what peoples opinions are for the future of the property Market in Poland/Warsaw ?

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fear peile

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I was looking at Frank Knight's Polish residential property report and anyone that bought 2005-2006 seems to have performed very well, also the PLN currency exchange rate has performed very strong, if someone released equity from a property here in Ireland and purchased in early 2006, I think they would be up about 10% on the exchange rate alone and according to Frank Knight, prices are up 77% in Warsaw.

My question is what peoples opinions are for the future of the property Market in Poland/Warsaw ?
 
Re: what peoples opinions are for the future of the property Market in Poland/Warsaw

fear peile said:
I was looking at Frank Knight's Polish residential property report and anyone that bought 2005-2006 seems to have performed very well, also the PLN currency exchange rate has performed very strong, if someone released equity from a property here in Ireland and purchased in early 2006, I think they would be up about 10% on the exchange rate alone and according to Frank Knight, prices are up 77% in Warsaw.

My question is what peoples opinions are for the future of the property Market in Poland/Warsaw ?
Click to expand...
EUR-PLN historical data:
(from http://www.oanda.com/convert/fxhistory)
Zloty stood at 3.85 on 1 Jan 06
It is now at 3.65

That is a 5.5% difference.
During the interval it has ranged from 4.14 to 3.58

Over the last 4 years it has been as low as 4.90 to the euro and has averaged 4.14.

Depending on when you calculate it with a weak currency, you can make the figures look like a huge gain or a whopping loss.

In any case, the Polish central bank is locked into an exchange rate mechanism with the Euro, so you are unlikely to benefit much:

http://www.nbp.pl/Homen.aspx?f=en/onbp/informacje/polityka_pieniezna.html
"Meeting the exchange rate stability criterion is one of the conditions of joining the euro zone. Therefore before the adoption of the euro, the zloty exchange rate against the euro remains fixed for at least two years within the ERM II (Exchange Rate Mechanism II). This means that during this period the National Bank of Poland will maintain the market zloty exchange rate against the euro within the permissible range, with regard to the set central parity."

Betting on exchange rates is a poor way to make a large capital investment. Hasn't the dollar halved against sterling in the last few years. If only you had bought dollars a few years back and invested them in the UK, you'd be quids in.
 
There is a context to the currency discussion on Poland, which is:
* key date is May 04, when Poland joined the EU - zloty has strengthened about 25% since then.
* zloty/euro direction is mostly governed by Poland heading for adoption of the euro by 2011/2012, made more likely by election of the new pro-business government two weeks ago, which has pushed zloty to 5 year high against euro
* Most commentators see a continuing strenghtening of the zloty until at least 2009 and likely until EURO entry, due to inflow of EURO 67 billion of EU funds, foreign direct investment, the pro-EU stance of the government (for reasons to lower their budget deficit, keeping inflation down by lowering import prices etc)
* This will drive up the cost of property for foreign buyers and it can be argued that it makes sense to buy earlier rather than later as there is still time for the zloty to strengthen further
* There are downsides to the strenghtening of the zloty for property investors, as it will probably be accompanied by higher interest rates.

Like the previous poster said, currency should not be seen alone as a reason to invest; increasing prices, stronger rental market, maturing mortgage market and strong economic fundamentals are some of the other reasons supporting the investment decision in Poland today.
 
from a political point of view, I am delighted that Donald Tusk has got in as president. The growth of the Polish real estate market happened in spite of the Kaczynski brothers' incompetence and desire to turn Poland into some medieval bastian of the Catholic church. Tusk wants to encourage Western investment and business.
 
For all their faults though, the [SIZE=-1]Kaczyński twins did prioritise anti-corruption during their reign, something which was badly needed in Poland and can only benefit the country going forward.
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Re: what peoples opinions are for the future of the property Market in Poland/Warsaw

I figure if someones asking its cause the future dont look too bright and they want out. But that may be overly pessimistic.

I looked in Lodz recently and found prices to be pretty high. Higher than locals could afford - so the only market was really aimed at rich locals or multinationals that are relocating looking for rentals (cheaper than hotels).

In the end I passed on the idea as it seemed very high risk. Maybe i will regret it, time will tell.
 
Propman said:
* This will drive up the cost of property for foreign buyers and it can be argued that it makes sense to buy earlier rather than later as there is still time for the zloty to strengthen further
* There are downsides to the strenghtening of the zloty for property investors, as it will probably be accompanied by higher interest rates.

Like the previous poster said, currency should not be seen alone as a reason to invest; increasing prices, stronger rental market, maturing mortgage market and strong economic fundamentals are some of the other reasons supporting the investment decision in Poland today.
Click to expand...

I agree with Propman and currency is going to drive up property in poland from an investors point of view. I think that prices are now out of reach from the domestic market in Warsaw and if there is a slow down from foreign investors , is there going to be a price correction ?

The main fundementals are correct that you quote, but if the currency acts in your favour this is a bonus :)
 
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