Property Times Poland Q2 2011 Poland in the sights
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Property Times Poland Q2 2011 Poland in the sights
Property Times Poland Q2 2011 Poland in the sights 15 July 2011 Poland has maintained its strong position in terms of macroeconomic performance compared with other European countries with a 3.8% GDP growth recorded by the National Bank of Poland (NBP) at the end of 2010. Retail sales and industrial output continued recording a healthy growth rate. The economy may still face some structural reforms ahead. In H1 2011 the office stock in Warsaw increased by 28,000 sq m and reached 3.5 million sq m in total. New completions occurred only in two subzones: the Upper South and City Centre, which are also the two largest business districts in the city. Due to growing demand and decreasing availability of offices, prime asking rents in the city centre increased slightly (by €1-2 per sq m per month) and have reached €24-26 per sq m per month. The total supply of modern retail stock in Poland (defined as retail schemes exceeding 5,000 sq m GLA delivered after 1990) totalled 10.5 million sq m at the end of H1 2011. 71% of the total modern stock is located in shopping centres which translates into approximately 7.5 million sq m. The retail market experienced revival from both supply and demand sides. Due to extensive pipeline, prime rents remain stable. The modern logistics market slightly increased in the first half of 2011 and reached a level of 6.6 million sq m. Due to the continued low development activity observed from the second half of 2009, new supply in H1 was lower than 100,000 sq m. Relatively stronger demand translates into a gradual decline in vacancy rates. In H1 2011 headline rents in Warsaw remained at the same level, however in other regions they grew slightly to €3.30–3.50 per sq m per month. The first half of 2011 continued to prove the recovery on the commercial real estate investment market in Poland. The first half of 2011 finished with transaction volume reaching €1.1 billion, constituting almost 60% of the total volume recorded last year. Currently prime office and retail yields are oscillating between 6.25% and 6.50%. Prime logistics yields stabilised at the level of 8.50%. Contents Economic Overview Office Market Warsaw Retail Market Poland Industrial Market Poland Investment Market Poland 2 4 7 9 11 Authors Anna Staniszewska Director, Consulting & Research +48 (0)22 222 3130 [email protected] Olga Drela Consultant, Consulting & Research +48 (0)22 222 3134 [email protected] Katarzyna Lipka Consultant, Consulting & Research +48 (0)22 222 3132 [email protected] Agnieszka Ciołkiewicz Junior Consultant, Consulting & Research +48 (0)22 222 3139 [email protected] Michal Nawrot Junior Consultant, Consulting & Research +48 (0)22 222 3135 [email protected] Figure 1 GDP growth and inflation, y-o-y GDP 2012 f 2011 f 2010 2009 2008 2007 2006 2005 Tony McGough Global Head of Forecasting & Strategy Research +44 (0)20 3296 2314 [email protected] 2004 Magali Marton Head of CEMEA Research +33 (0)1 49 64 49 54 [email protected] 8% 7% 6% 5% 4% 3% 2% 1% 0% 2003 Contacts Inflation Source: Central Statistical Office (GUS), (f)- Natonal Bank of Poland (NBP) www.dtz.com 1 Economic Overview Summary Poland proved that it is a stable developing economy in 2010, with GDP growth reaching a level of 3.8%. In general, the Polish economy is in a relatively good condition, but there are also reasons for concern including budget deficit, which reached 7.9% of GDP at the end of 2010 and public debt which accounted for 55% of GDP at the end of the same period. It should be noted that according to internal Polish regulations as well as EU standards, the Polish government is obliged to cut expenditures to keep debt below mentioned level of 55%. In order to reduce the budget deficit, a reform of the pension system was introduced. This reform may result in a decrease of indirect investments into the Polish market and have an overall negative influence on the performance of the