Summary of the last year and prognosis for 2013 according to Colliers International:

GENERAL OVERVIEW

  • As expected, 2012 turned out to be an attractive and optimistic year for the land market, best proven by the total volume of concluded deals. This doesn’t mean a return to growth trends witnessed before 2009, however. It is  a sign though of systematic stabilization in this area of the economy, felt in particular by strong, capital healthy developers and investment funds.
  • Investors most willingly bought land for office and residential development. Overall funds divided their investments by 85% for office and residential, 10% retail and 5% for industrial investment sites.
  • Warsaw accounted for 80-85% of all land purchased for residential or office developments.
  • Despite the progressive stabilization on the land market in 2012, there were also some negative trends, a result of financial problems that led some developers and investment funds to sell their land or to offer for sale the investment areas taken-over by banks from their customers.
  • It is also worth noting that, according to our forecasts, some business entities on the market were seeking possibilities of temporary or permanent cooperation with their competitors.

TRENDS

  • In 2012, we could observe a change in the strategy of companies participating in investment processes on the land market and looking out for new investment possibilities. We noticed an increase in their interest, mainly for office development land.
  • Residential developers, in particular, but also some dealing in the retail real estate market, began an intensive search of land suitable for construction of office buildings. This trend was particularly evident in major Polish cities such as Warsaw, Wrocław and Kraków.
  • A similar situation, although on a slightly smaller scale, applies to land suitable for retail development, located in cities with more than 30 thousand inhabitants. This land is of interest to entities previously investing in the housing market.
  • This phenomenon is the result of the enactment of the Developer Act, but also due to limited access to investment finance, banks' lending policies and good indicators and forecasts for the office market in Poland.
  • Among the factors increasing interest in investing in the land assigned for construction of offices, one should also mention signals from companies specializing in this segment, according to which in the near future, a demand for land suitable for office development should be observed in cities such as Lodz and Poznan.
  • In the case of Łódź, among factors accelerating its development, two should be enumerated: the opening in 2012 of a highway connecting the city with Warsaw and the announced reduction of travel time between these two cities of up to 35 minutes, due to the construction of a new high-speed rail link.

PRICES

  • In 2012, the value of land transactions for office, retail, residential and industrial development, including acquisition of companies holding such assets, reached PLN 1.5 billion (this is up on 2011’s land investment transaction volumes which totalled PLN 1.2-1.3 billion).
  • One of the main reasons for the volume of transactions in 2012 was a reduction, throughout Poland, of the prices of all sectors of the land market. It is a continuation of trends observed in 2011.
  • In comparison to transaction prices in 2011,  in Polish cities they are falling. Overall prices decreased by 7% in Katowice and 7% in the suburbs of Warsaw.
  • Office land grew cheaper in particular in Katowice by 12%, in the Tri-city by 10% and in Wrocław by 11%.

PROGNOSIS

  • 2013  will be characterized by the dynamics of transactions on office and retail land markets, primarily in cities such as Warsaw, Kraków and Wrocław, and secondly in Łódź and Poznań.
  • We expect that new sales of land for housing development will take place mainly in Warsaw and Kraków. In other local markets, such as the Tri-City, Poznań and Szczecin, residential land sales will occur and transactions will be made primarily by local developers.
  • From our recent consultations with developers and investment funds regarding their planned expenditures on real estate properties in 2013, we draw the conclusion that there is a chance by the end of 2013 we will have exceeded the value of last year’s transactions. However, we should bear in mind that, most transactions in the land market will take place in Warsaw. 

2012 was a very good and interesting year for the land market. Many companies as well as private investors decided to keep up with the market trends and lowered the prices of land for sale which resulted in a sequence of transactions and helped to hit the record result for the Land Department of Colliers International. We expect that 2013 will be as good as the last year or even better in terms of the number and the volume of transactions.” – comments Daniel Puchalski, Associate Director, Land Agency, Colliers International.