New Real Estate - Bank Austria · 2018. 11. 19. · and Eastern Europe (CEE) after Russia, Turkey...

RealEstateCountry Facts

042012“Property investors

favour Poland – but for how long? ”

2 | Real Estate Country Facts 04 / 2012

Real Estate Country Facts

Disclosure pursuant to Section 25 ofthe Austrian Media Act: Supervisory Board: Erich Hampel, Chairman of theSupervisory Board; Paolo Fiorentino, Deputy Chairman ofthe Supervisory Board; Members of the Supervisory Board:Candido Fois, Karl Guha, Jean Pierre Mustier, RobertoNicastro, Vittorio Ogliengo, Franz Rauch, Karl Samstag,Wolfgang Sprißler, Ernst Theimer. Delegated by theEmployees’ Council: Wolfgang Heinzl, Chairman of theEmployees’ Council; Adolf Lehner, First Deputy Chairman ofthe Employees’ Council; Emmerich Perl, Sedond DeputyChairman of the Employees’ Council; Barbara Wiedernig,Third Deputy Chairman of the Employees’ Council;Members of the Employees’ Council: Josef Reichl, RobertTraunwieser.

Management Board: Willibald Cernko, Chairman, ChiefExecutive Officer (CEO); Gianni Franco Papa, DeputyChairman (CEE Banking); Members of the ManagementBoard: Massimiliano Fossati (CRO Risk Management),Francesco Giordano (CFO Finance), Rainer Hauser (Family &SME Banking), Dieter Hengl (Corporate & InvestmentBanking), Doris Tomanek (Human Resources Austria & CEE),Robert Zadrazil (Private Banking).

Objective of the medium: Information of the customer

Imprint: Publisher and media owner: UniCredit Bank Austria AG http://www.bankaustria.atEditor: Bank Austria Real Estate Consulting & Investment, Karla Schestauber, Tel. +43 (0)50505-54784Layout: www.horvath.co.at

Dated: 15 March 2012

A joint publication of Bank Austria Real Estate, UniCredit Research and Immobilien Rating GmbH (IRG).

Disclaimer:Despite diligent research and the use of reliable sources, UniCredit Bank Austria AG assumes no responsibility or liability regarding the completeness and accuracy of the information herein. This publication is not a proposal or request for proposal and shall not be construed as such.

Legal notice – please read this important information: This publication is neither a marketing communication nor a financial analysis. It contains information on general economic data and real estate market data and related assessments of real estate market developments. Despite careful research and the use of reliablesources, we cannot assume any responsibility for the completeness, correctness, up-to-dateness and accuracy of information containedin this publication.

The publication has not been prepared in compliance with the legal provisions governing the independence of financial analyses, and it isnot subject to the ban on trading subsequent to the distribution of financial analyses.

This information should not be interpreted as a recommendation to buy or sell financial instruments, or as a solicitation of an offer to buyor sell financial instruments. This publication serves information purposes only and does not replace specific advice taking into accountthe investor’s individual personal circumstances (e.g. risk tolerance, knowledge and experience, investment objectives and financial cir-cumstances).

Past performance is not a guide to future performance. Please note that the value of an investment and the return on it may rise and fall,and that every investment involves a degree of risk.

The information in this publication contains assessments of short-term market developments. We have obtained value data and other information from sources which we deem reliable. Our information and assessments may change without notice.

Poland’s entry into the EU in 2004 played a significant role in sup-porting medium-term economic growth prospects. It brought aboutrapid growth in trade with the EU countries (exports grew at an

average annual rate of about 18 % 2004 – 2008), while substan-tially supporting investment in Poland by increasing foreign directinvestment and through the inflow of transfer payments from the EU(in the period 2004 – 2008 average annual investment growth wasabout 11 %).

In 2009, when the European economy experienced a deep reces-sion, Poland – as the only EU country – managed to sustain eco-nomic growth (1.6 %). The next two years brought a revival, duringwhich Poland’s GDP growth reached 4.3 % in 2011. In our opinion,this year will see a clear slowdown of economic growth in Poland (toaround 3 %) following the faltering economic activity of major trad-ing partners (including Germany) and due to the weaker growth ofdomestic investment.

Polish economy reaps rewards of EU accession

Real Estate Country Facts 04 / 2012 | 3


Macroeconomic data and forecasts2009 2010 2011e 2012f 2013f

NGDP (EUR bn) 310.2 354.3 340.1 389.7 435.9

GDP per capita (EUR) 8,129 9,275 8,904 10,203 11,410

Real GDP (%-chg) 1.6 3.9 4.3 3.1 3.5

CPI (avg.%-chg) 3.5 2.6 4.3 3.3 3.1

Unemployment rate (%) 11.9 12.4 12.5 13.1 13.2

Exchange rate EUR / PLN, avg. 4.3 4.0 4.1 4.2 4.0

Current account / GDP (%) – 3.9 – 4.6 – 4.1 – 3.1 – 3.8

FDI / GDP (%) 3.0 1.9 2.7 2.5 2.2

General government balance / GDP (%) – 7.3 – 7.9 – 5.6 – 3.2 – 3.1

Public debt / BIP (%) 50.9 52.8 53.9 52.7 50.7

Foreign debt / GDP (%) 59.4 65.9 64.6 60.6 56.3

Source: UniCredit Research / f … forecasts / e … estimate

Facts and figuresPoland is a parliamentary republic in Central Europe. It bordersthe Baltic Sea and Russia to the north, Ukraine and Belarus tothe east, the Czech Republic and Slovakia to the south, andGermany to the west. The country has an area of 312,685 km2

and its population of 38 million is the fourth largest in Centraland Eastern Europe (CEE) after Russia, Turkey and Ukraine.Poland’s gross domestic product (GDP) reached EUR 340 bn in2011, and GDP per capita was EUR 8,904. It became a mem-ber of the European Union on 1 May 2004.

Latest country ratings

Moody’s A2 Outlook stable

S&P A – Outlook stable

Fitch A – Outlook stable

Real GDP (2008=100)

85.0

90.0

95.0

100.0

105.0

110.0

Germany HungaryGreece Italy France

Poland

2008 2009 2010 2011

Source: UniCredit Research

A rapidly growing negative trade balance in 2007 – 2008 led to asharp rise in Poland’s current account deficit (close to 6 – 7 % ofGDP). Due to the economic slowdown and the sharp depreciation of the zloty in 2009, the deficit in subsequent years narrowed


significantly to below 5 % of GDP. In 2012, weaker economic growthshould contribute towards a further narrowing of the current account deficit (according to our estimates to about 3.1 % of GDPfrom about 4.1 % of GDP in 2011).

