SPECIAL EDITION: EXPO REAL 2011

SPECIAL EDITION: EXPO REAL 2011

■ OFFICE SPACE

■ RESIDENTIAL

■ WAREHOUSES

& INDUSTRIAL

Photo by Zbigniew Panow for Warsaw City Hall

kol E01-E12 nr 10 real ok 9/23/11 10:00 PM

October 2011

Several new skyscrapers will appear in the Warsawcityscape over the next few years.One of them may become thetallest building in Europe.

Acompany owned by Jan Kulczyk,one of the richest men in Poland,plans to build a more than 282-

meter skyscraper in the center of the city,near Zawiszy Square. Originally, the pro-ject was scheduled to get under way in2009, but air traffic safety restrictions stoodin the way. Under the regulations at thetime, buildings taller than 130 meters couldnot be built in this area, which is in partcovered by the Ok´cie airport protectionzone. However, the regulations changedrecently, and today there are no formalobstacles to issuing a permit for a sky-scraper to be constructed there.

The Kulczyk Tower is expected to be282.4 meters tall, almost 52 meters taller

than Warsaw’s Palace of Culture andScience and nearly 24 meters taller than theCommerzbank Tower in Frankfurt,Germany, which is currently the tallesthigh-rise in Europe. The Kulczyk Towerwill be almost 81,000 sq m in area and hosta service complex, hotel rooms, apartmentsand garages.

The area where the Kulczyk Tower will bebuilt will become the “Warsaw Manhattan”in the future. Many developers are interestedin constructing tall buildings in this area.One ongoing project is the Warsaw Spireskyscraper, which is being built onTowarowa Street. The office complex willcomprise three buildings: a 220-meter towerand two side buildings, each with a height of55 meters. In all, the project will offer about100,000 sq m of office, service and retailspace. The developer is the GhelamcoPoland company, which also plans to con-struct a tall building on Zawiszy Square, onerising to 130 meters. It unveiled the idea at areal estate fair in Cannes earlier this year.

A few years ago, Spanish developerTorca bought a large plot on Towarowa

Street, hoping to build 200-meter skyscrap-ers. The plot currently hosts the Jupitershopping center and several other buildings.Local officials recently permitted the devel-opment of two towers there, one with aheight of 170 meters and the other rising to130 meters.

The area around the Marriott Hotel and theWarszawa Centralna train station will hostanother cluster of tall buildings in the future.A 260-meter skyscraper, designed byacclaimed architect Zaha Hadid and calledLilium, is expected to be built there.However, the project, which has already beenapproved by the Warsaw authorities, hasbeen put on hold due to the crisis. In theimmediate vicinity, on Emilii Plater andNowogrodzka streets, two 218-meter towerswill be built in a project that will be in har-mony with the skyscraper designed by Hadid.

The Twarda Tower, being developed bythe Hines company, will be 160 meters tall.Located in the very heart of Warsaw onTwarda Street, it will hold a hotel on thelower floors and apartments on the upperfloors. Nearby, on ONZ traffic circle, a 150-meter Dipservice skyscraper will be con-structed. Dipservice is part of the GrupaPolski Holding NieruchomoÊci real estatecorporation.

At the beginning of the previous decade,developers worldwide started constructing

E2 THE REAL ESTATE VOICE

New Era of Skyscrapers in Warsaw

Z∏ota 44, Orco Property

Real Estate Voice Director:Marcin K∏osowski,

tel. +48 22 335 97 [email protected]

Real Estate & New Business Executive Manager:

Agnieszka Roƒda-Bieƒ,tel. +48 22 335 97 81

[email protected] Real Estate Voice Editor:

Andrzej [email protected]

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October 2011

many tall buildings with luxury apartments.The global fashion for residential towersalso reached Poland. Several such projectswere started and a number of others were onthe drawing board. However, many of theseprojects were later discontinued due to thecrisis. Some of them have been completelyabandoned, others have stalled and still oth-ers have been redesigned to suit new marketneeds.

