Not your average "hot spot" by Brian O'Brien Looking for a credible property investment in Europe? Poland may have what you want. Since joining the European Union in 2004, Poland's economy has performed well, buoyed by considerable foreign direct investment (the third highest in Europe) and a booming local property market. This may be the right time to consider your own purchase of a home in northern Europe. 
| The beautiful city of Krakow is one of Poland's property hot spots.
Photo courtesy of Krakow Investments |
Why now?
What's fuelling the current property boom in Poland? Three main drivers: a growing middle class, a housing deficit, and the potential for long-term growth. The growing number of multinational companies choosing to locate in Poland has resulted in an increase in high-level jobs for the local population, which has, in turn, created a Polish middle-class with a hunger for property ownership. Demand has also been helped by the improved availability of financing for local buyers. In 2004, only 14% of Polish people had a mortgage, but this figure has increased-mortgage approvals doubled from 2005 to 2006. This is one of the key differences with other so-called hot spots: the Polish property market is primarily locally driven, and, if you invest in Poland, you'll invariably be competing with local purchasers. This also provides you with a clear exit strategy of selling back to local buyers. Housing deficit
Poland currently has the largest housing deficit in Europe. The Housing Initiative for Eastern Europe estimates that two million new homes are needed and existing homes require immediate modernization. In fact, approximately 64% of the entire housing stock requires substantial repairs and around 700,000 of these should be replaced in the next five to 10 years. This accounts for the high level of demand for new-build accommodation. The strong demand and the urgent need to rehabilitate much of the existing stock offer you good prospects. Property samples in Krakow: Two-bedroom, 645-square-foot apartment with 215-square-foot terrace, views of Wistula river, entry phone, 10 minutes' walk from downtown: 137,000 euro ($185,000). Three minutes' walk to the main square, a three-bedroom, 1,000-square-foot apartment with high ceilings: 202,000 euro ($267,000). |
Potential for long-term growth
The relatively limited supply of land and the lengthy procedures for getting building permission will mean that supply will struggle to keep up with Polish demand and thus steadily rising prices are predicted. The Polish economy has arguably the best potential for long-term growth, with strong, sustainable price growth and relatively low interest rates (in January 2007, the rate for borrowing in euro was 5.60%). This-and the existence of a booming middle class keen to invest-makes Poland a highly attractive proposition if you want to get a property foothold in Europe.
[Editor's note: Brian O'Brien runs Krakow Investment, website: www.krakowinvestments.com, and is happy to answer any questions you may have. E-mail him at info@krakowinvestments.com or call (+353) 21-494-3934] |
