By the end of the first half of 2024, the available PRS (Private Rented Sector) units in Poland totaled over 19,000, representing a 32% increase over the last 12 months. PRS resources under construction grew by 10%, hitting a level exceeding 14,500 units. Despite challenges in procuring new projects, investors maintained high activity levels. Almost 90% of investors indicated that tenants prefer budget apartments, while only 10% opted for premium apartments, highlighting the high price sensitivity of Polish tenants. At the same time, almost half of PRS platform managers pointed to increasing operational costs as a key challenge in managing PRS real estate investments – according to the report “Institutional Rentals – Favorable Environment for New Transactions” prepared by PwC Poland.
The past 12 months in the real estate market have been characterized by a significant decrease in demand. The discontinuation of the 2% Credit Program significantly limited financing availability, directly influencing a decrease in transaction numbers. The largest declines were in Warsaw and Krakow, where 50% fewer apartments were sold in the second quarter of 2024 than in the third quarter of 2023. On the other hand, developers currently have a record number of unrealized building permits. In combination with weakened demand, this could create a strong incentive for collaboration with PRS funds which could become key partners in executing these projects. Existing resources amount to almost 19,400 dwellings, with an additional 14,600 under construction. By 2028, the number of ready units could rise to nearly 80,000.
“The coming months could usher in a new phase of development in the PRS market, mainly due to a slowdown in the apartments for sale market. Although both segments largely operate independently, residential developers and PRS platforms compete for the same land resources. The dwindling interest of individual apartment buyers due to high prices and more difficult access to credits could open the door to new transactions in the PRS market.” – says Kinga Barchoń, PwC Poland partner and leader of the Real Estate market services team.
In the first half of the year, over 2,600 new units hit the market, raising the total stock of apartments in Poland to nearly 19,400. This represented an increase of 4,707 apartments compared to the first half of 2023. As a result, in the last 12 months, the stock rose by a solid 32%. The first half of 2024 was also active in terms of the initiation of new construction projects. Investors not only maintained the number of units under construction despite a large increase in the number of completed units, but they also increased this by over 400 units, meaning the start of construction on over 3,000 units. Simultaneously, the share of the three main investors in the market continues to decrease in favor of companies outside the big three (Resi4Rent – 23%, Vantage Rent – 14%, PFRN – 11%,) who continually increase their apartment portfolio and already own over 50% of apartments.
“The PRS segment is still not adequately developed from a tax practice perspective and recent jurisdiction, for example, in regards to depreciation for taxation, or real estate tax is heterogeneous. Additionally, the specificity of this sector means that neutrality towards VAT for entities conducting economic activity cannot be taken for granted. Consequently, the tax implications of investments should be carefully considered from the start. This way, opportunities and limitations can be recognized, which would otherwise potentially pose problems in the future” – says Marta Pabiańska, PwC Poland Partner, Leader of the Real Estate Sector Practice.
At the end of the first half of 2024, Warsaw offered around 8,400 dwellings for rent and another 4,700 were under construction
The first half of 2024 was very active for Wrocław in terms of the number of dwellings delivered for use; the number of available dwellings increased by over 900 units, translating to a 38% increase compared to H1 2023. Currently, Wrocław offers about 3,300 dwellings for rent, with 2,100 more under construction. Resi4Rent has 1 252 dwellings in Wrocław, while Vantage Rent has 1 149. Resi4Rent plans to significantly strengthen its position in the market in the coming years by building 1,290 new homes. The market is also shared by smaller developers.
At the end of the first half of 2024, Warsaw offered about 8.4k rental dwellings and another 4.7k were under construction. Over the last six months, the number of dwellings in the capital increased by 931 units, almost on par with the previous half-year when the growth was about 1,000 units. Resi4Rent continues to have the most extensive inventory of dwellings with over 1.9k existing dwellings and about 300 under construction, followed by Heimstaden Bostad, with almost 1.5k dwellings and 200 under construction. AFI Europe, which currently has 743 ready units, 523 under construction, and over 2.5k in preparation, should also join the front-runners by 2027. Other PRS stakeholders in Warsaw include NREP, Van Der Vorm Poland, LRC Group and Aurec Capital Polska.
At the end of the first half of 2024, there were over 3k dwellings for rent in Kraków and almost 2k under construction. The increase in the number of existing dwellings compared to the previous six months is due to Heimstaden Bostad’s completion of two major projects in the first quarter of 2024 and LEW Invest’s ongoing platform development, which now counts 411 dwellings in Kraków. The PRS market in Kraków is dominated by AFI Europe with 685 dwellings and Heimstaden Bostad with 596 dwellings. The PRS stakeholders in Krakow also include Resi4Rent with 535 dwellings (and 873 under construction), Van Der Vorm with 318 dwellings (and 4 under construction), and G City Europe with 109 dwellings. Lifespot, not previously present in Kraków’s market, currently has 1,086 dwellings under construction.
At the end of the first half of 2024, the number of existing dwellings in Poznań was just under 1.7k – an increase of nearly 250 units compared to the end of 2023. In the first half of 2024, the number of dwellings under construction in the Tri-City area increased by 1,486 units (to 2,307), while the number of ready dwellings remained the same (987 units). In the first half of 2024, the number of dwellings available in Łódź remained the same (1,564 dwellings). Only one project is currently underway in the area, which will bolster Resi4Rent’s portfolio but does not leave much room for a significant increase in supply in the institutional rental market in Łódź (a total of 287 units are currently under construction).
Source: https://ceo.com.pl/rynek-prs-w-polsce-rosnie-o-32-ponad-19-000-nowych-lokali-po-i-polowie-2024-r-50164
