2020 will be remembered as a time of unexpected global crisis caused by COVID-19 pandemic. Today however we know the crisis did not stop the trends started in past 5 years. For sure we noted corrections affecting private property owners, nevertheless investors entering the Private Rented Sector (PRS) continue their activity unabated.
Overall, the preference to rentals as opposed to ownership is increasing. The proportion of tenants who are Polish people is on the rise in competition to expats. Simultaneously, rising wages and decreasing unemployment rate is accelerating professional mobility. Furthermore, rental stock is increasing in quality and quantity encouraging people to favor flexible rental agreement over mortgages.
Since 2016, we have seen growing interest in PRS from institutional investors. A typical transaction in this segment would be an acquisition of a part or an entire building especially for the purpose of renting to tenants. We have seen several significant deals in the segment in recent years including the unprecedented purchase of 72 apartments in the iconic tower at Złota 44 in Warsaw, where Hamilton May has a leading role among brokers sourcing long-term tenants.
Another example is the Resi4Rent brand, which is intensively building a large portfolio of apartments in Warsaw, Gdańsk and Poznań. It has four existing locations and manages over 1,000 premises. Hamilton May cooperates with Resi4Rent on Browary Warszawskie project in Warsaw’s city center.
Browary Warszawskie is an architecturally interesting mix-use project with offices, recreational and residential areas, explains Ilona Stanik, Senior Consultant for PRS and Capital Markets in Hamilton Group. The project has experienced a rapid take up since its release. Residents of this project have a place to live and work as well as plenty of leisure time activities in proximity.
The key information for the development of Polish PRS was announced in April 2020. As we read in the Built to rent report published by ThinkCo: Aurec Capital Poland purchased a 200-unit Build to Rent property at 186 Puławska Street for over 100 million PLN. The fund owns two additional investments in Warsaw’s Praga neighborhood, where over 250 apartments [are] in the works. Its future plans include over 2,000 Build to Rent units. Hamilton May remains also active in Praga Północ location, where weassisting Aurec in sourcing tenants for the Jagiellońska scheme (read more in the blog article).
We are pleased to be entrusted by Aurec Capital where we assist with letting their first, unique project at Jagiellońska street, summarizes Ilona Stanik.
The above are only examples. The data shows that by 2023 we expect the total number of built-to-rent apartments completed reaches 7,000. This is only the official data – in fact, the scale may be larger, as the estimates do not include planned and yet unannounced investments. As experts from ThinkCo note, even tens of thousands new dwellings in the next four years will not be able to meet the current demand for rentals in Poland.
2020 crisis played in the hands of the investors as people want more flexibility and the difficulty accessing housing loans raised. Regulated and professional rental market is needed in Poland and PRS is a catalyst for change – a single professional building manager gives a greater guarantee of keeping the quality of the property over time. Over time, tenants may move and upgrade within the same property. Stable rental arrangements and transparent lease agreements with emotions taken out will be appreciated by tenants. Parallel to the growing co-living trend, we predict people will accept PRS schemes. In the long term, a developed rental market stabilizes prices on the real estate market, reducing the risk of speculative bubbles and motivates housing developers to apply ecological and quality solutions.
The Hamilton Group regularly cooperates with funds running in the PRS area. It results directly from the practical experience in renting apartments, built since 2004 – summary Ilona Stanik. We have an established position on the premium real estate market and in the corporate segment, as shown by the recommendations of our clients.