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Developers' hunger for land. Changes are coming to agricultural plots in cities

Głód ziemi ze strony deweloperów. Szykują się zmiany ws. działek rolnych w miastach

The housing crisis is in full swing, a problem that affects not only Poland but all of Europe. While seeking another election as President of the European Commission, Ursula von der Leyen assured that this would be one of the priorities of her future term. She even proposed appointing a commissioner for housing, who would solve the housing crisis, which is constantly growing.

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Horrendous housing prices

In Poland, there is talk of a deficit of 1 to 2 million apartments. The government is looking for a way to streamline the construction of new premises to calm down demand a little, and to make real estate purchase prices a little more realistic. It is worth recalling the horror prices from the first quarter of 2024, which were still rising. According to Bank.pl, apartments from the primary market were still the most expensive in Warsaw, where an average of PLN 17,500 had to be paid per m2 in the first quarter of 2024. Kraków was in second place with a price of over PLN 16,000 per m2, and Gdańsk closed the podium, where a m2 of an apartment costs almost PLN 15,000. The cheapest new apartment in the past quarter could be bought in Gorzów Wielkopolski (over PLN 7,000 per m2), Zielona Góra (almost PLN 7,500 per m2) and Opole (PLN 7,700 per m2).

70 million zlotys from a developer for an agricultural plot in Warsaw

How heated the market is is also shown by the price levels of land for housing development. In July, the media reported a record sale in Warsaw's Ursus district. The developer paid a mere 70 million złoty for 3 hectares. At that time, everyone was calculating how much they could earn on such agricultural land left for agricultural use, how much on subsidies, and generally there was discussion whether it was even appropriate to sell the patrimony for this price.

Business does not like a vacuum and therefore will fill with housing estates the three hectares which, although still agricultural, were situated within the city limits.

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Developers about agricultural plots

As we read in propertynews.pl, Tomasz Kozak, board member and director of Commercial Investments at Profbud, points out that changing the regulations regarding agricultural land in cities may significantly increase the supply of apartments, which is crucial in the face of the growing demand for new premises.

– Currently, the lack of available land for development is leading to an increase in property prices and restricting housing development. The release of agricultural land will allow for an increase in available investment areas, which will contribute to price stabilization and improved housing availability. Greater land availability will enable the implementation of a greater number of projects, which will benefit the entire property market – explains Kozak.

However, it points out that the transformation of agricultural land should be carried out taking into account environmental protection and the needs of local communities.

Jesika Mackiewicz, Business Manager Portfolio Warsaw at Matexi Polska, points out that the development industry has long been calling for changes that would increase the supply of land for residential construction, including changes regarding agricultural land in cities.

– Removing them from the protection of agricultural laws will make it easier to change the status of an agricultural plot to a building plot. Thanks to this, land that has so far been subject to restrictions will be released for investment activities, increasing the supply of land on the housing market – says Mackiewicz.

She also emphasises that changing the regulations may slow down the growth of land prices in cities, which will result in lower housing prices, which is the main goal of the proposed regulations.

Buying land is a challenge

Piotr Pietrzak, Expansion Director at Unidevelopment, points to the difficulties associated with the current regulations, which significantly complicate the turnover of agricultural land in cities.

– The current provisions of the Act on the shaping of the agricultural system significantly complicate the trade of agricultural land in cities. Land with an area of 3,000 m2 to 10,000 m2 is subject to the right of pre-emption, implemented by the National Support Centre for Agriculture, and the trade of land above 1 ha is almost impossible – explains Pietrzak.

Changing the regulations could therefore help revive the market and increase the supply of land, although Pietrzak notes that general plans may pose a challenge, as they may limit the possibilities of developing some areas.

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The industry is waiting for changes

Karol Dzięcioł, business development advisor to the management board at Develia, assesses the proposed changes as positive, but notes that the effects will only be visible in the long term.

The process of preparing them for the implementation of the development will require many months of work, which will ultimately translate into an increase in the supply of new apartments in a few years. In my opinion, the change in the regulations regarding agricultural land in cities will have a stabilizing effect on apartment prices and will allow for meeting the demand needs of the population, but only in the long term – says Dzięcioł.

It also points to the risks associated with locating agricultural land on the outskirts of cities, which may generate additional social costs.

A similar opinion is expressed by Katarzyna Unold, Managing Director at Acciona in Poland, who emphasises that the new regulations may result in an unfavourable trend of “sprawl” of peripheral districts.

– It is worth noting, however, that these regulations may cover, in addition to urban areas with infrastructure, also areas on the outskirts of cities, which would result in an unfavourable trend of 'sprawl' of peripheral districts – notes Unold, adding, however, that the company is waiting with hope for the final shape of the new regulations.

Dawid Wrona, Chief Operating Officer at Archicom, also points to the benefits of simplifying procedures and changing the status of agricultural plots to construction plots.

– The draft amendment will soon be submitted for public consultation. The possibility of purchasing and easier reclassification of agricultural land for construction will affect real estate prices and increase their supply, which will undoubtedly be beneficial for the market – says Wrona.

However, it emphasises that for the new regulations to bring the expected results, their introduction should be accompanied by the improvement of administrative processes.

Magda Kwiatkowska-Świstak, legal counsel at Ronson Development, also sees the potential of the new regulations to support urban development.

– The project of releasing agricultural land located within the administrative boundaries of cities, which the Ministry of Development and Technology is working on, is an initiative that may have a positive impact on the housing market – says Kwiatkowska-Świstak.

He points out, however, that this is only a new proposal, the future of which will be closely monitored.

The industry needs to simplify administrative processes

Małgorzata Ostrowska, Marketing and Sales Director at JW Construction, emphasises that the simplified de-agriculturalisation procedure will reduce the time and administrative costs associated with preparing the investment for implementation.

The change in the regulations concerning agricultural land in cities may have far-reaching consequences for the housing market in Poland. The simplification of the procedures for de-agriculturalization and the introduction of the principle of tacit consent to change the purpose of land from 2026 will certainly accelerate investment processes – explains Ostrowska, adding that in the long term this may lead to stabilization of demand and supply.

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