Polish office developers could be overbuilding, Bloomberg claims, with a record amount of bonds being placed on the local capital market to fuel new investment in the city. The Polish National Bank, however, is warning that the vacancy rate on the Warsaw market has hit 14 percent and is expected to widen as significant projects like Warsaw Spire and Q22 come on-line. In an effort to finance their investments, Ghelamco and Echo Investment have issues bonds worth PLN 1.7bn, according to Fitch Ratings.
Andrzej Czarnecki of Union Investment TFI points out that real estate bond investments have always carried higher risk, compared to corporate bonds, but developers will be able to handle high vacancy rates, as prices on product continue to grow.
Market watchers say that the European Central Bank’s easing policy is pushing investors to look for higher profits on emerging markets, such as Poland. The scramble has pushed yields on Poland’s Treasuries to 1.47 percent.
