Sunday, 17 April 2022 12:37

Did the increase in rental rates increase the demand for flats?

pixabay pixabay

Do increases in rental prices affect the demand for apartments? Is the group of people investing capital in real estate for rent increasing? Are developers considering entering the PRS market? Which companies are preparing projects with apartments for rent?

Yes, investment funds' interest in package rental housing purchases has increased significantly in recent weeks. Last year, we announced that, as part of the diversification of the product offer, we would start the construction of apartments offered under PRS. The company signed two letters of intent related to its involvement in this market segment and started negotiating the terms of sale of real estate in Warsaw and Wrocław. In addition, we have selected several other projects that we offer to investment funds as part of package purchases.

In response to the needs of tenants, we implement new design standards that guarantee functional solutions for residents and the best possible returns for investors. Activities in this area will be financed, inter alia, by from the funds obtained from the sale of commercial assets. The company's goal for 2022 is to provide 600-800 apartments under PRS.

100% sale Robyg's stake by Bricks for TAG Immobilien AG, one of the leading rental housing companies in Germany, which was finalized on March 31, 2022, prompted us to analyze our land bank and allocate a portion of it to rental housing (PRS). TAG already bought Vantage in Poland two years ago, and in 2022 we plan to combine the activities of both companies. As a result, the consolidated group will become the largest residential developer on the Polish market and set a new standard for PRS. Our goal is to have 20,000 apartments for rent by the end of 2027 and at the same time we plan to continue selling 2,500 apartments per year.

The rental market is currently bouncing back. Following the weakening that has been evident since the outbreak of the pandemic, the demand for rental housing is growing, and so is rental prices. The share of individual investors thinking about renting also increased compared to the market. It should be remembered that the market itself decreased significantly in the first quarter of this year.

In 2022, we will develop the second, parallel pillar of our activity, the institutional market segment, where we want to deliver 3,000 apartments for rent in Warsaw, Wrocław and Poznań by the end of 2025. Until then, our land bank in the PRS segment will be secured for approximately 5,000 units.

Yes, the increase in prices on the rental market has increased the interest of our investors. We are seeing an increase of 30 percent. combined with a relatively low offer of available premises. This translates into significantly better profitability of investments in premises for rent. Our company is open to various types of cooperation and considers various markets, including PRS.

Buyers who have cash in these times of rising inflation have no better option than investing capital in real estate for rent. At present, however, it is too early to talk about whether the company will decide to enter the PRS market.

The increase in rental rates on the rental market stimulated the appetite for small flats. The increase in prices and interest rates as well as the influx of emigrants resulted in a revival of the demand for small space. Investments in real estate still remain a profitable form of capital investment. Especially in FIQUS Marcelin, we note such purchases, also bundled, with a view to renting. This is due to the good location and well-arranged housing, and these two factors are the greatest magnet for investors who invest capital in real estate.

In our opinion, the institutional rental segment will grow very quickly over the next few years. Modern apartments for rent, managed by a professional company, are a trend that should be present in Poland a long time ago. As a developer, we look at the functioning of institutional funds and we do not exclude this type of cooperation. Meanwhile, we listen carefully to signals from the market, preparing an offer for further investments, tailored to the needs and capabilities of buyers.