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Savills IM advises caution

Eurobuild CEE 17 January 2020
EUROPE/POLAND Savills Investment Management advises investors to concentrate on long term income streams in Europe because the company believes that occupier markets are now significantly weakening. Economic growth is slowing, while a number of geopolitical risks remain unresolved.

Despite the gloom, Savills IM notes that Poland is amongst the fastest growing economies in Europe. According to Oxford Economics forecasters, GDP will rise by 3.2 pct in 2020.

According to Savills Research, rental growth for office space should continue in 2020. This will be correlated with a decrease in vacancy rates, especially in central locations. Returns on the best office investments will be at the level of 4.5 pct, which provides an attractive alternative to developed Western European markets.

In Poland, the development of the logistics space market and its geographical diversification are being driven by demand from logistics tenants and the growing e-commerce sector. Rapid rental growth has recently slowed down. Nevertheless, a further increase in effective rates is expected in the coming months, due among other reasons to rising construction costs.

Despite high consumer spending, the retail sector in Poland is becoming polarised between state of the art centres and older assets. According to BNP Paribas Real Estate, state-of-the-art shopping centres are seeing high demand and a low level of vacancy; however, older assets are increasingly exposed to e-commerce competition and a deterioration in the efficacy of their leasing models.

“Whatever strategy investors take, we would advise them to partner with asset managers who have the local expertise and on-the-ground knowledge to pinpoint and secure the best opportunities in what will be challenging markets,” says Andreas Trumpp, the head of research and strategy for Europe at Savills Investment Management.

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