Is there something which can slow down the growth of new investments on the Polish real estate market?
A great challenge, especially for the business sector, is a falling number of attractive plots in the neighborhood of the central urban parts. There is currently a lack of plots for development, hence the bitter rivalry for investment areas. The prices of construction materials and labor also increase. Furthermore, due to record-breaking rates in supply of office real estates, we can soon observe an increasing phenomenon of tenants leaving old, modestly furnished and poorly located buildings. As a professional advisor on the real estate market, I support my clients in searching for such market occasions which could bring higher returns from investments as well as increase in asset value in the long term. However, the most important long-run challenge can be the society which is getting older as well as baby bust, which will potentially translate into a change of the perspective concerning the employment market growth and more difficult access to well educated, ambitious, speaking in many languages and relatively cheap group of employees.
What actions can be undertaken by investors due to the shrinking number of attractive plots in the cities?
The searching for new niches can direct developers towards other dynamically developing regional markets such as Łódź or Katowice but also towards smaller academic centers. These cities are blazing a trial of land rehabilitation concerning historical development for new commercial goals. The investors point out that the revitalized buildings generally grow old morally and technically much slower than a typical business park. Moreover, a perfect location and individual character, the so called “spirit” of a given place, are also in favor of such investments. The example is OFF Piotrkowska Center in Łódź, where we were able to create one of the most valuable and famous locations in the city from a degraded quarter, which will soon gain some new office functions.
Which investment opportunities provide attractive return rates?
At present, we are analyzing investment opportunities on behalf of our clients, including off-market ones, which provide income and initial return rate gross above the average market. The attractive return rates for the best quality assets on the regional markets at the level of 6-7% in the commercial and office sector and 7-8% in the industrial and warehouse sector constitute a spur for funds, institutional investors and private capital investors from Europe.
To sum up, can we say that 2018 is a good year for locating our capital in profitable real estates?
We can still observe a stable demand for office areas among tenants, which is connected with growth of companies, increased employment and relatively good capitalization rate. After appropriate preparation, these projects should bring a stable source of passive incomes in the case of the majority of regional markets. The growing popularity of investing in real estates can be observed all over the world, and Poland can guarantee the extra safety of this undertaking. It is certainly worth taking advantage of this opportunity.
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