Optimism on the rise

Over 200 people representing each of the real estate sectors came together on November 20th at the Hotel Hilton in Warsaw to discuss the latest market trends and forecasts. Marcin Mrowiec, the chief economist of Pekao Bank, stated during the first panel that the main risks for growth are located not inside but outside Poland: both the United States and Western Europe suffer from structural problems. “We don’t know how long the crises in the euro zone will last. Looking at the data from the peripheral states of the EU, we can assume that we are about half way through these crises,” opined Michał Dybuła, the chief economist of BNP Paribas Bank.
Tomasz Trzósło, the managing director of Jones Lang LaSalle Poland, then presented some promising figures for the Polish investment market, with 2013 volumes expected to exceed last year’s level. The projected volume is EUR 3.2 bln, which would be the best result since the boom year of 2006. This was the starting point for the panel discussion entitled ‘The investment market: growing nicely, but... ’. Despite the ‘but’ in the title, there was hardly any pessimism in evidence during the discussion. Most importantly for those for whom buying is their core business, the conclusion was that they are going to have their hands full in 2014. “We have EUR 200 mln designated for 2014,” said Przemysław Krych, the CEO of Griffin Real Estate. “The market is stable. We don’t expect any major changes,” the panellist declared.
After lunch the participants met to discuss the future of the residential market. “An increase in sales has been registered since last July and this is a good sign. We are now seeing a rebound in prices,” announced Mariusz Książek, the chairman of the board of Marvipol. “I share this assessment. It is much better now and prices are unlikely to fall again,” concurred Kazimierz Kirejczyk, the president of the board of analysts Reas. He noted, however, that the performance of the residential market is mostly dependent on macro-economic factors and the credit policies of the banks. But the panel agreed that the mood for the sector was likely to be good at the 2014 conference.
Is it worthwhile developing shopping centres in small cities and towns? This was the question that dominated the discussion on the retail market, which was moderated by Beata Kokieli, the head of retail at CBRE. Ełk, a town of 60,000 inhabitants in the Masurian Lakes, served as an example of a locality that cannot attract developers despite having no modern retail space. The blame for this was put on the high level of local unemployment and the low purchasing power of the local people. The lack of transparent administrative procedures and laws limiting the development of big box retail were also listed among the main deterrents preventing developers from entering towns of this size. The market, however, is becoming increasingly polarised: some developers are particularly active in large cities, while others chose the smaller ones. As the market has become ever more saturated, the definition of a small city has changed. “I remember when a town of 200,000 inhabitants was considered by developers as small. This is not the case today,” pointed out Jacek Wesołowski, the commercial development country manager of Immofinanz Services Poland. He also noted that the main problem as far as smaller cities and towns are concerned is not the weak purchasing power of the people who live there, nor is it the lack of tenants. The problem is how to exit such a project after it is built. Nevertheless, the development activity in smaller cities and towns is likely to improve as local purchasing power grows. “We’re fed up with fenced spaces that divide the city – we don’t want closed areas that divide the city up,” complained Katarzyna Łęgiewicz, the deputy mayor of Warsaw’s Wola district, during the ‘Developers and council officials: can anything grow on public land?’ panel. One example of a successful development is Warsaw’s Miasteczko Wilanów mini-district – the 170 ha project for 30–40,000 inhabitants has received a number of international prizes. On the other hand, Warsaw as a whole has few public spaces. It is a capital without a real city centre. “When you think about where Warsaw’s city centre is, many places may spring to mind, but they are not concentrated together. This is why places that could become centres on a district level are so important,” argued Wojciech Nowakowski, the investment manager of Capital Park Group. What impact will e-commerce have over the next decade on the warehouse market? This was the question posed in the title of the next panel moderated by Jason Sharman, a partner and owner of Sharman Church Chartered Surveyors. The discussion turned into a thorough analysis of the industrial market in Poland, which has recently been impacted by a number of large deals – including the 95,000 sqm lease by Amazon from Goodman in Wrocław. A great deal of optimism was also evident in the final discussion, which was focused on the office market. “The market is active and dynamic. Many transactions are taking place,” insisted Jarosław Zagórski, the commercial and business development director of Ghelamco. Although a number of office projects are currently being developed, the demand from tenants remains strong; and most importantly investors are interested in the Polish market – concluded the panellists in the closing discussion of the day.