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Polish rent rises – Independent data confirms rentals are surging
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In markets experiencing ultra rapid property price growth, rentals are always going to be flat. The fact of life is that it is all but impossible to plug into very rapid price growth AND high rentals.
For this reason, it is almost always necessary to cashflow the early years of a property investment in CEE markets.
Once the price growth starts to slow from the heady initial pace, we enter a second period of growth – the plateau period - of slower capital growth and higher rents.
This is because, as an increasing number of people need to wait longer in order to afford to buy, so demand switches from buying to renting – this increased demand pushes pushing up prices in the rental sector.
That, at least, is the logical theory.
But nothing can beat hard evidence – evidence that we can now see.
Of course, the next phase is the pattern we have seen develop in Prague, and that is a plateau period of strong rents and slower growth followed by a second wave of strong capital growth – not as strong as the first wave, but still exceptional.
Meanwhile, investors are able to take advantage of a newly vibrant rental market, as is the case in Poland.
The independent data comes from the property portal Szybko - one of the biggest property portals in Poland. Szybko’s big advantage is the fact that it advertises rental properties on both the primary and secondary markets.
What is interesting about the data is the consistency across the great majority of the Polish market.
Not only are rentals rising, voids are falling.
The time taken to rent out an apartment in Wrocław, for example has decreased from 24 days in 2006 to 19 days now.
A similar situation can be found in other main Polish cities such as Warsaw and Kraków.
According to the portal’s database, rents in Wrocław rose especially rapidly between September and October 2007. Rental rates for studios were close to Warsaw’s level. The demand is huge as it comes not only from students, but also from migrants finding employment in the city.
The problem with the rental market in Poland is that there is no way to estimate the real size of the market as many landlords (to avoid paying taxes) operate on the black market.
According to research conducted by TNS AISA for GE Money Bank, 70% of Polish people age 18-29 still live with their parents. In Czech Republic, Hungary, Romania or Russia the percentage is much lower.
For example 62% of surveyed Romanians declared that they own house. So, it is highly likely that the Polish pattern will follow that elsewhere going forward, creating increased rental demand.
Property Secrets analyst Anna Grybel said: “We are seeing a pattern develop in Poland exactly as we predicted.
‘We should expect strong increases in rent levels in Warsaw, Wrocław and Kraków as these cities have already entered a new phase of development and the sale market is cooling off.
‘Prices increase here will be only 5-10% in 2007. Strong inflow of migrants and significant students’ communities in those cities combined with lack of supply of quality rental apartments will continue to push up rents.
‘This especially applies to Wrocław, where anecdotal evidence is that supply significantly outstrips demand.
‘In Gdańsk, Poznań and Katowice, property prices have been increasing faster at 20-50% in 2007 – a sign that the markets are still in the first phase of rapid growth.
‘However, Gdańsk and Poznań are slowing down on a monthly basis – a sign they are coming to the end of their initial rapid price growth phase.
‘Katowice still has a lot of potential for future price increases – the city was the last Polish city to take off and that’s why here the residents’ purchasing power is still significantly higher than in other Polish cities - the average price hasn’t exceeded PLN6,000/sqm, while wages are the second highest after Warsaw.
‘In those cities it will take longer to see rents increasing significantly.’
Click on tables below to see details....
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POSTED BY
ROBIN BOWMAN
ON
MON 3RD DECEMBER
AT
19:30 GMT
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TAGS:
Wroclaw Property, Warsaw Property, Rental, Poznan Property, Poland Property, Katowice Property, Letting, Gdansk Property
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POLISH RENT RISES – INDEPENDENT DATA CONFIRMS RENTALS ARE SURGING
Romania and Poland - statistics and lies...
'According to research conducted by TNS AISA for GE Money Bank, 70% of Polish people age 18-29 still live with their parents. In Czech Republic, Hungary, Romania or Russia the percentage is much lower.
For example 62% of surveyed Romanians declared that they own house. So, it is highly likely that the Polish pattern will follow that elsewhere going forward, creating increased rental demand.'
This statement might be 'according to' but is it worth quoting? Assuming we are talking about the same age group (I dont have time to source the original report) do you REALLY belive that 62% of Romanians own their own houses? Maybe 2% is nearer the figure but that is only a guess. But of course it depends on who responded to the survey..and who was asked to participate.
I am a great supporter of PS's style of analysis and I believe it to be the best. However it could clearly be better if such 'according to' statements were backed up by supplementary evidence and the reality.
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POSTED BY
CHARLES BELL
ON
SAT 8TH DECEMBER
AT
02:00
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OWNERS
Charles, I don't understand. Are you suggesting that 98% of Romanians are renting?