Since early 2004 the National Bank of Poland (NBP) has been targeting an inflation rate of 2.5 % with an acceptable fluctuationband of + / –1 percentage point. The NBP maintains interest ratesin a range that is consistent with the inflation target by influencingthe level of short-term interest rates on the money market.Throughout 2011, CPI inflation remained above the upper limit of the inflation target (3.5 %), but in 2012 we expect it to return to around the NBP target, which will be supported by both theslowdown in domestic demand and the gradual appreciation ofthe zloty.

Since 2000, the zloty has been under a fully floating exchange rateregime and has not been subject to any restrictions for a decade.However, the NBP reserves the right to intervene on the currencymarket to achieve the inflation target, and in 2011 the central bankintervened on the FX market in order to prevent excessive deprecia-tion of the zloty.

One of the main challenges for the Polish economy is the reductionof the excessive fiscal imbalance that has persisted since 2008 (in 2010 the general government deficit reached 7.9 % of GDP).Currently Poland remains under the excessive deficit procedure, imposed by the European Commission in 2009. In our opinion, a

series of fiscal tightening measures taken so far by the governmentwill probably be sufficient to reduce the general government deficitto around 3 % of GDP in 2012. If the government’s deficit reductionplan succeeds, general government debt, after reaching approxi-

mately 54 % of GDP in 2011, should decrease in subsequent yearsand there should be no risk of breaching the Maastricht public debtcriterion of 60 % of GDP.


Current account balance (% GDP)

–7.0

–4.0

–5.0

–6.0

–3.0

–2.0

–1.0

0.0

2005 2006 2007 2008 2009 2010 2011s 2012p 2013p


General Govemment balance (% GDP)

–9,0

–4,0

–5,0

–6,0

–7,0

–8,0

–3,0

–2,0

–1,0

0,0

2005 2006 2007 2008 2009 2010 2011s 2012p 2013p


PLN/EUR exchange rate

3.0

3.6

3.4

3.2

3.8

4.0

4.6

4.4

4.2

4.8

5.0

01.0

1.0

8

01.0

7.0

8

01.0

1.0

9

01.0

7.0

9

01.0

1.1

0

01.0

7.1

0

01.0

1.1

1

01.0

7.1

1

01.0

1.1

2

Source: Datastream

Poland was the only country in the EU to achieve economicgrowth in the 2009 crisis. Real GDP rose by 1.6 %, comparedwith an average drop of 4.3 % for the European Union as awhole. This attracted the attention of international property in-vestors. In addition the degree of development and depth of thePolish property markets was also an argument in favour of in-vesting in the country. Foreign investment in Poland in 2010 and2011 was considerable: according to CBRE, investments in com-mercial property in CEE amounted to EUR 11.2bn last year – approximately double the 2010 level – with Poland accountingfor some 30 % of the total. This made Poland the region’s mostattractive market for investors in search of secure core invest-ments. In contrast, Russia, which also saw a jump in investmentvolumes, was mainly the market of choice for opportunistic localinvestors with a significantly larger appetite for risk.

Prime yields down sharplyWith buyers' interest so high, yields have fallen considerably.Prime yields in the office segment in Warsaw stood at 6.25 % atthe end of the fourth quarter of 2011 – the lowest level in CEE.The scope for further compression would now appear to havebeen exhausted. There are wide spreads between yields on coreand and non-core properties, and investments in higher yielding,opportunistic real estate could become increasingly attractive ifmoves to further deescalate the euro zone crisis are successfuland the economy begins to pick up again.

Although country risk as reflected in five-year credit default swap(CDS) spreads has increased as a result of the euro crisis, the



International investors on the lookout for core real estate

picture is still brighter than during the 2008 – 09 global economicand financial downturn. Poland’s CDS spread of around 170 basispoints (bp) is higher than those of the Czech Republic (around 120bp) and Austria (around 160bp), but considerably lower than thespreads of Slovakia and Hungary.

Banks’ scaling back commercial real estate lending in CEE Poland’s commercial property market is benefiting from the willing-ness of most international banks – some of which have beaten a retreat from the riskier CEE markets – to keep on providing funds.

CEE property investment by country 2011

Russia

Poland

Czech Republic

Hungary

Slovakia

Romania

Other

Source: CBRE

Office segment: prime yieldsQ4 2011 % qoq change (bp)

Frankfurt 5.00 0

Vienna 5.20 – 5

Milan 5.25 0

Warsaw 6.25 0

Prague 6.50 0

Bratislava 7.25 0

Budapest 7.25 0

Istanbul 7.75 0

Bucharest 8.25 – 25

Zagreb 8.30 0

Moscow 8.75 0

Sofia 9.35 0

Belgrade 9.50 0

Kiev 13.00 0

Source: CBRE

CDS spread development (5-year)

0

100

200

300

700

600

500

400

800

HungarySlovakia Czech Republic Austria

Polandbp

01.0

1.0

7

01.0

7.0

7

01.0

1.0

9

01.0

7.0

9

01.0

1.0

8

01.0

7.0

8

01.0

1.1

0

01.0

7.1

0

01.0

1.1

1

01.0

7.1

1

01.0

1.1

2

Source: Datastream


The financial sector has been hit hard by a combination of the euro-zone debt crisis, the new Basel III framework and the tighter capitalrequirements introduced by the European Banking Authority (EBA).Banks’ refinancing costs have increased, while the appetite for riskhas dropped. The CDS spreads of European banks are an indicator ofthe distortion in the market – in spite of their recent decline, spreadsare still close to the highs of the financial crisis in 2009.

Although the European Central Bank (ECB) has kept interest rateslow and the 3M EURIBOR is below the 1 % mark, rising bank liquid-ity costs have in some cases pushed up the cost of borrowing. The financing of investments, which can partly be refinanced usingmortgage bonds, enjoys an advantage here, but risk and cost factors mean that the chances of securing funds for developmentshave dropped in general.

Poland came a creditable third in a recent Ernst & Young ranking ofthe attractiveness of European real estate locations in 2012. But thepoint in the real estate cycle at which investors should move intothe Polish market is crucial. Experience shows that investors whobuy properties immediately after a crisis are more successful thanthose who make their move at or near the peak of the cycle.

Investors in commercial real estate should also bear the indirect ex-change rate risks in mind, even though rents in Poland are invoicedin euro. Since it peaked in July 2008, the zloty has lost some 30 %of its value against the euro, slipping by 15 % in the second half of2011 alone. However, the improvement of euro zone risk which ledto a growing appeal of carry trades, have helped to shore up thezloty significantly.


