Poland Upturn in offices and retail sector

The increasing number of investors and the stabilisation of financial indicators are evidence of the growing level of interest and the positive outlook for the Polish real estate sector. The country's investment market achieved its highest quarterly performance since Q4 2022. Investment volumes reached almost EUR 1.7 bln in H1 2024, a 91 pct increase compared to H1 2023.

The leading market sectors in H1 2024 were offices and retail, mainly due to large portfolio transactions. The number and value of transactions - in both the office and retail sectors - exceeded the total value achieved in H1 2023 as a whole. The warehouse sector, which was the most active sector last year, fell to third place. With lower inflation expectations and the start of the interest rate cut cycle by the European Central Bank, businesses are experiencing fewer macroeconomic challenges. These factors are contributing to the stabilisation of yields and improved investor sentiment and potential further reductions in funding costs.

In H1 2024, the office sector saw a significant increase in investment activity, with a total volume of 22 transactions amounting to around EUR 800 mln. This amount is significantly higher than the EUR 200 mln recorded in the same period of 2023. This increase was due not only to the completion of large transactions, such as the sale of CPI Property Group's property portfolio, but also to renewed interest in regional cities. For the first time since 2022, prime office transactions were recorded outside of Warsaw. Key ones included the sale of Nowy Rynek E in Poznań and the acquisition of the Format building in Gdańsk. These transactions confirm that high-quality office projects in regional cities continue to find buyers.

The beginning of 2024 brought a revival in the office market, attracting the attention of an increasing number of investors. New sources of capital are also appearing that until now would not have been active in Poland, the best example being Sona Asset Management. As in other Western European countries, we are seeing a slow stabilisation of yields, which at the end of June were around 6 pct for Warsaw and 7 pct for Kraków.
Marcin Sulewski, head of Office Investment, JLL

The retail investment market was characterised by a significant recovery in H1 2024, with transaction volumes increasing by 149 pct compared to the first six months of the previous year. Such a rebound underlines the growing attractiveness of the sector, evidenced by significant transactions such as the EUR 285 mln sale of six retail properties to new Czech investor Star Capital Finance. According to JLL experts, the current situation offers promising prospects for the retail sector in the future.

Despite the lack of prime transactions in the retail segment in Warsaw, we can see that yields for prime shopping centres were around 6.5 pct in Q2 2024, while yields for prime retail parks were around 7.25 pct.
Agnieszka Kołat, head of Retail Investment, JLL

The industrial and logistics sector continues to be the focus of investor interest, despite a decline in its share of total investment volume compared to last year. The reported slowdown in 2023, driven by rising financing costs and reduced levels of market competition, has shifted the focus towards more strategically positioned, higher quality assets. With the sector expecting a sharp rebound thanks to strong economic growth, the current market dynamics have led to lower average deal values and an increased focus on asset quality, particularly in relation to ESG compliance.

Despite a lower increase in prime bond yields due to lower interest rate volatility, there is still no clear - supported by high-value deals - evidence of a recovery. By the end of June 2024, the yield for prime warehouse properties with five-year leases was estimated at around 6.75 pct, and for prime projects in Warsaw at around 6.5 pct.
Sławomir Jędrzejewski, head of Industrial Investment, JLL