Immobilien market

The residential property market of Krakow is becoming an increasingly popular magnet for investment, both foreign and domestic, so prices are rising. We still see Krakow as being an outstanding investment opportunity, with significant room for further capital growth. Unlike the majority of Polish cities, Krakow escaped the bombing of the Second World War in tact, so the period buildings are original.

The Old Town

Unsurprisingly, prices in Krakow are highest within the old town, a UNESCO protected site, and one of Europe’s most well-preserved medieval cities. Life in the city revolves around the Rynek (old town square), the largest in Europe. Many fine cobblestone streets surround the Rynek. A combination of lack of supply and the desirability of the location means that residential prices in the old town are currently ranging from 8,500-14,000 PLN/m².

The city centre districts outside of the Planty

Just outside of the planty, the park which surrounds the old town, but still within a 5-10 minute walk of the Rynek, prices are more reasonable, ranging from approximately 5,000-8,500 PLN/m², depending on the condition and quality of the property. The town centre region to the West and North-West of the old town – e.g. Nowy Swiat, Piasek – tends to be marginally more desirable than the East, as the roads are both quieter and leafier, particularly within the second ring road which is easily visible on a map. In these high-class residential areas, you will find an abundance of beautiful turn-of-the-century architecture which is so desired by many foreign investors.

Kazimierz

The old Jewish district, Kazimierz, is a short distance to the South-East of the old town. Prices are comparable to the districts just outside the planty described above (5,000-8,500 PLN/m²), and the area is equally desirable, but for different reasons. Kazimirerz was for many years run-down, but is gentrifying rapidly and is now identifiable not only by its Jewish history (synagogues, museums, cemeteries) but also by its cosmopolitan café, bar and restaurant scene. It is also the bohemian hub of Krakow, home to galleries and the scene of regular cultural events.

As an example, if you wished to purchase a 1 bedroom 50 m² unit within a 7 min walk of the city centre or perhaps in Kazimierz, you should expect to pay approx 7,000 pln/m? for a renovated or good condition property meaning a cost of 350,000 PLN (plus purchase costs of approx 7%), which is approx 90,000 EUR (60,000 GBP).

Podgorze

Across the Vistula river from Kazimierz, Podgorze was home to the Jewish ghetto in the Second World War. Historic and imposing period buildings can be found in the area, as well as some new build developments. Although still relatively run-down, this area is undergoing somewhat of a renaissance. Recent improvements to the high street have included a new road surface and renewed tram lines. Still well connected to the city centre (approx 5-7 mins by tram to the old town), Podgorze is considered to be an up and coming area and has great potential for investment. Prices range from 3,500-5,500 PLN/m? depending on quality and condition.

Other desirable areas

Nowa Wies, Czarna Wies, Zwierzyniec: these districts are outside the second ring road to the west of the old town, and offer leafy streets with a combination of period and newer buildings. These areas are located close to the AGH University, beautiful Park Jordana and the vast Blonia field. Walking distance to the old town is approximately 15-20 minutes.

Kleparz: north of the old town, 5-10 minute walk. Near Nowy Kleparz market and Dluga Street, a main shopping thoroughfare.

Stradom: located between the old town and Kazimierz, many desirable buildings and quiet streets.

Wesola: to the East of the old town, many leafy streets. However, the area is intersected by a main train line.

Salwator: located slightly South-West of the old town, this district is sandwiched between Krakow’s largest park, Blonia, and also the Vistula river. It is considered by locals to be one of the most desirable residential districts in the city, and is much in demand because of its relative tranquility and short distance from the city centre.

Wola Justowska: this region is again to the West of the city, but further out beyond the greenery of Blonia and Salwator, en-route to Balice airport. This is the district of choice for Krakow’s wealthy and is dotted with substantial residences which often match the price per square metre of the more desirable central districts.

Suburban Krakow and new-build residential developments

Further out from the centre, prices are significantly lower, with a large supply of new build developments, which are primarily being bought by Poles. Such properties sell for 3,500-5,000 PLN/m² and are often sold-out before building begins. If you are considering buying such a property off-plan, it is advised that you take the time to visit the site. Whilst some developments can appear attractive on paper, sometimes the surrounding buildings, such as Soviet built panalaks (blocks of flats) may detract considerably from the property in question.