Euopean Banks’ CDS spreads (5-year)

0

100

200

150

50

300

250

400

350

bp

01.0

1.0

7

01.0

7.0

7

01.0

1.0

9

01.0

7.0

9

01.0

1.0

8

01.0

7.0

8

01.0

1.1

0

01.0

7.1

0

01.0

1.1

1

01.0

7.1

1

01.0

1.1

2

Source: Datastream

PLN/EUR exchange rate

3.0

3.6

3.4

3.2

3.8

4.0

4.6

4.4

4.2

4.8

5.0

01.0

1.0

8

01.0

7.0

8

01.0

1.0

9

01.0

7.0

9

01.0

1.1

0

01.0

7.1

0

01.0

1.1

1

01.0

7.1

1

01.0

1.1

2

Source: Datastream

Theoretical property cycle

Ren

ts in

EU

R/m

onth

time

Strong competition between banksRelative weak position of risk departments

High LTVsHigh investment volumes

Plenty of new developments are startetd

Strong competition between banksRelative weak position of risk departmentsHigh LTVsHigh investment volumes Plenty of new developments are startetd

Bank financing is difficult to get Relative strong position of risk departmentsLow LTVsDistressed properties are coming to the marketInvestment volumes are lowHardly any new developments

Banks act more reluctantlyFinancing conditions get more conservativeAllowances for depreciation are increasing

Bank financing is easier to get Financing conditions are less conservative

Source: Bank Austria, Real Estate Research

Relative attractivenes of European property investment by country 2012

Switzerland

Germany

Spain

Austria

France

Netherlands

Russia

Sweden

Poland

UK

Belgium

0% 50%40%30%20%10% 60% 70% 80% 90% 100%

very attractive attractive less attractiveno commentneutral

Source: Ernst & Young

According to an IRG survey, Warsaw currently has just under 3.6 million m² of modern office space. Over one-third of Warsaw’sexisting office space is located in the city centre, while the majorityof the office developments are outside the central area. The mostimportant location for offices outside the city centre is in the Mokotow district.

When comparing office space per capita, Warsaw is more or less ona par with Prague and slightly ahead of Budapest, but still lagsWestern European cities by a considerable margin.

Over the past few years the amount of new office construction inWarsaw was relatively high, but in 2011 the figure fell back to approximately 120,000 m² of additional offices. For 2012 the forecasts predict between 250,000 and 300,000 m² of new officespace again. And there are still more than enough projects in thepipeline – numerous speculative projects got underway last year.

New lettings of office space reached impressive heights in 2011.Nearly 575,000 m² of office space were let in Warsaw by the end of the year, which is the highest amount recorded to date. Approxi-mately one third of the space let represented lease extensions andrenegotiated rental agreements.

Because of continuing high demand for office space, the vacancyrate in Warsaw was once again very low in 2011. At 6.7 %, Warsaw

International investors continue to focus on office property in Warsaw: the market is considered to be stable, and has very lowvacancy rates. In 2011 many major deals highlighted the attrac-tiveness of the Warsaw office market.

Despite investors’ strong interest in Warsaw, it should be notedthat Poland has numerous other populous cities, also with consid-erable office property markets. The most significant of these regional centres are Krakow, Wroclaw, Poznan and the Tri-City(Trójmiasto) conurbation consisting of Gdansk, Gdynia and Sopot,as well as Katowice and Lodz.

However, the office sector is not developing at the same pace inall these cities, so properties need to be very carefully analysedbefore any investment decision is reached. While demand for newoffice space in Warsaw has over the past few years generally re-mained consistently strong enough to absorb the annual increase,it cannot automatically be assumed that new office space else-where will immediately be taken up.

These uncertainties have often led international players to seethese other markets as too small and uninteresting, with the resultthat regional office property developers have become predominantoutside the Warsaw area. They are better able to gauge the levelof demand accurately, and to adapt their projects to local require-ments.



Office property in Poland: hot spot Warsaw, but many interesting alternative locations

Warsaw office property market 2000–2012

0.0

3.0

2.5

2.0

1.5

1.0

0.5

3.5

4.0

4.5

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

2012(f)

Million m2

Source: CBRE / IRG

Office space per capita (2011) m² per capita

Zürich 27.63

Geneva 23.14

Frankfurt 17.09

Munich 16.49

Milan 9.14

Vienna 6.10

Bratislava 3.36

Prague 2.23

Warsaw 2.09

Budapest 1.82

Bucharest 1.26

Sofia 1.16

Moscow 1.12

Zagreb 0.82

Belgrade 0.32

Istanbul 0.22

Source: IRG



had one of the lowest vacancy rates for office space in Europe. Thevacancy rates in the other Polish cities vary widely. The office mar-kets in Wroclaw and Tri-City show similarly low vacancy rates inKrakow and Poznan the vacancy rate was slightly higher, while themarkets in Katowice and Lodz showed significantly higher vacancyrates.

Prime segment booming The financial and economic crisis led to a downward correction ofoffice rents in Poland as well. In 2007, before the crisis, top rents inWarsaw were in excess of EUR 30 / m² per month; since then rental

prices have fallen significantly. At the end of 2011 top office rentsin Warsaw were around EUR 25 / m² per month.

In general, price levels are lower outside Poland’s capital. Top officerents in Krakow, Wroclaw, Poznan and Tri-City are about EUR 15 –16 / m² per month, and in Katowice and Lodz slightly lower, at approximately EUR 14 / m² per month.

Office space scheduled for completion in 2012 or later (selection)Office project Total usable space (m²) Status City

PLAC UNII 41,000 under construction Warsaw

Mokotow Nova 40,000 completed Warsaw

Libra BC 30,000 under construction Warsaw

Green Corner 26,000 under construction Warsaw

Senator 25,000 under construction Warsaw

Nimbus 20,000 under construction Warsaw

Ambassador 16,000 under construction Warsaw

Oliva Point / Tower 24,000 under construction Gdansk

Katowickie Centrum Biznesu 18,000 being completed Katowice

Centrum Metropol 13,000 planning stage Wroclaw

Aurus 10,000 under construction Lodz

Source: IRG

New construction and take-up CEE 2002–2011

0.0

0.5

1.0

1.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2002 2004 2005 2006 2007 2008 2009 2010 20112003

CEE vancancy rate (excl. EE)New construction Take-up

Mill

ion

m2

Vacancy rate (%)

Source: CBRE / IRG

Office vacancy rate in Europe (%) Q4 2011

Dub

lin

Bud

apes

t

Am

ster

dam

Buc

hare

st

Kie

v

Mos

cow

Pra

gue

Liss

abon

Bru

ssel

s

Ista

nbul

Mad

rid

Sto

ckho

lm

Ber

lin

Rom

Cop

enha

gen

Osl

o

War

saw

Vien

na

Lond

on W

est

End

Par

is

0

10

5

15

20

25

Source: IRG

Prime office rents: Warsaw 2007–2011

0

20

15

10

5

25

30

35

EUR/m²/month

2007 2008 2009 2010 2011

Source: IRG



Although construction is under way on several large shopping centres and retail parks, almost three-quarters of the space due tobe added in 2012 is accounted for by small and medium-sized developments with lettable space of under 40,000 m². Due to thelimited catchment areas of the minor towns and cities, these small-scale retail properties serve as neighbourhood shopping outlets andare better suited to consumers’ needs.

