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Eye on Krakow: Nieruchomosci - Property

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Juan King, Spanish exchange student, writes exclusively in his new CracowOnline.com weekly column “Eye on Krakow” of his experience of life in Poland.

This week:

“Nieruchomosci” - Property

When I first arrived in Poland at the beginning of the summer I had at my disposal enough wealth to buy a one bedroom apartment near the centre of Krakow. And so? I decided to wait a few months to get to know the town and be in a better position to choose in which area to buy. The consequence? Three months later I'm now struggling to find anything in my price range.

I am surprised at the rate at which the price of property is rising in Krakow - and so it would appear are the locals. Almost 1,000 apartments are being sold off-plan each day throughout the country and prices have risen by 23% in the first half of 2006. Most of the press have tended to concentrate on the hardships the potential buyers are facing in trying to get on the property ladder but precious few column inches have thus far been dedicated to the deeply-troubled property providers.

Amongst the hardest hit are Poland’s architects. A spokesman for the Krakow regional architectural programme (KRAP) stated: “The market has gone crazy. The price per square metre of the special paper on which we draw up our plans is going through the roof. Some of our suppliers have doubled their prices on us since the start of 2006. We are having to fly ink in from Switzerland in order to keep costs down.”

Another architect, who has chosen to preserve his anonymity, dismissed this as “typical KRAP”. “Yes, prices of raw materials are increasing,” he said, “but our fees are escalating at the same rate and essentially that’s all we care about.”

The architect also absolutely rejected the notion of a “Polish paper bubble” as “spurious”. As an aside he also maintained that rumours the Kaczynski administration were planning on “naming and shaming” former communist architects to prevent them from creating more eyesores would be widely welcomed but hence were not expected. According to unofficial sources, a clampdown on gay architects and use of the colour pink, however, he said, might come into force at the beginning of 2008 along with an increase in the rate of VAT on new-build properties.

But what of the developers themselves? “I simply don’t know what to do,” conceded a developer operating in the Wola Justowska district. “I have already been on holiday abroad five times this year, mainly long-haul, and I still can’t spend the money as quickly as it is coming in.” But surely the developer should be spending time (and money) on site? “Simply not necessary,” he remarks “, we are still waiting for WZ – it’s a kind of permission we need to build but I don’t know exactly what it is. Anyway, people are still throwing money at us - mainly Irish people who haven't even been to Poland - so what do I care?”

Another developer speaking on the phone from his Cayman Island holiday home reminisced: “The market’s not like it once was. It’s no longer a case of calling a few friends together to buy a few thousand square metres. It is now extremely difficult to find the money to buy new building plots. We are being forced to provide business plans to banks to raise finance. They want to know lots of details: what we are going to build, how much it will cost and what we will sell it for - I mean, crazy!”

Who knows what the future hold for the Polish property market then? Who cares - I'm already priced out of it...

Teraz Polska!

Juan King