According to Otodom data, investing in rental properties in Poland’s most significant cities is much less profitable than in smaller ones. The difference in the rate of return is surprisingly high. Does buying a flat for rent in Warsaw or Krakow no longer make sense?

Investing in real estate in large cities is becoming less and less profitable.

Investing in an apartment for rent in a large city is often less profitable than in a neighbouring smaller town. The difference in the rate of return can be dramatic, amounting to up to 3 percentage points, even when a large and small city is nearby.

Lower Silesia is a perfect example. According to Otodom Analytics data from April 2024, the rate of return (ROI) on investment in an apartment for rent in Wrocław was 5.65%. Meanwhile, for Legnica, it is 7.44% and for Wałbrzych, 8.39%.

This is a significant difference, especially since the average investment in real estate for rent (5.65%) in Wrocław may be less profitable than purchasing a treasury bond. The three-year Treasury bond in June 2024 offers a yield of 6.20%, and the 10-year bond even 6.80% (in the first year).

Bytom or Katowice? A surprising result.

Otodom Analytics analysts estimated that the ROI on investing in a rental property in Katowice is, on average, 5.82%. In the case of Bytom, it is 8.10%; for Ruda Śląska, it is 7.93%; and for Zabrze, it is 7.62%.

The slightly more distant Gliwice and Tychy also record a higher average rate of return than central Katowice, 6.90% and 6.82%, respectively.

A similar situation occurs in Pomerania. In Gdańsk or Gdynia, you can average an annual rate of return of 5.45% and 4.75% on an investment in an apartment for rent. However, in Elbląg, it is 7.20%, which is more.

Large cities usually have low rates of return on rental investments

The largest Polish cities offer a relatively low rate of return on investment in a rental apartment. In the case of Warsaw, it is 5.55%, but for Krakow, it is 4.87%, data from Otodom Analytics show. In Rzeszów, it is 6.21%; in Poznań, it is 5.48%; in Białystok, it is 5.34% and in Kielce, 5.35%.