My understanding was that in Romania (as with other CEE countries) the majority of people are owner occupiers, having been given their apartments with the end of communism. This is a big part of PS's 'affordability' argument - that locals can afford to buy swanky new builds because they already have so much equity in their existing properties.
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POSTED BY
ANDREW
ON
SAT 8TH DECEMBER
AT
12:32
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Munich Expo 2007 - what will it tell us about residential investment strategies?
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Here we are in Munich Expo 2007 – one of the biggest commercial property events of the year, with a focus on central Eastern Europe and apparently 20,000 city locations covered with exhibitors from 40 different countries.
So, what are we here for?
Well, despite Property Secrets's interest in residential property, it is worth knowing and understanding what is happening in the commercial property world as it will have a big impact on property values and where we aim to invest.
Put it another way, it is about following the money! Where today’s office block goes, tomorrow’s jobs will be created and that’s where we’ll see growing middle class populations who want to buy or rent modern apartments and homes.
For us, the most interesting aspect of this show is the structure of the forums which are mainly an examination of CEE property markets.
Often, the most interesting thing is not what is said from the platform – but just the size of the interest from the audience.
In 2006 we saw interest in the German real estate market switch from foreign investors to local investors (spotted by the reduction in the number of people in the audience who need the translation headsets).
We’re expecting to pick more unusual insights and hints about the trends in our key emerging markets and we’ve also got the brief to look outside CEE to see if we really should be looking at any other markets – Qatar for instance? Or even Malaysia?
And of course, who has the biggest stand? Will it be Warsaw?
Watch this space over the next couple of hours….and the next two days.
Cheers
Neil
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POSTED BY
NEIL LEWIS
ON
MON 8TH OCTOBER
AT
15:42 GMT
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TAGS:
Warsaw Property, Real Estate Investment Strategies, Qatar Property, Property Secrets, Malaysia Property
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MUNICH EXPO 2007 - WHAT WILL IT TELL US ABOUT RESIDENTIAL INVESTMENT STRATEGIES?
Lots to report from the first day here at Expo Real in Munich and an insight discussion will follow soon.
Meanwhile, here's my Quote of The Day:
'Things that took several years to happen in Poland take just months in Romania.
'In terms of market expansion, in just one year in Romania, we've done what it took five years to do in Poland. This is a much more dynamic market.'
Claudius Ferentz, Head of the Romanian Branch of Investkredit Bank AG, Vienna
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POSTED BY
ROBIN BOWMAN
ON
MON 8TH OCTOBER
AT
16:04
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DYNAMISM OF BUCHAREST
Hi Robin
Yep, I agree - this is a great indicator of just how dynamic the Bucharest and Romanian markets are.
Clearly, this is one of the fastest moving markets anywhere in the world at the moment.
I'm still absorbing the quotes
"land prices have doubled in 12 months"
and
"construction costs have risen 40%"
... the implication for this is that developers will start to tread a little more cautiously - as they are very unsure of the final profit margins ... and that will lead to a slow down in development - it will still grow, but perhaps it will grow at a more sustainable pace...
... the good news for investors is that there is no let in demand for residential investment and that this prices increases for the developers will mean that there is less supply brough to the market.
That means, less competition for residential developments and therefore higher prices...
Good news for residential investors - even if it is at the expense of some developers.
Cheers
Neil
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POSTED BY
NEIL LEWIS
ON
MON 8TH OCTOBER
AT
16:10
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BUCHAREST
Neil - That is good news for investors indeed and in line with what you advised around July. I bought in the Citadella development and I have been noticing quite a lot of developments coming onto the market which made me concerned about a risk of over supply if the pace od development continues. However your comments about land prices and construction costs would indicate that there is not a high risk of oversupply depressing the market.
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POSTED BY
BRETT S
ON
MON 8TH OCTOBER
AT
19:20
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SUPPLY IN BUCHAREST
Hi Brett
It is pretty tough to call this one - but my gut feeling is that the total development in Bucharest is still very small compared to the overall size of the city, its density and the increase in demand/population.
My instincts tells me this city could survive many many more developments before demand is dampened...
... and therefore, any slowing down of development is only going to accelerate the price growth even further...
Cheers
Neil
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POSTED BY
NEIL LEWIS
ON
MON 8TH OCTOBER
AT
22:40
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GERMANY
Hello Neil
From what you've seen so far in the expo, what are the latest news regarding german property and the forecast regarding the german market ?
Cheers
Claude.
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POSTED BY
CLAUDE
ON
TUE 9TH OCTOBER
AT
08:38
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