Investors are increasingly looking at Polish regional cities such as Krakow, Wroclaw, Lodz, Poznan, Tricity and Katowice, says Colliers International in its latest research report.
Colliers International in cooperation with Deloitte Legal have just released a guide to investors that gives the overview of investment, office, retail, and industrial markets in 6 regional cities in Poland. The report also analyses types of transactions, taxes, risks, as well as the government’s draft of the REIT legislation. The key findings of the report include the following.
Optimistic macroeconomic prospects for Poland
The Polish economy is forecasted to continue to grow approximately twice as fast as the EU average. Cumulative GDP growth of over 15% by 2020 is anticipated. Poland is anchored by conservative local capital markets, state participation in key industries including the banking sector, low debt levels per capita and a strong domestic consumer market. The public debt burden of 54.4% of GDP is among the lowest in the EU and favourable compared to +90% in the EU, and ca. 100% in the US.
Poland is the CEE regional diversification leader
Unlike most of its CEE peers, Poland is seeing a substantial proportion of investment channeled into the regions (including second- and third-tier cities) versus the capital, a sustained trend since 2013, which highlights the fact that Poland has been successfully underwritten nationwide by international purchasers.
Assets acquired in the Polish regions made up 72% of national flows in 2016 and 75% in H1 2017. The absolute totals of €3.34 billion in 2016 and €1.13 billion in H1 2017 outshone all CEE peers.
The capital continues to be mainly of interest to managers from the UK, US, Germany, Asia and from South Africa (€2.0 billion invested in the last 18 months). The largest players of H1 2017 include Echo Polska Properties, Pradera, DAWM, Octava, U City and CPI Property Group.
Poland investment volumes H1 2017
Over €0.9 billion was invested in retail assets accounting for 60% of the total investment volume. €260 million was allocated to the office sector (17%). High investment activity in the hotel sector resulted in a historical record of €0.34 billion and 23% market share.
No significant investment activity in the industrial sector was noted in H1 2017; however, it is expected that the volume in this sector in 2017 will be high as several deals are at advanced stage, including the sale of Logicor, Blackstone’s European warehouse operation, to China Investment Corporation, the biggest private equity real estate deal in Europe on record (total volume of ca €12.25 billion).
Nearly €0.6 billion was invested in Warsaw (39% of overall volume). Regional markets absorbed EUR 0.9 billion (61%), which is a continuation of the investment trend for search for good assets in rapidly regional markets at all asset classes including offices.
The current status of REITs in Poland
The commercial real estate market in Poland has been developing for 25 years with only minimal participation from Polish investors. The act concerning REITs in Poland will most likely apply only to investment in residential real estate. The legislative process is ongoing and is currently at the stage of making further amendments to the second version of the draft focused on covering the commercial real estate sector.
