The office sector in Warsaw is on track for a record year and investments could reach 2.7 billion Euros by the end of 2019, delegates heard yesterday at the CEE Summit 2019, which was organised by Poland Today and Real Asset Media.
A broadening investor base is the reason why volumes have increased, as new-comers join established players in what they see as dynamic and promising markets.
‘Warsaw office transaction volumes were virtually double the long-term average at the end of September, driven by a slew of big-ticket deals during the first nine months,’ said Simon Mallinson, Executive Managing Director EMEA & APAC at Real Capital Analytics.
So far this year RCA has recorded 1.6 billion euros of office deals, just under the record level of 1.8 billion for full-year 2018. ‘But as another 1.1 billion of deals are still pending, even if not all of them are finalised by the end of December we should see 2019 at least reach, if not overtake, the 2018 figure’.
The office sector seems to be a favourite with investors, as activity across the CEE, including Russia, has reached a 10-year high of 7.6 billion euros, according to new RCA figures. Warsaw has been the most active market in the region, followed by Prague, Budapest, Moscow and Vilnius.
‘Our data suggests that a broader group of investors is becoming more comfortable with real estate investing across CEE markets,’ said Mallinson. One of the attractions is the relatively wide gap in pricing with the more expensive core Western European markets, he said.
The robust investment levels in the CEE region in general, and its office markets in particular, has resulted in rising levels of market liquidity. RCA’s Capital Liquidity Scores show that Warsaw is currently at its second highest level of liquidity ever, while Budapest has exceeded its previous record.
In Warsaw, liquidity is being driven by the very high proportion of institutional capital in the market and the fact that total investment volumes have increased, said Mallinson, but there is still an issue with the lack of domestic capital being deployed in the market.
‘International investors do like to see a domestic investor base because it gives them confidence and the certainty of an exit,’ said Mallinson. ‘
The CEE Summit 2019 continues today with more briefings, panel discussions and presentations from market experts.