The war in Ukraine has hindered progress on NREP’s residential projects in Poland, but the long-term outlook for the market remains positive, according to the group’s chief investment officer Jani Nokkanen.
After 15 years of real estate investing in the Nordics, NREP entered Poland last year where it is seeking to leverage opportunities within the company’s two largest business areas: logistics and rental housing.
NREP has opened an office in Warsaw and established a Polish team, which plans to realise the construction of around 1,000 residential and micro living units in Poland’s biggest cities: Warsaw, Gdansk, Poznan and Wroclaw.
Providing an update on the plans at Expo Real, Nokkanen said that construction had been delayed due to the war in Ukraine. Many Ukrainians working on construction sites in Poland had to go home to fight, he explained. In addition, the white clay used for making bathroom tiles and normally sourced from Ukraine was temporarily not available. Compounding these issues were higher inflation and interest rates in Poland.
Yet, despite these setbacks, Nokkanen is confident about the long-term success of the Polish venture. ‘The Poland residential market will follow the same trend as other markets. Young people want to rent and are not ready to buy yet,’ he said.
The group is partnering with YIT, a listed Finnish developer, on the residential projects. Said Nokkanen: ‘We wanted to work with a company that has experience in the market, since we are new at it.’
The NREP investment chief noted that Poland is ‘way behind in sustainability’, an area where the Nordic group is a pioneer. Political risk – due to Poland’s fraught relationship with the EU – is another factor to contend with, he said. ‘The Polish government has to deal with this if they want foreign investors to continue to do business in Poland.’