The country’s demographic and economic development is makingPoland an attractive market for international retail chains. Big nameluxury brands are thin on the ground on the premium shoppingstreets in Poland’s major cities, and numerous international retailersas yet unrepresented in the country are planning to establish out-lets. The limited amount of space in the main shopping boulevardsmeans that many such retailers are turning to shopping centre locations. However, most of the established centres now have longwaiting lists, a point which has frustrated the expansion strategiesof many companies. International chains such as GAP, Desigual,Toy“R”Us, Foot Locker, LC Waikiki and Jula have recently openedtheir first outlets in Poland.

Eastern Europe’s early movers were quick to gain a foothold in War-saw’s retail market, so the focal point for new retail developmentssoon enlarged to other large cities. Poland’s largest retail locationsare situated in Warsaw and seven other major urban conurbations.

WarsawWarsaw is Poland’s biggest retail centre. Its 1.7 million inhabitantshave an annual per capita purchasing power of EUR 9,807 – 60 %higher than the national average. Around 2.5 million people live inthe greater Warsaw area. The city has some 1.1 million m² of shop-ping centre space, as well as about 350,000 m² of retail parkspace.

The relatively crisis-proof Polish economy has helped to stabilisewage levels, which in turn has kept private consumption buoyant.

With 38 million inhabitants, the country has the largest population ofany of the eastern European EU member states. Around 1.7 millionpeople live in the capital Warsaw, and there are a number of citieswith populations of over 200,000. In addition to these major centres,investors have been focusing on smaller towns for some time now.New shopping centres are springing up around the country, and sev-eral first-generation developments now require renovation and mod-ernisation in order to hold their own in an increasingly competitivemarket.

At 225 m² per 1,000 inhabitants, the density of retail space in Polandis below the western European average. According to MB Research,in 2011 the Poles’ per capita purchasing power of EUR 6,077 wasalso significantly lower than the European average of EUR 11,577.

Figures from Jones Lang LaSalle show that Poland has a stock ofsome 7.6 million m² of shopping centre space and around 1 million m²of retail park space. In 2011, 550,000 m² of retail space was added.About 700,000 m² of retail space is currently under construction.The growing popularity of smaller towns and cities with investors isreflected in the fact that close to two-thirds of that space is beingbuilt in locations with less than 200,000 inhabitants. As more andmore small-town retail developments are completed, investors willfind it increasingly difficult to identify locations with an undersupplyof retail space.

Retail properties also on the radar ofinternational investors

Retail space density vs. purchasing power

6,000

9,500

9,000

8,500

8,000

7,500

7,000

6,500

10,000

10,500

300 400 500 600 700 800 900

Pur

chas

ing

pow

er in

2011 (E

UR

per

cap

ita)

Retail space per 1,000 inhabitants

Warsaw

Upper SilesiaKraków

Łódź

PoznańTri-City

Szczecin

Wrocław

Source: BulwienGesa, MB Research

Ten largest retail centres in PolandName Lettable area (m²) Opened City

Arkadia shopping centre 103,000 2004 Warsaw

IKEA Port Lodz retail park 96,000 2010 Lodz

Manufaktura shopping centre 90,000 2006 Lodz

Bonarka City shopping centre 90,000 2009 Krakow

Silesia City Center 86,000 2005 Katowice

Park Handlowy Tar-gowek 80,700 2001 Warsaw

Matarnia Retail Park 78,000 1998 Tri-City

Galeria Mokotow 74,500 2000 Warsaw

Wola Park shopping centre 73,000 2002 Warsaw

Galeria Echo 70,000 2002 Kielce

Source: BulwienGesa, operator information



Warsaw’s largest retail outlets in terms of lettable space are the103,000 m² Arkadia shopping centre (Poland’s biggest); ParkHandlowy Targowek retail park (80,700 m²); Galeria Mokotow shop-ping centre (74,500 m²); Wola Park shopping centre (73,000 m²);Centrum Krakowska retail park (66,400 m²); and Zlote Tarasy(63,500 m²). In 2011, only 10,000 m² of new space was addedwith the opening of the VitkAc shopping centre (also known as WolfBracka), which offers high-end brands such as Gucci, Bottega Venata and Lanvin. The lack of suitable development sites and thehigh plot prices have put the brakes on large-scale retail projects incentral Warsaw.

The 44,000 m² Auchan shopping centre in Lomianki is scheduledfor completion this year, and the 14,000 m² Annopol factory outletcentre is also due to open its doors in 2012. Plac Unii, a mixed-useoffice and shopping centre complex is currently under construction,and 15,500 m² of lettable space in the location’s City Gallery willcome onto the market in 2013. The Galeria Tesco Kabaty shoppingcentre, with around 45,000 m² of lettable space, is still in the plan-ning phase. Expansions to the Promenada and Wola Park shoppingcentres, each with 20,000 m² of space, are also planned, althoughthese projects are not due to be completed before 2013.

Vacancy rates at most of Warsaw’s shopping centres are aroundthe 1 % mark. The limited amount of space available means thatmany shopping centres have waiting lists for prospective tenants.Monthly shopping centre rents in the Polish capital are currently inthe EUR 15 – 90 / m² range, depending on the size and location ofthe shop. Prime yields are around 6.25 – 6.75 %. Since the demandfor modern retail space has remained steady, we do not expect anysignificant changes in rents or vacancy rates in the near future.

Warsaw’s leading high streets are Nowy Swiat and the area aroundPlac Trzech Krzyzy. The city offers Europe’s most reasonably pricedretail property locations, with prime rents of about EUR 90 / m².Prime yields are currently about 7.5 %.

Upper SilesiaThis is one of Poland’s main industrial centres, and purchasingpower is relatively high. The region includes the cities of Katowice,Gliwice, Sosnowiec, Zabrze and Bytom. According to BulwienGesa,the regional population of 2.8 million has access to some 875,000 m² of retail space.

Upper Silesia’s largest shopping centres are Silesia City Centre inKatowice (86,000 m² of lettable space); M1 in Czeladz (55,000 m²);M1 in Zabrze (48,000 m²); Forum Gliwice (43,000 m²); Arena Gliwice (41,000m²); and 3 Stawy Katowice (40,000 m²). In 2011some 20,000 m² was added to the Silesia City Centre, and M1 inZabrze was extended by around 14,000 m².

