Ten post dostępny jest także w języku: polski
According to the British daily newspaper The Independent, Warsaw’s Praga is the best district of all European cities. The most interesting aspect of it is the original, pre-war architecture preserved on the right bank, as opposed to the buildings on the left bank of Warsaw, almost completely destroyed after World War II and the Warsaw Uprising. Travel Supermarket magazine, on the other hand, assessed Praga as the fourth most fashionable district in Europe, perfectly connected with the city centre thanks to the metro line, SKM, trams and buses.
“Due to the very high potential, the developers are also building exclusive investments in Praga-North, the district is also well connected by the underground, which encourages young people to live here. Many years of investments in Praga-North make us observe dynamic socio-cultural changes. Prague-North is no longer associated with negative associations, today we think of it as a district with great potential, friendly to residents and artists, thanks to numerous art galleries, climatic restaurants, festivals and concerts in Prague’s courtyards. I’m not afraid to say that the current combination of modernity and history will make Prague-North not only a popular destination for tourists from all over the world, but also the best place to live in the world for many people, including residents. – says Ilona Soja-Kozlowska, mayor of the Prague-North district.
“During the war, the district did not suffer much. The uprising lasted only a few days, after which the Germans escaped and the Russians and Poles entered. This means, on the one hand, that there are indeed few such places with preserved urban fabric in the capital, but on the other hand, when “the whole of Poland was building its capital”, Prague was forgotten for over 50 years”. – explains Tomasz Kucharski, Mayor of the Prague-South District.
Covid-19 changed the real estate market. The blockade that lasted for several weeks has influenced the setting of new directions of development, and remote working has contributed to the increased interest in larger apartments and houses in well-connected peripheries. On the other hand, fashionable smaller investment units in the city centres have been successful. The development of technology and a new lifestyle (networking, coworking) have a strong impact on behaviours related to work and organisation of activities, including the choice of location of residence.
“Warsaw, as we know, is an exceptional location, not only on a national scale, but among European metropolises. It is said that the Polish real estate market is divided into two parts: Warsaw and the rest of the country. Thus, investments in the capital city’s real estate are unrivalled in many respects: the best labour market, the highest demand for rental housing in each segment, a huge choice of all kinds of properties, optimal return on investment and the highest increase in value over time, etc.”. What is interesting is that more luxury apartments are being built in the capital city than in all other Polish metropolises put together, which gives the best evidence of the potential of the country’s main market”. – says Jarosław Jędrzyński, an expert at RynekPierwotny.pl, the largest portal containing offers from developers.
Both those coming to the capital city, as well as its residents, are eager to choose fashionable places with the potential to ensure an increase in real estate prices and good communication.
Currently, the most fashionable place in Warsaw is the Praga district consisting of the northern and southern part. The name derives from the word “roast”, which means burning the densely growing forest of the area. The district, which has almost a quarter of a million inhabitants, has been going through a renaissance for years. Previously famous for its exclusive Saska Kępa, Skaryszewski Park with its charming lake, the cult Różycki Market, the National Stadium and the ZOOO with an open bear enclosure from one of the main streets, today it gains thanks to the oldest and once most neglected part – the so-called Old Prague. The cooperation of officials, residents and investors gives very good results and the district gains with every day.
Many investors are wondering where to place their savings in the long term and protect them against inflation and low interest on bank deposits. This results in additional development of the district, as investors looking for opportunities see good business there, similarly to the Powiśle district on the other side of the Vistula River, where today the price of an apartment starts from over 26,000 PLN per square meter and the demand for it is enormous.
Crisis-proof real estate
The Poles have accumulated in banks record high savings. The sum of money deposited in February 2020 reached nearly PLN 620 billion. In times of interest rate cuts, deposits become even less attractive, and increased volatility may persist on the stock market. As Robert G. Allen, an American businessman and member of the US House of Representatives, said: “How many millionaires do you know who became rich by investing in savings accounts?” The money has to work, so the current situation arouses great interest in real estate offers. Just like after the crisis initiated in 2008, buying a flat remains one of the most attractive forms of long-term investment – both in terms of rate of return and relatively low volatility. It should be stressed at this point that the foundations of the increase in apartment prices in recent years (strength of demand, labour market, living standards in the largest cities) are much stronger than in the period of the 2006-2007 boom.
“History shows that apartments defend their value in the long-term perspective. In the Covid-19 era many people are looking for ways to protect their savings. Housing is a comfortable, safe capital investment, resistant to inflation. With current, record low interest rates, falling prices of raw materials and uncertain situation on world stock exchanges, an attractive property may be one of the most interesting capital investment options” – informs Grzegorz Smoliński, Sales Director at Dom Development.
As Brokerage House Michael Strom analysed in the report “Flats as an Investment Asset Class”: taking into account the period from Q4 2006 to Q4 2019, where we have data for all asset classes, the highest rate of return was recorded for gold. The second strongest growing asset was the price of the apartment plus rent. In the analysed period such a combination generated a return of 135%. Their valuation increased strongly in the initial period, which was a result of the boom in apartment prices in 2007. The maximum slip amounted to 22 p.p. and was recorded in the second quarter of 2008. Then, after about 4 years of stabilization, the growth began. The result in the whole period is a component of the increase in apartment prices by 53% and rental income, which added another 82 p.p. of the result. In the analyzed perspective, the increase of apartment prices alone defeated the consumer inflation by over 23 p.p., which increased by 30% for 13 years.
“Price changes on the residential market are practically invisible so far. It is difficult to believe that a price drop not exceeding even 1% may cause any perceptible changes on the part of the buyer, despite the fact that consumer expectations have radically changed, from the conviction of a never-ending price increase to the expectation that prices will now fall. But those who hoped for a clear fall in prices later this year may be disappointed. – reported in the April report of SonarHome, a company providing free online apartment valuation. However, as early as in May and June this year, a 10% increase in primary market property prices was recorded in Warsaw.
