2021 brought a surge of interest in Poland’s premium residential segment. The Tri-City is emerging as the second-largest real estate market of this type after Warsaw, with sales last year reaching a record 900 units.
The Tri-City real estate market has developed at a rapid rate in recent years, with average unit prices now only behind those of Warsaw. This market’s performance is due to the increasing share of units from the apartment segment in the developers’ offer and the buyers’ unflagging interest in them. The latest report, “The premium residential market in Tri-City”, prepared by the global consulting company JLL in cooperation with Invest Komfort shows that:
In Poland’s six main residential markets, upper-middle and high-end apartments accounted for 6 percent of the available offer. In the Tri-City, this share stood at 10.6 percent, the highest among the cities analysed.
Sales of apartments increased significantly in 2021, reaching nearly 3,200 units, of which as many as 900 were in the Tri-City market.
The main purchasers of premium properties continue to be a group of affluent Poles and foreigners with direct ties to Poland. People from Asia and the Middle East, who treat their purchase as a pure investment, still represent a small percentage.
Buyers’ motives include both the desire to improve their living conditions and to financially gain from short-term rentals. In recent years, there has been a marked increase in the demand for property partially driven by purchasers wanting to protect their savings from factors including rising inflation and uncertainty in the financial markets.
One in three developers’ apartments in Poland were on offer in the Tri-City
The Tri-City market, like residential markets in other major Polish cities, is dominated by investments that JLL classifies as low-end and lower-middle flats. Although the offer of units from higher-quality segments has been systematically expanded by developers in all major cities for several years, it is in the Tri-City where this category’s share is currently the highest. At the end of 2021, the primary market in Gdynia, Gdańsk and Sopot offered a total of 580 apartments, on a par with the Warsaw market which is double the size of Tri-City.
“It is safe to say that every third apartment from the developer’s offer, which was available on the largest national markets at the end of 2021, was located in the Tri-City. Tri-City was also the only market where the share of units in the apartment segment exceeded 10 percent of all units available for purchase,” comments Aleksandra Gawrońska, Head of Residential Research at JLL.
Although this pool is dominated by properties that can be classified as standard apartments last year, in Gdańsk and Sopot, luxury apartments also appeared on the market, something that until now had mostly been available in the capital. What is also noteworthy is that of the 1,200 apartments in Tri-City that were under construction at the end of December 2021, nearly half had already been purchased. This is relatively atypical for the apartments segment.
“The continuing attractiveness of premium real estate as a form of capital security as well as the increasing specialisation of companies that supply this type of product to the market means that more and more often decisions to purchase are made at the stage of investment implementation. This, in turn, provides greater liquidity and the possibility to prepare further investments well in advance, thereby complementing the offer on an ongoing basis,” says Michał Ciomek, Member of the Management Board, Invest Komfort.
Buyers are attracted by the view of the water
The premium properties offered on the primary market differ across the world in terms of the scale of the investment, the finish as well as the package of available services, and Poland is no different. These markets have all got one thing in common – an exceptional location. The fact remains that the most valued locations are those described as “waterfront”, guaranteeing an unobstructed view and direct access to water whether it’s a river, lake, ocean or, as in the case of the Tri-City, a bay. Gdańsk additionally offers many interesting places with a view of the river and older parts of the city. As a result, properties in Gdańsk, Gdynia and Sopot are becoming increasingly popular among wealthy Poles. It’s no wonder then that developers, faced with growing demand, are more and more actively expanding their premium real estate offer in these locations.
A marked increase in the supply of apartments and luxury apartments first occurred in the Tri-City in 2016. Since then, there have been years when up to 800 such units per year have been put on the primary market for sale. Increased supply and growing customer interest meant that more than 900 units of this type were sold here in 2021, setting a new record for annual sales in the Tri-City’s apartment segment. This has had a significant impact on prices.
“Over the last decade, apartments prices in the Tri-City have increased from PLN 10,000/sqm in 2011 to PLN 19,900/sqm at the end of 2021. Currently, the only city to have a higher square metre price is Warsaw. Since 2015, we have seen a surge of interest in the Tri-City market in buying properties in the higher quality segments – first for personal use, then for short-term rentals and, from 2019, primarily to protect one’s savings. As a result, despite a significant increase in the supply of units from the apartment segment, we were still seeing demand outstripping supply,” comments Aleksandra Gawrońska, JLL expert, Head of Residential Market Research.
Location, location and one more time location
The extent to which it will be possible to meet the growing demand for premium real estate is largely dependent on the availability of land in locations that allow for the development of a project of an appropriate standard. And although this resource is limited in the largest cities, as experts emphasise, these three cities’ evolution makes it possible to exploit some surprising opportunities.
“In the Tri-City, the land bank also consists of locations with hidden potential. The changes that we have been observing in the West for years are now slowly germinating in our country as well. We learn to read the city, predict the future of its urban development, and stimulate and support positive change. In Gdynia and Gdańsk, only a dozen or so years ago, few people looked at the port areas as locations with potential for luxury real estate. Today, our city-forming investments, such as Brabank Apartments in Gdańsk, and Portova in the centre of Gdynia, do not surprise anyone and attract a great deal of interest,” summarises Michał Ciomek, Member of the Management Board of Invest Komfort.
This also means that, unlike any other city, the stock of Tri-City investments in the highest quality segments is greatly diversified in terms of development types. This is exemplified by high-rise projects in the centre of Gdynia, intimate projects e.g. in the area of Oliwa, Jelitkowo and Orłowo, and typical investment apartments along the Motława river. An additional category is investments with access to a marina, such as Yacht Park in Gdynia.
“Everything indicates that the group of wealthy Poles who will be able to afford to buy an apartment in the future will grow, and the wealthiest will buy bigger and more luxurious units. Customers will increasingly expect standards that match those of Western Europe, both in terms of finishing, floor space and the additional services on offer. This will be of particular interest to the group of empty-nesters – people aged 50+ moving from single-family homes to flats for the next stage in their lives, and active retirement. With the limited availability of such units, this phenomenon will be important for the future value of units bought today, because an expensive flat as an asset will have more liquidity,” concludes Aleksandra Gawrońska.