Poland property-latest discovery a game changer?

March 4, 2013

Many property text books and due diligence property guidance, say to watch for markets or micro-markets where there is some breakthrough development or infrastructure improvement, as a precursor to considering a property market as attractive. Evidently there are many more criteria to be taken into account as well, but let’s just focus on that one thing here…Shale Gas is one of the most talked about breakthrough developments in Europe right now. With talk of energy supplies running out, many nations around the Globe are focused on finding a viable alternative to natural Gas or oil supplies.

Polish Property - Shale Gas MapUnder EU agreements to reduce carbon emissions, several coal-powered stations, hitherto supplying 6 million households in UK, will be closed mid 2013. Elsewhere in Europe, countries are seeking to reduce their dependency on countries like Russia for their nation’s  energy supplies.

Shale Gas is a potential game-changer. In the US, tapping into vast reserves of shale have cut consumer energy bills and reduced industry costs, to the point that some energy production has been repatriated from low-cost producing countries like China.

Price Waterhouse Coopers (PWC) have produced a report that highlights how shale energy could boost British Gross Domestic Product (GDP) by an incremental 2-3% by 2035. The British Geological Survey estimates British reserves to be enough to supply households for decades to come. Think what the potential could be elsewhere.

Poland property scene and how it could be affected

Poland, the Cinderella of Europe, as a lone growth economy in Europe, stands out as one of the more stable and safe places to buy in Europe.

Kraków, the second city in Poland (after Warsaw) is a top tourist destination, particularly as a city centre break, as well as an emerging, city location for investment in global BPO projects (Business Process Outsourcing) in the world. Low labour costs and proximity to important markets in Central and Eastern Europe, make Poland an attractive manufacturing destination.

Poland ranks as the 6th most attractive country for Foreign Direct Investment (FDI) in the world and puts Poland ahead of all other European Union countries. Krakow is becoming a world class outsourcing and servicing centre. The sector provides more than 25,000 jobs and companies such as Lufthansa, Shell, Google, HSBC, Motorola, Capgemini and more recently Cisco have set up back-office operations in the city.

Much rented accommodation has been taken by workers for these international firms, driving demand in the local, Kraków property market.

What’s more, Poland is now well positioned to lead shale gas development in Europe. This will help itself and other nations in Europe to limit dependence on conventional natural gas from Russia. The country has one of the largest reserves for shale gas in Europe. Estimates from the Polish Geological Institute, in March 2012 are for production levels of 346-768bn cubic metres (bcm). Estimates for the UK, for instance, are lower at 150bcm. Oil and gas companies with interests in Poland’s exploration fields will be making strategic decisions regarding future operations during 2013 and this will encourage inward investment in a country already on the up in Europe.

So far, 111 exploration concessions have been awarded to about 30 companies, both state-owned and international, over territory of more than 35,000 square miles – nearly a third of the country. The work undertaken by these energy companies will help establish more accurate estimates of potential production levels.

This will have a positive effect on the Polish economy, boost job growth and ultimately create demand for property, for those moving and wishing to rent and those who wish to settle more permanently through buying property in Poland.

NB: Map courtesy of Rigs International

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