Property investment in Poland soars and could reach €2 billion by end of 2010, according to analysts

Property investment could reach more than €2 billion by the end of the year, according to the latest real estate investment bulletin from international consultants Savills covering the first half of the year.
 
The report shows that the office sector has continued to dominate investor demand accounting for two thirds of transactions completed in the first six months of the year. It includes the sale of Horizon Plaza for €102 million to Union Investment and Harmony Office Centre sold to CommerzReal for €54 million.
 
The report also shows that there has been a significant increase in transactions on warehouse properties, which total €225 in the first half of 2010 compared with €50 million in the first half of 2009.
 
In comparison, the retail sector has experienced substantially lower activity than previous years accounting for just 11% of total volume in the first half of the year. However, Savills predicts that the retail sector’s share of total investment volume will return to the usual 50% level following the completion of Simon Ivanhoe’s assets in Arkadia and Wilenska, as well as several other deals expected in major regional cities.
 
‘Overall, investors in Poland are seeking prime assets in the main cities, preferably Warsaw, with offices at the top of their agenda. However, due to a decreased development pipeline, there will be a shortage of good quality office buildings over the next 12 months and we therefore expect to see investors focus their attention more on the retail and warehouse sectors,’ said Brian Burgess, managing director of Savills Poland.
 
When assessing demand, Savills confirms that the most active investors were found in Austria, Germany, the UK and France, which collectively accounted for approximately 90% of total volume in the first half of the year. The firm also notes that there is a continued resurgence of interest from UK private and equity investors.
 
Prime investment yields have remained stable with Savills reporting that prime office yields in Warsaw are at 6.75% in the Central Business District (CBD) and 7% to 7.25% in non-central locations. Prime shopping centre yields in Warsaw currently range between 6.25% and 6.5%.
 
‘We expect that the next trend for yields is compression however the timing and speed for this is dependent on the stability of the capital and financial markets and, in particular, the lack of further large scale turbulence in the European economies,’ said Eri Mitsostergiou of Savills European research.