Off plan and new build developments in the centre of Krakow

New build developments do occur in and around the centre, but are less common as brown-belt land is scarce. A quality central new-build development sells for 7,000-8,000 PLN/m² and will most likely come with parking (typically 25,000-40,000 PLN + VAT per space). Centrally-located developments are more typically renovation projects of traditional town houses/buildings (Kamienica), although frequently new extensions or floors are added. Such projects are becoming increasingly popular with foreign investors as it allows them to purchase a tradition apartment, renovated, with new installations. They are also sold off-plan and are more often than not sold out in the early stages of construction, however, rarely come with parking facilities, which can be viewed as a disadvantage.

Prices in Krakow compared to Warsaw

In Krakow, as a rule of thumb, you should expect to pay approximately two-thirds of the cost of comparable property in Warsaw. However, it is difficult to make comparisons between the two cities as the geographical layouts are very different. Warsaw is much larger and more spread out, so districts overlap and are more difficult to define than in Krakow.

A former granary in the Zabłocie district of Kraków is to be converted into lofts by the Ziarno company. According to the investor’s plans, the
building could contain 30 lofts, each with an area greater than 100 sqm. Currently the firm is awaiting a decision over the conditions of site
development before beginning the investment.
Lofts are very popular in Western Europe. They have huge surface, modern look and architecture.
What is your attitude to living in loft?

Poland is a popular tourist destination, with 15.2m visitors coming to this country in 2005 and an around 6% annual increase in that figure expected in the next few years. The growing demand for travel and tourism in Poland has boosted interest in hotel real estate. The first signs of revival in the area of hotel construction may already be noted, and investments in construction of new hotels are expected to grow in the years to come.
The number of hotels in Poland is steadily rising. According to the Institute of Tourism, at the end of 2004 Poland had 1,202 hotels, which represents a twofold increase on the slightly more than 600 of a decade earlier.
The hotel market enjoys exciting prospects for the coming years. Christoph Harle, Vice- President of Jones Lang LaSalle Hotels, says that Poland is an attractive market for foreign hotel chains. He estimates that expenditure on new hotel buildings in the immediate future may reach several hundred million euro per year. The exact amount of such investments is rather difficult to determine, as the construction of even one five-star hotel is such an immense project that it may distort the estimations.
Based on the information concerning investment projects that have already been announced, we expect that the expenditure on hotels in Poland will amount to at least €600m per year.
The hotel resources in Poland are very limited not only in comparison with the economically developed Western Europe but also with other countries of Central Europe. A mere 60 four- and five-star hotels were built in Poland over the last decade. According to Tomasz Dziedzic, hotel market analyst at the Institute of Tourism, the share of this type of hotels in the Polish market structure is two times lower than the world’s average.
In terms of the number of hotel rooms per capita, Poland is at the very end of Central European statistics. Germany has 200 hotel rooms per 10,000 inhabitants, the Czech Republic – 220, and Poland – only about 40. The comparison reflects, on the one hand, the market’s underdevelopment and, on the other, its enormous potential.
Another manifestation of the potential is the higher occupancy rate in 2005, which proves that the demand for hotel services is rising and should translate into intensified investment activity in the sector.

