Utilising its proprietary data, global real estate services firm Cushman & Wakefield estimates that the commercial real estate investment volume in Poland for the first half of 2024 was EUR 1.76 billion, representing an almost 80% increase compared to the same period in 2023. The investment market is experiencing a revival in the activity of investment funds, including Polish investors, with this year’s total investment volume likely to hit EUR 4 billion, says Cushman & Wakefield.
The commercial property market in Poland experienced a notable rebound in the first half of 2024, with more than EUR 1.7 billion in investment transactions, representing an increase of nearly 80% year-on-year and of over 50% compared to the same period in 2022. This strong performance is attributed to lower interest rates and improving economic sentiment which is an additional incentive for buyers to invest in real estate. It is worth noting that the number of active investment funds is growing and the sector is also seeing transactions closed by domestic investors. Polish market players are filling the niche of lower-value deals by investing not only in developer projects but also in standing commercial buildings. Looking ahead, we expect these positive trends to continue,
comments Krzysztof Misiak, Head of Cushman & Wakefield Poland.
Although this year continues to be dominated by value-add transactions, the Polish market is seeing the first core+ deals whose share in investment volumes is likely to increase on the back of more stable interest rates, which in turn will attract major cross-border players. This year’s total investment volume is expected to reach EUR 4 billion, nearly double 2023’s figure and accounting for 75% of the five-year average,
adds Paweł Partyka, Head of Capital Markets Poland, Cushman & Wakefield.
Offices are the top performer
This means that office assets recorded a fourfold increase in transaction values year-on-year, with the strongest buyer activity reported in the second quarter. The growing number of promising, concrete negotiations between sellers and buyers bodes well for the future. This confirms the strong fundamentals of the Polish office market, which leads the way in CEE in terms of office stock, product quality and diversity. The coming months are likely to see an increase in the number of office transactions as interest rates and yields have stabilized at lower expected levels. This appears to be the last call to compete for trophy assets before the largest investors are back on the market,
says Marcin Kocerba, Partner, Capital Markets, Cushman & Wakefield Poland.
Retail assets are back in demand
Although the retail investment volume for the first half of 2024 has already exceeded last year’s total, the best is still to come. From our observations, the retail sector is very likely to dominate this year’s investment volumes on a par with offices. We are seeing strong investor interest in retail assets across Europe, suggesting that retail is back in favour for good and is increasingly being seen as an alternative to industrial or office assets in investment fund strategies,
comments Paweł Partyka.
Stabilization on the industrial market
Strong demand for industrial assets which as yet has not translated into transactional activity bodes well for a quick return to high trading volumes in 2025. The coming months are likely to see transactions finalized by buyers who have long been absent from Poland or are new market entrants. The main drivers of investor interest in Polish warehouses include their high quality. According to Cushman & Wakefield, Poland’s total industrial stock is approaching 35 million sq m, of which as much as 40% will be in projects completed in 2021-2024, signifying that the Polish market contains mainly modern and sustainable assets that are particularly sought after by investors,
says Paweł Partyka.
The market is waiting for REITs
Draft legislation on Polish REITs provides for an investment vehicle in the form of a publicly listed joint-stock company dubbed SINN (a Company Investing In Real Estate Leasing) and expected to invest in rental apartments, student houses, care homes, office, industrial and retail buildings. Such a company will be exempt from tax on rental income and property sales, with a one-off preferential 10% tax rate applicable to dividend payments. It is, however, required to generate 90% of income from property rental or a sale of a property leased for 12 months or longer,
explains Mira Kantor-Pikus, MRICS, EMBA, Head of Equity, Debt & Alternative Investments, Cushman & Wakefield.