The fast-paced development of Warsaw’s property market has reshaped the skyline of Poland’s capital city since the country opened up its economy after the collapse of Communist rule in 1989.

Today, a bystander on one of the city’s bridges over the Vistula river will see modern towers such as the Zlota 44, designed by Polish architect Daniel Libeskind, which surrounds the rocket-like Palace of Culture and Science, one of the most iconic and controversial symbols of the country’s communist past.


On the other side of the river, the brand-new National Stadium glitters in the distance and not far from it the redbrick warehouses and chimneys in the blue-collar area of Praga are being refurbished to make room for the city’s growing service sector. And much more development will hit the market in coming years, says Pawel Dębowski, a partner at law firm Dentons in Warsaw and head of the firm’s European real estate group.

Q: Why do you see further space for development in the local property market?

A: If we look at how many square metres the Warsaw market has, and compare it to the importance of the city in Poland and the whole region, it is obvious Warsaw will keep developing. Most European capital cities are home to around 10% of their country’s population. In Warsaw we have only 2 million people [around 5% of Poland’s population]. Thus it is inevitable that the city will grow.

Q: What makes Warsaw’s property market unique?

A: The property market in Warsaw is unique because of the big volume of investments it attracts and its dynamism. The country is still developing and people’s disposable incomes and standard of living are continuously improving. In the early 1990s people would move to Prague or Budapest because the quality of life there was very good. Here in Warsaw the quality of life caught up and, today, the price and quality that the city offers are fantastic.

Q: At the same time, some segments of the property market, in particular the office segment, see a massive pipeline of projects under development. Is it getting close to a limit?

A: There is a lot of space coming onto the market but the take-up remains strong and sustainable. Warsaw does not attract a lot of back-office operations because of the higher cost of space [than in other cities across the country], but it still retains all the law firms, banks and consultants because it is the capital city. And new tenants are coming. Despite much scepticism, the Warsaw Spire [a new tower being developed on the verge of the central business district (CBD)] is almost filled up.

We can definitely see a trend of local and international companies moving to more modern space. They are sort of playing musical chairs as they move from one space to another, so that their old space becomes vacant, eventually cheaper and new tenants move in. Many of these firms first went to Mokotov, a neighbourhood south of the city centre that was among the first industrial areas to be redeveloped in the 1990s, then Mokotov became very congested and they are now going back to the CBD.

Q: Rents have been falling for a few years now. Will they keep falling?

A: Rents are close to their bottom. Outside the CBD rents can be as low as 12 euros per square metre, which means effective rents are at around 10 euros per square metre. They have fallen by around 40% in the past 10 years or so. Developers cannot really build any cheaper than that. The space that is now vacant will be absorbed in a couple of years, at least in the CBD, and then rents will bounce back. 

The market as a whole appears quite polarised today. In Mokotov yields are around 7% and rents close to 12 euros to 14 euros per square metre; in the CBD yields are at 6%, maybe even below 6%, and rents in the higher teens/low 20s. This means that those markets finally got established: the city centre as the market for prime space, Mokotov and more recently Wola as the place for B-class locations with cheaper rents, but still quite high quality rents.