Poland continues to maintain its position as the most dynamic CEE investment market - RICS report

Poland continues to maintain its position as the most dynamic CEE investment market - RICS report

Published at: 2016-08-02 08:26 | Author: RICS Polska
Despite some changes in the investment sentiment linked to Brexit and the expected outflow of capital from CEE to the core markets, Poland stands out in the CEE region in terms of the market size, substantial volume of prime assets and liquidity of the market.

Occupier Market

According to the Q2 2016 RICS Poland Commercial Property Monitor results, headline occupier demand continued to rise firmly for a twelfth quarter in succession. When broken down, the industrial and office sectors recorded the strongest pace of growth while tenant demand rose only modestly in the retail segment.

Alongside this, availability increased sharply once more, extending a run of sequential quarterly growth dating back to Q4 2011. The office sector recorded the biggest pick-up in leasable space during Q2 - an ongoing trend over much of the past five years.

Development starts increased across all areas of the market, again led by a substantial rise in new office construction.

These supply demand dynamics are keeping twelve month rent expectations negative across most sub markets. The prime retail and industrial sectors are both exceptions, where rents are expected to rise and hold steady, respectively. At the other end of the spectrum, respondents expect secondary office space to post the most significant decline over the year ahead.

Over the medium term, rents across prime markets are anticipated to hold stable while the downbeat outlook is largely concentrated in secondary markets.

Investment Market

Investment demand remained relatively solid in each area of the market during Q2. However, although still comfortably positive, the RICS investment enquiries indicator did moderate notably. Furthermore, the foreign enquiries data shows a very similar trend.

The supply of property for sale increased significantly in the office arena, modestly in the industrial sector, while the supply of retail units remained more or less unchanged.

Twelve month capital value expectations remain mixed. Projections point to prime retail assets posting modest growth, while the outlook is maringally positive across the prime office and industrial areas of the market. Meanwhile, prices are expected to come under further downward pressure in the secondary office sector.

In general, these trends are anticipated to remain in place over the medium term although the three year outlook is slight brighter for prime office assets.

The Investment Sentiment Index (a composite indicator of overall investment market conditions) slipped into broadly neutral territory during Q2 at +4. This follows q1’s reading of +15 and suggests momentum is fading in the investment market.

Monika A. Dębska-Pastakia FRICS MRTPI, Partner and Chairman of the Board, Knight Frank Poland:

“Poland continues to maintain its position as the most dynamic CEE investment market with a total transaction volume in H1 2016 doubling when compared with the same period in 2015. Despite some changes in the investment sentiment linked to Brexit and the expected outflow of capital from CEE to the core markets, Poland stands out in the CEE region in terms of the market size, substantial volume of prime assets and liquidity of the market. This is confirmed by solid investment demand and a downward pressure on prime yields in all property sectors. Nevertheless, a reverse trend is observed primarily in the secondary offices owing to a growing supply, increased vacancy rates and falling rents. Consequently, yields for secondary assets may face a further upward pressure”.

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