Poland sees record levels of investment volume in Q4 2015
19 January 2016
The volume of investment in commercial property in Poland exceeded EUR 4.0 billion last year, according to the latest research by Savills. This is the second highest volume and the most active last quarter ever recorded. Michal Cwiklinski, Head of Investment, Savills Poland, says: “It has become almost a tradition in Poland that the last quarter of the year sees a surge of investment activity. The last quarter of 2015 was no exception, with the highest quarterly investment volume ever recorded.”
The international real estate advisor highlights that the year-end result was boosted by two large share deals – the takeover of the majority stake in Echo Portfolio by Oaktree and PIMCO (managed by Griffin Real Estate) and the acquisition of some SPVs of Trigranit by TPG Real Estate. Transactions in the retail sector were dominant last year, accounting for ca. 55% of the total volume. Michal Cwiklinski adds: “Investment activity in Europe has been rising, especially in the retail sector. The last quarter of 2015 confirmed that this trend is also a case in Poland, despite a shortage of decent investment product.” The high levels of investment in the retail sector was a consequence of a few large transactions; notably the acquisition of Riviera Shopping Centre in Gdynia by Union Investment (for EUR 291 million), the acquisition of Stary Browar by Deutsche Wealth Asset Management for circa. EUR 285 million, and the acquisition of Karolinka and Pogoria Shopping Centres by Rockcastle for EUR 221 million. Savills reports that office transactions in 2015 amounted to ca. EUR 1.3 bn, almost 27% less than in the year before.
Investor interest in the office sector is shifting from Warsaw towards regional cities, which is a result of a massive supply coming to the Warsaw office market, putting rental levels under pressure. More than half of the sector's volume last year accounted for office properties located outside Warsaw. Savills anticipates, however, that this year the volume of office transactions in Warsaw may outpace regional markets, as a few larger properties in Warsaw City Centre may be transacted.
Savills reports that the largest office investment transactions in 2015 in regional cities were dominated by sales of Skanska's properties: the portfolio of office properties in Krakow and Katowice for EUR 160 million sold to NIAM, Dominikanski Square in Wroclaw sold to Union Investment for ca. EUR 117 million and Green Horizon in Lodz sold to Griffin Real Estate for ca. EUR 65 million.
As far as yields are concerned, Savills registers that prime office yields have been sharpening across all property sectors with prime office and retail yields at ca. 5.50%, and prime warehouse yields at sub 7.00%, not taking into account the recent sale of Amazon facility, which was an extremely unique investment product, transacted at a significantly lower yield.
Savills remains optimistic about investment activity in 2016 and expects transaction levels to be much the same yet they do anticipate stock levels to rise in the office sector, due to the sale of prime assets in Warsaw City Centre and regional office markets.
