The investment volume on the Polish commercial property market is estimated to have reached EUR 1.05 billion in Q3 2020. According to real estate advisory firm Savills, the industrial sector accounted for approximately 70% of that total, which illustrates the current investor preference for logistics properties, especially facilities dedicated to e-commerce.
Preliminary analyses from Savills show that industrial investment climbed to approximately EUR 740 million in Q3 2020, accounting for a vast majority of the total investment activity in that period. Savills also note that the share of the industrial sector is likely to be higher when the final data for Q3 is fully known.
The industrial sector has already posted the strongest annual performance ever. Its previous highest result of EUR 1.8 billion was recorded in 2018. Logistics investment has already hit almost EUR 1.9 billion in YTD 2020, accounting for about a half of the total investment activity on the commercial property market in that period. The industrial sector also saw an almost 200% increase in the transaction volume in Q1-Q3 2020 compared to the same period last year.
“Investment activity in 2020 clearly shows that the industrial sector is the dominant real estate investment sector. 2020 is already a record year for warehouses which have never before posted such a good result and are likely to remain the top-performing sector in terms of commercial real estate investment volumes by the end of this year. Industrial assets have become the first choice for investors, boosting investment demand, which in turn has pushed prime yields down,” says Tomasz Buras, CEO, Savills Poland.
In Q3 2020, the total commercial property investment activity across all sectors (EUR 1.05 billion) fell by approximately 12% compared with the previous quarter and was down by around 43% on Q3 2019. The investment volume for transactions finalised from the beginning of 2020 till the end of Q3 2020 is estimated at approximately EUR 3.98 billion, down by around 14 pp on the same period last year.
According to Savills analysts, the subdued investor activity in Q3 was due to the Covid-19 pandemic. The Q2 investment volume largely comprised transactions commenced in 2019 or early 2020. Investment in Q3 was relatively low as market players scaled down activity during the lockdown period and the economic downturn caused by the pandemic, which weighed on investor sentiments.
The runner-up was the office sector, which turned over approximately EUR 210 million in Q3 and EUR 1.54 billion since the beginning of the year. Investment activity in the retail sector remained muted. Retail investment amounted to around EUR 90 million in Q3 and to a mere EUR 535 million since January, which accounts for just 13% of the total transaction volume and represents a 43% decrease on the same period last year.
“We anticipate that as usual the final quarter of the year will be crucial for the full year investment volume. We estimate that the transaction volume is likely to surpass EUR 6 billion by the end of the year, which will represent a 20-25% year-on-year decrease. And yet, despite Covid-19 challenges, it will most probably be the third-best result in the history of the commercial real estate investment market in Poland,” concludes Tomasz Buras, Savills.
