With the widespread uncertainty surrounding interest rates and inflation, real estate investors adopted a wait-and-see approach in the first half of 2023. The total volume of transitions came in at €802 million for the first six months, according to CBRE data, signifying a 70% drop compared to the first half of 2022. Even if we acknowledge that last year’s volume was boosted by a record-breaking sale of the Warsaw HUB to Google, the figures remain lukewarm. The second quarter was even weaker than the first, with an investment volume of a mere €150 million – the weakest since 2004.

Local investors 

Interestingly, while global investors remain cautious about Poland’s real estate, local capital is less reluctant. As much as 60% of the investment capital came from Europe, with CEE investors dominating the investment landscape. US capital came in second with 10%, while Middle-Eastern investors accounted for 6% of the transaction volume. Still, the share of Polish capital remained low, at 4%. 

CEE investors expressed particular interest in the office and industrial segment. Czech investor Trigea acquired City Logistics Wrocław II park and the My Place II office scheme from Echo Investment for almost €45 million. Two Hungarian investors were active in the office segment: Adventum International purchased Wola Retro for €70 million (the largest office transaction in the first half of 2023), while Indotek acquired four buildings in Wiśniowy Business Park in Warsaw. The first half of 2023 also saw a new Lithuanian investor enter the Polish market landscape: Eika Real Estate Fund bought the Celebro office complex from White Stone.

Industrial segment in the lead

The industrial sector dominated the investment market, with over half (54%) of the entire transaction volume. While the figure of €438 million traded in H1 signified a 34% drop compared to the first six months of 2022, according to JLL data, it was still slightly above the 10-year average of €425 million. 

The largest transaction was Wrocław Campus 39, purchased by P3 for approximately €139 million. JLL experts anticipate increased interest in the warehouse segment. “The market is driven by demand, resulting from a shift in the sourcing strategy of European companies, as Poland is considered Europe’s top nearshoring destination,” JLL analysts stated.

Retail parks, Mokotów offices, and PRS

With €200 million across 12 deals (involving 17 assets), retail investments accounted for 24% of the total transaction volume. "This seems low compared to last year's, but some larger deals are progressing, including portfolio and single asset deals with some closings completed in July (Matarnia Retail Park, PKO TFI Retail Park portfolio) or planned later in the year; therefore, we expect that substantially better results will be reported for H2 2023," JLL experts said. 

The purchases in January-June 2023 were scattered among regional shopping centers, the biggest deal being the sale of convenience mall Atrium Molo in Szczecin for an undisclosed sum, as well as retail parks and supermarkets in smaller cities. Investment activity was primarily generated by value-add and opportunistic transactions. 

By contrast, deals in the office segment were concentrated exclusively in the Warsaw market and the Mokotów district. Their total value of €190 million in H1 2023 accounted for 22% of the entire investment volume. 

The private rental sector (PRS) has become a significant asset class in the Polish real estate market since 2019. "As foreign exchange risk and expensive financing continue to pose an obstacle to single-asset transactions, there is a growing focus on JVs, particularly equity stakes in PRS platforms, as well as M&A opportunities," JLL stated. Several deals are in the works, even though only one single-asset transaction was closed in H1: the sale of a commercially zoned PRS project in Warsaw's Mokotów district.

The segment, while still relatively small, is poised to grow quickly. At the end of 2022, there were over 9,400 units available for institutional rent in Poland, while another 13,000 were under development. Experts from Avison Young point to the prolonged conflict in Ukraine and increased demand for rental homes from the younger Polish population as the main drivers of growth of the segment.