Investor activity in Poland is expected to shift towards retail and regional offices in 2015
The latest research by Savills reveals strong investment activity in Poland in 2014 resulting in a €3.1 billion investment volume, reflecting a small drop of ca. 5 percent year-on-year. Office transactions dominated the activity, while transactions in the warehouse sector outpaced retail for the first time in history. International real estate advisor forecasts, that this year the situation in investment market will change.
Michal Cwiklinski, managing director, head of Savills investment department in Poland, said: “2014 was definitely the year of the office and logistics sectors. We expect that this year investment activity will be significantly higher in the retail sector as well as in the regional office markets.”
Savills expects that investment activity in the office sector will continue to be strong, however demand will shift towards regional offices, while in Warsaw investors will be buying A-Class offices in B-Class locations and B-Class assets in A-Class locations as the supply of prime assets dries up. Investor activity in the retail sector will grow significantly in 2015 and probably even more in the following years with potential transacted volume of over €1.5 billion this year. Activity in the warehouse sector will still be high, but lower than last year due to a lack of investment products available to buy.
Savills highlights, that despite the fact that the investment market in Poland still dominated by cross-border investment, 2014 was also a record year for domestic buyers, who made up 12 percent of the total investment volume, which is ca. 50 percent increase in comparison to 2013.
Kamil Kowa, director, head of Savills valuation & consultancy in Poland commented: “2014 was a record year for domestic investors. The volume of domestic acquisitions was the highest in history and saw the first €100 million+ transaction by a Polish buyer in the warehouse sector."
Savills forecasts, that the activity of Polish buyers will grow further in 2015. The advisor also predicts, that there will be even more portfolio transactions and joint-ventures across all property sectors.
In terms of yields, Savills notes that prime office yields remain stable at 6.00 percent in Warsaw's city centre and between 7.25 percent and 7.50 percent in Warsaw's non-central locations with downward pressure on both due to the recent news of the EBC relating to the QA plans. In the most established regional office markets, prime yields are in the range of 7.25 percent – 7.50 percent. Prime achievable shopping centre yields stand at 5.75 percent for the best Warsaw assets and at about 6.00 percent for the best regional shopping centres. In secondary cities, prime shopping centre yields are in the range of 7.25 percent – 7.75 percent. In the warehouse sector, prime yields are recorded at sub-7.25 percent for prime, single-tenant modern assets let to strong covenants tenants, moving out to 7.75 percent – 8.25 percent for multi-let prime properties.