Savills looks to the future

"Following a record year on the investment market in Poland, with a total investment volume of EUR 7.2 bln, we expect investment sentiment to remain positive in 2019. Just as in other European markets, prime yields in Poland are now at a record low, nevertheless, rapid growth in both the office and industrial markets and fierce competition among major developers has until now, inhibited rental rate rises and kept capital values at attractive levels. Strong occupier demand and rising construction costs have been gradually pushing developers to increase rents, providing potential buyers with the opportunity for growth. Thus, we expect we will see continued demand for prime office assets in Warsaw’s city centre as well as in leading regional markets, especially those with excellent public transportation, and that we will see strong investor demand for industrial assets. Just as in other European markets, retail investment will be limited to prime, modern and centrally located assets that respond well to changing consumer habits and to opportunistic and value-add projects,” said Michał Stępień an associate in the investment department at Savills.

“Average prime office yields are at a record low in Europe (3.65 pct in Q3 2018), however as an investment product it will remain a top pick in 2019, especially for risk averse strategies,” claims Eri Mitsostergiou, director, European research, Savills.

Logistics investment in Europe has already risen to almost 14 pct of the total and is expected to grow even more over the next twelve months. Prime industrial yields have dropped to an average of 5.3 pct across Europe, which is 148 bps below the ten year average.

“The market will remain competitive for investors in 2019. The lack of supply of prime assets will lead more investors towards niche sectors, secondary cities and development opportunities,” claims Marcus Lemli, the head of investment for Europe and the CEO for Savills in Germany. “New types of property uses have emerged and expanded in Europe, responding to demographic and technological changes such as co-working, co-living, retirement communities, purpose-built student housing and mixed use concepts to name but a few. From an investor’s point of view these types of property are not just alternatives to the traditional real estate portfolio but becoming the new mainstream as they prove to respond successfully to the structural changes to the drivers of demand,” he adds.