Forecasts for the real estate market for 2021
Forecasts for the real estate market for 2021
2020 was a year that no one expected. The outbreak of the pandemic slowed down real estate prices, which have been growing continuously for several years, and caused a deep crisis in the market of hotel apartments and shopping malls. What are the forecasts for the real estate market in 2021? We invite you to the next part of the cycle in which Lions Estate experts analyze the real estate market and present forecasts for the coming months.
2021 – a year of progressive price increases
Despite the earlier predictions of most experts, the pandemic did not cause any cuts in housing prices. Prices not only did not start to fall, but after a temporary freezing, they began to rise again. One of the effects of the pandemic is, however, changes in customer preferences and an increase in demand for properties with larger areas. According to the observations of our experts, currently the best sellers are houses on the outskirts of cities, large apartments with access to greenery and premium real estate invariably. The current slowly stabilizing epidemic situation, the progressing vaccination process and the forecasts regarding lifting the restrictions allow forecasting the return of the real estate price growth rate to the period before the pandemic.
The eased credit policy will increase the demand for loans and fuel sales
During the pandemic, the banks tightened their lending policies, increasing the requirements for potential borrowers. This process has excluded from the market especially people purchasing real estate from the lower price range. The first restrictions mainly concerned people obtaining revenues from civil law contracts, industries that suffered the most during the pandemic, and entrepreneurs. Now the situation should slowly return to normal – in the new year, most banks returned to their standard requirements, which were in force in the first quarter of 2020. Despite the next stage of the pandemic, banks rationally approached the issue of crediting the purchase of real estate, meeting potential borrowers.
Primary market – back to what was?
The real estate market always responds to the needs of customers, sometimes it only creates new ones. Therefore, according to experts from Lions Estate, no revolution on the market should be expected. Developers will continue to build real estate tailored to customer expectations – from luxury apartments in the most prestigious districts to new housing estates on the outskirts of Warsaw. A signal confirming the latter trend is the recently announced purchase by Marvipol of a new 1.4 ha plot in Białołęka, which sees potential and development prospects in this location.
Developers offering luxury real estate have a record year behind them. Luxury prices in Poland are constantly rising, slowly approaching the prices in the western part of Europe. The prospects are tempting.
“To illustrate the direction in which the market is heading, we can add that the price of an ultra-luxurious 300-meter apartment in Śródmieście, which I have in the off-market offer, exceeds PLN 80,000 per square meter and I have already arranged the first presentations”
– says Paula Perz, Partner and Premium Property Advisor in Lions Estate.
What properties will clients be looking for?
It is difficult to predict whether the currently observed trend of fleeing from city centers will continue after the epidemic situation is completely brought under control and a return to “normal”. Changes in the way you work can have more long-term consequences. The forced opening of companies to remote work has shattered many previous beliefs on this subject. Many companies that previously did not allow this option saw that it could also work for them. On the other hand, employees who have experienced working from home or working in hybrid mode may not want to go back to the previous model. This suggests that the interest in plots and houses on the outskirts of Warsaw and in larger apartments with their own terrace or garden in locations more distant from the Center will last longer.
The rental market continues to be diverse
2020 was a year of crisis for most areas of the rental market. The short-term rental market suffered the most, as it ceased to exist overnight as a result of restrictions and travel restrictions. Most of the short-term rental offers are either for sale or for long-term rental. This was one of the reasons the latter segment is also going through the crisis today. A lot of new offers appeared, while the demand was limited, which resulted in a drop in prices and difficulties in renting empty premises.
„The huge crisis of the short-term rental market and the oversupply of smaller apartments for rent is a fact. When analyzing the Warsaw market, a visible decline in rental rates is particularly visible in Bliska Wola and in the area of office buildings near Domaniewka street, who have become “victims” of remote work. Relatively stable liquidity and rental profits are constantly guaranteed by large premium apartments and houses in the vicinity of international schools, which are the specialty of Lions Estate”
– comments Rafał Lewandowski, Partner in Lions Estate.
When can we expect the rental market to return to normal?
It all depends on the pace of further lifting the restrictions and the companies returning to normal operations. Lions Estate experts are already observing the stabilization of the situation in the case of foreign corporations with which we cooperate.
„We can see that companies and corporations have already adapted to the current situation and are beginning to return to their traditional cycle of employee relocation and searching for real estate for them. So there is hope that the rental market will start to return to normal in the spring. Spring is the time when many expats and diplomats come to Poland with their families. Currently, we receive more and more inquiries and orders to search for real estate for rent, which proves that this sector is slowly being thawed. “
– says Alicja Chmura, Premium Property Advisor in Lions Estate.
What else has changed in customer preferences?
When it comes to the mid-priced real estate sector, the price-quality ratio is still of the greatest importance to customers. Currently, more people choose the so-called “Turnkey apartments” – thanks to such a decision, they can avoid the risk of additional costs that were not included in the originally planned budget.
When analyzing the situation on the premium real estate market, Lions Estate experts emphasize that the situation in this area is stable, which translates into the growing interest of clients and investors.
“The crisis situations, including the current pandemic, show that it is always worth investing in real estate. Regardless of turbulence and times of uncertainty, real estate not only maintains its value, but continues to increase it over time, being an excellent safe haven for capital. The luxury real estate market is especially successful in this role. “
– comments Bartłomiej Annusewicz, CEO Lions Estate.
Real estate market post-COVID 19
Despite the slight impact of the current pandemic on the real estate market, we must be aware that the pandemic is still a risk factor, especially in the context of the condition of the Polish economy. Slight changes in customer preferences and the gradual return of the rental market to normal should go smoothly.
On a global scale, it seems that the international community has passed the test, and despite an unprecedented challenge, we managed to avoid a catastrophe, both in a humanitarian and economic sense. There is also a hope that the wiser of our current experiences, we will be able to better face possible new threats.
As citizens of the Republic of Poland and entrepreneurs, we count on the fact that, as a result of the stabilizing situation in Poland and the progressing vaccination process, in the coming weeks our government will begin to boldly lift the applicable restrictions. It seems that the current freezing of some businesses is a greater threat to our economy and, consequently, also to the real estate market than the ongoing epidemic. With this message, we end our report and look at the beginning of 2021 with moderate optimism.
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