A missed opportunity

“The Ministry of Finance has announced that the introduction of the act on REITs has been put back and will not now come into force on January 1st 2018. Notably, Polish REITs will now only be able to invest in residential projects. It is likely that such limitations as removing the option of REITs investing in commercial properties will have a negative impact on the attractiveness of this form of investment among individual investors – as well as upon the realisation of the actual aim of the introduction of REITs: the activation of Polish capital, making the capital market more dynamic and giving a significant boost to the economy. The commercial real estate market in Poland is now stable, liquid and has standards that have been established over the years. It is attracting many foreign investors, such as German and Czech citizens, who can invest in pension funds in their own countries to become the co-owners of significant properties in Poland. The share of Polish capital in this kind of investment so far has been, unfortunately, negligible. We suspect that the scaling back of the scope of REITs announced by the Ministry of Finance stems from worries over the state of the commercial property market expressed by the National Bank of Poland. But, according to CBRE, this is, on the contrary, a good time for investing on this market: property values are lower than their historical peaks, rents should continue to fall and the demand for commercial space is strong and stable. All of this should guarantee the interest of individual investors, providing them with stable revenues from rents as long as the properties are managed professionally. The apartments for rent segment is undoubtedly interesting and should be included in the potential investments of REITs, but it should also not be their only target. We hope that further work and consultations by experts will generate a more positive attitude and that an appropriate legal framework can be worked out for this unquestionably much-needed investment format.