Polish Real Estate Market: the Outlook is Still Good

Warehouses market

Real estate investments in Poland have recently slowed down. The reason, however, is not a lack of demand for new offices, commercial premises, warehouses or apartments. The slowdown was precipitated mainly by high construction costs or difficult access to financing. A longer perspective offers reasons for optimism

The recent years have marked a time of dynamic changes in Poland's real estate market. At first, due to the pandemic, then the war in Ukraine. Despite this, it is still growing, albeit at a slightly slower pace.

Office space market

Problems brought about by the COVID-19 coronavirus outbreak are effectively gone from the office market. In 2022, demand approached the level from before the outbreak of the pandemic. It amounted to 1.448 million sqm, compared to approximately 1.5–1.6 million sqm per year between 2017 and 2019. This reflects people returning to offices, but also the public sector moving into modern space, or the growth of businesses. It is particularly evident in the banking, financial and IT sectors, due to the growing role of cybersecurity. New offices are also being sought by companies that previously had their offices across Poland's eastern border or had branches there.

Poland's principal office market is still Warsaw, where in 2022 the demand amounted to 860 thousand sqm, 33 per cent more than the year before, and almost the same as in the record-breaking 2019. In other major markets, such as Kraków, Wrocław, Tricity (Gdańsk, Gdynia, Sopot), Katowice, Poznań, Łódź, Lublin and Szczecin, over 623 thousand sqm was leased, almost 5 per cent more than in 2021. This situation, however, is not reflected in the activity of developers. Inflation-driven high construction costs, including prices of building materials, land, utilities and wages, as well as limited access to debt financing, mean that the scale of new investments is decreasing. As a result, current supply of new offices in Warsaw is at its lowest level in a decade. According to CBRE data, in the last year 236.8 thousand sqm of space was delivered to the market and only 179.7 thousand sqm remains under construction.