Developers operating in the commercial real estate sector are increasingly seeing the potential and attractiveness of residential real estate. The pandemic did not negatively verify these beliefs, on the contrary, this market turned out to be immune to turbulence. Investors focus mainly on projects with apartments for rent, but not only.
It’s natural for developers to look for new opportunities. Diversification allows for greater flexibility in a changing environment. The last example is Apsys. In Poland, the company is associated with the commercial sector, but in France it successfully implements projects with other functions, including housing. Even before the pandemic, in 2019, the Polish company announced that it would expand its activities to include office property management and the implementation of residential investments. Entities operating in the commercial real estate sector are increasingly recognizing the potential and attractiveness of residential real estate. Although currently rented apartments are very popular among investors, companies that adjust their business profile rather respond to a typical demand resulting from the desire to own a flat.
There are many examples of diversifying the real estate portfolio. Another company is Atrium, which is traditionally present on the retail market and starts operating in the rental housing sector. In turn, Immofinanz has announced a return to the residential market with a plan to extend apartments in shopping centers. For now, this applies to the buildings of the Stop Shop chain in Austria, but they are also in Poland. The EDS Group announced the creation of EDS Residential (next to EDS Retail), and the Tonsa fund, after being involved in an office project in Gdańsk, announced the implementation of a project in the rental housing sector. It is worth emphasizing, however, that the diversification of development activities is ongoing, depending on the market environment. The cooperation of Rank Progress and Vantage in Wrocław has been operating for several years. Also the Resi4Rent network (existing since 2018) can be considered as a diversification of activities in the case of Echo Investment. Traditional housing developers – Marvipol and J.W. Construction has recently completed investments in the office and warehouse market.
At the moment, the largest developer activity is observed in the warehouse and housing sectors. At the same time, the activity in the latter sector is limited due to the lower availability of land and the expected reduction in demand. In the pandemic, the development of the sector with flats for rent belonging to institutional investors accelerated. Developers are more and more willing to consider implementing projects in this segment. However, on a national scale, this activity is still a niche, although it will develop dynamically in the coming years. The office sector is also very active. We currently have over 1 million sqm across Poland. space under construction, mostly in major cities. Only large shopping centers do not appear as fast as a few years ago. This does not mean, however, that retail facilities are no longer on the developers’ radar. The most developing concept in this sector are retail parks and convenience centers.
It is also worth mentioning the new trend that promotes the offering of mixed-use investments that combine various functions in a user-friendly and environment-friendly manner. In order to implement these types of projects, developers have to expand their competences or establish long-term cooperation.
Author: Agnieszka Mikulska, Senior Consultant, CBRE
