Recently released market study: Poland Real Estate Report Q4 2013

The overall picture for Polish real estate has become clouded, even though on a regional playing field Poland remains one of the stronger real estate teams, wider economic concerns are now catching up with the sector. Retail and industrial rents in particular look set to be under threat from lacklustre trade, retail and household consumption indicators. Growth in the office sector has been less forthcoming with a stalled trajectory. BMI cautions that in spite of recent success in the market, we need to be mindful that the country is not immune from external economic woes, and domestic weaknesses and news from the construction pipeline should be of concern.

Commercial real estate expansion is dependent upon a healthy macroeconomic environment. In light of the sharp collapse in Polish domestic demand in the first quarter of 2013, we have downgraded our real GDP growth forecasts for 2013 and 2014. As such, the weakened macroeconomic picture is set to adversely impact the commercial real estate sector as it serves to dampen both property fundamentals and capital markets placing downwards pressure upon tenant retentions, rental growth, yields, development activity, financing and asset values. The persistence of soft market conditions will result in a continued tenantfavourable environment as a lack of demand recovery buoys bargaining power.

Full Report Details at
- http://www.fastmr.com/prod/689066_poland_real_estate_report_q4_2013.aspx?afid=301

With a focus on the principal cities of Warsaw, Krakow, Gdansk, Sopot and Gdynia, the report covers the rental market performance in terms of rates and yields and examines the property fundamentals of the commercial real estate rental market and examines the office, retail, industrial and construction segments throughout the country, in the context of the struggling domestic and regional economy.

Key Points

* In light of the sharp collapse in Polish domestic demand in the first quarter of 2013, we have downgraded our real GDP growth forecasts for 2013 and 2014.
* Estimates available from the National Accounts Division and CSO indicate that the worse is yet to come.

The construction industry value declined by as much as 12.6% y-o-y during the first quarter of 2013, marking the worst quarterly decline between Q112 and Q113. As such, we have downgraded our outlook for the construction industry in 2013. Considering that the industry suffered sharp y-o-y declines of 8.7% and 6.8% in Q312 and Q412 respectively, we see some room for the sector to benefit from the favourable base effects during the later part of 2013.

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