- The Polish commercial property market is an increasingly attractive destination for value-add investors
- Real estate yields move out against the backdrop of economic uncertainty and the situation in financial markets
- European capital is clearly the main driver of buyer activity
As expected, financing constraints and economic uncertainty saw the Polish commercial real estate market underperform in early 2023. However, some investment funds were out hunting and analysing value-add opportunities as the industrial and logistics sector made a strong start to the year.
Rents continue to grow for almost all asset classes, partially offsetting the yield decompression of around 0.25 pp in the first quarter. Global bond markets still offer attractive returns, which has led to the repricing of safe assets such as fully-let commercial properties. In addition, the property market and the office sector in particular are entering a phase of lower supply levels, which is expected to further dampen investment activity for new buildings. Green shoots of investment recovery in Poland are expected in the late third quarter or early fourth quarter of the year
says Mateusz Skubiszewski, Head of Capital Markets, BNP Paribas Real Estate Poland.
Fewer transactions but investors are seeking opportunities
Warehouse rental growth is driving potential buyers to target facilities whose tenants will be able to accept higher costs once their current leases expire. Fundamental to this will be the economic and financial standing of tenants and their ability to pay higher occupancy costs, including service charges. Supply and demand levels and the availability of real office relocation alternatives will also play a key role
says Marta Gorońska-Wiercioch, Associate Director, Capital Markets, BNP Paribas Real Estate Poland.
The market is becoming more buyer-friendly
For this asset class, investment strategies should take account of moderately favourable forecasts for 2023 with a projected decline in real consumer spending of around 0.7%.
Given the tough market environment, 2022’s impressive office investment volume, which was over 24% higher than a year earlier, and the first quarter results, achieving solid full-year turnover growth is likely to be a major challenge
adds Mateusz Skubiszewski.