After an almost two-year hiatus, con-struction work has resumed on Warsaw’smost luxurious building, the Z∏ota 44 sky-scraper in the city center. The tower, beingdeveloped by the Orco Property Group, isexpected to open in 2012. The luxuriousapartment tower will rise to 192 meters and54 stories above the ground on Z∏ota Streetin the very heart of Warsaw. The buildingwas designed by Daniel Libeskind, an inter-nationally acclaimed American architect ofPolish extraction.

The tower, nicknamed the “Glass Sail”for its light form, and bright, almost trans-parent facade, will house a total of 251apartments of various sizes. Located higherthan any other apartments in Warsaw, theywill be the most luxurious ones in the city,

according to the developer. The lower partof the tower will house retail space withgeneral access. The building will offer aswimming pool, a sauna, a spa center, a sundeck, a fitness club with a yoga studio andconcierge service. It will also have space forcelebrations, complete with house cateringservices.

Warsaw is not the only city in Polandwhere skyscrapers are being built. Investorsin other cities are also aiming high, asexemplified by the Sky Tower under con-struction in the southwestern city ofWroc∏aw. Initially, it was to have 51 floorsand 203 meters, but after the complex wasredesigned its height increased to 258meters including the spire. Constructionstarted in April 2008, but in November theinvestor, Leszek Czarnecki, one of thewealthiest people in Poland, put the projecton hold. Work was resumed in October2009. The skyscraper will be 212 meterstall, making it the highest residential towerin Poland. But inside, there will be fewerapartments than the initially planned 900and more office space, in addition to bou-tiques, delicatessens, a medical center, asports center, and a spa. A.R.

E3THE REAL ESTATE VOICE

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Twarda Tower, Hines


October 2011

Although there is currently noproblem with renting an officein Poland’s largest cities, new office buildings are stillbeing built. The industry’sencouraging prospects are dueto growing demand for modernoffice space.

Inrecent years Poland has strength-ened its position as a desirablelocation to invest and do business.

This means greater demand for new officespace among foreign investors and conse-quently a boom in the real estate sector.

“The market for investment in commer-cial real estate is directly dependent on theoverall economic situation,” says PiotrMaciàg, Commercial Real Estate MarketDirector at Unidevelopment. “After a peri-od of stagnation in 2008/2009 in the wakeof the crisis, we are seeing clear signs ofrecovery. Although there are disturbing sig-nals about the state of the economy in othercountries, the situation in Poland is stable,which leads to increased interest amonginstitutional clients in office space. This isevidenced by data gathered by organiza-tions analyzing the Polish market.According to this data, in the first half ofthis year, over 100,000 sq m more spacewas leased than in the corresponding periodof 2010.”

The office market in Poland, and particu-larly in Warsaw, is clearly speeding up. Thedemand for office space is growing, whilevacancy rates are rapidly falling in a num-ber of popular locations, according to CBRichard Ellis’ Q1 2011 Poland and WarsawMarketView report.

Joanna Mroczek, director of the Researchand Consultancy Department at CB RichardEllis in Poland, says that demand for mod-ern office space is growing while the vacan-cy rate is decreasing. “Total take-up in 2011is expected to be at a similar level or evenhigher than in 2010,” says Mroczek. “Primerents in Warsaw are showing an upwardtrend—24-26 euros per sq m per month inthe city center, and 15-16 euros per sq m permonth in non-central areas. However, thereare no sharp changes and the increase hasbeen rather gradual.”

Predictably, most modern office build-ings are being constructed in Warsaw.According to Paulina Misiak of Cushman &Wakefield, the supply of modern officespace in Warsaw has increased 1,400 per-cent compared with 1991, from 250,000 sqm to 3.5 million sq m. There are over 375modern office buildings in Warsaw, Misiaksays. “The office space delivered in the last10 years is among the most modern of itskind in Europe both in terms of its standardsand technical solutions,” she adds.“Examples include the Rondo 1 andMetropolitan buildings. Separate officesand endless corridors have been replaced byopen-plan space and the reception desk

instead of the office of the company’s pres-ident is now the company’s hallmark.”

