Prospects for the real estate and construction sectors in Poland in 2023
The BPCC’s Real Estate & Construction working group holds quarterly meetings that bring together developers, contractors, subcontractors, engineers, architects and real-estate consultants, to discuss prospects for the coming quarter and beyond. Held under the Chatham House rule (you can say what was said at the meeting, but you can’t say who said it) to encourage openness, the idea is to share insights about current and future prospects for the sector. Participants discussed the state of trade, investment pipeline, input price factors such as building material costs and access to skilled labour – and how these translate into prospects for supply and demand, yields and vacancy rates.
The entire sector is facing a turbulent year, with many uncertainties. Will the Polish government unblock the EU funds earmarked for infrastructure development? Will the war in Ukraine come to a quick and just end, to be followed by massive reconstruction effort across Poland’s border? Will inflation be brought under control? How will the post-pandemic return to office work finally look – and how will this affect demand for commercial property? Will the boom in industrial property – warehouses and factories – continue, and if so, for how long? These questions and more were discussed by representatives from across the sector.
BPCC members met at the new offices of PM Group in Warsaw’s Wola district – an example of how inward investment in the shared-services sector has transformed once-drab parts of the city into attractive a modern business hub – for an open discussion that gave many insights. There was also a chance for participants to take a tour around the office and see its features, which take account of the new realities of office work.
After an introduction with an overview of the sector by region and by property types, members introduced themselves and their businesses, and spoke about current market conditions as they experienced them. Interesting growth areas include the continued rise of data centres and back-up offices for the larger shared-services centres. Flexspace remains in demand, with developers creating offices with a mix of traditional and co-working areas.
At the heart of the sector’s future challenge lies the fact that while over the past 12 years, building costs have doubled, rents have only risen by between 10%-25%. Meanwhile, there’s no clear picture of future demand for office space – it might take another two years to see outcomes. Poland, however, compared to Western Europe, remains relatively cheap.
A major issue affecting investors and developers is the permitting system in Poland. Differences in the way land-use regulations are interpreted from region to region is a problem, a lack of clarity and predictability means that Poland is losing out to competitor economies such as Romania, Czechia or the Baltics where planning is more transparent and less complicated. There is, as a result, much risk associated with developers’ plans being delayed or even stopped.
Participants spoke of the potential pipeline of work in Ukraine after the war comes to an end, with Poland being seen as a natural base for major construction projects. So in many ways, 2023 is very much seen as a ‘wait and see’ year by many firms in the sector.
Future meetings already planned include one in February about communications between local authorities and private-sector developers, investors and contractors; and there was much demand for a meeting among participants about the vexed questions of land use and planning permissions.