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News Release


Interview with Agata Sekuła, International Director, Head of Retail Investment CEE at JLL

Retail investment market in Poland

Was 2015 a successful year on the retail investment market?

2015 was a very successful year for the retail investment market in Poland. The volume of transactions of retail schemes totaled over €2.26 billion. This is an excellent result and only slightly lower than the record-breaking number recorded in 2006. The volume is a result of the huge investor interest combined with a wide range of interesting products available on the market. Last year we recorded a significant number of high value transactions. The biggest transactions included Riviera in Gdynia (approx. €300 million), Stary Browar in Poznań (approx. €290 million), Bonarka City Center in Kraków, Sfera in Bielsko-Biała and a portfolio including Karolinka in Opole and Pogoria in Dąbrowa Górnicza (€221 million). Furthermore, it also worth noting that the market rarely witnesses such a number of large transactions of prime retail assets.

So will transactions for prime shopping centres continue to be visible in the next few years as well?

A very big transaction has already been announced this year. JLL had the pleasure of advising the vendor on this deal. This was the purchase of 75% shares of Echo Prime Properties - a subsidiary of Echo Investment - by Redefine Properties. The transaction included 10 shopping centres and office buildings and already represents significant volume for 2016. In my opinion, we will continue to see a large number of retail investment transactions this year but of lower single volumes. We are also expecting growth in investor activity for cities between 100,000 and 400,000 residents.

Are there further transactions to be announced in the near future?

Indeed. There are already transactions that were commenced last year and remain in the preliminary agreement phase. Huge investment activity in 2015 further encouraged owners to sell their projects and, as a result, a number of new shopping centres made their investment market debut. This means that we might expect announcements of newly signed agreements. Some of them will be advised by JLL Capital Markets team.

What's your take on 2016's retail investment volume? 

Taking into consideration the large transaction between Echo and Redefine announced in March 2016, this year's retail investment volume in Poland will be comparable to the results from 2015.

Is there fierce competition among investors on the Polish market?

Each transaction has its own traits and everything depends on the product's type. There are projects that attract great popularity as well as projects with a much shorter list of potential investors. The demand depends on the specificity of a particular scheme as well as allocation requirements of investors in a given time with regards to the region, country, type and volume of a particular transaction. Different strategies are employed for locating capital. Therefore, a project that is attractive for one investor might not be attractive for another – it can be out of their reach due to a property's price, it might not offer a sufficient return on investment or may indicate high financial costs due to renovation needs. Some investors are prepared for refurbishments and have extensive developer experience and their structures include units specializing in asset management services. On the other hand, other market players prefer to limit their engagements and remain purely financial investors. The Polish retail market has a lot to offer the many types of investor.

The market in Poland has investors from Germany, United States etc. Are there other countries who have started to take an interest in Poland?

A recent trend on the Polish investment market is the growing activity of capital from South Africa. An excellent example of this is Rockcastle Global Real Estate which has been operating on the Polish market since 2014. Last year, Rockcastle purchased numerous retail schemes including Karolinka in Opole, Pogoria in Dąbrowa Górnicza and Platan in Zabrze. This year, Redefine Properties, another investor from South Africa, entered the Polish market Poland as well. The most active player in 2015 was a German institutional fund - Union Investment. In 2015, it acquired Riviera in Gdynia, Sarni Stok in Bielsko-Biała and Focus Park in Rybnik. Furthermore, its portfolio also includes Manufaktura in Łódź and CH 3 Stawy in Katowice. In 2015, CBRE Global Investors, Deutsche Asset and Wealth Management, Meyer Bergman and TPG also invested in the Polish retail market.

Is Asian and Middle Eastern capital also active on the market?

Investors from all parts of the world, including Asia, closely observe the retail market in Poland. Moreover, investors from these regions often participate in transactions indirectly through investment funds that operate and acquire projects in Poland.

What are the yields for such projects?

Retail yields, for best-in-class products, are oscillating at around 5.0%.

Will these investors keep the assets they've purchased? Or will they look to re-sell them in the next few years?

On the Polish market, we mainly have investors with long-term strategies.

Besides being interested in prime shopping centres, do investors also look for retail schemes in smaller cities? And retail parks?

Since 2014, we have witnessed growing interest among investors in smaller cities offering well-functioning retail schemes. This is confirmed by the transactions concluded in Bielsko-Biała, Płock, Rybnik and Opole.

Last year, we also recorded transactions in the retail park segment. Mitiska REIM, on behalf of its real estate fund First Retail International (FRI), purchased PH Młyn in Wrocław while LaSalle Investment Management took over Futura Park in Wrocław. The retail park segment offers interesting options for portfolio development and we believe there will be further transactions for such real estate projects.

How did the rest of the CEE retail investment market perform in 2015?

The volume of the retail investment transactions in Central and Eastern Europe (excluding Russia) totaled €3.97 billion in 2015. The biggest transaction was concluded in the Czech Republic – the purchase of Palladium centre by Union Investment for €570 million. In addition, projects such as Campus Square, bought by CBRE GI, and Arkady Pankrac (75%), acquired by Atrium, changed hands in the Czech Republic as well. In Serbia, Atterbury Group purchased 33% of shares in MPC's portfolio including seven retail schemes. In Hungary, a joint venture of Morgan Stanley (MSREF VIII), WING and CC Real became the owner of MOM Park. In 2015, the transaction volume in the European retail market was €56.4 billion.

Speaker: Agata Sekuła, International Director, Head of Retail Investment CEE, JLL