Investment volumes in Poland surpass record €7.2bn in 2018

Investment volumes in Poland surpass record €7.2bn in 2018

According to Savills, 2018 was an all-time record year for the real estate investment market in Poland with a total volume of over €7.2bn and more than 100 transactions completed. This reflects nearly 45% growth year-on-year. Savills reports that record volumes were registered in each of the major commercial sectors, with over €2.75bn invested in the office sector, c.€2.5bn in the retail sector and an impressive €1.84bn in the industrial sector. €120m was invested in the hospitality sector.

 

Marek Paczuski, Deputy Head of Investment at Savills in Poland, commented: “Following the dominance of retail transactions for three consecutive years (2015-2017), the office sector was the major focus for investors last year. The annual results for the retail sector were still impressive, with over 70% of the volume in the sector accounted for in the first quarter of the year. Investors have gradually shifted their attention towards the industrial sector, which recorded significant growth from quarter to quarter.”

 

Indeed, investment activity in the industrial sector was outstanding, reflecting more than 83% growth year-on-year. A shift from retail towards the industrial sector results from the dynamic growth of the logistics market globally, boosted mainly by the rise of e-commerce.

 

John Palmer, Head of Industrial Investment at Savills in Poland, said: “Strong foundations for further, long-term growth of the logistics market constitute a major magnet for investors. Moreover, logistics assets appeal to a wide group of buyers, from core sovereign wealth capital to core plus and more opportunistic capital, offering a wide range of lot sizes with almost no upper limit in the case of large platform deals.”

 

Last year also showed an increased inflow of new capital, coming mainly from the APAC region, primarily targeting core office or logistics assets, as well as warehouse portfolios. South African investors, traditionally interested in retail assets, have also expanded their interest into the industrial sector.

 

2018 was also a record year in terms of prime yields. Marek Paczuski comments: “In 2018 prime yields reached record levels in the Polish market, in all major property sectors, having significantly broken the psychological barrier of 5% in the office, retail and logistics sectors. This sets new benchmarks for core assets and opens the door for some yield compression for non-core assets and locations.”

 

To be more concise, some 2018 transactions in the office sector were closed at ca. 4.70-4.75%, while in the retail sector they were even as low as 4%. The prime yield in the industrial sector was ca. 5.15%.

 

The company anticipates that the positive investment sentiment in Poland will be maintained throughout 2019, driven by GDP growth, high consumer spending, record low unemployment figures and growing public investments. Investment activity is expected to be particularly strong in the office and warehouse sectors. Prime yields are expected to stabilise at current levels.

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