According to the At a Glance Investment Market in Poland Q2 2016 report, prepared by the experts from BNP Paribas Real Estate Poland, the second quarter was highlighted with the largest share transaction ever recorded in the CEE, namely the acquisition of 75% of the shares of Echo Prime Properties owned by Griffin Real Estate. The portfolio of retail and office space was acquired by South African Redefine property fund for approx. €891 million. The deal accounted for nearly 60% of the overall volume last quarter and made investment volume grew over four times when compared with the corresponding period last year and three times versus the last quarter, with over €1.5 billion transacted in Q2 2016.
Retail accounted for 55% of all of the assets traded. The bulk of the volume was attributable to shopping centres acquired by the aforementioned Redefine. Offices scored 38% of the market share with the remaining 7% spend on warehouses.
Despite worsening of key office market indicators, including vacancy increase and decline in take-up volume, Warsaw has finally seen some sizable transactions concluded in the office sector with more to close over the course of the next quarters.
Such a trend derives from the fact that there are significant differences between prime and well-located schemes recording high occupancy levels and secondary assets struggling with tenant retention. Investors are keen to compete for prime projects with sustainable levels of rents given their location and quality. – says Anna Staniszewska, Head of Research and Consultancy. BNP Paribas Real Estate, CEE.
Investors continued their shopping spree in regional office markets, in particular in Kraków and Tri-City. More deals are expected to close once these pipeline schemes are delivered and leased. According to BNP Paribas Real Estate Poland year-end volume is expected to close at around €4 billion.
Compression in office prime yields in Warsaw became factual, falling to around 5.30-5.40% in Q2. Retail is also estimated to sell well below 5.50%. Quality class industrial and logistic products are expected to trade at around 6.00-6.25% with exceptional cases closing at 5.50%.
A reverse trend is recorded for value-add and opportunistic properties across the sectors where there are interesting investment opportunities.
Prime yields remain under pressure due to general availability of financing and lack of core products, however a significant spread of pricing on value-add and opportunistic assets is evident. Availability of financing remains high, even with an increase of interest rates by an average of 0.50bps, resulting from the new banking tax.- comments Del Chandler, Managing Director, Capital Markets, BNP Paribas Real Estate, CEE.
Source: BNP Paribas Real Estate