Appetites remain strong

Rodno 1 Image : Shutterstock

Nearly €1 billion worth of real estate assets were sold in the first quarter in Poland. Prime assets, albeit increasingly scarce, are still in demand, but investors are also looking elsewhere

by Beata Socha

The real estate market is past the recovery stage and expansion seems to be in full swing, at least judging by the amount of money coming into Poland. With some €940 million in investment volume, Poland accounted for 69 percent of the total value of real estate sale and purchase transactions concluded in the CEE region in the first quarter, according to data collected by JLL. The whole CEE market generated €1.37 billion in such deals, recording a 19 percent increase year-on-year.

The office segment accounted for 56 percent of the CEE’s total deal volume. Retail transactions accounted for 29 percent, while logistics (9 percent) and hospitality (6 percent) made up the remainder.

Top three

The largest transaction in the first quarter of the year was BlackRock’s sale of the Rondo 1 office scheme, located in Warsaw’s CBD, to Deutsche Asset & Wealth Management for some €300 million.

“The pace at which these top-class centers are delivered to the market may not match the demand.”

The biggest deal to close in the retail segment in Q1 was the sale of Poznań City Center by Trigranit, Europa Capital and PKP to the consortium of Resolution Property and ECE Fund. The amount was not disclosed, but market sources estimate it at some €250 million.

Image : ECE Projectmanagement

Image : ECE Projectmanagement

The logistics market saw the sale of Panattoni Park Wrocław and Panattoni Park Błonie I by Standard Life to Hillwood. All three of the largest transactions were recorded in Poland.

Back on track

According to market experts, in terms of investment volumes 2014 will likely be at least as good as last year, when the transaction volume exceeded €3 billion.

“Looking ahead, we will witness increased momentum relating to cross border portfolio and platform opportunities. This activity of scale supports the view that CEE investment volumes for 2014 are on track to match or even exceed the impressive 2013 levels,” said Troy Javaher, JLL’s head of capital markets, CEE.

Poznań City Center was sold for some €250 million, according to market sources

Poznań City Center was sold for some €250 million, according to market sources

Investors’ radars are still tuned in to the prime segment. “In the office market, we may witness more transactions of prime schemes in Warsaw and other major markets. … In the industrial sector, investors’ attention will still be drawn to A-class facilities in major logistics locations secured with long-term lease contracts,” said Agata Sekuła, head of retail investment, Central Europe, JLL.

Unlike in the office segment, investors are looking for retail assets all over Poland. “As for the retail segment, investors will not only look for various products located in Poland’s major regional cities but also further afield in the country’s smaller towns and cities,” Sekuła said.

Casting a wider net

The reason for expanding scope is the scarcity of prime retail assets on the market. Most of the top offers have already been sold and new ones take time to develop.

“The pace at which these top-class centers are delivered to the market may not match the demand. As a consequence, that will further increase the pressure on yields rendering the purchases more expensive,” said Leszek Sikora, managing director of ECE Projektmanagement Polska.

Accordingly, investors will have to consider other options. With the prime segment nearly dry, they will likely focus on the next-best thing.

“There is a group of properties available that have to be redeveloped, revitalized, commercially restructured and could be profitable if properly managed. I think we will see a number of transactions adopting this rationale in 2014,” said Joanna Kowalska-Szymczak, investment director at Kulczyk Silverstein Properties.

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