New projectsIn the next 12 months, few projects will becompleted, but the completion of a signifi-cant number of major office developmentsis planned in 2013 (such as Warsaw Spire,with an area of 100,000 sq m). Currently,around 400,000 sq m of offices are underconstruction, of which over 30 percent hasbeen pre-leased.

The trends on the office market inPoland show that the greatest recovery andpotential have been visible on the Warsawmarket.

“Although areas with significant poten-tial also include Cracow, Wroc∏aw, theTricity, Katowice, Poznaƒ and ¸ódê, thesituation in each of these cities should beconsidered on an individual basis,” saysMaciàg.

“It often depends on one or two large pro-jects. The biggest companies usually viewthese cities as potential locations for spaceintended for business process outsourcing(BPO). In most cases, central offices stilltend to be located in the capital.”

Revival on regional marketsRecently there has been a lot of activity onregional markets as well. “We have beenobserving increasing revival in regionalcities—a third of the transactions in whichwe have participated took place outside ofWarsaw,” says Cushman & Wakefield’sMisiak.

Prime office stock in Cracow stands ataround 500,000 sq m. “In the first half of2011, about 24,000 sq m hit the marketthrough schemes such as Bonarka 4Business (phase 1) and Green Office (build-ing B),” reads the Marketbeat Autumn 2011report from Cushman & Wakefield.“Around 61,500 sq m is under construction,of which more than 30 percent will bedelivered before the end of 2011. It shouldbe noted that about 80 percent is being builton a speculative basis—without pre-letagreements. Take-up in the first half of2011 stood at 55,370 sq m, with renegotia-tions and new agreements representingaround 46 percent. The largest transactionwas the renewal of a lease of 16,100 sq m inthe Kraków Business Park by Shell. Newcompletions pushed vacancy rates up slight-


➛

Modern Offices Still in Demand

Ambasador, Kronos Real Estate



■ The Promenady Wroc∏awskie (Wroc∏awPromenades) district is being developed onaround 20 hectares in the heart of Wroc∏aw.When completed, the district will be hometo 2,000 apartments and 80,000 squaremeters of office space. Construction hasbegun on the first office building, thePromenady Epsilon, which will have 6,700sq m of space. The developer has preparedthe first residential phase with 248 apart-ments. The whole project, which began in2010, is scheduled for completion in 2018.

Due to the magnitude of the project andthe long construction period, to build thevalue and synergy of construction, VantageDevelopment SA is open to join forces withother financial partners and developers tocomplete the project.

The proposed forms of a team-up are asfollows:

1. The developer can work jointly withanother developer or financial investor onindividual construction phases as part of aspecial-purpose vehicle.

2. The developer can sell a part of theproperty complete with the developmentconcept.

3. Partners could provide funds for theproject or individual phases of it.

Contact:

Henryk Wojciechowski—Development Directortel. +48 71 798-35-41; cell +48 510-012-012e-mail: [email protected]

www.vantage-sa.pl

Construction of New District in Wroc∏aw Commenced!

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October 2011

ly, and by the end of the first half of 2011the rate had risen to 10.4 percent. Askingrents remain at 13-15 euros/sq m/month.”

According to Cushman & Wakefield ana-lysts, with 395,000 sq m of office stock,Wroc∏aw is the second-largest and at thesame time the fastest-growing regional officemarket. In the first half of the year, about5,980 sq m of space came onto the market,including the Grabiszyƒska Office Center,which is being refurbished. A relatively largeamount of office space, 74,360 sq m, is underconstruction, most of this on a speculativebasis. Increasing development activity on theWroc∏aw office market is the result of sus-tained occupier interest and the lowest vacan-cy rate in Poland, Cushman & Wakefieldsays. The leasing transaction volume in thefirst half of the year was 17,670 sq m, withnew agreements making up 85 percent of thetotal, whereas prelets accounted for about 57percent of take-up. The largest transactionwas IBM’s lease of 8,000 sq m in theWojdy∏a Business Park. The vacancy rate inthe first half of the year increased slightly to4 percent, as new completions hit the market.Asking rents are 13-15 euros/sq m/month.

