International activity boosts Poland Investment Market

Foreign money continued to dominate Poland’s commercial real estate investment market in Q1 2012, which recorded a total transaction volume of ?728m, 21% up on Q1 2011, according to Savills research. The international real estate advisor notes that non domestic investors accounted for over 98% of transactions in Q112, with US, Austrian, German and UK investors leading the way. With a strong start to 2012 the firm expects year-end investment volumes in Poland to reach a similar level to 2011 at ?2.5bn.

The retail sector accounted for nearly 80% of the quarter’s total transaction volume, according to Savills data. The largest deal was a single transaction of mixed-use property Zlote Tarasy, including 66,200 sq m (712,571 sq ft) of retail and 47,300 sq m (509,133 sq ft) of office space in central Warsaw. A further significant retail transaction was the acquisition of 25,000 sq m at Alfa Centrum in Olsztyn by Rockspring Property Investment Managers from Arka Property Funds for ?84m.

Michal Cwiklinski, Head of Investment at Savills Poland, says: “We have seen a strong start to 2012 with continued interest from foreign investors, particularly in retail assets. These international buyers are attracted to Poland’s above average GDP growth and the country’s high consumer confidence making it an appealing market to invest in, both in the capital as well as major regional cities.”

Savills data reports two office transactions in Q1 2012, excluding the Zlote Tarasy sale, both in Warsaw’s central business district (CBD), and the firm expects investor focus in this sector to remain on the capital. Poland’s industrial sector recorded one investment transaction in the first quarter, the sale of 10 properties and one development site by Prologis to Hines Global REIT for approximately ?92.8m.

In terms of yields, Savills reports that the prime office yields in Warsaw’s CBD stand at 6.00 - 6.25%, or 6.75% for prime offices in the non-central locations, while major regional cities are currently 7.50%. Industrial yields in Poland are at approximately 7.50 - 7.75% and in the retail sector prime yields have remained stable at 6.00% for shopping centres in major regional cities, with leading galleries in smaller cities standing at 7.00 - 7.50%. The firm expects prime yields in all sectors to remain stable in 2012.

Michal Stepien, Senior Consultant in the research team at Savills Poland, says: “Warsaw continues to be a key draw for investors and we expect prime offices in the capital to remain the most sought after product on the market. We also anticipate a rise in warehouse investment due to an improved occupational market.”

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