According to the latest report by Cresa, commercial real estate investment volume in Poland surpassed €2.85 billion, the second-best result in the country’s history. The key growth drivers were the office and industrial markets which together generated just more than 84% of the investment volume. The industrial market attracted nearly €1.08 billion worth of investments, which represented an all-time high, while the office market saw nearly €1.33 billion worth of deals, the second-best result of the segment in the history.
“Before the outbreak of the COVID-19 pandemic, we expected the investment market to set another record this year. Despite the historically strong performance in the first half of the year, investment activity is likely to slow down in Poland in the second half and to bounce back quickly in the next 12 months,” says Paweł Nowakowski, Head of Capital Markets at Cresa Poland.
The H1 investment volume was nearly 7% up on the same period last year. The first half of 2020 saw 52 transactions totalling more than €2.85 billion. The office and industrial markets led the way in the first half with a total of €2.41 billion worth of deals. Retail investment volume amounted to €0.45 billion (nearly 16% of the total volume). Due to the exceptionally difficult situation on the hospitality market, which was under lockdown for a considerable part of the first half of the year, no transaction was closed on this market.
“Investors’ appetite for the industrial sector remained strong, with the investment volume exceeding €1 billion, a record-breaking result for this sector in the first half of a year. Prime industrial assets offer long-term leases, and the rapid expansion of e-commerce is another driving force behind the growing demand for this asset class coming from tenants and investors alike,” adds Paweł Nowakowski.
A significant amount of investment activity was generated by Savills Investment Management, which acquired industrial properties for a total value of more than €290 million across three transactions. Among other leading investors of the first half of 2020 was CPI Property Group, which bought five office buildings in Warsaw for close to €230 million. Another notable transaction was the sale of a 61.49% stake in GTC’s office and retail portfolio to the Hungarian-based investor Optima Investment for approx. €550 million.
Regarding transaction sizes, deals ranging between €50-100 million that usually dominated on the market in previous years also had the largest share of the investment volume in H1 2020 – it stood at 34%. Transactions ranging between €100-200 million accounted for 28% of the total investment volume.
“In mid-2020, yields for prime office buildings in Warsaw’s CBD with strong covenants and long-term leases stood at 4.5%. The most attractive industrial yields were 5.5% for BTS schemes let to a single tenant under a ten-year or longer lease. Retail yields averaged 5.0%, largely for dominant large-city shopping centres that are successfully adapting to ongoing demographic changes and evolving consumer habits,” comments Paweł Nowakowski, Head of Capital Markets at Cresa Poland.
