Real estate investment still on the rise

With EUR 1.9 bln of investment the retail sector had the largest share (59 pct) in the overall volume– more than double the result in H1 2017. The high investment activity in this sector was primarily due to large portfolio deals with investors attracted to the retail sales growth in Poland regardless of the Sunday trading ban.

Office sector investments are also on the rise, adding EUR 938 mln to the aggregate figure in H1 2018 and outperforming H1 2017 by 261 pct. This growth is underpinned by booming occupier demand and falling vacancy rates. These factors, together with rental growth and competitive yields compared to Western European markets, continue to create an attractive investment market.

The industrial sector also saw growing demand with an investment volume of EUR 338 mln representing a 10 pct investment share for H1 2018. Following the record EUR 750 mln Logicor portfolio transaction by China Investment Corporation in 2017, the industrial and warehouse sector is expected to reach new highs over the coming months. As in the office sector, record high take-up and rental growth are expected to drive investment demand in the industrial sector.

The hospitality sector received EUR 69 mln in investment, 2 pct of the total H1 2018 total investment volume. This low level of investment is largely due to a lack of stock availability. However, the relatively robust tourism demand in Poland with hotel occupancy rates growing by the year helped to underpin a rise in RevPAR of 9.2 pct in 2017, far ahead of the European average of 2.2 pct.

The largest transaction over the period included Griffin Real Estate’s acquisition of the largest retail portfolio on the Polish investment market – M1 portfolio, consisting of 28 retail assets (shopping centres, retail parks, hypermarkets and DIY stores) across Poland, at a value of EUR 1 bln. Employees Provident Fund of Malaysia acquired Galeria Katowicka. US newcomer Madison International Real Estate Liquidity Fund VI acquired a 50 pct stake in the Warsaw Spire tower, while Revetas and Goldman Sachs Asset Management bought TriGranit and its office portfolio located across the CEE region, with EUR 327 mln in assets and business operations in Poland.

“We anticipate further consolidation among platform operators, with the growing importance of M&A transactions as well as waves of new capital. We estimate the total investment volume in 2018 will exceed EUR 6 bln and expect increased activity from North American, German, Asian, South African and Czech investors,” writes C&W on their website.