Build while it lasts
With leading developers posting good results and special economic zones becoming overcrowded, market insiders believe a good yield can still be achieved from retail investment in Poland.
Warsaw produces a reasonable eight percent revenue from capital invested in office buildings. Although it is far from Moscow's 13 percent (which is dominated almost entirely by Russian money), Warsaw is still ahead of the western European average, usually below seven percent. Andreas Ridder, managing director for the CEE region at CB Richard Ellis, puts it bluntly: "The entire world wants to invest in the CEE."
In fact, revenues were substantially higher a couple of years ago, but so were the risks connected with investment. Now, says Ridder, with EU accession and entrance to the eurozone on the horizon, the threat of economic instability has disappeared.
Ridder was speaking at an announcement by Globe Trade Center (GTC) that it intends to triple its 300,000 sqm of developed space by 2009. GTC is one of the leading developers in Poland and is listed on the Warsaw Stock Exchange (WSE).
"Since the IPO we pressed the pedal really hard," said Eli Arloy, chairman of the supervisory board at GTC. His firm, through subsidiaries already operating in six CEE countries and craving more in Bulgaria and Slovakia, reported a 60 percent increase in net profit, to $40.6 (zł.118.7) million.
Growth in capitalization reached $846 million (zł.2.47 billion) against $520 million (zł.1.5 billion) at the end of 2003 and the management is adamant that its target of $1 (zł.2.9) billion in value is within reach soon. In four years' time GTC intends to become a regional leader, at the same time putting more emphasis on countries other than Poland and, in effect, decreasing its share of operations here.
Indeed, apart from Czech Republic and Hungary, countries like Bulgaria and Romania tempt investors with even better markups than Poland. And investors are salivating at the thought of the heretofore isolationist Moscow market opening up soon.
However, Ridder predicts that yields in the region will bottom out at seven percent as soon as the end of this year and align themselves with western levels, while 'old' EU averages will settle at above six percent. This may not be enough to attract foreign capital, and the answer for developers could be switching to retail investment, which here, unlike in the rest of Europe, produces better profits than the office sector.
Warsaw produces a reasonable eight percent revenue from capital invested in office buildings. Although it is far from Moscow's 13 percent (which is dominated almost entirely by Russian money), Warsaw is still ahead of the western European average, usually below seven percent. Andreas Ridder, managing director for the CEE region at CB Richard Ellis, puts it bluntly: "The entire world wants to invest in the CEE."
In fact, revenues were substantially higher a couple of years ago, but so were the risks connected with investment. Now, says Ridder, with EU accession and entrance to the eurozone on the horizon, the threat of economic instability has disappeared.
Ridder was speaking at an announcement by Globe Trade Center (GTC) that it intends to triple its 300,000 sqm of developed space by 2009. GTC is one of the leading developers in Poland and is listed on the Warsaw Stock Exchange (WSE).
"Since the IPO we pressed the pedal really hard," said Eli Arloy, chairman of the supervisory board at GTC. His firm, through subsidiaries already operating in six CEE countries and craving more in Bulgaria and Slovakia, reported a 60 percent increase in net profit, to $40.6 (zł.118.7) million.
Growth in capitalization reached $846 million (zł.2.47 billion) against $520 million (zł.1.5 billion) at the end of 2003 and the management is adamant that its target of $1 (zł.2.9) billion in value is within reach soon. In four years' time GTC intends to become a regional leader, at the same time putting more emphasis on countries other than Poland and, in effect, decreasing its share of operations here.
Indeed, apart from Czech Republic and Hungary, countries like Bulgaria and Romania tempt investors with even better markups than Poland. And investors are salivating at the thought of the heretofore isolationist Moscow market opening up soon.
However, Ridder predicts that yields in the region will bottom out at seven percent as soon as the end of this year and align themselves with western levels, while 'old' EU averages will settle at above six percent. This may not be enough to attract foreign capital, and the answer for developers could be switching to retail investment, which here, unlike in the rest of Europe, produces better profits than the office sector.
