In a world of claims of sky-high yields and returns, (some of which turn out to be too good to be true) there is still a role for solid, reliable, investment returns.
Let’s consider the economy. Poland is the leading European Union economy in the Central and Eastern European region. Average growth rates have been 3.3% for the last 20 years and are projected to be 2.5% per annum. This makes Poland a serious competitor to Germany.
Poland’s infrastructure has benefited from European Union investment which, together with government funds, tallied more than €100bn by 2013 for road projects, motorways, railways. Poland is at the heart of Europe, so it is a great place for factories, warehouses and logistic operations of large multinational businesses and has attracted subsidiaries of big firms like Coca Cola, Dell, GE, Gillette P&G, Ikea. VW is also investing in a van factory near Poznan, East of Warsaw.
Shale Gas is a potential game-changer. In the US tapping into vast reserves cut consumer energy bills. Poland is now well positioned to lead shale gas development in Europe. It has one of the largest reserves for shale gas in Europe.
Poland is a politically stable country. An indication of this, is that for the first time since the reintroduction of democracy in Poland since 1989, marking the end of Communist rule, an incumbent government was re-elected in October 2011 serving a second term. The government has pursued a policy of close cooperation with the European Union and has benefited from this relationship. An inflow of EU funds has modernised Poland and help privatise state enterprises.
The International Monetary Fund’s CEE representative says: “Poland is in some ways more like a large emerging market, a version of Turkey or Brazil or possibly China. In the four years since the crisis began, the Polish economy grew by 15 percent… So the performance has been extremely strong….And finally, the banking system itself is well capitalized and highly profitable, and in rather better shape than in many other countries.”
So where in Poland should you invest? What represents value?
Poland may be considered a low cost place to invest in some areas, in the countryside and the 2nd and 3rd tier cities. The main cities like Warsaw and Krakow are cheaper than many Western European counterparts, but not necessarily cheap. Clearly lower-priced, property can be found on the outskirts of the cities, a 1 bed apartment may cost under €100,000 but in prime central Krakow or Warsaw, the same 1 bed may be €150,000-€200,000. It is also a great place to consider buying a ski property. Whereas many established European ski resorts have become unaffordable for many, Poland represents great value for money. An apartment in the biggest ski resort of Zakopane would cost around €125,000 upwards for a small 30 sqm investment property
What impact would Poland joining the Euro have on the property market?
Poland is obliged to join the single currency bloc as part of its 2004 European Union entry deal, but has not rushed to do so. Joining the Euro could provide a fillip to Polish property prices. We only need to look to other countries, which have joined the Euro, and experienced an, almost immediate, inflation in property prices. The dynamics in Europe are different now, given all the trouble in the financial and property markets, so it would be healthier for Poland if that were to be a more muted price rise.
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Tags: foreign buy-to-let, investment property, Katowice, Kraków, Lodz, Poland, Risk & Reward, Value buying, Warsaw, Zakopane