H1 2012 in a nutshell as per Colliers’ report:

Yields
  • Prime office yields for Warsaw CBD were in the range of 6.5% for prime CBD core assets and 6.75% for CBD fringe assets. Core yields in Warsaw’s Mokotów district, the 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, saw upward movement from sub-7% levels in Q4 2011 to 7.5-7.75% in H1 2012 due to market saturation and a weaker leasing environment.
  • Prime retail yields were sub-6-7% in Warsaw, sub-6% for selected ‘trophy assets’ and 8.5% in secondary cities.
  • Prime logistics yields were in the range of sub-8-8.5% in select locations.
  • 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.

Volumes

  • The investment transaction volume recorded in Poland in H1 stood at approximately €950 million, which is below the corresponding 2011 figures.

Volumes by sector

  • In terms of investment volumes by sector, the Złote Tarasy transaction pushed the retail sector into first place representing 70% of total investment activity in Poland in H1 2012 followed by office (16%) and industrial transactions (13%).

Deal specifics and stories

  • The most notable investment transactions in H1 2012 included the acquisition of Złote Tarasy by AXA Real Estate and CBRE Property Fund Central Europe LP for a reported €475 million; the Prologis Portfolio by Hines Global REIT for €98 million; Alfa Centrum by Rockspring for €84 million and the second phase of the Harmony Office centre by Azora for €54 million.
  • The transaction cycle has lengthened and on average, requires six to nine months from commencement of marketing to deal closing, depending on the structure.
  • Activity in secondary cities was predominantly driven by retail transactions. Office and logistics transactions outside of the Warsaw area were limited, partly due to the lack of investment grade product.

Colliers' Prognosis

Poland will continue to drive investment volumes in the CEE, even though purchasers will be more selective about real estate investments.” – forecasts Monika Rajska-Wolińska, Managing Partner, Colliers International

Investment volumes recorded over the past two years are unlikely to persist in 2012. There are several projects in the due diligence phase, which if closed, will result in an investment transaction volume of €2.5 billion by the end of 2012.” – adds Rajska-Wolińska

Additional prognosis:

  • The pricing gap between core and non-core assets is expected to hold in H2 2012. Impaired liquidity of non-core assets is also expected to prevail. Negative leasing could cause yields to soften in some sub-markets.
  • Over the mid-term, core yields will continue to depend on the macroeconomic fundamentals of the Eurozone and the CEE region.
  • Single transaction lot sizes are expected to remain lower than in previous years amid financing constraints.
  • Subject to availability, strong demand for Warsaw Class A institutional grade, CBD located assets and non-Warsaw retail properties will continue in H2 2012.