POLAND ON TOP · destination for BPO/SSC services • Stable asking rents INDUSTRIAL SECTOR € 456...
Transcript of POLAND ON TOP · destination for BPO/SSC services • Stable asking rents INDUSTRIAL SECTOR € 456...
POLAND ON TOP
2016
32%UK
23%Germany
11%France
5%Sweden
4% Nether-lands
4% Spain
3% Italy
3% Norway
1.5% Ireland
1.4% Denmark
1.4% Austria
1.4% Poland
Chart 2. Prime yields by sector in the CEE region
Czech Poland Lithuania Hungary Slovakia Estonia Latvia Romania Croatia Bulgaria Slovenia Serbia Russia Ukraine Republic
Map 1. Major investment markets in Europe - share in investment volume (2015)
16% —
14% —
12% —
10% —
8% —
6% —
4% —
2% —
0% —
A solid economic background and a stable
political situation in Europe have boosted
investments in the real estate markets.
According to the Real Capital Analytics the
total volume of transactions concluded
in Europe was 23% higher in 2015 than the
year before and exceeded EUR 285bn. Nearly
41% of accounted transactions concerned
the office sector. The leading active markets
remained unchanged with UK first, followed
by Germany and France. Poland was ranked
11th in Europe in terms of investment activity
volumes in 2015 and outperformed all other
CEE countries.
In 2015, CEE countries accounted for 4% of
the volume of signed deals in Europe. The total
investment volume in CEE countries amounted
to EUR 11.5bn and noted an 18% growth,
when compared to 2014. The region of Central
Eastern Europe has drawn investors’ attention
POLAND - THE MOSTATTRACTIVEINVESTMENT MARKETIN THE CEE REGION
Chart 1. Structure of the investments in Central Europe region
51% Poland
31% Czech Republic
11% Slovakia
7% Hungary
Source: Knight Frank on the basis of RCA
1.3% Belgium
1.2% Switzer-
land
0.9%
0.9%
0.2%
Portugal
Investment level higher than in Poland
Investment level below than in Poland
Office Retail Industrial
CzechRepublic
POLAND ON TOP
primarily to the retail sector, which made up
43% of all concluded transactions in the CEE.
Being more and more courageous when
investing in Europe, global investors are an
increasingly willing to invest in the CEE region,
that is already seen in the Polish market. In
terms of alternative locations, CEE countries
became an investors’ opportunity for risk
diversification.
It is remarkable that Poland leads the way
in terms of total volume of investment tran-
sactions in the CEE region. Over EUR 4bn
transaction volume in Poland accounted for
nearly 51% of investment market in Central
Europe, followed by Czech Republic, Slovakia
and Hungary. The stable economy and liquid
market that enables the pursuit of exit strate-
gies encourages investors to allocate funds
in Poland. Roughly 50% of nearly EUR 8bn
invested capital in Central Europe was made
up by the retail sector and Poland stands out
in terms of volume of allocated funds.
2% Russia
Chart 3. Structure of the investment in the CEE region
5 bn —
4 bn —
3 bn —
2 bn —
1 bn —
0 —
Rus
sia
Pola
nd (E
UR
4.1
bn)
Czech
Repub
lic
Slovakia
Hungary
Romania
SerbiaBulgaria
Estonia
Lithuania
Cro
atiaUkra
ine
Montene
groLatvia
Office
Retail
Industrial
Other
Poland benefited mostly from German funds,
followed by the US and other European
investors. Activity in Poland was boosted by
several large portfolio deals, most notably
takeover of the majority shareholding of Echo
Investment portfolio by Griffin Real Estate, and
the acquisition of part of the portfolio by TPG
Real Estate. First transactions closed in 2016
announced a continuation of the positive
sentiment in the market. At the beginning of
2016, Redefine Properties acquired 75% of
the Echo Prime Properties portfolio worth
EUR 1.18bn. It is important to note that the
deal was the largest in the history of Polish
real estate market. Furthermore, it is expected
that demand on the investment market will
remain strong. With a few portfolio deals
planned to be completed by the year-end, the
investment volume for 2016 will reach
a comparable level to the previous year. As
the most mature investment market in the
CEE region, Poland should be distinguished in
terms of the scale of the market, the relatively
wide offer of the prime assets and liquidity of
the market.
