Residential real estate and the Private Rented Sector (PRS) are attracting the greatest interest. In addition, more realistic pricing expectations among sellers are increasing the prospects for a marked revival in transaction activity.
Investor sentiment can currently be described as cautious but decidedly proactive. Given the prevailing geopolitical and macroeconomic environment, capital is becoming more selective. Investors are scrutinising pricing, financing costs, value appreciation potential and, above all, the ability to launch projects quickly. The quality of assets remains important, but the time required to complete an investment process and the predictability of that process are becoming increasingly significant.
Residential Property Is Investors’ Main Target
Poland continues to be an attractive market for capital seeking opportunities, particularly in the residential and logistics sectors. In residential real estate, interest spans projects of various sizes, although plots with building permits and developments that can move quickly into the construction phase are particularly sought after. In the PRS segment, investors are looking at both completed projects and land earmarked for new developments.
The markets most frequently identified as attractive include Warsaw, Kraków, Wrocław, Poznań and Gdańsk. Investors see the strongest long-term rental demand prospects in these major urban centres.
Office Asset Prices Become More Realistic
The logistics sector continues to attract interest as well. Investors are assessing both stabilised, fully leased properties generating predictable income and new developments offering potential for capital appreciation.
At the same time, greater pricing flexibility among sellers is becoming increasingly evident in the office market. Owners of assets that have been held in their portfolios for many years are now more actively considering disposals. More realistic valuations are gradually narrowing the gap between buyers’ and sellers’ expectations, which has been one of the main barriers to higher transaction volumes in recent years.
This does not, however, automatically translate into yield compression. The most attractive buildings are maintaining and, in many cases, increasing their rental rates. This clearly demonstrates that the performance of prime assets is becoming increasingly detached from the condition of the office market as a whole. Investors are becoming increasingly selective in the office market, focusing on individual assets with clearly defined value drivers and strong potential for future growth rather than the sector.
Financing Costs Remain a Key Factor
Financing costs are also becoming an increasingly prominent topic in investment discussions. Conversations with banks suggest that financial institutions are preparing for various interest rate scenarios, including the possibility of rates rising.
The cost of debt remains one of the most important factors assessed when considering new projects. It directly affects expected returns, asset valuations and the feasibility of investments. It should be emphasised, however, that current signals from the banking sector primarily reflect preparations for potential changes rather than a confirmed forecast of interest rate hikes.
The Final Quarter Could Bring More Transactions, with Greater Participation from Polish Capital
The market is clearly gearing up for an active year-end. Current transaction processes suggest that the fourth quarter could see several major deals, both in the most established markets and in less obvious locations.
Importantly, some transactions may involve assets whose value investors intend to unlock by changing their use. Interest is therefore focused not only on properties generating stable income but also on projects offering opportunities for redevelopment, conversion to a different use or additional development. The potential to create value is becoming an increasingly important investment consideration.
The picture of the Polish market following EXPO REAL is clear. Investors remain active, but their approach is now considerably more selective. Price discipline, asset quality, financing costs and the ability to launch investments quickly are the key priorities.
At the same time, the growing activity of Polish capital is an important sign of the market’s increasing maturity. Domestic investors are increasingly capitalising on emerging opportunities, and the momentum behind their activity could become one of the key drivers of transaction volumes in the near future.
If sellers’ price expectations continue to converge towards levels acceptable to buyers, the scope for completing transactions will expand significantly. Poland’s real estate market is therefore entering a phase driven less by risk tolerance and more by selectivity and the ability to identify value where it has not yet been fully priced in.
(Press Materials)
