Local investment funds open doors to realty
Individuals have, of course, directly and profitably invested in local real estate projects, but they have hardly benefited from the risk diversification provided by foreign investment funds targeting Poland that have also come to market with millions in capital to secure portfolios of the most select local assets.
Members of the country's exponentially expanding industry of investment fund companies (TFIs) expect to transform their sector by launching the first-ever real estate TFIs later this year - and provide retail investors witch a piece of the real estate action.
"In my opinion, the moment for the investment is very soon," said Marek Łukaszewski, president of the Association of Investment Fund Companies in Poland.
The new asset class won't be a sea change for the industry, but it will provide a safer haven for investment-savvy Poles who want to invest in real estate and bring more capital and liquidity to the real estate markets.
Indeed, this is not a brand new concept. CA IB and BRE Bank's Skarbiec have both attempted and failed to close real estate funds. And BRE Bank, CA IB and, Kredyt Bank expect to come to market with new funds in the future.
Last year, CA IB Towarzstwo Funduszy Inwestycyjnych launched fund raising for a zł.160 million real estate fund, under Poland's Act on Investment Funds, only to have to close up shop on the project at the eleventh hour. After raising zł.90 million from retail investors, the plans had to be sidelined in December because corporate bureaucracy at local open-ended pension funds, which had promised the remainder of the capital, slowed up the cash transfers. And the law forbade CA IB from extending the capital raising deadline beyond December.
"It would have been the first real estate fund based on the Investment Fund Act," said Grzegorz Szymanski, head of investment department at CA IB TFI.
Yet, though once bitten, Szymanski is not twice shy.
"We'll come back with the fund this year," he asserted.
CA IB is banking on the commitment from pension funds as well as the mass of retail investors that were previously interested. That would enable it to snap up the zł.160 million at a faster clip than last year, and still be the first Polish real estate investment fund.
The fund will invest 60 percent in office space, 30 percent in retail and 10 percent in warehouses.
For Szymanski, time is of the essence. "Of course, we already worked hard on this," he said. "The longer time we wait, the less of a chance we'll have. And the second reason for coming to market sooner is competition."
CA IB realizes that, as with any good idea, they will find competition.
Wojciech Kostrzewa, chief executive at BRE Bank, said that Skarbiec - following its unsuccessful attempt at a real estate fund - is still considering a second attempt. He noted that there is a clear demand among investors for real estate as an asset. But investing in real estate through an investment fund vehicle is a bit counter-intuitive for Poles. Investors want to own physical real estate, not paper shares in a real estate fund.
Yet, Kostrzewa expects this to change, by following the Western investment model in which real estate comprises a more substantial portion of investor portfolios.
Kredyt Bank, for its part, expects to attack the industry firstly through its European real estate funds where it could marshal its international expertise in Poland. But Gert Rammeloo, managing director, said it would likely wait longer than some other funds to launch a Poland specific real estate vehicle. "We are trying to challenge the market with new funds," he said. "Real estate is not for tomorrow, but the future."
Members of the country's exponentially expanding industry of investment fund companies (TFIs) expect to transform their sector by launching the first-ever real estate TFIs later this year - and provide retail investors witch a piece of the real estate action.
"In my opinion, the moment for the investment is very soon," said Marek Łukaszewski, president of the Association of Investment Fund Companies in Poland.
The new asset class won't be a sea change for the industry, but it will provide a safer haven for investment-savvy Poles who want to invest in real estate and bring more capital and liquidity to the real estate markets.
Indeed, this is not a brand new concept. CA IB and BRE Bank's Skarbiec have both attempted and failed to close real estate funds. And BRE Bank, CA IB and, Kredyt Bank expect to come to market with new funds in the future.
Last year, CA IB Towarzstwo Funduszy Inwestycyjnych launched fund raising for a zł.160 million real estate fund, under Poland's Act on Investment Funds, only to have to close up shop on the project at the eleventh hour. After raising zł.90 million from retail investors, the plans had to be sidelined in December because corporate bureaucracy at local open-ended pension funds, which had promised the remainder of the capital, slowed up the cash transfers. And the law forbade CA IB from extending the capital raising deadline beyond December.
"It would have been the first real estate fund based on the Investment Fund Act," said Grzegorz Szymanski, head of investment department at CA IB TFI.
Yet, though once bitten, Szymanski is not twice shy.
"We'll come back with the fund this year," he asserted.
CA IB is banking on the commitment from pension funds as well as the mass of retail investors that were previously interested. That would enable it to snap up the zł.160 million at a faster clip than last year, and still be the first Polish real estate investment fund.
The fund will invest 60 percent in office space, 30 percent in retail and 10 percent in warehouses.
For Szymanski, time is of the essence. "Of course, we already worked hard on this," he said. "The longer time we wait, the less of a chance we'll have. And the second reason for coming to market sooner is competition."
CA IB realizes that, as with any good idea, they will find competition.
Wojciech Kostrzewa, chief executive at BRE Bank, said that Skarbiec - following its unsuccessful attempt at a real estate fund - is still considering a second attempt. He noted that there is a clear demand among investors for real estate as an asset. But investing in real estate through an investment fund vehicle is a bit counter-intuitive for Poles. Investors want to own physical real estate, not paper shares in a real estate fund.
Yet, Kostrzewa expects this to change, by following the Western investment model in which real estate comprises a more substantial portion of investor portfolios.
Kredyt Bank, for its part, expects to attack the industry firstly through its European real estate funds where it could marshal its international expertise in Poland. But Gert Rammeloo, managing director, said it would likely wait longer than some other funds to launch a Poland specific real estate vehicle. "We are trying to challenge the market with new funds," he said. "Real estate is not for tomorrow, but the future."
