Located in central Europe, Poland is an often overlooked tourist destination and not highly regarded as a lucrative investment opportunity in comparison to other more high-profile European countries. However, with a rich history, beautiful scenery and attractive ROI in some cities, Poland is worth consideration for open-minded investors willing to explore lesser-known property markets.
Indeed, despite an exceptionally strong first quarter in 2021, as of the first half of 2022 Poland's housing market has slowed considerably, according to property company JLL. A combination of the COVID-19 pandemic, the shocking outbreak of war in Ukraine and rising inflationary pressures has resulted in Poland's 2021 property boom being severely undermined.
In areas such as Warsaw, KrakÃ³w, WrocÅ‚aw, the Tri-City, PoznaÅ„ and ÅÃ³dÅº, house sales in Q1 2022 were close to 10,400 – approximately 31% lower than the preceding quarter. In comparison to Q1 2021, this was a 46% decrease in house sales. However, there is reason to be optimistic. Despite sales being impacted, Poland attracts substantial interest from foreign property investors.
According to the European Commission, Poland’s economy grew by about 5.9% during 2021, an improvement from the previous year’s 2.2% decline. Poland's economy is expected to grow by another 5.2% this year as the country rebounds from the COVID-19 pandemic and inflationary pressures begin to subside. However, the economy is expected to decelerate during 2023-24.
- Poland continues to attract substantial interest from property speculators.
- The economy – and particularly the housing market – has suffered during 2022.
- Investors looking to explore Poland's property market must prepare to invest long term.
The capital city of Poland, as well as the country's largest city, Warsaw is situated on the River Vistula in east-central Poland. Warsaw is often overlooked by tourists who prefer to explore sunnier climes. However, the city still has a lot to offer. Warsaw is a combination of older and more modern history, with the city's architecture tracing Poland's anachronistic journey.
Warsaw's Palace of Culture and Science nods to the city under socialism following the end of the Second World War. On the other end of the spectrum, royal parklands at WilanÃ³w and the 'Palace on the Isle' presents Warsaw's centuries-old history as the royal capital of Poland. The River Vistula – where Warsaw is located – is also the longest river in Poland.
For house prices and rental yields, Warsaw's figures for 2022 have been mixed. During the year to Q1 2022 – when adjusted for inflation – house prices declined by 4.2%, also down from the previous year’s 8.9% price rises. In relation to house prices, Warsaw lags significantly behind Poland's other major cities. However, the buy-to-let market is robust, with rental yields at 6%.
An expansive and popular city near the border of the Czech Republic, Krakow is renowned for its distinctive architectural landmarks dating back 1,000 years, regal market square and vibrant atmosphere. Considered the cultural heart of Poland, Krakow's past as the royal capital of the country can be appreciated throughout the city.
Property in Krakow also possesses enormous potential for investors. In relation to house prices, Krakow outperformed all of Poland's other major cities by a substantial margin. The city experienced a surge in both nominal and real figures, with a 19.5% Year-On-Year price surge in Q1 2022 – still 9% when adjusted for inflation.
For investors looking to explore the buy-to-let market, rental yields are generous and similar to Warsaw at around 6%. However, the market for property purchases – especially in and around the Old Town – is competitive. Considered an even better city to live in than Warsaw, investors have purchased approximately 70% of available apartments in and around the Old Town.
Considered to offer a quieter pace of life than Krakow, Wroclaw is nonetheless the largest city in Lower Silesia and the primary industrial, economic and administrative hub for the entire region. In addition to its 130,000 student population, Wroclaw offers annual festivals, thriving nightlife and several theatres to choose from. It is a city which entertains despite a subdued exterior.
Wroclaw has also enjoyed high house price increases, rising by 14.2% year-on-year. Compared to 2008 levels, Wroclaw's house prices have risen overall by 52.6%. The city also comprises many of Poland's modern builds which were constructed after the year 2000. Gross rental yields are also attractive, on average offering returns just shy of 8%.
Wroclaw offers property investors an attractive buy-to-let market. Rental figures in areas like Krzyki appear to be the most lucrative, with a four-bedroom house costing tenants on average EUR 2,524 – much higher for that type of property than most other parts of Poland. Laws between tenant and landlord are neutral but unstable, as rents can be freely negotiated between parties.
Lodz is Poland's third-largest city, which grew to prosperity due to its role in the textiles industry during the 19th century. Residents and visitors can even visit the Central Museum of Textiles to commemorate the city's commercial success. Piotrkowska Street is also dedicated to commerce, lined with restored merchant homes and Art Nouveau townhouses.
In more recent years, Lodz has retained its industrious spirit, becoming a hub for advanced technology manufacturing. House prices have also increased, with Lodz overall experiencing the second-highest house price increase in Poland since 2008 – up by 53.2%. Gross rental yields in the city centre average 4.36% while outside the city centre yields are approximately 4.74%.