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News Release

Warsaw

The lowest since 2003 investment volume recorded in 2009 in Poland

Jones Lang LaSalle summaries the property investment sector in its latest publication “Warsaw City Report – Q4 2009”


In Poland, 2009 was characterized by incremental slowdown in investment activities across all sectors with only couple of major investment deals such as Atrium City, Grzybowska Park, Marynarska Point or Mayland Portfolio. These four deals accounted for over 60% of entire 2009 volume of € 725 million. Jones Lang LaSalle summaries the situation on the property investment market in Poland across recent 12 months in its latest publication “Warsaw City Report – Q4 2009”.

Tomasz Trzósło, Head of Capital Markets Central & Eastern Europe at Jones Lang LaSalle informs: “The investment volume in the property sector in Poland recorded in 2009 is the lowest level since 2003. Last year 21 investment transactions were concluded with a total volume around of € 725 million. To put it in the context, in 2008 Poland had € 1.7 billion of transactions, in 2007 the total volume was € 3.2 billion and in 2006 which was a record year for Poland’s investment transactions the total volume reached € 5.0 billion. Such a heavy reduction in investment volumes was nothing surprising and was in line with heavy reductions of investment volumes throughout entire Europe, in result of the financial crisis.”

In Q4 2009, Jones Lang LaSalle analysts estimated prime office yields at approximately 7.25-7.50%, and prime retail yields possibly closer to 7.0%. Prime warehouse/logistic yields were at 8.50-8.75% for 10-year leased schemes and closer to 9% for schemes with shorter leases. For a more secondary product (classified by either shorter leases, older quality or not prime location) office and retail yields continue at around 9% and this is unlikely to change in the foreseeable future. Trzósło adds: “We have started to see some yield compression in the market recently and so we are positive that yield decompression has now stopped – there are investors ready to buy offices at 7% or prepared to go at or below 8.5% mark for logistics product. Same applies to retail, where we believe the top product could now secure yields of below 7%. Secondary product will however continue to suffer in terms of values. The main reason for a spread of yields for secondary product is a limited pool of potential buyers for such product. The investors’ demand can however increase if substantial pricing discounts can be secured for such product. But that would only confirm the higher yielding approach to such assets.”

Concluding, Jones Lang LaSalle currently witness rather limited, in comparison to 2006 and 2007, activity in the market but a substantial improvement in investors’ sentiment when compared to only six months ago. The recently completed deals combined with some ongoing transactions confirm improving market sentiment and this, together with reasonably good economic fundamentals of Poland, shall lead to improvement of market turnovers and some minor compression of yield levels in 2010.