Source: Knight Frank on the basis of RCA
Source: Knight Frank on the basis of RCA
1.3% Finland
0.3% Slovakia
Hungary 0.2% Romania
0.1% Bulgaria
0.1% Lithuania
0.1% Estonia
p
2015 turned out to be highly important in the Polish investment market. The total investment volume exceeded EUR 4bn. It recorded a 35% growth when com-pared to 2014 and was also the highest result noted since 2006. The largest share in the investment volume reached acquisitions in the retail and office sec-tors. No longer just the city of Warsaw was the attractive investment market but also other regional cities encouraged investors.
Increasing demand for retail assets
The total investment volume in retail sector
reached the highest level since 2006 and
amounted to EUR 2.2bn, accounting for 54%
of total signed contracts in Poland in the
commercial real estate market. The volume
of retail deals in 2015 was nearly three times
higher than the result recorded in 2014. The
most sought-after assets in the market were
shopping centres with leading market po-
sitions and retail parks in medium and small
regional cities.
COMMERCIAL MARKET
Chart 4. Investment volume in Poland
Transactions in regional cities prevailing in the Polish office sector
The total volume of investment transactions
in the office sector amounted to EUR 1.3bn
and accounted for 33% of all investment
deals in the Polish market in 2015. In contrast
to the previous years, the interest of investors
in 2015 was mainly focused on regional
markets. Over 66% of the Polish office
transactions volume was concluded outside
the Warsaw office market. More than EUR
880m spent on commercial properties was
a record-breaking result in the regional office
market. The dynamic growth of regional office
markets and their development potential were
reflected in both the number of transactions
and the more opportunity - seeking behaviour
of local and foreign investors.
Warehouse portfolios – the most sought--after assets in the industrial sector
After record-breaking 2014, the limited
number of properties put up for sale resulted
in decline in the volume of transactions in the
industrial sector in 2015. The volume of wa-
rehouse investment transactions exceeded
EUR 456m and made up 11% of share of
total volume in the Polish commercial market. Office
Retail
Industrial
Source: Knight Frank
Map 2. Investment volume by location 2015
POLAND ON TOP
RETAIL SECTOR € 2.2 bn investment volume
Total stock: 10.8 m sq m
Stable Growth
• Increasing retail saturation: 240 sq m/1000 citizens, exceeding the
European average density
• Strong developers activity: 600,000 sq m new retail supply in 2015,
higher than a 5-year average
• Numerous redevelopments and refurbishments of existing schemes
• Stable demand on retail space
• Low levels of vacancy rates, not exceeding 5%
• Stable asking rents with upward pressure on prime rents
OFFICE SECTOR€ 1.3 bn investment volume
Total stock: 8.3 m sq m (55% in Warsaw, 45% in regional markets)
Dynamic development
• Record breaking developers’ activity - 1.3 m sq m of space under con-
struction at the end of 2015 (44% more than a 5-year annual average)
• 460,000 sq m - an average annual new supply (2010-2015)
• Substantial take-up - 1.3 m sq m m leased in 2015, i.e. nearly 50%
more when compared with average annual volume in 2010-2014
• Increasing demand on office space as Poland became major European
destination for BPO/SSC services
• Stable asking rents
INDUSTRIAL SECTOR€ 456 m investment volume
Total stock: 9.9 m sq m
Boom in the market
• Record-breaking take-up over 5.0 m sq m leased within the last two
years
• Strong demand driven by international manufacturers, logistic opera-
tors and e-commerce sector
• Substantial new supply and development pipeline
• Increasing number of schemes on speculative basis
• The lowest rate in the history below 5% of the total supply
• Stable asking rents
Source: Knight Frank
Over €4bn - record-breaking investment volume since 2006
54% of investment transactions volume allocated to the retail sector
66% of office transactions volume recorded in regional markets
Prime yields compression:
5.50% retail
6.00% office
7.00% warehouse
6 —
5 —
4 —
3 —
2 —
1 —
EUR billion
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Tricity€ 0.4 bn
Warsaw€ 0.6 bn Poznań
€ 0.5 bn
Łódź€ 0.1 bn
Wrocław€ 0.4 bn
Katowice€ 0.1 bn
Kraków€ 0.6 bn
STABLE ECONOMY AND LIQUID MARKET
ECONOMIC BACKGROUND
8th biggest EU economy in terms of GDP
3.6% estimated GDP growth in 2015 according to
the Main Statistical Office forecast
50.4% of GDP - public debt burden, compared to
86.8% in the EU
-0.5% inflation rate (December 2015)
Decreasing unemployment rate: 7.5% in December
2015 according to Eurostat
EUR 195.8 bn European Funds 2014-2020
(the largest amount among EU members)
Growing industrial production, retail sale and domestic
demand
IMPROVING POLAND’S POSITION IN INTERNATIONAL RANKINGS
• 25th in Doing Business (World Bank) - 3 places
up y-on-y.
