Record sales of investment land

The analysis carried out by Colliers International shows that the interest in investment land in 2017 was demonstrated primarily by developers seeking land for further residential projects. Only in the first three quarters of last year, the sale of plots for housing exceeded 70 pct of all market transactions. The heating up of the market was also visible in transaction prices for land that reached record high levels. Currently, prices even reach PLN 3,500 per sqm of usable and residential space while a year ago an increase to maximum PLN 2,500 per sqm was forecast. When a particularly attractive offer appears on the market, prices grow by 20 or even 30 pct compared to 2016. “This is a result of a significant imbalance between the demand for land and its lower supply each year. This trend can be observed not only in the capital but also in the largest regional cities. In 2017, developers adopted the strategy of aggressive extension of their land banks, competing in the purchase process by price, shortening the negotiation period and increased readiness to conclude cash transactions. In addition, developers are boldly analyzing large, multi-stage developments spread over the period of 6-8 years,” explains Emil Domeracki, director in the department of investment land at Colliers International.

In 2017 investors’ greatest interest was enjoyed by the areas on the outskirts of large cities and conurbations (especially Wrocław and Kraków) and areas closer to the centre, but requiring revitalization (Łódź, Tricity and Warsaw). Last year, the effective average price of land for office development remained at a stable level. However, also in this sector, there was a noticeable decline in the supply of attractive plots in large cities. Therefore, developers more often sought for locations that were previously typical of B-class buildings or bought centrally located plots including several-year-old office buildings, with a view to replacing them with new facilities. The cities that enjoyed last year's greatest interest among investors were Kraków and the Tri-City. However, it can be expected that developers, looking for new market niches, will also start to be interested in cities that have been neglected, such as Łódź, Lublin or Szczecin. When it comes to warehouse and industrial space, Central Poland and Silesia, Szczecin and Tri-City enjoyed the greatest interest among developers. Colliers experts predict that in 2018 the areas of investors' interest will not change in geographical terms, the only exception may be the greater popularity of Tri-City. There were no significant purchases on the commercial and service land market providing for the construction of huge shopping centres with a wide range of services and entertainment in large cities. Investors' interest shifted towards towns with less than 100,000 inhabitants and the retail park model. As a result, land prices in this segment remained stable, adequately to the scale and location of projects. Larger business and tourism contributed to the growth of demand for hotel rooms and conference space last year, especially in Kraków, Gdańsk and Warsaw. Furthermore, the classification of hotel services in planning studies provided developers with greater flexibility in the use of real estate, e.g. in a condo system, as an existing operator's franchise or as rental apartments or other collective residences (student halls, sanatoriums, senior homes). Colliers consultants predict that there will be a slight slow down in the purchasing activity in 2018 and the number of transactions will decrease. This does not mean, however, that the market of investment land in Poland will experience a downturn in the near future. Prices should continue to grow. In the case of attractive land, this increase may even be drastic due to the declining supply of such areas. The retreat of investors from the concept of building apartments for rent may only result in an increase of interest rates on bank deposits.