Savills latest report into the Polish commercial property market shows an exceptionally strong final quarter to end last year, boosting the year-end total to a 6 year high. The firm predicts the strength will continue throughout the first half of this year, helping towards an exceptional year for investment in Poland.
According to the report 2.7 billion Euros was invested in Poland last year, an 8% year on year growth and the highest annual volume since 2006. The firm is predicting strong activity across all sectors continuing into this year to bring 1 billion Euros investment in the first half.
Michal Cwiklinski, head of investment at Savills Poland, says: "After a strong finish to 2012 we anticipate the Poland investment market to maintain a stable level of activity in 2013 and forecast a year-end total of €2 to €2.3 billion. Looking ahead we expect to see sustained activity in the first half of 2013 with German funds still the leading investors in the prime end of the market. We are also seeing a lot of interest from international buyers in distressed assets and believe that Polish investors will play an increasing role buying both prime and opportunistic assets this year."
Some 60% of last year's transactions (22 out of 42) were finalised in the final quarter, including 9 transactions worth over 100 million Euros. That said: the largest transaction of the year actually took place in Q1, namely the €475 million purchase of a 77% stake in mixed-use development Zlote Tarasy by Axa Real Estate and CBRE Property Fund Central Europe LP.
Michal Stepien, senior consultant in Savills Poland, comments: "Investors put a strong focus on prime assets in 2012, which was reflected in the highest average lot size recorded in the history of Polish commercial property investment market, at approximately €64m. Hence, despite a relatively low number of investment transactions in 2012 the volume was the highest since 2006."
The report also noted a possible end to the domination of the retail and office sectors. According to the report the warehouse sector accounted for 17% of transactions last year, up from 6% in 2011. During 2012 11 transactions were completed in the sector worth 436 million Euros, a 200% increase compared to 2011's total of 144 million Euros in 7 transactions. The firm expects to see continued interest in the warehouse sector in 2013, with prime warehouse yields currently at 7.75%.
In the office sector, Warsaw remains the key destination for investment with only one office property sold outside the Polish capital in 2012. Savills states that prime office yields in Warsaw CBD currently stand at 6.00% and at 7.50% in prime, non-central Warsaw locations and expects these to remain stable.
The retail sector dominated the investment volume in 2012, accounting for 43% of the annual investment volume (down from 46% 2011). Prime achievable shopping centre yields will remain stable at approximately 5.60% in Warsaw, 6.00% in major regional cities and 7.50% in secondary cities.
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