Why Poland?

Poland has managed to do a huge amount since it introduced a parliamentary democracy and free-market economy, but has managed to do most of it quietly and without having to shout about it. At the same time, it has been a great destination for investors over recent years, and still has plenty to offer both in terms of economic growth and cultural heritage.

The heady days of the 1980s, when the Solidarity movement of Lech Wałęsa was a constant thorn in the side of the Soviet-controlled Communist dictatorship, led to the country being one of the first to manage to throw off the chains of Soviet rule and declare independent elections, beginning the journey to rehabilitation on the global scene and a bright future.

The Third Polish Republic, as this most recent phase in the country’s political history is known, has been characterised by growth. Free speech and human rights reforms have followed political progress swiftly, and Poland joined NATO in 1999. The transformation of the country took another significant leap forwards when Poles voted to join the EU, becoming a full member in 1st May 2004.

Popular property locations

The property market in Poland has been driven by foreign investment since the fall of Communism, when the new government saw it as the best way in which to encourage foreign direct investment into the country. While the market for foreign buyers has been active for some time, it is in the past five years that growth has really accelerated at an impressive pace. The government encouragement of foreign investors is set to continue, while there is a new market of Poles in the growing middle class who will soon be looking to become property owners themselves instead of renting.

Warsaw remains the most popular destination for investment buyers in Poland, with most of the foreign direct investment and the institutional investment channelled through the capital city. Located just east of the centre of the country, Warsaw is on the Vistula River, some 200 miles from both the Baltic Sea and the Carpathian Mountains. The old town, now a UNESCO Heritage Site, has been preserved for the future, but the city suffered terrible damage from being occupied by both the Nazi and the Soviet forces during the Second World War. As a result, many families were forced in prefabricated housing after the end of the war, when many of the ugly concrete blocks, which have been the norm of housing stock in the Eastern Bloc throughout the Communist era, were built.

Many of the damaged buildings of historical significance in the old town have been restored, and there are now developments of new apartments coming along to replace the concrete towers. Property investment in Warsaw can be split into two categories. The first is apartments in the best city districts that are purpose-built to be let to foreigners coming to Warsaw to work for one of the multinationals for a set period and who demand a quality of living similar to what they have at home. The second potential market for buying property in Poland is to buy smaller and more modest apartments in the districts where local workers settle, in order to let them to workers who are inevitably drawn to the capital. Although the returns on these properties may not be as exciting as more ‘executive’ apartments, the rental could be steadier and more reliable.

Tourism in Warsaw is increasing due to the frequency and affordability of low-cost flights, with many people visiting on long weekend breaks to see the history and culture the city has to offer. This is the third potential market for overseas property investors, offering an alternative to hotels for visitors, while property owners can charge more for short-term lets than they can for longer contracts.

As the economy in Poland develops, along with the property market, there are more property investment options beginning to come to the fore. New areas are beginning to be publicised and economic growth has started to spread across the country, which allows more choice in the market, as well as the potential for high growth rates to continue.

These ‘second-tier’ cities are becoming increasingly popular as investment choices as tourists, businesses and low-cost airlines are discovering the potential for growth, and the local economies are beginning to expand quickly as a result. Chief among these are cities like Wroclaw, which has seen growth in the number of buy-to-let projects available for overseas buyers. Low-cost airlines fly directly to the city, economic growth is high, and the employment opportunities are good, making Wroclaw a great investment for the medium to long term.

Other cities that are benefiting from their ‘second-tier’ growth status include Poland’s second city, Krakow, which has 75 per cent of its citizens under 45 and lies in a government-designated ‘Special Economic Zone’. Katowice, with a population of over three million, is said to be Poland’s sleeping giant, waiting for the extension of the local economy and the development that will go with it. Lodz and Poznan are also not to be overlooked as destinations for investment properties.

Legal issues

Foreign nationals are permitted to buy property in Poland, however there are some restrictions and hurdles to overcome, none of which should present too much of a problem to anyone looking to invest in the country.

The main thing to get organised is that anyone wishing to buy in Poland must gain the approval of the Ministry of Home Affairs in order to buy a property. The process for this is relatively simple and hassle-free, and there are a number of specialist solicitors who have now set up specifically to help with this process due to the numbers of foreign investors who are buying in Poland.

This approval, once granted, is usually good for a period of six months. Should you not find the property you want or be unable to complete within this time, extensions to the approval are available.

It is extremely important to keep in mind that should a buyer attempt to go ahead with a purchase without this permission, the contract of sale will be void, and all deposits will be lost. The property will also go back on the market for others to buy. Permission cannot be applied for retrospectively.

There are also a number of areas where the buying of property by foreigners are prohibited. Most of these restrictions are in the areas of the Polish frontier, and it is important that your independent legal representative carries out the checks to make sure the property you are buying is not in one of the restricted zones.

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