Polish H1 volume down 40% due to lack of product - Colliers

Real estate transaction volumes in Poland amounted to €810 mln in the first half of 2015, down 40% on the year-earlier period, according to Colliers International.

The property adviser said investor demand for Polish real estate remains high but that 'limited availability of institutional product for sale' was the major reason for the decrease in spend.

However, Colliers believes the market may make good on the shortfall in deal volume in the second half of the year.

'The 2015 investment volume is expected to approach 2014 figures as there is more than €1.5 bn in transactions in due diligence and pre-closing and others are in the negotiation phase,' said Piotr Mirowski, director of investment services for Poland at Colliers International.

'Poland remains one of the most coveted investment destinations in the CEE region. Diversity of capital deployed in the country continues to increase, which results in growing competition for prime product, improved liquidity and upward pressure on pricing,' he added.

Office dominates
Colliers recorded over 20 institutional investment transactions in the first half of this year. Overall volume of single-asset transactions was lower than in the corresponding period of 2014. However, that was due to the limited availability of large-ticket properties for sale.

The office sector dominated in the overall transaction volume at 49%, predominantly due to the scale of the sales of Green Horizon (€65 mln), Enterprise Park (€65 mln) and Europlex (€65 mln). The retail and logistics sectors accounted for 32% and 19% of the market respectively.

Notable transactions included the sales of the CA Immo logistics portfolio by CA Immobilien Anlagen to TPG/P3, Sarni Stok by CBRE Global Investors to Union Investment, Green Horizon by Skanska to Griffin Real Estate and Enterprise Park by Avestus Real Estate to Tristan Capital Partners.

New market entrants in commercial real estate such as Lone Star and Rockcastle completed the acquisitions of the Aviva Portfolio & Europlex and Solaris, respectively. The market also recorded a major corporate deal as Griffin Real Estate/Oaktree and Pimco acquired a stake in Polish developer Echo Investment.

Yields
Pricing for core assets, particularly in the office and logistics asset classes, continues to be primarily driven by the residual lease term. However, Colliers notes that the liquidity for core+ and value-add properties is now also growing. Prime office yields for Warsaw are in the range of 6.00% for CBD Core and 7.50% – 7.75% for Warsaw Mokotów, whilst initial yields in major regional cities (Wroclaw and Kraków) have fallen below 7.00%.

Retail yields range from 5.50% for Warsaw and major regional cities for modern, 3rd generation, dominant, trophy-type assets, up to 8.00% - 8.50% for shopping centres in smaller secondary cities.

Prime logistics yields have now decreased below 7.00% for core assets.