Thanks to Poland’s accession to the European Union and the full opening of the nation’s skies, traffic at Polish airports has surged. Airport expansion is an opportunity for development no city wants to forego. As a result, at present every port in the country is a construction site.
The especially bright prospects before the Polish air transport market are primarily the offspring of the country’s accession to the European Union and the related full opening of the Polish skies to international air carriers, which has also prompted greater activity among carriers already established in Poland. There are also many new players – primarily low cost airlines – thanks to which the number of offered connections as well as passengers, have risen.
For regional Poland, the development of airports is an opportunity for better regional accessibility, a higher ranking as investment and travel destination, higher capital expenditure both on airports as well as their immediate and more remote vicinity, new jobs in air transport and passenger services at the airports as well as in regional tourism, more investments designed to improve road and airport infrastructure, greater regional prestige as well as metropolitan structures and functions. Airports have become a material factor underlying development of cities and regions. Good transport access is a basic prerequisite for any region to be considered a viable localisation for a new business investment. A high number of flight connections mean better regional economic growth which, in turn, spurs higher demand for new connections. In addition, according to the Airports Council International, in 15 years 60 airports in Europe will reach maximum capacity, and 20 (including the Prague airport) will be completely jammed. This creates a huge window of opportunity for Polish airports, at least to take over some transatlantic connections.
This is why airport operators in Poland, on the wave of good economic conditions and equally sound outlooks for the future, have launched infrastructure investment projects.
The forecast high rates of growth in passenger traffic make investments in airport infrastructure a necessity, as without them the ports will not be able to handle the higher flux of passengers. The higher number of air carriers will also necessitate investments in the navigational infrastructure.
In the opinion of Krzysztof Koziol of Budimex: Expansion of airports comprises yet another growth opportunity for the Polish construction sector and, as a consequence, for better performance of construction firms. Airports are not made up of just halls, runways and ramps, they also encompass a complete road (and sometimes rail) infrastructure as well as facilities (offices and warehouses) that attract commercial investments.
According to PMR’s estimates, approximately PLN 440m will be invested in Polish airports in 2006.

About Polish Apartments
As you would expect in a central European country that has significant wealth in its past there are a large number of period apartments with plenty of features and high ceilings. These apartments were purpose built as town homes for the aristocracy rather than apartments converted from town houses as can be seen in Britain. The post war years saw massive building programs under the socialist government with massive estates of concrete blocks. Ironically these are now some of the best buys on the Polish market. From the late 1980s onward the style of new apartment blocks from the outside is little different to anywhere else in Europe.

Pre War Polish Apartments
period style block usually has high ceilings, cornicing, wood doors and all the other trappings you would hope to find in the ex home of an aristocrat! These buildings must, however, be put in context. During socialist rule many were given to “The People” at a very low rent and both the flats and the blocks fell into disrepair. Buyers should tread carefully when purchasing an entire block to see if there are still sitting tenants living there. In some cases they have the right to stay at a fixed low rent until their death, or even the death of their children. Purchasing such a block could leave you with expensive maintenance duties, a small income and no rights on the building that you own. Many of these blocks have been successfully purchased by developers and renovated. They make fantastic and impressive places to live or rent to businessmen and women.

Polish Post War Apartments

On a practical note these apartments are usually located in blocks with a lower ground floor that is given over to storage. Every apartment usually has a cupboard on this floor for storing old furniture, etc. On the landings there is often an additional cupboard for keeping bicycles, prams, etc. Its a practical idea absent from many modern blocks! Almost every apartment has a balcony of some shape or size. There is a fundamental difference between the housing policies of Western governments and those of Poland during the post-war concrete block building period. While in the West estates were built of the socially poor and became the ugly council estates that are still so unpopular, in Poland the poor got the period properties and the new estates were built for people with at least some wealth. These complexes were usually run on the same principle as a housing association, shared ownership. The result was very ugly concrete estates with very proud owners. Even today these estates remain litter free and with hardly any vandalism. Furthermore with less pressure on land the blocks were well spaced with plenty of green space, children play areas, pedestrian and cycle paths and so on. In recent times a national program has given most blocks a face lift with the gray facade being replaced by painted colors. In general they are well built, well run and excellent value for money. Even apartments in an un-modernised condition can be easy to rent out, especially in student areas. Moreover because of the over-optimism of socialism the infrastructure is, or was, far ahead of its time. The governments expected all the people would have a car and so the road and parking system was built with this in mind.

Polish Modern Apartament
The construction of modern blocks (the late 1980s on) is slightly different. Usually there is a basement garage level with either open plan parking or individual garages. Apartments then start from the raised ground floor or ground floor upwards. Unlike their concrete predecessors however there is now a greater pressure on land space and so some new developments have little green space and parkland surrounding them.

Buying Polish Off Plan Apartments
Buying off plan in Poland is slightly different from other countries. The reservation and exchange of contracts is generally the same. You will put down a small amount to reserve the property and then have two to three weeks to exchange contracts. Between exchange and completion however you are usually required to pay installments rather than paying the balance on completion. As such if you are raising a mortgage for the purchase it is essential to choose one that will pay out as the construction process advances. You should also be aware that most off-plan units are sold as shells without flooring, kitchens or bathrooms.

