Real Estate Investment Trusts („REITs”) are specialized entities listed on the stock market which provide for an alternative form of making investments in real estate. Having originated in the USA, REITs are meant both for small and large investors, as they facilitate passive (not requiring active actions of the investor) and low-cost capital investments within properties sector. Their expected introduction into Polish legal system could positively reshape the whole real estate market, especially considering that similar regulations have been successfully adopted in numerous other states many years ago.
Investing in real estate is still a dominant trend in Poland
Real estate sector in Poland is constantly growing, as Polish residential properties remain a top investment asset for Polish individual investors.
In 2023, the average price of a residential property on secondary market in Poland has increased by around 90% compared to 2015.
Source: Own elaboration based on: Polish Central Statistical Office, Obrót nieruchomościami w 2023 roku. Informacja sygnalna, page 3, graph 3 (access as of 9th April 2025).
In recent years the average transactional price per square meter of a residential flat from primary market in Warsaw has constantly been on an upward curve, i.e. it has risen from PLN 7,965 in Q1 2018 to PLN 15,896 in Q1 2024, meaning the average 12,37% price increase per year (compared with Q1 of the previous year) in 6 years[1].
Constant price increase of residential real estate is being supported by consecutive governmental housing programs.
Individual investors currently face numerous challenges on the real estate market
Although individual buyers are eager to invest, the high-value entry threshold makes the real estate sector unattainable for majority of them. This results from the fact that there is no legal framework for REITs in Poland. Polish investors interested in passive income from rental need to acquire the entire property, which is simply too expensive.
Current challenges for individual investors:
- high entry threshold,
- limited options to invest in commercial properties,
- lack of sector-related knowledge,
- limited rental management capacity.
REITs are not regulated in Polish legal system, so currently they cannot be established in Poland. There are some alternative legal vehicles used for real estate investing (e.g. investment funds), however comparing to REITs they are not attractive from perspective of individual investors and their market share in Poland is insignificant.
There is a large demand gap on the market in terms of passive investment in properties. This gap could be filled by REITs which has been noticed by Polish government.
Future REITs regulation in Poland
In Poland, legislative process on REITs regulation is currently ongoing. Full draft act on REITs is still not available, however, Polish Ministry of Economic Development and Technology announced key legislative assumptions of Polish REITs regulation:
- REITs will be regulated and supervised by Polish SEC Authority (PL: Komisja Nadzoru Finansowego),
- REITS will operate in legal form of a joint-stock company with a minimum share capital of PLN 100M (roughly EUR 24M),
- REITs will be listed on stock market,
- at least 90% of REIT’s income should have source in lease or sale of properties located in Poland (commercial or residential),
- at least 90% of REIT’s income shall be distributed to shareholders in form of dividend,
- preferential taxation rules shall apply to REITs (tax rate 10% - no tax obligations for investors),
- admissible Loan–to–Value ratio will amount to max. 50%.
Legislation on REITs is being currently prepared within Ministry of Economic Development and Technology in cooperation with Ministry of Finance. Further details will be probably shared by the end of Q2 2025. After preparation of the draft act, the legislation procedure in Polish parliament is going to commence.
Based on market situation, one may predict that Polish REITs will be very popular investment vehicles among individual investors in Poland.
REITs will offer numerous opportunities for the investors
Main advantage of REITs is opening the properties sector to masses of investors having smaller amount of funds at their disposal.
Further advantages of REITs:
- low entry threshold and investment costs,
- high liquidity of investment,
- possibility to invest in various types of properties and wide portfolio of properties,
- no necessity of self-managing the real estate and bearing related costs,
- possibility of receiving dividend payment.
