“Each market has its own premium”
Batłomiej Annusewicz, Managing Director of Lions Estate in an interview with Gazeta Finansowa talked about the situation and trends on the premium real estate market
Agnieszka Bulus – Trando: You specialize in premium real estate. What was the demand for them during the pandemic?
Bartłomiej Annusewicz: At the beginning of the pandemic, the market froze. Everyone abstained from any activity. As advisers, we were unable to work. There was a lot of concern, people did not know how this pandemic would unfold. However, the market quickly returned to normal. Moreover, if we summarize 2020, it was a record year for our company in terms of sales volume. I also have information from other companies that the market was very active, there were a lot of transactions.
AB: Have you mainly advised on the sale of real estate recently, or on the contrary? Real estate became a good investment and there were more purchases?
BA: We serve both sides. This is quite unusual, as most real estate agencies specialize in sales consulting. The search process is much more difficult because we need to understand the client’s needs. And that takes a lot of time. We sell most of the luxury real estate from the so-called demand customer. So working for someone who is looking for such a property, we find it. We have a large database of our properties, but I can say that many times we even create offers for clients, acquiring something that was unavailable. We find properties that have not been put up for sale, we reach their owners. I think that demand customers are dominant at the moment. We have a lot of clients who are looking for expensive houses, residences, in the most prestigious neighborhoods. There are really few of these offers.
We have clients who are looking for large, several hundred-meter apartments in Śródmieście, whether in tenement houses or apartment buildings. And here, too, they must be patient. It is such an interesting situation that there is now a chance for very profitable sales on the luxury real estate market. There are wealthy customers for whom the price does not matter.
They just want to acquire it for various reasons. I think the pandemic has accelerated their decision-making process. They just want to put the money somewhere. Real estate prices are rising anyway, but in these cases we can get amounts that significantly exceed the growth. You also have to take into account that this situation will end soon. When the pandemic is over and the market calms down, customers will be less determined to buy property at any cost. Therefore, on the one hand, there is a lot of interest, on the other hand, the supply is not so high. We are talking about the sale of an apartment in a restored, historical building, several hundred meters long, where last year, at the very beginning of the pandemic, our client bought it for about six million, today there is someone who wants to pay eight. Such a difference appeared in a year. Without any adaptation.
AB: Apart from the purchase and sale, you also advise on the rental of premium real estate. Does this consultancy currently focus on corporate clients or are there also private clients?
BA: Usually our clients are foreign companies or embassies. We help relocate foreign managers to Poland and we rent it for them. Of course, the pandemic has stopped many of these processes. We rent all the time and even during the first quarantine or immediately afterwards, we had quite a lot of these rentals. An interesting fact here is that most of these rentals, maybe not most, but almost half, were remote rentals. Clients could not come to Poland and we, as advisors, switched to virtual work. There were online presentations, instant messaging presentations or video recording and sending them to clients. And remote transactions. This has become a permanent feature.
Today, although traveling is much easier, most customers rent this way. However, this is a different situation than in the case of sales, where customers always want to see a specific premises. Watching it at a distance is a kind of preselection, in this way specific offers are approved or rejected. However, before the final purchase, there is always a “live” presentation.
One more thing is interesting. We had clients who, having their own apartment in the center, decided to rent a house outside of Warsaw’s outskirts for the duration of the pandemic, six months or a year. Most of the houses we have on offer have been rented out.
AB: So what is more advantageous, renting or buying real estate?
BA: A very interesting and topical question. Foreign capital enters Poland very intensively, in the so-called Private Rental Sector (PRS). There are more and more of these investments, they are on a large scale. And this lease is also being promoted. There are companies and foundations that lobby very strongly for the fact that renting is more profitable, that it gives flexibility, and that institutional leasing is more civilized. Which is, in a way, true, because such a large player can introduce very systematic, unified rules and conditions for these rentals, and this gives more transparency. I think that there are many arguments that are cited here that the purchase of real estate is a thing of the past and that only renting gives flexibility, this is only part of the truth. Buying a property is also the process of building your own property. He was, is and will be. We buy real estate, their value increases, we can dispose of them, we can then sell them, buy more. In my opinion, we cannot also present it in such a way that the purchase of real estate is a lifetime contract with a bank, that it is not us, but the bank that owns the property. That is not true. We are the owner, we just have a loan. A lifetime contract with a bank in practice is that most loans are repaid within the first ten years.
Buying or renting is simply someone’s decision and choice. Does he prefer to rent, or be bound by a contract with someone, or to buy and thus build his personal property. Personally, I am in favor of building my property, also by purchasing real estate for it. I see many benefits in this that are not offered by renting.
The value of the property increases, sometimes in a short time, and the money that we would spend on rent will pay off our loan. We have the same flexibility as with rent. In the event of a change in life needs, we can sell our property at a profit, buy another one or allocate funds to anything else. This is, of course, an individual decision, but I myself perceive real estate as an asset, an element of personal property and intend to invest my money in it.
AB: We have already talked a little about the locations chosen by Poles. That something has changed here, new trends are emerging to live in the suburbs. But what real estate do wealthy Poles need? Is it some kind of mansion, apartment? How is it shaped?
BA: According to my observations and analysis of our clients’ needs, I believe that palaces are not the most sought-after real estate today. I believe that this type of real estate had its splendor before. Today, customers outside of Warsaw look rather modern. We can really see how much interest there is when we offer a modern house on the outskirts that has a thoughtful and consistent architecture. The interest is huge. More classic properties pose a greater problem.
When it comes to apartments, apartments in revitalized historical buildings are becoming more and more popular among customers. There are still few such offers, and the interest is enormous. Although we are observing a gradual increase in the supply of truly unique apartments in restored tenement houses. Today we have in Warsaw several hundred-meter apartments in tenement houses with roof terraces overlooking the panorama of Warsaw. It reminds me of New York, Paris and other Western capitals where such deals were available. So far, they have not existed in Poland. Currently, there are more and more of them and more and more customers looking for them. This is a very welcome product.
AB: What makes an apartment “premium”?
BA: There are a lot of these definitions. Most of them are descriptive. We can talk here about the quality of the finish, location, quality of the building, standard, and services that are provided in it, such as a gym or a swimming pool. And it’s so less tangible. I like the definition of Ms Karolina Kaim, with whom I cooperate, who said that “premium real estate is the one percent of the most expensive real estate”. It is so mathematical, so tangible. So the properties with the highest price are these premium properties. You can also give an example of the price with which the premium category begins …
AB: Which is what? What amounts are at stake here?
BA: Each market has its own premium. And this applies not only to different cities, but also to different districts. In Warsaw, this amount is constantly increasing, now it is about 26,000. PLN per m2. Today we have a lot of clients who are looking for and buying real estate that cost 30-35 thousand. PLN per m2. And these levels are acceptable.