2016 set to be record year for Real Estate investment in Poland

After a series of significant preliminary real estate investment deals being signed in Poland early this year, the investment outlook for the rest of 2016 looks to be a record one,  with the total volume exceeding EUR 4.0 billion, according to international real estate advisor Savills.

Around 20 investment transactions with a total volume of ca. EUR 504 million were closed in Poland in the first quarter of this year. South African investor Redefine Properties Ltd has recently signed a preliminary purchase agreement of a 75% interest in Echo Prime Properties, an Echo Investment subsidiary, which owns 18 commercial income-producing assets, with a total value of ca. EUR 1.18 billion. This volume makes it the largest real estate transaction in the history of the Polish market.   Another notable deal signed in Q1 2016 was the sale of the Prime Corporate Center (new Raiffeisen HQ in Warsaw) by Golub GetHouse to Warburg-HiH, which has set a record low yield level. Both of these are due to be finalised in Q2-Q3 2016.

Michal Cwiklinski, head of investment in Poland, says: “The investment sentiment in Europe may be described as 'cautious optimism', nevertheless, the cross border capital flow and pricing in Poland is still on the rise. Core European capital is now even more targeted towards prime assets, driving prices up into record levels, and with other landmark office developments due to complete this year, Warsaw may see a strong recovery, compared to a relatively weak performance last year.”

Savills has recorded that prime yields have been sharpening across all property sectors with prime office yields well below 5.50%, prime shopping centres yields at 5.50% and prime warehouse yields at sub 7.00%, not taking into account such assets as Amazon facilities, which were extremely unique investment products, transacted at even much lower yield.

Savills remains optimistic about the rest of 2016, expecting investor activity to bring this year’s volume to even higher levels than in 2015. Office assets will account for up to 50% of the total volume, boosted by sales of a few prime office buildings in Warsaw, and a decent number of transactions in regional office markets.