Europa Centralna Retail Park, a 67,000 m² mixed-use shoppingcentre and retail park, is currently being built in Gliwice, and is due

for completion in autumn of this year. The Galeria Katowicka shop-ping centre, with around 50,000 m² of lettable space, is also underdevelopment. Completion is scheduled for 2013.

Prime monthly rents in Upper Silesia’s shopping centres are aroundEUR 55 / m².

KrakowKrakow is the capital of Malopolska Voivodeship, and a key businessand university town with a strong international reputation. It isPoland’s second-biggest city, with a population of around 756,000,and a total of 3 million people live within 100 km of the city.

The region’s consumers have access to some 540,000 m² of retailspace spread across 16 shopping centres and four retail parks. Thelargest shopping centres are the 90,000 m² Bonarka City Center,Galeria Krakowska with 60,000 m², and the Zakopianka shoppingcentre, which offers some 59,000 m² of lettable space. The openingof the Futura Park outlet centre and retail park in 2011 saw the addition of 44,000 m² of retail space.

Construction of the new Auchan Bronowice shopping centre kickedoff at the start of this year, and the 46,000 m² development isscheduled for completion in 2013. The Serenada shopping centre,with around 40,000 m² of lettable space, is still at the planningstage.

Krakow’s most popular high streets are Florianska and Grodzka.Prime rents for smaller outlets in the city’s shopping centres arearound EUR 50 / m² / month, compared with EUR 75 in the highstreets.

Tri-City (Trójmiasto)This region covers the three neighbouring cities of Gdansk, Gdyniaand Sopot in northern Poland, and has a total of around 746,000inhabitants.

The three cities have a stock of approximately 450,000 m² of shopping centre and 210,000 m² of retail park space. The largestregional retail properties are the 78,000 m² Matarnia Retail Park inGdansk, the Galeria Baltycka shopping centre, also in Gdansk(around 46,000 m²), the 42,000 m² Auchan Port Rumia shoppingcentre in Gdynia, and the Auchan Gdansk shopping centre withsome 40,000 m² of lettable space.

The initial phase of the Morski Retail Park development in Gdanskwas opened in 2011, adding 23,000 m² of lettable space. Con-struction work is now in progress on the expansion projects at theWzgorze shopping centre (45,500 m² of additional lettable spacescheduled for completion in 2013) and the Galeria Szperk retailpark (around 23,000 m²). The opening is planned for 2012. Spring2012 will see the start of building work at Gdansk’s Galeria Neptun,a 25,000 m² shopping centre due to open in early 2014. The



second phase of construction at the Morski Retail Park, a develop-ment of about 33,000 m², is also scheduled to begin this year.

Average vacancy rates at the region’s shopping centres are around3 %, although some locations are being hit by stiff competition whileothers report occupancy levels of 100 %. The prime rents for small shopping centre outlets in the greater Tri-City area are around EUR 45 / m² / month.

As large-scale, state-of-the-art shopping centres have opened, international investors have turned their backs on shopping streetssuch as Dlugi Targ in Gdansk and Swietojanska in Gdynia.

LodzWith around 740,000 inhabitants, Lodz is another key retail location. It lies in central Poland, only about two hours’ drive fromWarsaw.

The city offers 540,000 m² of retail space, with shopping centresaccounting for 360,000 m² and retail parks around 180,000 m².The density of retail space is 576 m² per 1,000 inhabitants. Thelargest retail centres are the 96,000 m² IKEA Port Lodz retail park,the Manufaktura shopping centre (around 90,000 m²), the GaleriaLodzka shopping centre (around 40,000 m²), the 38,000 m² M1 retail park, and the Tulipan (33,000 m²) and the Pasaz Lodzki(32,000m²) shopping centres.

No large shopping centres are under construction in the city atpresent, although work on the Sukcesja shopping centre with a lettable area of around 37,000 m² is due to start this year. Primerents in Lodz are around EUR 40 / m² / month.

The city boasts one of the world’s longest shopping streets – Piotrkowska ulica. It is also one of the most reasonably priced high-street locations in any of Poland’s major cities, with prime rents ofEUR 30 / m² / month.

WroclawSituated on the banks of the River Oder, Wroclaw has a populationof some 630,000. It is a major business location, with a low unem-ployment rate. Greater Wroclaw is home to around 1.2 million peo-ple, and the region has over 580,000 m² of retail space. No newspace was added in 2011, but the city still has the highest densityof retail space in the country – 765 m² for every 1,000 inhabitants.

The Magnolia Park shopping centre is the largest retail property,with 74,000 m² of space, followed by the Auchan Bielany retail park (56,000 m²) and the Pasaz Grunwaldzki shopping centre(50,000 m²).

Although the stock of retail space is large, further developments areunder construction. Work has begun on the mixed-use Sky Tower,which includes around 24,000 m² of shopping centre space and is

scheduled for completion in late 2012. The 11,000 m² expansion at Magnolia Park is set to be completed by the end of 2013. Newspace is also being added at Pasaz Grundwaldzki, where a 12,500 m² development should be in place by this autumn.

Top rents in Wroclaw’s shopping centres range from around EUR 45 – 50 / m² / month.

PoznanPoznan is the capital of Wielkopolska Voivodeship, and a key traffichub between Berlin and Warsaw. It is a university city of some553,000 people, and a vital industrial, retail and services centre.Poznan is also one of the Polish host cities for this summer’s EURO2012 football championships.

Investors took a keen interest in the city shortly after the fall of theIron Curtain, so the majority of shopping centre space was built be-fore 2000.

Poznan currently has a stock of 470,000 m² of lettable shoppingcentre space, with a further 125,000 m² accounted for by retailparks. The city’s density of retail space is second only to that ofWroclaw, at 749 m² per 1,000 inhabitants. The largest shoppingcentre in Poznan, the 53,000 m² Galeria Malta, opened for businessin 2009. Other major retail locations include the M1 and the KingCross Marcelin shopping centres, and the Centrum Franowa retailpark, each with about 46,000 m² of lettable space.

The 53,000 m² Galeria Malta was the most recent large-scaleshopping centre to open in Poznan, in 2009. No new retail spacecame onto the market in 2010 or 2011, and a number of major de-velopments were put on hold or cancelled. The 14,000 m² GaleriaMM shopping centre in the heart of Poznan is due to open in 2012.Construction work on Glowny City Center, a 58,000 m² develop-ment, started recently. This new shopping centre is scheduled forcompletion by the end of 2013. Planning for Lacina – Poznan’slargest shopping centre, with some 98,000 m² of space – is stillongoing, but construction could begin in the course of this year. Thedevelopment is scheduled to open in 2014. The Metropolis shop-ping centre project, with around 50,000 m² of lettable space, hasbeen put on hold, although building work could start some time thisyear. Rents for smaller shopping centre outlets in Poznan are be-tween EUR 30 – 45 / m² / month.

