Poland was the first country in post-communist Europe to embrace rapid economic liberalisation at the beginning of the 1990s. It joined the European Union (EU) in 2004 and the Polish Zloty will be no more after 2012, the year Poland switches to the Euro. Even without the Euro’s stabilising influence, Poland is in a very healthy state economically and offers plenty of opportunities for those keen to invest in the property market.

Whether for business or pleasure, Poland has been long overlooked as a destination in favour of Berlin to its west or Prague to its south. However, its strong post-transition economy and the relatively low price of real estate has attracted a considerable amount of foreign investment of late.

The capital, Warsaw, has a thriving arts scene and chic cafés and bars are springing up all over the city, notably in the charming old town. Like Warsaw, Krakow is home to a rich variety of Renaissance, Baroque and Gothic architecture, and the northern Polish city of Gdansk and Poznań in the west are also worth investigation. The former is Poland’s principal seaport, while the latter hosts the annual Poznań International Fair, an important event for global trade.

As well as offering numerous incentives to attract international firms (Tesco, Toyota and GlaxoSmithKline are already on board and bringing in capital as well as employment opportunities), the Polish government is also actively encouraging foreigners to invest in property. Along with accession to the EU has come better protection of ownership rights and, as of 2009, foreign buyers won’t need an investment permit. Notably, Poland ranks fifth in the world on the Foreign Direct Investment Confidence Index.

Investors looking to rent to the locals are aware that Poles are getting rich fast and that they are demanding better quality residential property. Already (post 1990) 60 percent of the population own their own home, and Poland is at the top of the European House Price Growth League Table.

Due to residential shortages (according to a recent Knight Frank report, there is a shortfall of around 1.5 million dwellings), there is plenty of construction work taking place in Warsaw. Approximately 30,000 apartments are currently being built, and districts such as expat-friendly Wilanow and upscale Praga Poludnie – as well as Ursynow-Kabaty and Bemowo – are internationalseeing most of the action. Yields may not be too generous at around 6 percent, but there is a good chance this will increase as Poland’s economy continues to boom.

Those looking to invest in Warsaw would also do well to investigate residential properties in Ochota, Old Zoliborz, Saska Kepa and Mokotów. In these districts the average price for a 538-square-foot home is HK$1.6 million (PLN456,987), and the expected rental HK$7,896 per month. Key developments worth a look include Arlet House, near to the city centre, which offers up 190 flats in a single apartment block; and Park Tivoli next to the Bródnowski Canal, which supports 280 apartments on 4 hectares. Restaura Górskiego, a pre-war building that is currently being refurbished to acommodate 109 homes, seems another good bet: it is owned by the Restaura Group, which has successfully renovated apartments in Barcelona, Madrid, Paris, Lisbon and Berlin during its 30-year history.

The trend towards upscale residential properties is not exclusive to the capital: Krakow, Gdansk and Poznań also have a number of similar developments springing up. While homes in Warsaw sell for around HK$150,000 per square foot, prices outside the city are considerably lower.

The country’s second largest urban area, Krakow is a city in transition, and most of the new property developments are located in the east, in districts such as Nowa Huta, Czyzyny and Grébalów. In Gdansk, new-builds in Chelm (Szadólki) are appealing to foreign investors.

Poznań, meanwhile is the city to watch: heavy investment and rising property prices are likely prior to the 2010 completion of the A2 motorway, which will improve access to Berlin in the west and Warsaw in the east. Recognised as the capital of commerce and finance, property prices in Poznań are growing off a lower base than those in Warsaw and moving faster than any city in Poland. Investors are looking at paying around HK$100,000 per square foot in the heart of town. It’s not unlikely that a HK$1.5 million investment will be worth HK$7.7 million in ten years time.

Factors to bear in mind before investing in Poland are not only the low to moderate rental yields, but the high rental income tax, which currently stands at 17.44 percent. However, all things considered, Poland still looks like a destination worthy of your dollars.

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