The coming months will not bring a significant acceleration in the commercial real estate market. However, the number of transactions should increase in the second half of the year, especially if interest rates stabilize and prices reach sustainable levels, Avison Young believes.
The total investment volume in Q1 2023 reached 651 million euros, the share of the warehouse sector reached 62%. During this period, 26 commercial real estate transactions were completed in Poland.
“According to Avison Young’s forecasts, the coming months will not bring a significant acceleration. […] However, we forecast that the number of transactions should increase in the second half of the year, especially if interest rates stabilize and prices reach sustainable levels.
According to analysts, the last quarter maintained moderate liquidity despite low investment volumes.
The transactions point to the dominance of opportunistic and value-add properties and investments for redevelopment. Warehouse investors focused on primary market assets and those located in western Poland, it was also reported.
All transactions in the office sector, on the other hand, took place in Warsaw. The retail sector was dominated by opportunistic shopping center purchases. Investors from the U.S. and the Central and Eastern European region remain the most active, focusing on warehouse and office products.
According to analysts, the warehouse sector is currently facing an investment slowdown.
We are already seeing clear downward pressure on the selling prices of logistics properties, which translates into higher capitalization rates. The difference is to some extent ‘compensated’ to owners or developers with increases in base rental rates, the company reported.
Investment volume in the warehousing sector worth €401 million accounted for 62% of total volume in Q1 2023. However, the largest transaction, P3’s acquisition of Campus 39 in Wroclaw from Panattoni, accounted for more than a third of this result. 12 transactions involved single assets. No warehouse portfolio was sold.
Analysts point to a strengthening pattern of investor concentration in western Poland. 8 of the 12 warehouse properties transacted in the period under review are located near the country’s western border, and 9 of the 12 were acquired on the primary market.
Retail investment volume amounted to EUR 134 million, accounting for 20% of the total investment market volume in Poland in Q1 2023.
The office sector achieved the smallest investment volume in Q1 of this year. – 116 million euros – realized in 6 transactions.
An emerging real estate category driven in terms of demand by global economic turmoil and the geopolitical situation is institutional rental housing, according to analysts. Interest in PRS products in Poland has been growing for several years, both from tenants and investors.
The sector will continue to grow, which is also confirmed by the plans announced by many investors to build another 20,000 or so rental apartments over the next few years, double the existing stock. Moreover, due to the early stage of development of this sector, the Polish market will be attractive to both domestic and foreign investors, who can obtain higher rates of return on their investments than in the Western European market.
Source: Avision Young and ISBnews
