A gradual recovery in economic performance and business confidence this year will set the European real estate market up for a stronger recovery in 2014, according to the latest report by CBRE, the world's leading commercial real estate advisor.
European property markets faced a difficult economic environment in 2012, with heightened fears of a euro break up in the first half and output flat or falling across almost all the continent by the year end. 2013 has started more positively, with the threat of euro disintegration receding, together with encouraging news from China and the US, underpinning some signs of improvement in market sentiment and business confidence.
Outlook for Poland
According to CBRE experts, with its continuously positive GDP dynamics and substantial infrastructure investment, Poland was among the strongest performers in terms of economic activity in Europe in 2012, along with Germany and Sweden. This reflects positively on the performance and prospects of the Polish property market.
Colin Waddell, Managing Director at CBRE for Poland, commented:
"Improving sentiment and better fiscal stability within the Eurozone is having a quiet but positive knock-on effect in Poland, a country that in itself is one of the brighter spots on Europe's economic map. It may not be overly visible in 2013 but we anticipate economic confidence to steadily build as we draw closer to 2014 and beyond. The current healthy levels of occupier activity in the industrial and office sectors are likely to remain and consequently investor interest in Poland will continue."
While office take-up across Europe was around 7% down in 2012 compared with the previous year, in Poland it went up by 9%, due to occupier activity both in the capital city as well as in the regional agglomerations, mostly Kraków, Wroc³aw and the Tricity. This largely results from global and European corporate behavior heavily focused on cost management, with companies tending to consolidate operational portfolios and looking to expand operational networks into emerging markets, including Poland.
In the retail sector, global players continue their expansion, with 20% of them looking to open more than 30 stores in 2013. Poland comes fifth among the markets named as their key targets for expansion in Europe, and with a total of ca. 140 stores planned to open around the country in 2013, Poland scores third after Germany and Spain in terms of the overall expansion potential. In Poland, as well as in Europe, the theme of polarization is a prominent feature of the retail market, with retailer demand heavily focused on the best quality prime space in the largest cities. With a limited supply of new space in the most desired projects, in 2013 retailers will continue to find it difficult to secure the right type of space in their target locations.
Outlook for Europe
Occupier markets are likely to remain relatively static over the year, with rental growth most likely confined to a limited number of prime retail and office locations, where demand exceeds supply. While demand and rents for industrial space are expected to be broadly flat through 2013, new requirements to support multichannel retail strategies are a potential bright spot. Both occupational and investment markets in Europe will continue to show a marked north/south divide, with core locations in the north expected to record stability, or even price rises, for prime assets.
The heightened polarization between prime and secondary property was a major theme of 2012 and a key question for 2013 is whether this will ease. A greater appetite for property risk would improve this situation, but the availability of new debt for secondary is unlikely to improve much, if at all, in the coming year, meaning the outlook for these assets hinges on the economic fortunes of the region. Nevertheless, improved prospects for better quality secondary assets in stronger markets, which began to attract more interest in late 2012, look set to continue in 2013.