The stagnation that Poland suffered in 2008 has carried on into 2009 with the commercial sector being badly affected. In the first half of 2009 there was a 90% decrease in transaction volumes compared with the same period in 2008, according to CB Richard Ellis's Accumulator, Investment Market in Poland, 1H 2009, report that covers all aspects of the property investment market in Poland and its future trends.
In the first six months of this year there were just eight deals worth just €118 million, with each transaction worth an average of €14 million, the report shows.
The office and retail property sectors continue to dominate the investment market, although the share of retail transactions is lower. Since the beginning of the year there were only five retail transactions totalling €40 million and three office transactions in Warsaw totalling €78 million. So far in 2009 there have been no transactions registered in hotel and industrial sectors.
Open and closed-ended funds were the major buyers this year with Arak BZ WBK and Deka being the most active. The majority of the invested funds came from Germany; however Polish and UK investors closed more than one deal each.
'The current unfavourable situation in the investment market is expected to improve towards the end of current year. As vendors' price expectations start to reduce in order to adjust to purchasers' capability and demand, the market may speed up towards last months of the year,' said Joanna Mroczek, Director of Research and Consultancy at CB Richard Ellis.
Yields have suffered. Analysts estimate that prime office yields in Warsaw are around 6.75 to 7.00%. Prime retail yields have increased and currently are estimated at around 7.00%. Industrial yields are estimated at 8.75 to 9.00%.
The demand for modern office space in Warsaw has significantly fallen with total take up in the first half of 2009 amounting to 109,000 square meters, down a massive 55% compared to the corresponding period of 2008.
A large share of the take-up is renegotiations. Demand is generated mainly by companies less vulnerable to the economic downturn, the analysis shows.
Construction activity on the office market has significantly slowed down with around 600,000 square meters of office space which was due to be delivered in 2009 and 2010 postponed.
'Because of the turmoil on the world's financial markets and tight credit policy, investors are quite cautious with regard to investment decisions. The falling demand has influenced the further development of the office market in Warsaw,' explained analyst Olga Drela.
However, the trend of subleasing office space is becoming more common which means that potential tenants have a wide range of office space in existing and well located buildings to choose instead of waiting for pipeline projects, she added.
