For a state that only escaped from its 'Soviet satellite status' in 1989, Poland has certainly been making the most of its new-found freedom. Its picture-perfect heritage towns have experienced a rush in construction to provide for the country's growing industrial sector and urban population, and struggling villages in the heart of the dramatic Polish countryside have been given a new lease of life by the sudden tourism influx.

Despite lagging behind the Baltics in the 2007 Knight Frank forecast for investment growth in residential property markets, Poland is tipped by savvy investors as Europe's new property hotspot. One study, conducted by the Royal Institute of Chartered Surveyors, showed a massive 58 per cent increase in the country's property prices – rising to almost 100 per cent in the popular market town of Krakow. And this is bound to bring in new foreign investment. "The Polish property market is growing hugely," says Greg Heywood, founder of UK and Polish estate agency The Step. "There is a housing shortage of 40,000 homes every year. The Polish earnings and standard of living are increasing dramatically while interest rates are just three per cent and it is possible to obtain mortgages of 80–90 per cent." Emma Holifield of property investment specialists Property Frontiers also forecasts a positive future for Poland. "According to the 'Emerging Trends in Real Estate Europe Report' released jointly by the Urban Land Institute and PriceWaterhouseCoopers, Poland should show the largest increase in residential sales across Europe," she says. "With an increasingly robust economy and within three-hour flight of London, a buyer can keep a close eye on their investment."

Experts tend to be divided over whether property in Krakow or Warsaw will yield the most return on investment. Krakow, a rapidly expanding southern Polish city with a beautifully preserved medieval core, has certainly enjoyed dramatic property price-hikes over the last few years, in part due to the burgeoning tourism industry. Last year, average house prices increased by 58 per cent in Krakow, while some property around the main square saw a virtually unprecedented 100 per cent rise. Some, however, believe that the extreme growth seen in Krakow is simply unsustainable. According to Pauline Scrace of International Horizons, the capital of Warsaw is the place to put your money. "Warsaw, the Polish capital, will always reign supreme when it comes to market standards," she says. "Krakow is actually the hardest city in Poland to get building permission, and the development returns on investment are not as great as in Warsaw and its surroundings."

Simon Tweddle, Head of Research and Analysis at Property Secrets, agrees that Warsaw property represents a sound investment. He has described the Polish capital as 'a bit like London' with the low risks associated – adding that its market is still in the process of maturing. One of the best kept Polish secrets is the port of Gdansk – a traditional cultural centre turned economic and industrial hub. Plans for the development of the city, including an airport expansion, a 38-million-euro urban transport project a new motorway and modernisation of the waste and water infrastructure, can hardly fail to affect property prices. In addition, in spite of a rash of construction all over the city, demand for new property in Gdansk still outweighs supply, making for a healthy market and offering good investment potential.
 
One of the factors that implies the stability of the Polish property market is the increasing wealth of the Polish themselves. "Wages and disposable income are fast increasing, and unemployment has plummeted in recent years from 30 per cent to 18 per cent," Holifield reveals. "In addition, the country now enjoys a very confident finance and banking system, and 80 per cent mortgages are now being offered to investors (subject to status), with tenures from 25–30 years and interest rates as low as 2.9 per cent." Poland is generally agreed to be one of the more stable of the emerging European property markets, expected to sustain significant growth for years to come.

Buying process for Polish property
Because the Polish legal system is very different to that in the UK, it is advisable to hire an experienced notary. A notary is a publicly appointed official, who acts neither for the purpose of the vendor or the buyers, although in other respects they are similar to the British solicitor. The main role of the notary is to draft legal documents, ensure that all state taxes are paid and register the transaction at the Polish land registry. You may also employ a second notary to represent your own interests – if you choose to do this, make sure that the notary has knowledge both of Polish and of British law.

Unlike the UK, it is very unusual in Poland to get an independent valuation of the property – although this is likely to change as the property market matures. Surveys are also rarely conducted, and as a result there are no licensed Polish surveyors. The alternative is to commission a report from a licensed builder, which can cost as little as £45 including translation.

Most UK banks will not lend against the value of a Polish property, so your best option is probably to approach a Polish bank direct. Polish banks will require evidence of income to proceed. Many will fund self-employed people, and buy-to-let mortgages are also available. 

A preliminary agreement will be signed at the notary's office once a price is agreed on the property. The deposit needed at this point will vary between 10 per cent (for a resale property) and 20 per cent (for an off-plan project). Time between reservation and completion is rarely more than three months, during which time the notary will carry out necessary checks and searches. At the end of this period, the purchaser is required to pay the balance on the property to the notary, who will then transfer it to the vendor.

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Article published July 2007