Poland's investment market posts 40% drop in 2007

Property investment dropped by 40% in Poland last year to EUR3bn, according to a new research report released by King Sturge on Friday. Activity was lower due to the credit crunch, with banks more hesitant to provide financing than that in previous years and requiring reduced loan-to-values and higher margins, the property adviser said. The retail segment accounted for 53% of the activity. The office sector contributed 34% while industrial accounted for only 10% of transactions.

'Similar to previous years, the majority of investment took place in retail. However, movement has been seen in logistics property investment as the Parkridge portfolio was sold to Prologis in a pan-European transaction', said Jaros³aw Wnuk, head of King Sturge's Investment Agency.

Investment yields stabilised in the country during 2007, and prime yields stand now at 5.25-5.50% for office buildings, 5.50-5.75% for retail and 6.75-7.00% for industrial properties. Jaros³aw Wnuk: 'Current price levels for prime properties should prove sustainable while secondary properties and secondary locations will most likely be affected. It is more difficult to obtain financing for the acquisition of secondary products. Commercial banks have revised their approach towards financing of commercial acquisitions in CEE and are showing less flexibility than in the first half of 2007.'

As the market has become more difficult for investors who are interested only in existing and income generating stock, the market has witnessed an increasing number of joint venture initiatives, King Sturge said.