Demand for retail space remains strong, and international retailerssuch as Toys“R”Us – a relative newcomer to the market – are onthe lookout for suitable locations. Due to the limited availability ofspace until completion of Glowny City Center, and steady demand,rents and vacancy rates in the city are likely to remain stable.

Some international brand retailers have lost interest in the ul. SwietyMarcin high street as the stock of shopping centre space hasgrown.



SzczecinSzczecin is the smallest of Poland’s eight metropolitan regions, with407,000 inhabitants. It is situated in the northwest of the country,on the German border.

The city offers about 365,000 m² of retail space, including some295,000 m² of shopping centre space. The largest shopping cen-tres are the Galaxy and the Galeria Kaskada, both with around42,000 m² of lettable space. The latter opened in autumn 2011.Only a small number of international brands have a presence inSzczecin, although German shopping tourists are an importantsource of income for the city. As a result, several foreign retailersare currently looking for suitable properties. Planning for the 38,000 m² Aleja Slonca shopping centre is currently in progress.

Sczeczin’s high streets are 3 Maja, Aleja Niepodleglosci and AlejaWyzwolenia.

Prime monthly shopping centre rents are EUR 45 / m².

Smaller Polish towns and citiesAround 60 % of the retail space currently under construction is located in towns and cities with fewer than 200,000 inhabitants.The largest such development is the 75,000 m² Atrium Felicity inLublin, which is due for completion in 2013.

However, identifying the needs of local markets is a difficult task forforeign investors. Developers need to bear a variety of factors inmind when assessing potential sites, such as infrastructure, socio-economic aspects, and whether a location falls within the catch-ment area of a larger city.

The demographic structure and purchasing power of smaller citiesmean that retail parks and smaller local shopping centres are prov-ing to be a successful option for retailers. Rents at retail parks arerelatively cheap, which mainly attracts low to mid-price retailers.

Poland still an attractive target for expansion by international retailers Poland remains an attractive destination for international retailerslooking to expand. The strong demand for premium retail space hasnot flagged, and discounters and clothing retailers are thought to be looking closely at the possibility of expanding. As consumers become more price-conscious, discount retailers look set to enjoyfurther success.

The Polish market is well served with shopping centres. However,the acute need to revitalise some older properties is posing chal-lenges for the operators – around a third of all shopping centrespace is more than ten years old. A number of first- and second-generation shopping centres are in need of reconstruction and upgrade. Refurbishments are also not uncommon at more recentlydeveloped properties, as the operators look to gain ground in theface of stiffening competition.

As international brand retailers continue their search for suitableoutlets, rents may rise in cities where only limited growth in thestock of retail space is expected in the next year or two. Less suc-cessful shopping centres in locations where the availability of spaceis increasing more rapidly will start to feel the pinch. This is espe-cially true for smaller towns and cities where a large amount ofspace will soon come onto the market. Prime yields on shoppingcentres outside Warsaw range from 6.5 – 7.25 % and are likely toremain stable in the short term.

Selected retail developments at planning stage / under construction

Lettable ScheduledProject area m² Status Opening City

Lacina shopping centre approx. planning 98,000 stage 2014 Poznan

Atrium Felicity approx. under con-74,000 struction 2013 Lublin

Europa Centralna shopping approx. under con-centre / retail park 67,000 struction 2012 Gliwice

Poznan Glowny approx. under con-City Center 58,000 struction 2013 Poznan

Trzy Korony shopping centre approx. under con-57,000 struction 2012 Nowy Sacz

Galeria Katowicka approx. under con-50,000 struction 2013 Katowice

Auchan Bronowice approx. under con-46,000 struction 2013 Krakow

Galeria Narew approx. under con-46,000 struction 2013 Lomza

Wzgorze shopping centre approx. under con- Tri-City(extension) 45,500 struction 2013 (Gdynia)

Galeria Tesco Kabaty approx. planning 45,000 stage 2013 Warsaw

Auchan Lomianki approx. under con- Lomianki / 44,000 struction 2012 Warsaw

Serenada approx. planning 40,000 stage 2013 Krakow

Siodemka shopping centre approx. planning 40,000 stage 2013 Elblag

Galeria Korona approx. under con-39,000 struction 2012 Kielce

Aleja Slonca shopping centre approx. planning 38,000 stage 2013 Szczecin

Sukcesja shopping centre approx. planning35,000 stage 2013 Lodz

Morski Retail Park (extension) approx. planning33,000 stage n / a Gdansk

NoVa Park approx. under con- Gorzow 32,400 struction 2012 Wielkopolski

Galeria Ostrovia approx. under con- Ostrowshopping centre 36,000 struction 2012 Wielkopolski

Sky Tower approx. under con-24,000 struction 2012 Wroclaw

Source: BulwienGesa, Jones Lang LaSalle, operator information



The logistics market in Poland benefits both from the country’s position as a hub for both Western and Eastern Europe, and fromthe country’s large geographical size. Unlike in other Eastern Euro-pean countries, the logistics market is not concentrated exclusivelyin and around the capital city. Many regional centres have logisticagglomerations as well. They are mainly in Central Poland (Lodz,Poznan), in Silesia (Wroclaw, Katowice) and in the greater metropol-itan area of Gdansk, Gdynia and Sopot (Tri-City). At the end of 2011Poland had roughly 6.6 million m² of warehouse and logisticsspace, of which approximately 40 % was in the greater Warsawarea and the rest in regional centres.

High vacancy rates in some areasDespite the increase in demand for warehouse and logistics spacelast year, at the end of 2011 vacancy rates remained comparativelyhigh, particularly in and around Warsaw: in some areas they wereas high as 19 %, and for the Warsaw region as a whole the aver-age was 16.5 %. The lowest vacancy rates in the logistics sectorwere in Poznan and Katowice. In 2011 developers remained cau-tious about new projects; most of the completed properties werebuilt to suit. Consequently, very few speculative properties cameonto the market.

Rental prices stable at low level Compared with other CEE countries, rental prices for storage andlogistics space in Poland are at the lower end of the spectrum. Atthe end of 2011 the average rental prices for storage and logis-tics space in the greater Warsaw area were around EUR 2.75 / m²per month. Since the beginning of the global financial and eco-nomic crisis, rents have steadily fallen. As demand is predicted toremain stable in 2012 and projects scheduled for completion, although slightly higher than last year, are mainly for own use,rents should largely be stable, too.

