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 The “Premium real estate market in Poland” report prepared by KPMG indicates that the domestic luxurious real estate segment is still developing. When compared to the Western European countries, the Polish premium real estate market offers relatively low prices and a small number of apartments of a truly prestigious nature. In this context, it is worth to briefly look at the situation of Poles who decide to buy such real estate.

 

Wealth of Polish buyers compared with the rest of Europe

 

Currently, the premium real estate buyers fall mainly into the HNWI (High Net Worth Individuals) category. These are the ones who possess liquid assets – such as shares and stocks, cash, or real estates that they don’t live in – worth at least one million dollars. It is estimated that in 2018 in Poland there were nearly 62 thousand people who satisfied these criteria. This is a small share of the entire society of merely 0.16 percent, yet the group is steadily rising – it grew by 4.6 thousand year-to-year. Compared to other European countries, Poland ranks only 18th when it comes to the number of HNWIs. Nearly 90 percent of the Polish HNWIs boast wealth worth more than 5 million dollars. There are only 144 people in Poland with assets whose value exceeds 100 million dollars. There are only 7 Poles on the Forbes list of the wealthiest people, while the richest of them ranks 691st.

In Poland, the largest number of wealthy Poles live in the Mazowieckie, Śląskie and Wielkopolskie Voivodships, with a clear predominance of Mazovia. It is a region that stands out from the rest in terms of the richest inhabitants.

 

 

Wealthy and rich Poles and Premium real estate

 

Let’s start with the basics, i.e. the definition of luxury. According to the report discussed here, Poles with earnings between PLN 10,000 and 20,000 believe that a luxury apartment starts where the price per square meter reaches a minimum of PLN 16,000. In the range where earnings exceed PLN 20,000, this estimate is increased by PLN 1,000. In the eyes of HNWI, the measure of luxury is an amount starting from PLN 20,000 per square meter. The experts of the “High Level Book” report prepared by High Level Sales & Marketing set the threshold for entering the premium segment, i.e. the minimum price per square metre, at a different level depending on the city, in Warsaw it is PLN 25,000, Tricity PLN 17,500, Wrocław PLN 14,500, Kraków PLN 13,800, Poznań PLN 11,000 and Łódź PLN 6,600.

In the real estate world, the most expensive apartments and houses are defined in many different ways. Conventionally, premium properties are those which are valued at PLN 1 million in the shell and core condition. It is worth noting that the premium property border is slowly beginning to move up. For a 100-meter apartment in the most prestigious districts of Warsaw or Tri-City one can pay twice as much. In Warsaw, in the most expensive luxury locations, such as Złota 44, Cosmopolitan or Foksal 13/15, the offer prices are at the level of PLN 25,000 – 45,000 per sqm. In Tri-City, in such prestigious projects as Yacht Park in Gdynia, or in units located in Gdańsk on the banks of the Motława River or the seaside, the price is PLN 18,000 – 20,000 per sqm.

It should be noted that the premium real estate market in Poland grew by nine percent in 2018. Its value is over PLN 1.3 billion, according to the aforementioned HLB report. The HLSM report also presents the highest, record-breaking transactions on the real estate market in the past year. In Warsaw, it was PLN 14.5 million in the Park Lane residence. The podium also included properties in Tri-City: a nearly 200-metre unit in Gdynia for PLN 5.9 million, Gdańsk with a transaction for PLN 3.1 million, and Sopot – PLN 2.9 million.

And who are the Polish buyers of luxury properties? In the study cited above, the highest share of buyers of this type of goods (61 per cent) are rich people, i.e. people earning more than PLN 20,000 gross per month. What is more, 84 percent of the HNWI category also willingly invest their capital in this segment. More than half of the respondents from this group make purchases every three years or even more often, which undoubtedly indicates a strong increase in the importance of the Premium segment.

From the point of view of the positions held, top executives lead the way – for example, managers of multinational corporations. Another category is private entrepreneurs and self-employed persons. Then come lawyers and notaries, among others. In these groups at least half of the respondents declared that they own some kind of luxury property.

 

Forecast development

 

Thehighest standards of world luxury – both in terms of finish and surface – set by such giants as New York, London, Singapore or Dubai are currently met by only a few Polish apartments. One of such apartments is a penthouse – a pearl of luxury – located on the 52nd, 53rd and 54th floor of the Zlota 44 skyscraper in Warsaw. This means that potential buyers of this luxury apartment will live at an altitude of almost 200 meters above the ground. The apartment also has a 30-metre terrace. Residents will also have the services of a concierge at their disposal.

It is estimated that the number of luxury apartments with unit prices above PLN 17,000 per square metre sold annually in the five largest Polish agglomerations will grow over the next few years. The latest HLSM data show that sales of premium apartments in Warsaw increased by 10% y/y in the first half of 2019. Significant target groups will also be wealthy representatives of the Polish Diaspora, especially from Western Europe and the USA.

It should be noted, however, that with each successive Premium apartment being put into use, the competitiveness of the primary market, in the form of the secondary market, will also increase. At the moment, however, the rapid development of residential estates seems much less likely. At least on a national scale, because in the vicinity of an exclusive golf course in the Warsaw agglomeration the situation may look different.

Some experts also point out that a stimulating factor may be the proximity of world-renowned universities, allowing rich and affluent Poles to provide their children with education of the highest quality.

How will the situation in the premium real estate market develop? The forecasts are positive, mainly due to the growing demand and relatively low prices compared to the same segment in foreign markets.