March 15, 2017

Knight Frank experts report on the investment market in Poland

Knight Frank experts report on the investment market in Poland

Real estate agency Knight Frank took the opportunity at the MIPIM real estate fair in Cannes to launch their latest Polish investment market report on March 15. According to the report, Poland’s perspective of long-term stable profits attracts new investors

In 2016 more than €4.5 billion were invested in Poland in the commercial real estate sector, thus reaching a record level within the last decade. More than 82 percent of the assets invested were located in the retail and office sectors. Investors focus their attention not only on offices, retail and warehouses, but more often look upon the hotel and private student housing sectors.

Marcin Purgal, Director, Capital Markets at Knight Frank, commented: “Despite the limited number of the best assets available for sale, investor activity remained high. Investors are looking for investment opportunities in all real estate categories, not only those situated in the most prestigious locations. Poland’s attractiveness is confirmed by the entities operating on the market. 2016 brought new investors such as South African funds Redefine Properties and MAS RE, German fund Warburg-HIH Invest Real Estate, Hansa Invest, and GIC - the Government of Singapore Investment Corporation. The capital market in Poland remained very attractive to investors looking for fund allocation, offering investment returns at the level of 125-175 basis points higher than Western European countries.”

Aleksandra Burkot, Consultant, Research at Knight Frank added: “Poland, the most attractive market among the CEE countries, is a perfect alternative location to the Western European markets. As a result of the wide range of modern assets of all categories on offer, it attracts a growing number of investors every year. They are interested both in the acquisition of single assets and entire portfolios which enable them rapidly to increase exposure to the domestic market. Last year more than €4.5 billion were invested in the commercial real estate sector in Poland, which was a record-breaking result within the last 10 years. Also the largest transaction in the history of the CEE capital market was signed between Echo Prime Properties and the South African fund Redefine Properties with a total worth of almost €890 million. Last year 82 percent of the assets invested were located in the retail and office sectors. Capital investors’ activity grew on the Warsaw office market where the total transaction volume surpassed €1.15 billion.

Stable rental levels in all commercial sectors and low prime yields for the best assets enable foreign investors to look at Poland as an alternative location for risk diversification and offering a guarantee of stable investment returns in the long term.

Investors are more keen to focus on less obvious sectors of the commercial market such as the hotel segment or the private student housing segment. 2016 proved to be one the best periods for the Polish hotel industry. Tourists steadily continue to value domestic destinations, which results in record results for hotels both on the seaside and in the mountains. This, in turn, results in the rising value of hotel properties and the dynamic growth of this industry in Poland. What’s more, last year’s acquisition of the five-star The Westin Warsaw hotel by the Qatar holding Al Sraiya and the market debut of a new player only confirm the rising popularity of the hotel sector in Poland. The same applies to the private student housing sector. In the last years its rapid growth can be observed in major academic centres in Poland. The sector is a popular source of assets for investment funds operating on Western European markets. In Poland these kinds of investments were realized by e.g. Griffin.”

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