The Polish residential market is currently experiencing an unprecedented boom. Despite the developers` efforts in recent years, there is still a huge supply gap, estimated at 3.2 million apartments. In Poland, almost 40% of people still live in overcrowded dwellings. The average rate for the EU as a whole in this matter is 17%, explained Dorota Wysokińska-Kuzdra, Senior Partner, Corporate Finance & Living Services for CEE countries at Colliers in her opening speech.

Two years ago, the private rental sector was virtually non-existent in Poland - everyone was buying the apartments, not renting. But surging prices and the appearance of Western investments funds are slowly changing terms on the Polish residential market.

„We have approximately 6,000-6,500 PRS units in operation. Another 20,000 units are under construction. We already know about 10,000 units that were not officially announced. And if you add the expansion plans of the different local players or those, who would like to enter the market, you probably end up with 50-60 thousand rental units being prepared in the next 5-7 years. It may seem a lot, but I remind you about the supply gap of 3 million. I think this shows that we are on the way to reaching the point where everybody has a choice whether to rent or to buy an apartment,” said Dorota Wysokińska-Kuzdra, who moderated the discussion.

Large portfolio purchases in recent months have intensified claims that PRS players are responsible for increasing apartment prices of the Polish market. Who is to blame here?

„While it is always good to have someone to blame, the price hikes are caused by increasing construction costs. A year ago, we were able to sign the contract with an average construction cost of PLN 4,200 zlotys per sqm, now it's almost 6,0000. Of course, we buy a part of the offer from the market. But the same was done by individual investors for the last five or more years, and each year they were buying more or less 40% of the offer. And no one said that they were to blame for the price increase”, said Dariusz Węglicki, Country Manager at Catella Residential Investment Management.

Dariusz Pawlukowicz, a Member of the Management Board of Vantage Development was of a similar opinion: „Let's look at numbers. Together we operate 6,500 units at the moment and in the pipeline, there are 24,000 apartments. And the total number of apartments to rent in Poland is about 1.2 million. So our impact on the market is so far very small. I can only confirm that construction prices and low plot availability are our main issues”, said Pawlukiewicz.

It is a fact that rising inflation (currently close to 7%) has forced many Poles to withdraw their savings from banks and to invest them in residential property, with prices rising by 11-12% annually. To choke inflation, the government has increased interest rates and is probably going to continue that in the coming months.

„In my opinion, the individual investors are not an evil for the market, until they put their investment properties into the offer. It's happening now - people park their money in flats, not offering them for rent. We observe it in our projects because we are also a residential developer, we not only rent flats, but we also build them for sale. And we observe that part of the flats, bought today by individual investors, is not used. They are kept empty with nobody living in. And that's the worst thing that can happen to the market. Increasing interest rates may cause people to look for different kinds of investment, not only flats. Because when we were living in the world of very low interest rates, flats were the best idea. And now maybe some other options of investment will be open again. On the other hand, the increasing prices of flats will also encourage people to think about the other was to invest”, commented Jarosław Bator, Chief Operations Officer of Resi4Rent.

PRS units in Poland are now mostly rented by so-called young professionals, Poles and foreigners as well, singles and couples with no children. The product on the market is tailored for them – and they mostly need studios or one-bedroom apartments. But the market experts are expecting this model to change, as the studio-only model is not sustainable in the long run and the market will need more family rental units. „Of course, the studios and one-bedroom flats are the majority of what we have. But the demand for larger family apartments in non-central locations is already visible. The prices in these units per square meter are of course lower and the profitability is lower as well. But in the end, we look at the bigger perspective, because we are trying to encourage people to stay in our flats longer than a year or two. Because that's the main issue - to convince people that it's not something strange to live in a rented apartment for more than a year or two,” said Dariusz Pawlukowicz.