Growth in Poland’s Real Estate Investment Market Activity

As a real estate agent with over 10 years of experience in the Polish real estate sector, I am pleased to share insights on the recent growth in Poland’s real estate investment market.

Overview

The Polish investment market experienced a significant uptick in activity during the first half of 2024, recording its best quarterly performance since Q4 2022. The total investment amounted to approximately €1.7 billion, marking a 91% increase over the first half of 2023.

Economic Factors

Businesses are encountering fewer macroeconomic hurdles due to the European Central Bank initiating a cycle of interest rate decreases and falling inflation expectations. These factors contribute to the stabilization of capitalization rates, enhanced investor confidence, and the potential for further reductions in financing costs.

Leading Sectors

Large portfolio deals propelled the office and retail sectors to lead the market in H1 2024. Both the quantity and value of transactions in these sectors surpassed the totals for the entire year of 2023. The warehousing sector, which was the most active industry the previous year, fell to third place.

Office Real Estate Investment Market

The office sector saw a notable surge in investment activity in the first half of 2024, with 22 transactions totaling nearly €800 million. This represents a significant increase compared to the €200 million reported during the same period in 2023. The closure of significant transactions and renewed interest in regional cities were the primary drivers of this growth. “Prime office” transactions were recorded outside of Warsaw for the first time since 2022, as buyers continued to be attracted to premium office buildings in smaller locations.

Retail Real Estate Investment Market

In H1 2024, the retail investment market experienced a substantial comeback, with transaction volumes rising by 149% compared to the first half of the previous year. Major transactions underscore the sector’s increasing attractiveness, highlighted by this remarkable recovery. The retail industry has promising future prospects given the current circumstances. Market perception indicates that, in Q2 2024, capitalization rates for the best shopping centers were approximately 6.50%, while rates for the best retail parks were around 7.25%, despite the lack of prime transactions in Warsaw’s retail segment.

Industrial and Logistics Real Estate Investment Market

Although accounting for a smaller portion of total investment volume than the previous year, the industrial and logistics sector remains a focus for investors. Rising financing costs and reduced market competition contributed to the 2023 slowdown, shifting the emphasis to higher-quality, more strategically positioned properties. Given the current market dynamics, which are expected to drive a swift rebound fueled by robust economic growth, the industry anticipates an increase in asset quality, particularly regarding ESG compliance, and smaller average transaction values. Despite the prime bond market’s slower growth due to decreased interest rate volatility, there is still no conclusive, transaction-backed evidence of improvement. By the end of June 2024, the capitalization rate was estimated to be nearly 6.75% for the best warehousing facilities with five-year leases and approximately 6.50% for the best projects in Warsaw.

Comparison with Other European Markets

Compared to other European nations, Poland’s real estate investment industry has demonstrated exceptional growth and resilience. While historically dominated by countries like Germany and the UK, Poland is emerging as a serious contender due to its strong economic development and attractive investment opportunities. The Polish market offers higher yields and lower entry costs compared to Western European markets, making it particularly appealing.

Key Cities Driving Growth

Several cities are significantly contributing to the expansion of Poland’s real estate investment market. As the capital and economic hub, Warsaw remains the primary attraction and source of substantial investment. Additionally, there is a rise in investment activity in other cities, such as Gdansk, Wroclaw, and Krakow. These cities attract both domestic and international investors by offering a blend of modern infrastructure, economic potential, and historical charm.

For those interested in exploring the dynamic Polish real estate sector and uncovering lucrative investment opportunities, I invite you to contact me. With over a decade of experience, I am well-equipped to guide you through the intricacies of the market and help you make informed investment decisions.?Let’s connect and discuss how you can benefit from Poland’s thriving real estate landscape.