Munich Expo takeaways

Poland is still first on the list for investors looking at CEE. While the Warsaw office market faces a shortage of prime product for sale, regional office markets are gaining traction. The retail segment still offers niches in some areas and a wealth of opportunity in repositioning. Logistics is as hot as ever. And even the hospitality sector has been on the upswing recently By Beata Socha The world’s real estate community once again converged on Munich in early October, for the 17th Expo Real trade fair. Poland had a strong presence as usual. It came in seventh in terms of the number of visitors after Germany, the UK, the Netherlands, Austria, Switzerland and France. Investors and developers emphasized the continuing positive sentiment on the real estate market, with Poland being the main player in the CEE region. [caption id="attachment_71069" align="alignright" width="200"] EXPO REAL 2013[/caption] “Poland’s GDP growth rate is supposed to be 3 percentage points higher than for the rest of the EU. It is the third biggest outsourcing destination in the world,” said Adrian Karczewicz director at Skanska Commercial Development Europe responsible for CEE transactions. Investor activity in 2014 reaffirms Poland’s position as the leader among CEE markets. “Looking at the industrial and logistics market alone, 2014 is a record-breaking year in terms of space being developed. There were 853,000 sqm of space under construction during the first six months of the year. A lot of investors see our country as an important location on the warehouse-space map,” said Andrzej Wroński, country head for Poland at P3 Logistics Parks. [big percent= "36,900 "]industry professionals took part in this year’s Expo Real trade fair.[/big] Changing perspective While logistics operators are still predominantly focused on the western part of Poland, due to its proximity to the wealthy western neighbor, investors looking for office schemes are gradually shifting their focus to Poland’s regional cities. The main cause for that is the shortage of prime assets for sale in Warsaw, but also because the regional markets are increasingly mature and offer significantly higher yields. There are also voices saying that Warsaw still has a long way to go before reaching saturation in office space. “Some say that Warsaw is becoming a mature market. When you look at Warsaw, it’s comparable to Hamburg in terms of population. But while Warsaw has 4 million sqm of office space, Hamburg has 13 million sqm,” Karczewicz said. “We have our feet on the ground in Warsaw, but we are also looking at other regional cities. What is important is understanding the microlocation in each regional market,” said Urlich Steinmetz, managing director at Deutsche Asset & Wealth Management, which has bought two major Warsaw office schemes this year, Rondo 1 and Metropolitan. The BPO industry was discussed in detail, as a long-term source of demand in Poland’s secondary office markets. “Increasingly often, service centers sign contracts for several years – even up to 10 – and negotiate new engagements. Nine out of 10 investors declare that they are planning to increase employment,” said Jacek Levernes, president of the Association of Business Service Leaders. [negative]When you look at Warsaw, it’s comparable to Hamburg in terms of population. But while Warsaw has 4 million sqm of office space, Hamburg has 13 million sqm.[/negative] Retail niches Experts agree that the retail market, despite being increasingly saturated, still offers some opportunities. “I think there is more to come - maybe not in the top regional cities, as they are already pretty dense. … I would rather expect new shopping centers in small cities, of up to 200,000 inhabitants,” said Marek Koziarek, managing director of the Department of Structured Finance and Real Estate of Bank Pekao. There are also certain niches in Warsaw, in new and growing residential areas, but the real opportunities lie in refurbishing, repositioning and expanding existing shopping centers. “Shopping centers can develop. The demand is still there. There is a need of repositioning and, consequently, growth of shopping centers,” Koziarek explained. [caption id="attachment_71068" align="alignleft" width="225"] Expo Real 2014[/caption] Hospitality on the upswing All types of real estate are doing well in Poland, it would seem. Even the hotel industry, after a few tentative years, is back on track. Hotel investors are looking for opportunities both in Poland’s capital and in regional cities. “Warsaw is not really a tourist destination, but it definitely has growth potential. It’s the capital of the biggest CEE country. Secondly, it has a very good capital market. There is an active stock exchange, which also creates business coming from the service industry,” said Franz Jurkowitsch, CEO of Warimpex. “There are some quite interesting secondary cities in Poland, like Kraków, which were not destroyed during the war. They have developing airports, there is the BPO industry on the business side and they are also interesting for leisure,” Jurkowitsch added. As many as 36,900 industry professionals took part in the three-day fair in Munich, 900 more than in 2013. While the number of visitors remained unchanged (18,600), the number of exhibitors increased from 17,400 to 18,300. Next year, the event will take place October 5-7, and you can be sure that Lokale Immobilia will be there to give you the scoop on the next big thing in real estate.