Poland’s strong retail sector is one of the most important cus-tomers for storage and logistics space, and provided retailing continues to thrive, this will also have beneficial effects on the logistics market. Equally important is economic development inthe eurozone, in particular in Germany, Poland’s most importanttrade partner. This year’s European Football Championship will bea definite boon to the Polish logistics market. As a host, Polandhas significantly developed its infrastructure, including the motor-way system, in preparation for the tournament.

Warehouse and logistics vacancy rates: Warsaw 2007–2011

0

5

10

15

20

in %

2007 2008 2009 2010 2011

Source: IRG

Average warehouse and logistics rents: Warsaw 2007–2011

2.0

2.5

3.0

3.5

4.0

2007 2008 2009 2010 2011

EUR/m²/month

Source: IRG

Logistics market: developers remain hesitant despite strong domestic economy



Supply, demand and pricesSome 120,000 new housing units were completed in Poland in2011, a 3.1 % decline compared with 2010. For the first time sincethe boom year of 2007, construction permits showed an increaseof 3.7 % to around 182,000 housing units.

For the sake of simplicity, the information and analysis that followsis restricted to the six largest housing markets in Poland: Warsaw,Krakow, Wroclaw, Tri-City, Poznan and Lodz.

According to real estate agents REAS, the number of units sold inthese cities in 2011 rose by 5 % compared with 2010. The only flyin the ointment was that the number of apartments still availablefor sale increased even more. Housing prices fell.

The price of residential property in Warsaw is currently somewherebetween EUR 1,300 and EUR 2,300 / m², with the average aroundEUR 2,025 / m². The second-highest average of EUR 1,675 / m² isfor Krakow, Poland’s southernmost city. Wroclaw and Tri-City havemuch the same prices, while the cheapest housing is in Lodz, withan average price of EUR 930 / m².

The lending climate deteriorated steadily in 2011, with young fami-lies finding it especially hard to borrow. Foreign currency loans areto all intents and purposes no longer being made, and rising infla-tion combined with the banks’ prevailing shortage of capital haspushed up borrowing costs in zloty. As a result of the now more

The EU accession boom Poland’s accession to the European Union in 2004 triggered a genuine boom in housing prices. Taking Warsaw as an example, thecost of an apartment increased by roughly 23 % in 2005, 28 % in2006, 45 % in 2007 and 13 % in 2008.

In 2009 the international financial crisis hit the Polish market, put-ting the brakes on property price madness. By the end of the yearsubstantial price corrections were already in evidence, disguised asmore generous discounts, or in the form of additional fixtures andfittings.

Because the Polish economy proved relatively resilient in the face ofthe crisis, the 13 % fall in housing prices in the 2009 – 2011 periodwas considerably more moderate than elsewhere.

According to central statistical office, Poland’s housing stock at 31 December 2011 amounted to some 13.4 million dwellings withtotal usable space of around 951.2 million m². Approximately two-thirds of the housing stock is in towns and cities.

Compared with the EU average of 54 %, a very high proportion ofhousing – 63 % – consists of multi-family residential blocks. The39% accounted for by high-rise apartments is also considerablyabove the EU average. In spite of the privatisation of much socialhousing in the 1990s, home ownership is about 76 % – below thelevel in most other CEE countries.

Residential property prices ease

Completions, construction starts and permits 2002–2011

0

150,000

100,000

50,000

200,000

250,000

PermitsCompletion Construction starts

Num

ber

of d

wel

lings

2002 2004 2005 2006 2007 2008 2009 2010 20112003

Source: GUS, IRG

New housing prices 2011

0

1,000

500

1,500

2,000

2,500

War

saw

Kra

kow

Wro

cław

Tri-

City

Poz

nań

Łódź

–2.6

–4.2

–5.3

–1.3

–3.2

–5.4

Average price (EUR/m²) Change on 2010 (%)

Source: REAS, IRG



onerous conditions of the Family on its Own Programme1, our Pol-ish colleagues are expecting a 10 – 20 % reduction in new loans.The final draft of the Clients Protection Act2, now awaiting pas-sage, will also bring changes on the supply side.

In 2011 around 37,500 new apartments were put on the marketin Poland’s six largest cities. This was an increase of 21 % on2010, and only in the boom year of 2007 was this number ex-ceeded. It is worth noting that new projects are again increasinglyconcentrated on the major cities, with smaller markets showingonly very limited activities.

Despite the large number of apartments sold, the total number ofapartments on offer at the end of 2011 rose by 25 %, to a recordof around 48,000 units.

Of these, 77 % were apartments that will only be completed andavailable in 2012 or later. Units completed before 2011 and stillunsold represented roughly 11 %.

Given the low level of building activity in 2009, however, the in-creasing volume of new property on offer should not lead to a glutin the medium term.

In the course of 2011, about 29,700 units were sold in the sixlargest cities together. In the last quarter the number of transac-tions fell back slightly, possibly as a result of the changes in theFamily on its Own Programme. Overall sales in 2011 were still

7 % higher than in 2010, and were again moving in the directionof the 2007 record. It should be noted that current purchases aregenerally more for own use than for the purposes of investment.

The mix of apartments for sale over the course of 2011 revealed achange in market sentiment: healthy sales in the first half of theyear encouraged many developers to raise prices slightly and offerslightly more upmarket properties for sale, while stiffer competi-tion in the second half brought lower prices and numerous sweet-eners, such as free parking spaces and fitted kitchens.

Dreams and realitiesReal estate portal Nowy Adres cooperated with Millward BrownSMG / KRC in a survey of 1,500 households with a potential interest in buying their own apartment: in 2011 only 6 % of thosesurveyed had found their ideal home. Roughly 28 % had post-poned any purchase indefinitely, principally because of highprices, tighter lending policies or excessively high interest pay-ments. Of the remainder, many had been forced to accept more orless serious reductions in their original expectations: 42 % ac-quired the space they wanted, but had to settle for less attractiveneighbourhoods or economise on furnishings; 24 % boughtsmaller apartments, or ones with fewer rooms. One of the crucialfactors in deciding which property to buy is bank lending policies:the current trend favours smaller, more economical apartments.

More than half the buyers (about 52 %) were looking for apart-ments costing less than EUR 70,000, while 23 % wanted some-thing cheaper than EUR 45,000. Roughly a third wanted apart-ments in the EUR 70,000 – 115,000 range, 12 % were preparedto pay up to EUR 230,000 for a new home, and only 3 % wouldaccept prices higher than that.

