POLAND Trends and Developments Contributed by: Radomił Charzyński, Kamil Majewski, Olga Durawa and Filip Widuch, Greenberg Traurig LLP
one of the best locations for nearshoring/friendly shoring in CEE. Residential Sector Due to the increase in financing and construc - tion costs, the housing market saw a significant decline in the sale of apartments and of mort - gage loans at the beginning of 2023. Neverthe - less, a reversal of this trend in the sale sector was observed throughout the remainder of 2023, owing to the introduction of the 2% safe credit government programme designed to stimulate housing demand in the form of a subsidy equal to the difference between 2% and the average fixed mortgage rate. This 2% government programme led to an increase in new mortgages and transactions in the resi-for-sale market. Although the value of new transactions is still below the record levels of 2021, there has been a positive change in the mortgage market. However, this has also led to an increase in apartment prices (average asking prices increased by 17% year-on-year between the end of 2022 and end of September 2023 in the largest metropolitan areas). The govern - ment announced a new subsidy programme at the beginning of 2024, which is intended to result in greater affordability of owner-occupied apartments. However, the increase in prices is not accom - panied by a corresponding increase in projects under construction and the number of construc - tion permits issued (23% lower in Q1‒Q3 2023 than in the same period in 2022). This may indi - cate that developers are taking a more conserv - ative approach to customer demand, but it also relates to the shrinking availability of residential land in Poland.
The development of the private rented sector (PRS) in Poland is heavily dependent on the mortgage lending situation in the resi-for-sale market. Given that the average rent in Poland at the end of Q3 2023 was approximately PLN1,150 higher than the average mortgage payment (assuming a 2% government subsidy), the mortgage market prevails among individual investors and does not encourage developers to seek alternative revenue sources among PRS investors. Currently, the Polish residential market is still dominated by owner-occupied apartments, with only 13% of the population living in rented accommodation. Although an institutional build- to-rent sector is emerging, it is still in the early phase of development despite dynamic growth in recent years (both in terms of construction and investment activities). As a result, build-to- rent premises accounts for approximately 1% of the entire residential stock for lease in the main Polish cities. Irrespective of the factors hindering or delaying the development of the PRS market in Poland, an increased number of PRS projects were com - pleted in 2023 (with the existing stock in Q3 2023 standing at approximately 15,000 units, compared to circa 8,000 units in Q3 2022, giv - ing a year-on-year increase of 83%). Although the number of announced PRS projects under construction remains stable (circa 10,000 units), some PRS projects have been abandoned at the design phase (the number of planned projects decreased from approximately 35,000 to 27,000 units). In view of the dwindling availability of attractive land, some investors are increasingly interested in converting office and retail build - ings into PRS buildings.
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