Despite a drop in residential sales, the market remains in a state of equilibrium
25 July 2019
Developers still doing well
25 April 2019
Kazimierz Kirejczyk, FRICS
Łódź: the shining star of the development market in 2018
6 February 2019
The housing market in 2018: a thriller with a happy ending
22 January 2019
Summary of 2018 on the primary residential market
31 December 2018
Kazimierz Kirejczyk, FRICS
The housing market in Poland is in its top form. To research and to analyse the phenomena on this market have been among of our key business areas at REAS. Quarterly reports published by our experts provide crucial market indicators to the majority of players in this sector. When talking to those interested in our findings we are asked about the methodology of our monitoring reports. Most frequently we are asked about the criteria used by REAS to assign housing projects to particular market segments, as this influences average prices and forecasts presented in our reports.
The key division into segments, which is particularly important for price analyses, is carried out on the basis of price and quality. In REAS analyses, dwellings in multi-family housing are divided into two basic segments: flats and apartments. There are two sub-segments in the category of flats: low-end flats and lower-middle segment flats. The apartment segment is also divided into two sub-segments: apartments (upper-middle segment) and high-end apartments.
In order to assign any dwelling to one of these particular segments we have to consider its location and quality with regard to a residential unit, a building, as well as a grouping of buildings. We also take pricing into account as a supplementary segmentation criterion. Contrary to some other research institutes, the methodology employed by REAS does not consider floor surface as a criterion that should automatically disqualify a unit from the category of apartments.
Low-end flats constitute a vast majority of offers from developers. The basic advantage of flats in this sub-segment is their affordability.
Lower unit prices of such flats are driven by several factors. The key factor is their location on relatively less expensive plots: typically on the outskirts of cities, or in less attractive parts of central districts. Those are often developments with limited access to public services and poor transportation options for getting to the city centre and business or industrial districts (in terms of both public transport and road infrastructure).
In the low-end segment, the size of the project is not an important consideration for customers. Those are often large groupings of buildings with repetitive design and high density. Such projects are usually surrounded by similar developments. The aesthetic quality of the surroundings and the „view from the window” are of limited importance. The lack of public spaces within such a development is acceptable, just as the use of parking spaces on the outside. Common spaces within buildings are limited to a functional and legal minima.
Another factor is their construction standard. Such developments are often built with the cheapest technologies available. The choice of building and finishing materials or workmanship is driven mostly by economic considerations.
The floor surface in this category of flats is close to a functional minimum. It should be stressed, however, that over time this parameter can change due to changing customers' expectations. Usually, there is no separate walk-in wardrobe, and the interior wall height stays in the range of 250-260 cm.
Projects with lower-middle segment flats are intended for buyers looking for more attractive locations, better finishing quality, and a comprehensive offer of additional services and amenities.
Compared with the low-end sub-segment, lower-middle segment flats are usually larger for a given number of rooms (by 20-30%) and offer a little more privacy. The corridor-like layout of units in a building is not accepted, and bedrooms should not share walls with hallways and staircases (only living rooms can). These flats usually have walk-in wardrobes and are designed in such a way that they can easily be transformed into open-plan flats (if the customer expects this). Occasionally, we can come across master suite type solutions (master bedroom with a private bathroom and wardrobe).
Some taller buildings are common to have specialty flats on top floors: they are much bigger, and equipped with access to large terraces. They may remind us of „penthouses”, which are typical of the apartment segment.
As a rule, projects in the lower-middle segment are more refined architecturally than low-end developments but the quality of architecture is not a decisive criterion for including a project in this sub-segment. The size of the project is not an excluding factor, either. However, the inclusion in the lower-middle segment is always conditioned by the presence of aesthetic and functional common spaces both around the building and inside the building (entailing a professional landscape design). It is a standard solution in this segment to have lifts at the level of the underground parking. The number of underground parking spaces is not smaller than two thirds of the number of flats in the building. Each flat has its own storage space within a building. Optionally, a reception desk can be spotted: one per a building or one per a grouping of buildings. Lower-middle segment estates are usually fenced off (if allowed by the zoning permission) with controlled access.
In most cases the building and finishing materials and workmanship are in medium price and quality ranges. As a rule, solutions of the lowest quality are avoided.
