Longer administrative procedures for obtaining building permits are reshaping the residential land market in Warsaw

– Warsaw is seeing an increasingly noticeable shift in the valuation of land designated for residential development. Traditionally, a plot’s attractiveness was determined primarily by its location, purchase price, and development potential. Today, the ability to move efficiently through the investment process has become just as important. In practice, this means that land with a clear planning status and a valid building permit is becoming increasingly valuable. For years, the market rewarded bold investment decisions. Developers that actively acquired land and capitalized on the uninterrupted rise in property prices earned a premium for taking on additional risk. However, this model is no longer as effective. The current market environment requires much greater selectivity and a thorough assessment of investment risk – says Damian Karkosiński, Investment and Acquisitions Specialist at Walter Herz.

This shift is not accidental. It is the result of administrative procedures that have been consistently taking longer for years and have become one of the key factors affecting the profitability of residential developments carried out by developers in Warsaw.

Walter Herz’s analysis, based on data from the General Office of Building Control (GUNB), shows that Warsaw currently records a historically long waiting time for building permits for multi-family residential developments. The average time between submitting an application and obtaining a building permit has now reached around 18 months.

Data from the last ten years points to a steady deterioration in the situation. – In 2016, the average time required to obtain a building permit for a multi-family residential project in Warsaw was around 82 days. By 2025, it had increased to 488 days – more than a fivefold rise. The trend is even more pronounced when amended building permits are excluded. In that case, the average processing time increased from 88 days in 2016 to 531 days in 2025 – says Damian Karkosiński.

Walter Herz’s analysis also shows that the pace of change has accelerated significantly over the past two years. The average permit processing time increased by around 30 per cent in 2024 and by a further 35 per cent year on year in 2025.

– The extended process of obtaining building permits for residential projects in the Warsaw market, which now takes up to a year and a half, is no longer merely a formal stage of the investment process. A building permit is increasingly becoming an asset in its own right, gaining tangible market value of its own – acknowledges Katarzyna Tencza, Transaction Director at Walter Herz.

Building permits as a scarce asset

Although regulations generally provide for a one-month period for issuing building permits in standard cases and a two-month period for particularly complex proceedings, the reality is quite different. In the case of large-scale multi-family residential projects, the administrative process from the submission of an application to the point at which construction can begin currently takes, in extreme cases, two or even three years.

The extension of these procedures is driven by a number of factors, including the need to supplement documentation, environmental approvals, road and infrastructure-related issues, the involvement of neighboring parties, the suspension of administrative proceedings, and appeal procedures. The average waiting period of approximately 18 months for the issuance of a decision reflects the entire, complex administrative process.

In practice, this results in a longer investment preparation cycle, higher land financing costs, and a reduced number of new projects entering the market. Consequently, the supply of new homes is constrained, with completed residential units often being delivered two to three years later than they otherwise would be.

As Damian Karkosiński points out, developers and private equity funds are now redefining their land acquisition strategies, increasingly focusing on sites covered solely by a Local Spatial Development Plan (MPZP). Investor activity is often speculative in nature and typically serves one of two objectives: increasing the value of the land by obtaining a building permit (PnB) and selling the asset at a premium within a two-year horizon, or strategically expanding a land bank. As a result, price competition is no longer limited to projects that are ready for immediate development. Instead, it increasingly centers on the most promising locations already at the planning stage.

At the same time, the number of residential building permits issued in the Warsaw land market has declined significantly, from a record 281 in 2017 to just 143 in 2025, of which only 112 were newly issued permits.

Project feasibility and investment certainty are becoming key value drivers

The growing unpredictability of the administrative process is fundamentally changing the way development land is valued. Valuation is no longer based solely on a site's planning and urban development parameters, but increasingly on the likelihood of successfully delivering a project within the anticipated timeframe and budget. In other words, the value of development land is becoming increasingly dependent on project feasibility.

– While traditional criteria such as location, acquisition price, development potential and expected investment returns remain important, they are no longer sufficient to assess the attractiveness of a development site. Land valuation is now also influenced by the stability of the regulatory environment, the timeline of administrative procedures, the availability of technical infrastructure and utility connection capacity, transport accessibility, as well as environmental and social risks –  says Katarzyna Tencza. – In practice, this means moving away from valuations based solely on a property's planning parameters towards a comprehensive assessment of a project's overall feasibility –  she adds.

For many years, Warsaw has faced a shortage of attractive development land. The sites that remain available are becoming increasingly expensive while also presenting greater regulatory, environmental and infrastructure-related challenges.

Capital is becoming increasingly concentrated in assets that offer greater certainty throughout the investment process. The strongest demand is for land covered by a Local Spatial Development Plan (MPZP) or benefiting from zoning decisions, with sites holding final and legally binding building permits attracting particular interest. These have become the scarcest and most sought-after assets in the market today.

At the same time, the market is increasingly discounting properties whose future planning status remains uncertain, particularly in light of the introduction of new general plans. Warsaw's residential land market has reached a turning point. Developers and investors are taking an increasingly selective approach, carefully assessing which sites will retain their development potential once the new general plans come into force and which may lose it.

The limited supply of land with a clear and secure planning status has made land prices remarkably resilient to economic cycles. In Warsaw's most prestigious locations, transaction prices have already exceeded several thousand PLN per square meter of gross residential floor area (PUM), while the cost of land acquisition can account for as much as one quarter of the final apartment price.