The report shows that developers havealso been busy in the Tricity area. The com-pletion of the Allcon Park in the first half of2011 brought the Tricity’s total office stockto 311,600 sq m. About 41,500 sq m ofoffice space is under construction, of which60 percent is scheduled for delivery beforethe end of 2011. Key projects under con-struction are the Olivia Business Center

(TPS), the Opera Office (Euro Styl), and theBCB Business Park (Ba∏tyckie CentrumBiznesu). In the first half of 2011, about11,640 sq m was leased, with new contractsaccounting for 77 percent of this total. Oneof the largest transactions was JeppesenPoland’s lease of 2,568 sq m in theArkoƒska Business Park. In the last sixmonths, the vacancy rate decreased by 2.2percentage points to 15 percent. Rentsremain at 13-15 euros/sq m/month.

Modern office buildings are also being con-structed in other large cities in Poland such asKatowice, Poznaƒ and ¸ódê. Prime officestock in Katowice is estimated to total around267,500 sq m. In the first half of 2011, onlythe 4,800 sq m of the completed Steel Office(Opal) project came on stream. Some 13,670sq m is under construction in four projects, ofwhich about 46 percent will hit the market bythe end of 2011. The Silesia Business Park I(Skanska Property Poland) and PiaskowaBusiness Center (Secus Property SA) havebuilding permits for a total of 20,622 sq m.The transaction volume in the first half of2011 totaled 23,790 sq m; new agreementsmade up 52 percent of this total. The largesttransaction in the first half of 2011 was therenewal of Capgemini’s lease of 5,700 sq m inAltus. Limited supply and growing occupierinterest pushed vacancy rates down to 15.2percent at the end of the first half of 2011,from 17.3 percent at the end of 2010. Askingrents remain at 12-15 euros/sq m/month.

According to the Marketbeat report, atthe end of the first half of 2011, Poznaƒ’s

total office stock stood at 250,120 sq m.The 4,170-sq-m Murawa Office Park (AigaInvestments) was completed. About 26,320sq m is under construction, of which 38 per-cent will be delivered to the market by theend of 2011. The largest construction startsare Malta Office Park III (Echo InvestmentSA), Okràglak (Immobel), and AndersiaBusiness Center (Von der Heyden Group).In the first half of 2011, some 30,700 sq mwas leased, with new agreements represent-ing about 85 percent of the total.Renegotiations accounted for about 11 per-cent. The largest transaction made in thepast six months was Allegro’s lease of14,600 sq m in the Cluster Grunwaldzka(Pixel building), currently under construc-tion. In the first half of the year, askingrents remained at 14-16 euros/sq m/month.The vacancy rate decreased by about threepercentage points to 11.7 percent.

With 233,550 sq m of office space, ¸ódêis the sixth-largest regional office market.Some 35,500 sq m is under construction,including the Teofilów Business Park(10,000 sq m) and the first phase of theGreen Horizon (18,000 sq m). The leasingtransaction volume in the first half of 2011totaled around 21,780 sq m, of which themajority (96 percent) was new agreements.Prelets made up about 52 percent of totaltake-up. The largest transaction was InfosysBPO Poland’s lease of 11,500 sq m inGreen Horizon, developed by SkanskaProperty Poland. The vacancy rate isfalling, reflecting limited supply and stabledemand. In the first half of 2011, the ratewas 19.7 percent. Asking rents rangebetween 12-14 euros/sq m/month. A.R.


