Warsaw’s office and shopping centre markets are not pressured by an oversupply of product, despite reports to the contrary, experts told a panel during PropertyEU’s CEE Summit which was held in the Polish capital recently.
Commenting on whether there is too much in the Warsaw office pipeline, Robert Sztemberg, head of German lender Berlin Hyp’s Warsaw office, told the panel ‘Which sectors and locations offer the best returns?’ that the supply issue should be seen in context. ‘I’ve always seen the Warsaw office market as positive, and I still see it as positive. It is still a small market of just over 5 million m2 in a country with a 40 million population. Compare that with Hamburg, which has a similar – perhaps even smaller – population, yet has three times the office stock.’
Moreover, he noted, Poland is much more centralised towards the capital city than Germany. ‘Warsaw supply in the next three years doesn’t scare me,’ he said. Nor is Sztemberg fazed by talk of saturation in the capital’s shopping centre market: ‘There is still space for three-four big shopping centres in Warsaw,’ he said.
Hotel market
Turning to the hotel market, Adam Konieczny, development director for Eastern Europe at Louvre Hotels Group, which was recently purchased by Jin Jiang International Holdings of China, was bullish on prospects, especially for Warsaw.
‘In May our hotels on Towarowa street in Wola were heavily overbooked for 16 days. We could easily create another 300 or so rooms only in Wola, and around 800 new rooms in Warsaw as a whole,’ he said.
Konieczny identified Krakow as a market still in need of more hotel rooms, and also mentioned the company’s Chinese owners’ interest in Prague, although pricing there is high, he said.
Richard Divall MRICS, head of cross-border markets EMEA at Colliers International, said that for Chinese/Asian investors, infrastructure is one of the key factors governing decisions about where to invest.
He cited Crossrail in London as an example of an infrastructure initiative which is influencing investors’ investment choices. Asian capital, he went on to say, is looking to diversify from the UK into continental Europe, and there could be some benefits for the CEE region from this.
Transparency and VAT rules
What Poland – and the CEE region as a whole – needs to work on is transparency, stressed Maurits Cammeraat, director of professional standards at non-listed funds body Inrev. Lack of it is putting off investors, he claimed. ‘Investors love information. Hopefully the professionals in the region will make sure the information is gathered in a consistent way.’
Otis Spencer MRICS, president of Peakside Polonia Management, highlighted liquidity as an issue of concern in the Polish market, but noted that this should change with the advent of local REITs.
‘The only thing missing in the Poland story is the liquidity from local money,’ he said, adding that this would, in particular, have a positive influence on the fate of 2nd generation office buildings. He also pointed to the uncertainty surrounding VAT rules. ‘Some investors have put Poland on hold until this is cleared up,’ he said.
