investing in Polish real estate

Empty apartments are all over Poland from over investment

I am an American living in Kraków, Poland. I am also a Polish citizen and an investor. My view of the Polish real estate market is this, if you want to buy a house to live in for the next ten years, that means owner occupied, I think this is fine. But if you are speculating on investing in Polish real estate you will almost certainly lose money. All these photos are with in a five-minute walk of my flat and this is not even all the empty buildings, there are, just a small sample. There are 1000s and 1000s  of apartments waiting for an investor or someone to take them off the builders and agents hands, in a short radius of my residence.

building in Krakow

This building they told me would be filled three years ago, it is still empty

Everyday, I see a new investment being complete and my wife jokes good, I think they should build more, and sure enough they do. This is nothing more than a speculative bubble that is in disequilibrium for the long-run. I know many people in Poland in Real Estate from builders to agents to lawyer to investors and they all think the market is over built and unrealistic.

Warning against investing in the Polish real estate market

  • Over supply – There is a huge over-supply in the housing market. Foreign investors build on speculation and local people can not afford their asking price. I see scores of empty investments, new and old apartments empty, and they are empty for many years.
  • Weak Demand – Every person I know is building their own house in the suburbs. No one person I know is moving into a new construction. The price per meter in a city is about 3-4,000 dollars a meter. In the suburb you can build you own house for about 500 dollars a meter.  My sister-in-law finished a beautiful large house in the country for 300 dollars a meter.  So what person will pay 1000% more for a house that is not built to their design. Usually some ugly block of flats that is some investors dream of making a profit with no care about design or the people who will live there.
  • Mortgages are hard to get – For normal people it is not possible to get credit since the crisis.
  • The population is decreasing or flat – Even a popular city like Kraków where I live, has a decrease in population every year, partially because of the birth rate but also emigration to warmer or high paid countries now that Poland is in the EU.
blocks of flats in Poland under construction

Construction everywhere because real estate operates on a lagging cycle economically.

If you just consider supply and demand and not even the tight credit market or long term demographics, the market is too high.

Polish investment housing

More investments then the market can handle in Poland

My friends in the Real Estate business have said they are selling nothing.

Polish house

One of countless Polish houses waiting for an investor in Kraków

I have heard people putting money down on a new construction and the builder goes bankrupt. I think the housing market in Poland is a mess.

empty lot in Poland

Empty lots for sale everywhere or new buildings going up only to remain vacant for the next five years

The good news about Polish real estate

Poles are hardworking sensible people. The country is getting rich.  With time income levels will rise. However, if the average income is 1000 dollars a month, this should be the average price of a house per meter.

Krakow apartments for sale

The whole city is for sale as people move to the suburbs and still more investing

Right now it is 300% this. Prices only really increased from 2005-2007.  To me that is a speculative bubble. Before that is was about 500 dollars a meter instead of 3-4,000 dollars a meter. Some someday in the far future incomes will rise and prices will come down and there will be equilibrium in the market.

Poland construction

Poland is in the tail end of an over investment construction cycle

Until that time, I would not walk but I would run from investing the Polish real estate market if you are considering buying. Me personally I will build my own house. It is cheaper and to my design. It will be my primary residence, not some speculative real estate investment in Poland.

real estate no owners

Many buildings are empty waiting for an owner.

Let me know when you think this market will recover, but some people say ten years.

Polish building for rent

Many buildings that can not sell are offered for rent, but are still empty

I am someone that lives in Poland and know about the real estate market first hand. It is not a good investment.