June 2023

Current Real Estate Trends

…at the Polish Real Estate Forum

Partner Sebastian Janicki, expert in real estate, construction, and environmental laws recently participated in the Polish Real Estate Forum in the picturesque seaside resort of Sopot.

Following fascinating discussion and heated debate, Sebastian was able to sketch out five clear trends that will impact the real estate market in the short- and long-term both domestically and globally.

1. Coming to Terms with Inflation

According to a recent Pekao Bank report, Poland can expect the persistence of elevated core inflation for the next two years. The market players have generally expected this state of affairs and inflation is now ‘built-in’ and accepted part of the whole economic package.

2. Bouncing Back Bit by Bit

It may take around two years for the market to fully return to normal but a small yet tangible rebound of 2% could be the optimism the market needs. Although lending rates remain a little bit lower than in the past, contractor prices still remain high, ant there are some additional factors that could limit investment opportunities. This might lead to potential consolidation on the developer market. Additionally, joint ventures are being considered as a means to reduce the cost of bank financing.

“An emerging focus is shifting from recycling to the reuse of materials and equipment.”
Sebastian Janicki, Partner at Penteris

3. Sustainability in Focus

There is growing interest in decarbonization within the construction industry, addressing important aspects such as the impact on investment costs, including demolition and construction. Consideration is given to utilizing materials and technologies with low carbon footprints. It is worth noting that Poland has yet to draft the necessary legislation for implementing these measures, so there is great potential in this regard. Furthermore, an emerging focus is shifting from recycling to the reuse of materials and equipment, highlighting the importance of sustainable practices.

4. AI to Speed Up Development

Artificial intelligence (AI) is having an increasingly important role in supporting investment preparation and marketing efforts. One prominent example is a tool that enables efficient research on the absorption capacity of an investment site. In just several minutes, this application can provide insights on development options based on the site’s planning requirements and current regulations, including housing layouts, surroundings, communication, and green spaces. While some developers express scepticism about interpreting regulations, this tool is expected to be a gamechanger for architects with the knock-on effects being obvious.

5. Developers to Consolidate

The final trend being observed on the real estate market is less of an economic or technical trend but rather a business trend that could have the greatest impact on the entire market. With bank financing becoming increasingly difficult for smaller developers due to the above factors, businesses are more often considering merging with the competition in order to give themselves the necessary resources to compete on a more challenging market. There could be huge ramifications for the Polish real estate market and beyond when this particular trend begins to take effect.