TIME FOR SOME REAL LUXURY

Being first isn't always an advantage. Developers have been claiming their residential projects deserve to be classified as luxury, but some serious new players are intent on showing the market what real luxury looks like.

There's no lack of residential projects in Warsaw being marketed as luxury. But it's only the most recent wave of such developments, most of them going online in 2009 at the earliest, which are likely to retain their top-notch status in the long run.
Developer Ghelamco has made its name in Warsaw with several office projects, but earlier this year it announced the creation of a residential subsidiary that’s taken on the renovation of two historic houses on central Foksal Street. The company is working closely with the Warsaw Conservation Office to come up with a luxury project with prices starting at €6,000 per sqm, according to Matylda King, Ghelamco's residential sales and business development director. One agent, howev-er, estimates that prices at the Foksal project could run as high as €15,000 per sqm, a revelation King doesn't want to confirm.
According to King, it's only a handful of projects - most of them still under development - that will create the market for luxury residential products in the city. "Warsaw's luxury market has hardly any history," she says. The acid test to determine whether a project fits the luxury category is whether it can retain the moniker, and the price, for the long haul.
Paweł Augustyn, board member of Spanish developer Restaura, which is currently developing the Restaura Górskiego project where prices start at €6,000 per sqm, maintains developers have only recently started to grasp that luxury projects aren't just the sum of prestigious locations plus expensive materials and appliances.
"The developers of some of the most expensive projects would deliver them and forget about them, but the real test for luxury of your building starts only after residents move in, as they expect high quality day-to-day management," he says.
What developers often forget is that all elements that make luxury -location, fit-out, apartment sizes and in-house services - must come together. "Should any problems surface with any of those elements, apartments that were sold as luxury may not bring buyers [a return on investment] if they decide to sell," says King. Having an investment just reclaimed on a luxury product is a major setback, she adds.
If the product lives up to what constitutes luxury, it's almost guar-anteed to prove a decent investment, though return estimates offered by developers and agents vary. Augustyn expects just 3 per-cent growth annually for luxury flats, well below what people were able to achieve on the mass market over the past few years.
Stephen Haigh, who leads residential projects in Poland and the Czech Republic for Quinlan Private Golub, predicts price growth will be higher, up to 10 percent. QPG is the developer behind Oakland Park, a luxury residential scheme at Konstancin just outside Warsaw, where finished houses will cost in excess of €1.7m.
A fine line can separate merely expensive residential projects from those truly deserving the tag of luxury, but that line can be hazily sub- Luxury apartments should be located in the center of town The majority of apartments sell in advances stages of development ejective. What Ghelamco and Restaura's projects have in common is that they’re relatively small. According to Mikołaj Martynuska, head of residential at CB Richard Ellis, such smaller projects will likely live up to the luxury status, and keep this status in time.
Less clear in the view of some is whether high-rise projects like Złota 44, despite its €6,000 per sqm price tag, offers the right location and privacy to its residents that luxury demands. It lacks greenery and is dominated by the concrete facades of the Złote Tarasy shopping center, the InterContinental Hotel and the Warsaw Towers, all very close to the high-rise. But what one person sees as a concrete, commercial jungle, others may interpret as a full complement of services, all within easy walking distance.
In the end, it's the sales figures that matter. Unlike the mass market, however, luxury schemes rarely sell out before completion. "Sales tend to be slow while the project is under development," claims King. "Once the product is there to see, it should speed up. Customers of luxury products simply want to see for real what they’re putting so much money into."
Magdalenka Zakrzewska, Knight Franks head of residential, fine-tunes this view. "The majority of apartments do sell in more advanced stages of development, but the most attractive ones tend to sell earlier on," she says.