Poland’s capital city is becoming a busy business hub with multiple building projects breaking ground to meet demand and investors are taking note.
Tomasz Trzoslo, the head of Jones Lang LaSalle’s Polish office said recently that Warsaw’s central district usually attracts interest from between 20 and 30 funds, while suburban areas account for interest from 10-15 funds. Secondary Polish cities and other central and Eastern European capital cities would attract between 5-10 funds, according to Trzoslo.
Investors are less likely to be looking for properties in Southeastern Europe and the Balkans. Properties in these areas often only attract two or three investors, which would be “mostly small funds specialising in riskier frontier markets.”
With nearly four million square metres of existing office space, Warsaw is the largest office market in Central and Eastern Europe. The city accounts for about 25 per cent of the stock for the entire region.
In 2012, 267,000 square metres of office space was completed. Warsaw is the only capital city in the region where office projects have not been postponed; instead, it has seen the largest increase in new projects.
The largest financial investment deals in the region were based in Warsaw. One example was the €210m sale of the Warsaw Financial Centre to Allianz Real Estate and Tristan Capital Partners. Another large transaction that was completed last year was the sale of the International Business Center to Deka, a German property manager, for €210m.
Poland is no longer thought of in the same category as Hungary, Romania, Bulgaria, and the Czech Republic, according to Adrian Karczewicz, investment manager with Echo Investment, a Polish developer and property management firm.
Yields in the central part of the city are approximately 6.25 per cent. In other parts of the region, yields can be 8.5 per cent or higher, which is greater than in large Western European metropolitan areas. For investors looking for higher rates of return with low risk compared to markets in Berlin or Paris, Warsaw is a good choice.
Maciej Zajdel, of Polish IVG, said, ““We are competing with London, Paris and Spain. We are having our five minutes. The news that we are having a slowdown has not yet gotten out widely. That means we still have about 12 months to continue to attract capital before we hit a wall.”
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