The year has started on a high in Poland and other Central and Eastern European countries, with levels of activity and interest which are rare for the usually quiet month of January, said market experts gathered in Warsaw for the latest PropertyEU CEE Investment Briefing.
'The new year has just started and already we have seen deals being signed and projects come into due diligence,' said Piotr Mirowski, director of CEE Investment Services Poland at Colliers International. ‘All this activity points to a very good performance in 2017. 'It looks like it will be another very good year for financing in Poland, said Martin Erbe, head of International Real Estate Finance, Continental Europe at Helaba: ‘It is unusual to be working so hard in January.'
Even pessimists see the bright side: 'I always tend to see the glass half empty, but I must say that in the first few weeks of the year we have seen the number of instructions increase rapidly and this bodes well for the rest of 2017,' said Pawel Debowski, Chairman, European Real Estate Group at Dentons Poland. ‘There is new money coming in from Asia and the Middle East, so now I am optimistic.'
There is a changing of the guard taking place in Poland, with new investors from South Africa and Canada, China and the Middle East flanking and in some cases replacing the traditional core investors who have been in the market for years and who might take the opportunity to rebalance their portfolios.
The result is a deeper, more diverse market with more depth and more liquidity, said Mirowski: 'A positive development which will benefit investors as well as other market participants'.
Strong economic fundamentals, investor interest and a growing market are creating a virtuous cycle that is leading foreign investors to want to establish a longer-term presence, he said: 'The scale and diversity of the market is attracting investors and that in turn contributes to growth. Our share of the European pie is growing so everyone wants a piece.'
In this context, the demand for offices is still growing and will keep pace with the new supply coming onstream. CEE offices, which in 2015 used to be 40% of Skanska's total leasing activity, are now up to 65% and growing, mainly in Poland. 'It is a very attractive market, rents are falling and now foreign banks like Goldman Sachs and Credit Suisse are relocating part of their activities to Poland,' said Adrian Karczewicz, head of divestments CEE, Skanska Commercial Development Europe.
It is not just banks but law firms and other companies too: 'Dentons have just moved their entire shared services department from London to Warsaw, where rents are lower and the availability and quality of employees is high,' said Debowski.
There is a risk in such a strong foreign presence, warned Erbe: 'Last year 98% of money invested in Poland was international. I would prefer to see a strong local investor base, because if the Government makes the wrong decisions the foreign investors will leave and the market will be in trouble. You do not want the whole country to be owned by international investors.'
The World Bank's advice in Poland is 'leave aside the politics and focus on the economy,' said Carlos Pinerúa, country manager for Poland and the Baltic States for the World Bank. And the institution has been so impressed with Poland's economic performance that it is hailing the country as a beacon of hope for all emerging markets.
'It is a very dynamic, entrepreneurial country that has achieved impressive levels of growth and development,’ said Pinerúa. 'We want other countries to learn from Poland's positive experience and to follow its example.'
The country is a good place to do business, but there are some areas that need improvement, such as construction permits which take too long. ‘We have been invited to help the Government address this,’ said Pinerúa. ‘There is a willingness to improve procedures in order to speed up the investment process.’