➛

■ Poland is among themost attractive economicregions of Central andEastern Europe. For manyyears Warsaw has beenthe strongest market in thecountry. The office marketin the capital continues torecord the biggest interestfrom customers.According to a report by

the Warsaw Research Forum, modern officespace leases in Warsaw in the first half of2011 reached 322,200 sq m, rising by 46percent from the same period last year. Inthe second quarter, leases for space notexceeding 1,000 sq m clearly prevailed.Ghelamco signed four major contracts withnew tenants during this time. PKN Orlenand the Rabobank Group leased officespace in the prestigious Senator officebuilding. Cargill and Hyundai Motor Europe

leased premises for their new headquartersin the Nova Mokotów building. The newtenants signed contracts for 1,600 and1,000 sq m of modern A-Class office spacerespectively.

As for the vacancy rate, it has fallen in2011. In part, this has been due to limitedsupply and increased demand in 2010.According to analysts, in the second quar-ter of 2011, the vacancy rate was 6.2 per-cent. A further drop in the vacancy rateshould be expected due to limited supply inthe future. Over the next few months, furtherprojects, chiefly those outside the city cen-ter, will contribute to the Warsaw real estatemarket. In the third quarter, phase one ofthe Mokotów Nova project delivered 25,000sq m of office space to the market.

COMMENTARY

Warsaw Still the Most Attractive Market Jaros∏aw Zagórski, Commercial & BusinessDevelopment Director, Ghelamco Poland

Modern Offices Still in Demand


October 2011


■ What makes investing the Euro-ParkMielec Special Economic Zone in Polandworthwhile? To begin with, we approachinvestors with an interesting choice ofareas to locate their projects, completewith attractive alternative locations. Weoperate on 22 sites in the south and northof Poland. Our plots of land are well pre-pared for new projects. Vast humanresources are available in our main region,the southeastern part of Poland. Hereinvestors can look forward to the higheststate aid available in Poland. The land thatmakes up the Special Economic Zone isconveniently located in terms of trans-portation. Parts of the zone are located inthe Podkarpacie and Lublin science andtechnology parks. We have vast experi-ence in carrying out investment projectswith over 130 active investors in the zone,including global corporations.

The Euro-Park Mielec SpecialEconomic Zone is particularly attractivefor aviation companies. The region hasstrong aviation traditions which are culti-

vated to this day in the form of an excep-tional project called the Aviation Valley,which is like nothing else in Poland.

The main city of the region, Rzeszów, isthe largest economic center of southeasternPoland with a modern airport. All of that iscoupled with a strong academic community,mainly that of the Rzeszów University ofTechnology with its laboratories and foreigninvestors such as the United TechnologiesCorporation. Lublin, the other big city in theregion, is a major academic center as well.

Some of the most prominent investors inthe zone include BorgWarner Turbo SystemsPoland, based in the United States,Germany’s MTU Aero Engines Polska, FirmaOponiarska D´bica SA of the Goodyeargroup, Sweden’s Husqvarna, Ball PackagingEurope Lublin and Hamilton Sundstrand,which has a new project in the pipeline.

One more thing: we have a lot to beproud of when it comes to the region’sresources in training workers for the auto-motive and aviation industries and other sec-tors. Centers for the transfer of new produc-

tion technology are under development inseveral cities in the region. The centers willprovide practical vocational education at thehigh-school level.

We strongly encourage you to check whatthe Euro-Park Mielec Special Economic Zonehas to offer. For over 15 years, we have beenturning it into a Zone of Success. The zone ismanaged by the Industrial DevelopmentAgency SA (ARP), which has for years been aproven partner of the Polish government.

