For the investor, it's probably fair to say Poznan represents one of Poland's second string cities, after Warsaw and Krakow.

That doesn't mean it doesn't represent an excellent investment opportunity - only that it's less well publicised and known than the capital and Krakow.

This fact AND the essential ingredients that mean its property sector is about to take off make it an ideal basement level investment target.

The Property Secrets investment team spends considerable time evaluating where the next big opportunities will be in Poland - it is such a vast market, after all.

Poznan comes out as a winner in just about every way we look at it (and, yes, we are aiming to source a deal here soon).

Here's why...

Superb location for economic growth

Poznan - still relatively undiscovered by overseas investors and still barely supplied by new build developments - sits in a superb logistical position, on an arterial route half way between New Europe (Warsaw) and Old Europe (Berlin).

It is already established in Poland as a commercial centre and a year-round convention and fair location.

But Poznan's more strategic attractions to the property investor are that it is growing fast, has high employment levels, a young population as well as an educated one and a well paid one, AND a short supply of new build, high-quality developments, plus high demand for such property. (How it stacks up against other Polish centres can be seen in the tables at the foot of theis article.)

In short, Poznan represents a perfect recipe for increasing levels of commercial investment and also for a newly burgeoning residential property market.

By Poland's standards, property market price growth last year was fairly dull - around 10%.

Property price forecast of 15-20% this year

But, our Poznan expert, Piotr Jaskowski, of tabelaofert.pl, sums up why Poznan represents great opportunity for the investor and also what price growth is anticipated.

'Last year, the market in Poznan was dead. We say about 10% growth, even so.

'This year, we believe, is the ideal time to look at this market - immediately before it takes off.

'Inevitably, money is going to ripple out from the more establish markets of Warsaw and Krakow, in search of very rapid growth potential.

'Poznan is perfectly placed as one of a limited number of Polish cities to benefit enormously.

'This year we forecast residential property price growth of 15-20%'

The market in summary

We asked Piotr to sum up the market and why he feels it will take off.

'Essentially, there are a number of factors at work here,' he said.

'Unemployment is very low for Poland - 6.1%, second only to Warsaw.'

'Salaries are the second highest in the country after Warsaw'

'New builds are really just just starting. There was barely any activity last year. The city was dead. This year we know this will all change.'

Rental market

We've all heard the argument of growth in Poland's big cities many times. But, for the investor, what is key is where the rental market will come from - after all, this is a country offering 100%+ mortgages, so who would rent when it's so easy to buy?

In fact there are several key reasons why rental opportunities in cities such as Poznan will increase.

First, new, directives are to be introduced by the Bank of Poland and imposed on all banks to tighten lending criteria.

We will be exploring this important subject in a separate article in the next few days.

But, essentially, the Bank will insist that while a loan may be extended to a property buyer in Swiss francs - which is the norm in Poland because the Swiss franc rate is so much cheaper than the zloty rate - nevertheless the bank must assess the credit worthiness of the individual based on the prevailing zloty repayment rate.

While this will take a lot of the heat out of the Polsih property market - which we welcome because when price growth consitently hits 20%+ a year, we all know it is not sustainable long term, and the risk of a bubble grows.

So, more people waiting longer to be able to afford to buy means more people will be looking to rent.

'The demographics in Poland, show a bulge is now taking place and will increase over the next five to 10 years - of the sector of the population that is 30+,'said Piotr.

'A great many of these are the young professionals we hear so much about in Poland.

'This newly emerging sector is going to increasingly change the demographic landscape of the country as this group moves to cities for work.

'And this trend is especially marked in Poznan.'

One crucial element when assessing rental potenial is transport - or rather transport and nearness to a city's central busines district.

Traffic congestion is a growing problem in Polish cities and it is likely that it will get worse before it gets better.

'Right now there is barely anything to rent in Poznan that has any appeal to this group of late 20s and 30-somethings,' said Piotr.

'But, if you offer a modern development that is of good quality and it's near the city centre, it will rent, there's no doubt about that.'

Another factor for many people is their lack of a credit history in Poland. As the domestic mortage market tightens, as is is doing, credit history is likely to become an increasingly important factor causing people to rent.

'Also, many people are still not comfortable with big loans in Poland - the whole mortage idea is still relatively new to mosdt people and that mind set will take quite a few years to change,'' said Piotr.

'So, this is another reason why the rental market will be sustained.'

In Poznan, there is also the potential for company lets and good opportunities for shorter lets because, as mentioned earlier, this is a year round commercial fair city - a business that is growing in importance to the city.

In fact, Targi Poznanskie is the largest fair venue in central and eastern Europe and hosts events year round. See www.mtp.pl/all/en/19968.html

Property prices and what sells in Poznan

Research by Piotr and Tabelaofert.pl, our property partners in Poland, reveals that supply of residential units in Poznan is currently concentrated at the cheaper end of the market.

The price of almost 97% of flats for sale does not go above PLN250,000.

57% of flats on the market cost from PLN 150,000 to PLN200,000 and it is these flats that enjoy most interest from buyers - their share of demand is 53%.

The cheapest flats, those costing up to PLN 150,000 do not arouse much interest in buyers.

The situation is completely different for flats costing PLN200,000 - PLN 250,000. Here there is marked excess demand, which is likely to drive up prices.

Flats costing over PLN 250,000 have a marginal share of the market and given the current state of the market these sell quite easily.

Demand and Supply by total price sections

Source: Tabelaofert.pl

Most of Tabelaofert.pl clients looking to buy in Poznan are aged 20-35 - this group makes up some 80% of buying inquiries. Many in this group are products of the city's strong educational tradition. It is a highly reputable centre of tertiary education and there is strong demand from graduates who came to Poznan to study, have a good job and are now looking for a new, well-designed apartment.

Most buyers are looking for for 45-55 sqm units (1 bed)

In 2005 only 1700 units in this category were built, creating a big build up of demand in excess of supply.

Economic summary

Last year saw the Poznan economy strengthen somewhat, with a significant fall in unemployment, which is already low by Polish standards, as well as a growing number of registered businesses operating in the city - 1000 new ones set up in Q4, 2005 alone.

Statistical Office data shows unempoyment , at 6.1% , was the lowest for five years - 19,600 people, which equates to 61 people looking for jobs per 1000 adults of working age. Around 50% of these unemployed people are long term unemployed - over a year.

The new businesses registered reveal the commercial make up of the city - every third business operates in trade and services, every fifth in property and company-related services and every tenth in production. There were 90,700 registered businesses in the city at the end of 2005.

Industrial output continues to climb and last year amounted to goods worth PLN27 billion - a 35% increase on the year before.

The British pharmaceutical company GlaxoSmithKline is one of the biggest investors and employers in the city and has been present since 1998.

Other major employers are Volkswagen and Lech Brewery.

Property construction

In 2005, the number of residential properties being built increased by over 30%. By the end of the year, 3,400 new flats came onto the market - the vast majority, according to official statistics, were sold to owner occupiers. Of these, 2,300 flats were built by private developers.

The majority of new flats built by developers were handed over near Szyperska Street, Chartowo Street, Katowicka Street and B?#8218;a?eja Street.

Poznan - Quick Facts
Source - Polish Statistical Office

Population

¦#160;

Low Average Age

¦#160;

GDP per capita

¦#160;

Graduates of higher schools per 1000 population