Despite unfavourable external factors, the real estate market has demonstrated remarkable stability across most sectors, with the private rented sector (PRS) emerging as a resilient alternative asset class, attracting 4% of investment volume. Poland has successfully attracted €5.8 billion in capital, further strengthening its real estate market. However, caution remains as market uncertainties make it challenging to surpass previous investment volumes achieved in 2021-2022.
In response to the challenging environment, the implementation of a hybrid work model is already underway, leading to flexible lease terms and changes in office space requirements. Rising inflation has resulted in higher rent indexation and increased energy costs, potentially impacting occupier demand. Additionally, there is a noticeable shift in demand for retail space, focusing on convenience and mixed-use developments, while the popularity of shopping at discounters and outlets has grown due to inflation.
Environmental, social, and governance (ESG) considerations are driving investment in green solutions across all sectors. Property owners are expected to invest more in sustainable solutions due to the surge in energy prices. Energy-efficient buildings not only reduce operational and maintenance expenses but also provide resilience against energy and utilities cost fluctuations during the ongoing global energy crisis. ESG-compliant properties attract a broader pool of potential tenants and investors willing to pay a premium for environmentally friendly assets.
Key regulations implemented in 2022 have significantly impacted the Polish real estate market. Noteworthy changes include amendments to the Construction Law, aimed at optimising the investment and construction process, and the introduction of the Electronic Construction Log to track construction progress online. The Development Act has established a Developer Guarantee Fund to protect purchaser funds, and real estate-rich companies face limitations on tax depreciation (started from January 1, 2023). Additionally, a new tax on shifted profits has been levied on Polish entities since 2022.
The remaining part of the year 2023 poses various challenges for the real estate market, including the cost-of-living crisis, inflation, increased interest rates, the war in Ukraine, and the persistent effects of the COVID-19 pandemic. Companies must carefully assess the potential impacts of these events on their financial statements in accordance with International Financial Reporting Standards (IFRS). However, amidst these challenges, the upcoming year also presents exciting opportunities in the real estate sector. To succeed in this dynamic landscape, companies should prioritize flexibility, preparedness, and adaptability to the new normal, with ESG considerations at the forefront.
At KPBL, we offer comprehensive legal services tailored to the specific needs of our clients. Our expertise covers various aspects of real estate and construction law, including representing investors in purchase and sale transactions, assisting landlords and tenants in lease and sale-and-lease back transactions, and advising developers on commercial and residential projects. We conduct thorough due diligence reviews, provide guidance on permit acquisition and administrative decisions, and offer legal counsel for structuring and financing investment projects. Our services also extend to advising on restitution claims, corporate aspects of transactions, construction issues, land use, planning, permitting, environmental matters, and drafting and negotiating necessary documentation.
Tax efficiency and security are essential considerations in every transaction and investment project. That’s why we provide expert advice on the taxation of numerous real estate transactions, such as the purchase and sale of land and buildings. We help our clients take advantage of tax investment relief for residential purposes and explore opportunities to avoid income tax when selling or transferring real estate. Our expertise also covers the recent tax on revenues from real estate ownership exceeding PLN 10,000,000, as well as determining the applicability of Value Added Tax (VAT) and its conditions for exemption. Additionally, we offer guidance on real estate tax and stay up to date with administrative court jurisprudence and tax authority interpretations to provide clients with the most relevant and effective assistance. In case of disputes with tax authorities, we vigorously represent our clients to protect their interests.
If you require official tax interpretations tailored to your unique situation, we are well-prepared to assist you. Our goal is to present compelling legal arguments that are readily accepted by the tax authorities, ensuring efficient and timely resolution of tax-related matters.
Choose KPBL for expert guidance and representation in all your real estate and construction legal matters. Contact us today to discuss how we can assist you in achieving your goals while ensuring compliance with applicable laws and maximising tax advantages.