Will rising construction costs mean higher rents in the future?

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Rising construction costs and higher land prices will eventually lead to an increase in office building rents. The situation is also not eased by the competition on the residential market, which means that developers are fighting for premium plots.

According to Katarzyna Zawodna-Bijoch, president and CEO of office company Skanska in the CEE region, constantly rising construction costs as well as land prices may soon lead to an increase in office building rents. As she explained at Property Forum 2021, office developers have to compete with residential developers, who often choose to buy premium plots to build rental flats in very good locations. This also means that residential developers are choosing to carry out investments on plots that are zoned for services.

Higher rents are also likely to affect the housing market, with inflation and rising housing prices expected to be the reason for the increases. Although rental prices tended to remain flat during the pandemic due to the provisions introduced by the crisis shield, they may return to an upward trend in the long term.