CEE region and Poland smashes real estate investment record
According to JLL, CEE's real estate investment transactional volume for 2018 was in excess of €13.2 billion, with Poland accounting for €7.2 billion, and smashing its previous record from 2006 (€5.05 billion). Poland was followed by the Czech Republic (over €2.5 billion) Hungary (over €1.85 billion, Romania (ca €900 million), and Slovakia (ca €820 million).
"With €13.23 billion in 2018, the CEE commercial real estate investment volume recorded an 11% increase over 2017, and for the third year running set a new record transaction volume for the region. We have seen the most significant volume increase in Poland in 2018 with €7.2 billion traded, a substantial uplift in volumes over previous years. For 2019, we expect continued, strong interest for product in CEE markets although perhaps not quite matching the spectacular levels seen last year. One of the most interesting aspects has been the growth of domestic capital in the Czech Republic and Hungary with 50% and 60% of volumes respectively coming from domestic capital sources. We expect this to continue in 2019. Our current forecast for the full year suggests that CEE regional volumes will total around €11 billion for 2019," commented Mike Atwell, Head of Capital Markets Czech Republic & CEE, JLL.
Poland leads the way in the CEE market
The Polish real estate investment market continued to grow for the fourth consecutive year with an impressive 2018 year-end result of €7.2 billion traded. This volume was unprecedented and outperformed the previous record for the country's investment volumes (2006) by almost €2.2 billion.
"2018 was a unique year in Poland for many reasons. It saw a noticeable yield compression in most asset classes. There were almost 100 transactions concluded throughout the year including the biggest retail portfolio sale in the history of the Polish market for €1 billion, the largest number of seven portfolio transactions traded in a single year in the industrial sector, and the highest investment volumes reported in the key sectors: €2.75 billion in the office sector, €2.47 billion in retail and €1.84 billion in industrial assets. It’s the first time in the last few years when office investment volumes outperformed retail and became the first-choice asset class in Poland," commented Tomasz Trzósło, Managing Director, JLL, Poland.
In addition, around €120 million was traded in the hotel sector.
Retail sector sees largest ever deal in Poland
Following €1.87 billion traded in retail in H1 2018, over €600 million was transacted in the sector in H2 2018, pushing annual retail investments in 2018 to a record high of €2.47 billion. The biggest retail deal in 2018 was the sale of a portfolio of 28 retail properties by ARES/AXA/Apollo Rida to Chariot Top Group for a total amount of about €1 billion. Other key transactions included: the sale of Wars Sawa Junior in Warsaw by PFCEE (a fund managed by CBRE Global Investors) to Atrium European Real Estate for €301.5 million and Galeria Katowicka by Meyer Bergman to EPF for an undisclosed amount.
Prime shopping centre yields, achievable for best-in-class, dominant, major schemes in Poland currently stand at 4.90 percent, high street assets trade at around 4.00 percent, while prime retail parks have recently seen yield compression to 6.80 percent.
Poland's office sector experiences all-time high investments
In the office sector, for the second time in history, investment volumes exceeded the €2.0 billion mark and reached €2.75 billion, which outperformed 2006's record volume by over 20 percent.
Key Warsaw office transactions included: the acquisition of Gdański Business Center (buildings C and D) from HB Reavis by SIM on behalf of EPF for slightly above €200 million; the purchase of Skylight and Lumen from Unibail-Rodamco-Westfield by Globalworth for around €190 million; the acquisition of CEDET by GLL Partner on behalf of an Asian client for almost €130 million.
The key transactions in regional cities included the acquisition of the Skanska office portfolio by NIAM for almost €173 million.
Prime office yields in Warsaw now stand at 4.75 percent. Core regional city yields now stand at 6.00 percent.
The best-ever-industrial investments results in Poland
In the industrial sector, volumes reported in 2018 doubled that of 2017 with a record 1.84 billion EUR in traded assets. It is worth noting that 2018’s result was dominated by portfolio transactions, including the Encore Portfolio acquired by Mapletree from Hillwood for approx. €320 million; a Prologis Portfolio acquired by Mapletree for around €260 million; the Och-Ziff Portfolio acquired by Griffin/Redefine for about €195 million; the Azurite Portfolio bought by Blackstone from Goodman for approx. €190 million; a Hines Portfolio purchased by Blackstone for around €140 million.
Prime warehouse yields stand at 6.50 percent with exceptional, long leased assets trading at around the 5.50 percent mark, and Warsaw inner city projects standing at around 5.25 percent.
Hotel investment volumes complete the picture
In 2018, the Polish hotel market recorded approx. €120 million investment volume with the acquisition of a Holiday Inn in Warsaw and Park Inn in Kraków by Union Investment, as well as a portfolio transaction comprising six Puro Hotels located in Kraków, Wrocław, Poznań, Warsaw and Gdańsk, where a 30 percent stake was acquired by LPP.
JLL participating in transactions worth €3 billion"The value of investment transactions involving the JLL advisory in 2018 totaled approximately €3 billion in Poland. We represented funds in some of the most spectacular deals. These included 28 retail properties (Chariot portfolio) on behalf of ARES / AXA/Apollo Rida; Galeria Katowicka – on behalf of Meyer Bergman, Gdański Business Center – on behalf of EPF, Warsaw Spire – on behalf of Ghelamco, Lumen & Skylight – on behalf of Unibail-Rodamco and a portfolio of nine logistics Panattoni properties – on behalf of Redefine/Griffin," said Tomasz Trzósło.