Union Investment acquires Paris office development (FR)

Union Investment acquires Paris office development (FR)

Logicor expands Bucharest II Logistics Park with an additional 21,200 sqm of prime warehouse space

Logicor expands Bucharest II Logistics Park with an additional...

Paulina Brzeszkiewicz_Kuczynska

29/10/2022 Comments (0) Views: 459 Capital Markets, Central Europe, Home, Industrial, Poland, Warsaw

Property investment market in Poland Q3 2022 Avison Young report

Author: Paulina Brzeszkiewicz-Kuczyńska, Research and Data Manager, Avison Young

Polish investment market falloff? Not this time!

Nowadays, making investment decisions is accompanied by particularly careful analysis. The conflict in Ukraine, rampant inflation and skyrocketing interest rates affect all markets in Central and Eastern Europe. The industry now finds itself in a difficult macroeconomic environment, accompanied by the looming potential energy crisis. Nevertheless, in the first three quarters of 2022, the investment market in Poland did not show any alarming signs of slowdown. On the contrary, the total volume of transactions in the commercial real estate sector exceeded the result of 2021 by over 20%.

The real estate sector is still a great hedge against inflation thanks to rising rents. Previously unfinished transactions were pushed to 2022. Avison Young notes that the recorded result was shaped by five spectacular transactions which accounted for 47% of the total investment volume in Q1-Q3 2022.

After the domination of the office sector seen in the first half of 2022, in Q3 2022 the industrial sector took the lead again. The office market, in turn, saw an increase in the volume of transactions in Warsaw. The retail sector is invariably based on smaller facilities, such as retail parks and convenience schemes. In Q3, residential sector saw two PRS transactions concluded in Warsaw and Wrocław.

When it comes to capital sources, Israeli investors and funds were particularly active in the past quarter.

  • EUR 4.3 bn. – total investment volume Q1-Q3 2022
  • 84 transactions vs. 103 transactions in Q1-Q3 2021
  • Third best Q1-Q3 period since 2016


Warsaw comes out of the regional markets’ shadow

Office sector in Poland continuously sparks investors’ interest. However, major institutional investors have narrowed their investment criteria as a direct result of the current cost of debt and the focus on ESG. The growth in construction costs over the past years accompanied by continuous rental growth offer landlords’ of existing assets a huge competitive advantage and improved returns over a new-build projects when setting rental rates and leasing strategies.

With EUR 1.77 billion, corresponding to a 41% share in the total transaction volume, the office sector dominates in terms of the value of transactions that were made in Q1-Q3. However, the distance to the industrial sector shrunk from 20% in H1 2022 to only 5% in Q1-Q3 2022 period. Among 21 office transactions recorded in Q1- Q3 2022 period, 15 regarded regional office markets. Nevertheless, Avison Young points out that two most impressive deals took place in Warsaw.

H1 2022 was dominated by the office acquisitions on the regional markets, which amounted for 80% of number of deals signed and shared the same investment volume as transacted in Warsaw, because of the extraordinary acquisition of The Warsaw HUB. Q3 2022 tipped the scales slightly in favor of the capital city. The 4th biggest office transaction in Poland, namely the purchase of Generation Park Y by Hansa invest, brought Warsaw ahead, with 55% share in office investment volume in Q1-Q3 2022 period.

  • EUR 1.77 bn. – office investment volume Q1-Q3 2022
  • 55% of which was transacted in Warsaw in Q1-Q3 2022
  • The 1st and the 4th largest single-office-building acquisitions in Poland since the beginning of the market

TOP 10 biggest single-office-building acquisitions in Poland

Source: Avison Young


Secondary hubs hold the guns

Industrial and logistics, being the darling sector of 2021 sought-after by almost every institutional investor stays atop the shopping list also in 2022. Avison Young points out that investors still want to purchase warehouse properties, while owners are not ready yet to lower prices. Hence, the overall volume of the sector records relatively lower results. Demand is propelled by the record low vacancy, which in turn, is driving rental growth across Poland.

