POLAND - Upward-moving rents and "rational" pricing are boosting the acquisition appeal of Polish property assets, according to James Rushworth, European property director at Standard Life Investments. 

"Pricing has moved on a long way from 10 years ago," he said, despite some evidence of mild yield compression. "Yields are robust,  not cheap, not moving out," he said.

"The average rent is incredibly low. There's a great, long-term story on rents."

His comments came as the fund management firm announced a €70m deal with developer Helical to fund Tarawa retail park near Opole for its European Property Growth fund. Construction will begin in October this year, with expected completion in September 2009.

With Carrefour already identified as the anchor tenant, Rushworth said the firm was "in negotiations" with a DIY retailer as a second potential tenant. The French supermarket chain last September announced it would offer 20% of its €24bn southern European property portfolio to "strategic" investors, including pension funds.

"Tenant demand is generally very strong because of the relative wealth of Polish consumers and their propensity to spend," said Rushworth. "The asset is in an area with the highest anticipated retail spend. Location is important."

Rushworth also expressed confidence that developer-deterring regulations introduced under the previous government would "eventually" be repealed. Rules introduced by a government dominated by the economically-erratic Kaczynski brothers would have made getting permission for the construction of large retail developments more difficult .

Incumbent president Donald Tusk has vowed to remove the legislation, though repeal is likely to be some way off.

This is SLI's  third acquisition in Poland; the other two were logistics assets.  "I wouldn't rule more Polish acquisitions in office or logistics," said Rushworth.

"There are a number of office opportunities in Warsaw but there's always competition. Some is domestic   property companies and investment companies. Other competition is coming from global investment firms. Most active are German open-ended funds. They're active everywhere, but they're especially interested in Poland."

Topics