Advice on what Polish city to invest in....

i am sorry but your math has flaws. the merit of any such investement lies with the yield. with pzl interest rate average at 5.5%, adding the costs of managment company without adding the costs for repairs or incidental costs, one should expect roughly speaking a yield of about 9% to meet the costs.

if as you say one purchases an appartment in the area of 6500-7000 plz per sqm, then suppose that you buy an app. of 70 sqm = 490000 roughly speaking. 9% on that amount would mean that you must get by renting it 44000 per year - again roughly speaking. which is 3600 per month. and this is assuming that you rent 12 months full, which is usually not the cases, as gaps of several months are unavoidable. if you know the lodz market, can you seriously claim that standard appartments are rented at that price. i am sorry but this is definitely not the case.... what you mention about companies renting for foreigner employs, this is the rosy scenario but it is only happening still in small scale in warsaw. in lodz it is completely circumstantial.

and do not say that one expects profit from the appartment selling at higher prices later. if you pay 6000-7000 then you need another 1000 per sqm to finish off the black finish appartment. it has already become too expensive.

one must say also that up to now it has been a sellers market. they artificially blow up prices and to certain extent as the number of companies is not that great one could imagine a cartel having been formed. in secondary market i doubt that such prices can be reached.

as i said before: caution for the buyer, avoid agents, buy land, if you want appartments wait for secondary market in 2-3 years. thousands of units will be on sale in a rush mainly from anglosaxon first time investors who bought a hot potato. they will need to offload the property at any price. secondary market prices will be lower than currently developer prices. add to that that all developments look better on visualizations. in real life may not look as great. do yourself a favour and visit recent developemnts in warsaw especially. they look much worse than the visualisations, not much different than the communistic blocs, just newer.

the only projects that are pricey but worth any penny of your money are: in lodz the uscheiblera, in warsaw the zlota44, in krakow one brewery becoming lofts, dont remember the name and in poznan similar project of a distillery, have to find it. any of this projects you can rent or sell without difficulty - they are extraordinary. its worth checking out the pricey zlota44 project, you wouldnt find buildings like that easily. continue, farming land category A for farming purposes and small hotels in proven touristic places. the rest if you did not do anything up to begining of 2006, now forget it. you missed the train. just check out how much prices went up from 2004 to 2007!!! you will buy expensive, you would have to compete with smarter investors who bought earlier than you and eventually you would have to find an escape route writing down a loss.

PS1. developers do not pay commission to agents??? dont think so!!! if you check the polish civil code, expressly it says that agents in principle can claim commission from both parties. and that is exactly what they do. all. but if you ask, small and big, none of them says so. so, typical sales blah blah again...
PS2. i do not assume anything about you. i only see that you are in defence of a professional agent and it does sound strange. let him defend himself (under the name of michael or dmmm or whatever he chooses).

Krakow, Poznan, Gdansk or maybe Wroclaw

generally, how much for a flat with two bedrooms in these cities?
Very curious

central or in the suburbs ?

Donomar

ill answer your points 1 at a time so we dont all lose the plot

I didnt research the rednet report as after the 1st 2 it didnt seem time wise - i will now look further

Im not saying your wrong in your opinions that the Poland market is heading for bad times ,im just saying i disagree - were all entitled to an opinion but the tone of your posts seem to be uncalled for

i,ll have a read of the report thanks for the link it will be interesting reading & i,ll post my thoughts ASAP

I always do my research & that goes for researching Michael C ,i would suggest you have a look at hes track record & make your own opinion before slating the man off

With regards to your implications that Dmmmm is the same person as MC - your incorrect .My intials are Dmm however these are often taken as usernames on many registrations & so i dont have to remember several differnt usernames i stick to 1 that no one else seems to use

Im glad to see you belive Lodz to be a good bet for bet & surely as others have pointed out if land prices are a good investment proerty will follow thereafter

I prefer to look at mid - long term investmen returns & not a 1 month blip but thats another differance of opinion between ourselves

I agree with kneehawk that your negitivity is unhelpful .if you put your case but left it to the facts & toned your posts down you would give yourself & your opinions more credibilty

I dont understand why you look at this forum ifyour so negative towards Polands Real Estate investnts!!

