Shortfall of as many as 7,500 luxury homes

According to the report, the total value of transactions on the primary luxury real estate market currently amounts to app. PLN 500 mln per year, 90 pct of which is from the sales of luxury apartments, with the remainder being luxury houses. There are currently 160–180 sales transactions involving luxury apartments on the Polish market annually, while the number of transactions on the luxury houses market is 20–25 with an estimated value is PLN 50–57 mln. “Luxury is concentrated in Warsaw, which is no surprise. Other locations of luxury residential projects include Kraków, Wrocław and the TriCity. Poznań too, but there are really very few of them there,” says Kazimierz Kirejczyk, the managing partner of Reas. “The highest historical sales price achieved on this market in Warsaw is PLN 65,000 per sqm in the Rezydencja Opera project,” he adds. In spite of this, KPMG points out that the prices of luxury properties in Poland have been substantially discounted. By comparison, the prices are four times as high in Austria. However, the market has clearly been developing. Echo Investment’s Melody House project is cited as an interesting example. The building was considered to be a trendsetter on the luxury apartment market of in Poland because of its location, the amenities installed in the building and the quality of apartments. When it was completed in 1999, the apartments cost USD 2,500 per sqm. “Now their value is at least three times as high,” says Kazimierz Kirejczyk. Jan Zajączkowski, the president of Eko Park, added that one of the characteristics of luxury properties is the fact that they have an unwritten price increase guarantee.

As far as the growth potential of the demand is concerned, the Poles are still far behind the European average. The average value of assets per European Union resident amounted to USD 153,600 – seven times as much as in Poland, where it was USD 22,200. According to KPMG’s calculations, Poland is to reach the European average in 43 years, assuming that the ownership of such assets continues to grow at the current rate. According to the report there are 47,000 people in Poland with liquid assets of more than USD 1 mln. The report states that 84 pct have one luxury property, while the other 16 pct will probably want to buy such property. And this is likely to be located in Poland because, according to KPMG’s and Reas’ survey, 99 pct people who already have such properties have them in Poland while the remaining 1 pct have properties in Poland and abroad.

When can we consider an apartment to be luxurious? The authors of the report asked the wealthiest people in Poland, with assets worth more than PLN 1 mln, who responded that for them a luxury apartment is located in a large city and is turnkey finished. The opinion of such respondents was that the lowest price of such an apartment is around PLN 19,700 per sqm. However, there are no market guidelines in place specifying the precise cut-off between luxury and standard apartments.

The president of Eko Park goes on to add that there cannot be too many luxury apartments because luxury is rare and difficult to find. “Even in Eko Park I would not call all the apartments luxurious. Furthermore, there are divisions into various classes of apartments even in the luxury apartment segment itself,” he added. According to market analysts an apartment is luxurious if it features the following amenities: video surveillance – 90 pct of such projects have this, while 74 pct have a reception area and nearly half have air-conditioning. Such features as a security service, a fitness club, sauna, swimming pool, concierge and intelligent house solutions are also common. The size of an apartment is not considered to be an indicator of luxury in Poland. A 50 sqm studio, which was sold for PLN 2.5 mln, is one such example of this. According to developers, size becomes important if such an apartment is actually intended to be the residence of the buyer. However, in the majority of cases buyers lease such apartments or they only live there for a few days a month when they are on a business trip. “There are also collectors who want to have apartments in the best projects in Poland, which is why we are not surprised to see the same clients in different projects,” says Rafał Szczepański, the vice-president of BBI Development. Katarzyna Rauber of Yareal adds that the location is more important for such projects than the amenities. “A luxury apartment building should have good transport links but be away from the stress of life in the city,” she comments.