• 39th in the world in 2016 Index of Economic
Freedom (The Heritage Foundation and The Wall
Street Journal) - 3 places up y-on-y.
• Poland is a regional leader in the outsourced IT and
BPO services. Warsaw (25th) and Wrocław (58th), are
amongst Tholons Top 100 biggest movers and
Kraków maintains its’ 9th position amongst
the Emerged Outsourcing Destinations (1st in Europe).
• 17th in the world, 1st in CEE in Global Real Estate
Transparency Index 2014 (JLL).
• 2nd in CEE and 30th in the world in terms
of business transparency (Corruption Perception
Index 2015).
• Katowice Special Economic Zone as
the best special economic zone in Europe according
to Global Free Zones of the Year 2015.
• 20th largest receiver of foreign direct investments
in the world according to World Investment Report
2015 (UNCTAD).
• 41th in the world in The Global Competitiveness
Report 2015-2016 (World Economic Forum) –
2 places up y-on-y.
OUTLOOK
Poland has been developing as one of the most attractive
locations in the world for professional services. The gro-
wing number of jobs created thanks to FDI and investors
entering the market leads to the anticipation that this
trend will continue for the foreseeable future.
Forecasted growth in GDP and increasing domestic
demand goes hand in hand with the further growth of
the commercial market in the short and medium term.
Additionally, record-breaking demand for offices and
warehouse space accompanied by growing activity from
developers bring positive forecasts for dynamic growth of
the commercial market.
Poland is already perceived as a stable capital market. An
offer of prime assets is still being developed in Warsaw
and regional cities. The dynamic growth of the commer-
cial market and optimistic attitude towards the economy
should be reflected in the investment market. Further-
more, the probable yield compression will provide an
opportunity to increase the asset values in the future.
INVESTMENT ATTRACTIVENESS
• High supply of skilled, well-educated workforce
with university degrees and speaking foreign
languages.
• Relatively low cost of doing business
(wages and rents lower than in most EU countries).
• Geographical proximity to Western Europe.
• The Warsaw Stock Exchange - the most important
Stock Exchange in Central and Eastern Europe.
• Attractive, relatively low property prices.
• Special Economic Zones enabling tax exemptions.
• Most prospective sectors of economy: Manufacturing
(Food processing, Domestic Appliances
and Electronics, Automotive and Aviation, Pharmacy),
services (distribution, transport, storage
and communication), business services
(BPO/SSC, IT, R&D centres).
• 98% of foreign investors in Poland would invest
here again.*
*according to survey conducted by PAIiIZ, Grant Thornton
and HSBC, „Made in Poland 2016. An Investment Guide
for Manufacturing Sector Companies”
POLAND ON TOP
Contacts in Poland:
+48 22 596 50 50 www.KnightFrank.com.pl
RESEARCH
Elżbieta Czerpak [email protected]
ASSET MANAGEMENT
Monika A. Dębska - Pastakia [email protected]
ASSET MANAGEMENT - OFFICES AND LOGISTICS
Bartłomiej Łepkowski [email protected]
ASSET MANAGEMENT - RETAIL
Małgorzata Szychułda [email protected]
CAPITAL MARKETS
Joseph Borowski [email protected]
COMMERCIAL AGENCY - OFFICE
Izabela Potrykus-Czachowicz [email protected]
COMMERCIAL AGENCY - RETAIL
Paweł Materny [email protected]
PROPERTY MANAGEMENT
Magdalena Oksańska [email protected]
VALUATIONS
Grzegorz Chmielak [email protected]
Contacts in London:
INTERNATIONAL RESEARCH
Matthew Colbourne [email protected]
COMMERCIALMARKET
© Knight Frank Sp. z o.o. 2016This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears.
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