It’s not only the largest cities such as Warsaw, Krakow, or Poznan that are attracting attention from the housing sector. In 2023, a full 55% of all units delivered by developers were created outside of the most significant urban centers and their agglomerations. Data from Otodom Analytics shows that current prices per square meter in cities like Szczecin, Lublin, or Bydgoszcz are comparable to those in relatively cheaper main markets, a clear signal that smaller cities are increasingly marking their position on Poland’s development map.
When analyzing the housing market, we usually include seven of the largest markets in Poland – Warsaw, Krakow, Wroclaw, Poznan, Katowice, Lodz, and the Tri-City. The most apartments are built and sold in these agglomerations, and their situation is reflective of the health of the entire sector. Yet, in recent years, smaller markets have also accelerated and are developing dynamically.
“Lublin, Szczecin, Bydgoszcz, Rzeszów, Kielce, and Białystok are approaching the level of investments and prices of major urban centers. They are attracting more and more investors and are characterized by steady growth in housing construction. Therefore, we can boldly call them emerging markets that are worth observing to have a full picture of the situation in the Polish housing sector.” comments Katarzyna Kuniewicz, director of market research at Otodom Analytics.
High Potential and Rising Prices
The analysis of how much is being built in emerging markets, such as Lublin, Szczecin, Bydgoszcz, Rzeszów, Kielce, and Bialystok is quite revealing. At the beginning of November in Lublin, the largest of these cities, developers offered about 4,000 apartments and houses. Meanwhile, in Bialystok, the smallest in this grouping, a little over 1,000 units were available – a number equivalent to the average monthly sales in Warsaw over the past year. The total number of apartments offered by developers in all these markets combined is similar to the current offer available in the capital.
It’s worth noting that the number of developer units in these cities is higher than a year ago – by even about 80% in the case of Szczecin and Kielce. Simultaneously, developers are introducing new investments for sale. In October, Rzeszów recorded a 54% increase in the number of introductions year on year. In Lublin, it was around 30% r/r, and in Bydgoszcz almost 25% r/r.
But can buyers in these emerging markets expect lower prices? It turns out, not necessarily.
“Smaller cities do not necessarily mean lower prices. One could even say that they are catching up with the largest Polish markets in this respect, and even surpassing those where average rates hover around PLN 11-13 thousand per sq. m. These price levels result from growing construction costs and limited availability of land for new investments, but also the dynamic development of these cities, which drives the demand for apartments,” emphasizes Katarzyna Kuniewicz.
On the most expensive emerging market, Szczecin, a developer’s apartment costs exceed PLN 13,000 per sq.m. This is more than the average prices per sq. m. of a new unit in Lodz (PLN 11.5 thousand/sq. m.), Katowice (approx. PLN 12 thousand/sq. m.), and even Poznan (approx. PLN 12.6 thousand/sq. m.). In Lublin, the average prices of apartments have been above PLN 11,000 per sq. m. since the beginning of 2024. The cheapest is in Bialystok, where you can buy a developer’s property for less than PLN 11,000 per sq. m.
A Decentralized Market
The Polish housing market is decentralized. More than 220 thousand apartments and houses were put into use across the country in 2023. About 138 thousand, or 62%, were built by developers. It’s worth looking at the location of their investments. Almost every fourth apartment was created in the seven largest markets, and in the counties bordering them so-called bagels – 19%. This means that the agglomerations of Warsaw, Krakow, Wroclaw, Poznan, Katowice, Lodz and Tri-City account for 43% of all developer units, while the rest are built in smaller cities, towns and villages.
“In our domestic housing market, both large national development companies and smaller local entities implementing projects in specific cities or regions are present. Differences in their organizational structure and available resources shape the size and character of their investments – from extensive estates with comprehensive infrastructure to small scale projects, adapted to the specifics of local needs and financial possibilities. Unlike countries such as France, Spain or Great Britain, where the supply of apartments and demand concentrate around a few dominant cities, and smaller centers and regions do not play such a significant role, the Polish market is decentralized and diversified. This trend will continue and the position of smaller regional cities will strengthen,” concludes Katarzyna Kuniewicz.
Source: https://managerplus.pl/nie-tylko-warszawa-i-krakow-deweloperzy-stawiaja-na-mniejsze-miasta-86103
