“Poland maintained its position as the leading CEE market in terms of investment volume, liquidity and availability of debt financing for core product.” – says Piotr Mirowski, Director at CEE Investment Services of Colliers International.
Prime office yields for Warsaw are in the range of ca. 6-6.25% for CBD Core prime assets and ca. 6.75% for CBD Fringe. Core yields in Warsaw’s Mokotów district (second largest office sub-district in the city) have stabilized at ca. 7.5-7.75%. In H1 2013, prime retail yields in Warsaw stood at sub-6%, while in secondary cities it was around 8.5%. The selected prime locations in regional markets were characterized by yields similar to ones recorded in Warsaw, which were slightly below 6%. Prime logistics yields are in the sub-8% region (selected locations only), where the pricing is largely driven by the weighted average unexpired lease term. Properties with a shorter residual lease term would be expected to trade with a ca. 50-75 bps premium.
The total investment volume in the first half of 2013 amounted to approximately EUR 1.05 billion (EUR 830 million in the corresponding period last year). The office sector has dominated the investment volume in H1 2013 with a 58% share in the market, followed by retail (26%) and logistics (15%). Hotel transactions accounted for 1% of the market. Approximately 68% of the investment activity was allocated to Warsaw, mostly due to the dominance of the office asset class in the overall volume. Regional cities traditionally have attracted retail investors, however it should be noted that there is growing demand for core office product.
The market has recorded in excess of 30 institutional transactions, including several with single volumes over EUR 100 million (including the acquisition of New City by Hines and Senator office building by Union Investment, as well as the acquisition of shares in the Złote Tarasy shopping centre by Unibail-Rodamco).
“Growing diversification of the pool of investors is a positive trend in the market. German funds maintain their substantial share (25% in the overall volume), however the market has also recorded transactions involving purchasers from the US, Israel, UK, as well as domestic entities. Traditionally we expect that the investment activity will gain momentum in the second half of the year and that the overall volume will approach the 2012 levels (ca. EUR 2.7 bn), as there is a number of large transactions at preliminary/conditional agreement stage or in due diligence” – explains Piotr Mirowski.