A more logical state of affairs

Small talk
Paweł Partyka, a partner at Cushman & Wakefield in Warsaw, give us his take on the more positive mood at MIPIM this year, despite all the economic and geopolitical uncertainty – and why retail is set for a comeback

What did you think of this year’s MIPIM fair?

Paweł Partyka, a partner at Cushman & Wakefield: My takeaway was how diametrically different it was from last year’s fair, in terms of the change in mood. Last year, we all came to Cannes just after the Russian invasion of Ukraine and so the atmosphere was uncertain, with polarised forecasts for Poland and the rest of Europe. However, this year at MIPIM you could see that people were a lot more cautious in their opinions, while funds were carefully setting out their future plans to navigate the turbulence on the global markets. The great news is that since last year the perception has improved of both Poland and the entire CEE region.

Does such caution mean that they are expecting worse months to come in terms of figures or transaction volumes?

It is a fact that the transaction process has become prolonged. It now takes much longer to attract bids or complete negotiations, which can result in lower volumes. However, the amount of work that all players in the market are now doing is huge, which is a good sign. The market has definitely not gone into a slump, but it is trying to find a new pricing level. I believe that the next few months will reward active players who are enterprising and creative. Such an approach could turn out to be their recipe for success. As for the volumes, of course the interest rates hikes have been dampening the enthusiasm on the market. Some capital is leaving in search of other ways to invest, which has resulted in a lower number of transactions.

Which market is the biggest competitor to real estate?

High-interest bonds and deposit counts, for example. Some of these are now a real alternative to real estate. However, there is another side to the coin of rising interest rates, which is rather more positive. More expensive money means that our market should return to a more logical state of affairs, where the new is more expensive than the old, What I’m mainly talking about are the rising rents that we, in particular, are seeing in new real estate projects. Higher rents and realistic incentives for tenants are what Western investors have long been saying are both lacking and necessary for Polish real estate to move up into a higher price bracket. Now we are seeing rents shoot up, but they may fall back a bit in due course. However, the supply gap that could impact the warehouse and Warsaw office markets is still going to push rents upwards, thus making real estate more attractive as an investment product.

Which investment sector in your opinion has the best prospects? Is it true that retail is going to make a comeback?

Yes, quite definitely! The reports of the death of traditional retail have been greatly exaggerated, and it is finally casting off the role of the ugly duckling rejected by everyone. Investors are coming back to shopping centres, and what’s even more pleasing is that newcomers are appearing on the market. One interesting trend is the increased activity of debt funds, which can offer really attractive investment terms and are keen to finance construction, mainly for logistics centres (but not exclusively), including those that are being developed speculatively.

I hear that your family has grown quite recently. How well are you managing to combine your home life with your career?

Not too badly, I think, although a lot in my life has changed – including the books I’m now reading. I’ve had to put down my books on negotiation and replace them with books about looking after babies. One of them was written by a former anti-terrorist agent, but I can’t remember which one.

Interview: Tomasz Cudowski