High rise buildings are a subject of great controversy in Kraków nowadays. Naturally, we have to protect the panorama of Kraków’s Old Town; at the same time however, by constantly hiding behind its uniqueness we fail to address important development issues. Here, I present the idea of a golden means designed to satisfy both investors eager to build high-rises, as well as the ones who find it vital to protect our historical legacy. Also presented is current situation of high-rise buildings in Kraków.

As far as building heights are concerned, Polish construction law defines four types of buildings:

· low buildings – up to 12 metres tall (above the ground level), for residentials this means buildings up to 4 storeys above the ground

· medium-size buildings – 13 to 25 metres tall, residentials: 5 up to 9 storeys

· tall buildings – 26 to 55 metres tall, residentials: 10 up to 18 storeys

· high-rise buildings – more than 55 metres tall

According to the breakdown above, buildings we often call skyscrapers are, officially, high-rises. Let’s stick to this definition then.

How do we measure the height of a building? Well, simply go from the ground up till the highest-situated construction point, being an integral part of the building. Spires, antennas and all other sorts of ‘foreign bodies’ designed by architects don’t count, as they can always get removed without affecting the height of the building.
Definition of high-rise buildings in Kraków

We decided to tweak the definition a bit to make it suit our purposes. A high-rise then:

· it’s height is at least 50 metres from the foot of the building to its highest-situated construction point

· it’s got at least 14 storeys

· it’s not a residential building, built from pre-fabricated concrete slabs (“commieblock”)

Although their height may very often exceed 50 metres, we decided to exclude dozens of simple, concrete blocks, as their sheer numbers and completely unacceptable appearance would only distort the overall picture.
The total number of tall and high-rise buildings In Cracow

In 2003 in Cracow there were 589 buildings, of height exceeding 25 metres.
(source: City of Cracow Safety Report, 2003)
High-rises in the city

There are currently four high-rise buildings in Kraków:

· Cracovia Business Center (Błękitek) – 88 meters (105 metres, including the spire)

· Dom Wschodzącego Słońca (House of the Rising Sun) – about 60 meters

· Okrąglak (Stocky) – about 60 meters

· Biprostal – 55 meters

Currently there are two new high-rises being built:

· Rondo Business Park – 55 meters

· Salwator Tower – 53 metry
Modern, high-rise architecture and the historic Old Town

The main argument of Cracow’s high-rise opponents is the distortion in the city’s panorama they allegedly create. It would be true if only the panorama were really unique. But today it’s mainly constituted of drab and grey residential districts and the chimneys of the heat and power plant and steelworks. The real panorama is only visible between Kościuszko Mound and The Old Town.

Unquestionably then, we shouldn’t build anything tall between Kościuszko Mound and Wawel Castle or in area limited by Planty park and both Kazimierz and Podgórze districts. There is, however, nothing wrong with building high-rises a few kilometres east from the Old Town Square. They wouldn’t dominate the panorama nor would they be visible from the Old Town (which has already been proved by the existing Cracovia Business Centre). Kraków, just like Paris, should have a certain area, prepared for high-rise architecture in order to avoid them being built randomly in all the districts, often definitely too close to the Old Town.
The area of Mogilskie roundabout, Mogilska st. and Aleja Pokoju – places ideal for high-rise office buildings

The area set by Mogilskie roundabout, Powstania Warszawskiego st., Grzegórzeckie roundabout, Aleja Pokoju, and spreading eastwards, along Mogilska st. seems ideal for high-rise office architecture. Below, the arguments in favour of such a solution:

· There are already two high-rises In the area, marking two separate corners of the area: NOT building and Cracovia Business Centre (their existence may prove to be a godsend for an investor, as current Polish law allows for the height of new buildings to be similar to the one of their neighbours).

· Existing buildings are often high-rises: e.g. 12-stoyes high office buildings of Biproskór in Powstania Warszawskiego st, 11-storey Podlew in Mogilska st. and nearby-located objects, often taller than 10-storeys.

· Sufficient distance from the Old Town, combined with the area’s closeness to the railway and bus stations as well as Cracow Central Route, connecting the second ring road and the City Centre.

