PL

Poland PRS is the safest

Residential
Institutional rental comes from Western Europe and is firmly established, among others, in Germany, Switzerland and the Netherlands. For several years, interest in the PRS market from both investors and tenants, has been steadily growing in Poland.

The sector has been developing since 2014, when the state-owned Fundusz Mieszkan na Wynajem fund purchased the first apartment building in Poznan for institutional rental. Since then, more and more newcomers have appeared in this market segment. Avison Young points out that its clear development only took place after 2019, when new players began to appear on the market. At the end of 2022, we had approx. 9,400 existing premises on the market and another 13,000 under construction. Current market conditions mean that even larger development opportunities are opening up for the PRS sector. High inflation and interest rates, poor access to mortgage loans increase the demand for apartments for rent.

The year 2022 closed for the PRS sector with a record high transaction volume. Avison Young experts emphasize that EUR 150 million is the best result achieved in this segment in the history of the young Polish market. Five out of seven transactions concluded in the sector last year, were located in Warsaw. PRS sector in Poland, due to its initial stage of development, is dominated by transactions on the primary market, where buildings are purchased directly from developers. Avison Young points out, however, that last year such a high volume was also built thanks to the exceptionally large share of secondary market transactions - the sale of Catella portfolio, which left Poland. The portfolio included residential premises in Złota 44 in Warsaw and Pereca 11 in Warsaw and Trio in Cracow.

Other transactions finalized in 2022 include the sale of 138 apartments in Studio Plac Dominikanski in Wroclaw, the purchase of 136 apartments in Unique Tower in Warsaw, the purchase of 116 apartments in Wola Nowa project in Warsaw, and the sale of 55 apartments in Metro Polczynska complex in Warsaw. Avison Young emphasizes however, that it should be noted that many forward funding projects were implemented simultaneously. The PRS investment market is characterized by various types of acquisitions, depending on the status of the project. Most agreements signed in 2021-2022 in Poland, included forward financing, when the parties conclude a purchase and sale agreement at the beginning of the construction process. The investor provides financing for the individual stages of the project, most often in the form of advance payments towards the purchase price.

Avison Young emphasizes that forward funding transactions, finalized over a period of about 2 years, reflect the actual market dynamics and investors' appetite for the PRS product. In 2021-2022, approximately 6,000 PRS units in 15 investments, the total volume of which amounted to approximately EUR 700 million were the subject of forward financing deals. The most active investor and the undisputed leader in forward funding projects in this period was Heimstaden Bostad, responsible for over 60 pct. of the transacted volume. As a consequence, the entity is also the most dynamically developing PRS operator in Poland.

Investment funds usually buy entire buildings and even residential complexes, which they then allocate for institutional rental. Along with the development of the PRS sector in Poland, Avison Young also observes changes in the cooperation model. Projects implemented in the build to rent formula, where residential properties are built from scratch for rent, are very popular. This formula makes it possible to standardize subsequent rental rates. Avison Young points out that investors active from the very beginning on the PRS market in Poland are now giving way to newcomers. The undisputed leader in terms of the number of PRS units at the construction stage is Swedish Heimstaden Bostad, which has 27 per cent share in total resources under construction. It is followed by the operator Resi4Rent, Vantage Rent and Resi Capital. After launching all new projects which are currently under construction, Resi4Rent will maintain its dominant position in the sector, becoming the owner of 24 per cent of resources. Heimstaden Bostad, the most dynamically developing operator, will occupy the second position with 17 per cent market share. As far as the origin of capital is concerned, the structure of the Polish PRS market is dominated by investors from Israel, Germany and the Netherlands. Their transactions accounted for a total of 75 per cent of total transaction volume since 2014.

According to Avison Young report, over the last nine years the total volume of closed deals in the PRS sector in Poland exceeded EUR 325 million. In terms of demand, PRS market is currently developing very dynamically, which is paradoxically favored by the geopolitical and macroeconomic situation: the war in Ukraine generates an influx of potential tenants, high interest rates make it difficult for potential buyers to obtain a loan to buy their own apartment. On the other hand, some investors are suspending or renegotiating new projects due to rising construction costs resulting from rising energy and raw material prices, destabilizing supply chains and increasing financing costs.
However, looking at investment activities on the PRS market from the perspective of the end of 2022, Avison Young expects further development of investments in this sector, assuming that the costs and financing strategies adopted by the banks will not stand in the way.

Residential properties and commercial convenience projects, catering to the basic needs, are considered the safest in times of widespread market uncertainty. Avison Young adds that the PRS sector of apartments for rent will develop not only due to inflation or high mortgage rates, but also due to the changing perception of homeownership. Across Europe, the number of people renting flats rather than owning has been growing for many years. The rental trend is starting to gain momentum thanks to the greater mobility of Poles and more frequent changes, which to some extent have also been enabled by the pandemic. This is because renting does not oblige individuals to be permanently bound to their place of residence, but gives them the possibility of flexible changes, such as moving to another city for work.

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schedule 24 March 2023
Opr./edited by ANZ

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schedule 24 March 2023
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schedule 23 March 2023
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schedule 23 March 2023
Opr./edited by ANZ

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schedule 23 March 2023
Opr./edited by ANZ

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schedule 23 March 2023
Opr./edited by JC

According to the latest Avison Young report, at the end of 2022, there were over 9.4 thousand units in the pool of apartments for institutional rent in Poland, and another 13 thousand flats were under construction. The prolonging conflict in Ukraine and the significantly reduced credit scores increase the demand for renting apartments and thus, affect the development of the PRS market in Poland.

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schedule 22 March 2023
Opr./edited by ANZ

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schedule 22 March 2023
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schedule 22 March 2023
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schedule 22 March 2023
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schedule 22 March 2023
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schedule 21 March 2023
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schedule 21 March 2023
Opr./edited by ANZ

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schedule 21 March 2023
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schedule 21 March 2023
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schedule 21 March 2023
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schedule 21 March 2023
Nathan North
deputy editor

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Latest in Residential

schedule 23 March 2023

PRS with ambitious plans

According to the latest Avison Young report, at the end of 2022, there were over 9.4 thousand units in the pool of apartments for institutional rent in Poland, and another 13 thousand flats were under construction. The prolonging conflict in Ukraine and the significantly reduced credit scores increase the demand for renting apartments and thus, affect the development of the PRS market in Poland.

schedule 15 March 2023

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schedule 15 March 2023

PRS is the safest

Institutional rental comes from Western Europe and is firmly established, among others, in Germany, Switzerland and the Netherlands. For several years, interest in the PRS market from both investors and tenants, has been steadily growing in Poland.

schedule 13 March 2023

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schedule 28 February 2023

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schedule 13 December 2022

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schedule 14 November 2022

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schedule 14 November 2022

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schedule 10 November 2022

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schedule 17 October 2022

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schedule 13 October 2022

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schedule 19 September 2022

Unique Tower handover for Heimstaden

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