How can you say Poles dont rent from foreigners . They surely do what people do over in the UK - they look at a property ,if they like it they say how much ,yes ok i like the price ill rent - not who owns it ,oh a foreigner i wont rent it then!!

As you noted i work in the construction Industry as a Contracts Manager ,i would say 60% of the guys on my site are eastern European & their quality is no problem to me at all. I manage sites from 2m - 10m not small extension

Yeild v capital growth - to keep things simple when yeild goes down capital growth goes up ,i can live with that when im in for the mid- long term

In summary Donomar i dont agree with your opinions on many thoughts but only time will tell whos was right ,but if you amend your tone we can continue to exchange differnet opinions .

Remember - if everyones thinking the same then someone aint thinking

Many Thanks

Dean Martin FCIOB (not MC)

donomar,
i have given you credit where there obviously there is not credit due ,so i will go back to basics,as that is maybe all you can understand.using your criteria of a property valued at 490000subtract a 10% deposit which is exactly a deal i am working on at the moment, and that leaves you with 441000.If you continue to calculate ,the interest only mortgage bases on swiss francs will cost you 1378zl per month.Where the **** did you get 3600 from. i have already told you to use swiss francs .Zl is to expensive.
you seem so preocuppied with the top end ,whatever happenend with the entry and middle market ?
The rest of your comments rest at best on the ridiculous so i cannot be bothered to answer .but i will ask this question yet again ,since you continue to avoid it .What is your experiance of the polish property market?

Sorry,
i forgot to start.The merit of any type of this investment lies in capitol appreciation, and NOT yield (see matey boys first stupid comment)

you start getting nervous and be unnice. you must abide by basic rules of politeness otherwise you should stop from the forum and definitely stop addressing my posts!

swiss franc morgage interest only!!! wow, what a fcuk up strategy!!! even if you get a 6% value increase per year the cost of money taking into account all expenses would annul any profit!

on the other hand, polish media is increasingly talking about a bubble, and serious analysts say that stabilizition, or slight fall lies in the horizon... not so much capital appreciation in the future. how much more can you go above and over 6500-7000 plz per square meter in lodz? in reality not much...

there was a chance in lodz to make money a year an a half ago when starting prices were 3500 pzl and secondary market in tenement houses from 2500 pzl. if you missed that chance the bird flew away. do you want to be the last one to buy at most expensive? the agents do have an interest in telling that prices would go up infinitely, yet nothing can be further from the truth. you would have to compete with people who bought at the right time at the right place and you stand no chance!

for example in lodz, in the uscheiblera project prices started at 3500 plz per sqm! and keep in mind that this is the top top end of the residential market. how can you compete with the people who bought there with your entry level crapy appartment at 6000-7000? you cannot! you will get the keys to your appartment at the same time with the scheibler owners and guess where prospective tenants will choose to stay....

if you want to go back to basics, and if you are "specialist" in entry/middle level, do you have the faintest idea what is the entry/middle salary in lodz, poland??? well, its about 200-300 euros per month. these are the potential tenants or buyer of your entry class half a million zloty appartment! you need to better inform yourself about real life situation there. and of course any customers you may possibly have whose life savings are endangered by foolish advice.

again an opportunity to warn potential investors: be wary of sales agents presenting a rosy picture. they take commisions from anybody involved, seller, buyer, bank. they will create a certain solution, they will suggest financing (for which they also take commission from the bank), they will spin your mind with imminent reaches, but truth it is only them whom make a safe catch - THEIR best investment is YOU and your willingness to believe and SIGN. if you want to do something, buy land, buy top end, avoid agents and play safe in a foreign country. i said it before. somebody has to protect the innocent from the hawks...

you ask repeatedly what is my experience. funny question in fact....

i thought of ignoring a patronising question like that, and surely i would not like to give my identity away but you did get me into giving you a hint: according to data from the ministry and the agency for foreign investmnets in poland (do you access to?), i rank among the top 40 single individual foreigner investors in real estate in poland. if you know the market as well as you claim, you can risk a guess about who i am...

let me quess what is your experience: ...ahhh...ahhhh...well you are a sales agent, right? or you are covered under the pretence of investor who "helps" other investors, right? trust me, i have come accross many of this type, especially in the last 24 months, most of uk origin... i feel sory for the poor souls they are "advising"... 2 hours internet search makes their "advice" redundant! no local polish person or experienced investor would ever use their services...

