Significant resurgence in the market

Q3 2024 marked a significant resurgence in the market, with 30 transactions completed. By the end of September, the investment market reached €2.7 bn, reflecting an increase of 60% y-o-y. Following another interest rate cut by EBC, a return of large-scale transactions involving institutional capital is observed. Q3 saw 7 portfolio deals, with 2 exceeding €100 million, contributing almost 50% of the total investment volume. Notably, 3 new investors entered the market: Arete and Greykite, who acquired warehouses in key industrial hubs in Poland, and Emira Property Fund, who purchased DL Invest’s shares.

While office and retail transactions dominated the first half of the year, the industrial regained prominence in Q3, primarily driven by 3 major portfolio deals. As Avison Young forecasted before, office investments in regional markets also gained momentum, contributing over 20% to the total office volume in Q1-Q3 2024. Moreover, prime office transactions in central locations have finally returned, with Swedish investors acquiring Studio B in Warsaw and Nowy Rynek E in Poznań. Retail investments remained robust, focused on retail parks and convenience schemes. However, the sector’s volume was still driven by the sale of Cromwell’s shopping centres portfolio, accounting for nearly 50% of the retail volume in Q1-Q3 2024. Notably, the retail sector has already surpassed the entire 2023 result.

Highlights:

• €2.7 billion - total investment volume in Q1-Q3 2024 (€965m in Q3 alone)
• 86 transactions in Q1-Q3 2024 vs 57 transactions in Q1-Q3 2023
• volume increased by 60 % y-o-y
• 14 portfolio deals - 4 exceeding €100m, 7 took place in Q3 2024

OFFICE: Return of regions

While investors remain focused on office assets in the capital city, regional markets also drew significant attention, accounting for 23% of total office investment volume in Q1-Q3 2024. In Warsaw, transaction volumes are evenly distributed, with 38% in the central locations and 38% in non-central zones. Finally, prime office acquisitions in the city centres made a notable return, with Stena Real Estate AB purchasing Studio B in Warsaw, and Eastnine acquiring Nowy Rynek E in Poznań. However, 4 out of 10 transactions in Q3 took place in Mokotów and Służewiec office zones. Furthermore, Q3 2024 marked the potential return of prime transactions with yields below 6%. The largest office deals remain CPI’s shares sold to Sona Asset Management, followed by Stena Real Estate’s purchase of Studio B.

Highlights:

• €999 million office investment volume in Q1-Q3 2024
• 23% share of regional markets in office investment volume in Q1-Q3 2024
• 32 transactions in Q1-Q3 2024 vs 11 transactions in Q1-Q3 2023

INDUSTRIAL: Back in favour

In H1 2024, the industrial market experienced a notable slowdown, with investment volume dropping below €300 m. However, Q3 saw a strong rebound, with warehouse investments exceeding the entire result of H1. Over Q1-Q3 2024, the warehouse sector accounted for 27% of total investment volume, with 5 notable portfolio deals. 2 of them, which surpassed €100 million threshold, were concluded in Q3. The Big Five hubs dominated, accounting for over 75% of the industrial volume. Additionally, 3 new investors entered the market in Q3: Greykite, making the largest industrial deal with the acquisition of 3 Diamond Business Parks in Silesia, Warsaw and Central Poland; Emira Property Fund by acquiring part of DL Invest’s shares, and Arete, who purchased Panattoni Park Zgorzelec in the Wrocław hub.

Highlights:

• €738 million total investment volume in Q1-Q3 2024
• 5 portfolio transactions out of 18 transactions in Q1-Q3 2023
• Over 70% share of the Big Five hubs in industrial investment volume
• 3 newcomers: Greykite, Emira Property Fund, Arete

RETAIL: Retail parks are still on the wave

The retail sector recorded a total investment volume of €614 million in Q1-Q3 2024. Retail parks and convenience schemes remain invariably hot assets, making up over 50% of number of transactions, but shopping centres led in value, representing 67% of the total retail volume. Portfolio sales were numerous among the transactions, of which 2 involved shopping centres. The Cromwell portfolio sale was the largest, accounting for nearly half of the retail market volume.

During that time, the market welcomed 2 new investors: Star Capital Finance from the CEE region who acquired 6 shopping centres, and RSA-based Emira Property Fund who took a stake in DL Invest’s portfolio. Moreover, WP Carey’s purchase of over 120 Żabka stores was the largest Q3 deal in the retail sector. Worth noting, that Polish investors represented 15% of the retail volume, focusing still on retail parks and convenience schemes and highlighting the value of domestic capital.

Avison Young brokered 3 significant transactions in the analysed period including Centrum Galardia shopping centre in Starachowice, and two retail parks – Aniołów Park in Częstochowa and Rock Park Przeworsk in Przeworsk. “Moreover, we are aware of many ongoing deals regarding both shopping centres and retail parks formats, apart from Magnolia Park shopping centre in Wrocław and Ozimska Park retail park in Opole already closed in October", adds Artur Czuba, Associate Director, Investment at Avison Young

Highlights:

• €614 million retail investment volume in Q1-Q3 2024
• 6 portfolio deals in Q1-Q3 2024, 2 regarding shopping centres
• 13/21 transactions regarding retail parks and convenience schemes in Q1-Q3 2024
• 2 newcomers: Star Capital Finance and Emira Property Fund

PRS & PBSA: Record-breaking deal

In Q1-Q3 2024, the residential investment market saw 10 transactions totalling around €320 m. Of these, 9 involved the Private Rented Sector (PRS), while 1 focused on Purpose-Built Student Accommodation (PBSA). Warsaw continued to lead in the market with 7 deals concluded, while the other 2 took place in Kraków, involving projects by Heimstaden Bostad and Xior Student Housing and 1 in Wrocław by AFI Home. The standout transaction during this period was the acquisition of the Metro Zachód project, developed by Dom Development, featuring 500 PRS units, making it the largest deal in the residential sector so far.

Highlights:

• 9 transactions in the PRS sector and 1 transaction in PBSA in Q1-Q3 2024
• domination of the Warsaw market in transaction structure, only 3 transactions on regional markets
• €320 million total PRS & PBSA investment volume in Q1-Q3 2024

What awaits us in the second half of the year?

“Optimism was evident at the EXPO this year, with Poland continuing to demonstrate strength and stability as an attractive market for real estate investments. We have already witnessed new entrants into the market and expect a resurgence of large institutional funds. Based on our own projects and conversations with other market participants, we are seeing a significant number of properties across various sectors currently in the bidding, due diligence, or even finalisation stages. The office sector is particularly active, especially in Warsaw-Mokotów as well as on a few regional markets, as pricing is more attractive for the buyers. Convenience retail remains a “safe haven” and the logistics sector, especially sale and leaseback deals are gaining momentum,” concludes Marcin Purgal, Senior Director, Investment at Avison Young.