Institutional rental market in Poland: Dynamic development despite adversity


Elevated interest rates, legislative changes, low availability of land, and stagnation and decline in rental prices are among the most frequently mentioned challenges identified by key market participants, which can significantly affect the budding institutional rental sector. In the first half of 2023, the institutional rental market recorded a small number of transactions – only two. Both transactions concerned the purchase of newly constructed buildings. Compared to the end of 2022, the number of apartments under construction fell by 23%. The number of apartments planned for construction increased by 30%, indicating that investors are keen to continue developing their institutional rental portfolios and that the market’s economic fundamentals remain sound. These findings come from the “Institutional Rent – After a Breather, Time for Ambitious Plans” report.

Due to the early stage of the PRS (Private Rented Sector) market development in Poland, financing structures available are quite conservative compared to those seen in Western Europe markets. As the market develops, and with further successes in commercialization, and hence, the change in market perception by financial institutions, future financing conditions might gradually loosen. According to PwC Poland research, 50% of respondents would like to secure debt financing in EUR. Unfortunately, banks, in order to minimize currency risk, finance the PRS sector primarily in PLN, even in the case of borrowers belonging to foreign capital groups. A foreign currency tranche is sometimes included in the financing structure, provided part of the revenues is denominated in that currency. The main issue for investors currently remains high interest rates and project owners’ price expectations.

“Our cyclical report sums up the first half of 2023 on the PRS market in Poland. We present the current market situation (focusing on eight of the most active cities), the transactions concluded, and market comments from investors on the operational aspects and areas related to the debt financing of projects. I am pleased that this issue has been supported by the PwC Debt & Capital Advisory team, which allowed us to present a comprehensive overview of key debt financing issues for PRS projects,” says Kinga Barchoń, PwC Poland partner and team leader for real estate market services.

Warsaw, at the end of the first half of 2023, offered about 6.5 thousand rental units with an additional 5.8 thousand under construction. In Wrocław, the market is dominated by Vantage Rent, which owns 1,149 apartments and Resi4Rent with 571. In Kraków, by the end of the first half of 2023, there were almost 1.9 thousand rental units, which is a significant growth compared to the end of 2022 (+52%).

Despite the dynamic increase in the number of rental units in Krakow, the number of investments under construction is also increasing, indicating a high interest of investors in expanding their portfolio in the capital of Malopolska. At the end of the first half of 2023, 3,280 apartments were under construction, four entities accounted for 90% of new housing resources: LifeSpot (1,086 apartments), Resi4Rent (873), AFI Europe (530), Heimstaden (479).

At the end of the first half of 2023, Poznań had about 1,400 existing units. Poznań’s PRS resources are dominated by Vantage Rent (826 units) with a 59% share. Investments under construction cover 1,380 new units.

In the Tri-City, the number of available units increased (+104 units), but there are no new units under construction. At the end of the first half of 2023, there were 988 units which were in the portfolios of 5 entities. New projects are planned by Resi4Rent, which would increase the number of available units by about 1,300.

Lodz saw a dynamic increase in the number of available units over the first half of 2023 (+122%) – with 1,228 available units by the end of June. This dynamic growth is due to the completion of a LifeSpot project at Wroblewskiego 21, which provides 674 apartments.