The first interest rate cuts in the Eurozone and the first in Great Britain are behind us, and we await the Fed’s decision. In early August, stock markets crashed and there was a lot of geopolitical tension in the world. Data on the value of commercial real estate transactions show a strong improvement in the CEE region, while in the rest of Europe and the world investors are still cautious. What prospects do you see for our market?
I am an advocate of a balanced approach: on the one hand, we cannot be overly optimistic, because we still have many challenges ahead and new and difficult circumstances are constantly emerging. I think we are still getting used to the geopolitical environment – in the perspective of the last two decades, the last 2.5 years have been especially full of events that we should take into account when talking to investors today. I would like to add that Poland is often assessed positively as a stable and developing country. The impact of Russia’s attack on Ukraine in 2022, despite the ongoing hostilities, is currently not widely discussed in terms of its impact on the stability of our economy, and we also see many positive phenomena.
The value of transactions in Poland increased significantly in the first half of 2024, reaching €1.76 billion. This is 80 percent more than a year earlier and 54 percent more than in the second half of 2023. It is important to note that investors are active in basically all sectors of the market. We estimate that the value of transactions in Poland should reach €4 billion over the course of 2024, which is double the figure for 2023. Moreover, this is an organic improvement, a larger positive trend, and not the effect of a single larger transaction. Investors feel that these are the last months in which they will be able to negotiate asset purchases from a slightly stronger position.
So far, the so-called core capital (buyers’ focus on rental returns – the best buildings and tenants, low risk and adequate return – ed.), mainly from Germany, has not yet returned to a large extent – but we think it will be a matter of 6 to 12 months before this happens. But we still have many active players in value addition (buyers’ focus on returns due to increased property value, higher risk – ed.). Some new investors have appeared on the market, mainly from Central and Eastern Europe, the Baltic countries and Scandinavia. It is worth noting that almost 10% of the transaction value in the first half of the year, i.e. 175 million euros, are Polish investors. They have found their niche in smaller transactions. This is noteworthy and means that we have high hopes for the REIT Act, which should mobilize Polish capital, including individual investors who currently invest in apartments, shares or higher-risk financial instruments.
The Polish real estate market has proven to be performing very well even in difficult circumstances, is stable and built on good foundations. We have healthy domestic demand and a decentralization that sets us apart from other Central and Eastern European countries – Poland has Warsaw, but also several strong regional markets. This decentralization is truly unique, because in other Western European countries it basically only exists in Germany, France and Great Britain. At the same time, in most sectors we have lower saturation and higher capitalization rates – you can buy a good-quality project cheaper here. All in all, the conclusions after summing up the six months of 2024 are positive.
