The past couple of years have been challenging for the European real estate market, including Poland, but signs indicate that the worst may be over. An increasing number of foreign investors, particularly from the UK, are once again showing interest in Poland’s property market. This renewed attention suggests that British investors can still effectively diversify their portfolios in Poland, according to Szymon Mojzesowicz, a Polish real estate expert and member of the Royal Institution of Chartered Surveyors (RICS).
Poland’s economy has been showing noticeable signs of improvement, with a reduction in inflation and a decrease in interest rates. These positive developments are sending encouraging signals to the global real estate industry. In a recent survey of global investors, Poland was ranked third among the top ten countries expected to deliver the highest returns on real estate investments.
Affordable Prices Attract Investors
“We’ve seen a rapid increase in real estate prices over the years, but Poland still offers more affordable housing compared to many other European countries,” says Mojzesowicz, who is also associated with the consulting firm Lege Advisors. “In major cities, property prices are much lower than in Denmark, Sweden, or the UK. You’ll pay less per square meter for an apartment in Poland than in Prague, Budapest, or London. This is good news for individual investors and suggests that prices are unlikely to fall anytime soon—they may even rise.”
Rental Investments: A Lucrative Opportunity
One particularly attractive area for investors is the purchase of residential units for rental purposes. Poland boasts one of the highest rates of return on rental properties in Europe, combined with some of the lowest tax costs associated with renting. In 2023, Poland completed 238,000 new apartments, one of the highest numbers in Europe, with over 14,000 of these units purchased by foreigners.
“Although the UK is no longer part of the EU, it was still among the top ten nations buying apartments in Poland last year, accounting for 12,000 square meters,” Mojzesowicz notes. “That number is expected to rise in 2024. Investing in rental property in the UK has become less popular due to high interest rates and unfavourable tax changes introduced in recent years. The Polish market, therefore, presents new opportunities for British investors.”
Commercial Real Estate: A Sector in Recovery
Poland has long been a leader in commercial real estate investment within the Central and Eastern European region. However, recent years of global economic and geopolitical turmoil have led to stagnation in this sector.
“The current state of Poland’s commercial real estate market reflects the global hesitancy towards investing in this area,” explains Mojzesowicz. “As a result, the volume of investments in Poland during the first quarter of 2024 was reminiscent of levels seen in 2010. Nevertheless, an improvement is anticipated in the second half of 2024.”
At the end of Q1 2024, the sales value of commercial real estate in Poland for investment purposes was approximately 200 million euros. Of this, 31% was for warehouse space, and 37% was for office space.
Why Invest in Poland?
Poland’s real estate market offers significant growth potential, having proven its resilience to various forms of economic turbulence. The market also benefits from a steady influx of global capital and international migration. For British investors, Poland provides a safe investment environment, bolstered by political stability and regulatory transparency.
“Understanding the legal framework and regulations governing foreign investment is crucial for British investors entering the market,” Mojzesowicz advises. “But, as experience shows, they adapt to these realities quite well.”