1. Warsaw

The capital of Poland, Warsaw, lies almost in the centre of the country. Traces of settlement date back to the 10th century, but it wasn't until the 14th century that a town developed. In the 18th century, Warsaw flourished and became a famous centre of the arts. In 1830, Russia seized control of Poland and governed until the start of World War I. When the war ended, Warsaw became a thriving capital again. Badly bombed in World War II, it remained under Soviet domination until 1989. Today, it's a modern, bustling metropolis with an exciting diversity of attractions including theatres, museums, chic shops, as well as the Royal Castle and painstakingly restored palaces. Residential property prices have risen by more than 25 per cent in the last year. Demand and prices for two-bedroom apartments now rise faster than those for large, luxury apartments near the centre. A small, centrally located two- bedroom studio apartment costs between £25,000 and £30,000, while a fully furnished luxury two-bedroom flat within 10 minutes' walk of the old town costs around £335,000. More than 40 per cent of new flats in Warsaw are located in Ursynow and Bialolek, the fastest growing markets in the city. Other prime locations include Ochota, Saska Kepa, Upper Mokotow and Old Zoliborz.The average rents for city-centre apartments are between £5.70 and £8.40 per square metre.

2. Gdansk

Lying midway along Poland 's northern coastline, Gdansk is the largest city in Northern Poland . It began life as a small fishing village in the 9th century, and by the 14th century had transformed into a major trading port. The arrival of the German community from Lubeck in the early 13th century influenced the town's development for the next 700 years. The city was annihilated in World War II, but was rebuilt and has retained a medieval feel. Today, Gdansk is one of Poland's key commercial cities, manufacturing a diverse range of products, from ships to sugar. Property prices in Gdansk rose steeply prior to joining the EU in May 2004, because people expected big returns on their investments. In the latter half of 2004, supply outstripped demand and prices stabilised. However, the market is expected to pick up again in 2005.

Centrally located properties sell for an average of £690 per square metre, while new developments fetch an average of £875 per square metre. The suburbs command even higher prices, at over .£1,000 per square metre, since land is in short supply and there's a demand for greenery and seaside locations.

Returns on an average two-bedroom rental apartment are around £320 to £480 per month.The prime location for renting and selling property is the main town area of the city.

3. Krakow

Krakow lies near the southern border and was Poland's royal capital for 500 years. As such, it has a more colourful history than any other city in the country. The town evolved around the Wawel castle during the 11th century, and by the 16th century it was a centre of culture and commerce. Today, Krakow is home to 2.5 million works of art and has Europe's oldest, and Poland's largest, university. The medieval city centre is a World Heritage site.

Krakow escaped serious damage during Wo rid War II, so it has retained some 6,000 historic buildings and monuments. Today it's a lively metropolis where tradition blends comfortably with modern culture.

The record numbers of tourists visiting the city each year (up 20 per cent in 2004) means that the short-break accommodation market is very buoyant, and with low-cost flights to Krakow's International Balice airport, prices are set to rocket. Popular areas include the old town and Kazimierz.

Residential property prices have risen an average of 25 to 30 per cent in the last year, but are still about 66 per cent cheaper than those in Warsaw. A two- bedroom apartment close to the city centre costs around £60,000 to £70,000, while a two-bedroom flat within a five to 10-minute walk of the centre costs about £50,000. Further out of town, prices continue to fall, and they vary according to property type and condition. Generally though, in popular areas such as Wola Justowska, property sales average £850 per square metre.

4. Zakopane

Tucked into the foothills of the Tatra mountains, Zakopane is Poland's prime mountain and ski resort. The town evolved during the 17th century, but really flourished during the latter half of the 19th century, when it became a favourite destination among tourists and artists. Its popularity hasn't waned, and today around two million people visit each year. Apart from its natural beauty, Zakopane's appeal lies in the range of outdoor activities available, including hiking, cycling and skiing in the Tatras National Park. Main visitor attractions are the pre-WorldWar II cableway and funicular railway. The town's hub focuses around Krupowki, a trendy street lined with bars, cafes and restaurants offering cheap local cuisine. Property in Zakopane is affordable, and offers good returns as the range of activities in the area attracts visitors all year round. With budget flights into nearby Krakow, the tourist boom is certain to continue.