The Polish real-estate market might be a hot prospect, but some Poles are now choosing to splash their cash on foreign properties, both as holiday homes and investment vehicles.
Spain is a sunny favorite, but many investors are looking to take advantage of a pre-EU accession run on Bulgarian property prices.
Until recently, buying a house or apartment outside of Poland was something most Poles could only dream of. After 1989, only the country's wealthiest citizens could afford a far-flung home or real-estate investment and most of those transactions were kept secret.
The first boom in buying properties outside Poland properties was in the mid 1990s and was caused by the country's economic prosperity. These deals were complicated and protracted. "Such transactions were very hard since Poland's and the European Union's laws required permits to purchase a real-estate plot or property outside Poland," says Tomasz Błeszyński, an independent real-estate market analyst.
Błeszyński said that during the mid 1990s Poles were investing in holiday apartments typically in Spain and Italy, which they used during the holiday season and rented out after their return to Poland.
But it was only after Poland's accession to the European Union that Polish investors really began to take a hard look at foreign real estate. In addition, economic prosperity has meant a growing number of Polish citizens venturing abroad for holidays and work, and many now consider emigrating altogether. "Polish streets and entire suburbs have been established in some western cities," says Błeszyński.
This wave of emigration has been accompanied by a resurgence in Poles' interest in property in holiday destinations, such as Spain and Bulgaria.
Sunny side up
Carisma is a Polish company that has been selling foreign property on the Polish market for more than 10 years and its clients have bought properties mostly on the Spanish market.
With offices in Gdynia, Warsaw as well as Miami and New York, the company offers a full service, which includes visits to Spain as well as organizing loans from a Spanish bank.
Spanish apartments are often cheaper than those on the Warsaw market. "We offer a two-bedroom fully furnished luxury apartment of 75 sqm, in a prime location, which can be purchased for EUR 162,000 (zł.630,180) plus seven percent VAT," says Piotr Cicharski, the head of Carisma's Warsaw branch.
Cicharski adds that a significant number of his firm's customers come from Florida's Polish diaspora, who now want to move to Europe. "Those people are Polish-American citizens who has been living in Florida for dozens of years," says Cicharski. "They feel tired of Florida's weather, with its storms and tornadoes, so they decide to move to Europe, buying one home in Poland and a second in sunny Spain's Costa Blanca area, which reminds them of Florida."
"This increase in market demand can be seen, as the price level on the Spanish real-estate market does not shock Polish customers anymore," says Maria Hahn, research and marketing co-ordinator of the residential department at CB Richard Ellis Polska. "Now, even Poland's middle-class citizens can consider investing in a Spanish apartment."
Not only the West
Spain is not the only destination of choice for Poles with money to spend. Bulgaria is attracting an increasing number of international investors who are interested in the country's real-estate market.
According to a CB Richard Ellis report, in 2004 the Bulgarian real-estate market's prices increased by 40 percent. "This is why the recent attention of international investors, including Poles, was brought to the market," says Hahn.
"This is a relatively new market and its high demand is caused by the relatively low prices," said Agnieszka Żyłka, sales manager with Life House Properties, a company that offers properties in Bulgaria. "For only EUR 800 (zł.3,112) per sqm our clients can purchase a fully completed apartment that is located on the coast of beautiful Bulgaria. While waiting for the investment's effect, our clients make a profit by renting apartments as there are many agencies that take care of servicing bought apartments when their owners are not in the country.
"A dynamic growth of prices can be noticed, and Bulgaria's accession to the EU will only maintain that tendency," says Żyłka. "Many investors with experience from other real-estate markets are now investing in the Bulgarian market before the accession, when the prices are still very attractive."
Piffling paper trail
For EU citizens, buying new properties in this budding market is very easy, as only a passport and a transaction agreement is needed. The case is a little bit more complicated when a foreign investor decides to buy land or second-hand property, because the country's laws state that non-Bulgarian citizens cannot own such real-estate plots.
"In this case, the purchase has to be conducted by a Bulgarian-based company," says Żyłka. "But it has never been a problem for our clients, with the help of our Bulgarian-based lawyers."
The main advantages of the Bulgarian and Spanish markets are their predictability and stability. "The investment is safe and will grow evenly," says Hahn. "Prices grow from one year to another, which is unlike in Poland where prices jump from month to month."
From Warsaw Business Journal by Piotr Paciorek 23 October 2006
