With plots in the city becoming more and more pricey and difficult to obtain, developers are increasingly turning their eyes to the capital's numerous swathes of unused post-industrial land, preparing investments that will in effect create new residential districts and help revitalize some of the city's most neglected areas.
Grand plans
Pirelli Pekao Real Estate's plans to build a huge residential complex in the capital's Bielany district have been rumored for some time, yet only now has the company confirmed it has purchased land in the area. The developer has announced that the scheme will be a joint initiative of Pirelli Real Estate, Grove International Partners and Lusigest, which have 34-, 51- and 15-percent stakes in the property respectively, with Pirelli Pekao Real Estate being responsible for the realization of the investment.
A preliminary concept of the land's development, prepared by the APA Kuryłowicz & Associates architectural studio, calls for the completion of approximately 8,400 units. But Pirelli Pekao Real Estate has revealed that its Italian mother company had signed deals allowing for a considerable extension of the project in the future.
"Pirelli RE has signed deals by virtue of which, after the fulfilment of certain conditions, the project can be extended within the next two years to include neighboring land totalling 1.7 million sqm. The transaction will allow for increasing the residential space by another two million square meters. In this way, one of the largest initiatives on the European real estate market would come into being," said the developer in an announcement to the press.
Projects galore
Pirelli Pekao Real Estate's Bielany investment will only be one of a number of new residential schemes expected to be erected in the capital's post-industrial areas. The so-called Żoliborz Przemysłowy area alone, located in the vicinity of Warsaw's ul. Powązkowska, ul. Krasińskiego and ul. Broniewskiego, offers 66 ha of land on which some 10,000 units could potentially be constructed. Robyg has already started a residential project called City Apartments there and a number of other investors including Acciona, Atlas Estates and Turret Poland have announced their plans to build apartments in the area. Altogether, from 15,000-20,000 people are expected to move into Żoliborz Przemysłowy when its area is developed.
Thousands of new apartments are also expected to be built in the Wola district's Odolany area, where Polish State Railways and arms producer Bumar own a few dozen hectares of land earmarked for residential developments, as well as at the intersection of ul. Kasprzaka and al. Prymasa Tysiąclecia where residential space will be furnished on an eight-hectare plot formerly housing the VIS factory. Schemes of a comparable scale will also be realized in the vicinity of ul. Ostrobramska in the Praga Południe district and ul. Kolejowa, ul. Przyokopowa and ul. Sienna in Wola where Pirelli Pekao Real Estate and Pro Urba, respectively, will develop sizable pieces of post-industrial land.
Urban planning
Due to their size and inevitable impact on the city's landscape, extensive residential projects covering many hectares of land present an opportunity to bring modern urban tissue to some of the most devastated city areas. However, those projects create the danger that sizable portions of the city will be badly laid out when the developer's intention to densely develop their plots, and thus maximize profits, takes precedence over the public interest of having proper city infrastructure. In the case of large projects such as Pirelli Pekao Real Estate's Bielany investment, close cooperation between the developer and city authorities is inevitable.
"Such a large area [90 ha] requires the drafting of a local spatial development plan. I cannot imagine this kind of investment to be realized on the basis of issuing consecutive decisions on the conditions for the [land's] development," said Tomasz Andryszczyk, a spokesperson for the city of Warsaw. "The procedure of drafting a local spatial development plan has already started and the investor can and should cooperate with the city on its preparation," he added.
According to Andryszczyk, the plan will have to include such facilities as kindergardens and schools, and its provisions will have to be strictly adhered to in the implementation process.
"A large investment that is realized by one investor gives the investment a chance to be coherent in terms of architecture and urban planning. The city will certainly be keen to see the post-industrial area become a modern, coherent part of the city and not another huge housing estate devoid of social infrastructure," said Andryszczyk.
Market optimism
From the developer's point of view, the realization of a large residential project inevitably raises the question of the investment's profitability in a time when the housing market seems to have entered a stabilization phase and many analysts now predict a considerable decrease in apartment prices. According to Ryszard Danielewicz, president of the board of Pirelli Pekao Real Estate, however, the fact that the Polish residential market is far from being saturated practically makes new investments bound to succeed.
"According to data published by the Ministry of Infrastructure, the Polish residential market suffers from the shortage of approximately 2.5 million apartments. Some five to 10 percent of that figure, from 125,000-250,000 units, are in Warsaw. [The data shows] that new residential projects are indispensible in Warsaw," said Danielewicz. He added that the planned Pirelli investment will be realized in the next 15 years and thus its ultimate profitability should not be affected by short-term market adversities.
Jarosław Szanajca, president of the board of Dom Development, a company that has developed Marina Mokotów, one of the capital's largest existing residential projects, pointed out that developers of a huge residential scheme can considerably reduce investment risk by means of a careful market analysis and diversification of their offer. According to Szanajca, the Marina Mokotów project was successful partly due to its broad range of products that were well suited to existing market trends.
"Each residential project should fulfill certain functions determined by the current market needs, trends and location. Marina Mokotów is a project that responded perfectly to the needs of a large group of clients offering a broad range of products," said Szanajca.
