The value of commercial real estate purchase transactions in Poland exceeded EUR 6 billion in 2018 and was the highest in the history of the market, estimate specialists from Walter Herz.
– Poland is one of the few countries in Europe where investment activity in the commercial real estate segment is growing. The state’s good economic position, including indicators regarding the rental of commercial space, create favorable conditions for investment. Walter Herz specialists calculate that the value of investments in commercial real estate in Poland in 2018 exceeded EUR 6 billion. The contracts concluded were dominated by contracts for the purchase/sale of commercial real estate, which covered approximately 42%. overall investment volume. A little less, over 40 percent. the value of all investments was related to changes in ownership of real estate in the office segment. Investments in warehouse facilities accounted for approximately 16% and in hotels 1.5%. – we read in Walter Herz’s summary of the year.
Sources of capital
Foreign capital flows to Poland mainly from South Africa, South Korea, Singapore and the USA. One of the main players on our investment market, similarly to the region of Central and Eastern Europe, has long been German and Austrian funds. Over recent years, they have built large real estate portfolios in Poland and are still active on the Polish market, especially when it comes to top office properties, although their share in the transaction volume has recently been decreasing.
– German investors’ interest in the Polish real estate market, especially in the office and logistics segment, remains at a high level, which was noticeable last year. Nevertheless, strong competition for German funds today comes from investors from Asia, South Africa and North America. – said Bartłomiej Zagrodnik, managing partner and president of Walter Herz.
The commercial real estate sector recorded the highest share in the transaction volume in 2018. The largest transaction in this segment was the sale by ARES/AXA/Apollo Rida to Chariot Top Group of a portfolio of 28 retail properties for a total amount of approximately EUR 1 billion. The EPP fund finalized the first stage of the purchase of M1 shopping centers, taking over centers in Czeladź, Kraków, Zabrze and Łódź for approximately EUR 360 million. The Malaysian EPF fund bought Galeria Katowicka for EUR 300 million.
However, the demand for retail facilities is starting to decline. According to Zagrodnik, in the near future, office and logistics properties will be preferred by investors.
– The biggest difficulty for buyers is the deficit of investment products. The small new supply in the office segment, which should be taken into account this year and next, in view of the continuing high demand for office properties, will result in an increase in competitiveness in this market segment. All the more so because Warsaw office buildings are becoming more and more attractive on the market due to the increasing tendency in rents and low vacancy rates in the agglomeration. – explained the president.
Offices are starting to dominate
Last year saw a growing number of transactions in the office real estate segment. In the third quarter of this year The largest transaction on the Warsaw office market was the sale of two buildings of the Gdański Business Center complex for EUR 200 million. The Spektrum Tower office building also changed its owner and was taken over by Globalworth for EUR 101 million. Globalworth Poland Real Estate also concluded an agreement with Unibail-Rodamco-Westfield for the purchase of two Warsaw office buildings, Lumen and Skylight, with a total area of 45,000 sq m for EUR 190 million. m, which are part of the multifunctional Złote Tarasy complex located next to the Central Railway Station, Walter Herz mentions.
At that time, Skanska sold the first office building in the capital’s Generation Park investment for EUR 83 million. The developer also concluded a sales transaction regarding buildings C and D of the Silesia Business Park office complex in Katowice, which were purchased for EUR 59 million by the ISOC Group investment group based in Manila, Philippines. Additionally, last year’s transactions included the Biuro przy Bramie office building, part of the Browary Warszawskie project by Echo Investment, which will be purchased by a fund managed by GLL Real Estate Partners for EUR 76.5 million after obtaining the occupancy permit.
White Stone Development plans to purchase two office buildings located in Warsaw at ul. Cybernetyki 7 and 7a, offering a total of approximately 15,000 sq m. sq m of leasable area. The Singaporean Cromwell European REIT fund, in turn, plans to take over the Riverside Park and Grójecka 5 office buildings in Warsaw and the Arkońska Business Park office building in Gdańsk from Artemis Acquisition Poland for over EUR 72 million.
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