The first quarter of 2022 ended with significant changes on the real estate market, which affect consumers’ decisions about buying or renting a flat. They open up even better prospects for the institutional rental sector.
The decreasing creditworthiness of Poles is one of the problems that affects more and more people who dream of buying a flat. This is due to the constantly rising interest rates, galloping inflation already exceeding 12.4%, as well as the fall in the value of the zloty and the tightening credit policy. This applies to the greatest extent to people who are now at the beginning of their career path and their income does not allow them to buy even a small apartment. Poles are also deterred from investing in their own apartment by high prices – in all cities they increased by 2 to 8 percent. on a quarterly basis. The turbulent situation on the housing market was also aggravated by the war over our eastern border, the consequences of which are enormous not only for Ukraine, but also for neighboring countries. A total of about 3.5 million people from Ukraine entered Poland from February 24, which caused a demand shock on the rental market. Most of them decided to stay in large cities, which means a jump in their population – in Gdańsk by 25%, Kraków by 19%, and Warsaw by 15%. The consequence of this was a decrease in the availability of real estate – the number of apartment offers for rent in the largest Polish cities decreased by as much as 70%, and rental prices in some markets increased by as much as 50%. At the same time, as a result of the war with Russia, about 391 thousand people left our country for Ukraine. people, mainly men working professionally in Poland, which resulted in a shortage of construction workers. In addition, disruptions in the raw material markets and disruption of supply chains from beyond the eastern border resulted in an increase in the cost of building materials by 29%. Due to these factors, in Q1 2022 the sale of new apartments decreased by 47% compared to the previous year, and the value of inquiries about housing loans in February decreased by 29.2%.
Resi4Rent, the largest company offering pre-paid flats in Poland, ended the last quarter with the rental of all flats from a portfolio of 2301 flats.
“Currently, each of our 8 investments is 100% occupied. Naturally, from time to time, single vacancies appear, which results from the expiring current lease agreements. Such great interest in the form of pre-paid apartments shows that the PRS market is a response to the current needs of consumers. The housing gap in large agglomerations and low creditworthiness are the basic factors prompting the decision to rent a flat, not buy it. The great interest in letting also results from the rapid influx of Ukrainian citizens. If some of them remain in Poland, in the next few years, they may generate an additional demand for housing, even in the hundreds of thousands. With such a large influx of people, the institutional rental market is a natural choice, guaranteeing the possibility of renting a flat from a reliable and experienced entity, on clear and transparent terms. The possibility of renting more apartments in one place has recently turned out to be of great importance also for companies relocating their employees with their families, who, thanks to comprehensive service and efficient relocation, can settle down faster, continue working and not deal with the issues of looking for a flat for their own hand,” says Sławomir Imianowski, president of Resi4Rent.
“At Resi4Rent, in order to keep up with the demand, we design over 6,000 premises. Soon, three new facilities in Krakow and Warsaw will be commissioned,” adds Imianowski.
The subscription formula has a chance to affect the housing market in a similar way as it influenced the automotive or entertainment market by increasing the popularity of streaming platforms. Pre-paid flats win over private rents primarily in terms of a higher standard of newly built flats, accessibility and professional service.
“Both the results of surveys among our clients and the latest reports of independent advisors show a high customer satisfaction rate on the PRS market – practically everyone is satisfied with the rental services provided. At the end of last year, the number of people who came to us as a result of a recommendation from our other tenant was 10%, now it is almost 20%. The advantages of an institutional lease are dominated by, among others, the option of living in a convenient location, easy access to the municipal infrastructure, the possibility of a flexible replacement of the apartment with another one. Additionally, administrator care is available in all Resi4Rent buildings. In addition, the rental price includes much more than just accommodation. It is a whole package of additional services, such as discounts to fitness clubs and local restaurants, the possibility of using a free bicycle inspection after winter, or special occasional events, such as coffee at the cost of Resi4Rent on the Neighbor’s Day. Such a tailored offer and efficient customer service result in a very high demand for our apartments, they find tenants within 2 days on average. The growing trust and popularity of the subscription-based formula is also confirmed by Resi4Rent’s recognition of the “Discovery of 2021″ and the award of the Customer Laurel,” says Alicja Kościesza, Sales and Marketing Director at Resi4Rent.
Although the development potential of the institutional rental market is very large, in Poland it is only at an early stage. The current PRS offer includes just over 7,000 apartments and constitutes a small fraction of the housing stock in our country, and the knowledge about such a model is still very limited. In the coming years, we can expect a significant expansion of this sector. So far, Resi4Rent has completed 2,300 apartments. In just a month, it gives away two new investments, incl. in Krakow and Warsaw. By 2025, the company intends to expand its portfolio to at least 10,000 units, most of which are already under construction.
