IL Postcard
Poland’s Property Party Ain’t Over Yet
Date: 10/30/2007
October 30, 2007
Paris, France
The euro is getting stronger, and, yes, the dollar is falling. We reckon it’s going to carry on falling for some time yet, but that’s no reason to give up on Europe. On the contrary, if the dollar is going to get weaker, it makes sense to put your cash elsewhere. You can still build up a strong property portfolio here if you invest wisely—if a property is a good deal, it doesn’t matter what currency you use to buy it.
According to our contact Brian O’Brien, of Krakow Investments, this is a great time to consider Polish options:
“The Polish economy has prospered greatly over the past number of years. However ‘outsiders’ view the Polish political arena, no argument can be made for it having curtailed economic development in any measurable way. GDP and FDI continue to grow, and EU funds continue to pour in; the currency remains strong without any real fluctuations; unemployment is tumbling; the property market continues to attract investors from around the world, as well as local operators; investment in highways, airports, sports infrastructure, and hotels is set to increase exponentially in line with requirements for the European Football Championships to be held in Poland in 2012.
“Poland is legally bound to adopt the euro in the coming years under the terms of the Maastricht Treaty. It’s a case of when not if [Editor’s note: The transition is targeted for 2012].”
Krzystof Rybiński, Deputy President of the National Bank of Poland, is generally upbeat about why Poland should join the euro-zone, and says that one of the likely benefits will be lower interest rates, creating more investment opportunities, and growth in local borrowing.
The dollar has lost 17% to the zloty over the past 12 months and looks likely to fall further: the current exchange rate is $1 for 2.56 PLN. Average prices in the capital Warsaw rose by more than 50% last year to $2,620 dollars a square meter, and although some experts said the country’s apartment price rises would slow, it looks like they’ll see a 10% increase this year. I’d say there’s still time to pick out prime property in Poland and take advantage of the economic dynamism that should follow Civic Platform’s election win.
Best regards,
Maria Savage
IL's Europe Consultant