Warsaw Property Market - Case Study Example

Introduction Warsaw is the largest and the capital of Poland. It is the centre of business, cultural and political life. Of all cities in Poland, Warsaw has had the strongest economical background, highest FDI inflow, the highest GDP per capita and the lowest rate of unemployment. Warsaw city is one of the best cities to locate business in because of its strategic geographical position, cheap labour and highly qualified people. It is a city with historical buildings and due to the growth in capital, modernisation has set in Warsaw. There are various reasons as to why residents of Warsaw buy apartments; to have bigger and better apartments, to make buying as an investment, to live in another district, buy to rent, buy for their children while others buy for their parents. This has asserted quite a good market for real estate owners and mangers. Warsaw has approximately 2 million people and thus making a good market base and opportunity (Kucharska & Załęczna 2001). Warsaw city is comprised of Irish and Polish people and thus it becomes easier to understand the full wishes of the customers and offer a suitable end product. In the city of Warsaw there are various companies involved in property management. Warsaw city has leading organisations that ensure smooth transition of real estates, properties and businesses to the suitable hands of the investors (Ling & Naranjo 2002).The companies have many distinct knowledge of development companies, real estate law and local market policies; as a result they can offer practical and sound advice to other investors using the only trusted and tried methods to oversee investments in Poland. It is aimed at ensuring that their customers understand originality and uniqueness and so should be their investments. Warsaw rules out individuality and enhance on co-operation with other designers like interior designers to provide an enticing finish to their estates and thus attracting more customers. Warsaw city offers a wide range of services mostly to investors who are foreign and willing to get into or are already doing business through other property management organisations. It has been one of the most profitable cities when it comes to real estates management in Poland. The city plays a part in offering stable prices and they predict growth conservatively in the coming years. In 2006 real estates prices rose by almost 50% from the previous years (Robert & Abbink 2004). This came as a result of high demand in the city of Warsaw. Due to the fact that Warsaw city has a good capacity, the population has been on the increase and hence more and more investors coming to set up their business in Warsaw. Many of these investors look forward to buying property in Warsaw city. Despite Warsaw city been a business centre, it is also involved in providing leisure facilities to Poland. Most of municipalities in Warsaw have green fields, cool and calm atmosphere and sporting facilities. Their role in provision of leisure activities has been boosted by the announcement of Poland hosting 2012 European Football Championships. This will act as a catalyst to improved social amenities, roads, railways and other infrastructure improvements. Warsaw city has also gained as a result finances acquired from foreign investments in the past years. As a result many large companies were attracted to Warsaw and hence they came to invest (James, et al 1995). Prices are very high in city centres and this is brought about by high demand. The location of an estate also plays a big role in pricing as many people look for apartments near to their offices or workplaces. These apartments are the most expensive as a result of their location. Warsaw city has a population estimated to be over 40 million people, of whom 50% are under 35 years; there was a need to invest in residential homes and estates. For the last few years wages and salaries have been growing consistently and as a result, increased income. Residential houses have been on high demand since 2003; in 2005.the demand exceeded the supply of homes and increasing the gap. In 2006, many investments were leased to income producing assets to cater for the needs of the people. Demand and supply Demands in Warsaw city have been on the rise since it started performing well in the real estate market. There are various reasons as to why its demand has risen all of a sudden. To start with, it the quality of services they offer to the clients (Robert & Abbink 2004). They have high quality, well finished apartments and building which always attract customers. Warsaw has plans for developing their organization and hence it has land reserves to ease construction and development. Every investor wants to own an organization that has its own land which can be leased or used to expand the office space. Warsaw city has many institutions abroad that represent it for example: ING Real Estate, FIM, Mahler and many more. All this businesses assist in increasing the investments of Warsaw and play a part in large part in large scale projects. Residential homes and apartments are on high demand due to increased economic growth in Poland and specifically in Warsaw city. Many investors have asked Warsaw to provide luxurious apartments. They argue that many foreign investors do not hold permanent positions and