Poland’s commercial real estate market is showing strong signs of stabilisation. According to the latest report by BNP Paribas Real Estate Poland, the total investment transaction volume for January to September 2024 exceeded €2.68 billion, marking a year-on-year increase of nearly 57%, with office assets being the top-performing sector.
2024 headline deals
With a 37% share of the commercial real estate investment volume, offices have outperformed in Poland this year. This market segment saw 31 transactions between January and September 2024, with a combined value exceeding €990 million - more than three and a half times the volume recorded during the same period last year.
The third quarter of 2024 witnessed several major transactions. Stena Real Estate acquired Skanska’s Studio B in Warsaw, spanning 18,000 sqm of office space, for over €86.3 million in what was the largest office deal to complete in the three months to September. Meanwhile, Sona Asset Management acquired a 49% stake in the CPI (Vulcanion) office portfolio from the CPI Group, representing 315,000 sqm of office space.
Industrial and logistics assets, which continue to be a strong driving force in the investment market, came second with a 28% share. Between January and September 2024, this sector attracted investment deals totalling more than €751 million, of which 59% was transacted in the third quarter of 2024. Investment activity in the third quarter was dominated by US investors who invested over €255 million in this sector, representing 57% of the quarterly volume. The largest transaction was Greykite’s acquisition of the Diamond Business Parks portfolio from White Star, comprising 141,000 sqm of industrial and logistics space.
The private rented sector (PRS) assets also garnered strong investor interest, with nearly €240 million worth of transactions.
Stabilisation and a positive outlook
Global financial markets are showing early signs of stabilisation. In Poland, prime commercial property yields remained unchanged over the quarter, with some asset classes likely to experience compression over the coming quarters.
Poland’s commercial properties are becoming increasingly attractive compared with Polish treasury bonds. However, due to existing risks, they have yet to attract larger volumes of international capital. While Poland must continue to compete strongly on the price-risk trade-off against Western European countries, the main sources of risk such as armed or customs conflicts, migration or fiscal crises are shared across the continent.
“Benefiting from stable yields and rental growth, investors are likely to achieve higher total returns. Recently, there has also been renewed momentum in transactions involving portfolio assets, indicating that investors are identifying strategic opportunities for their optimisation and value growth while recognizing positive macroeconomic forecasts and anticipated fund disbursements under the National Recovery and Resilience Plan in 2025 and 2026”, comments Karolina Wojciechowska, Associate Director, Capital Markets, BNP Paribas Real Estate Poland.
Interest rate cuts boost the market
The successive interest rate cuts by the European Central Bank bode well for the investment market, suggesting that it may be entering a new phase of the economic cycle. According to forecasts, the ECB’s deposit interest rate is expected to decline to 2% by the end of the year, though the likelihood of it falling below this level in the longer term appears minimal. As a result, the recovery in transaction volumes is likely to be a gradual process requiring adaptation to the new monetary policy framework.
“Nevertheless, this year’s combined investment volume is on track to exceed €3.5 billion, surpassing 2023’s total by over 65%. Additionally, the PRS is expected to record the highest investment transaction volume in history, providing, alongside other alternative asset classes, new opportunities for investors. This will, in turn, add depth to the market and increase its resilience to economic fluctuations in the future”, says Mateusz Skubiszewski, Senior Director, Head of Capital Markets, BNP Paribas Real Estate Poland.