Q3 2022 strengthened the warehouse sector position as far as Polish investment market is concerned. Acquisition of Danica industrial portfolio by CBRE IM from Hillwood was the second largest transaction recorded in Q1-Q3 2022 period. The transaction also had a significant impact on the share of portfolio transactions in the total volume of the warehouse sector, which amounted to 50%. Notwithstanding, EUR 1.54 billion of recorded investment volume didn’t catch up 2021 y-o-y results. Industrial transactions in Q1-Q3 2022 amounted to 36% of the Polish investment market volume, indicating considerable shift compared to H1 2022 (24%).

Interesting pattern observed by Avison Young in Q1-Q3 2022 period in the industrial sector was the growing importance of emerging markets over the “Big Five” warehouse and logistics hubs. 47% of transacted volume regarded secondary industrial hubs. Especially visible trend is the increase of property investments in Western Poland in rising markets of Szczecin and Lubuskie Province, which is currently the most intensively developing industrial market in Poland.

  • EUR 1.54 bn. –  industrial investment volume in Q1-Q3 2022
  • 50 %  share of portfolio transactions in total volume of the sector in Q1-Q3 2022
  • 47 % – share of secondary hubs in industrial investment volume in Q1-Q3 2022


Convenience and retail parks – what else?

Convenience schemes still dominate the retail market in Poland. The most desirable properties are those which accommodate discounters and “value retailers”, which are thriving nowadays, when buyers often limit their purchases and pay more attention to prices. Avison Young points out that Poland still offers very generous yields in retail parks (6.8%), which confirmed to be not only COVID-19 but also recession-resilient sector.

Upcoming months should bring two new investors from France and Israel, attracted by the retail park product. PSPAs has been already signed.

In Q1-Q3 period retail sector recorded 26 transactions, of which 17 were due to retail parks and convenience-based schemes. Redevelopment was the purpose of 5 investment deals, considering former hypermarkets as well as Sukcesja shopping centre in Łódź (stopped operations in 2020). Shopping centers featured comparable share in retail transactions, including two small facilities in Płock and Zielona Góra, as well as EPP JVs transactions from the beginning of the year.

Retail investment volume in Q2 and Q3 accounted for EUR 69 and EUR 62 million respectively, ranked on the third and second lowest place since 2016. Nevertheless, due to unprecedented results of Q1 2022, total retail investment volume at the end of September stood at EUR 859 m, what translates to 20% share in total investment market in Poland.

  • EUR 859 m – retail investment volume in Q1-Q3 2022
  • 17/26 share of retail park and convenience transactions in Q1-Q3 2022
  • 5/26 share of redevelopment deals in Q1-Q3 2022
  • Two newcomers about to debut in the retail park sector


Emerging market under investors’ magnifying glass

Ballooning inflation and interest rates resulted in the slowdown on the housing sales market, which in turn increased occupiers’ demand on the Private Rented Sector (PRS). However, factors such as high construction costs resulting from increasing energy and raw material prices, unsteady supply chains and financing costs growth force some investors to temporarily suspend new projects. Previously started transactions are closing. Altogether with student housing, PRS sector featured 3% share in total investment market volume in Poland in Q1-Q3 period.

Only in Q3 2022 two new PRS acquisitions were noted. Heimstaden Group finalized transaction regarding Unique Tower D in Warsaw with Marvipol Development, while Atrium European Real Estate acquired Studio Plac Dominikański in Wrocław from Toscom Development. PRS investment market is characterized with the predominance of forward funding agreements, thus many projects are still under development. Avison Young has been involved in the delivering wide scope of technical advisory services, from construction monitoring to final handovers for the entire Warsaw PRS portfolio by Heimstaden Group.


A hard start to the 2022 brought many question marks regarding the condition of the Polish investment market and its future shape. As time goes on, all the stakeholders observed the market with bated breath as none of scenarios could have been excluded. Fortunately, despite treading on thin ice, the resilience of the Polish investment market has resulted in good performance again, exceeding 2021 y-o-y investment volumes by over 20%.

In coming quarters, Avison Young expects the large industrial portfolios to be put on the market, benefiting from the record-high indexation rates, allowing to achieve same pricing despite increasing yield levels.

Retail sector may change its course and turn investors’ attention to well-performing shopping centers again, however on much higher yields than we observed before pandemic. Hopefully, Polish investment market will keep demonstrating its strength.

The full Avison Young report can be downloaded here: https://www.avisonyoung.pl/market-reports

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