Mariusz B∏´dowski, DirectorIndustrial Development Agency

Branch Office in Mielec EURO-PARK MIELEC Special Economic Zone

Worth Investing In

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• Experience in managing investment projects: one-stop-shop, industrially developed real estate in Industry and Technology Parks

• Maximum support for investors• Highly qualified work-force potential; graduates

of Lublin and Rzeszów universities available• New production space available on site• Cooperation opportunities as part of Aviation Valley

Industrial Development Agency Branch Office in Mielec, Poland39-300 Mielec, ul. Partyzantów 25

tel.: +48 17 788 72 36 • e-mail: [email protected]

www.europark.com.pl


@The latest news on the Polish RealEstate market by e-mail every week

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NEWSLETTER


October 2011

After a period of stagnation caused by the crisis, demand formodern warehouse space has revived in Poland.

According to a recent report by consulting firm CB Richard Ellison the market for warehouse and logistics space in Central andEastern Europe, 2011 is expected to be a time of growing supply anddemand for modern warehouses, especially in Poland and Russia.

Joanna Mroczek, market research director at CB Richard Ellis,said, “Logistics space developers have visibly increased their activ-ity over the past several quarters.”

Forecasts of 4-percent economic growth in 2011 in Poland andRussia, the two largest economies in the region, have helped producea considerable increase in demand and supply in this sector, she said.

“An increase in manufacturing has prompted a shift of develop-ment activity from capital cities towards regional cities. This isespecially the case in the Czech Republic and Poland but also tosome extent in Hungary and Slovakia. In most markets, developersare going ahead with their projects after signing pre-let agreementswith prospective tenants or are undertaking build-to-suit projectsmeeting specific orders and detailed customer technical specifica-tions,” Mroczek added.

Due to a slowdown in the economy and the economic crisis, thenumber of warehouse and logistics centers built by developers hasdecreased significantly in the last two years. After an uninspiring2009, developers almost stopped building new facilities. Accordingto data by real estate services company Jones Lang LaSalle, in 2010only 270,000 sq m of new warehouses were completed in Poland,over 1 million sq m less than in 2008, which was a record year inthis respect. The largest warehouse completions were PanattoniBTS Tesco Gliwice and Panattoni Park Toruƒ (BTS for CerealPartners Poland Toruƒ-Pacific), yielding 56,700 sq m and 30,300 sqm respectively.

Currently, the modern warehouse space stock in Poland amountsto 6.5 million sq m. Most of this space was completed between2004 and 2008. The years 2006-2008 were a boom period for thewarehouse market as the demand for space exceeded the rate ofnew developments and warehouses were leased before their con-struction was completed.

Joanna Sinkiewicz of Cushman & Wakefield said, “Speculativeconstruction ground to an almost complete halt due to difficultieswith obtaining financing. Since 2009 tenants have become increas-ingly interested in build-to-suit schemes which, apart from the pos-sibility of tailoring the technical specifications to individualrequirements, can also be constructed in locations selected by thetenant. Such projects will unquestionably contribute to the devel-opment of the warehouse space market in new locations. Headlinerental rates vary, depending on the region, and fall within the rangeof 3-6 euros per sq m per month.”

According to Cushman & Wakefield, the first half of 2011 wasthe best period for the warehouse sector since the financial crisis.Following the boom years of 2006-2007 and stagnation in 2008-2009, the warehouse market recovered in 2010 and continued togain momentum in the first six months of 2011. Take-up rose by 40percent and the number of schemes under construction was nearlytwice that of the corresponding period of 2010. The warehousemarket is developing not only in new regions such as Rzeszów andLublin, but also in established regions such as central Poland(Radomsko, BTS Manuli) and the Poznaƒ region (GorzówWielkopolski, BTS Faurecia).

“Transaction volume reached nearly 941,000sq m in the first half of 2011 with record take-

up of 543,000 sq m in the second quarter,” said Malwina Kierebiƒskaof Cushman & Wakefield’s industrial department. “Such strongdemand has not been seen since early 2008. Leases for new space orextensions accounted for 75 percent of all deals. Demand came most-ly from logistics operators (37 percent), electronics companies (14percent) and the automotive sector (10 percent).”

