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Property Investment in Poland 2008

With an economy that has been growing steadily for over a decade, huge inward investment as a result of its accession to the European Union (EU) in 2004 and a booming tourism sector that attracted around 7 million tourists during the first half of 2007 representing an increase of 6.5% on the previous year, according to the Polish National Tourist Office, it is hardly surprising that The Times rated Poland as ‘one of the best locations on earth to make money from property’.

During the first decade after the collapse of communism, Poland rose from eighteenth to fifth in the list of Europe’s most popular destinations, bettered only by France, Spain, Italy and Britain (Source: WTTC). Poland’s Travel and Tourism is expected to generate US$43.5 billion of economic activity (total demand) in 2007, with the direct and indirect impact of the Travel and Tourism Economy to account for 8.3% of GDP and 7.8% of total employment (1.14 million jobs). Growth of this sector is predicted to have grown by 4.3% during 2007 with a growth forecast of 4% year-on-year between 2008 and 2017. Poland’s Institute of Tourism expects tourist numbers to exceed 20 million by 2012. Such a growing tourist sector can only be good news for property investment in Poland.

Today, Poland possesses a thriving private sector economy creating more than 300,000 new jobs in 2006 alone. In 2007, economic growth was an impressive 6.5%, with growth predicted to remain at a reasonably high level of 5.1% for 2008, according to The Economist.  This was based on the rising private consumption of one of the biggest markets in Central Europe, along with a 16.7% increase in investment and burgeoning exports. As the economy continues to develop, capital investments should yield a strong return.

"The growing year-round tourist trade should translate into higher rental yields, according to Moneycorp."

Polish retail sales are also growing by more than 7% a year, according to Moneyweek, yet inflation is one of the lowest in the EU at just 1.3% in 2006, and wages remain relatively low. Poland has an average income per capita of just one fifth of its neighbour Germany (Source: World Bank). As this disparity levels out, wages, and in turn property prices, will naturally rise.

The growing year-round tourist trade should translate into higher rental yields, according to Moneycorp, with high demand for short-term lets in cities such as Krakow and Warsaw providing an attractive income stream. Analysts predict that while investors should not expect high rental yields in city centres, an average of about 5% to 6% capital growth is likely to be available.