Selected large-scale housing projects Project Number of Price EUR / m² Completion City

dwellings

Osiedle Zielona Italia 864 1,380 – 1,520 2012 Warsaw

Osiedle Przy Lesi 370 1,380 – 1,590 2013 Warsaw

Osiedle Goclawska 323 1,360 – 1,820 2013 Warsaw

Osiedle Mieszczanskie II 245 1,350 2012 Wroclaw

Osiedle Harmonia 290 1,380 – 1,640 2012 Warsaw

Zielony Zoliborz II 274 n.a. 2012 Warsaw

Centrum Poludniowe 256 1,300 – 2,820 2012 Wroclaw

Osiedle Rodzinne 260 1,030 – 1,200 2013 Krakow

Nowe Winogrady 240 1,300 – 1,450 2012 Poznan

Osiedle Eskadra 240 n.a. 2013 Warsaw

City Zen II 357 n.a. 2012 Warsaw

Source: PMR, IRG

Apartment sales/apartments on offer: 2011

0

12,500

10,000

7,500

5,000

2,500

15,000

17,500

20,000

War

saw

Kra

kow

Wro

cław

Tri-

City

Poz

nań

Łódź

On offer Sales

Apa

rtm

ents

Source: REAS

1) The state provides first-time home buyers with a subsidy of 50 % of the interest cost in thefirst eight years, but under the revised terms and conditions the eligible age and maximum pur-chase price have both been lowered. The programme will be completely phased out by the endof 2012.2) Developers will be required to provide background information, including details of competingprojects in the neighbourhood, when the apartments are put on the market. The regulations alsostrengthen tenants’ rights.



Luxury properties The market for luxury apartments in Poland developed in the late1990s. The first projects were luxury apartment blocks in the capital, Warsaw, closely followed by other cities such as Krakow,Wroclaw, Gdynia and well-known holiday resorts such as Sopot, Jurata, Miedzyzdroje and Zakopane.

Poland’s luxury apartment market is a niche segment, representingonly 2.5 % of the entire residential property market. Warsaw leadsthe way in this market, and roughly 26.2 % of all Polish propertiesin this category are located in the capital. Krakow has the secondlargest share, with 23.4 %, followed by 14.8 % in Wroclaw and8.2% in the Tri-City Region including Gdynia.

The current price in the capital is between EUR 2,800 and EUR 9,500 per square metre. In the Tri-City Region (Gdansk-Sopot-Gdynia), Wroclaw and Krakow, prices start at around EUR 2,300 / m²and go up to EUR 7,000 / m². In Poznan and Lodz, on the otherhand, prices have stabilised at under EUR 2,300 / m² as a result ofthe weakness of demand.

Outlook for 2012: supply may again outstripdemand The number of residential properties on the market will increase before the Client Protection Act comes into force in 2012. Delayingtactics on the part of purchasers in the hope of further price reduc-tions, and the more rigorous restrictions on the subsidies providedby the government’s Family on its Own Programme may put adamper on demand. If the number of new properties coming ontothe market grows as rapidly in 2012 as it did in 2011, there is adanger that the oversupply will persist.

Potential purchaser price categories (EUR ’000)

>230 3%

115–230 12%

90–115 12%

70–90 21%

45–70 29%

<45 23%

Source: Novy Adres / Millword Brown SMG / KMC



Summary

Since EU accession in 2009 Poland has posted relativelystrong economic growth. In 2009, as the global financialcrisis pushed the EU into recession, Poland was the onlymember state to achieve real economic growth (+1.6 %).

Although real GDP may grow more slowly this year com-pared to last, it is still expected to reach around 3 %.

Budget consolidation is one of the key challenges facingPolish economic policymakers. A series of fiscal tighteningmeasures has been designed to cut the 2012 budgetdeficit to about 3 % of GDP. This should keep the country’spublic debt below the Maastricht threshold of 60 % of GDP.

Poland has been attractive for international property investors. Steady economic growth combined with thebreadth and depth of the property markets have made investing in Polish commercial real estate an attractive option.

According to CBRE, around EUR 11.2bn was invested incommercial property in CEE last year, with Poland account-ing for some 30 % of the total.

With buyers' interest so high, achievable prime yieldshave fallen considerably. From a cyclical point of view, thePolish office market in Warsaw seems to converge to thecyclical peak.

The markets now see the country risk associated withPoland as lower than during the 2008 / 09 crisis. However,investors still need to bear in mind also a certain degree ofexchange rate risk.

Warsaw has around 3.6 million m2 of modern officespace – about three times the total in 2000. Another250,000 – 300,000 m2 of space is set to be added in 2012,and the project pipeline is well stocked.

At end-2011 top office rents stood at around EUR 25 / m2 /month, compared with over EUR 30 in 2007.

At 225 m2 per 1,000 inhabitants, the density of retailspace in Poland is below the western European average.However, according to MB Research, the Poles’ per capitapurchasing power of EUR 6,077 is also lower than the European average of EUR 11,577.

In 2011, 550,000 m2 of retail space came onto the Polishmarket. Around two-thirds of the 700,000 m2 of retailspace currently under construction is located in towns andcities with fewer than 200,000 inhabitants.

Despite the increase in demand for warehouse and logis-tics space, at the end of 2011 vacancy rates remainedcomparatively high, particularly in and around Warsaw,where the average was 16.5 %. As a result, developers remained cautious about new logistic projects last year,and most of the completed properties were built to suit.

Poland’s housing stock at the end of 2011 amounted tosome 13.4 million dwellings with total usable space of951.2 million m2. Some 120,000 new housing units werecompleted in Poland in 2011, a fall of 3.1 % compared with2010. However, for the first time since the boom year of2007, construction permits showed an increase, to around182,000 units. There is a danger that some oversupply willpersist.



Contacts:Bank Austria

Real EstateKarin Schmidt-MitscherTel: + 43 (0)[email protected]

Günter HofbauerTel: + 43 (0)50505-57488gü[email protected]

Anton HöllerTel: + 43 (0)50505-55980anton.hö[email protected]

Gerd HauserTel: +43 (0)[email protected]

Alexander StichlerTel: +43 (0)[email protected]

Eva BöhlerTel: +43 (0)[email protected]

Bank Pekao SA Poland

Commercial Real Estate Finance Marek Koziarek Tel.: +48 22 524-5641/[email protected]

Monika MieleckaTel.: +48 22 [email protected]

Piotr KwadransTel.: +48 22 [email protected]

Agnieszka KowalskaTel.: +48 22 [email protected]

Authors :Bank Austria

Karla SchestauberTel: + 43 (0)[email protected]

Immobilienrating GmbH (IRG)

Helmut Schneider Tel: + 43 (0)[email protected]

Alexander StögbauerTel: + 43 (0)[email protected]

Doris TomschizekTel: + 43 (0)[email protected]

Bank PeKaO

Marcin MrowiecTel: +48 22 524 59 [email protected]

Bank Pekao SAFinancing Provider of the Year in PolandEurobuild 2011 Awards

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