In their latest update on the Polish Investment market Savills report that Poland will remain the largest investment market in the CEE.
Despite the lower number of property investment transactions in H1 2012, the total volume of transactions is just 15% lower than in H1 2011. Taking into consideration preliminary agreements that are expected to be finalised in the coming months as well as a few other larger investment transactions that are in progress, Savills believe, that the volume of investment transactions to be closed in H2 2012 will be significantly higher bringing the annual total volume to €2.0-2.5bn.
The total volume of commercial property investment transactions in Poland in H1 2012 was ca. €856m. Only 12 investment transactions have been closed in the first half of the year, five of which in the office sector, four in the retail sector and three in the warehousing sector. The retail sector accounted for ca. 70% of the total volume, however, this was mainly the result of the acquisition of a 70% stake in Z?ote Tarasy, a mixed use retail and office centre, by a fund managed by AXA Real Estate and CBRE Property Fund Central Europe LP. Four out of five transactions in the office sector involved Warsaw properties. The remaining one took place in Tri-City.
Polish investors play an increasingly important role in buying both prime and opportunistic assets. In H1 2012 one third of the transactions involved buyers with Polish capital. Domestic investors were active in office, retail and warehouse sectors and the total value of their acquisitions in H1 2012 amounted to almost €47m.
The largest transaction in the office sector was the acquisition of the second phase of Harmony Office Center by Azora for ca. €54m. Also in Q2 2012 GLL took over Renaissance, an office building primarily let to Polbank, located in the centre of Warsaw. There was also one transaction outside Warsaw in Q2 2012 - one of the largest Polish investment funds has acquired Arkonska Business Park (buildings A3 and A4) in Gdansk. Earlier transactions included the acquisition of Marsza?kowska 76 by Raiffeisen Immobilien Kapitalanlage GmbH and acquisition of Prima Court by Griffin Group. Both properties are located in the centre of Warsaw. A few larger transactions in the office sector, mainly in Warsaw are expected to be finalised in H2 2012.
Prime achievable office yields in Warsaw CBD remain stable at 6.00-6.25%. In Warsaw non-central locations prime office yields have increased slightly to ca. 7.00%. In major regional cities (Wroclaw, Krakow and Poznan) prime office yields are at 7.50%.
Four property investment transactions took place in the retail sector in H1 2012 accounting for ca. 70% of total investment volume. The largest investment transaction in the retail sector was the sale of ING's share in the holding company which owned a 77% stake in Zlote Tarasy. Zlote Tarasy is a mixed-use complex, located in the core centre of Warsaw, comprising 66,200 sq m of retail and 47,300 sq m of office space. In accordance with the official statement, as a result of this transaction, ING has reduced it's exposure to the real estate business by €475m, which is an important step in their overall strategy. The purchaser is a fund, managed by AXA Real Estate and CBRE Property Fund Central Europe LP, in which Uniball Rodamco, the previous owner of the asset is a limited partner.
The transaction was closed in March 2012. In Q2 2012 a Polish investor, Wikana took over a portfolio of 6 retail stores let to Komfort from Redevco. The stores are located in Gorzow Wielkopolski, Kalisz, Inowroclaw, Lodz, Krakow and Leszno, and altogether have the GLA of ca. 9,880 sq m. The rental contracts expire in 2017 but can be extended for further 10 years. The total price was €7.57m. The other two transactions in the retail sector took place in Q1 2012. Rockspring Property Investment Managers acquired Alfa Centrum in Olsztyn from Arka Property Funds. Alfa Centrum is located in the centre of Olsztyn and comprises 25,000 sq m of retail space and benefits from a high quality tenant-mix including H&M, Reserved, New Yorker and Helios Cinema. Blackstone completed the acquisition of Galeria Tecza, a shopping gallery located in Kalisz from Rank Progress S.A. Galeria Tecza was opened in October 2011 and has 16,100 sq m. The value of the transaction was €37m. The combined area of shopping centres in King's Street Retail - Blackstone's portfolio of shopping malls in Poland – exceeded 200,000 sq.m.
A few further investment transactions in the retail sector are expected to be completed in H2 2012. Based on the above transactions and those that are pending, we anticipate that prime shopping centre yields remained stable over the last quarter and are now at ca. 5.60% for the best assets in Warsaw, 6.00% for prime regional shopping centres in major cities and 6.75-7.00% in case of non- regional prime shopping centres.
Contacts at Savills Research
+33 (0) 144 517 388
+31 (0) 20 301 2087
+44 (0) 20 7016 3833