Real estate in Prague an investment with potential
“Warsaw is definitely one of the most attractive real estate markets in Poland. We focus on developing our residential offer in the “green” outskirts with good infrastructure, while in central locations, following the high demand, we locate an attractive offer for investing funds, mainly related to leasing. Currently, apart from Powiśle, the Praga district is becoming the most fashionable area of the city,” confirms Klaudia Siarkiewicz, President of Dom Invest, one of the construction leaders in Warsaw.
Thanks to good management by the authorities in recent years, this once neglected district has regained its shine and charm. Large investments, such as the 8-hectare Soho Factory (from the most fashionable district of New York City), through the 38-hectare Praski Port, which connects loft apartments with canals from Amsterdam and the beaches on the Vistula River overlooking the Old Town, to the restored historic vodka factory “Koneser” in the heart of Old Praga, offer events, food, fashion, design, art and unique urban space. It is not surprising that Google for Startups has located its campus called the Business Incubator in this innovative environment. Parks and greenery, developed water areas, fashionable restaurants, theatres, galleries and clubs, graffiti and murals make more and more investors invest their funds in real estate in this part of Warsaw.
Soon, at 17 Bliska Street, in one of the most interesting places in the southern part of this district, an original building “Close Residence” designed by the famous architectural studio “Beczak & Beczak” will be constructed. The design of the building fits in with the unique architecture and image of the most fashionable district of Warsaw. The developer Kreator Dom Invest will build 196 modern micro-investment apartments there.
“Prague is changing beyond recognition. I remember it from the 70s or 80s, its pre-war and post-war face from family stories. We welcome its Renaissance and all those big and small investments. Finally, we can be proud of our district.” – says Adam Białas, journalist, market expert, inhabitant of Warsaw’s Praga since birth, activist of the “Modern Praga” Association. His ancestors also lived in this district for several generations before World War II.
Investments with a future
A lot of people are interested in small premises, but in trendy locations with good infrastructure. Not wanting to get into too much debt, they prefer mini apartments and the use of attractions located in the area. This fashionable trend was created over 30 years ago in Asia and is well adapted in cities in the USA and Europe. By investing in such premises you can profit from their price in the future and easily sell or rent them if necessary. You also don’t have to pay back a large loan for unnecessary large areas, but focus on other life’s activities.
“Close to Residence are modern, comfortable 1- and 2-room flats with areas from 20 to 35 sqm. They will be a great option for short and long term rentals. This unique solution combines the possibility of a stable residential investment with all aspects of protection through a development agreement and, at the same time, an excellent commercial purchase with a multidimensional rental option”. – informs President Kreator Dom Invest Klaudia Siarkiewicz.
The estimation of the price of a square meter in this fashionable apartment building is about 13,500 – 13,700 PLN gross with the possibility of full VAT deduction, which gives a 23% discount and a price of 10,975 PLN per m2. The building’s operator will be a reputable company, known for its other projects, which provides about 7% of the annual rental profit from the invested money.
Prague is also a well-connected residential base for many young people, including students of the universities located there. The modern apartment buildings, which fit into the atmosphere of brick walls and old tenement houses, appeal to many Warsaw residents. In the summer, Ząbkowska Street is closed to car traffic, which is conducive to walks, fairs and numerous stalls, and even ping-pong games. Prague surprises with its openness, and restaurants with gardens on Ząbkowska Street encourage Varsovians to spend a lazy afternoon there.
“Warsaw is the largest agglomeration, with new residents still arriving. It is a regional business centre where contract managers arrive. It is also a thriving academic centre that attracts young people. Therefore, the use of flats for rent is a very interesting investment, especially as attractive flats and locations are more resistant to any economic turbulence than other market instruments. I would like to add that our clients understand this mechanism by investing their free money on the real estate market. In the first quarter, Dom Development’s cash transactions, as in 2019, accounted for approximately 40%. – says Grzegorz Smoliński, Sales Director at Dom Development.
“We are constantly observing global trends. In many of the world’s cities, once neglected districts have now become the most fashionable areas due to revitalisation, e.g. in Barcelona, Miami or Berlin. That is why we have a great interest in the investment on the part of buyers. Today, our clients require attractive solutions in locations with a future, and this is undoubtedly what Prague is like” – adds President Kreator Dom Invest.
“Undoubtedly, our district has been experiencing a renaissance in recent years, and not only because of the huge funds that the capital city of Warsaw allocates to the Revitalisation Programme – it is nearly 1.5 billion zlotys, the lion’s share of which between 2015 and 2022 allows to restore the former glamour of many northern-Prasian monuments. It is enough to remind you how rare preserved complexes of compact pre-war buildings looked like in Warsaw not long ago. The renovated tenement houses and outbuildings have become the undoubted showcase of this part of the capital and this is the greatest reason for us, as the District Board, to be proud. Of course, there is still a lot to do” – said Ilona Soja-Kozłowska, Mayor of the Praga-Północ district.
“Poland is waiting for a great investment, which will undoubtedly be the construction of a modern concert hall for the Sinfonia Varsovia Orchestra. Already in 2010, an international two-stage architectural competition for the design of a new concert hall for more than 1,800 spectators was settled, which was won by Atelier Thomas Pucher from Graz. In 2015, in the presence of the Mayor of Warsaw Hanna Gronkiewicz-Waltz, the architect Thomas Pucher and the director of Sinfonia Varsovia Janusz Marynowski signed a contract for the design documentation. The investment schedule assumed completion of the design works in February 2020 and commencement of construction works in October 2020. The opening of the concert hall was planned for February 2025”. – says Tomasz Kucharski, mayor of the Prague-South district.