The volume of transactions on the Polish investment market in the first half of 2014 shows stable demand for all types of assets with a significant focus on smaller projects in regional cities. Portfolio assets represent a large share of the transactions, mainly in the logistics sector. Most of the traded assets in the office and retail sectors relate to projects sold by developers, while the industrial assets are mostly re-traded.
After years of strong dominance of the prime sector, we see the smaller assets, located in secondary & regional locations, being heavily transacted. This stems from the fact that some of the new investments, mainly from the retail sector, have been located in these markets.
Logistics properties continue to be sought after as the industrial sector is expected to expand further in the coming years, mainly due to the lack of supply of modern logistics space and competitive rent levels. Taking into account the number of new and completed developments in this sector and the increasing demand, the potential volume of transactions will most likely exceed the volume observed in 2013.
The retail sector, which historically enjoyed a large share in the total volume of transactions mainly due to some large transactions, is moving towards smaller projects in regional cities.
The achieved yields in most sectors are compressing, reflecting increased demand from investors. Compared to previous periods, the largest decrease in the level of yields can be observed in the logistics sector.
As in previous years, foreign investors have been the most active players on the Polish investment market in the first half of 2014, however the increasing presence of Polish capital can also be noticed.
Traditionally the biggest investors were the foreign investment funds as well as some opportunistic funds, which represent a shorter-term investment strategy and seek higher-risk assets, which offer potentially higher rates of return. These entities represent the most significant part of the transaction volume in the second quarter of 2014.
The fact that we can observe a rising number of smaller deals, which mainly relate to properties located in regional cites, shows that the Polish real estate investment is maturing and deepening, said Craig Maguire, Head of the Capital Markets, DTZ. Taking into account currently closing transactions and the future pipeline we believe that the volume of transactions in 2014 will be at a similar level or slightly higher than last year, added Maguire.
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