Property Investment in Poland

Poland is the largest of the ten countries to join the European Union (EU) in 2004. It is located in the very heart of Europe. A large country, with a population of just under forty million, Poland sees a concentration of its people living in and around the capital city of Warsaw and the major city of Krakow. Two other cities are at the forefront of development, Lodz, home to a prestigious international film festival, and Wroclaw, a stunning ancient city that continues to thrive. There is plenty of skiing in Poland as well, with regions such as Kaprun that offer a long season and ideal weather conditions.

Analysts claim that Warsaw’s population may double in the next 4 to 5 years. There is a low rate of unemployment and the growth indicators for the country remain strong. The low tax structure and political stability adds to Poland’s overall strengths as a destination for overseas investment. Property in Poland is owned by right of freehold or absolute ownership. The economy is largely dependent on income from exports and has seen liberalization in recent years. Poland is ranked amongst the new member nations of the EU that may soon achieve alignment with the economic standards set by the EU to join the Euro zone. This is already impacting the property prices in the country, and these are rising. Another reason for the rise in prices is access to EU aid that serves to create infrastructure development and boost the economic growth of Poland.

Rents are rising as well, largely due to: an influx of employers from the West, looking for low-cost, educated work force and reduced overhead expenses. Increased numbers of expatriates in the country are also creating a demand for high quality residential real estate. Furthermore, data suggests that the bulk of East Europeans prefer to live as tenants as opposed to owners - a major social and cultural factor to consider if you wish to ‘buy to let’.

Average rental yields are estimated to be a healthy 5%, and many people see major possibilities in off plan investment properties. While there are all levels of housing available, the safest bet may be the mid market price range options. These are likely to see the most appreciation, particularly if held for the long term. While it may seem risky to invest in an emerging market that you may know little about, consider that the returns on your capital also have the potential to be large. The capitalized western markets offer very low growth; even countries like Spain have seen most of their growth already. Eastern Europe is regarded as the next big thing by a number of investors looking to double their money.

Further incentives are provided by Polish rules that provide a capital gains tax holiday and freedom from value added tax (VAT) for properties that are sold after a five year period. The country has focused on reducing the limitations and paperwork surrounding overseas investment property for foreign nationals. Several billion dollars will be invested in the Polish real estate market over the next few years, and this is sure to create pressure on the prices. Exciting new developments are coming up in Warsaw and other historic cities such as Wroclaw offer opportunities from property development and resale.

However, a final word of caution: Poland has its share of con artists like any other country, so select your lawyer and agent carefully. One possibility is to get your local agency to handle the deal for you, so find out whether they deal in overseas investment property. You will need a local lawyer as well so ask others who have bought real estate, particularly buy to let property in Poland. As with any major investment – do your research and get good advice!