Polish land in demand

. Increased activity over residential land has been observed by JLL experts since the end of 2013. Record high apartment sales, the ‘Apartments for the Young’ programme and the relatively good availability of mortgages have encouraged developers to replenish their land banks. Plots covered by a local zoning plan or site development conditions, or even better a building permit and a construction design, are the most in demand. Developers operating in Poland had PLN 1.6–1.7 bln to spend on new plots last year. Developers were able to pay between PLN 1,800 and PLN 4,000 per sqm of useable and residential space in Warsaw’s Śródmieście district. In other districts prices ranged from PLN 400 to PLN 2,500 per sqm of useable and residential space. In Polish cities with more than 400,000 people, the price was from PLN 550 to PLN 1,300 per sqm of useable and residential space. Another effect of the good economic climate has also been the growth in the popularity of joint venture projects. Meanwhile, oversupply on the market in the Persian Gulf area, Poland’s healthy economic indicators and, importantly, the promotion of Poland in this region, has intensified the interest of investors from Saudi Arabia, the United Arab Emirates, India, the Republic of South Africa and China in Polish land. “Representatives of these companies are visiting Poland and getting to know the market. They are usually interested in specific locations in Warsaw: in Śródmieście, the Wola district close to the city centre and the Żoliborz district close to the city centre,” claims Daniel Puchalski. The expert expects that in 2015 the trends will be maintained, demand will grow considerably, supply will remain at a stable level and prices will go up slightly.

The situation on the office market in Poland, despite the oversupply of office space, or perhaps because of it, has resulted in a situation in which developers are taking the opportunity to buy plots more cheaply now with the prospect of building a new facility in a few years’ time. This is why demand and prices should remain unchanged. However, the supply of new plots could grow. “Cities such as Warsaw, Wrocław and Kraków are those that show the most potential. As far as the capital city is concerned, developers are looking at areas along the new underground line and following the road-building plan in the city, particularly the ring road. Average prices in Warsaw’s central business district now amount to PLN 2,000–4,000 per sqm of useable and office space, while prices range from PLN 1,600 to PLN 2,200 per sqm of useable and office space close the limits of this district. In more remote districts, the price is PLN 600 to PLN 1,300 per sqm of useable and office space, whereas in Polish cities with more than 400,000 inhabitants, such space costs PLN 400 to PLN 1,100,” explains Daniel Puchalski.

Transactions aimed at the development of small convenience facilities or retail parks with areas of 2,000–5,000 sqm in towns of more than 50,000 inhabitants currently dominate the retail land market. Land for the construction of retail facilities combined with a bus or railway station are also enjoying a great deal of popularity, as shown by the interest in tenders organised by the Polish State Railways (PKP) and the Polish Post (Poczta Polska). According to the JLL report, one sqm of useable and service space on land designated for large-format retail in Warsaw costs PLN 2,000–5,000. Prices range from PLN 1,500 to PLN 2,000 per sqm of useable and service space in Warsaw areas where retail parks or detached facilities could be built. Meanwhile, in other large Polish cities (with more than 400,000 inhabitants) you should be prepared to pay from PLN 400 to PLN 1,200 per sqm of useable and service space. JLL’s analysts expect that the supply, the demand and prices will remain at their current level in 2015.

Daniel Puchalski also believes that the market for hotel development land will undergo a revival. Based on JLL’s market analysis, in the next 3–5 years app. 10–15 new hotel facilities will be built, half of which will be budget hotels. Warsaw continues to enjoy the most interest among hotel operators looking for new locations, as well as Wrocław, Kraków and the TriCity – and similar to office investors, hotel operators are tending to look for areas with good transport links and located close to the city centre. Areas along the second underground line are the most popular in Warsaw, while in other cities they tend to be near the main stations and transport routes.

The situation for agricultural land also looks interesting. “May 1st 2016 is approaching, when the agricultural land market will open up to foreigners who are citizens of the countries in the European Economic Area or the Swiss Confederation. This means that they will be able to buy agricultural land under the same terms as the citizens of the Republic of Poland. This allows us to think that the interest in purchasing agricultural land will not decrease. Interestingly, it will also be generated by foreign investors because despite the growth trend, the prices of agricultural land in Poland are at least two or three times lower than the average prices in other countries of the European Union, where there is often a shortage of free land,” explains Daniel Puchalski. “Investors interested in the agricultural market are trying to ‘book’ attractive plots for themselves by leasing them in order to avoid the necessity of obtaining a permit from the Minister of the Interior for their purchase, as well as to guarantee the acquisition price after 2016. The growing demand for agricultural land is having an impact on the growing price expectations among the owners of agricultural land designated for sale,” reads the report. Polish agricultural land is attractive for funds interested in raising cattle and farming from across the world.