The investment

Plots in Poland: The investment potential As the prices of apartments and houses in major towns and cities in Poland continue to rise, plot prices follow suit and rise rapidly. Hence there is a great deal of interest in building plots. It is becoming more difficult to find interesting plots. Most people are interested in suburban plots and agricultural plots on the outskirts of towns. Agricultural land is eligible for EU subsidies enhancing its attractiveness to investors. It is predicted that in 7-8 years if land values follow the current trend, they will be similar to prices in major EU countries.

Land in and around towns and cities Last year in 2006 demand for building plots resulted in a large rise in prices. One reason is insufficient coverage by the zoning plans of towns and long waiting times for zoning permissions on specific plots (WZ). Another is demand, which has meant that many cheap central plots have been bought up and are no longer available. As a result in central locations several developers are purchasing plots with existing buildings, destroying the building and then redeveloping the plot. For example in one of the main Warsaw bus depots on Inflancka street was sold for 13,600 zloty per square metre. Soon after another plot on the corner of Hoza and Mokotowska street was sold for 31,000 zloty per square metre. The plot had existing buildings on it in bad condition, which were then to be demolished and replaced by new apartment blocks. Similar circumstances have occurred in Krakow, Wroclaw, Trojmiasto, Poznan and Lodz.

Building land in Krakow Plot prices are growing rapidly in Krakow. The largest growth has been seen in plots for apartment blocks, where price is now driven by the development potential rather than the size of the plot. Prices range from 1,000 zloty to 5,000 zloty per square metre of usable space that might be constructed in the development. For commercial land costs in the town centre were up to 15,000 zloty per sqm depending on location. The average price of land in 2003 was 150 zloty per sqm on average. In 2005 this was 250 zloty per sqm and 2006 it is expected to be greater than 500 zloty per sqm.

Agricultural areas Most agricultural areas (Villages, farms) in Poland are covered by zoning plans that define where agricultural and building land are located. It is still relatively easy to find a small building plot for a single residential house, but it is more difficult to find large plots where multiple dwellings can be built. Land defined as being agricultural in use is in plentiful supply, however prices are also increasing due to EU subsidies on the land and speculation. The graph below from a government agency confirms the trend:

Large price differentials exist on agricultural lands depending on the region of Poland where they are located. Soil quality is one factor that explains price differences, for example in the chart below the region 'Kujawsko-Pomorskie' is famous for its good quality soil. Prices are also influenced by distance of the plot to major towns and likelihood to come under the zoning plan of the town and become a suburb. Note that Krakow is located in the Malopolskie region, Warsaw in the Mazowieckie region.

Projections Further increases in demand for new apartments will continue to drive the prices of agricultural and building land. Agricultural land prices in particular benefit from EU subsidies and the ability to change the plot from agricultural land to building land. Further activity on the land market will be driven by the expansion of town zoning plans and the easing of regulations when applying for plot specific permissions (WZ).