Record-breaking results on the investment land market in Poland. Transactions have exceeded PLN 5 bn in value.

2018-05-29  |  06:00
Says:Emil Domeracki
Function:Associate Director at the Investment Services | Land, Colliers International
Company:Colliers International
  • MP4
  • The value of transactions on the investment land market has crossed the threshold of PLN 5 bn, making this the best result since 2006. Purchases with the highest value involved the housing segment. Investors were particularly interested in land in need of revitalisation, located on the outskirts of large cities and close to the city centres. In 2017 and during the first quarter of this year, we have also observed an increased demand in the hospitality segment. Despite concerns surrounding the new legislation, the current year may be even better than the last one, as assessed by Colliers International experts.

    2017 was yet another year with records broken by developers, mainly in the housing segment which for the third year in a row would stir up much emotion on the land transaction market. Over 70 percent of this ‘investment cake’ fell to developers who put their money into housing projects,” Emil Domeracki, Associate Director at the Investment Services | Land, Colliers International, told Newseria Biznes.

    Colliers data shows that in 2017 the investment land market enjoyed the greatest prosperity in years. The transaction value exceeded PLN 5 bn, the best result since 2006. This favourable climate encouraged investors to make new purchases.

    The high demand in the housing segment made investors fight for every plot of land as soon as it appeared in an attractive location, where construction could start almost immediately.

    “Warsaw is facing the problem of a very limited availability of land. A large portion of the investment market has moved away to regional cities. It has been noticeable for a few quarters that markets such as the Tricity, Wrocław, Kraków, Łodź, and Poznań are where the transaction market is flourishing. This translates into the prices of land which in Warsaw have skyrocketed, sometimes growing at 60-80 percent compared to 2016. That's why developers have started to diversify their investment plans by shifting some of their activity to the regional cities, the Colliers International expert explains.

    A square metre of land in the centre of Warsaw costs from PLN 1,500 to PLN 4,000. Outside the centre, it's PLN 800-1,650, and in other cities with a population of more than 500,000, prices fluctuate around PLN 400-1,200.

    Much has been going on in the office segment. Construction developers commissioned over 736,000 sq. m., with 880,000 more planned for this year, 70 percent of which is located outside Warsaw. This high level of planned supply directly impacts on the engagement of investors interested in land for office projects, mainly on the Kraków, Tricity, and Łódź markets. High demand, in turn, is causing a drop in the number of uninhabited apartments (from 12.7 to 10.8 percent on the nine largest markets).

    As regards trade market, investors’ interest focused on smaller cities with population below 100,000. The warehouse space market has recorded reduced developer activity, although the transaction level remained high. In contrast, there has been an enormous increase in the number of new plots purchased on the hospitality market, a trend visible also in Q1 of this year.

    As stressed by the Colliers International expert, the period from January to March is a good sign for the whole year.

    “We expect this tremendous dynamics in investment land transactions to continue as the residential segment portfolio is still going up. We have noticed some concerns among investors, stemming mainly from the attempts at introducing new tax and legal regulations that could affect this transaction dynamics. Still, investors’ activity should remain high,” Emil Domeracki expects.

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