Warsaw offices more resilient than western counterparts

CEE offices are attracting more interest and Warsaw has proved to be more resilient in terms of defending capital values than its Western European counterparts according to Capital Park Group board member and partner Marcin Juszczyk.

“We see a lot of opportunities in the office sector, especially in Warsaw where the supply is a record low,” Juszczyk 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.”

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

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

Juszczyk told Real Asset Insight’s Richard Betts that property markets in Poland are beginning to see the light at the end of the tunnel.

“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,”

However, although there is a new wave of optimism among investors, including international investors from  the Baltic countries, Czech Republic, Hungary and the Nordics he said there are concerns in Poland about Germany.

“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.”