King Sturge has launched the latest edition of its yearly report on the commercial property markets of Poland and despite low investment activity and caution among occupiers, Poland is expected to recover quickly.
The report includes an economic outlook for the country together with a review of the investment, office, industrial and retail sectors of the property market.
Poland is expected to recover quickly from the downturn with positive GDP growth forecasts for 2010 and 2011 of 1.3% and 4.3% respectively. These are the highest of any EU-27 country and reflect the relative health of Poland's banking system and its limited reliance on trade compared to other economies in the region.
The volume of investment activity fell by more than 45% during 2008 to 1.7 billion, approximately 1/3 of the 4.9 billion transacted at the market's peak in 2006. To date, few sales have completed during 2009 with buyers and owners at a standoff.
During the first half of 2009, 174,100 m² of new office space was delivered to the market taking the total stock to 3.15 million m². The majority of the projects were in the Mokotów or Upper South zone. A further 86,000 m² of supply is forecast during the second half 2009. The majority of supply will be outside the City Centre zones. Despite turmoil in the financial markets, 2008 was a record year in terms of letting activity with a 7% increase year on year in take-up to ca 520,000 m².
More than 1.3 million m² of warehouse and logistics space was delivered to the market in 2008 and a further 843,900 m² in H1 2009 taking total stock to almost 6.0 million m². Aside from Warsaw, the major markets are Upper Silesia, Central Poland, Wielkopolska and Lower Silesia. New supply in H1 2009 in these four markets accounted for over 70% of the total. We estimate that there is currently ca 160,000 m² of warehouse space under construction which represents ca 3% of total current stock.
Despite a dip in retail sales in Q1, Q2 has shown some signs of recovery with the overall result for the first half of the year mildly positive at +0.4%. While improving consumer confidence and investor sentiment is undoubtedly positive news for retailers, rising unemployment, forecast by BMI to reach 13.5% by the end of 2009 (currently estimated at 11.2%), will continue to put pressure on consumer spending. Modern retail stock in the 40 largest Polish cities is estimated by King Sturge at ca 6.5 million m² or 587 m² per thousand inhabitants. In the 10 largest cities the average modern retail provision is over 700 m² per thousand inhabitants, which can be accounted for by higher average earnings. Despite Warsaw having over 1.3 million m² of modern retail space there appears to be little evidence of over supply. In the current climate the pace of openings of modern retail stock is set to slow over the next two years with ca 35% of all planned developments already put on hold due to lack of financing.
Source: King Sturge