Records unlikely to be broken

29 May 2019

Are investors still queuing up for assets on the Polish market? According to the first panel of the conference, they certainly are. However, the panellists agreed that the yields for the best office buildings are unlikely to fall to 4 pct.

The first panel, ‘Investors Still Queuing Up’, featured Paweł Skałba, a senior partner and director of the office department at Colliers International as the moderator of the discussion, as well as Justyna Bauta-Szostak, a legal counsel, tax advisor and partner at MDDP, Mariusz Frąckiewicz, the national director in Poland of Avestus Real Estate, Matt Lunt, the operational director at Tristan Capital Partners, and Soren Rodian Olsen, the director of capital markets at Cushman & Wakefield.

When asked about the future of the office market in Poland, they pointed out that there is still a huge interest from foreign funds investing in our market, but this time around no records are going to be broken. Soren Rodian Olsen drew attention to the fact that around 95 pct of transactions are being carried out by international operators. “We are at the top of the cycle. There are, however, some indicators suggesting a slowdown by the end of the year. This year will not be as record-breaking as the previous one,” he said.

Matt Lunt noted that Poland is still doing very well compared to other European countries. “There is a negative trend on the horizon,” said Mariusz Frąckiewicz. “The investment volume is not as high as in 2018,” he added.

When asked about tax issues and their impact on the investment market, Justyna Bauta-Szostak replied that after July 1st, 2019 some uncertainty could arise. “There may be some doubts about withholding tax on dividends,” she said.

In response to a question about the source of capital inflows into the Polish market, the panellists pointed out the money still continues to pour in from South Africa, Asia (including from South Korea) as well as Germany, the US and the UK. “Transactions below 5 pct have already taken place in Warsaw. So cap rates should continue to fall,” believes Soren Rodian Olsen. “Will they, however, get down as low as 4 pct? I doubt it,” he replied, when asked whether we are going to see record low yields on the Warsaw market. “This is probably good for Warsaw and foreign investors,” he added.

Mariusz Frąckiewicz drew attention to the fact that the huge interest in the Warsaw market also means greater traffic on Polish local markets. When asked about other product worth investors’ attention, the panellists agreed that this certainly includes student halls and hotels.

Justyna Bauta-Szostak noted that these products could be easily converted into homes for the elderly in the future, which is important in an aging society.

Paweł Skałba also asked whether older buildings have investment potential. The panellists agreed – the location and quality of the building are the most important in this respect. As Matt Lunt pointed out, the location always looks after itself.

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