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Happy days are here again?

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For those who have been gloomy about the prospects for the real estate market, Eurobuild’s 7th Invested Interest – Investment Market Conference must have come as a welcome tonic. It was almost as though we could already breathe in the post-pandemic reality

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The conference kicked off with financial market analyst Piotr Kuczyński, who stressed that the second half of 2021 should bring some rapid economic growth and that the Polish economy also looks in very good shape compared to other markets. But the good mood seemed to continue into the first panel discussion, which was about the impact that Covid has had on investment. “There is EUR 50 bln of unspent capital in Europe at the moment, which we would assume and our intel suggests still wants to find a home in real estate,” announced Jeff Alson, an international partner and Head of CEE capital markets at Cushman & Wakefield, who moderated the panel discussion. He also pointed out that many properties transacted during the pandemic are now worth more than they changed hands for.

In the panel discussion that followed, the speakers agreed that it might still be too early to say in the long run whether we will see a change in people’s working habits. “At the moment I think many people have had enough of working from home – there’s something that I’ve heard is called ‘zoom fatigue’ and employers would like to see their workforce coming into the office to a larger extent,” claimed Yovav Carmi, the president of the management board at GTC. Piotr Trzciński, the Poland head of Investment at Savills Investment Management, also agreed that remote working had many disadvantages. “How do you foster company culture without any physical presence?” he asked. Łukasz Duczkowski of Globalworth believes that one of the drivers of the sector might turn out to be more business coming to the CEE region. The speakers admitted, however, that in the short term the number of people coming in to the office will still be much reduced, by around 40 pct.

Privates on parade

The coffee break that then followed would normally take everyone out of the conference rooms for some intensive networking in the hall, but this time there was no chance to do any of that as all the panels of the 7th Invested Interest – Investment Market Conference took place online. This is a way of doing things that has very much become the norm over the last year, and from the teleconferencing proficiency of the panellists and other guests you could see that it has become their everyday habit.

Just after the break Kamil Kowa, the director and head of valuation and consultancy at Savills Poland, led panellists through the next office discussion, which was on the private rental sector and student housing. PRS, unlike the other sectors in Poland, is actually still a very young market. “We brought into use all our assets during the pandemic, having now delivered 1,800 units, and we are now about to deliver another 600 units before the year-end. So we don’t know how the institutional rental sector was working before the pandemic. The only reliable data we have is the data from during the pandemic, but it gives us a very optimistic picture”, commented Jan Trybulski, the vice-president for investment at Griffin Real Estate. All the panellists agreed, however, that the sector has positive prospects.

And now for the undoubted winners...

The market with the least to worry about due to Covid is obviously warehousing. If it has any problems at all, these are rather more related to the availability of general contractors due to the large amount of new construction going on, as well as the growing land and material prices – both of which are being driven by the current high levels of demand. “One of the challenges for urban logistics will be the competition between various functions – residential, logistics and offices – and the shortage of available land,” explained Bożena Krawczyk, the investment director for Central Europe at Segro. All of these issues, however, simply look like minor glitches in the runaway success story of the warehouse market.

In the last session it was time look at hotels and shopping centres – the two asset classes that seem to have been hit most by the lockdown. Everyone agreed that the market would bounce back, although the prevailing opinion was that a full recovery would not occur before 2024. Bartłomiej Kordeczka, on the other hand, provided us with the comforting thought that people were so tired of the lockdown that they would be happy to return to shopping centres to buy what they want there without the hassle of having to send back products all the time, as they have to do with e-stores. The panellists stressed, however, that it was always difficult to predict the future and that nobody would have expected a few years back that so many assets would suffer. It is always good, therefore, for an investor to diversify their products, just in case (as we have seen) unforeseen challenges arise.

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