Report E-VALUER INDEX 2018 ENGLISH

ANALYSIS OF THE TRANSACTION PRICES AND FORECAST FOR THE RESIDENTIAL MARKET PRIMARY AND SECONDARY MARKET E-VALUER INDEX TABLE OF CONTENTS E-VALUER INDEX 2018 INTRODUCTION 3 ANALYSIS OF THE RESIDENTIAL MARKET IN 2017 4 RESIDENTIAL MARKET IN POLAND PRICES, TREND, FORECASTS 6 WARSAW 7 CRACOW 10 WROCLAW 12 POZNAN 14 TRI-CITY 16 LODZ 19 KATOWICE AND SELECTED CITIES OF SILESIAN AGGLOMERATION 21 REGIONAL CITIES 23 ANALYSIS OF THE BUILDING PERMITS 24 CONSTRUCTION COSTS OF DEVELOPMENT INVESTMENTS 25 THE MARKET OF NEW APARTMENTS TO LET 26 MIESZKANIE PLUS (APARTMENT PLUS) 32 FORECAST 2018 34 DESCRIPTION OF EMMERSON EVALUATION’S ACTIVITIES 35 2 INTRODUCTION Dear Readers,Dear Readers, We wouldWe like would to present like to you present the ffth you edition the ffth of editionE-VALUER of E-VALUER INDEX, our INDEX, annu -our annu- al report onal report the residential on the residential market in market Poland. in Poland. Once again,Once some again, record some high record numbers high numbershave been have recorded been recordedon the resi on- the residential market.dential Demand market. forDemand apartments for apartments continues continues to be high, to coupled be high, with coupled with an increasean inincrease supply. in This supply. situation This issituation refected is refectedin higher inprices higher of pricesapart- of apartments onments the primary on the and primary secondary and secondary market, as market, well as as in well the rateas in of the their rate of their PRICESPRICES sale, which,sale, in mostwhich, cities, in most was cities, faster was than faster in the than previous in the year.previous In our year. report, In our report, we attemptwe to attempt analyse to the analyse most importantthe most important factors afecting factors the afecting current the mar current- mar- The analysisThe includes analysis includesdata on datatransactional on transactional prices. Please prices. note Please that note thatket situation ket andsituation identify and the identify directions the directions and trends and that trends may, that to the may, greatest to the greatest a transactiona transaction price is a priceselling is pricea selling only price which only was which provided was providedfor in a no for- in aextent, no- afectextent, the afect residential the residential market in market the future. in the Taking future. into Taking account into theaccount the tarial deedtarial at the deed stage at theof preliminary stage of preliminary or fnal contract. or fnal contract. practice adoptedpractice inadopted previous in publications,previous publications, we refer towe price refer medians, to price whichmedians, which in our opinionin our refect opinion the refect situation the onsituation the residential on the residential market much market better much better MEDIANMEDIAN than averagethan prices. average prices. The analysisThe coversanalysis the covers largest the residential largest residential markets inmarkets Poland. in Due Poland. to the Due to the In this reportIn this medians report of medians real estate of real transaction estate transaction prices have prices been have used. been used.spatial diversityspatial ofdiversity large urban of large agglomerations, urban agglomerations, the report the analyses report pricesanalyses prices Median (theMedian so-called (the so-called„middle-value „middle-value dividing a dividing set into atwo set equal into two parts) equal parts)and trendsand also trends for individual also for individualdistricts. districts. refects informationrefects information regarding regarding real estate real prices estate in pricesbetter inway better than way av- thanThis av- yearThis we haveyear we re-examined have re-examined the rental the market rental for market new apartments.for new apartments. erage becauseerage its because amount its is amount not afected is not by afected single byfgures single signifcantly fgures signifcantly In addition, In weaddition, have enrichedwe have ourenriched report our with report aspects with that aspects are important,that are important, deviating deviatingfrom the frommajority the of majority transactions of transactions typical of typicalthe entire of the set entire(such set (suchespecially especially from the investor’sfrom the investor’s point of view, point such of view, as the such pace as ofthe investment pace of investment as, for example,as, for example,the purchase the purchaseof one high-end of one high-endproperty). property). sale, supplysale, and supply demand and ondemand the developer on the developer market and market construction and construction costs costs In this report,In this all report, prices allare prices per 1 are sqm per usable 1 sqm area usable of an area apartment of an apartment of new apartments.of new apartments. (PLN / sqm).