According to the authors of the report, despite relatively low transaction volume realized in Q1, the entire 2019 may close with a slightly lower amount than the previous year. It is clearly visible that the office as well as logistics and warehousing assets will lead the way. However, the attitude of capital to commercial real estate is very cautious, hence the expected transaction volume in this sector will definitely be below the last year's amount.
Following the record-breaking investment volume achieved in 2018 and the extremely busy end to the year, investors spent Q1 of 2019 building up their strength. Approx. 722 million euro were transacted over the first three months of this year, which is a result significantly lower than that registered in the corresponding period last year—not surprising when we take into account the fact that January 2018 started with a bang in the shape of a purchase transaction completed in respect of a portfolio of retail properties for 1 billion euro, which was a price not previously recorded on the Polish market. However, the start to this year was a great deal more dynamic than the opening quarters for 2015–2017. When we consider the number of transactions currently being negotiated, we can expect another intensive year for the investment sector of the commercial property market.
The office sector—which saw completion of transactions worth approx. 536 million euro—attracted the most investor interest in Q1 2019. Despite the fact that Warsaw’s market accounted for 60% of that amount, investors are also keen to look to regional markets such as Kraków, Gdańsk and Katowice. It was Gdańsk indeed where the transaction for the highest amount was completed. The Philippines based ISOC holding company purchased the Argon building in the Alchemia office complex for the amount of 92 million euro. Furthermore, two office buildings in Arkońska Business Park also changed hands. In turn, Kraków saw completion of purchase transactions worth nearly 94 million euro as finalized with regard to three buildings: the .big office building was purchased by Credit Suisse, Globalworth Poland RE expanded its portfolio with the purchase of Rondo Business Park, while K1 was purchased by FLE GmbH on behalf of its Luxembourg based fund. Additionally, two office buildings located in Katowice also changed hands.
Wartość transakcji w sektorze biurowym na rynku warszawskim osiągnęła ok. 320 milionów euro. Otwarty w końcówce ubiegłego roku budynek Biura przy Bramie, będący częścią Browarów Warszawskich, został zakupiony przez GLL RE. Obiekt jest w całości zajęty przez WeWork, L’Oréal, Epam i Sony Interactive Entertainment Polska. Inne znaczące transakcje obejmują zakup biurowca Atrium International przez Strabag RE, Graffit na Mokotowie przez Zeus Capital Management czy biurowców Riverside i Grójecka 5 przez Cromwell European REIT. To właśnie ten ostatni nabywca przejął w tym samym portfelu wspomniane wcześniej dwa biurowce z kompleksu Arkońska Business Park.
The low investment volume in the retail sector achieved in the first three months of this year and the small number of transactions currently underway clearly show that Poland is also experiencing a slowdown as regards investor interest in this particular sector. Even though Poland’s modern retail market is built on solid foundations and doing quite well, investors are asking numerous questions regarding the future of traditional retail schemes, particularly set against the background of the increasing share in the market of e-commerce and the trading ban applying to more Sundays now. Transactions completed in Q1 2019 were worth a mere 38 million euro and regarded only small retail schemes located on regional markets. Investor interest in small shopping centres and retail parks of the “neighbourhood convenience centre” type has been increasing for several quarters now and we expect this trend to continue.
In turn, logistics and warehouse properties are attracting increasingly more investor interest—this results from the favourable conditions prevailing in the sector as driven by the dynamic growth of Poland’s economy. The total volume of transactions completed in the sector over the first three months of 2019 came to approx. 58 million euro, which accounts for approx. 8% of the entire investment volume achieved in that period. Examples of properties that changed hands include 7R Park in Czechowice–Dziedzice, Hillwood in Warsaw and a Panattoni scheme around Wrocław. The logistics and warehouse sector has the highest potential as regards increasing its share in investor portfolios over the coming quarters. Build-to-suit schemes are now attracting particular interest and they are often purchased while still under construction. Furthermore, it is expected that the warehouse sector will experience strongest yield compression, in particular as regards unique assets with long-term leases concluded with e-commerce operators—yields could drop here much below 5%. Lowest yields for other top quality industrial and logistics properties stand at approx. 6.25%–6.50%.
Na koniec ubiegłego roku stopy kapitalizacji w segmencie handlowym spadły do poziomu ok. 4.25% i nie jest spodziewana ich dalsza kompresja, w dużej mierze ze względu na brak obecnie toczących się na rynku negocjacji dotyczących aktywów najwyższej klasy.
Yields for prime office assets located in Warsaw stood at approx. 4.75% and they are expected to compress further. However, the first three months of 2019 saw a drop in yields on the most developed regional markets, i.e. down to approx. 5.50%–5.75%.
"Compared to the mature markets of Western Europe, yields in Poland are considerably higher and there is good availability of top quality schemes. This is the reason why foreign investors consider Poland to be an extremely attractive market. The record-breaking transaction volume of more than 7.2 billion euro achieved last year might not be exceeded this year, however the positive investor outlook and the high number of acquisitions currently under negotiations allow us to be positive about the figures that we expect to achieve through the year. In particular when we take into account the increasing flow of investment capital from markets across East Asia (e.g. Singapore, South Korea, the Philippines , Malaysia) attracted by Poland’s stable economy, positive progressive growth forecasts and the relatively high level of liquidity of assets." - Piotr Krawczyński, Head of Capital Markets CEE, BNP Paribas Real Estate Poland.
Source: BNP Paribas Real Estate