Apartment projects are exceptional products, intended for the most demanding and affluent customers. Apartments are situated in prestige locations and built with the use of high-quality materials. However, functional and aesthetic qualities are not sufficient to include a project in this segment: it is the prestige that matters.
Apartments are located in central city districts and the most prestigious locations of sub-central and suburban districts. Apartment developments are usually surrounded by varied residential buildings of good quality, and possibly also by some non-bothersome non-residential structures. The only accepted annoyance for an apartment project is the vicinity of busy urban roads (but even if this is the case the ambient noise should be limited by appropriate technological solutions). Good transportation options for getting both to the city centre and prestige business districts, as well as easy access to public services, are also crucial aspects of the location.
The style and the density of development are important characteristics of this category. The density is usually moderate, although some centrally located high-rise buildings can also be qualified as apartment projects. An apartment development should feature an original, attractive architectural design. Moreover, in the case of bigger estates, individual buildings should remain independent and quiet. External finishing should at least in part utilise quality materials (stone, high-grade ceramics, custom-made architectural details). Large glazing surfaces are also typical of apartment projects.
A reception desk combined with a spacious, presentable lobby is a standard feature of apartment projects. Even low buildings (less than four floors above the ground level) are fitted with lifts. Apartment estates and buildings usually have 24-hour security guards and video surveillance of common spaces. In bigger developments, the residents frequently have access to on-site recreational facilities, such as swimming pools, saunas, fitness rooms, or tennis courts.
Floor surfaces of apartments are often similar to those of lower-middle segment flats. However, they usually feature a separate walk-in wardrobe and an option to have an independent, well-lit kitchen. In apartments with three or more bedrooms, master suite isa standard solution. Some units can have bay windows or winter gardens but the most common solution are large balconies or terraces. The walls inside apartments are usually at least 275 cm high.
One of the most important criteria is building technology. Apartment buildings are constructed with the use of traditional methods and high-grade, healthy materials (with an exception being some centrally located high-rise apartment buildings). Natural stone, stainless steel, brass, high-quality wood – these are used widely. The building and finishing workmanship is also of the highest standard and based on customised interior and architectural detail designs. It is more and more common to fit apartments with air-conditioning and modern technologies, for instance smart home systems.
Only a few projects countrywide offer the highest standard available, entailing the use of all (or almost all) of the state-of-the-art technologies and the most prestigious sector practices. Among the 3,000 apartments completed in 2009-2014, approximately as many as 400 were classified as high-end apartments. Currently, there are around 300 apartments of this kind under construction.
Locations for high-end apartments are characterised by very attractive surroundings. The vicinity of attractive green areas (park, forest, river, lake, sea) or historic districts (e.g. the old town of a city), as well as convenient access to cultural and social life centres. Access to public transport or road connections with business districts seems to be less crucial. Window views of high-end apartments usually embrace wide panoramas or elegant squares and streets.
High-end apartment developments feature great and unique architectural designs from distinguished architects. The exterior finishing is marked by expensive materials such as stone, glass, and decorated with custom-designed architectural details of stainless steel, bronze or brass.
Floor surfaces of the majority of units in this segment exceed 100 square metres. As a rule, minimum surfaces for different rooms are used, usually much larger than in the other market sub-segments – e.g. bedroom: ca. 20 sq. m, living room: ca. 30 sq. m. As a rule, the number of bathrooms equals the number of bedrooms, and the kitchen is a separate and well-lit room with an option for a separate pantry room or a utility room. A high-end apartment frequently has a large square-like hall. A wardrobe room (or even several of them) is a must. Master suites are standard at any premium apartment. Wall heights usually exceed 300 cm.
A development in this sub-segment offers a wide range of additional services. Its residents can use both a standard reception service and also have access to concierge services, minor repairs, cleaning services, etc. Underground parking spaces are designed to accommodate bigger cars. High-end apartment buildings offer storage spaces for various sports equipment (surfing boards, bicycles, skis). Additional parking spaces for visitors and a driveway for taxis are also frequent. You may also come upon car wash services located at the underground car park. There are extensive common spaces. On-site recreational facilities, such as swimming pools, saunas, fitness rooms and tennis courts, are standard. One can also have business meeting rooms or leisure rooms (mini cinema rooms, etc.)