Investing in Poland

Strong investment volumes in 2016 and further inflow of capital.

There is a reasonable prospect that 2016 will be at least a comparable year to 2015 for Poland in terms of investment volumes. Investors are still very keen to invest in the country by the Vistula.

“Due to the fact that H1 ended with an total value of closed deals of ca. EUR 2 billion and taking into consideration the number of projects which are either in due diligence or contractual negotiations, we expect the market to continue to perform well” – said Piotr Mirowski, partner at Colliers International, director of Investment Services.

Historically office and retail asset classes have accounted for in excess of 85% of the overall volume and the expectation is for retail to be the dominating asset class, which recorded a volume of ca. €2.5 bn and a 55% market share in 2015. However, alternatives such as e.g. student and retirement housing are generating more interest nowadays, though the availability of such product which can be directed to institutional investors is limited. Platform / corporate deals have also been in high demand.

In terms of the geographical spread of the investments, five years ago, 85% of the capital invested in Poland was allocated to Warsaw and the balance to regional cities. An exact reversal of the above trend in the course of the last 2 years has been observed (ca. 85% of the volume allocated to regional cities), which highlights the fact that Poland as a whole has been underwritten by the international investment community. Investors are more willingly looking into secondary and tertiary markets in search of quality assets.

“In terms of office projects, Wroclaw and Krakow have been the frontrunners, but we see increased interest in the Tricity, Katowice and Lodz. Cities compete for new occupiers and it also creates critical mass for investors in terms of the size of the market, one of the criteria which is important when considering potential of a given city” – commented Piotr Mirowski, partner at Colliers International.

The geographical composition of investor pool also continues to expand. Historically, German investors have been the market-makers, particularly for core product. Currently the landscape is more diversified, with the most notable group of new investors originating out of South Africa, South Korea and Malaysia, both directly as well as through money managers. Successful deals involving e.g. Redefine which was the largest deal in Europe in Q1 2016, have generated more liquidity and increased Poland’s status as an established investment destination.

“I expect that the Polish capital will ultimately become a larger contributor to the market, following establishment of REIT structures, which are currently in the pre-planning stage and as a result create additional liquidity for the market, which will facilitate its further growth” – added Piotr Mirowski, partner at Colliers International.

Poland over the last decade has emerged as a an undisputed regional leader, and EU’s 6th largest economy, CEE’s largest consumer market and the investment gateway for the entire region. Currently the real estate investment volumes account for ca. 40% of the overall transaction activity in the region.

Keywords Colliers, investing