Sun shining on the sector

Almost everyone was in attendance at the Palais des Festivals in Cannes – from South America to Japan. Delegates from the UK also turned up in large numbers, despite the rumours that hordes of paparazzi were awaiting them. There were also many from the CEE region (the Czech Republic, Slovakia, Hungary, Romania, Ukraine, Russia, the Baltic States and Poland).

The stands that stood out among the Polish delegations included Łódź, Warsaw, the TriCity, Kraków, Poznań – and Invest Pomerania, which invited Lech Wałęsa to Cannes. A great deal was happening on the Łódź stand, where, for instance, Ghelamco was able to unveil its latest project in the city, while Cushman & Wakefield handed out its latest report on the prospects of the local real estate market. The Warsaw stand, meanwhile, was bursting at the seams during the traditional cocktail party. This was also where the first debate in the history of the fair took place about the future of the Polish capital city. Among the private companies present, the combined stand of Echo, EPP and Griffin featured a new model of Warsaw (complete with future projects) made out of beech and oak, which aroused great interest. A scale model of Slovakian developer HB Reavis’ Warsaw project Varso was also very popular. Polish developer Cavatina was another that had the opportunity to show off scale-models of its projects – with that of the Chmielna 89 office building under construction in Warsaw attracting particular attention. Similar interest was enjoyed by the model of Taryan Towers in Kyiv, while Former boxer Vitali Klitschko, now the city mayor, pulled no punches in promoting the virtues of the Ukrainian capital. Cities in the Czech Republic, meanwhile, showcased themselves on a joint stand in the palace.

Capital markets analysts from the main consultancies were particularly busy during the fair, which bodes well for the investment market in the near future. Especially when we consider how German funds have once again opened up to the Polish market and are preparing major transactions, as one analyst informed us. Investors, however, have become very selective and are only preferring the best prime locations. And they are willing to pay top dollar for these: “We should expect to see yields of around 4.75 pct for the Warsaw office market,” predicted one of the consultants we talked to.

The retail segment is also enjoying the attention of investors. “We have been seeing substantial interest from South African, Asian and German funds. The inflow of new capital into Poland has been huge. I believe that this year will be even better than 2017 when it comes to the total investment volume and will be dominated by portfolio purchases. There are already several retail portfolios worth as much as half a billion euros that have been put up for sale. And several individual projects will be changing hands for EUR 100 mln,” remarked Dariusz Forysiak, an associate director in retail investment services at Colliers International.

Hungarian developer Granite Polus (owned by Sándor Demjan, the co-founder of TriGranit) has been preparing a massive project of its own. The company has announced that it intends to build a multi-functional complex with a total area of 320,000–450,000 sqm on a 9.4 ha site next to the WestEnd City Center in Budapest. This will involve the construction of new office buildings, retail space, apartments and hotels as well as a 2 ha of greenery. The project is to be developed along the lines of the ‘smart city’ concept, more details of which are to be revealed during the summer.

The Polish hotel market is also very popular. Large expansion in Poland is being prepared by such as players as the Louvre Hotels group, which currently has 18 locations in the country. “Our aim is to double our Polish portfolio over the next three years,” declared Adam Konieczny, the director of development in Eastern Europe at Louvre Hotels. German group Meininger, meanwhile, took the opportunity to announce its imminent entry into Poland, where it is looking for hotels to operate in Kraków and Warsaw.

The CTP group, whose portfolio in CEE countries should reach 5 mln sqm of warehouse and logistics space this year, also has very ambitious plans. “Achieving this size for our portfolio will mark the next stage of a much larger plan – to double this level by 2022,” revealed Piotr Klank, the Poland regional director of CTP Invest. The construction sector, meanwhile, has a few issues to contend with. “There is a shortage of labour and the prices of building materials have soared in a very short time. As a result current contracts are now teetering on the edge of profitability,” admitted Christopher Siemieński, the business development and marketing manager of CFE Polska. Overall, however, an optimistic – if not a highly optimistic – mood prevailed among those attending MIPIM 2018. This was not even extinguished by the downpour on the penultimate day of the fair. In any case, on Friday the sun came out once again.