CBRE: Investors enter 2023 cautiously, and will start making decisions in the spring

The situation in the Polish commercial real estate investment market is strongly linked to what is happening globally. The first shock of the war in Ukraine is over, although, as in other countries in the region, there is still a slowdown in the market. Inflation and central banks raising interest rates have investors looking for a new equilibrium point. A process of re-pricing is underway. Rents are rising, but still represent a small part of total corporate spending. The fundamentals of the real estate sectors are strong, so while we will still see a lot of caution in early 2023, the next few years should be more dynamic.

We are at a point where most players are waiting for the market to recover to start investing again. Despite record-breaking beginnings, we closed 2022 with a similar volume of investments as the previous year. The last quarter in particular will be weaker. This situation will continue into early 2023. Investors are watching how tenants react to rising rents and other business costs. Availability and cost of credit are key. Transactions are fewer and will continue to be so in the coming months.

Strong rental market
Despite the turmoil and search for a new equilibrium, the rental market in Poland has a strong foundation. Although rents are rising, against a backdrop of high inflation and rising operating costs, they still represent a small percentage of total expenses. Our observations suggest that tenants will bear the brunt of rising prices, and the strong rental market allows us to assume that the stabilization of interest rates will bring the investment market back to normal.

Decisions postponed
Although there is less construction and transactions at the moment, we are still dealing with them in various sectors of the market. Not all investors have adopted a wait-and-see position; some believe that right now is a good time to make important decisions because there is less competition. New players are also appearing, mainly from the local market, especially Central and Eastern Europe. The Polish market remains competitive in the region. Compared to the Czech Republic or Slovakia, for example, it is characterized by greater liquidity and diversification. There are isolated examples of inflow of Ukrainian capital. Branches of multinational companies are moving operations to Poland, especially in the areas of manufacturing and logistics.

Sectors with strong foundations
In the office market, especially in the regions, we are dealing with many transactions, some of which are yet to close. This trend will also continue in 2023. In retail, interest in retail parks continues to grow, with larger deals involving shopping centers and new players emerging. The warehouse market, despite the slowdown, remains resilient, with both single facility and portfolio purchases.

Cautious optimism
We enter 2023 in an atmosphere of cautious optimism. Concerns about inflation or rising interest rates are not high, and we assume that the situation will stabilize already around the second quarter of the year. It is worth remembering that although the real estate market reacts to changes a little more slowly than others, it is able to find a balance under different conditions.

Source: CBRE