AXI IMMO summarizes 2023 on the commercial real estate investment market in Poland.

In 2023, the Polish commercial real estate market on the investment sector saw a decline in activity, with a total transaction volume of around €2 billion (-65% y/y). It was one of the lowest results in the last ten years, mainly due to high-interest rates and a general macroeconomic slowdown. The industrial sector continued to attract the most capital, accounting for 46% of the total volume (EUR 935 million). In comparison, the retail (EUR 427 million) and office (EUR 410 million) sectors had a share of 21% and 20%, respectively. An increase in investments from Central and Eastern Europe, especially the Czech Republic, and an increase in the share of Scandinavian capital in the Polish investment market were also noted, which impacted the diversification of financing sources.

Grzegorz Chmielak, Head of Capital Markets and Valuations, AXI IMMO, comments: “The last 12 months on the Polish investment market have again been dominated by transactions involving warehouse and logistics assets. The sector is seen as the most stable. The largest transaction was the acquisition of a majority stake in 7R by NREP, and thus, a significant increase in capital of Scandinavian origin on the Polish market. In 2023, we observed a wait-and-see attitude among most players and wide divergences in the context of the difference in expectations between buyers and sellers”.

The industrial sector is an important part of the market

In the industrial sector, transaction volume in 2023 was EUR 935 million (-55% y/y). Warehousing and manufacturing assets remained an essential part of the market, with yields for prime facilities continuing their upward trend. In addition to acquiring an 80% stake in 7R by NREP, Panattoni sold warehouse projects with a total value of around EUR 520 million, including the largest of these, Campus 39 in Wrocław to P3.

Interest in retail sector

Despite a 71% drop in investment (EUR 427 million) in the retail sector, investor interest was still in retail parks and convenience facilities. The largest transaction was the purchase of the Matarnia retail park in Gdańsk by the French company Frey from Ingka Centers for EUR 102.6 million. In contrast, the largest portfolio transaction was the sale of five PKO TFI assets to Lords LB for EUR 56 million. The retail park segment looks stable, with the threshold for entering a project also within reach of medium and smaller investors.

The Warsaw office market is targeted by investors

In the office sector, however, the total transaction volume reached EUR 410 million (-81% y/y). Investors focused mainly on the Warsaw market, especially prime properties. Also noted were a few cases of buying office properties to change their residential functions. Despite the decline in activity, some investment transactions were still observed, suggesting that the office sector remains an attractive commercial real estate market segment. The largest recorded transaction in 2023 was the Mokotów Nova business center sale for EUR 75 million by Tristan Capital Partners, where M&A Capital was the buyer.

Other sectors, including private dormitories, PRS, hotels, and others, saw transactions totaling EUR 262 million (13%).

Prospects for the investment market in 2024

Grzegorz Chmielak concludes: “Considering that all sectors saw low transaction volumes on the investment market in 2023, we count on the status quo in 2024 at worst. Nevertheless, we all look forward to a positive rebound. Most players will be waiting for the ECB and the FED’s decision regarding interest rate cuts in the Eurozone and the United States, respectively, which should only affect higher investment activity at the end of this year or in the first months of 2025. One assumed scenario is to continue looking for alternative products like PRS, student housing, or value-add projects and waiting for the market to improve”.