Polish real estate set for another good year
Investment & financeIn 2016, Poland is to see an increasing number of investors entering the country, who will be interested in all asset classes as well as platform and corporate deals. According to the agency, the investors should also be ready to commit to forward funding and forward purchase arrangements.
Office Market
Currently, 1.5 mln sqm of modern office space is under construction, half of which is located in Warsaw. The new supply planned for delivery in 2016 is estimated at 970,000 sqm . Nevertheless, it is likely that the delivery of some of planned schemes might be postponed to 2017. Based on current forecasts, the Warsaw office market will witness growth of 436,200 sqm. Among regional cities, the largest increases in stock will be recorded in Kraków (157,800 sqm) and Wrocław (142,900 sqm). Downward pressure on base and effective rents will continue in markets with strong construction activity. The overall vacancy rate for major office markets will exhibit an upward trend.
Industrial market
Currently, over 893,000 sqm of modern industrial space remains under construction, of which 68 pct is leased. One noteworthy factor is that developers are frequently embarking upon partially speculative investments. In 2016, further growth in the industrial market is expected (Toruń/Bydgoszcz, Lublin, Rzeszów, Szczecin). Apart from BTSs, BTO transactions will be observed (known also as fee development), in which clients order developers to build warehouses for ownership. Due to the fact that smaller companies from the e-commerce sector will continue to emerge, there is likely to be growing interest in small business units (SBU). The experts expect further expansion by German and Scandinavian companies, which will be locating their distribution centres in western regions of Poland. Enterprises from other European countries and the US are also present in Poland. Foreign funds view the Polish market positively and will invest. They are also increasingly interested in smaller regions. Despite the low vacancy rate, effective rental rates will remain at a stable level.
Retail market
It is estimated that in 2016 a decrease in the annual supply will take place. App. 400,000 sqm gla will be delivered to the market. Interest among developers in cities with populations below 100,000 inhabitants is not declining. CH Posnania in Poznań will be the most spectacular opening, which will constitute over a quarter of the supply in 2016. At the end of 2015, about 600,000 sqm of retail space remained under construction in Poland, 12 pct of which is made up of extensions of existing schemes. The construction of Galeria Północna in Warsaw (64,000 sqm) and Serenada in Kraków (42,000 sqm) began in 2015. Vacancy rates will probably remain stable and will not exceed 5 pct across the eight major Polish retail markets. Stable structural vacancy will be observed in secondary projects, while rents will also remain stable. A slight downward trend could be observed in cities with a high density ratio - and in particular for older centres.
Hotel market
The hotel supply in Poland has increased by 37.6 pct over the past five years. At the end of 2015, Poland had 2,620 licensed hotels, which provided 248,310 beds in 124,982 rooms. Poland’s supply of hotel facilities is set to rise steadily, as is the quality of the country’s hotels. More projects are to be located near office facilities – for example, Moxy and Four Point by Sheraton in Warsaw in the Mokotów district business hub – while others will be situated near airports, such as Moxy (Marriott) in Pyrzowice, and Renaissance by Marriott in Warsaw. International hotel brands AC by Marriott and Indigo are entering Poland for the first time this year. International hotel chains are increasingly attracted to the country’s regional markets. Poland’s market features stable occupancy and average daily rates. There is increasing competition for hotel facilities from new vacation rental platforms, such as Homeaway and Airbnb. The latter offers 1.5 mln apartments/houses worldwide, which exceeds the total number of rooms offered by Marriot after its merger with Starwood.
Source: Market Insights report
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