In the first half of 2024, the investment market on the Vistula recorded a noticeable increase in investor activity. The value of transactions amounted to over EUR 1.65 billion, an increase of 86.5% compared to the same period in 2023. With more than 50 deals concluded, the market came close to reaching 85% of the total investment volume of the whole of last year. The authors of the report from Savills note that market players were keen to invest in the office sector, with buildings in regional cities also in their orbit.
Market comes out of stagnation
Most transactions took place in the second quarter, which accounted for as much as 80% of the value of all transactions. In the entire first half of the year, domestic investors completed 12% of all purchases, spending more than EUR 206 million on all property types. Investors from other Central and Eastern European countries were responsible for 21% of the transaction volume. In the first half of the year, Warsaw was the place where funds realised purchases with a value close to 50% of the total value of all transactions. Although investors acted selectively, focusing on assets with high growth potential, the number of active buyers in the market increased.
“The current volume of transactions does not fully reflect investment sentiment. These are likely to improve over the coming year, especially as funds with pan-European strategies come into play more strongly and start to transact in Western European markets. Nonetheless, the gap between sellers’ and buyers’ expectations remains significant and this will be reflected in the number of deals completed, particularly in the prime segment,” says Mark Richardson, Head of Investment, Savills Poland.
Offices
The office sector dominated the investment market in Poland, with transaction values exceeding €800 million, an increase of 301% compared to the first half of last year. A total of 22 sales agreements were signed between January and the end of June, including six deals for office buildings in regional cities. In contrast to 2023, investors have now finalised deals for premium properties. Although, on the other hand, the authors of the report point out that office buildings with the potential to increase the value of the property (value-add office buildings) were still far more popular.
Retail property
In the retail property sector, transactions totalled EUR 497 million, an increase of 149% compared to last year. The sale of a portfolio of six shopping centres to Star Capital Finance had a significant impact on the results. The total value of the transactions amounted to EUR 285 million. In the first half of the year, investors continued to show considerable interest in retail parks and smaller properties.
Logistics, warehousing and industrial real estate
Despite increased investor activity, the sector saw a decline in deal value to €294 million, down 33% compared to the first half of 2023. The number of active investors is increasing, but they are primarily targeting modern facilities with solutions that help meet ESG targets, and located in major logistics hubs.
Institutional leasing (PBSA and PRS)
The authors of the report have seen a significant increase in investor interest in private dormitories, and the event of the half-year was the launch of a private dormitory platform involving Signal Capital Partners, Griffin Capital Partners and Echo Investment. Over the next three to five years, the trio plans to invest in growing the portfolio to 5,000 beds in private, modern and energy-efficient dormitories in Poland’s major academic cities. The institutional residential rental (BtR) sector is also attracting attention, but transaction activity has been limited. In the first half of 2024, operators had a pool of 1,400 units of this type.
“We expect investment activity in the Polish market to increase over the next 6-12 months. We expect that the reduction of interest rates by the European Central Bank may improve investor sentiment and increase activity in the market. Poland remains an attractive market for capital from Central and Eastern European countries, including the Czech Republic and the Baltics. Investors’ perception of the market on the Vistula River has not changed, they still look at Poland as a mature, developed and stable market where investing is still profitable,” says Mark Richardson, Head of Investment, Savills Poland.