economy in the future. Economic Growth 2010 saw a 3.8% increase in GDP, which is a much better result than 1.6% growth in 2009. The positive economic indicators are an effect of fast rising consumer expenditure and an increase in public investment volume during 2010. According to the National Bank of Poland (NBP), GDP growth may reach 3.2% and 4.6% in 2011 and 2012 respectively. Figure 1 The currency exchange rates EUR/PLN and USD/PLN PLN 5,00 4,50 4,00 3,50 3,00 2,50 2,00 1 EUR 1 USD Source: Natonal Bank of Poland (NBP) Figure 2 Foreign Direct Investments (FDI) mln € 18 000 15 000 12 000 9 000 6 000 3 000 2011Q1 2010 2009 2008 2007 2006 2005 Trade balance mln € 160 000 120 000 80 000 40 000 Import 2010 2009 2008 2011Q1 Export 2007 2006 0 2003 After a decrease to € 9.3 bn in 2009, FDI slightly recovered in 2010 reaching € 9.8 bn (4.9% growth y-o-y). Based on the results from Q1 2011 and other factors, we should expect a higher FDI volume in 2011. Figure 3 2005 Foreign Direct Investments (FDI) Source: National Bank of Poland (NBP) 2004 An increase in the VAT rate together with turbulences on the raw materials market and food market influenced the level of inflation, which leveled at 2.6% in 2010. According to the NBP forecast, despite the VAT rise which came into effect at the beginning of this year, inflation should not exceed 2.7% and 2.9% in 2011 and 2012 respectively. 2004 2003 0 Inflation Source: Central Statistical Office (GUS) www.dtz.com 2 Economic Overview Trade Balance Figure 4 Polish export rose by 20% from € 98.2 bn in 2009 to € 117.4 bn in 2010. During the same period of time, import volumes increased by 22% from € 107.5 bn to € 130.9 bn. An increase in the rate of import growth combined with export increase has proven to be a typical factor related to the economic recovery in Poland. Among the main recipients of Polish products and services are Germany (25.9%), France (7.2%) and Great Britain (6.9%). The majority of Polish import came from three countries namely Germany (21.3%), Russia (10.1%) and China (9.9%). Unemployment rate 25% 20% 15% 10% 5% 2012 f 2011 f 2010 2009 2008 2007 2006 2005 2004 2003 0% Unemployment and salary The unemployment rate at the end of 2009 reached a level of 11.9% and slightly increased to 12.3% at the end of 2010. On the short time basis the unemployment rate trend remains stable. According to the Central Statistical Office, the level peaked at 12.2% in May 2011. Analysts are of the opinion that an improvement of the overall economy in 2011 will be reflected by a decrease in the unemployment rate which should reach 11% by the end of the year. Source: Central Statistical Office (GUS), (f)- Natonal Bank of Poland (NBP) Figure 5 Industrial production growth, y-o-y 14% 12% 10% 8% 6% 0% 2011Q1 2010 2009 2008 2007 -4% 2006 -2% 2005 Annual growth in industrial production reached 9.7% in 2010, compared with 2009. The first quarter of 2011 showed an 8% increase with 25 out of 36 industrial sectors which noted an upward trend. The fastest pace occured in metal manufacturing (30.8% y-o-y), other nonmetallic mineral resources manufacturing (29.9% y-o-y) and furniture manufacturing sectors (28.2% y-o-y). The most significant decrease of production was noted in tobacco products (-16.1% y-o-y) and manufacturing of machinery and equipment (-8.6% y-o-y). 2% 2004 Industrial Production 4% 2003 The average monthly salary in the enterprise sector rose by 3.2% from PLN 3,325 at the end of 2009 to PLN 3,435 at the end of 2010. In May 2011 it reached PLN 3,484. Source: Central Statistical Office (GUS), Ministry of Economics Figure 6 Retail sales, y-o-y 30% 25% 20% Retail Sales During the first three months of 2011 retail sales increased y-o-y by 5.8%, 12.2% and 9.4% compared to the same months last year. According to analysts, retail sales growth should continue its upward trend. 