The BPCC, together with its members Colliers and Hoogells, held a meeting of the Real Estate & Construction Group on 19 November in Colliers’ Warsaw office, focused on Poland’s fastest growing real-estate sector – PRS.
There is no hard-and-fast definition of ‘private rental sector’, but it includes build-to-let apartment blocks financed by institutions, as well as student accommodation and senior accommodation.
The BPCC’s chief advisor, Michael Dembinski, introduced the meeting, mentioning the needs of Poland’s shared-services sector, which employs nearly half a million people, many of whom are from outside the employer’s base city. This means that for HR departments across Poland’s global business hubs, finding accommodation for their new recruits (especially foreign ones) is a headache that institutional solutions such as PRS could solve.
Kamila Kasprzak, manager, at Colliers’ Corporate Finance CEE Living Services, gave an overview of the entire PRS sector, setting out the fundamentals, the broad perspective, opportunities and potential returns. She mentioned Poland’s huge supply gap in housing, saying that the Warsaw market alone could absorb 200,000 units. Ms Kasprzak explained that whilst Poland has one of the highest rates of owner-occupation in the EU (86%), Generation Z is more likely to rent accommodation rather than buy, a trend she compared to the declining sales of CDs and DVDs as streaming – a form of rental – becomes more popular.
Ms Kasprzak’s overview showed a market in need of many forms of institutional housing, with student accommodation also offering huge potential for investors. The number of foreigners coming to Poland to study is rising by 18% year to year; the country is the EU’s sixth-largest student market – with 1.2m students – of whom over 105,000 are from abroad. She explained the concept of co-living, where hotel-style and home-style accommodation blend into one, with residents able to stay from one night to a couple of years, the supply and demand of space managed by an app.
The legal and regulatory aspects of living sector in Poland, with an emphasis on PRS and student housing, was covered by Mirosław Metych, partner, and Adrianna Kończak, senior associate, from law firm Hoogells. The problem, they said, is that the definition of PRS defined as accommodation-as-a-service attracts a VAT rate of 23% (as do hotels), while residential housing falls in the 8% VAT rate. A PRS development offering a gym, swimming pool, and laundry services, for example, could be interpreted by the tax authorities as a hotel, or indeed it could also be seen as ‘satisfying a permanent housing need’, in which case a tax interpretation could favour the lower rate. Greater clarity is needed from the tax authorities if Poland is to attract more capital in to this form of housing.
At the moment, Poland has some 20,000 PRS units built, with 7,500 under construction and a further 34,600 in the planning stage. Compared to Poland’s overall housing needs, this is still a drop in the ocean.
More discussions will be needed with the government, ministries and regulators to obtain clarity on which VAT rate would apply, so that investors have a higher level of predictability when preparing their business models for PRS developments.
The presentations were followed by networking and an opportunity for one-to-one discussions with the speakers.
