News Article Avison Young industrial investment office Poland PRS report retail
by Property Forum | Report

The current results of the Polish investment market may not appear very optimistic at the moment, but this is only a temporary situation. The Polish real estate market has a solid foundation, and investors have proven to be highly adaptable, as evidenced by the results achieved in previous challenging years, reveals Avison Young's investment market summary for H1 2023, prepared by Research and Data Manager Paulina Brzeszkiewicz-Kuczyńska.

The COVID-19 pandemic significantly impacted the economy and customer behaviour, consequently affecting the real estate market and investors’ activity. However, buyers relatively quickly adapted to the new circumstances and the total investment volume reached €5.3 billion in 2020 and €5.9 billion in 2021. While these figures were lower than the volumes seen in 2018 and 2019, they still secured the market’s third and fourth-highest positions in terms of volume. In 2022, the outbreak of war in Ukraine further disrupted the market, leading to record-high inflation, increasing interest rates, and escalating investment uncertainty. Despite these challenges, the year concluded with a volume close to that of 2021 (€5.8 billion), once again highlighting the maturity and liquidity of the Polish real estate market.

However, 2023 is facing a significant slowdown as the one to bear the pricing clash. During the first half of the year, the total volume of completed transactions reached only €802 million, which was the first H1 period since 2015 below €1 billion. To put this into perspective, the transaction volume during the same period in 2022 was over three times higher. Particularly concerning was the performance in Q2, with a mere €150 million in investment volume, marking the lowest quarterly result in the last decade. Nevertheless, the current moment presents a significant opportunity for strategic purchases. Market prices are becoming increasingly favourable, and there are prospects for financing to be cheaper next year. Moreover, rental rates in Poland have not yet experienced a significant surge, while the solid economy continues to sustain cash flows.


  • €802 million – total investment volume in H1 2023
  • 33 transactions closed
  • 54% - industrial sector’s share in the total volume of H1 2023

Industrial market’s driving power

The industrial investment market was significantly impacted by the pricing clash in 2022. However, there was a slight improvement in H1 2023. Warehouses, with €436 million transacted accounted for 54% of the total investment volume during this period. Following a strong Q1, which ranked as the third-best opening in history after the record years of 2020-2021, Q2 saw only two deals - LeadCrest Capital Partners acquired the KGL warehouse in Czosnów from KGL and LCN Capital Partners invested in K-Flex BTS in Uniejów developed by Panattoni.

“H1 2023 did not witness any portfolio deals, and it is likely that the market will await the return of significant multi-asset transactions. To minimize risk, investors are currently focusing on small-scale projects,” comments Bartłomiej Krzyżak, Senior Director, Investment w Avison Young. Out of the 14 single-asset transactions, 12 were below €50 million in value. The most notable transaction was the acquisition of Campus 39 in Wrocław, which surpassed the €100 million threshold. The new pricing dynamics may entice major warehouse developers to consider acquisitions instead of constructing new assets to expand their portfolios in Poland. The costs of new investments are gradually approaching the attractiveness of acquisitions. Hopefully, the industrial investment market will continue its recovery trajectory and gradually address the pricing imbalance.

Industrial sector highlights:

  • €436 million – total sector’s investment volume in H1 2023
  • 14 transactions closed
  • No portfolio transactions

Regional office markets faded into the background

In contrast to the previous year, when 50% of the office sector’s transaction volume was attributed to regional markets, the focus of investors in 2023 shifted to the capital city.

During H1 2023, all 8 office buildings acquired were located in Warsaw. The transaction structure consisted of a mix of core+ and opportunistic assets, with plans for further redevelopment or change of function. Over 95% of the invested capital originated from companies based in CEE, the Baltics and Poland. In H1 2023, the office investment volume amounted to a modest €190 million, accounting for 24% of the total investment market in Poland during that period. Interestingly, out of the 8 office buildings transacted, 7 were situated outside the city centre of Warsaw. The largest deal, valued at €69.8 million and with Avison Young co-representing the seller, involved the acquisition of the Wola Retro office building by Adventum Group (CEE origin) from Develia.

Office sector highlights:

  • €190 million – total sector’s investment volume in H1 2023
  • 8 transactions closed
  • CEE investors dominating

Seeking new possibilities in retail

After several years of unquestionable dominance by retail parks and convenience schemes, the structure of the retail investment market is undergoing a shift in 2023. Investors are actively seeking new opportunities, primarily focusing on transactions involving both local shopping centres and those earmarked for redevelopment, as well as stand-alone retail warehouses.

The retail investment volume in H1 2023 reached €175 million, marking the lowest H1 result since 2010. During the beginning of the year, the market witnessed some transactions of regular shopping centres in regional cities and acquisitions for redevelopment purposes. In Q2, the closed deals primarily involved retail warehouses. Notably, New Gate Investment acquired the Castorama DIY store in Płock from P.A. NOVA, while LeadCrest Capital Partners made investments in three professional DIY warehouses owned by 3W, located in Warsaw (two stores) and Silesia (one store).

Retail sector highlights:

  • €175 million – total sector’s investment volume in H1 2023
  • 2/11 deals due to convenience retail in H1 2023
  • retail warehouses dominated in Q2

PRS – Potential niche in redevelopments?

Older buildings are making way for new ones, and the trend of redeveloping plots in the centres of large cities in Poland is intensifying. Furthermore, the plans include not only new development projects that arise after demolitions but also transforming existing office buildings into residential projects, including those in the Private Rented Sector formula.

The number of inquiries regarding analyses of the possibility of adapting existing commercial properties for new purposes is increasing. In such cases, the Avison Young team evaluates, among other things, the profitability of the investment, considering options of demolishing older office buildings or transforming them into PRSs. When planning such actions, investors seek well-located, easily accessible office buildings, with a rich offering of gastronomy and services in the vicinity.

The technical advisory team at Avison Young highlights that older office buildings, which often exhibit significant differences in standards compared to modern and energy-efficient Class A office buildings, in many cases might be relatively easily converted into residential function. “As a result, converting these buildings into residential spaces may prove to be more profitable than persisting with the upkeep and leasing challenges of increasingly less appealing office spaces. The Polish market is eagerly anticipating the first conversions of such buildings,” adds Tomasz Daniecki, Director, Head of Technical Advisory at Avison Young

What’s next?

One of the factors contributing to the decline in the number and volume of transactions in the first half of 2023 is the ongoing process of aligning price expectations between sellers and buyers. However, there are early indications that this situation may improve by the end of the year.

At present, numerous buyers are seeking to capitalize on the market conditions by submitting bids significantly below property valuations, hoping to secure favourable deals. However, many owners are not in a hurry to sell. This situation tends to change when circumstances arise, such as the need to liquidate a fund, depletion of funding, underperformance of the property, or an individual’s inability to proceed. We anticipate that opportunistic and value-add assets will dominate the commercial real estate market in Poland across all sectors during the second half of the year.

“The inflation is showing signs of slowing down and we expect interest rate situation to stabilise next year. We observe signals that financing may be cheaper next year. Cash flow remains stable as the Polish economy is resilient. Therefore, this is indeed a good time for investments at good prices,” concludes Michał Ćwikliński, Principal, Managing Director at Avison Young.