Offices

Some 75% of the whole market in Poland are transactions in Warsaw, which also had the greatest volume of transactions in the first half of 2007 (around EUR 868 million). The buyers of office space were in over 90% funds from Germany, U.K., the Netherlands and France, and the most active funds from outside the EU were companies from Israel. There was also a considerable growth in the activity of Polish investment funds (Arka, BPH, and AIB Polonia).
Even though the number of purchase transactions outside Warsaw diminished slightly, the market was still very dynamic, following a large number of minor transactions and a few larger purchase transactions such as Focus (example of an increase in activity on the secondary market), Prosta Office Center, and Trinity Park II.
Initial estimations are that by the end of 2008 demand for office space throughout the country will increase by some 800,000 square metres (over 20% of the existing space). As much as two thirds of the new demand will be on the Warsaw market, but... Apart from the centres already existing on the map of Poland there will also be new ones, such as Łódź – 75,000 square metres, and by the end of 2008 we will see an increase in the importance of Lublin and Szczecin.
Since the property developers’ offer is primarily addressed to large tenants, the number of business parks in regional cities is growing. Most of them are located on the outskirts or in the suburbs, in the vicinity of local airports (e.g. in Wrocław – Strzegomska Business Park and Wrocławski Park Biznesu, and in Kraków – Kraków Business Park).
Retail
In 2008 Europe will see a record number of 11.4 million sq m of new space delivered for use (38% more than in 2007 – 8.3 million sq m). The combined supply of gross rental space in shopping centres accross Europe is now 105 million sq m (in 1997 it was 58 million sq m).
John Strachan, Head of the Commercial Space Global Department at Cushman & Wakefield, said: “Next year will see more new space delivered for use in shopping centres than ever before. Many new, developing European countries have been ranked at the top of the list when it comes to new space to be completed. However, we musn’t forget about the more mature Western European countries, where the number of newly built shopping centres is also growing.”
In the second half of his year and in 2008 shopping centres in Russia will provide 4.6 million square metres of new space. The second place is taken by Poland (1.5 million sq m). Among the most important investments is the Malta Arcade (52,000 sq m of gross rental space) built by Spanish property developer Neinever in Poznań and an investment by Danish Braaten+Pedersen – Agora in Bytom (25,000 sq m).
Commenting Poland’s high position on the ranking list, Piotr Kaszyński, Head of the Commercial Space Department at C&W Poland, explains: “Leading traders, both foreign and domestic, have concentrated in around 40 Polish cities with a population of more than 100,000. Their demand for good quality space generates the demand for new shopping space in the shopping centres in those cities.”
In the first half of this year, the total volume of transactions on the retail property market was EUR909 million (33% of last year’s volume). One of the largest portfolio transactions was when Oppenheim paid to GE Real Estate EUR132 million for hypermarkets in Gdańsk, Sosnowiec and Zabrze (together with the adjacent shopping arcade), and the largest single purchase – Wola Park shopping centre in Warsaw bought by French fund IXIS AEW Europe from Ivanhoe Cambridge (EUR146 million). The record transaction of 2007 was Macquarie CountryWide Trust’s purchase for EUR232 million of a property portfolio from Simon Ivanhoe.
In the first half of 2007 the volume of modern retail space in Poland amounted to around 6.7 million sq m (175 sq m per 1,000 inhabitants), 4.7 million sq m of which is located in the eight largest cities, including 31.9% in Warsaw, where 22.3% of the national volume is located. Some 400,000 sq m of modern shopping space was completed (over 100% more than in the corresponding period of 2006). The largest space volume (95% of the total shopping space) was completed in the shopping malls sector in the centres of the largest Polish cities.
Another wave of demand for modern shopping space on the Polish market is expected between 2008 and 2009 (at the end of the first half of 2007 some 1.3 million sq m of space were under construction). Medium size cities will see the completion of around 70% of investments, but the completion pace could be slowed down by new regulations regarding large stores (over 400 sq m).
In Poland, at the end of the first half of this year there were 242 shopping centres with the combined space of over 4 million sq m. The first half of the year saw the completion of some 380,000 sq m of space in shopping centres. The most important event was the opening of the Złote Tarasy shopping centre in Warsaw (63,500 sq m of gross rental space), and the Grunwaldzki Passageway (45,000 sq m) and Wrocław Arcades (32,000 sq m) in Wrocław, Forum in Gliwice (46,000 sq m), 2nd stage of Stary Browar in Poznań (26,000 sq m), Plaza Sosnowiec (13,100 sq m), Plaza Lublin (23,700 sq m), and Plaza Rybnik (18,500 sq m). Some 980,000 sq m of space was under construction, including Malta Arcade Poznań (4 April, 2008), Bałtycka Arcade Gdańsk (4 April, 2007), Legnicka Arcade Wrocław (1 April, 2008), Wisła Arcade Płock (3 April, 2008), Auchan Rumia (4 April, 2007), and Pestka Poznań (2 April, 2008). Construction activity growth in this sector is also visible in Białystok, Bydgoszcz, and Lublin. We are also about to see the completion of projects in Rzeszów, Częstochowa, Radom, Opole, and Słupsk.
