Situation on the Polish Rental Market. Investments in Properties Still Bring Profits.
In 2017, developers sold 17% more premises than last year, also to investors for whom one and sometimes the major source of income is rental of apartments. The value of the real property market is higher every year; every year, there are more and more investments which are a tasty morsel for hungry buyers who purchase properties for gainful purposes.
The Record Was Beaten!
The National Bank of Poland has announced that in the last quarter of 2017 only, apartments worth PLN 5.2 billion were sold in the largest Polish cities. In reference to previous years, this is a record result. As a comparison, five years earlier, real properties worth in total PLN 6.1 billion were sold in the course of the entire year. 14,000 apartments sold in just one quarter is a sign that the real property market is becoming more active. The statistics clearly show that the rental of premises constitutes 5% of profits annually.
Polish cities with highest profitability are primarily Gdańsk with a result of 6.5% net in the scale of the year.
Right behind it, there is Warsaw, Lublin, Katowice and Białystok. Thus, it might be concluded that the increase in real property supply entails a decrease in rent prices. However, the situation is different as the number of lessees is still high and thus there is sufficient space for new investors. Lessors are aware that even a higher amount of rent will not deprive them of potential lessees.
Every year, the rental prices go up; there are also exceptions, such as the city of Poznań, where the rental prices in 2017 did not change in comparison to the previous year. However in Warsaw, every subsequent year means prices higher by 3% - 4%.
Where Are Investments Unprofitable?
Real property investors are primarily active in large cities where, at the present moment, the rental market is filled in only 70%. Lessees are abundant in large cities, which is conditioned by a large number of young people - students and persons looking for well-paid jobs. Many people decide to purchase an apartment for rental in their city, which results primarily from convenience and ease of management. Obviously, it is also possible to manage apartments from the other end of the country, yet it requires greater devotion and is often related to additional costs, such as, e.g., use of real estate agencies and representatives. However, it should be remembered that a smaller town not only means lower rent, but also a smaller number of potential lessees.
The most profitable investments are in places where dynamic development of a city is observed, where new work places are created and where the influx of young people is constant. However, it is necessary to be careful when buying properties with the use of credit. There are people who decide to take a large credit facility in order to purchase several apartments, hoping that the investment will bring profits in a short time. It is a good solution if the monthly credit instalment is lower than rent. The credit is repaid and the lessor earns money.
A Mine of Profits
Highest rental prices are obviously in the capital, where the prices of a bed-sitter range from PLN 1,200 to PLN 1,900. With a two-room apartment, lessors can count on profits around PLN 2,500 per month, whereas a credit instalment is approx. PLN 1,300 up to PLN 1,800. Thus, one can earn even over PLN 1,000 per month. All over Poland, there are approx. 75,000 apartments for rental; 60,000 of them are located in Warsaw, Wrocław, Kraków, the Tri-City, Łódź and Poznań, which makes up 80% of the entire rental market.
The last years in Poland were characterised by significant socio-economic changes which had great impact on increased interest in apartments for rental. The desire for mobility and frequent changes in place of residence force people to postpone the decision on purchasing own apartments. The investors are licking their lips, as nothing indicates that the situation is going to change in the near future.