon-to-be officially launched residential and development advisory. According to him: „Developers are fighting over land, as new players are continuing to enter the market. The competition is causing an increase in the price of land and the creation of new residential zones." However, the major cause for concern – for house buyers at least – is that the number of new homes coming onto the market remains very much the same as it was for last year: in Warsaw 30,000 new units appeared by the end of the first half of this year – only marginally higher than the 29,000 for the same period of 2005, and for the whole of Poland no significant increase is expected by the year\\\'s end on the more than 110,000 homes constructed in 2005.

There still remain 4 or 5 main residential markets in Poland. Warsaw is by far the biggest, accounting for around 30 pct of the Polish market. Kraków and the TriCity are the next two biggest sub-markets, with demand increasing also in Wrocław and Poznań – with the growth of the latter, however, still being hampered by its perception as a business rather than a residential centre. Missing from the list is Poland\\\'s second city, Łódź, which remains unfashionable, as Mikołaj Martynuska elaborates: „Łódź is very much in the shadows of the residential market. This should change in a few years – there is a stock of buildings in a poor state and the population is decreasing, so for the moment supply should satisfy the demand."

Dizzy developers

Mikołaj Martynuska of CBRE draws a comparison with similar sized Spain, where prices have gone up 15-20 pct for the last 10 years, but where annually 500-800,000 new units have come onto the market. With much less new product, unless something is done, the pressure for housing will continue to be enormous. It is imperative that Warsaw\\\'s authorities act to make the freeing up of land for residential development much easier. This has taken place in the satellite towns outside Warsaw, with localities such as Piaseczno and Piastów taking advantage of the demand for housing emanating from the capital and where local councils have made the granting of permission for residential development a priority. Białołęka on the outskirts of Warsaw has seen a 60 pct increase in house prices on last year, as buyers increasingly regard it a new residential district of Warsaw.

 Living at the office

   Hochtief is also said to be considering a similar shift in its strategy. According to Mr Martynuska: „Prices per sqm for residential properties can now be higher than for offices – traditionally it is the other way round. I wouldn\\\'t be surprised if office buildings start being converted into residential blocks. Developers will definitely diversify into the residential sector – there is strong potential, high demand, low interest rates and mortgages are easier to obtain."

Nathan North