By Bartłomiej Zagrodnik, Managing Partner and CEO of Walter Herz
The growing activity of Polish capital is one of the most important signals emerging from this year’s EXPO REAL. While some Western European investors continue to seek opportunities outside Poland, domestic investors are becoming increasingly confident in pursuing transactions. Residential real estate, particularly the Private Rented Sector (PRS), is attracting significant interest. At the same time, more realistic pricing expectations among sellers are improving the prospects for a marked revival in transaction activity.
Investor sentiment can currently be described as cautious but decidedly proactive. Against the prevailing geopolitical and macroeconomic backdrop, capital is becoming more selective. Investors are scrutinising pricing, financing costs, potential for value appreciation and, above all, the ability to launch projects quickly. Asset quality remains important, but the time required to complete an investment and the predictability of the process are also becoming increasingly significant.
Residential Property Leads Investors’ Search for Opportunities
Poland continues to attract investors seeking opportunities, particularly in the residential and logistics sectors. In residential real estate, interest spans projects of various sizes, although plots with building permits and developments that can move quickly into the construction phase are particularly sought after. In the PRS segment, investors are considering both completed projects and land earmarked for new developments.
The markets most frequently identified as attractive include Warsaw, Kraków, Wrocław, Poznań and Gdańsk. Investors see the strongest long-term rental demand prospects in these major urban centres.
Logistics Remains Attractive as Office Pricing Adjusts
The logistics sector continues to attract investor interest. Market participants are assessing both stabilised, fully leased properties generating predictable income and new developments offering potential for capital appreciation.
At the same time, greater pricing flexibility among sellers is becoming increasingly evident in the office market. Owners of assets that have been held in their portfolios for many years are now more actively considering disposals. More realistic valuations are gradually narrowing the gap between buyers’ and sellers’ expectations, which has been one of the main barriers to higher transaction volumes in recent years.
However, this does not automatically translate into yield compression. The most attractive buildings are maintaining and, in many cases, increasing their rental rates. This demonstrates that the performance of prime assets is becoming increasingly detached from the condition of the office market as a whole. Investors are focusing on individual properties with clearly defined value drivers and strong growth potential rather than making broad sector-based investment decisions.
Financing Costs Remain a Key Factor
Financing costs are also becoming an increasingly prominent topic in investment discussions. Conversations with banks suggest that financial institutions are preparing for various interest rate scenarios, including the possibility of rates rising.
The cost of debt remains one of the most important factors in assessing new projects. It directly affects expected returns, asset valuations and investment feasibility. However, it should be emphasised that current signals from the banking sector primarily reflect preparations for potential changes rather than a confirmed forecast of interest rate hikes.
The Final Quarter Could Bring More Transactions, with Greater Participation from Polish Capital
The market is gearing up for an active year-end. Current transaction processes suggest that the fourth quarter could see several major deals, both in established markets and in less obvious locations.
Some transactions may involve assets whose value investors intend to unlock by changing their use. Interest is therefore focused not only on properties generating stable income but also on projects offering opportunities for redevelopment, conversion to alternative uses or additional development. The potential to create value is becoming an increasingly important investment consideration.
The picture of the Polish market following EXPO REAL is clear. Investors remain active, but their approach is considerably more selective. Price discipline, asset quality, financing costs and the ability to launch investments quickly are the key priorities.
At the same time, the growing activity of Polish capital signals the market’s increasing maturity. Domestic investors are increasingly capitalising on emerging opportunities, and the momentum behind their activity could become one of the key drivers of transaction volumes in the near future.
If sellers’ price expectations continue to converge towards levels acceptable to buyers, the scope for completing transactions will expand significantly. Poland’s real estate market is therefore entering a phase driven less by risk tolerance and more by selectivity and the ability to identify value that has not yet been fully priced in.
