We are now approaching the end of a cold and snowy winter, even by Krakow standards. Unsurprisingly, both the rental and sales market have been quiet during the winter, though we can already see rising levels of interest in the market as spring approaches.

A recent poll conducted by KRN.pl, a leading Polish real estate portal, Krakow is the number one destination in Poland in terms of attractiveness for real estate investment. Krakow scored 31.6% of the vote, a long way ahead of Warsaw (21.8%) and Wroclaw (12.4%).

The issues which were holding back buyers in the market this time last year – falling prices, difficulty in obtaining bank financing – are now less evident, and most analysts believe 2010 will be a turning point for the Polish real estate market. Sales and rental prices in Krakow have been relatively stable since around the 2nd quarter of 2009, and little change in prices is expected this year as supply from the end of the boom years is exhausted.

We believe that 2010 represents an excellent opportunity to purchase in Krakow before prices begin to rise again. This particularly applies to apartments on the primary market direct from developers. Not only is there a good selection currently for sale, there is still the opportunity to negotiate on prices, and buying new apartments in a completed development is inherently less risky than buying off-plan.

In economic news, GDP in Poland is expected to rise by 2.6% in 2010, according to a recently revised forecast from the European Commission. The recovery is expected to be driven by exports, which are benefitting from a rebound in external demand and delayed positive effects of a weaker Polish zloty. This FX effect is projected to be less of a driver during the course of 2010, replaced by stronger domestic demand.  Investment is also expected to recover slightly during 2010, reflecting strong public spending in capital expenditure, mainly provided by structural funds from the European Union. It was recently announced that Poland (together with the Czech Republic and Slovakia) will receive up to an additional 3bn EUR in structural funds from the EU in the period 2011-2013 as a result of higher than expected GDP growth.

Following a big fall in the value of the zloty during the worst of the global financial crisis in late 2008 and early 2009, mainly over concerns regarding the whole Central and Eastern European (CEE) region, the zloty has appreciated against all major currencies as analysts and investors recognized the relative strength of the Polish economy in comparison to its neighbors. Currently, the zloty is trading at just under 4 PLN / 1 EUR, approximately 2.9 PLN against the USD and better than 4.5 PLN against the GBP.
Inflation in 2010 is expected to be at a level around 2.5%, while at a recent meeting of the monetary council of the National Bank of Poland, interest rates were kept on hold at a historic low of 3.5% and are not expected to rise much, if at all, in 2010.

The offer of PKG Real Estate continues to grow, with almost 300 properties (rentals and sales) currently active on our website, together with an increasing number of 0% commission properties for sale direct from local developers. Watch this space for more news and offers from PKG Real Estate in 2010.