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

SUMMARY

  • Total transaction volume of approximately EUR 2.7 billion approached pre-crisis levels of 2007.
  • Large single transaction volumes such as Manufaktura or Warsaw Financial Center underline the confidence vested in the Polish market by the international investment community.
  • Poland maintained its position as the the leading CEE market in terms of investment volume, liquidity and availability of debt financing for core product.

YIELDS

  • Prime office yields for Warsaw CBD are in the range of ca. 6.25 - 6.50% for prime CBD Core prime assets and ca. 6.75% for CBD Fringe. Core yields in Warsaw’s Mokotów district (second largest office sub-district in the city and one of the most active sub-markets in terms of real estate investment over the last 24-30 months) have been subject to an upward movement from sub-7% levels in Q4 2011 to ca. 7.5-7.75% in H2 2012 due to market saturation and softening leasing environment. Notwithstanding the above, this district recorded two significant transactions in 2012, i.e. the acqiusition of Platinum Business Park by Allianz and Marynarska Business Park by Heitman.
  • Prime retail yields are in the range of sub-6%- 6.5% in Warsaw and sub-6% (selected ‘trophy assets’)- 8.5% in secondary cities.
  • Prime logistics yields are in the sub-8 region (selected locations only), where the pricing is largely driven by the weighted average unexpired lease term. Properties with a shorter residual lease term would be expected to trade with a ca. 50-75 bps discount.

VOLUMES

  • Total investment volume of EUR 2.7 bln reached 2007 levels and exceded last year’s performance, mostly due to the impressive fourth quarter, which accumulated approximately EUR 1.6 bln in closed transctions.

VOLUMES BY SECTOR

  • Predominantly due to the scale of the Złote Tarasy, Manufaktura and Renoma transactions, the retail sector volume accounted for 45% of the market share, followed by the office asset class at 34% and industrial at 17% - the latter recorded a significant growth in volume in comparison to the previous 2 years.

DEALS SPECIFICS AND STORIES

  • The market recorded in excess of 40 institutional transactions with an average ticket of ca. EUR 65 mln and 8 transactions exceeding the EUR 100 mln mark.
  • Most notable transactions included the acquisition of Złote Tarasy by AXA Real Estate and CBRE Property Fund Central Europe LP for a reported EUR 475 million, the acquisition of Manufaktura by Union Investment for a reported EUR 390 million as well as the Warsaw Financial Center for ca. EUR 210 mln by a joint venture between Allianz Real Estate and Tristan Capital Partners.
  • We note that the transaction cycle has lengthened and now on average amounts to approximately 6-9 months from commencement of marketing to closing of the deal, depending on the transaction structure.
  • Activity in secondary cities in 2012 (39% of total investment volume – EUR 1.07 bln) has been predominantly driven by retail and logistics transactions. Office sales outside of Warsaw have been limited to a minimum, partly due to the limited availability of investment grade product but also due to the fact that Warsaw is the main market generating tenant interest.

PROGNOSIS

  • Prime yields fore core properties will remain firm.
  • Investor confidence and market activity is to be maintained, subject to the EU macroeconomic outlook. 

Poland will maintain its position as the dominant market in the CEE. Any further movement in pricing is expected to depend largely on the impact of the sovereign debt crisis and additional capital requirements of the main senior lenders in the market.” – comments Piotr Mirowski, Director, CEE Investment Services, Colliers International.

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