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Greater activity by retail investors and price stability, the effects of the epidemic are felt, but in principle only for the first months. These are the main conclusions of the analysis of the situation on the still growing and attractive micro apartments market over the past year. What will happen next year?
Investment premises in Poland are mainly bought by individual investors, but for several years now institutional investors have been playing an increasingly important role in the market, especially funds that immediately buy entire storeys and even buildings. However, in the end of 2020, the activity of institutional investors was lower than the current trend could indicate. This was clearly visible in the segment of micro apartments, which is growing every year in Poland. – The main change is that this year we have a much larger number of individual clients than the packaged ones. We are currently observing a greater activity of investors who are buying a few micro apartments, informs Konstantyn Fedyna, investment expert from the BY MADE group, which is building 129 investment units in the Legnicka 60C building in Wrocław.
Micro apartments market still attractive
According to the BY MADE analysis, there has been no major change in the micro apartments market compared to 2019, despite the fact that the effects of the pandemic were initially felt. In the end, prices remained stable and sales fluctuations occurred solely due to the pandemic and the associated tightening. After the outbreak of the epidemic, investors held up decisions not only in the property market, but after the first months the situation began to stabilise slowly.
According to the expert, investors accepted the new circumstances, and therefore, despite the continuing uncertainty, they are still choosing premises as a form of investment in savings. – The coronavirus situation, falling interest rates and money value, as well as zero interest on bank deposits have resulted in a larger group of clients still being interested in the real estate market,” explains Konstantin Fedyna.
The expert notes that the real estate market is much more stable, which cannot be said about other markets such as stock markets or securities, which are additionally more demanding in terms of the time needed for analyses and tracking trends. This is why Poles are more and more willing to invest in alternative products such as micro apartments. – They treat them as a safe and profitable capital investment and are aware of the great chance for their value to increase in time if they choose an investment located in the centre of large Polish cities such as Wrocław, Warsaw or Katowice,” explains Konstantyn Fedyna.
Next year the situation will be stable
What can you expect from the investment property market in 2021? Konstantin Fedyna predicts that the situation will be stable. Investors will be looking for micro apartments, encouraged above all by the profitability of this form of investment oscillating around 7% net per year (this is a fixed profit in the case of signing an agreement with the operator who manages the rent on behalf of the investor). Konstantyn Fedyna predicts that the trend of increasing popularity of micro apartments will continue for a long time: – A steady, stable profit and an increase in value over time will encourage purchases also in the following years. Products such as micro apartments are future-oriented. It is an ideal place to work in the city centre, a comfortable flat for a young person or persons, or a room in a building of hotel standard, located close to business centres and major points in the city.
A great benefit for investors is also the possibility of recovering 23% of VAT after purchasing a micro apartment for both business people and individuals. Other major advantages include a low entrance threshold, high standard turnkey finishing and low maintenance costs. An additional convenience is the possibility to use the services of tax advisors and accountants, who will help with the formalities or take them over completely.
Based on the BY MADE plans, which take into account the premiere of a new building with micro apartments, it can be assumed that in 2021 and subsequent years this segment of the real estate market will develop as dynamically as in recent years.
The first BY MADE building – Legnicka 60C – is already in its raw state. In addition to 129 micro apartments, it has a remote working area, a roof terrace and a catering facility. Parking spaces will be located in front of the building. Construction of Legnicka 60C should be completed in the fourth quarter of next year.
Source: BY MADE