Poland has diverged significantly from its neighbors in the south and east in terms of market trends and size. The prospects that the success story will continue are good, considering the moderate national debt, essential improvements to the transportation infrastructure and the large pool of cheap and skilled labor. This is the conclusion of the study 'Poland: Focal point of international investors' published in German, English and Polish by IVG Immobilien AG.
The Warsaw office rental market has been experiencing a steep upswing since mid-2010.
The study is based on two key themes that appear to be contradictory at first glance. At present, many investors believe that investments in the Polish real-estate market are justified by the pace of growth of the country's economy and, consequently, its commercial real-estate markets. Other investors cite stability as a major reason for a buy recommendation.
What at first glance appear to be diametrically opposed explanations actually constitute a textbook example of real-estate market development. "The economic classification of Poland as a CEE country now seems to be outdated, as the individual countries of Central and Eastern Europe have shown different development patterns in the last two decades," says Maciej Zajdel, Head of IVG's Warsaw branch.
The Warsaw office rental market has been experiencing a steep upswing since mid-2010, leading to a clear reduction in vacancies and a strong recovery in rent levels. Measured in terms of rental trends, the Warsaw market remains highly cyclical by European standards.
According to a forecast by IVG Research, the rental market is set to return to a more stable situation in the next two years: the expected high demand for office space in 2012 and especially 2013 will possibly be met by a large number of new construction projects. "Irrespective of the sound market structure of the Warsaw real-estate market and its new B locations, the current attraction of Poland is also to be regarded as a reflection and yardstick of the current situation on the other real-estate markets in Europe," states Thomas Beyerle, Head of Research at IVG.
Rising outsourcing of sub-processes by international companies to Polish subsidiaries or specialized service providers has contributed to the increasing maturity of other office rental markets in large cities other than Warsaw. The limited, albeit dynamically increasing capacity of these office locations means market development volatility is very pronounced.
"However, entry is made more attractive to property investors through high initial yields for prime properties from 7.25% to 7.5%," adds Beyerle.
Consequently, there will continue to be a number of suitable investment opportunities on the market in 2012. "However, more restrictive lending conditions imposed by real-estate financiers across Europe could prove to be an investment obstacle, although international banks offer relatively attractive conditions for investments in Poland," predict the IVG analysts.
Source: IVG Immobilien AG