2013: Tough to beat

Alt text
description One of the largest transactions in the office market was the sale of the Atrium 1 complex in Warsaw for €94 million
Image : Skanska

The volume of real estate transactions stood at €3.4 billion in 2013, the highest figure since before the crisis. The score may be hard to repeat

by Beata Socha

Transaction volume on the real estate market reached €3.4 billion in 2013, 26 percent higher than in 2012 when the volume came in at €2.75 billion, according to a report by Jones Lang LaSalle. “This is the highest value since 2006, when the transaction volume reached €5 billion,” Agata Sekuła, JLL’s head of retail investment CEE said.

Big foreign input

Foreign investors accounted for some 94 percent of total volume in 2013, with the majority of them being global funds, e.g. Blackstone, Atrium and Allianz. German investors (RREEF, Union Investment, Invesco, IVG, Allianz) came in second followed by British (LCP, Tristan Capital Partners, SEGRO) and US capital (WP Carey, Hines, KSP and Lone Star).

how the cake was cutThis year will likely see lower real estate transaction volumes than in 2013.

“Last year set the bar really high and this year’s transaction volume could be slightly lower,” Michał Stanisławski, capital markets consultant at CBRE said. “Investor sentiment and their appetite is strong. The influx of capital will not go down, particularly from the Far East and the US,” Stanisławski added.

According to Michał Puch, head of office & industrial investment at JLL, “Taking into account transactions already in progress, we expect that this year’s transaction volume on the Polish commercial real estate market can be close to last year’s result and reach around €3 billion.”

Smaller cities

There is no doubt that money is coming to Poland but is there anything left to sell?
“We have seen a number of high-volume transactions in 2013. There are few large schemes left on the market which may shift focus to other opportunities,” Stanisławski explained.

With limited supply, the demand for Polish real estate may well put smaller cities on the map, particularly in the retail segment, which continues to attract capital.
“Smaller cities used to be outside the scope of interest for core investors. But that has changed. Now, they are looking at them,” Stanisławski added.

Yields compressing

Prime office yields are currently estimated at around 6.25 percent, but could see some downward pressure throughout 2014. Similarly, warehouse yields are expected to inch down over the course of the year from their current value of a little under 7.75 percent for prime assets in the segment.
Meanwhile, retail properties are expected to maintain their current yields, with 5.75 percent for the best class properties.

 

 

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