Reflection on the past ready for the future? Report CRIDO and CBRE

POLISH COMMERCIAL REAL ESTATE, 20 YEARS LATER... RE FLECTION ON THE PAST. RE ADY FOR THE FUTURE?

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The first to be mentioned were apartments for rent, which - apart from a purely commercial perspective - are part of the need to fill the housing gap.

However, the growing mobility of the population and the decreasing affordability of apartments have resulted in an increase in the popularity of the rental market, as well as its sub-segments such as private dormitories or seniors’ homes. At the same time, modern assets from the Living sector are on the radar of investors looking for stable but attractive income compared to other investment options. Although all CEE countries are experiencing interest in modern investment assets from the Living sector, respective markets grow at a different pace. In Poland, the Baltic countries, and the Czech Republic, we can find both modern buildings with apartments for rent and private student dorms. Meanwhile, in Slovenia, the rental apartment market is much less developed, and the owners of rental apartments are almost exclusively private individuals. The offer of serviced apartments is quite developed, but lacks professional operators. In Slovakia, the rental market is small and dominated by private individuals. However, there are individual private student dorms in Bratislava. In many CEE countries, the private student dormitory market developed dynamically only after 2020. Its popularity has been boosted by the increasing mobility of young people as well as by an increase in the share of foreigners among students, permitted by the accession to the European Union, among other things. There are enough places in dormitories (both public and private) for a small group of people: from just over 10% of students in Poland’s largest

student centers, 19% in Hungary, over 20% of students in Ljubljana and Prague and 15-30% in the Baltic countries, which shows a lot of room for further development of this sector. Due to demographic trends and social changes, the prospects for private investments in housing for seniors are expanding. Private senior homes or nursing homes are still much less popular than public nursing homes, and their share in investment transactions in the CEE region is usually close to zero. However, international investors, developers, and operators are exploring the CEE region in search of new opportunities related to this asset lass. In response to this trend, the first international operators of senior housing entered the region and, in some regions (including the Baltic), there has even been a slight increase in the number of development projects in the field of housing for seniors. Market opening of also resulted in greater opportunities for the development of companies from the Living sector outside their country of origin. Polish housing developers implement projects in, among others, Germany, Spain, Hungary and Romania. In turn, investors and housing developers from the Baltic states are heading to Poland in droves, looking for more favourable market conditions.

The housing market in Central and Eastern European countries is characterized by high attachment to ownership. In each of the CEE countries that joined the EU in 2004, the share of the population living in their own homes is higher than 75%. In Slovakia and Hungary it even exceeds 90%. Owning a house or apartment is often perceived as a symbol of stability, security and success among residents of CEE countries. Therefore, the period after 2004 has been a time of dynamic growth for developers providing new apartments for sale. In particular, major Polish cities have become some of the largest construction sites in Europe, and national press headlines reported that as many new apartments were being sold in Warsaw as in London, a several times larger city. Foreign developers have appeared on the market, expecting rapid economic growth and an increase in the wealth of residents after accession to the EU.

Chart 8. Homeownership in the CEE region I source: Eurostat