Currently, there are 34 investments in Poland under the Private Rented Sector (PRS, institutional rental market) offering a total of over 5,600 apartments. There are 4.4 thousand under construction, and another 25.6 thousand at the planning stage. apartments, according to a report by Knight Frank and the law firm Dentons “Rynek PRS w Polsce”.
The largest number of apartments in the PRS sector is currently in Warsaw (2,351) and Wrocław (1,176). Most construction is in the capital city (2,351), Łódź (669) and Katowice (668). There are 16 active operators in the sector.
“Poland, as the most attractive country in terms of investment in Central and Eastern Europe, is an excellent alternative to the markets of Western Europe, where PRS achieves very good financial results. Investors assume that the success will be repeated also in Poland, regardless of the fact that the PRS market is still at its initial stage. stage of development and a long way to reach maturity. Despite the limited number of investment products, the potential of the Polish market is noticed by new investment entities, which only confirms the investment volume achieved over the last two years. over EUR 800 million was invested. Next year is still a big unknown, but it can be assumed that the interest in alternative products will not decrease,” said Krzysztof Cipiur, the partner, director of the Capital Markets Department at Knight Frank.
According to the authors of the report, the analysis of the scale of the existing rental housing market in Poland compared to the volume in other European countries allows the conclusion that the Polish PRS sector still has a long way to go to maturity. Nevertheless, it is this stage of development that has attracted an increasing number of foreign investors for about 2-3 years, and the existing developers are encouraged to build apartments in this system, which is clearly shown by the number of apartments and premises for which the construction of developers in this sector has secured already land supply. Such a dynamic development of the market would not be possible without the socio-economic development of Poland and the presence of certain aspects determining the development of the PRS segment. Thanks to the stable economic development and the expected GDP growth, as well as the growing disposable income, an increasing number of Poles can allocate funds to improve housing conditions.
At the same time, the internal compulsion to have an apartment, established in the past decades, is changing, and subscription models, which are becoming more and more popular among Poles, are becoming familiar with the possibility of benefiting from things that we do not own. Although the long-term population forecast for Poland shows a downward trend, the largest Polish agglomerations record the opposite. By systematically creating new jobs, they attract residents of neighboring municipalities and cities, as well as economic migrants, whose inflow has been growing significantly for several years. A similar trend is also shown by the number of foreign students who, given the limited number of places in private dormitories, are also a potential target group for the PRS sector, according to the report.
“PRS is one of the newest class of assets available to investors on the Polish real estate market. The PRS market is at an early stage of development, therefore many of its elements are still at the stage of shaping appropriate market practices, i.e. the so-called market standard. of the transaction side, the vast majority of investments are carried out in the forward funding / forward purchase formula, which requires precise and safe for the investor defining the principles of cooperation between the parties to the contract during the construction of the facilities and their acceptance. from the early 2000s, which did not provide for investments such as PRS. They concern the possibility of building PRS on the service area, i.e. determining whether, from the legal point of view, PRS is a residential or service investment, as well as defining what is short-term and long-term use,” Piotr Staniszewski added team partner in real estate at the law firm Dentons.
Source: Knight Frank, Dentons and ISBnews
