Preliminary summary of the commercial property market performance in 2018 in Poland

20 December 2018

TEN KEY MARKET TRENDS

POLISH PROPERTY MARKET HIGHLIGHTS OF 2018

WHAT’S IN STORE FOR THE MONTHS AHEAD? 

A growing investor appetite for industrial assets, a supply gap on the Warsaw office market and Poland moving up global ratings - these are some of the real estate market highlights of 2018. All the indications are that in the months ahead the market’s focus will be on alternative asset classes and the likelihood of an economic slowdown. Real estate advisory firm Savills presents its preliminary summary of Poland’s commercial property market performance in 2018 and an outlook for the next twelve months.

According to Savills, in addition to further rapid supply growth and a record-high occupier demand for warehouse and industrial space, this sector also figured strongly on investors’ radars in 2018. The situation on the Warsaw office market was somewhat skewed by the number of new projects underway in the belt between ONZ and DaszyƄskiego roundabouts. Those buildings, however, will not come onto the market before 2020, hence the current supply gap in the city. Other highlights of 2018 included the Sunday trading ban that took effect earlier in the year and Poland’s upgrade to developed market status on the FTSE Russell index. Poland is the first country in almost a decade to have made it, which could potentially bring an upswing in interest from investment funds targeting exclusively the most mature markets.

2019 is shaping up to be a year of alternative asset classes. Poland is seeing a gradual increase in supply of purpose-built student accommodation, private rented housing and senior homes which are increasingly becoming sought-after investment products. The next two years will also be a moment of truth for serviced offices and co-working spaces that have already taken hold in Poland and started to transform slowly the office leasing market. With further technological advancements underway, smart property solutions will become the norm. And yet, the human being will remain the key focus with community managers increasingly taking care of office building users.

“This year’s transaction volume is likely to hit an all-time high driven by robust investment activity on the commercial real estate market. Polish properties are rising up investors’ agenda, which in 2018 pushed office yields down to below 5%, the lowest on record. Despite a positive outlook for the next twelve months and a desire of investors to avoid the effect of a self-fulfilling prophecy, next year will probably see the first signs of increased investor caution. This will lead to a focus on portfolio diversification and investors increasingly targeting industrial and alternative assets,” says Tomasz Buras, Managing Director, Savills Poland.

Real estate advisory firm Savills estimates that this year’s investment volume is likely to hit nearly EUR 6.5 billion, which would be an all-time high of the Polish commercial real estate market. According to Savills preliminary data, approximately 750,000 sq m of office space was delivered to the market in 2018, bringing Poland’s office stock to 10.4 million sq m. Poland’s retail stock now stands at almost 12 million sq m following the completion of approximately 350,000 sq m of retail space in 2018. The warehouse sector continued its strong momentum with more than 2 million sq m completed in the past twelve months, bringing the country’s total stock to 15.5 million sq m.

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