With 40 percent market share, Prologis dominated the develop-ment market, with renewals accounting for nearly 50 percent of totaldeals, according to Cushman & Wakefield. It was followed byPanattoni (18 percent), Goodman (8 percent) and SEGRO (6.5 per-cent). Some 136,000 sq m of warehouse space was delivered in thefirst half of 2011. The largest completions included Zelmer’s schemein Rzeszów (32,500 sq m), developed by Panattoni; phase I of GoodPoint II in Góra Kalwaria (21,900 sq m); the first building of KrakówAirport Logistics Center (Goodman, 13,400 sq m) and Danone’sbuilding in Panattoni Park Âwi´cice (13,600 sq m). At the end of thesecond quarter 336,000 sq m was under construction, and as in theprevious year some 80 percent of this space was leased. Schemes tobe completed without pre-lets accounted for only 63,000 sq m.Despite the upturn in the market, speculative projects were rare andusually developed as small modules in buildings with some pre-letssecured, for example small business units in Tulipan Park ¸ódê.Regions with the largest warehouse development volume under con-struction include Upper Silesia (81,000 sq m), Wroc∏aw (66,000 sqm) and central Poland (54,000 sq m). At the end of June 2011 thevacancy rate reached 12.9 percent, down by 2.1 percentage pointsfrom the level at the end of the previous year. A.R.


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Growing Interest in Warehouses


Housing sales have increasedthis year and many projectsthat were disrupted by the cri-sis have resumed. Yet the mar-ket is still a far cry from theboom of several years ago.

Aresidential market report by realestate consultants REAS, who pro-vide advice to those planning and

carrying out housing projects in Poland,shows that the second quarter of this yearsaw a further increase in new home sales.The improvement is chiefly due to the factthat the Polish economy acceleratedmarkedly in 2010 and entered 2011 with astable labor market and steadily risingincomes. The number of individual mort-gage loans granted by banks has stabilizedat a relatively high level and interest ratesremain exceptionally low.

The market monitoring study conductedby REAS at the end of the second quarterindicates that the supply of new housing inthe six largest markets in Poland (Warsaw,Cracow, Wroc∏aw, the Tricity area compris-ing Gdaƒsk, Sopot and Gdynia; Poznaƒ and

¸ódê) increased for the seventh consecutivequarter and was 29 percent higher than ayear earlier.

One reason behind this is that the numberof housing units launched for sale remainedhigh. However, the sales result was slightlylower than in Q1 2011 and at the same timemuch lower than the number of homesbrought to the market. Additionally, eventhough developers usually expect bettersales in spring, the second quarter of theyear saw a drop in this department, follow-ing three straight quarters of increased sales.

During the last four quarters, a total of29,900 residential units were sold on theanalyzed markets, 8 percent more than in2010 and over 17 percent more than in2008. The REAS study shows that the totalnumber of dwellings launched for sale inthe six largest conurbations in Q2 2011exceeded 10,600 and was over 20 percenthigher than in Q2 2010 and 1 percent lowerthan in Q1 2011. The number of unitsbrought to the market during the previousfour quarters exceeded 37,000, almost5,000 more than in 2008 as a whole. In thefirst half of 2011, a total of over 21,300dwellings were launched for sale, the high-est figure since the first half of 2007.

Data published by the Central StatisticalOffice (GUS) on the number of dwellingsstarted in H1 2011 seems puzzling in thiscontext, according to REAS analysts. WhileQ1 saw a significant, 14.5% increase over2010, the total number of units started inH1, at 28,529, was 9.3 percent lower than inthe same period of the previous year. Sincethe number of units launched for sale in themajor Polish markets is currently growing,either some of these dwellings are beinglaunched for sale after securing buildingpermits but before formally launching con-struction, or we are witnessing a repeatedconcentration of developers’ construction inthe largest agglomerations, accompanied bydecreased activity in smaller markets,REAS says.

