Warsaw Business Journal sits down with Bartłomiej Kordeczka, Poland's Co-Managing Partner and the Deputy Head of Real Estate at Dentons, to talk about the commercial real estate investment market sentiment in Poland
How does the real estate investment market in Poland look?
In 2023, Central Europe’s commercial real estate market witnessed an interesting change. By looking at the pool of inbound investors—Western capital inflow decreased while the local investment share rose. In particular, 12% of the capital invested in the Polish market in H1 2024 came from domestic investors, making an increase from the 2-5% in previous years. I see this as a very positive sign for our market and this trend clearly highlights the growing role of regional investors in sustaining market liquidity and driving investments.
Obviously, at the same time, we actively encourage foreign companies to consider new transactions in Poland, highlighting the country's significant potential, especially in uncertain times. While Western European countries are often seen as ideal investment destinations, I can assure you that Poland is also offering prominent opportunities, as recognized by investors from the CEE region.
Is Poland the most undervalued market in CEE?
Poland stands out as an underrated gem in the commercial real estate market in Europe. As a CEE market leader with a stable economy and favorable conditions, it is an attractive yet undervalued destination for new investors and their projects. The positive outlook for Poland’s real estate sector is reinforced by a rising number of transactions and investment volumes so far this year, which have doubled, compared to 2023. This trend is expected to continue in the second half of 2024, signaling robust growth and presenting a wealth of opportunities in the real estate sector. Poland’s unique position makes it a prime candidate for investors seeking stability and growth in the region.
What emerging trends do you anticipate will shape the future of the PRS sector in your country over the next few years?
The Private Rented Sector (PRS) and Purpose-Built Student Accommodation (PBSA) are expected to attract significant investor interest in the coming years. Key sector trends here include forming new collaboration models among investors, developers, and property owners, such as joint ventures, which enhance liquidity and enable scale expansion. Driven by the dwindling supply of land in attractive locations, there is also a growing number of projects which involve converting commercial premises, like offices or retail spaces, into PRS and PBSA. We are involved in a pioneering transaction of this type in Warsaw now, with conversion of offices into PBSA.
Another emerging trend is co-living, a housing model based on the shared economy. This concept provides residents with a convenient accommodation while fostering community participation. This model is already well-established in Western markets, but in Poland it is only beginning to gain traction and should attract new residential investors.
Are offices to take a leading role in the investment market?
The Polish office market is one of the most dynamic and innovative in the Central and Eastern European region. Office developments remain a key focus for investors, particularly in centrally located areas in major cities like Warsaw, reflecting underlying confidence in the market, despite geopolitical concerns. Unlike other European markets, Polish offices are high-performing commercial properties. In H1 2024, transactions involving office assets represented 46% of the investment market in Poland, making it the largest sector during this period.
Additionally, the office investment market has seen several deals in regional cities, following the dominance of Warsaw. Most of these deals involve value-add and opportunistic assets, indicating a strong presence of prudent investors who seek opportunities without overpaying for assets.
What is interesting about Poland is that hybrid working has not had a significant impact on the office leasing market. Here, the possibility of hybrid work is primarily viewed as an employee incentive, typically involving 1-2 days of remote work per week. Unlike some other European cities where hybrid work trends are influenced by long distances between home and office and rising urban violence, Poland's adoption of this model is driven by post-pandemic shifts and employee expectations. This trend is expected to persist, shaping the future of the way we work in Poland.
‘Retail is dead’ – fact or myth?
Retail remains a vibrant sector in Poland, accounting for 30% of the total transaction volume in the first half of this year. Such results were largely driven by the record €285 million acquisition of Cromwell’s portfolio of six shopping centers by Star Capital Finance, the largest retail investment transaction since early 2022. This deal highlighted the robust activity of CEE investors in Poland, and should encourage further transactions and new projects, many of which are already in the pipeline and in the advanced stages of negotiation.
Overall, we are witnessing a shift in investor sentiment. Currently, the most sought-after shopping centers are those located in major cities and anchored by food retailers with long-term leases. This marks a change from the dominance of convenience centers in previous years to gallery transactions, indicating evolving preferences in the Polish retail investment market.
Nearshoring and more – What's driving warehousing demands?
Warsaw is an ideal location for small business units (SBUs) with high demand for small and flexible warehouse modules. Despite a decrease in investment volume this year, caused by a lack of large portfolio transactions and a disparity between seller and buyer price expectations, the sector is stabilizing and is expected to perform better in the second half of the year.
A key driver of warehousing demand is nearshoring, as production shifts closer to sales markets. Poland is poised to benefit significantly from this trend, positioning itself as a major hub for logistics and warehousing. The industrial sector is also anticipating large deals, which will further boost demand.
