A year ago AT Kearney placed Poland fifth on its index of Foreign Direct Investment Confidence. Given that China and the USA occupied first and third positions on the index respectively, this may not seem such a strong endorsement of Polandâ€™s attractions a year later but, in fact, the Polish economy is still doing very nicely and the property markets continues to prosper alongside.
According to the Royal Institute of Chartered Surveyors 2007 European Housing Review, Polandâ€™s housing market has continued to grow following the downturn in 2001 and 2002. Warsaw house prices rose 33% in 2006, up from 28% the previous year. Krakow saw a rise of 55% in prices being agreed for new-build apartments in 2006, giving the city the fastest growth of any location in Europe.
Prominent characteristics of the market include the high number of people per dwelling (3.2, the highest average in the EU), the high proportion or apartment blocks â€“ 40% of Poles live in high rise blocks and the poor condition of much of the countryâ€™s housing stock. Nevertheless all the countryâ€™s major cities have substantial districts given over to detached housing. Although home ownership reached 57% by 2004 it is only increasing slowly. Particular considerations to borne in mind are the likelihood that freeholds will not be in the hands of the owners of apartments and the possibility of ownership being contested because much housing was expropriated by the state after 1945 without adequate legal title.
Commercial property development is beginning to play an important part in increasing the housing stock but the migration of large numbers of skilled workers is having a marked effect on the building trade in Poland itself. The large-scale emigration highlights another factor to consider in the long term; that Polandâ€™s birth rate is falling rapidly and the population will level off or even fall within the next quarter century.
With the exception of mountain resorts in the Tatra, Polandâ€™s cities are overwhelmingly the focus of foreign investor interest. They vary greatly character with Warsaw, not surprisingly being the fastest and most cosmopolitan and Krakov the most beautiful and historic. Epithets such as â€˜the Salzburg of Polandâ€™, describing Poznan, only 300 km from Berlin, or â€˜the Manchester of Polandâ€™ to describe the traditional textile centre of Lodz (pronounced woods) give a flavour of the differences to be found. Wroclaw (pronounced Rotslaw) is particularly favoured for foreign industrial investment and is also hoping to benefit from becoming a East European regional hub for Ryannair. Generally speaking square footage and distance from a city centre are the main factors affecting residential property prices. Rental values are normally expected to cover investorâ€™s costs but is recognised that the tourist lettings market is stronger than the market in lettings to locals.
Taxes include 2% stamp duty, 1.5% annual property tax and 7% VAT (expected to rise to 22% soon). From the beginning of 2007 a 19% capital gains tax has been payable and there is also a 10% tax on property sales unless the property has been owned for over 5 years or the proceeds are re-invested in property in less than 2 years.
For a quick, helpful introduction to Poland visit www.poland-eu.org/default.asp.