hence they do not hold offices for long, thus apartments would be good investments. Many warehouses are concentrated in the South of Warsaw with the emphasis on Katowice and Poznan highways (Brown & Matysiak 2000). A recent report shows that Healey Warsaw and other prominent people were positioned third in for all European countries whose leaderships has created a favourable atmosphere for businesses and investments. Market of real estate in Poland has continued grow and hence increase in property values by 10-15 %.Investing in the property market requires flexibility, knowledge and professionalism of Warsaw city to make it in investments. Social economic factors There are various social economic factors that have contributed in the growth of Warsaw city. Economically, the GDP has tremendously increased by approximately 7.5% in 2007.This attracted more investors to Warsaw. This led to rise in capital by 20-25% per year. Moreover the capital is expected to keep on rising by 15% per year until 2012.When compared to other cities in Poland, Warsaw has the lowest rate of unemployment which is below 5%, where as unemployment level in Poland is 14%.Number of working places are on the increase in Warsaw as a result of many investors residing in the area. Other economic factors include an enormous highly skilled workforce which provides cheap labour. As a result production cost is lowered enhancing maximum profits (Liam 1994). Socially, Warsaw city is the home for many government agencies, domestic companies, international companies, national institutions and other organisations; it serves as the heart of Poland and thus the many investors. It also has historical monuments like buildings which are Poland’s heritage. Warsaw city offers very attractive environment for business and investments due to the modern technological advancements and qualified professionals who the necessary knowledge and skills for management of real estates. In the financial sector, is has become a central point for all investors which has led to growth in he country’s economy. Other factors like infrastructure have played a big part in growth of Warsaw city. For example, Warsaw International Airport which operates 60 routes worldwide enhances movements of investors from different parts of the world to Poland (Tuna, T 2004). Other social factors like sewerage system have a part to play in the growth of Warsaw city. Warsaw is a neat city with many waste collectors to serve 90% of the inhabitants. A plan to come up with a new sewerage treatment plant to the south of the city is underway. Telecommunication goes hand in hand with transportation. Telephone lines and connections are best I the districts with lost of business like Warsaw. There are four operational mobile phone providers in Warsaw; they include Orange, Era, Play and Plus GSM. These networks cover the whole of Poland. Currently there are more than 500 phone lines per 1000 dwellers. Warsaw City has constant sources of water supply. It has three main water supply systems which supply water to all inhabitants of Warsaw. They include Wodociag Centralny, Wodociag Praski (Praga Water Main) and Woodciag Polnocny (Northern Water Main). Woodciag Centralny is the oldest and the central source of water. As a result of the three sources of water supply, problems like shortage of water are a minor occurrence (Bengt, et al 1992). Tourism has also been a key factor in growth of Warsaw city as a leading investments centre. This is because approximately 5 million tourists spend a night in Warsaw in a year. Many visitors come from Germany and Soviet Union. This can be attributed to the social, political, economic cultural factors and the favourable geographic positioning of Warsaw. Many of these tourists come to purchase goods while some come as tourists, mainly for pleasure or they are on holiday. Hotels in Warsaw can accommodate approximately 17,000 visitors. Many hotels have emerged and still emerging which makes Warsaw city develop as business city. In an estimate, tourists who visit Warsaw use approximately 1 billion dollars per year in Warsaw (György 1998). Conclusion Warsaw city is the heart of Poland. There is a lot of growth in economic and industrial sectors as a result of the high population, affordability of cheap labour, huge demand which has outdone the supply and hence there is competition. Warsaw is the most developed and largest market in Poland; it has managed to sustain its growth even with the rapid price increase and decreases. The market has also being in a position to strengthen its rental market and develop mortgage market at the time thus increasing its market area. Many property management organisations have thrived as a result of cultural, social, economic and political factors (Barbara & Jacek 2009). Increased demand in mortgage enhances completion between different organisations like banks making them introduce more products and services in the market to keep up with the competition. As a result many banks in Poland have improved on their money lending terms and conditions bringing them to suit the people. 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Robert, EW & Abbink, J 2004, Current issues in globalization, Nova Publishers Tuna, T 2004, Budapest, Istanbul, and Warsaw: Institutional and spatial change, Eburon Uitgeverij B.V. Read More