You have set the tone of this debate and not me.It is you who without evidence have accused others of misrepresentation and labelled Irish investors as ignorent so i am merely following the path that you laid down.

You are confusing yield with capitol appreciation.I am using Swiss Francs because that is the cheapest way to finance property in Poland at the moment for the average investor.

If capitol appreciation in Poland was at 6% per annum as you state,then i would not invest in Poland.

I have already agreed that the Schleibera development is the best in Lodz and yes investors who got in quickly got themselves an excellent deal,but as i said before the emergence of interest only mortgages only recently will reduce the deficit and also once those units bought for investment purposes are let and demand drives the rental up there will be new tennants coming into the market all the time and they all cannot live at Schleibera.

If you are among the top 40 single individual investors in Polish property,then without doubt i am the only one true King of England.

well, well, well...

the director of rednet in an interview today, announcing the definite turn of the company to the overseas property, she says that the end of significant price growth in the appartments prices has come to poland. she cannot see any prospect for price growth in appartment prices, she tells investors to look hard at polish market...

mind you, this is the largest sales agent in real estate in poland - by far. when they make such statement (which in fact is against their interests) things are really serious.

now if there is one single soul that wants to believe the likes above who tell you that you will double your money, then nobody can protect such a fool from his destiny.

you are indeed a king in the making, the king of deception...

swiss franc is the most popular way of poles getting a loan. yet they are exposed to the danger of currency risks. the central banks are advising the banks to limit loans on swiss franc, banks dont care as long as they make customers. what do you know about all that? nothing, why should you care, you are a sales agent, you are only after your commission...

you have avoided answering many of my questions. one on which i insist: if one buys to live in, then no problem with that. but if one buys a very basic appartment in lodz at the price of 6000-7000, how that investor would compete in the market with the smarter investor who bought much better quality at significantly lower price? real estate is a market - you compete with others and as in any market you cannot win if you buy worse quality at more expensive price....

apart from individual irish investors, shrewed individuals, some of whom i know personally, the big mass of irish have been acting foolishly in the overseas investments in europe. they are the one who bought in bulgaria at astronomical prices, they are the ones who buy without even visiting the actual site, they are the ones who in poor judgemnt used the capital release from their own private homes to finance dubious purchases, they are the ones take their experience in their local market and apply it everywhere... irrespective of macro/micro economics of the place they invest. that is the sad truth... and sad is how some irish sales agents are ripping off their countrymen.

am i talking to a ghost? michael c, dmmm and kneehawk, all are based in london!!!! they all support eachother!!!! they all are interested in property in a professional manner!!! they all got registered at close dates!!!

anyway, even if it is so, i am taking comfort in the fact that anglosaxons may have look in the site, read the posts above and think harder before they trust their countryman who suggests to them "investement" in polish appartments...

if in spite of that they go forward, at least they have been warned. i would have no problem in buying their property in the next 3-4 years significantly lower than the price they paid...

How many times do i have to tell you before it sinks in.I am a property investor,i am not an agent.How can you possibly call me deceptive.I have answered all of your questions.
The reason i care what happens to the Swiss Franc is because it is my money that i am investing and i am the one that is taking out the loan something you do not understand because you have probably never bought a property in your life!

I will give you a current example of one of the flats that i am about to exchange on and just for you i will keep it simple so just maybe you can grasp the facts.
The flat is in Lodz city centre,off plan with completion in over 2 years time.It is approxamately 54sqm at a price of 6300zlm2 with a deposit of 10% and a garage space at 22000zl.I have also included 15% for fit out that the bank will finance.After the 10% deposit the bank will be financing this to the tune of 371907zl.After a couple of years the interest rate on swiss Francs may well be about 3.75%, so on an interest only mortgage this will equate to a monthly mortgage of 1162zl per month.I have established that for this type of flat ,in this location i can get a rental of around 1600zl per month at present.It will be more in over 2 years time.I am more than covering the cost of the mortgage and will keep the flat for at least 5 years with the capital appreciation that this will bring over 7 years.

