German funds make up 15% of total value invested in Poland, CEE region annually
German funds have always been one of the main players on the investment market in Poland and the CEE region, according to Skanka, a development and construction company in Europe. However, in recent years their share in transaction volume has been decreasing. Currently, they stand at around 15 percent of the total value invested annually. New entrants from the United States, Asia and South Africa have increased competition for commercial property in the region. Poland and the Czech Republic are still the CEE markets of choice for German investors seeking to locate their capital in commercial real estate.
According to CBRE, in the first half of 2018 German companies invested €284 million ($321 million) in Poland’s commercial real estate. Offices have to this point been the most favored asset class in this market (49 percent), followed by industrial (27 percent) and hotel assets (23 percent). German buyers were most active in Poland in 2012 and 2015 with commercial real estate transactions totaling over €1 billion ($1.13 billion). Volumes momentarily dropped in 2016 (€432 million/$488 million), but bounced back in 2017 with €983 million ($1.112 billion). As the market experienced a decline in the first half of 2018 activity, ongoing and planned transactions may well fail to match last year’s volume.
“Due to previous numerous purchases, German investors have built large property portfolios and are now focusing on active asset management,” said Sean Doyle, head of investment properties at CBRE. “Due to their significant investment in Poland, investors have become more selective and as a result are acquiring less assets. Nevertheless, German and Austrian funds are still the most active investors when the most expensive commercial, predominantly office buildings, are concerned. In the last 12 months three out of seven such transactions were closed with German capital.”
Investor strategies show that asset class and top-quality products are key factors when planning capital deployment in CEE and office developer activity in the CEE region remains high as well.
“CEE is perceived as a safe and attractive region to invest in by a growing number of property investors from the United Kingdom, United States, and increasingly, Asia,” said Paweł Dębowski, chairman, real estate (Europe) at Dentons. “German investors and fund managers like Union Investment, Deka Immobilien, GLL and Warburg-HIH have been actively investing in CEE for many years now, especially in the office, hotel and logistics sectors, and this remains a stable feature.
The positive momentum in Central and Eastern Europe is well-grounded as well, with international investors maintaining their appetite for transacting in the region’s commercial real estate markets. “Investor confidence in the region, underpinned by favorable legislation and sustainable economies, is invariably high. Poland undoubtedly holds the number one position in the region. It is seen as the most diversified and mature market in CEE, outperforming Western Europe in terms of attractive yields at low risk with relatively high liquidity,” added Dębowski.
