January 15, 2020

Strong investment results for real estate sector with offices leading the way

Strong investment results for real estate sector with offices leading the way

According to JLL, 2019 saw office investment transactions worth more than 3.8 billion EUR, breaking the record set last year. The coming months will see further spectacular deals.

JLL estimates, the value of the real estate investment transactions in Poland was a record breaking 7.4 billion EUR. This is a better result than 2018 (over 7.2 billion EUR). The last 12 months were the best ever for the office segment, where the sales and acquisitions were worth more than 3.8 billion EUR – over a billion EUR more than the previous year.

"For the second time in a row, the real estate investment market has been dominated by the office sector, where we saw a record value of transactions exceeding 3.8 billion EUR. This is over 1 billion EUR more than in 2018 and the equivalent of 2016 and 2017's office and retail sector performances combined," said Tomasz Puch, Head of Office and Industrial Investment, JLL.

2019's 3.8 billion EUR is almost three times higher than the office segment's average of the last 10 years. JLL data also shows that this strong investment trend will continue into the next few months.

"Investors appreciate the diversity and liquidity in the office segment. Considering ongoing transactions, we can expect further great results in the coming months. We already forecast that the first quarter of this year will close with approx. 1.5 billion EUR," added Tomasz Puch.

The most important transactions completed include the sale of Warsaw Spire Tower by Ghelamco Group and Madison International to IMMOFINANZ for 386 million EUR, Warsaw Financial Center by consortium of Allianz / Tristan Capital partners to CPI Property Group, and Warsaw West Station (I + II) by JV HB Reavis & PKP to a Singaporean investor, Mapletree, for around 190 million EUR. Experts from JLL advised on these as well as 20 other transactions.

The value of retail investment transactions exceeded two billion EUR. The market was dominated by portfolio deals – Cromwell’s finalized its pre-emption right for a shopping centre portfolio; Atrium sold Atrium Felicity in Lublin and Atrium Koszalin to ECE European Prime Shopping Center Fund II (298 million EUR) and EPP acquired the second tranche of M1 shopping centres.

"The value of industrial investment transactions totalled approx. 1.1 billion EUR. This is related to factors including a lower number of large portfolio deals compared to 2018. However, the ongoing transactions planned for 2020 allow us to estimate a significant improvement on 2019," said Tomasz Puch.

The largest transactions in this segment included the acquisitions of: logistics portfolio in Kraków, Tczew and Marki by GLL Partners; two Amazon warehouse centres by CNIC; Amazon centre in Wrocław and Eurocash centre in Konin by Hines / Mirae from Blackstone for 130 million EUR.

"It is also worth noting the hotel market's much improved result, where investment transactions were worth a total of 290 million EUR. This means a 140 percent increase on 2018 and is a signal of increased interest in this segment from international investors. This overseas interest is illustrated by the spectacular sales transaction of the Radisson Collection hotel in Warsaw, advised by experts from JLL's Hotels and Hospitality Group," said Agata Janda, Head of Hotel Advisory, JLL.

In 2019 the value of investment transactions with the participation of JLL in Poland totalled 2.4 billion EUR, with 1.67 billion EUR deals being in the office segment. Last year, the JLL team advised on the most spectacular transactions, including the sale of the Warsaw Spire Tower, Warsaw Financial Center and West Station I&II as well as the acquisition of Eurocentrum or sale of Atrium Felicity in Lublin and Atrium Koszalin.

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