Already half of new apartments are being built in smaller cities
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According to CBRE experts, the demand for flats in smaller cities and towns outside the largest agglomerations is growing. While in the previous years their share in the commenced development investments remained at the level of approx. 30%, this indicator increased to 38% in the last year, and in the period from January to September this year it was as high as 47%. The trend of growing popularity of smaller cities is fueled by, among others developers’ fierce struggle for land in agglomerations and popularization of remote work.
– Developers are fighting for future buyers of their real estate not only in the largest cities. Increasingly, also in smaller towns, you can live in a modern multi-family building. Buyers choose premises outside the largest cities, because it guarantees them greater peace and a lower price. This is evident especially this year. The trend of suburbanization, i.e. the development of housing infrastructure in suburban areas, has gained momentum. Employees who know that they may come to the office less frequently are more likely to consider buying a flat or a house in a smaller city with good access to larger towns – says Agnieszka Mikulska, housing market expert at CBRE.
The share of investments in the largest agglomerations is falling
The analysis of the Central Statistical Office data carried out by CBRE shows that the share of large cities and their agglomerations in the number of apartments in the commenced development projects in 2005-2017 never dropped below 66%. For 9 years in this period, this share exceeded 70% – this applies to the period 2005-2008 and 2013-2017. However, from 2009 to 2012 it ranged from 66% to 69%. The gradual reversal of this trend began two years ago, when developers began to focus more and more on building real estate outside the largest cities. In 2018, the share of the largest agglomerations in development investments started was 64%, in the following year it dropped to 62%, to reach only 53% in the first nine months of 2020. At the same time, while five years ago, in 2015, the construction of 62% of new development apartments was started within the largest cities of the 7 key markets, and only an additional 9% in their agglomeration areas, in the first three quarters of 2020 this share it was equal to 37% and 17%, respectively.
– We assume that this trend will continue in the coming years. Even at the beginning of this year, no one could have predicted that suburbanization trends would be strengthened by an additional factor, which was the pandemic. We now know that making decisions about settling outside of the largest cities will be easier. Remote work has become popular, which gives a strong impulse to living outside agglomerations. In addition, the fierce fight between developers for the best plots in the largest cities prompts part of the market to look for alternatives, such as smaller towns, says Agnieszka Mikulska, housing market expert at CBRE.
Developers focus on cities and towns
The share of smaller towns and villages in the number of flats in development investments commenced in the first three quarters of 2020 was 47%. (Of which 25% are smaller voivodeship and poviat cities, and 22% are other small towns.) In 2005-2008, this share did not exceed 30%, while until 2018 it ranged from 29% to 34%. Two years ago, 36% of new flats in development investments were already located outside the largest agglomerations in Poland, in 2019 even more, i.e. 38%.