Poland - Commercial Real Estate vs Residential Property?
In the United Kingdom we are used to thinking of complexes as either residential, retail or commercial. In Poland the big retail and commercial centres do exist but on almost every residential development part or all of the ground floor is designed and built for offices, shops or services.
It's an historical idea from a time when car use was much less prevalent and providing the essential amenities on each estate made good sense. Today residents may have cars but they still need a small food shop, nursery, language school, bank or any number of other services for which a car journey would be an unnecessary trial.
Most modern developments are gated but if the complex is not large enough to support the commercial units they are often flipped to face the streets outside thus serving both the residents in the blocks and those in the surrounding neighbourhood.
Polish agents rarely point commercial units out to foreign buyers, and foreign buyers rarely ask about them, but they can offer better yields, lower costs over the long term, less demanding and more stable tenants and capital gain that is every bit as promising as the residential apartments on the upper floors.
Yields, in fact, can be as much as twice those for residential apartments as the cost of purchasing is low and the businesses that use the units are often extremely profitable. If you are seeking capital gain and an immediate cash flow then it is well worth investigating this option before signing the reservation form on a residential property.
Also, as most new developments in Poland are finished to a shell state buyers also need to budget for the fit out and, in residential units, the majority of the financial burden comes from kitchens and bathrooms. In commercial properties the bathroom is usually small or simply a WC so the cost of taking a unit from shell to rentable or sellable is much lower.
With less "kit" in the property there is obviously less to go wrong over the long term. No washing machines to break down, wardrobes to damage, mattresses to replace and so on. Commercial units are an ideal, low maintenance buy to let option.
In residential apartments most tenants are ultimately looking to buy their own place when they can afford it and so the turnover of people passing through is inevitably high. Commercial tenants, on the other hand, are there to stay and their motivation is to build a stable business. A longer lease - over a five or ten year period - is much more common than with residential tenants.
Even if they do decide to move out, it is in their financial interest to try and sell or lease their business as a going concern, especially if it is retail or service related, and so the chances of landlords experiencing vacant periods are much lower.
Finally, if you buy your unit in an area popular with holiday makers, such as Gdansk or Zakopane, and only rent it to a tourist related business, this comes under the "second home" rule which means you do not have to apply for a purchase permit from the government. A café clearly aimed at tourists, bicycle or ski rental, or a shop with beach goods are all good potential and leave the investor free to buy another property elsewhere.
At a time when the herd is heading for residential property, those who understand the cultural difference in the way Polish developments are designed are more likely to achieve a better return both now and in the future and experience less hassle over the long term.
=========================================================== For solid, reliable and unbiased advice on buying property in Poland get Tim Hill's essential printed guide at ==> http://www.bookshaker.com/product_info.php?products_id=195 ===========================================================
Tim is Mamdom.com's Operations Director managing a team of consultants who help foreign buyers identify and purchase suitable Poland property opportunities for investment, development and relocation. As well as speaking regularly at seminars on the Polish real estate market his comments are often quoted in the domestic and international press. Tim is married and currently lives with his wife, Agnieszka, in the Polish city of Lublin.
Source: http://ezinearticles.com/
Added: March 20, 2008
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