Light at the end of the tunnel draws buyers to Polish market

Real estate markets in Poland are beginning to see the light at the end of the tunnel according to Capital Park Group board member and partner Marcin Juszczyk.

“Interest rates are going down, we can see that looking at the five-year Euro swap rate which we use in our financing and went down 100 basis points. It helps with negotiations and helps to close the gap between buyers and sellers,” Juszczyk told Real Asset Insight’s Richard Betts recently.

This year is expected to be a “more lively year” than 2023 in terms of transaction volumes, he said.

Capital Park is already in the process of selling three retail parks, which he said is a good sign.

There is also some interest in offices and Warsaw has proved to be more resilient in terms of defending capital values than its Western European counterparts.

“Indexation has been absorbed – 16.4% compound indexation for the last two years and this is what offsets the compression of yields,” Juszczyk said.

“We see a lot of opportunities also in the office sector, especially in Warsaw where the supply is a record low,” he said, adding that such a low level of supply has not been seen for 25 years.. “So that is very positive for developers and office owners on balance, and there’s pressure on rental growth on top of indexation, so we believe this is a great opportunity.”

Location is still important though and it is better to be at the centre of gravity rather than a mono-functional suburban office district.

There are opportunities too in residential which was fuelled by a government 2% mortgage scheme although, the market is waiting to see what changes follow the recent election.

There is, however, a new wave of optimism among investors, including international investors from  the Baltic countries, Czech Republic, Hungary and the Nordics.

“We are a little bit worried about what is happening in Germany, because that was a big traditional group of investors, but I’m sure we will soon see them investing in Poland again.”