The past year was record-breaking in terms of the investment transaction volume in the Poland’s real estate market, according to a report by BNP Paribas Real Estate Poland. The EUR 7.65 billion achieved in 2019 is 6% higher than in the previous year. That dynamic growth was the result of the decent availability of various asset classes, which combined with high investor demand and attractive rates of return stimulated the market's further development.
In the analysed period, half of the total investment volume – more than EUR 3.8 billion, came from office segment, where nearly 70 transactions – both single and portfolio – were completed, covering nearly 100 buildings with a total area of more than 1.4 million sqm Warsaw accounted for approximately 60% of the total volume, which totalled over EUR 2.4 billion. The largest transactions in the capital included the acquisitions of Warsaw Spire A by Immofinanz for EUR 386 million, Warsaw Financial Center by CPI PG for EUR 275 million and Eurocentrum Office Complex also by CPI PG for EUR 255 million. Investors were also looking towards regional markets.
Kraków and Wrocław are the leaders in terms of the size of assets, but other destinations have also become an object of interest for investors. In regional markets, the largest volumes were generated by the transactions of acquisition of office buildings: Argon in Gdańsk by ISOC Holding, Nowy Rynek in Poznań by Franklin Templeton Investments, Business Garden in Wrocław by ISOC Holding or Globalworth's purchase of the Podium Park complex in Kraków
Piotr Goździewicz, Director, Capital Markets, BNP Paribas Real Estate Poland
In 2019, the retail property sector generated more than ¼ of the value of all transactions (26%) – EUR 1.9 billion. Although this result is lower than in the record-breaking 2018, it is definitely better than the forecasts of experts, who, taking global trends into account, expected investors to refrain from buying retail assets. Investors were interested in retail schemes of different classes, with solid foundations, guaranteeing a stable return on investment. There was demand for assets in the region a well.
A significant share in the total volume of transactions in this segment concerned repositioned retail properties. Refreshing the offer or extending the tenant mix with new retail brands, service providers or entertainment elements, allowed for increasing the prestige of a particular asset. One of the most important transactions in this sector last year was the acquisition of all shares of external investors in Cromwell Polish Retail Fund, comprising seven shopping centres, by Cromwell Property Group
Mateusz Skubiszewski, Dyrektor zarządzający działem Rynki Kapitałowe w BNP Paribas Real Estate Poland
The appetite of investors for industrial and logistics properties in 2019 remained high. The availability of assets in this segment, however, was lower than in previous years, which translated into a lower transaction volume of about EUR 1.45 billion. Facilities built for e-commerce operators were the most popular, with asset prices reaching record-high levels unseen before.
It is worth mentioning that new segments of real estate had their share in the volume of investment transactions that took place in 2019. The first segment consisted of residential schemes for rent and institutional lease platforms which are currently being developed. The other one was the private student housing platforms. Residential projects for rent are currently being developed by companies such as Echo Investment (Resi4Rent platform) or Golub GetHouse, which launched the Inspirentals brand in 2019. In 2019, only a few transactions were concluded in the institutional rental segment. One of them was a transaction by Catella European Residential Fund, which purchased a project in Kraków consisting of apartments for rent and a student house from Hines for EUR 20 million. The private student housing market is currently facing a limited number of such investment products. Therefore, despite the great interest of investors, the number of transactions is small.
In 2019, Kajima Student Housing and Griffin RE purchased the Student Depot private student housing platform for approximately EUR 60 million from Oaktree Capital Management. Further transactions in both the rental and student housing sector are expected to appear on the horizon soon
Anna Baran, Head of Residential Department, Capital Markets, BNP Paribas Real Estate Poland
In the fourth quarter of the previous year, yields in the office and retail sector remained stable.
For prime office assets yields have oscillated around 4.50% in Warsaw and from around 5.50% to 6.00% in major regional markets. Prime yields for truly top-class retail assets range from 4.25% in Warsaw to around 5.00% in other major markets
Patrycja Dzikowska, Head of Research and Consultancy, BNP Paribas Real Estate Poland