Polish investment has record in its sights

“There is a chance that this year will yield record-breaking results due to various factors including the scheduled finalization of multiple transactions. We expect a volume of over EUR 5.5 bln in total across all segments of the commercial real estate market,” comments Agata Sekuła, the head of CEE retail investment at JLL. This would surpass not just last year’s EUR 5.03 bln but also the record figure of EUR 5.05 bln from 2006. According to the consultancy, in the first seven months the market was dominated by retail investment transactions (app. EUR 2.07 bln), followed by the office sector with a volume of app. EUR 1.21 bln, while the industrial sector came in with app. EUR 530 mln followed by app. EUR 70 mln for the hotel sector.

“The retail sector (…) constitutes 53 pct of the total volume registered across all sectors. Interestingly, this is also the same result for retail investment volume for the whole of 2017. This number includes the latest transaction, on July 31st, in which EPP acquired the King Cross Marcelin shopping centre in Poznań for EUR 91.1 mln. The buyer was advised for this transaction by JLL. Taking into account the ongoing finalisation processes of transactions and the availability of product, the retail investment volume is likely to exceed EUR 3 bln by the end of the year,” adds Agata Sekuła.

The largest investment transaction completed in Poland so far this year was the acquisition of a portfolio of 28 retail properties by a Griffin-led consortium from ARES /AXA /Apollo Rida, for app. EUR 1 bln. Griffin has sold the first part of the acquired properties to EPP with the other two installments due to be finalised with EPP by 2020. Another key retail transaction this year was the sale of Galeria Katowicka by Meyer Bergman to EPF for an undisclosed amount. Yields for prime shopping centres remained stable at 4.9 pct.

“In the first half of the year, the total volume of transactions concluded on the office market in Poland was app. EUR 938 mln with the regional cities accounting for EUR 569 mln and Warsaw EUR 369 mln. The bullish mood on the office market is set to continue until the end of the year. In July alone we witnessed transactions of more than EUR 270 mln and we are still waiting for the finalisation of some very significant transactions. This segment of the market is characterised by stability and liquidity,” explains Tomasz Puch, the head of office and industrial investment at JLL.

The largest office transactions concluded since the beginning of 2018 include the purchase of B4B in Kraków and Silesia Towers in Katowice by Revetas and Goldman Sachs from TPG for approx. EUR 325 mln; the purchase of a 50 pct stake in Warsaw Spire by Madison International Realty from Ghelamco for about EUR 175 mln, and the sale of Quattro Business Park in Kraków by Starwood Capital Group to Globalworth for EUR 139 mln. Prime office yields in Warsaw now stand at 4.75 pct, while in core regional cities yields are at the level of 5.75 pct.

“The market is expecting spectacular results in the industrial segment, where the transaction volume may well exceed EUR 1 bln by the end of 2018. For funds operating in this sector, prime properties are of particular importance. In the first half of 2018 the total volume of transactions was around EUR 344 mln. In July we had the pleasure to advise on a purchase transaction for a logistics portfolio for Redefine/Griffin worth almost EUR 200 mln. We expect that in the next few months a number of large industrial portfolios will change hands for more than EUR 500 mln in total,” adds Tomasz Puch.

The most significant transactions thus far include the purchase of nine logistics parks developed by Panattoni Europe by Redefine/Griffin and the acquisition of an Amazon centre in Szczecin by Vestas Investment Management from Invesco for app. EUR 110 mln, while Prologis Park Sochaczew was also bought by Ares. Prime warehouse yields stand at 6.5 pct with exceptional, long leased assets trading at well below 6 pct

The hotel segment saw stable results for the first six months of 2018. Union Investment took over the Holiday Inn in Warsaw for app. EUR 41 mln and Park Inn in Kraków for around EUR 26 mln from UBM Development.

“The volume of investment transactions concluded through the advisory of JLL during the period between January and July itself exceeded EUR 2 bln. We represented funds in some of the most spectacular deals concluded in Poland. These included: the 28 retail properties in the Chariot portfolio on behalf of Ares / AXA / Apollo Rida; Galeria Katowicka on behalf of Meyer Bergman; Warsaw Spire A on behalf of Ghelamco; Quattro Business Park on behalf of Starwood Capital Group; and a portfolio of nine logistics Panattoni properties on behalf of Redefine/Griffin,” reveals Tomasz Trzósło, the managing director of JLL in Poland.