The Surprising Resilience of Warsaw
By Andrzej Tokaj, Penteris
In a world seemingly teeming with traps, and brimming with stumbling blocks, finding an elegant solution to the challenges we are all now facing can seem like a labyrinthine task. However, the solution could actually be simpler than might be expected.
Although social distancing, economic slowdown and financial instability have become the seeming norm, this is not the first time we have witnessed chaos and it certainly will not be the last. There are specialists, cities, and sectors that are now surprising us in their resilience to the pandemic.
The fourth industrial revolution that is around the corner or indeed has already commenced with accelerating speed will result in many structural changes, one of them likely be lower trade in goods as a share of the global economy. In addition, this year’s unprecedented experience proves that many people can move out from their city lodgings and still retain access to the local job market.
Real estate seems to be a key sector and also is often regarded as a traditional form of investment; now it might not be unwise to consider cashing in.
The recent UBS Global Real Estate Bubble Index 2020 demonstrates the precariousness of our current situation. The risk-free and safe bets have always been cities like Zurich, Amsterdam and Paris yet the UBS report tells a different story.
Powerhouses like Munich and Frankfurt are on the brink of boiling, bubbles that could burst at any time. The Covid-19 economy is ready to reap the rewards of a previously inflated economy, yet move several hundred kilometres to the east and the outlook is brighter and the pastures greener.
Warsaw, the very real hub of Central and Eastern Europe, appears to be a safe haven according to the UBS report which places the ‘phoenix’ city in the ‘fair-valued’ category, on a par with the prime locations of Singapore, Milan and Dubai.
Unlike the others, Warsaw is a dark horse, a city that many ignore with low-risk, stable yields, and the security of the European Union behind it, this is a city geared for success.
Poland’s capital has been on the radar for some time already. Even if prices have increased significantly over the last few years, levels remain below those reported in 2008. For Warsaw to become included in the exclusive UBS report that lists only 25 prime investment global hubs marks the long road the city has taken from parvenue status to aristocratic club.
Few know that Warsaw was obliterated during WWII. Completely and utterly wiped off the face of the earth. To make matters worse, the iron curtain that “descended across the continent” to divide Berlin in two encompassed Warsaw in its entirety for fifty long years. Yet shortly after the war, a gargantuan operation began to rebuild the entire capital city. Its resilience, and determination gave rise to the “phoenix from the flames” moniker.
This bouncebackability gives hope in times of hopelessness. Recent murmurings of a possible Polish veto to the EU budget and political perturbations are in stark contrast to the reality on the ground. A recent Pew Research Center survey shows that Poles of all EU citizens feel most favourable towards both EU, and have the greatest confidence in its future for the next generation. The newest August 2020 Eurobarometer confirms this optimism amongst Poles.
As recently as May 2020, Bloomberg made the incredible announcement that Poland was the most resilient economy to Covid-19 in the EU. The recent “Real Estate Market Mid-Year Outlook 2020” CBRE report claims that Poland’s strong fundamentals will allow it to recover quickly. It will take Europe two years to return to pre-pandemic investment levels but Poland half a year less.
It is this kind of resilience, optimism, and positivity that we are all looking for today. As the engine behind the country’s real estate market as well as its cultural centre, (few realise that it attracts more international students than Berlin) a 21st century Warsaw also offers tangible returns.
Caught in today’s choppy seas, investors might find respite in the calm waters of Warsaw.
Andrzej TokajGGI member firm
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Published: December 2020 l Photo: Aleksander - stock.adobe.com