Down, but not out
In 2007, the Polish commercial property investment market saw a 40-percent drop in the value of assets traded, compared with the previous year, but activity among investors remained strong, according to advisory Cushman & Wakefield. The market saw EUR 2.83 (zł.10.11) billion worth of assets traded last year, which represented the highest volume in Central Europe, with the Czech Republic and Hungary seeing the next highest levels.
In total there were 77 transactions in 2007, with the average size amounting to EUR 37 (zł.132) million. This compares with 97 transactions, averaging EUR 49 (zł.175) million, in 2006. The largest deal of the year was the sale of Simon Ivanhoe's portfolio to Macquarie CountryWide Trust for EUR 232 (zł.829) million.
The largest financing transaction in 2007 was a R750 (zł.2,680) million deal between Whitehall Funds and Mayland for the development of four shopping centers across Poland. These are due to be delivered in 2009 and 2010.
Growth of commercial real estate prices last year wasn't as dynamic as expected and, while demand remained high, investors became more cautious due to increased costs of financing following the credit crunch in the United States. "Initially viewed as a US problem, it very soon became apparent that the subprime crisis [there] was severely impacting banks' lending abilities and directly impacting the CE real estate market," said Michael Atwell, partner and head of Cushman & Wakefield's capital markets group in Central Europe.
The effect of the credit crunch appears to have been countered by strong occupational markets, however. The office sector remains the most popular among investors.
Last year saw rapid growth in lease prices across the sector, especially in Warsaw's central business district, and as a result many buildings leased prior to this have very promising lease growth potential. When selling such buildings, investors are willing to accept very low initial yields of 5.5 percent or less, and 6.5-7 percent in regional cities.
Anna Kapica-Harward
