Investment land market in Warsaw 2023

Investment land market in Warsaw

The past year has brought significant changes to the investment land market for multifamily housing in Warsaw. The total value of transactions has been successively decreasing for three years. However, there has been an increase in the concentration of contracted land where prices were lowest, indicating a more strategic approach by investors looking for more accessible and affordable locations to minimise risk and maximise potential returns. The INWI team analysed recent transaction data in the capital’s investment land market. What has the experience of the last two years shown? What are the prospects for the multifamily sector? These questions are answered by the experts of INWI, a company that is a leader in the land, residential, logistics and retail real estate sector.

Declining market dynamics

It is noteworthy that the shortage of investment land has been steadily worsening for several years. According to INWI data, the number of transactions in Warsaw in 2023 is down by 8% on the previous year. This is reflected in the total area and the total value of transactions, which declined adequately year on year. In 2021, the transaction area of land for multifamily development was in the region of 800,000 m2, a year later it fell to just over 500,000 m2, while in 2023 it amounted to only 350,000 m2. However, the declining dynamics signal a stabilisation of market conditions. Investors are more informed and predictable in their decisions, which encourages more sustainable development. In addition, the lower number of transactions suggests a greater focus on long-term investment goals, which have more potential for the long term. The decline in market dynamics presents an opportunity to implement new investment strategies. Development companies and investors can focus on the qualitative aspects of investment, carefully analysing projects and minimising risks, which should bring significant benefits in the long term. The natural consolidation of the market also provides an opportunity for companies with stable foundations, increasing the prospects for long-term success and consolidating their position in the market.

‘We are observing a decline in the number of investment transactions in the capital. We interpret this as a signal of a stabilisation of market conditions and a greater focus of investors on long-term goals, which may bring benefits in the long term,’ says Mariusz Urbanski, Development Director at INWI.

Land price dynamics and spatial differentiation

In the first half of 2023, INWI experts observed a clear decrease in the average price per square metre of land compared to the corresponding period in the previous year. It amounted to PLN 2,211 per square metre, which is almost PLN 800 per square metre less than in the first half of 2022. The second half of 2023 brought an increase in this price to PLN 3,500 per square metre, which is, however, more than 500 per square metre less than in the second half of 2022. In average terms, in 2023, the value of land stood at PLN 2,908 per square metre, and in the previous year at PLN 3,370 per square metre. However, the thirteen per cent drop in land prices did not go hand in hand with the change in prices for residential floor space, which had remained at a very similar level for two years.

The district with the lowest price for land and PUM was Białołęka, where these prices amounted to PLN 1 082 and PLN 1 033 respectively. This was a particularly attractive area for investors, as confirmed by the number of transactions carried out, amounting to 21 in 2023 and 22 in 2022. The highest price per square metre of land was recorded in a single transaction in the Warsaw district of Ochota – PLN 19,272. The price per PUM for this transaction ranked very high at PLN 12,144.

Developers’ activity

The report prepared by INWI analysed the activity of developers operating in the capital, of which there were more than 40 in 2023. Each of them was compared based on three categories: total transaction area, total transaction value and total PUM on contracted sites. In terms of transaction area and PUM size, Dantex ranked first with just over 80,000 m2 of land purchased, which accounted for almost 24% of the total transaction area in the capital. The total PUM on these sites amounted to 47,373 m2. The largest purchase in terms of price was made by Dom Development, acquiring land in Mokotów and Bemowo for over PLN 125 million. Other noteworthy developers active on the Warsaw real estate market were Profit Development, Develia or Marvipol, who, ranked in the top five in terms of transaction volume and value and PUM size.

ABOUT INWI

INWI operates in the real estate sectors including land, residential, office, retail and logistics properties. It actively seeks land and buildings for its own investment plans and in cooperation with leading investors in the market. The company also participates in sale and leaseback transactions. To date, INWI has completed more than 50 projects and the value of completed transactions exceeds EUR 700 million. For more information, visit www.inwi.pl .