Answer ... Just as the real estate market was starting to recover from the immediate effects of the COVID-19 pandemic, 2022 brought its own share of challenges – some common across Europe, others particular to Poland. High inflation, rising interest rates and surging energy prices, as well as the outbreak of war in Ukraine, had a knock-on effect on the market, making investors adopt a more conservative approach that is likely to persist for months to come. Even so, a weaker Polish złoty could go a long way towards attracting foreign investment.
Residential: Demand for rental apartments is at a record high, with a massive gap between supply and demand causing rent rates to climb. However, the number of apartments available to rent has fallen by 70% compared with 2021, while the influx of Ukrainian refugees caused a spike in demand. This was exacerbated by high interest rates, which reduced consumers’ creditability and forced them to rent rather than purchase apartments. In turn, the lower number of prospective buyers, coupled with higher costs and unwelcome regulatory changes, caused developers to pursue fewer new housing projects. On a positive note, the drop in apartment sales makes the residential real estate market fertile ground for institutional investors.
Retail: Since the pandemic, retail parks and convenience stores have emerged as two of the most resilient parts of the retail sector, with the former attracting an increasing number of investors. This trend seems to be continuing, as value shopping and essential goods – both closely associated with retail parks – are still in demand.
Office: Office investment transactions soared in 2022. In the first half of the year, Warsaw faced unprecedented demand for office space, with tenants focusing on quality over footprint and redefining their expectations. On the other hand, high fit-out costs and overheads translated into more lease renewals and extensions, to the point that an average lease term for new buildings now exceeds seven years. Available space is expected to continue to shrink as the number of new office projects has dropped significantly.
Logistics: Over the last two years, the e-commerce frenzy boosted demand for logistics to an extraordinary level: city warehouse vacancies were at a record low and rents were on an upwards trajectory. Now, even though the industrial sector remains strong, new investments and transactions are expected to slow down, reflecting the fact that e-commerce is not growing as fast as during the pandemic.
Green energy solutions: The energy crisis has left its mark on the real estate market, causing construction and operating costs to spike. In response, developers have increasingly been turning to energy-efficient solutions, such as photovoltaic installations, water recuperation systems and vertical or rooftop gardens.