An overview of Poland’s investment market over the first five months of 2023 reveals a downturn in foreign investment. The value of concluded deals revealed from the beginning of this year to the end of May was just approximately €800 million, but it was more than twice as much in 2021 and 2022 over the same period. While there are many reasons for this decline, a major factor may be a decreased presence of Western investors due to Russia’s ongoing war in Ukraine global economic instability and unprecedented interest rates.
However, the uncertain investment market situation is also seen as a chance for new players to enter Poland’s real estate market.
Capitalica Asset Management, an investment management company based in Vilnius, Lithuania, is one of the funds to take this move into Poland and expand beyond its Baltic borders. This year, the company launched its 4th commercial real estate (RE) investment fund, the Capitalica European Office Fund, offering investors the opportunity to diversify their portfolios geographically by investing in the leading Central and Eastern European cities, including Wrocław, Poznań, and Katowice.
The primary objective is to acquire pre-built assets that generate consistent cash flow for investors: a few have already been identified and shortlisted candidates for Capitalica’s first potential purchase in the country, scheduled for the beginning of the next year.
According to the company, the regional geopolitical landscape, marked by economic challenges, war, and uncertainty, has created a vacuum of quality investments in Poland.
“As the West undergoes changes, a window of opportunity opens for foreign investors from nearby regions to enter and fill this void,” said Andrius Barštys, Chairman of Capitalica Asset Management. “Capitalica sees this as an opportunity to not only diversify its portfolio but also to potentially acquire assets on advantageous terms in uncertain times. This is an opportune moment to make bold decisions when others are hesitant – a strategy that has helped us and our investors succeed in the past.”
Capitalica has the ambition to reach an investment portfolio worth €1 billion and to do that, the company is establishing itself as a credible player in the international market that is able to double the initial investors’ deposit in 5-6 years.
“We have recently gone through a rebranding – our goal is to show that investment in real estate is able to generate stable returns. We call it investing in Realverse, as opposed to the fashionable high-risk investments in Metaverse”, said Barštys. “We are ambitious – we want to attract the new generation of millennial startup millionaires as our investors, and we want to expand internationally. We aim to spread the message that real estate investing is one of the most secure forms of investment in Poland, the same way as in our home country or in Latvia where we’ve been investing lately. Our goal is to contribute to the creation of green and sustainable cities of the future, wherever we invest.”
Capitalica has invested in the development of the greenest office complex in Riga, Latvia, called Verde, as well as in Kauno DOKAS – the first building in Lithuania to be sustainably cooled by river water. Whether developing new structures or acquiring existing ones, capitalica adheres to stringent environmental standards, engaging teams and materials that promote sustainability from the ground up: whether through BREEAM certification – such as the one awarded to Verde – or by receiving the SEB Bank green loan for the Kauno DOKAS project in 2018, unprecedented in the Baltics.
Another signature strategy of Capitalica is investing in central business districts only, and that has led to being trusted by many international companies to be their tenants, including KPMG, Swisscom, Tieto, Bentley Systems Europe B.V., DECTA, OAG Aviation Worldwide, Workland, Enefit, and many others.
The company’s data indicates that offices in central business districts (CBD) remain in high demand. Contrary to some perceptions, statistics show that offices in city centres are fully occupied, highlighting the continued need for socialization and business interactions, especially in regions that are further away from the main business clusters of cities.
According to a recent report published by Deloitte, factors such as Russian military aggression in Ukraine, inflation, rising interest rates, and confidence in investments in Poland have been in a downturn. Less than one-fifth of those polled anticipate an increase in investment volume and total investment activity in Poland. Meanwhile, half anticipate a decline in total market activity, and almost 60 percent anticipate a decrease in investment volume. For companies such as Capitalica, this uncertain time may be an opportunity to make a bold move and invest in Poland and neighbouring countries to pioneer the future of their real estate markets.