Rent a one-room apartment

The domestic rental market in Poland is still dominated by one-, two- and three-room apartments. Large premises appear less often in advertisements and should be considered as a promising, but still small, segment of the market. It is difficult to hide that the greatest interest for many novice investors is one-room apartments and studios (cavaliers). This is because the overall price of the apartments listed is the most affordable - even after the 2023 increase. On the other hand, cavaliers have a higher average price per 1 sq.m. compared to large premises. Therefore, it is worth asking yourself whether renting such an apartment is really the most profitable.

The domestic rental market in Poland is still dominated by one-, two- and three-room apartments. Large premises appear less often in advertisements and should be considered as a promising, but still small, segment of the market. It is difficult to hide that the greatest interest for many novice investors is one-room apartments and studios (cavaliers). This is because the overall price of the apartments listed is the most affordable - even after the 2023 increase. On the other hand, cavaliers have a higher average price per 1 sq.m. compared to large premises. Therefore, it is worth asking yourself whether renting such an apartment is really the most profitable.

For a long time there has been a relationship according to which one-room apartments are characterized by an average higher price per 1 sq. m. m., than larger rooms. Transaction data from the General Directorate of Statistics (GUS) confirms that for the 1st quarter. m. on average you have to pay the most for a one-room apartment.

Despite the higher average cost of purchasing 1 sq. m., cavaliers for rent turn out to be the most profitable. In some places the difference in yield compared to larger apartments is significant. The higher average yield provided by renting a one-room apartment suggests that there are not enough small apartments for rent on the market.

Is renting a one-room apartment the most profitable?

Despite the higher average cost of purchasing 1 sq. m., one-room apartments and studios for rent are the most profitable. In some cities, the difference in yield compared to large apartments is significant.

Studio apartments are still the most expensive per 1 sq.m.

Those who are a little familiar with the real estate market know that one-room apartments per 1 sq. m. m., as a rule, is more expensive than other apartments. This observation is confirmed by GUS data on average housing prices. These statistics are for 2022, but their big advantage is their reliance on notarial documents. For new apartments, the difference in the average transaction price is 1 sq. m. m relative to the area in 2022 was as follows:

• up to 40.0 sq. m. - PLN 8,427

• from 40.1 sq. m. up to 60.0 sq. m. - PLN 7,471

• from 60.1 sq. m. up to 80.0 sq. m. - PLN 7,272

• from 80.1 sq. m. - PLN 7,125

Similar nationwide statistics on the secondary housing market for 2022 are as follows:

• up to 40.0 sq. m. - PLN 7,427

• from 40.1 sq. m. up to 60.0 sq. m. - PLN 6,865

• from 60.1 sq. m. up to 80.0 sq. m. - PLN 6,710

• from 80.1 sq. m. - PLN 7,202

The information above clearly confirms that statistically you have to pay more for one-room apartments and small two-room apartments (in terms of 1 sq. m.). The data also indicates that for the primary market, the price for studios is significantly higher.

Of course, we are talking about national data here. On the scale of a particular city or even district, the situation may look somewhat different. Renting an apartment can bring different returns.

However, renting out an apartment brings high profits

In connection with the above statistics, the question may arise whether renting a gentleman’s apartment is really more profitable, despite the higher price per 1 sq. m. m.. Not only the interest of investors in the smallest apartments indicates an affirmative answer to such a question. This is stated in studies calculating the rental yield of one-room, two-room and three-room apartments in individual cities.

The profit margins mentioned include, but are not limited to, two months of rental downtime each year, repair or furnishing costs, and the need to pay a one-time rental tax. After averaging the results of all analyzed cities (Wroclaw, Warsaw, Szczecin, Sopot, Rzeszow, Poznan, Lodz, Lublin, Krakow, Katowice, Gdynia, Gdansk, Bialystok) it can be calculated that the average rental rate was as follows:

• one-room apartments: 4.7%

• two-room apartments: 4.5%

• three-room apartments: 4.3%

The above results prove that, according to statistics, renting out a one-room apartment is the most profitable. Of course, you need to keep in mind the fact that highly averaged statistics are taken into account here. This suggests that there is a chronic shortage of the smallest apartments in the rental market. This situation leads to the fact that renting a one-room apartment provides a profit above average - despite the high cost of purchasing 1 sq. m. m.

In the case of Rzeszow and Wroclaw, for example, the analyzed information showed a difference in the profitability of renting a one-room and two-room apartment of up to 0.7% (in favor of the gentleman).

Sources: nieruchomosci.egospodarka.pl, nieruchomosci.infor.pl