Property In Poland The Future Looks Bright
News Posted On: 12 June 2013
Poland is getting attention from global investors thanks to its continued avoidance of the worst of the financial crisis. Already investors from Asia, the US and Western Europe have interested themselves in Poland’s real estate market, and local investors are thought likely to be next in line.
Speaking to the IPD Central and Eastern European Real Estate conference in Vienna earlier this year, Otis Spencer, the managing director of Kulczyk Silverstein Properties, said that ‘people are curious about his growth story which is very positive compared to a lot of other markets in Europe.’
The country has historically offered unusually high yields too, though Mr. Spencer expects that prime real estate yields in Poland will probably continue their current decline as more investors allocate capital to the market. Polish retail yields are now 150-200bp higher than similar assets in Germany. ‘Because this is Poland there is a yield premium and this should go down in the future,’ Mr. Spencer told the conference. ‘We are not expecting a huge yield compression but it should fall.’ Meanwhile, Polish residential rental yields hover around the 4.8% mark, far higher than most Western European countries, making Polish property attractive to Germans and Spaniards as well as Poles.
Mr. Spencer further observed that Poland was a target for investors all over the world but that domestic investment had yet to catch up. ‘The key point for investors is not only the regulatory environment but liquidity,’ he said, and outlined a future trend in which Polish pension funds and other institutional investors turned to real estate rather than stocks and bonds. Mr. Spencer said he saw a strong future in ‘some of the secondary cities where the liquidity will improve on the future as domestic capital begins to invest in real estate.’
Poland can seem a risky investment opportunity to some. After all, the country has yet to join the Euro and fears over the regulatory environment hold some people back. However, the vast majority of Polish rents and property debt are denominated in Euros, a sign of the widespread assumption that the country will join the single currency soon. And the regulatory environment is also typically European in its simplicity and stability. Mr. Spencer points out that ‘there are similar regulations whether you invest in the Netherlands [or Poland] in terms of a good legal infrastructure to protect your investments.’
One potential engine for increasing domestic institutional investment is Poland's overall economic health. If Germany is Europe’s primary industry, the powerhouse of the Eurozone, then Poland is Europe’s secondary industrial base. Service companies that previously looked to Asian or African sites have turned their attention to Poland for the country’s stability and its convenient proximity to Germany. As a result the Polish economy as a whole is looking up, meaning more potential individual investors for the domestic market, better rental income and more opportunities for institutional investors. It also makes the country more attractive as an expatriate destination for other Europeans
Written by Les Calvert
News Posted On: 12 June 2013
Poland is getting attention from global investors thanks to its continued avoidance of the worst of the financial crisis. Already investors from Asia, the US and Western Europe have interested themselves in Poland’s real estate market, and local investors are thought likely to be next in line.
Speaking to the IPD Central and Eastern European Real Estate conference in Vienna earlier this year, Otis Spencer, the managing director of Kulczyk Silverstein Properties, said that ‘people are curious about his growth story which is very positive compared to a lot of other markets in Europe.’
The country has historically offered unusually high yields too, though Mr. Spencer expects that prime real estate yields in Poland will probably continue their current decline as more investors allocate capital to the market. Polish retail yields are now 150-200bp higher than similar assets in Germany. ‘Because this is Poland there is a yield premium and this should go down in the future,’ Mr. Spencer told the conference. ‘We are not expecting a huge yield compression but it should fall.’ Meanwhile, Polish residential rental yields hover around the 4.8% mark, far higher than most Western European countries, making Polish property attractive to Germans and Spaniards as well as Poles.
Mr. Spencer further observed that Poland was a target for investors all over the world but that domestic investment had yet to catch up. ‘The key point for investors is not only the regulatory environment but liquidity,’ he said, and outlined a future trend in which Polish pension funds and other institutional investors turned to real estate rather than stocks and bonds. Mr. Spencer said he saw a strong future in ‘some of the secondary cities where the liquidity will improve on the future as domestic capital begins to invest in real estate.’
Poland can seem a risky investment opportunity to some. After all, the country has yet to join the Euro and fears over the regulatory environment hold some people back. However, the vast majority of Polish rents and property debt are denominated in Euros, a sign of the widespread assumption that the country will join the single currency soon. And the regulatory environment is also typically European in its simplicity and stability. Mr. Spencer points out that ‘there are similar regulations whether you invest in the Netherlands [or Poland] in terms of a good legal infrastructure to protect your investments.’
One potential engine for increasing domestic institutional investment is Poland's overall economic health. If Germany is Europe’s primary industry, the powerhouse of the Eurozone, then Poland is Europe’s secondary industrial base. Service companies that previously looked to Asian or African sites have turned their attention to Poland for the country’s stability and its convenient proximity to Germany. As a result the Polish economy as a whole is looking up, meaning more potential individual investors for the domestic market, better rental income and more opportunities for institutional investors. It also makes the country more attractive as an expatriate destination for other Europeans
Written by Les Calvert