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Land in Warsaw for multi-family housing development in H1 2020

The real property industry has been very successful in recent years. The demand for flats has been growing year by year. The largest property developers have started even a few development projects each at the same time, while looking for new land for more projects. They are not discouraged even by the rising cost of land.

The situation in the land property market is good despite the COVID pandemic.

In Warsaw alone, the number of deals in the first half of 2020 was up by 20 percent compared to the same period of 2019. The average price of land in H1 2010 was PLN 2,100 per sq. m. In UFA (usable floor area) terms, the average price hovered at PLN 1,300 per sq. m.

Interestingly, nearly 70 percent of the deals closed during the first half of 2020 were properties covered by local zoning plans or local land use plans. It is somewhat strange given the fact that the percentage of transactions conditional upon obtaining outline planning permission or regular planning permission was significantly higher.

“The third quarter of 2020 already saw tens of new deals in Warsaw, the Tricity and Wrocław. This confirms that the market is still active and that property developers are not putting off their purchasing decisions. The majority of them have already experienced problems regarding land banks for new development projects. Despite the moderate sales of flats, investors are set to start new projects in the second quarter of 2020. According to figures from the Polish office for national statistics, property developers started the construction of more than 17 thousand flats in September 2020 (www.forsal.pl)”. “Land is still in short supply and therefore I do not expect a sharp fall in demand for land needed for new projects,” says Daniel Radkiewicz, chairman of INWI.

Land in the Tricity for multi-family housing development in H1 2020

The situation in the land property market in the Tricity (the three Polish cities of Gdańsk, Gdynia and Sopot) is surprisingly good. The number of property developers looking for new residential development land is increasing. In their latest report, INWI’s experts look at the prices of flats per square metre of UFA (usable floor area), present the locations of new projects and write about who bought and sold land properties.

Land in Warsaw for multi-family housing development: a summary for 2019

In 2019, the average price of land for multi-family housing development in Warsaw was PLN 2,606 per sq. m. In UFA (usable floor area) terms, property developers paid PLN 1,609 per sq. m. Twenty-five percent of the land deals were conditional upon obtaining regular planning permission.

“This means that there is a supply of land on the market, but you need to take a long-term approach when looking for properties,” Daniel Radkiewicz commented.

In fifty percent of the deals, the UFA was below 3,000 sq. m. The conclusion is that small projects are more popular, as they deliver return on investment within shorter periods and they are less capital intensive.

In UFA terms, for completed projects, the cost of land was the lowest in the Rembertów and Białołęka districts of Warsaw and the highest in the Wola and Śródmieście districts of the capital.

The largest number, or 49 percent, of plots sold in Warsaw in 2019 were properties covered by local zoning plans. This was followed by 25 percent of properties with regular planning permission, 17 percent with outline planning permission and 9 percent of properties covered by local land use plans.

The total area of land sold in Warsaw in 2019 was nearly 80 hectares. This included 28 hectares in the central areas of the city (the districts of Śródmieście, Mokotów, Ochota, Wola, Żoliborz, Praga-Północ and Praga-Południe), or 38 percent of the total figure.

In the areas outside the centre of Warsaw (the districts of Ursynów, Wilanów, Wawer, Wesoła, Rembertów, Targówek, Białołęka, Bielany, Bemowo, Ursus and Włochy), a total of 52 hectares (or 65 percent of all the land sold) changed hands. In 2019, the average cost in UFA terms  in the centre of the city was PLN 2,383 per sq. m., exceeding the average price in Warsaw by 49 percent, with PLN 4,662 per sq. m. of land, which was 83 percent above the average for the city. Outside the centre of the city, the average cost in UFA terms was PLN 1,075 per sq. m., i.e. 33 percent below the average figure, with PLN 1,165 per sq. m. of land, which was 58 percent below the average for Warsaw.