Obviously, the most apparent changes were noticed on the housing market, where needs were always outgrowing the financial capabilities of buyers and offers made by property developers. To understand the phenomenon of the recent housing price increase on the Polish real estate market and the related interest of foreign investors, historical perspective must be applied.

On the one hand the Acquisition of Real Estate for Foreigners Act that imposed administration procedures on potential investors (a permit for property purchase issued by Ministry of Interior and Administration (MSWiA)), on the other the restrictions to limit purchasing of properties (especially rural properties) by foreigners, preceding Poland’s EU accession. When looking closer at the statistics made by MSWiA, it turns out that permits issued for purchasing of property by foreigners accounts for only a small percentage of all market transactions in Poland (see the graph below).

Many foreign investors had been waiting for Poland to join the European Union, because after the 1st of May the number of transactions significantly increased. The permits for that were not needed any more. From January to May 2004, foreigners purchased 69 land properties, and from May to the end of December – 1369 of these. In 2003, there were only 394 such transactions. After the 1st of May the Germans, Dutch and British purchased the most property. It happened mainly in the Mazovia (Mazowsze), Silesia (Ślask) and Wielkopolska region. In 2006, however, according to the data collected by MSWiA based on authenticated deeds and reports of

Real estate register Courts, foreigners purchased 5,100 ha of investment lands, plus 500 ha of forest and rural lands as well as and almost 2,000 flats and 500 business premises. That makes the numbers four times bigger than six years ago.

Unfortunately, the statistics do not show transactions that have taken place more frequently in the last 3 years, i.e. purchasing of a package of dozens of flats and reselling them later yet at a contraction phase. According to property developers, in cases of foreign investments, this kind of transaction takes place in around 1 out of 5 of all flats built (in 2006, 38 000 flats were built by property developers). Similarly, the purchasing of properties by people with dual citizenship or companies dependent on foreign entities is not quite clear in the statistics. Watching the market, the British, Irish and Spanish are buying the most flats now, however there are also some investors from the  geographically more distant countries of Asia or the Middle East. The evident inflow of American investors hasn’t been noticed in this segment.

The experiences of the EU member states indicate that prices of properties will continue to grow in Poland in the next few years, especially when it comes to prices of flats. Even though an average salary does not keep up with the increasing prices of flats, an inflow of foreign capital can be expected (home income transferred from England, Ireland or other European countries is estimated at 750,000,000 pounds a year); the capital will be allocated primarily for housing needs. The statistical deficit is estimated in Poland at over 1,500,000 flats.

In other cities, the increase in prices of flats exceeded 50% in 2006 compared to 2001, with 53.5% in Warsaw, 51.2% in Krakow, 57.5% in Wroclaw, 46.6% in Tricity and 26.5% in Poznan (according to Reas Konsulting).

American investors invest their means in the real estate market mostly through business entities or as persons with dual citizenship. That applies especially to the emigrants from the 80’s. The change in mentality of our emigrants must be, however, noticed. The period of economic and political uncertainty at the beginning of the system transformation did not favour keeping property in the country and most of the Polish community abroad would sell off houses and land left back home, investing in the developing American real estate market (the changes in prices of flats on the Chicago market shown in Table 1 are based on the example of a few “Polish” districts). The end of the 90’s saw the crisis of the Polish economy and at the same time  the doldrums of the real estate market. If the American market had not created great opportunities for investments then, it would have been a very good moment for purchasing very cheap properties in Poland. Especially that the talks of the Polish government on EU accession had begun, and based on the experiences of other new EU state members, the huge increase in the property prices in the future could have been foreseen.

As a reason for investing in Polish real estate, the Polish community abroad gives the will to come back as “pensioners” to their home country, appreciating in this way the potential and stability of the Polish economy. What is also important for investments is the fact that the American real estate market goes through a distinct stagnation period and there is no chance for a quick increase in prices, in contrast to the Polish market where land and flat prices rose on average over 20% every year.  

The most active individual American investments can be seen in the South of Poland and in its northeast areas. Considerable speculative capital is located in the Warsaw area and in Wroclaw and Krakow as well. These are the areas where the most Polish emigrants in the USA come from.

“The economical reasons and distinct and steady growth on the Polish real estate market creates also an impulse for investment of business entities, especially investments funds.”

Among all American funds, AIG is the most active on the Polish real estate market.

The investment area continues to cover hypermarkets, the number of which increased fourteen times in the last ten years. The rate is still low if counted per 1,000,000 residents (around 5.3 hypermarkets per 1,000,000 residents, while the average in the EU countries is around 20 of them). This is a segment for investments of American concerns. This direction has been confirmed by the plans launching the Wal-Mart chain, or for instance the Apollo-Rida Fund activity (purchasing 28 shopping centers from Immopol GmbH&Co KG, a transaction of over 700 mln euros).

American involvement in Polish real estate is at 7.5%. This is not the biggest share. The Americans clearly give way to investors from the old EU countries. In the entire Central and Eastern Europe, the Americans were involved in around 17% of all foreign investments, with the biggest share (over 36.7%) belonging to the Germans. Certainly, those investments also apply to the real estate market (especially commercial and industrial properties).

Investing in the US is very ambitious for most Poles. They tend to go to the eastern [European], less developed countries for investment,

However, there are harbingers of the return of the American capital to the Polish real estate market. The interest of American investors can be seen in some divisions of American real estate service corporations appearing in Poland, such as Colldwell Banker, Century 21 or Remax.  The brands popular on the American market could appear more reliable to the American society for locating their means in Polish properties, and it would not necessarily apply only to the part of the society that is emotionally linked to their ancestors’ homeland.