View from the trough
In particular, Ben Bannatyne, managing director for Central Europe at JLLS, had to do a double take. He was in the unusual position of having to repeat much of what he said at the same event last year.
In a presentation entitled "Office market Poland - Are we over the worst?" Bannatyne claimed that the office market was at or approaching rock bottom. "Warsaw nets will bottom out according to the JLLS short-term rental cycle," he said. "I'm still not sure if we have got to the very bottom; I hope so."
Hope, it seems, is in short supply among investors at the moment. "It's not all doom and gloom, there are some good stories," claimed Bannatyne, but there was little to cheer those with money sunk in the office sector. Although the market has stabilized considerably this year, next year will see a surge in supply, with around 300,000 sqm expected on the market, which could flood the city center area and send vacancy rates rocketing. "I hope that lessons are learned by developers in terms of supply; [namely] don't overbuild, the results of which can be clearly seen in Warsaw today," warned Bannatyne.
"We haven't learned from our mistakes and 2006 looks like it could be approaching another record year," he admitted. "We believe a sustainable level of development would be around 150,000 sqm. If we deliver 350,000 sqm to the market next year, we can expect some challenges to follow."
According to Colin Dyer, the president and CEO of JLLS, there is increasingly a "morose market for the leasing of office products," and investment in retail is becoming a more attractive asset class for investors. "There is a wall of money available for investment" in CEE real estate, he added, estimating that with EUR 3 (zł.12.2) billion spent in the region last year, EUR 12 (zł.50) billion was available.
Despite this, developers remain upbeat on the region's prospect. Although "Prague, Budapest and Warsaw are far behind the rest of the major cities in Europe" in terms of supply, Ben Bannatyne said the property picture is much more complex. "A lot of developers when they see this think: 'Great, Warsaw has a long way to go, let's keep building.' Unfortunately that's not the case; these markets are very mature. Even though [the office market in Warsaw] is only 12 or 13 years old it has grown very quickly. This pace of growth cannot continue."
It seems that Warsaw is suffering badly from a lack of planning on a grander scale. "There is no real city center in Warsaw," said Bannatyne. "It needs more retail and leisure facilities to create a city center feel together with better public transport. It will come, but in the medium to long term."
In a presentation entitled "Office market Poland - Are we over the worst?" Bannatyne claimed that the office market was at or approaching rock bottom. "Warsaw nets will bottom out according to the JLLS short-term rental cycle," he said. "I'm still not sure if we have got to the very bottom; I hope so."
Hope, it seems, is in short supply among investors at the moment. "It's not all doom and gloom, there are some good stories," claimed Bannatyne, but there was little to cheer those with money sunk in the office sector. Although the market has stabilized considerably this year, next year will see a surge in supply, with around 300,000 sqm expected on the market, which could flood the city center area and send vacancy rates rocketing. "I hope that lessons are learned by developers in terms of supply; [namely] don't overbuild, the results of which can be clearly seen in Warsaw today," warned Bannatyne.
"We haven't learned from our mistakes and 2006 looks like it could be approaching another record year," he admitted. "We believe a sustainable level of development would be around 150,000 sqm. If we deliver 350,000 sqm to the market next year, we can expect some challenges to follow."
According to Colin Dyer, the president and CEO of JLLS, there is increasingly a "morose market for the leasing of office products," and investment in retail is becoming a more attractive asset class for investors. "There is a wall of money available for investment" in CEE real estate, he added, estimating that with EUR 3 (zł.12.2) billion spent in the region last year, EUR 12 (zł.50) billion was available.
Despite this, developers remain upbeat on the region's prospect. Although "Prague, Budapest and Warsaw are far behind the rest of the major cities in Europe" in terms of supply, Ben Bannatyne said the property picture is much more complex. "A lot of developers when they see this think: 'Great, Warsaw has a long way to go, let's keep building.' Unfortunately that's not the case; these markets are very mature. Even though [the office market in Warsaw] is only 12 or 13 years old it has grown very quickly. This pace of growth cannot continue."
It seems that Warsaw is suffering badly from a lack of planning on a grander scale. "There is no real city center in Warsaw," said Bannatyne. "It needs more retail and leisure facilities to create a city center feel together with better public transport. It will come, but in the medium to long term."
