2011 proved to be a good year for commercial property market
27 Feb, 2012, Warsaw
2011 was a favourable year for the commercial real estate market according to “Marketbeat Poland – Spring 2012”, a report prepared by the leading global real estate services firm Cushman & Wakefield. The overall investment transaction volume rose by 30% compared with 2010 and the Warsaw office market finished the year on another record high take-up level.
“Marketbeat Poland – Spring 2012” presents a summary analysis of the office, retail, warehouse and hospitality markets as well as the investment market in Poland in 2011. The publication also provides forecasts for the future development of the real estate market.
KEY FINDINGS OF THE REPORT:
Commercial investment market:
„Poland’s strong economic performance, access to finance for commercially viable projects and a flurry of attractive schemes prompted a number of deals. The market is developing dynamically, despite a temporary setback at the end of Q3 2011. With continuous growth in transaction volume, Poland continues to be one of the most attractive destinations for capital” – said Wojciech Pisz, head of Capital Markets Group of Cushman & Wakefield, commenting on the latest edition of Marketbeat.
Market entrants included the Qatar Investment Authority, one of the largest sovereign wealth funds in the Persian Gulf, which has become the owner of the Miasteczko Orange office complex in Warsaw. As in previous years, foreign investors were the main driver of this growth, and raised their market share to 96%. The largest deal in 2011 was Austrian propco CA Immo’s acquisition of Europolis, which holds shares in five Warsaw office buildings and two regional warehouse parks.
„In 2012 the investment market will depend strongly on the situation prevailing in global financial markets, which saw lower liquidity at the end of the previous year. We expect that the biggest investment interest will focus on office buildings in Warsaw and the retail facilities in the cities with 100,000-300,000 inhabitants. Given the number of pending negotiations, the industrial sector’s transaction volume is likely to surge in 2012” – added Wojciech Pisz of Cushman & Wakefield.
Office stock in other business centres in Poland stand at 2,025,700 sq.m. However, steady growth in occupier demand bodes well for the office supply in those locations going forward. Prime stock in Krakow, the second-largest office market after Warsaw, totals 539,235 sq.m.
„A dearth of new completions in Warsaw pushed vacancy rates down. However, this had little impact on rents, with a number of projects under construction and in the pipeline. The share of prelets is rising, helping developers get access to finance that will kick-start their projects” - said Paulina Misiak, Partner, head of Tenant Representation Services, Office Department, Cushman & Wakefield.
Rents in prime shopping centres for units sized between 100 sq.m and 150 sq.m remained high at EUR 77-80/sq.m/month in Warsaw and at EUR 35-40/sq.m/month in other conurbations. Despite difficulties in sourcing adequate funding for new investments, several retail projects were launched. At the beginning of 2012 there was 800,000 sq.m of modern retail space under construction. The 2011’s supply level is likely to be maintained over the next two years.
„2011 was another stable year for the Polish retail market in terms of rent, vacancy rates and supply. 2012 supply includes shopping centres in Gorzow Wielkopolski, Grudziądz, Kielce, Rzeszow and Łomża. Tenant demand remains at a healthy level, and is focused on established retail space offering high footfall and revenues. Large international and domestic retail chains continued to expand in 2011 and new entrants are expected in 2012. Due to lower development costs retail parks are likely to become increasingly popular” – said Katarzyna Michnikowska, senior analyst at Valuation & Advisory of Cushman & Wakefield.
„2011 was a very strong year for the warehouse market in Poland, with both supply and demand surpassing figures recorded in 2010. Almost all regions reported lower vacancy rates, which pushed rents up slightly in some locations where supply was limited. Around 370,000 sq.m is under construction, with most projects being on a build-to-suit basis or subject to a prelet. This type of development model ensures developers a stable income stream over a longer lease term, and also benefits tenants, who are able to occupy facilities tailored to their exact needs” – said Tom Listowski, Partner, head of Industrial in Poland & CEE Corporate Relations of Cushman & Wakefield.
„The hospitality industry in Poland showed a sustained recovery in 2011. Poland’s term as chair of the EU Council in the second half of the year has benefited the market, contributing to the growth of both ADR and occupancy levels. The forthcoming Euro 2012 football tournament is likely to prove a further stimulus over both the short term and the longer term, because major sporting events often promote tourism. The positive trend is the growth in the number of hotels operated by well-known international brands, with clients continuing to seek value when selecting overnight lodging” – said Dorota Malinowska, hospitality consultant at Cushman & Wakefield.
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