The Booming Real Estate Market in Poland

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The Booming Real Estate Market in Poland

• Adam Polanowski
• Polanowscy Real Estate Ltd.
• Stockholm, November 28, 2006

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Polish Economic Indicators
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RESIDENTIAL MARKET
Meridian, Warsaw, Ronson Development Group,
top-class apartament house
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Current Situation

• High prices increase in the biggest Polish
  cities
• Changes of clients preferences
• No price differences in primary and secondary
  market
• Low supply of apartments
• Increasing interest of foreign and Polish
  investors
• Secondary market cant satisfy needs

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The Biggest Residential Markets
Sources statistical bulletins.
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Apartments Built in 2001 - 2006
Sources GUS
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The Average Prices of Apartments (Primary Market)
Sources redNet Property Group
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Warsaw

• Huge increase of prices this year even more
  than 20
• Fast development of top-class apartments market
• Secondary market more expensive than primary
  market
• Speculation deals
• Quick sale of new residential projects
• Vicinities development

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Average Prices of Apartments in Warsaw 2001-2006
(Secondary Market)
Sources transactional data of Polanowscy
Nieruchomosci sp. z o.o.
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How Much the Clients Want to Spend on Apartments?
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Poznan Emerging Property Market

• Lack of top-class apartments future market
• Low prices of apartments
• Still growing demand for medium standard
  apartments
• Low level of unemployment and proportional higher
  salaries

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Other Future Markets

• Lódz industrial potential, qualified personnel,
  airport,
• Wroclaw fast developing region, nearness to
  Germany market
• Bialystok academic center, strategic location,

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Investment Trends 1

• Top-class apartments in new apartments projects.
• The prices will be largely determined by
  architectural solutions, additional equipment and
  amenities and start from 9.000 PLN/sq.m (Warsaw,
  Krakow)

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Investments Trends 2

• Flats - 50-70 sq.m high-standard apartments in
  rather small apartment houses located in nice and
  quiet areas.
• Average price of medium standard apartment on
  secondary market is 6500 PLN/sq.m up to 9000
  PLN/sq.m (high standard)- Warsaw, Krakow.

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Poland is not a Spain, but...

• Spain apartment prices in the years 1980-2002
  grew by over 120 (Madrid 149) the highest
  increase by The Economist report.

• Poland The real value of growth will range
  between 10-15 per annum experts say.
• Growth in 2006 20-60 !!!

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Forecasts 1

• Increase of prices on primary and secondary
  market
• Development of top-class apartments
• Expansion of vicinities development

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Forecasts 2

• Return to the secondary market (lack of
  sufficient no. of apartments on primary market)
• Interest in detached housing (in reply to
  increase of apartments)
• Lack of zonings will cause dense and high
  development

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COMMERCIAL MARKET
Renaissance Plaza in Warsaw, Apollo-Rida Poland
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Investment in Central-East Europe in 2005
Bulgaria, Romania, Russia, Slovakia
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Polish Commercial Market - Review

• Large inflow of foreign investors
• Low level of cap rates in Warsaw (even 6.5)
• Decrease of non-occupied area ratio
• Popularity of multifunction office/commercial
  projects retail parks
• Sale and lease-back as a characteristic deal
  for office market

Warsaw Trade Tower, Warsaw, Apollo-Rida Poland
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Investors where are they from?
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Investment Structure in Polish Property Market
(2005)
Retail EUR 1.8 bln
Offices EUR 1.2 bln
Industrial logistics EUR 0.1 bln
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Polish Property Investments Cap Rates 1998 - 2005
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Forecasts 1

• Development of regional commercial real property
  markets depends on investments related to service
  outsourcing
• Further drops of capitalization rates in all the
  commercial real property types
• Growth in the value of commercial real property
  as a consequence of relation of supply to demand

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Forecasts 2

• Increased interest of investment funds running
  increasingly aggressive policy with respect to
  the planned return
• Development of the second-hand property market
• Stable rent rates, negligible growth possible in
  the case of retail space
• Public sectors growing demand for office space

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Thank you for your attention
Adam Polanowski Polanowscy Nieruchomosci sp. z
o.o. Centrum Bankowo-Biurowe Kaskada Al. Jana
Pawla II 12 00-124 Warszawa www.polanowscy.pl adam
.polanowski_at_polanowscy.pl