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Poland Real Estate Report Q4 2011
Business Monitor International, Oct 2011, Pages: 40
Business Monitor International's Poland Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Poland's Real Estate industry.
Generally low vacancy rates, stemming from a good balance between demand and supply, saw the commercial property market in Poland remain relatively healthy throughout the global financial crisis. Now, with an expanding economy, led by goods exports to Western Europe and bolstered by domestic factors, the market has every reason to be confident.
Foreign direct investment in the sector is significant and most of the key players in the development sphere are transnational companies that operate across the region. Even so, many are openly stating that Poland is their best market at the present time.
Key factors affecting the real estate industry include:
- There are a number of projects either planned or under construction, but not so many as to create a potential glut of new property coming onto the market in the next few years.
- The economic fundamentals are attractive. BMI are expecting real GDP to grow by 4.6% in 2011 and exports by a very solid 8.2%.
- The building of new infrastructure – including roads, rail and the Warsaw metro line – across the country has opened up viable new areas for all sectors of the property market.
- Poland’s office real estate sector currently has one of the best prospects in the world, according to research by Jones Lang LaSalle. There is sustained demand, including from service providers who are already established or are looking at expansion. In the retail property sector, growth is fuelled by high retail sales. As consumer confidence is on the rise, so is consumer spending. In April 2011, retail sales (annualised for January-April) increased by 9.5% year-on-year. Poland’s industrial property sector is experiencing a pick-up in development activity, driven by increasing retail sales and industrial production.
The risks for the real estate market are essentially economic:
- As growth is based on exports, should the external economic picture deteriorate more quickly than BMI currently expect, this would have a deleterious effect on the Polish economy (and naturally its need for commercial space).
- The fiscal deficit rang in at almost 8.0% of GDP in 2010. While not BMIs core scenario, should the government find itself in breach of the constitutionally mandated public debt limit of 55% of GDP, this would prompt harsh fiscal austerity measures, in turn putting the positive economic outlook at risk.
- There remains a risk that nascent inflationary pressures in Poland (which hopefully peaked in May) could force the central bank to pursue a more aggressive monetary tightening cycle than BMI currently expect. This would obviously impact on the availability of finance for property investment.
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