Crodss-border investors should take the opportunity to invest in office real estate in Poland's regional cities, according to a report by Cushman & Wakefield.
Crodss-border investors should take the opportunity to invest in office real estate in Poland's regional cities, according to a report by Cushman & Wakefield.
The report asks where fund managers and investors understand the 'eminent investment opportunities' for office property in Polish regional cities.
It would be important for investors to gain an understanding of the markets quickly, says report author Soren Rodian Olsen, as their peers are already active. As a result, Cushman & Wakefield expects the international inflow of core and core+ capital sources will grow strongly Polish regional cities.
Olsen is head of office & industrial investments in Cushman & Wakefield's capital market team in Poland.
Large regional cities
In addition to the capital of Warsaw, Poland has 6 large regional cities with populations between 400,000 up to 1,000,000 people. These include Krakow, Lodz, Wroclaw, Poznan and the respective agglomerations of Tricity (Gdansk/Gdynia/Sopot) at the seaside and Katowice in the southern part of the country.
Similar to large cities in Germany, the 6 Polish cities have a specific heritage and role in the Polish economy in regard to shipping and trading with Scandinavia from the Tricity, textile and film industries in Lodz, heavy industry and mining around Katowice, trade & exhibitions in Poznan, as well as business process services in Krakow and Wroclaw.
With Poland’s entrance in EU in 2004, the country saw constant road/rail infrastructure improvements across the country as well as a gradual, positive change in municipalities’ support of foreign investors, improving ease of doing business. Subsequently, Polish regional cities have emerged as Central Europe’s best-in-class locations for setting up new business.
Poland’s large regional cities enjoy a purchasing power parity 15-35% above the national average, sub-7% unemployment levels and excellent access to young talent from numerous, highly reputed universities. Whereas Krakow has enjoyed many years of being a sought-after destination for BPO/SSC industries, the cities of Wroclaw, Tricity and Lodz have started to catch up during the past 2-3 years.
The report suggests investors should move now: 'Selected transactions in 2015 point to a narrowing yield gap between Warsaw and regional cities during the next 2-3 years, offering compelling opportunities for both short-term and long-term investors, looking for sustainable growth and income./'
Cushman & Wakefield expects prime yields in major regional cities to compress 50-75 basis points during the next 24 months and that 2016 will be 'an open window' for capitalising on the opportunity to capture prime office assets in Polish regional cities yet at discounted price levels.
