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Thursday, 24th May 2012
Home > Polish Property Blog > Profiting on Static Polish Property Prices
Profiting on Static Polish Property Prices
November 2010
"... is it any wonder Poland is such a popular place to sell up?" |
I have a feeling that there are more foreigners selling up in Poland at the moment than in any other central European country. And I'm waiting for someone to bring out the statistics to prove it followed by a proclamation that this must prove 'Poland has the worst performing real estate around'. It's certainly true that our Property Valuation service has been extremely busy this year and we are still backlogged with requests (a two week queue at the moment). Many of our clients have been doing this as part of a keep or sell decision. So does it mean Polish property has performed so badly? Actually the reality is probably that it has performed a little too well compared to neighbouring countries. Values have remained fairly static for the past two years which on the face of it is often disappointing to the our Property Valuation clients. But the initial gloom is short lived for two reasons. Firstly the fact that Polish property prices have held their own is more than can be said for the other ten new EU countries. Over the border many foreign investors are sitting in negative equity and those who have borrowed to buy simply cannot sell but must supplement the mortgages on a monthly basis until things look brighter. So Poland is one of the few countries where buyers can actually sell and get their money out should they need to. Although many who I have spoken to are reluctant to do so. It is the Polish properties that do not have a negative cash flow – the rents are affordable to the local population and few are relying on holiday lets from Westerners as is the tragic case along much of Bulgaria's coast line. But if an investor needs to create cash then it is often the Polish property that they have to sell. Prices are static but the market is moving and it is a local who, more often than not, will buy. They are not, and never were, priced out of real estate. It's usually at this point that the seller realises he or she has actually made a profit, and this is our second reason for seeing the gloom evaporate. Throughout the credit crisis the Polish economy has continued to grow, the only EU country to pull this off, and the currency has consistently gathered strength– especially against the pound. Around two years ago someone buying an apartment for 500,000 PLN would have needed to transfer £83,000 from the UK. If they sold now for the same price the funds that would end up in their sterling bank account would be £111,000. Now £28,000 is not a bad profit for two years in a static real estate market even if it was the shifting exchange rates that made the cash and not the property. For the many investors who borrowed to the hilt in the boom times and now need to find some liquidity, often to subsidise purchases made elsewhere in Europe that now languish in negative equity, is it any wonder Poland is such a popular place to sell up? |
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