Real Estate Today and How Developers Meet Demands

Developers recorded a more marked increase in activity in the offices of real estate issuing building permits this year. From the beginning of the year to the end of June, they received permits enabling the construction of more than a hundred thousand apartments, which translated into an increase of 47% in the first half of 2020 – individual investors received building permits in this period for 60,386 single-family houses.

In total, Polish offices issued 171,468 permits in the first half of the year, which was a result of 40.2 percent – higher than the one achieved a year ago, and looking at the two previous years not tainted by the pandemic effect, i.e. 2019 and 2018, the increase was 32.9%.

The Cause of Pandemic over Real Estate:

According to the JLL report, 19.5 thousand units were sold in the second quarter in the six main markets in Poland.

In most cities (except for Warsaw and Wrocław) the average prices of newly introduced flats to the market increased compared to the previous quarter. In Krakow, the increase was 10% and 7% percent. In Wrocław, the average price of new supply fell by 9% compared to the previous quarter.

The increase in prices is due to the accumulation of two key factors. On the one hand, complications in obtaining building permits and launching new investments in real estate for sale result in a significant reduction in the offer and encourage developers to raise the prices of apartments that are still for sale. On the other hand, growing and implementation costs are difficult to foresee in the long term.

This tendency encourages developers to increase provisions for sudden cost rises in budgets of commenced investments and other real estate. For the first time, a very unusual phenomenon can be seen: a large part of developers slow down rather than accelerate sales.