This development is closer to the city centre than Schleibera ,the implications of which given your previous comments you would probably not understand.

Your comment about michael c ,dmmm ,and myself is so ridiculous that it does not deserve a reply.

One other thing i will say is that Location is the single most important factor in property investment and one thing that i will agree with matey on is that some developments in Lodz are very overpriced and in less than desirable locations,as a result of this some investors both Polish and foreign will catch a cold.

ok, i see what is on here.... either you are completely a novice with the confidence and attitude of donald trump or you are pulling us a leg here...

the scenario you are describing is a sales case for agents. that is exactly, i mean exactly what they say to people, i mean this is the rosy scenario coming to life!!! are you real? its detached from reality in the city of lodz. the rent you say you can get is imaginary. i am sorry to be harsh, but generally the way you do your math is naive.

anyway, lets keep in touch. i may be buying your appartment at 4300 plz definitely in less than 5 years when your costs will be much higher any income you may get and you will be in hurry to get rid off.

ok,
if i am so naive why dont you show me the figures !

Do not even think about buying a flat in Poland nowadays.

The flats are highly overpriced since it's cheaper to build Your own house instead of a stupid flat, and many, many do! Building credit for first 7 months of 2007 is over 1,000,000,000 PLN (it's 46% more than OVERALL CREDIT from last year, so at least 4x more people will raise a loan in 2007 tan in 2006!).

Actually my mother is working as developer and I know it's much harder to sell a flat, because speculators made the prices really to high and there's no way to find people to buy these flats.

NOBODY wants the flats. You can loan the flat to students (but there's less and less students every year!) and then get cash from them, usually not more than 300-600 zl (in my city max 250 zl while 1 square meter is 6000 zl+) after 100 years or smth like that You will have Your cash back, lol.

OK, let's talk about my city.

1^2 meter flat - 6000 zl (average)
500000 zl / 6000 zl = 83 square meters flat

1^2 km = 100000 zl (depends on place, 100000 in about 20-30 kms to my city)
1^2 meter of house - 2250 zl (average)
(500000 - 100000) / 2250 = almost 180 m^2 HOUSE !!!

See the difference? It's 3x bigger NEW house than the used flat for the same cash!

And NOWADAYS flats in BERLIN are more CHEAPER than in Poland (I'm sure was few months ago). Really, much better is to find something in rich Germany (especially Bavaria wich is the richest area of EU) than in Poland, where You will sell You flats in next 10 years to Russians, because all Young Poles will have houses and the rest will work in UK, Holland, Netherlands, Spain, Italy, France, Germany or the USA.

I have been looking at the Polish market for some time and i find the rental yields unattractive. At current prices versus rents you are looking at gross yields of 5% at best. You have to strongly believe in future growth for it to make sense.

If you are looking for short term gain i.e to assign the preliminary contract before the project is completed, you have to consider that the end user buyer can only get a mortgage based on the original contarct price not on the uplifted price. So prices may have risen but you might not ne able to take advantage of them.

Hi Bigmoe,

You can now obtain a 90%--10% LTV irrespective of the original contract price.Up until a very short time ago you could not leverage ,this has changed and there are some financial products available now that will enable you to do this.I will ask my broker if she minds her email being posted on this site so you could contact her directly if you like ,and obtain a more detailed explanation.

Kneehawk,
I would very much be interested in details of how and which banks will lend to end users based on full value rather than original contract value.

Bigmoe,
Her email which she does not mind me posting is,marta@connectoverseas.co.uk
Let me know how you get on.

bigmoe, be careful with the brokers...

hi kneehawk, did you get my PM?

Hi Lodzinvest,

If you mean the one on Lodz, yes and it was sock on.