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News Release

Warsaw

Sound demand on the real estate market in Warsaw

Jones Lang LaSalle issues Warsaw City Report for Q2 2011


Warsaw, 16th August 2011 - Jones Lang LaSalle presents the latest edition of its quarterly market report - The Warsaw City Report - Q2 2011. The publication covers the main trends in the economy and demand / supply trends in the investment, office, retail and industrial markets. We also provide information on the residential markets and hotel sector, contributed respectively by our partner REAS and Jones Lang LaSalle Hotels.

Highlights:
• Office sector: Over 123,000 m2 of the modern office space was leased in Q2 2011. When combined with the demand registered in Q1 this adds up to over 321,000 m2. At the end of Q2 2011 approximately 6.2% of modern office stock in Warsaw remained vacant. The vacancy rate is expected to decrease further due to the relatively low number of new completions with only around 140 000 m2 scheduled for completion in 2011 and 173 000 m2 in 2012. Prime office space in Warsaw City Centre can now be secured from €22-25 /m2 /month. However, there are some A+ developments quoting rents even higher than this. The best Non-Central locations are being leased at €15.00-15.50 /m2 /month. The first sub-markets to witness rental growth were the City Centre, Upper-South and South-West.

• Retail sector: For a long time, the vacancy rate has been oscillating around 1%, with retail space in prime shopping centres available exclusively under the recommercialisation processes. Despite this, new brands have appeared in several shopping centres. These included: New Yorker, GoSport, Crocs, Sturbucks, Groovy Kids and Desigual. Prime shopping centres rents for 100 m2 unit shops remain stable at a level of €70 - €90 /m2/month. Likewise, rental levels for centrally located stores on Warsaw high streets (Nowy Świat, Chmielna, Plac 3 Krzyży, Marszałkowska) are slightly higher and range between €75 - €95 /m2/month. We expect the recovery on supply side of the market in Warsaw region to take place at the end of next year.


• Warehouse sector: Q2 2011 saw a sound demand for modern warehouse space in Poland of 557,800 m2 compared to the 1.24 million m2 in the entire 2010. The most sought-after locations in Poland in Q2 were the Warsaw Suburbs (143,000 m2) and Poznań which registered demand for 105,000 m2. The total vacancy for Poland dropped from almost 14.3% to 12.9% during the quarter. Warsaw’s suburban area vacancy is higher than Poland’s average and is estimated at 19.1% mainly due to a wide choice of options in Błonie (167,000 m2 vacant). The vacancy rate within the city boundaries is estimated at 12.4%. Effective rents for prime warehouses located within the Warsaw boundaries range between €4.00 and €5.30 /m2/month, whilst rents in Warsaw suburban area are quoted at €2.45-€2.90 /m2/month.


• Residential sector: In Q2 2011, slightly over 2,800 units were sold and over 4,000 were launched to the market in new projects in Warsaw. The number of transactions decreased considerably as compared to the previous quarter, while the number of units launched to the market was the highest since the boom of 2007. In consequence, the number of units on offer reached the highest level in the history of the Polish residential development market.


• Hotel sector: At year-to-date May 2011, occupancy level in Warsaw’s hotels has experienced a modest rise of 3.2%, reaching 63.9%, when compared to the same period in 2010. Nevertheless, hoteliers remain confident and have continued to increase their rates by 6.8% to €77.74, driving a 10.7% rise in RevPAR*.


* RevPar - revenue per available room