Despite stable sales, the availability ofnew housing in the six conurbations exceed-ed 46,000 units at the end of Q2 2011 andreached the highest level in the history ofPoland’s developer market. The supply isdominated by units under construction,which constitute 78 percent of the total num-ber of dwellings, and by units scheduled forcompletion in 2012 (47 percent).

Compared with the previous quarter, thenumber of completed and unsold units wasslightly higher. In total, the six analyzedurban centers offered close to 9,700 com-pleted and unsold units and this figure


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Revival on the Housing Market


October 2011

increased by 6 percent over the year. At theend of June, in Warsaw there were around4,000 such dwellings, slightly less than inthe previous quarter.

The second quarter of 2011 put an endto the downward trend in the asking pricesof units newly launched for sale. After aperiod of price drops or stabilization,which began in Q4 2008, in Q2 2011developers increased both the number ofunits introduced to the market and theirprices. Consequently, for the first time ina long while, the prices of new unitslaunched for sale started to resemble theprices of units already on the market. Thiscould be one of the reasons for the slow-down in sales. Considering the currentsurplus of supply over demand, in the fol-lowing quarters prices will either decreaseor remain at the present level, according toREAS.

“While in Q2 2011 the downward trendin the average price of units introduced tothe market was overcome, we need to bearin mind that this index depends to a largeextent on the characteristics of launchedprojects. Its increase partly results fromthe fact that, after a period of limbo,developers finally decided to start sellingmore projects in downtown and centrallocations rather than affordable schemes,which were mainly brought to the marketdirectly after the crisis. One should alsonote that even though nominal askingprices increased slightly, they still lagbehind inflation, which grew rapidly dur-ing the last year,” said KazimierzKirejczyk, CEO of REAS.

According to the company, in Q2 2011,total sales on the six analyzed marketsdecreased by close to 5 percent from Q1,

even though the market had expected aslight growth or at least stabilization in thesales level. Considering the growing sup-ply, this translates into a significant dropin sales per project, as confirmed by infor-mation coming from many developers. Inthe majority of the cities, total sales in thelast four quarters were slightly higher thanthe long-term average for these markets;in Wroc∏aw the surplus was significant. Inthis respect, the only exception is Warsaw,where around 11,800 dwellings were soldin the analyzed period, roughly 1,000 less

than the long-term average transactionlevel for this market.

Demand in the five urban centers is pro-moted by a combination of fundamentalfactors: more baby boomers graduatingfrom university, entering the job market,establishing families, and starting an inde-pendent life as adults. These locations arestill attractive for young Poles from small-er cities and villages, especially as thegovernment has declared it would focuson fostering economic development in thelargest cities in the coming decade.


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■ The market for new housing is showinga relatively stable and steady growth indemand and supply is running at a veryhigh level. The market is demanding, butthe situation is relatively stable, creatingopportunities for development also forsmaller developers and encouraging themto undertake new projects in 2012. At themoment, Unidevelopment Sp. z o.o. iscarrying out projects including PointHouse in Warsaw’s Mokotów district. In

addition, we are planning to build moremulti-family housing estates in Warsawand Poznaƒ. Our focus allows us to oper-ate effectively amid large developers. Ourservices extend beyond the most popularcustomer preferences, which are fully metby the biggest companies on the market.

For example, Point House, the projectwe are now finalizing, stands out with itshigh standards and unique location. Thedesign of this modern building refers to

Polish modernism andinterwar Warsaw.Although the building islocated in a well devel-oped part of the city, ithas a distinct atmos-phere. This explains whycustomers are interestedin buying apartments inthis project. While the realestate market in Poland’slargest cities is dominat-ed by demand for two-room flats with an area of up to 50 squaremeters, this prestigious project has alsoattracted customers looking for morespace.

COMMENTARY

Demand Steadily RisingEwa Przeêdziecka, marketing department head at Unidevelopment:


SPECIAL EDITION: EXPO REAL 2011

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