Pretty profile
Although almost EUR 970 million (zł.3.8 billion) was invested in the office sector and more than EUR 1.67 (zł.6.5) billion was spent in the retail market in 2005 (both record-breaking figures), investors still have good prospects for the year ahead.
"Warsaw continues to be an exciting place to be if you are in the real-estate sector. 2006 started well and it looks likely that this year will again set new records," said Ben Bannatyne, regional director for Central Europe at Jones Lang LaSalle.
For Bannatyne this year could turn out to be a turning point for the office market in Warsaw, as rents look set to finally rise, especially in the areas where demand is outstripping supply. "The total supply scheduled for the next two years might reach 444,000 sqm , out of which 75 percent will be built speculatively," says the head of research and retail consultancy at JLLS, Anna Bartoszewicz-Wnuk. About 155,000 sqm will be delivered in the city centre. With vacancy levels oscillating at 10 percent, JLLS predicts that in 12 to 24 months rents will start to increase.
Landmark deals
"Investors' great interest and appetite for acquisitions made prime yields dive to a level even below six percent from approximately seven percent [in] 2004," said Tomasz Trzósło, head of Polish investment at JLLS. "We expect the volume of investment deals [this year] to exceed 2005 levels. It is likely that Poland will again have a strong year in terms of closed transactions with some large landmark deals keeping Poland in first place in the region in terms of office investment volume." The biggest transaction in the CEE region was the resale of Rondo 1 in 2005 for an estimated EUR 230 (zł.904) million.
The retail business is also expected to have a strong year. Although the trend will be for developers to turn to other major cities in Poland, Warsaw still has huge potential. The most anticipated event in the capital is the opening of Złote Tarasy in the autumn, with its 65,500 sqm. "The limited supply along Warsaw's major high streets, plus the noticeable demand of tenants has pushed up the rent in Złoty Tarasy to EUR 85 [zł.336] per sqm per month," says Bartoszewicz-Wnuk.
Mature shoppers
It is expected that as the retail market in Warsaw is maturing much faster than the regional markets, it will look for new formulas, some of which are already present on the market, such as outlets, shopping parks, and housing-estate shopping centers.
"This year the retail transaction volume in Poland will continue to increase and it is likely to outweigh the levels registered in 2005," concludes Agata Sekuła, head of retail investment for CEE at JLLS. In terms of volume the French Klepierre was the most active investor in retail, with its acquisition of the Plaza Center's portfolio for EUR 338 million (zł.1.3 billion).
