New Polish planning act brings major changes to spatial planning and the real estate market

The real estate market in Poland is set for significant shifts following the enactment of the new Planning Act on 24 September 2023. This legislation, aimed at streamlining and standardising spatial planning processes, will have a direct impact on developers, investors, and local governments, particularly affecting industrial project investments. The new law seeks to enhance transparency, shorten procedures, and align spatial plans with real development needs, while also introducing fresh challenges and restrictions. Jacek Szkuta, Director of the Land Department at AXI IMMO, sheds light on what the market can expect as these changes take full effect by 2026.

Current Issues in Spatial Planning

The existing spatial planning system is primarily governed by three documents: provincial spatial development plans, municipal development studies, and local spatial plans. However, the lack of legal standing for development studies allowed for land development condition (LDC) decisions that often contradicted long-term strategies, leading to urban chaos. As a result, municipalities have struggled with disorganised development, particularly in cases where non-industrial areas were used for industrial projects.

New Rules: General Plans

Under the new law, general plans will replace the current condition studies, bringing more precision and accessibility to planning processes. Municipalities that currently lack comprehensive local master plans must adopt them by 1 January 2026. These plans will dictate local development and zoning decisions, limiting the flexibility seen in previous years. Existing local development plans will remain in force until they expire.

“Local general plans will define planning zones with clear parameters such as development intensity, building height, and biologically active areas,” explains Jacek Szkuta. “This will reduce the possibility of arbitrary interpretations by officials and impose a five-year validity period on LDCs, curbing land speculation and pushing for quicker project execution.”

Development Addition Zones: A New Approach

A key feature of the new law is the introduction of development addition zones, designed to encourage infill development in existing built-up areas. Each municipality will be required to establish such zones based on urban studies, allowing for a variety of functions, from residential to industrial uses. For the industrial sector, this marks a significant change, as LDCs outside these designated zones will be restricted.

Exceptions to this rule will allow for some flexibility in reconstructing or expanding existing buildings. Moreover, LDCs issued before the law comes into force will not be subject to the new five-year expiration rule.

Integrated Investment Plan: A New Tool for Investors

While the new regulations introduce stricter zoning rules, they also offer tools to facilitate investment projects. The integrated investment plan (IIP) allows investors to negotiate project conditions with municipalities, provided the projects align with general plans. This new mechanism replaces the previous “Lex Developer” law and applies to all types of investments, not just residential.

“The integrated investment plan enables faster project implementation through cooperation with municipalities, with investors covering infrastructure costs,” says Szkuta. “This law encourages better space management and long-term strategic planning, but also requires flexibility from investors and effective management from municipalities.”

Impact on the Industrial Investment Market

The new regulations offer both opportunities and challenges for the industrial real estate sector. On the one hand, greater transparency and predictability will benefit investors, providing clearer guidelines and potentially reducing wait times for planning permissions. On the other hand, limiting land development outside designated zones could shrink the pool of available land, driving up competition and prices in key locations.

For those opting to use the IIP, there is an opportunity to develop more complex projects in areas not traditionally earmarked for industrial use, provided they can meet infrastructure requirements.

“The 2023 Planning Act introduces reforms that will improve investment predictability and streamline spatial planning,” concludes Szkuta. “While the changes present opportunities for increased transparency and administrative efficiency, they will also challenge the market by limiting available land for new projects, particularly in the industrial sector.”

Source: AXI IMMO