· Perfect communication with the City Centre, as well as eastern, western and northern districts of the city. After Mogilskie Roundabout gets modernised and fast tram line finished, the area will become more attractive and plots more expensive.

· Many commuters in the area – this means lots of potential customers/visitors.
Łobzów and Krowodrza: districts ideal for high-rise residential buildings

The area that seems perfectly suited for high-rise residential apartments is the quarter set by Armii Krajowej, Conrada, Opolska, Prądnicka, Wrocławska, Kijowska and Nawojki streets. This means 3 districts of Łobzów, Azory and Krowodrza. A few arguments for: the presence of almost half a century old Biprostal building, luxury Salwator Tower, a new high-rise in Kijowska Street, a nearby 9-storey metallurgy faculty of the AGH University of Science and Technology and, located a bit farther, 14-storey House of the Rising Sun. The area is close to the city centre, while still remaining a quiet, residential district. Throw in an interesting panorama, when viewed from the top storeys and a considerable distance from the Old Town, and we can say with much certainty that no other place in Kraków is better.

It’s common knowledge that the city still has no urban development plan. All we have are bits and pieces in certain areas, but no more than 7% altogether. As the plans are currently drawn up, it seems common sense to define once and for all where we can build and what the maximum height would be. Thus, avoiding dangers such as:

· urban anarchy, caused by high-rises being built chaotically on free plots

· high-rises being built too close to the Old Town

· possible corruption – with no urban development plan and vague law, it’s often one office clerk’s decision

· constant protests of certain groups and individuals (no plan, everything’s relative)

· bad investment atmosphere

Last, but not least, it’s not our dream to see Kraków filled with scores of glass skyscrapers. However, we long for the situation when an investor comes to Kraków with a plan to build something else than yet another residential building and they know WHERE and WHAT they can build. We need to stop the expansion of urban chaos in Kraków. It has to be finally defined IN BIG BLACK LETTERS: here’s the protected Old Town and here’s the business district where you can build high-rises and none of the panorama or monument-lovers can pester you.

Are you for or against high-rise buildings in Kraków?

Citizens of the European Union, Island, Norway and Liechtenstein are free to purchase and own any real estate in Poland other than farmland and forests. As regards residential property they should make a pledge that it will be their fixed abode and they do not own other domicile in Poland. With the same intent to take up residence other aliens can buy apartments or plots up to 0.4 hectare (i.e. about an acre) in urban areas. All foreigners may also inherit any property. Otherwise acquisition of real estate by an alien requires authorization from the Ministry of Internal Affairs, easily obtainable in most cases. It applies to individuals as well as companies whenever foreigners hold the controlling interest. Furthermore, non-EU aliens need similar permission to take over 50% share or more of an enterprise having real estate among its assets.

On application the Polish Ministry of Internal Affairs issues ‘permit promises’, valid six months, to aliens and foreign-controlled corporations that want to shop for a real estate in Poland. Subsequently, government officials may not deny the permit for an acquisition made under conditions set by the promise and before its expiration date.

Buying Property in Krakow.

Kraków is the second most important market for real estate in Poland (after Warsaw, the country’s capital city) and the most attractive city to live in.
Krakow’s quality apartments in a decent neighborhood sell at euro 1,250 or so per sq. m, while flats in Krakow at the market’s lower end cost even a third of that. Three-bedroom houses are priced anything between euro 50,000–200,000, accordingly to their quality, state of repair, location, etc. And you may have a downtown tenement house for some euro 350,000–$800,000 or even a centuries-old palace in the historical center for a couple of millions euro.

On average building lots in Krakow sell at euro 30 per sq. meter but there is a wide range: from roughly $12 to $100-plus. And land prices in the very city center may look exorbitant indeed.

Hi Dzejdzej,

the information in the article was not precise. The location – Kopalina street, no data about the area of appartments, although it is one-store building only, elevator will be placed in it and corridors will be covered with the marble. It sounds like a gossip. Do not you think?

Latest hot news from Krakow’s immobilien market inform, that the apartments in Wola Justowska reached the price of 1 million dollars. It so so much, that for apartment in center of Berlin, Brussels or in New York.
Is it jurnalists phantasy or truth?

What is your opinion about immobilien market in Kraków?

Ewa