Poland the star of the region

Attempting to answer this and other related questions were the speakers on the ‘The Investment Market: the Star of the Region and Beyond’ panel at the 25th Annual Commercial Real Estate Market Conference held by Eurobuild Conferences at the Bristol Hotel in Warsaw in late November.

The moderator of the discussion opening the conference was Paweł Dębowski, a partner of Denton’s Warsaw office and the head of its European real estate law team. “The investment market is close to reaching last year’s levels, but is not there yet and maybe won’t be able to match it this year,” said the moderator, before turning to the situation on the retail investment market, which in contrast is very different from how it was a year ago. This, nevertheless, may have opened up some interesting opportunities. The topic was enlarged upon by Agnieszka Jachowicz, a board member at the Polish Commercial Real Estate Chamber [PINK]. “This year, the total retail real estate investment volume in Poland was down by more than half. There may be a problem with the trading of such assets until we get used to the new situation in this segment,” she suggested.

Other panellists focused on highlighting the positive aspects. “The pressure from e-commerce on traditional models will grow, but the talk of the death of traditional retail is very much an exaggeration,” believes Leszek Sikora, the managing director of ECE Projektmanagement Polska. “You have to adapt in changing conditions. Online will never provide buyers with the experience that traditional retail can provide,” argued the head of ECE Projektmanagement Polska. This view was endorsed by Globalworth’s investment director Łukasz Duczkowski, as he pointed out that “Poles love shopping centres. Even when they go to them only to collect goods bought online, they usually don’t stop at that and then buy something in a store.”

The investment situation, however, is difficult and the owners of some buildings will just have to accept this or find new ideas for how to use their real estate. “Investors are now focusing on two types of retail assets: dominant shopping centres and convenience centres. The next five years could be difficult for some medium-sized centres,” cautioned Kirill Zavodov, the executive director at Goldman Sachs.

The attractiveness of office buildings and the diversity of their locations across Poland were highlighted by Piotr Zamkotowicz, a co-founder and partner of Augusta Cracovia, which is the representative of Filipino group ISOC in Poland. Łukasz Duczkowski also spoke highly about Polish offices. “In Poland, many assets go to long-term players’ portfolios. Their range is varied and the product is good. However, we are seeing slight differences in yields between Warsaw and, for example, Berlin or Frankfurt. This calls into question further compression of the rates,” believes the Globalworth director.

The attractiveness of the Polish real estate investment market was also emphasised by the director of Goldman Sachs, who was equally positive about the Czech Republic – and not only that market. “Hungary is also an attractive market but is limited to just one city. In Poland, we have much greater variety,” emphasised Kirill Zavodov, who added that he is worried about the situation in Romania, which he is not too optimistic about due to the macroeconomic factors of that market. “Other countries in the region have a much better balanced economy,” he added.

The panel also discussed the current business cycle and the expected slowdown. Everyone agreed that it’s hard to say when this would happen. Apparently, however, it will not come very soon. “This is the longest period of growth I can remember, and I have already experienced three economic downturns. At present, it can be said that a slight slowdown should be expected next year but not really a recession,” predicted Paweł Dębowski of Dentons.