By Knight Frank


According to the latest RE:PRS report. Review, Trends and Outlook for PRS market in Poland 2023 prepared by the international real estate advisor Knight Frank and law firm Dentons, at the end of 2022 there were over 10,300 apartments available for rent on the PRS market. This means the market grew by 40% in 2022 alone. Nevertheless, apartments in the PRS sector constitute only 1% of all units available for rent in Poland. Considering the housing deficit in Poland, estimated at 800,000, units, the PRS market is expected to continue to grow and its potential is now recognised by private equity investors from Israel, Scandinavia, Asia and the US.

The predictions of real estate experts regarding the growing potential of the living sector in Europe have been confirmed. Alongside offices, logistics and retail, this sector is now cited by investors as the most attractive. This is further confirmed by the results of a Knight Frank survey of 44 institutional investors active in the living sector in Europe, managing €70 billion worth of residential assets across the continent. Analysis of the responses shows that respondents collectively plan to invest an additional €151 billion in the living sector in Europe by 2027, a projected increase of 115% on the €70 billion invested to date.

Poland will increasingly benefit from this trend. Investors recognise the potential of the PRS sector and the country’s significant housing shortage, estimated at around 800,000 units. The current economic and political reality, and in particular Russia’s aggression in Ukraine, forms part of a wider discussion about the market situation in Poland, although it poses no obstacle for investors. The strong demand for rental housing in the largest cities is unprecedented, and the dynamic growth in rents in Poland allows increasingly high returns to be realised.

Despite solid fundamentals, institutional investors from Germany and Austria, among others, are proceeding with caution due to rising financing costs, and are concentrating on their home markets. In their place, private equity investors from Israel, Scandinavia and Asia, along with institutional investors from the US, France and the UK, are showing increasing interest in the PRS sector in Poland. In their eyes, Poland’s advantages are an absorbent rental market and rising rents.

The main key takeaways from the report are:

  • In 2022, the stock of flats available for institutional rental (PRS) increased by 40%. The total number of available units exceeded 10,300, representing a 1% share of the total rental market in Poland’s largest cities.
  • High prices of residential units and high interest rates limit the purchasing power on the residential market, reducing the demand. In 2022, the number of mortgage loans decreased by 50% compared to 2021.
  • The vacancy rate in the PRS sector is estimated to be less than 3%.
  • With 4,200 flats for rent, Warsaw leads the way in terms of available supply, offering over 40 per cent of the PRS market in Poland.
  • Knight Frank survey conducted among 25 institutional investors, banks and developers active on the PRS market in Poland, shows that in 2023 approximately 85% of investors plan to start new PRS projects in the capital and over 40% of investors plan to start new projects in Kraków.
  • According to developer schedules, nearly 6,900 apartments are planned to be delivered by the end of 2023. Land banks which have been already secured by investors, allow for the construction of some 35,000 more apartments.
  • The capitalisation rates for PRS investments in the most popular cities of Western Europe stood at an average of 3.25% -3.75% in Q4 2022. In Warsaw, it is estimated that prime capitalisation rates were around 5.00% – 5.25%.

For the report, Knight Frank and Dentons also conducted a survey among investors, developers and banks. In it, more than 80% of investors said they would buy new PRS projects in Poland in 2023, with over 50% of them having a positive view of the overall regulatory environment for investment financing, implementation and follow-up operations. This indicator of sentiment builds a positive picture of the segment’s potential. At the same time, however, the majority of respondents point to tax volatility as a factor adversely affecting the fulfillment of PRS projects, with financing and construction costs as the main investment risks and barriers to growth.