(PLN The / sqm). primary The market primary refers market to refersgross prices. to gross The prices. report The was report We wasencourage We encourage you to read you this to report.read this If youreport. have If you any have questions any questions or would or would preparedprepared on the basis on theof almost basis of 90,000 almost transactions 90,000 transactions that took that place took placelike to obtainlike to a moreobtain detailed a more analysisdetailed of analysis a given of topic, a given as welltopic, as as a well study as a study in 2017. in 2017. covering anothercovering scope, another please scope, contact please us. contact us. Dariusz Książak,Dariusz Książak, Robert Korczyński, Robert Korczyński, Michał Mrowiec Michał Mrowiec The ManagementThe Management Board Emmerson Board Emmerson Evaluation Evaluation Sp. z o.o. Sp. z o.o. 3 ANALYSIS OFAnaliza THE RESIDENTIALrynku mieszkaniowego w 2017 r. MARKET IN 2017 2017 was another year of a record supply on the residential market. An increase in the number of apartments sold compared to 2016 was recorded in most of the major Polish agglomerations. A particularly high share of newly introduced apartments in the ofer of developers was recorded in Lodz, Katowice, Wroclaw and Warsaw. Moreover, in 2017 investments were sold faster than in the previous year. Despite the record high supply refected in the number of apartments put up for sale by developers, the increase in demand for apartments still remains dominant. This situation is particularly visible on the markets in Tricity, Cracow and Warsaw. The continued high demand for apartments translated into a general up- ward trend in their prices, both on the primary and secondary market. On the frst one, price increases in some locations amounted to as much as 10-15% of the amount paid by buyers in 2016, which is why in many locations on the primary market it is becoming more and more popular to conclude purchase agreements already during the construction phase, or even before the commencement of construction works. In most agglomerations the pace of sales of new apartments was increasing. In 2017, developers were able to count on contracting the purchase of nearly every second apartment in new developments at their initial stage (even before the open shell was completed). The prices of second-hand apartments also increased signifcantly, but their increase did not exceed 10%. The only city where prices grew faster on the secondary market than on the primary market was Poznan. 4 After Warsaw and Cracow, which invariably occupy the second and third Among the new trends in construction, investments in modern, high stand- place respectively in the ranking of the most expensive cities in terms ard dormitories have become more and more noticeable. To a large ex- of prices of new apartments (Sopot has been the leader in this respect tent, they are created through the renovation of old, no longer operation- for many years now), the fourth place in 2017 belonged to Gdansk, which al, industrial and technical buildings. Such investments are carried out, advanced by as many as two places compared to last year’s E-Valuer report. for instance, in Cracow, Lodz, Sopot or Warsaw. Even earlier they had ap- The median price of residential units on the developer market in Gdansk peared in Lublin and Wroclaw. The market for condo hotels is still growing in 2017 was PLN 6,719 per square meter. In comparison, in 2016 it amount- as it was not hampered by the new regulations on the minimum size of resi- ed to 5,792 PLN per square meter. It was Tri-City that recorded the biggest dential units. They most often take the form of commercial premises, as there price increases compared to the previous year, where in the already men- are no regulations for the minimum usable area specifed in the regulation tioned Gdansk prices grew on average by 16%. Prices of new apartments of the Minister of Infrastructure and Construction. Such units may be devel- in Gdynia and Sopot increased by nearly 10%. Besides Tri-City a similar in- oped in the form of micro apartments of as little as 15 square meters. crease (9%) could only be observed in Lodz. Another interesting trend observed on the real estate market in 2017 is the The dynamic development of the primary market stimulates growth also growing interest in luxury apartments. Developers who have completed this in the secondary market. In a situation where there are few ready newly built type of investment have recently boasted of record-breaking transactions. units, the demand is partly shifting towards the secondary market, which often ofers apartments located in more attractive locations than the newly Availability of land for new investments and the increasing construction built ones. None of the locations included in the E-Valuer report recorded costs are becoming more and more of a problem for the developer industry. any decrease in the median prices of second-hand apartments. Warsaw, Prices of land that could be used for multi-family residential development Sopot and Cracow were still the most expensive cities. The fastest growth are also breaking new records.

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