Global investors typically choose modern office buildings located in the largest cities in our country.
Most investment transactions on the commercial real estate market in Central and Eastern Europe (CEE) are still being concluded in Poland. Walter Herz analysts report that our country accounted for almost EUR 2.77 billion out of EUR 5.47 billion of the total volume of transactions carried out in the first half of this year in the CEE region. In the Czech Republic, investments in this segment of the market generated over EUR 1.6 billion, followed by Hungary, Romania and Slovakia with much lower results. Poland scooped almost half of the capital invested in commercial real estate in the CEE region in the first six months of this year.
The biggest number and the largest sale-purchase agreements were recorded in the office segment, with over 60 per cent of transaction volume. The purchase of retail real estate accounted for just under 16 per cent of invested capital, almost 14 per cent covered investments in the warehouse sector, and 10 per cent included investments in hotels, residential segment and other real estate.
– Investors’ attention is mainly focused on the office sector, for which the result of EUR 1.7 billion in transaction value achieved in the last six months was the best in the history of our market. Over 50 office buildings have been acquired in the largest business centers in the country. More agreements negotiations are underway, total value of which exceeds the value of transactions achieved in the first half of this year. Office real estate located in Warsaw enjoyed the largest investors’ interest with 60 per cent of transaction volume in this segment. The capital of Poland, where 26 office buildings were sold at that time, regularly strengthens its leading position on the office investment market in our region of Europe. Nevertheless, office properties located in the largest regional cities in the country are also very popular among the investors. If the transactions planned for implementation in the upcoming months are finalized, we have a chance to achieve an equally excellent result on the investment market this year, as in the record-breaking last year – says Bartłomiej Zagrodnik, Managing Partner at Walter Herz.
In the first half of 2019 in Warsaw, West Station I + II office complex, Warsaw Trade Tower, Ethos, Wronia 31, Piękna 2.0, Biura przy Bramie office building, and Centrum Marszałkowska complex have changed the owner. Malta Office Park, Poznań Financial Center and Nowy Rynek B investments were acquired in Poznań. Symetris Business Park I&II found a new owner in Łódź. In Cracow, the O3 Business Park I&II complex, .big, Rondo Business Park and K1 were sold. Moreover, Business Garden Wrocław in Wrocław, and Argon and Arkońska Business Park in Gdańsk have changed the owners.
Walter Herz analysts indicate that a growing group of investors in our country constitute companies from Asia, including South Korea, Singapore and the Philippines, who purchased assets worth EUR 0.5 billion in the first half of this year. Capital also flows to Poland from the USA, Western Europe and Africa, in particular from South Africa. There is also a growing share of investors from CEE, mainly from Hungary and the Czech Republic.
Investments in Poland are fostered by a good level of development of our economy and strong consumer demand. Stable growth of the commercial space lease market is also of great importance in this context. This is why investors now focus not only on the best secured lease agreements, the most modern facilities, located in the best points of the city. They also choose more demanding investments with a higher level of risk, but with a high potential for increase in the capitalization rate.
According to Walter Herz analysts, when it comes to the highest class office buildings, located in the best parts of Warsaw, the annual capitalization rate is around 4.50 per cent, and in less central locations it is slightly higher. The return on the largest regional markets in the country is around 5.40 per cent, up to 5.90 per cent.
