Lessons learned in Poland
Agnieszka Le Nart: How have you seen the Polish market develop since Ghelamco entered it?
Jeroen van der Toolen: The real-estate market in Poland has changed unbelievably in the 16 years that Ghelamco has been in Poland. Just two or three years ago we had a vacancy of 16 percent in Warsaw and 18 percent in the city center, with rent levels of E14 (zł.53) and E18 (zł.68), respectively. Yields were at nine percent for an average tenancy area of 1,000 sqm. In those years, developers were fighting for tenants and there was virtually no office market in cities outside of Warsaw. Large and small commercial developers began to withdraw from the office market.
Today there is great demand for office space. We are looking at three-percent vacancy in Warsaw, with rents at the level of E23-30 (zł.87-113) in the city center and rising steadily. Yield is at the level of 5.5 percent, with an average tenancy area of 3,000 sqm. In Wrocław and Kraków, the office market has grown 200-300 percent over the past three years. Office markets in other cities such as Łódź, Gdańsk and Katowice are also developing rapidly.
How have Ghelamco's investments evolved during this time?
Up until three years ago we delivered an average of three commercial projects annually - two office projects and one inner-city warehouse project. The size of each of these projects was adapted to the needs of the market, which was up to 20,000 sqm. Thereafter, in ancipation of the current boom, we increased our activity to deliver 140,000 sqm of office space and 30,000 sqm of warehouse space in the past three years. [By taking the initiative], we have benefited from the increase in demand. Over 93 percent of our space under development has already been leased, proving our timing was just right.
What do you have in the pipeline for the next three years?
Currently, we are expanding our office developments in Warsaw - including a number of high-rise projects - as well as in Wrocław, Kraków, Łódź and Katowice. The total office pipeline for the next three years in Poland is over 350,000 sqm, including a high-profile, high-rise project in Warsaw. We have also initiated activity on the residential market and have 1,000 apartments under development. Our first project will be delivered in Wrocław later this year.
How else has Ghelamco's strategy or focus changed?
We know the Polish market the best and our focus will stay on Poland, mainly in the office and residential sectors. We will also begin some new inner-city warehouse projects. Still, you never know how the economy will perform over the next five years. We've already started to expand to other countries, initiating projects in Ukraine and Russia and we have a total of 600,000 sqm of warehousing under development [in these countries]. The first building will be delivered in Kiev at the end of this year. We are also considering entering two more countries in the near future.
