Is buying apartments for rent no longer profitable? An interesting voice in the discussion
Investing in a rental apartment is no longer profitable. How did this happen?
Offer prices on the primary market increased very quickly year by year, according to NBP data for the first quarter of 2024. In Warsaw, from PLN 13,302 to PLN 16,191 per 1 sq m. This is an increase of 21.7%.
For the 7 largest housing markets (Gdańsk, Gdynia, Kraków, Łódź, Poznań, Warsaw, Wrocław) prices increased from PLN 11,919 to PLN 14,155 (18.7%).
Although transaction prices were lower by almost 10%, as in the case of Gdańsk, in the largest cities their dynamics was greater than that of offer prices. In Warsaw, prices changed from PLN 12,803 to PLN 15,888 (24.1%). For 7 cities from PLN 11,327 to PLN 13,500 (19.2%).
– Rents have increased slightly, but not as much as apartment prices on the primary market – says Kuba Karliński, founder of Magmillon and author of the book “Let's make money on real estate”, in an interview with MarketNews24. – An apartment in Warsaw generates an annual rate of return on investment of 4%.
With the basic NBP reference rate of 5.75 percent, and the Monetary Policy Council will almost certainly not decide to reduce it this year, loans are expensive. If the apartment is on loan, you actually lose money on rent.
Investing in commercial premises has become much more profitable. Purchasing 2 micro commercial premises for rent for PLN 224,000 net each instead of one apartment makes more sense.
– The rate of return on renting such premises will be twice as high as renting an apartment – comments K.Karliński from Magmillon. – In good locations it can be as much as 10 – 20 percent. annually.
