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Prices of land are stable

Colliers International presents its newest report concerning the investment soil market in the first half of 2013.

In the first six months of 2013 supply remained on a relatively high level. Ground well prepared for investing process in terms of technical, legal and planning conditions is in high demand. As usual, the property value is increased by its location. In the period described, 80 to 85 percent of land purchased for office space or housing purposes was located in Warsaw. Although the prices stabilized, the first six months of 2013 also noted some negative tendencies such as financial problems of some property developers which led to a number of clearance sales and putting up of some properties for sale by banks, to motivate customers into more active selling.

Property developers are highly interested in land for office and trade buildings, which make 65 % of deals. Next in line are grounds for housing purposes, with 30 per cent of signed deals, and for storage with 5 per cent - says Emil Domeracki, Senior Associate of Ground Investments Department at Colliers International. First half of the year brought about a stabilization of ground prices and good moods among investors – expert claims.

The popularity of conditional contracts is growing. They aim at allocating the amount of money paid in time of construction, as they are often called delayed payment contracts. Property developers, unwilling to ‘freeze their funds’, want to buy land on which they can start construction without any delay. The majority of constructions currently being planned are short – term, which means that they should start and finish in the next 5 years. If any property - related problems arise, a preliminary sale contract is signed.

According to the report, the supply does not meet the demand to the full extent. It’s caused by the fact that some grounds do not meet the property developers’ standards.

Since the beginning of the year, the value of the transactions of ground adjusted for investments market (including office, trade, housing and industry adjusted lands) reached about 300 million zlotys, which is 20 % of a total value of 2012. The price of ground required for construction of one meter square of usable space was lower in comparison to the previous year. The biggest decrease of land prices for office buildings was observed in Katowice (by 12 %), Wrocław (10 %) and Tricity (8 %). The lowest decrease of land prices was noted in Warsaw (2 to 3 percent).

According to experts’ predictions, in the current year the activity on the market of grounds adjusted for investment should rise. It should exceed over the overall value of the previous year. The second semester of 2013 will be characterized by an increased activity in terms of office and trade adjusted grounds purchases. In the highest demand will be properties in Warsaw, Wrocław and Cracow as well as in Gdańsk and Poznań.

The hitherto consultations with property developers and investment funds, procured by Colliers International, concerning currently conducted as well as planned contracts connected with property investments in 2013 allow us to predict, that by the end of the current year, the overall value of transactions from the previous year can be exceeded. It’s worth pointing out that the majority of purchases on the ground investing market will take place in Warsaw – sums up Emil Domeracki from Colliers International.

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