Knight Frank: investment hit EUR 4.7 bln in 2017

According to the consultancy, the high transaction volume is due to the health of the Polish economy, the high tenant activity in commercial sectors as well as the relatively low risk and portfolio diversification options along with decent rate of return on investment. Thus the market has maintained a high rate of growth and the attractiveness of Poland as a location for investment is confirmed by the growing interest of entities previously absent from the market, such as those from China or Singapore.

“The boom in the investment market is still ongoing. More records were broken in 2017, when the transaction value reached almost EUR 4.7 bln. This is the result of high investor activity towards the end of the year, when most of the purchase / sale agreements were concluded, both for individual properties and for entire portfolios. Investors’ were most interested in the retail sector, where as much as 40 pct of all funds were invested in 2017. In addition to that, for the first time in the history of the Polish capital market, a high volume of acquisitions was registered on the hotel market, where almost EUR 360 mln was invested, which accounted for almost 8 pct of all the capital invested,” explained Aleksandra Burkot, a consultant in the market research department at Knight Frank.

According to the company’s analysts, investors spent EUR 1.86 bln on retail real estate in Poland in 2017. Investors’ appetite for retail was reflected in the large portfolio transactions that took place. Four Ikea centres in Poland now have a new owner, the Pradera fund. The transaction formed part of the sale of 25 projects across eight European countries. In addition, Fashion House outlet centres in Piaseczno, Gdańsk and Sosnowiec were sold to RREEF Spezial Investment GmbH. The largest purchase of a single asset was the Magnolia Park shopping centre in Wrocław, which was bought for almost EUR 380 mln by German fund Union Investment. Office properties accounted for the second largest share of transactions, a volume of EUR 1.6 bln and 33 pct of all investment.

“At the same time there was an increase in interest in regional markets, such as Poznań, the TriCity and Wrocław. The largest office transactions in regional cities recorded in 2017 were the acquisition of the Maraton office building in Poznań, the Przystanek MBank office building in Łódź by LCN Capital, Wratislavia Center in Wroclaw by Austrian fund FLE GmbH, Katowice A4 Business Park III by Echo Polska Properties and the acquisition of Pilot Tower in Kraków by First Property Group,” revealed Marcin Purgal, the director of the capital markets department at Knight Frank.

The office transactions finalised in Warsaw included Proximo I, purchased by REICO (Česká spořitelna), and Warsaw Spire’s phase B by CA Immo. BPH TFI’s portfolio of three retail and eight office buildings in Warsaw and Kraków were also sold, to Octava FIZAN. The excellent state of the warehouse market also translated into increased investor activity. The total value of transactions in this segment amounted to EUR 875.5 mln – 13 pct more than in 2016.

The largest portfolio transaction was the acquisition of the Logicor platform from Blackstone by China Investment Corporation for almost EUR 750 mln. The transaction formed part of the takeover of 650 warehouse facilities located in 17 countries, out of which 28 were in Poland. Transactions in the warehouse sector included the purchase of Hillwood Ożarów by CBRE GI, Panattoni Warsaw Konotopa by M & G Real Estate and Metsa Krapkowice by Hillwood.

Yields for the best ‘prime’ properties have remained stable. Office properties located in the centre of Warsaw currently have estimated cap rates of 5.25–5.40 pct, while those outside the city centre are at between 7 and 7.5 pct. In regional cities the yields are in the 6.25–7 pt range for the best office properties. In the retail sector, for the most attractive assets yields are estimated at 5.25–5.5 pct and at 6.75–7 pct for warehousing assets.