2021-09-29-莱坊-Market_PRS_in_Poland_2021_44页_18mb

Summary of the PRS Market in Poland (2021)

Core Content

The Private Rented Sector (PRS) in Poland is currently in an early stage of development, but it is showing significant potential and attracting growing investor interest. This report outlines the current state of the PRS market, its development potential, and the key factors influencing its growth.

Main Points

Market Overview

• The PRS market in Poland is defined as institutional investments in residential properties, primarily aligned with the British BTR (Build-to-Rent) model.
• Institutional PRS investments focus on providing tenants with a service-based rental experience, including amenities and professional management.

Market Development

• The PRS market is gaining momentum, with over EUR 800 million invested in the sector.
• The market is still in its early stages, but the pace of development is accelerating, especially post-pandemic.
• The PRS market is expected to grow significantly due to increasing demand for rental housing and the lack of sufficient supply.

Market Segments

• Buy-to-Let: The largest segment of the private lease market, mainly involving individual and private investors.
• Co-living: A growing trend among young professionals and students, emphasizing shared living spaces and community.
• Multi-family buildings: Institutional investments in apartment complexes with shared facilities and services.
• Single-family houses: Targeting older demographics, offering flexibility and lower operating costs.

Key Drivers of Growth

• Shortage of apartments: Poland has a significant deficit of apartments, estimated at around 1.5 million, compared to the EU average.
• Overpopulation: A higher percentage of the Polish population (over 37%) lives in overpopulated households compared to the EU average (17%).
• Increasing disposable income: The steady rise in disposable income has enabled more people to consider renting as a viable option.
• Demographic changes: An aging population and a shrinking workforce may shift housing preferences towards rental solutions.
• Education and internal migration: A higher percentage of Poles with higher education (31% in 2018) is driving migration to major cities, increasing demand for rental housing.
• Foreigners as tenants: The growing number of foreigners in Poland (over 700,000) is contributing to increased demand for rental properties, particularly in student accommodation.

Challenges

• Limited data: There is a lack of comprehensive data on PRS transactions, rents, and collectability.
• Legal and tax regulations: No REITs structure exists in Poland, and VAT rules for PRS investments are unclear.
• High initial costs: The required down payment for loans is a barrier for young people entering the market.
• Small number of transactions: The PRS segment remains underdeveloped in terms of investment activity.

Key Information

Apartment Supply and Demand

• 1-room apartments (25-35 m²): Monthly rent PLN 2,000-2,400, operating costs PLN 250-350.
• 2-room apartments (35-55 m²): Monthly rent PLN 2,600-3,500, operating costs PLN 300-450.
• 3-room apartments (>55 m²): Monthly rent > PLN 3,500, operating costs PLN 700-800.
• Dormitory beds: Only 130,000 beds are available, meeting only 10% of student demand. Of these, 5% are in private dormitories, and only 9% of foreign students are served adequately.

Market Comparison with Europe

• Ownership vs. Renting: Poland has a much higher rate of home ownership (84.2%) compared to the EU average (69.8%).
• Apartment availability: The EU average has 40 apartments per 1,000 inhabitants, while Poland has 38, indicating a shortage.
• Rooms per capita: Poland has the lowest number of rooms per capita among EU countries, at 1.1.

Investment Trends

• Investment volume: Over 5,600 PRS apartments were in operation in H1 2021.
• Warsaw PRS market: 2,500 PRS apartments, with 14,500 new apartments announced by developers.
• Return on investment: The PRS market in Poland offers favorable returns, especially in the context of limited investment products and early market development.

Legal and Tax Considerations

• The lack of REITs and unclear VAT regulations for PRS investments pose challenges for institutional investors.
• Legal and tax knowledge is essential for navigating the PRS market, and the report is prepared in collaboration with Dentons legal practice.

Future Outlook

• The PRS market is expected to continue growing, driven by demographic changes, increasing disposable income, and the need for alternative housing solutions.
• The potential for high returns and the increasing interest from both private and institutional investors suggest that the market is on the cusp of significant development.

Conclusion

The PRS market in Poland is at an early stage of development, but its potential is substantial. With a growing population of young, educated individuals and an increasing number of foreigners, the demand for rental housing is on the rise. While challenges such as limited data, legal and tax uncertainties, and high initial costs exist, the market is showing signs of momentum and is expected to continue evolving. Investors are increasingly recognizing the opportunities in the PRS sector, and the report highlights the importance of understanding the market dynamics and legal framework to make informed investment decisions.