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47 (142) 2021
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Looking beyond Brexit - inward investment to Poland

Investment attractiveness of Poland in Europe

By Grzegorz Chmielak, managing partner, Knight Frank
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The year 2020 made history and will be remembered but not necessarily for positive reasons. The Covid-19 pandemic has affected world markets, forcing governments to introduce unprecedented restrictions in our daily lives to counteract the spreading virus infection and consequently severely affected many economic sectors. All this coincided with the end of the transition period for the UK’s withdrawal from the EU. How have all these things affected the individual sectors of the commercial property market in Poland? Does Poland remain an attractive country for foreign investors?

The fact that 2019 ended with a record €7.6 billion encouraged an optimistic mindset for the future, with expectations of yet another record. The spreading pandemic led to movement restrictions and the result, hindering access to property and the necessary offices, prolonged or postponed investors’ decision process. Today we know that by the end of 2020, the investment market had recorded a 30% drop in the volume of transactions (€5.3 billion). However, this result itself is stable and exceeds the average over the previous ten years by far.

“In the initial period of the pandemic, investors held their breath for a moment, analysing the situation. The banks adopted a similar approach, increasing their expectations with regard to in-depth market analysis. Furthermore, there emerged requirements for the analysis of the sensitivity of property value and the impact of yields and rent. We should remember that despite the precautionary approach, Poland is an important country in this part of the old continent, and the pandemic has affected the entire world. For the sake of comparison, the volume of transactions in 2020 in Europe was 29% lower than in 2019, which makes our result close to the European average,” says Grzegorz Chmielak, managing partner and head of CEE Valuation & Advisory at Knight Frank.

Poland ranks first in Central Europe in terms of the total transaction value in the field of commercial property. This clearly shows that our country has a strong position and that investors choose to invest here with confidence. A closer analysis of the sources of the capital which flowed to Poland last year shows that just over half of the capital (51%) came from Europe, with the 10% increase compared with 2019 suggesting that it is safer to invest closer to home nowadays. As it turns out, the share of capital from Asia, which is quite demanding with regard to the entire process, also increased from 19% to 24%. There was a decrease in the inflow of capital from the USA– from 18% in 2019 to 15% in 2020.

“From our point of view, Poland is and will continue to be an attractive market, despite the current situation, which is only temporary. It is worth taking into account the strength of our country, its location linking the West to the East of Europe and further to Asia; access to a large group of qualified workers and a growing domestic market. These elements have attracted and will continue to attract investors and, of course, the banks are following. Aareal Bank has established a long-term presence in Poland through its local branch in Warsaw and is looking forward to new business opportunities," says Hubert Mańturzyk, general manager, Poland at Aareal Bank AG

The important role of Poland is also emphasised by Justyna Kędzierska-Klukowska, head of the Warsaw Office at Berlin Hyp AG: “When focusing on the real estate industry, we must appreciate the role of the development of the BPO and shared-services sectors, for which Poland has become a European foothold. These areas are so closely tied with our country that even if the current situation slows down the expansion to some extent, their strong position will be defended. In fact, it is expected that Brexit will have here a positive impact from CEE perspective. Poland, which remains a stable market, will always be interesting for investors, which does not mean, however, that we will not be affected by the pandemic at all."

 

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