Polish retail investment has second best Q1 for six years: JLL

Despite the ongoing affects of the Covid-19 pandemic, the total value of retail investment deals in Poland in Q1 was approximately €190 million, which – unexpectedly – was the second best Q1 performance in the last six years, according to JLL.

“Considering the limited operation of shopping centres, investors are primarily targeting retail parks and convenience schemes, which have displayed the most liquidity,” said executive director retail investment Agnieszka Kołat.

The largest Q1 deal was EPP’s acquisition of four retail parks for €106 million, the final tranche of a larger deal covering 12 assets signed in 2018 with Chariot Top Group.

Private equity fund Henley Investments also made its debut in Poland by acquiring Galeria Pestka in Poznań from Blackstone. This was the first transaction involving a large shopping centre since 2019  if the Galeria Północna and Galeria Jurajska are excluded – their ownership transferred as part of Optima’s acquisition of shares in GTC.

More than half of the retail assets that changed hands in Q1 were stores belonging to UK supermarket chain Tesco, which is withdrawing from Poland. The Salling Group has acquired 301 Tesco grocery stores which will now be rebranded as Netto.

Further retail yield decompression expected

Despite a lack of transaction data for Q1, prime yields are estimated at 5.25% and further decompression is expected. However, JLL estimates that prime retail park yields will remain stable at around 6.8%.

During the period nearly 93,000 sq m of retail stock was delivered, comparable to the same period last year. Nearly 490,000 sq m of retail space remains under construction across all formats with a mix that reflects the trend for convenience and local shopping which became more marked during the pandemic.

“In terms of leasable space, retail parks will dominate new developments this year. This format is expected to account for 36% of total space planned for delivery, followed by stand-alone retail warehouses with a 27% share,” senior research analyst Joanna Tomczyk said. She added that new shopping centres and convenience centres are both forecast to have an 18 – 19% share of the market in 2021, a significant change as the dominant format developed on the Polish market has been shopping centres.