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Poland continues to maintain its position as the most dynamic CEE investment market

Monika A. Dębska-Pastakia FRICS MRTPI, Partner and Chairman of the Board, Knight Frank Poland

Despite some changes in the investment sentiment linked to Brexit and the expected outflow of capital from CEE to the core markets, Poland stands out in the CEE region in terms of the market size, substantial volume of prime assets and liquidity of the market.

According to the Q2 2016 RICS Poland Commercial Property Monitor results, headline occupier demand continued to rise firmly for a twelfth quarter in succession. When broken down, the industrial and office sectors recorded the strongest pace of growth while tenant demand rose only modestly in the retail segment.

Alongside this, availability increased sharply once more, extending a run of sequential quarterly growth dating back to Q4 2011. The office sector recorded the biggest pick-up in leasable space during Q2 - an ongoing trend over much of the past five years.

Development starts increased across all areas of the market, again led by a substantial rise in new office construction.

These supply demand dynamics are keeping twelve month rent expectations negative across most sub markets. The prime retail and industrial sectors are both exceptions, where rents are expected to rise and hold steady, respectively. At the other end of the spectrum, respondents expect secondary office space to post the most significant decline over the year ahead.

Over the medium term, rents across prime markets are anticipated to hold stable while the downbeat outlook is largely concentrated in secondary markets.

Monika A. Dębska-Pastakia FRICS MRTPI, Partner and Chairman of the Board, Knight Frank Poland:

“Poland continues to maintain its position as the most dynamic CEE investment market with a total transaction volume in H1 2016 doubling when compared with the same period in 2015. Despite some changes in the investment sentiment linked to Brexit and the expected outflow of capital from CEE to the core markets, Poland stands out in the CEE region in terms of the market size, substantial volume of prime assets and liquidity of the market. This is confirmed by solid investment demand and a downward pressure on prime yields in all property sectors. Nevertheless, a reverse trend is observed primarily in the secondary offices owing to a growing supply, increased vacancy rates and falling rents. Consequently, yields for secondary assets may face a further upward pressure”.

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