Industrial and warehouse
Since its accession to the EU and following the removal of trade barriers in importing goods, Poland has become an attractive place for warehouse and distribution investments. Potential investors’ large demand is not being satisfied by an adequate supply of high quality investment products. Just like in the case of other investment market sectors, the industrial real estate and warehouses market is dominated by foreign investment funds (among them most active have been British property firms).
In the first half of 2007 the industrial property market was characterized by a small number and value of transactions. In that period, the combined volume of the purchase transactions was around EUR20 million and was six times lower than in the same period last year. The largest transaction recently has been the purchase of the Ożarów Business Centre.
Due to investors’ interest in high quality properties some developers renovate squalid buildings. For this reason, accordingly to last year’s forecasts, regional markets see the realization of purchase transactions of industrial properties, like the production building in Tczew bought by a British fund.
In the first half of 2007 the volume of modern warehouse space in Poland amounted to 3 155,000 sq m (nearly 54% in Warsaw, but due to the dynamic development of other regions the capital city’s share in the market is diminishing). Since 2005 the map of modern warehouse space has expanded to include Poznań, Wrocław, Upper Silesia, and Łódź. In 2006 the group was joined by Kraków and Tricity. Investors are also interested in
Bydgoszcz and Szczecin, where the first modern warehouses are likely to be completed in 2008.
The development of regional markets is mostly dominated by the development of road infrastructure. Most wanted are areas located next to large cities and in the vicinity of the existing or planned motorways. Hence the popularity of Upper Silesia and Central Poland (construction of the A4 and A2 motorways, and the intersecting A1) and Northern Poland (the A1 is scheduled for completion by 2010).
Since the beginning of 2006 the prices of commercial land have grown – depending on the location – by 100-150% on average. The largest price growth has been recorded in and around Warsaw, Poznań, Wrocław, Upper Silesia, Gdańsk, and around Stryków. And since the building costs increased by around 20-40%, in 2007 the rent prices for warehouse space grew 10-20% on average, as compared to 2006.
Housing
Poland is perceived as a very attractive location for housing investments, so the housing market is developing very rapidly. Projections are that this trend will continue in the nearest future. The largest consumer groups are composed of national and foreign individual investors who buy apartments to live, sell or rent them in the future. Also institutional investors (e.g. investment funds) have intensified their activity.
The deficit on the housing market is followed by a price growth. Warsaw is considered the most expensive location when it comes to residential space prices in the whole Central and Eastern Europe. However, it is unlikely that the considerable price growth from 2006 repeats.
The luxury apartments market is still underdeveloped. They will be located in small housing  investments and skyscrapers, which is a new trend on the housing real estate market in Poland. Looking at the current trends we can assume the housing markets in the more important cities (Warsaw, Kraków and Wrocław) are becoming more mature when it comes to the quality and quantity standards. Second, regional markets, such as Tricity, Poznań, Łódź and Katowice, are developing gradually faster, which increases property developers as well as property buyers’ confidence in the housing investments in Poland. JB

The largest group of investors in the Polish retail space market is composed of companies with the EU capital: from Germany (Oppenheim, DEKA), Austria (Akron, Meinl, Immoeast), the Netherlands (ING RE), France (IXIS AEW, Klepierre) and GB/Ireland (Caelum, Hunter Development). Also funds from outside the EU had an important influence on this sector in the first half of 2007, mainly due to the purchase of Simon Ivanhoe’s portfolio by Macquarie CountryWide Trust from Australia, and the Near East, Israel.

The combined volume of modern office space on the most important Polish markets amounts to over 3.8 million sq m. Some 70% of office space in Poland is located in Warsaw. The next places are taken by Kraków – 315,000 sq m, Wrocław – 237,000 sq m, Tricity of Gdańsk, Gdynia and Sopot – 225,000 sq m, Katowice – 170,000 sq m, and Poznań – 164,000 sq m.