15% 10% 5% 0% -5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2010 2011 Source: Central Statistical Office (GUS) www.dtz.com 3 Office Market - Warsaw Supply In H1 2011 the office stock in Warsaw increased by 28,000 sq m and reached 3.5 million sq m. New completions occurred only in two subzones: the Upper South and City Centre which are the two largest business districts in the city (Fig. 7). Figure 7 Office stock by subzones, End H1 2011 sq m 1 000 000 900 000 800 000 700 000 An additional 90,000-95,000 sq m is scheduled for completion in 2011 which will bring the annual level of supply to 120,000-125,000 sq m. It is one of the lowest values recorded so far on the market and results from the economic slowdown, weaker demand and a tougher lending policy observed in 2009. 600 000 500 000 400 000 300 000 200 000 100 000 0 The level of deliveries in 2012 is likely to be much higher and reach over 200,000 sq m, the majority of which is located out of the city centre. Upper City South South Centre West Core West East Lower South North South East Source: DTZ Research, WRF 2012(f) 2010 2009 Take-up Source: DTZ Research, WRF 2011(f) Supply 2008 2007 2006 2005 2004 2003 Many companies in H1 2011 decided to renegotiate their current leases and the volume of such transactions stood at nearly 100,000 sq m. Due to decreasing availability of office space within existing buildings, pre-lets have become a popular market practice. The level of transactions signed before building completion in H1 2011 amounted to 81,000 sq m, compared to 63,000 sq m during 2010. sq m 500 000 450 000 400 000 350 000 300 000 250 000 200 000 150 000 100 000 50 000 0 2002 The high level of take-up resulted from the improving macroeconomic situation as well as the limited pipeline supply in 2011, which may lead to reduced availability and rental growth. Annual office supply and take-up 2001 The volume of leasing transactions (excl. renegotiations) in H1 2011 reached 228,000 sq m which represents a 60% increase in comparison to the corresponding period of 2010. Figure 8 2000 Demand (f) Forecast Figure 9 Office take-up by subzones, H1 2011 80% of the total take-up in H1 2011 occurred in three major business districts: Upper South, South West and City Centre (Fig. 9). 1% 6%2% 7% 33% Given the positive macroeconomic outlook, the demand in H2 2011 and 2012 is likely to remain at the current high level. 24% Upper South South West City Centre Core Lower South West South East East North 26% Source: DTZ Research, WRF www.dtz.com 4 Office Market - Warsaw Figure 10 Assuming a lower level of new deliveries as well as strong demand, the vacancy rate is likely to slightly decrease by the end of 2011 (Fig. 10). 20 15 10 5 Average Central 2012(f) 2011(f) 2010 2009 2008 2007 2006 2005 2003 2004 0 2002 Similarly to the last few quarters, the highest vacancy rate was recorded in the Lower South subzone. In the West, South East and East subzones, the availability ratio was the lowest among other districts in Warsaw. In the Upper South the vacancy rate dropped from 8%-9% recorded over the whole 2010 to 5.5% (Fig. 10). % 25 2001 Due to strong demand and limited new supply the vacancy rate in H1 2011 dropped from 7.2% at the end of 2010 to 6.2%. The availability ratio in central subzones remained at 8.1% and outside the city centre decreased from 6.7% to 5.2% (Fig 10). Office availability ratio 2000 Vacancy Non Central Source: DTZ Research, WRF Figure 11 Office availability ratio by subzones, End H1 2011 Rents 3,2% East 3,6% South West 4,9% Upper South 5,5% North 6,4% Core 6,7% City Centre 9,0% Lower South 11,5% 0% 2% 6% 8% 10% 12% (f) Forecast Figure 12 Prime office rental levels Source: DTZ Research 2012(f) 2011(f) 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 € / sq / month 45 40 35 30 25 20 15 10 5 0 Central www.dtz.com 4% Source: DTZ Research, WRF 1998 Over the next 12-18 months prime asking rents in non central locations are likely to remain stable and they may increase by approx. €0.5-1 in the Central Business District. At the same the incentive packages are going to further decrease, exerting an upward pressure on effective rents. 2,7% 2000 Incentive packages offered by landlords to attract occupiers dropped slightly in comparison to 2010, which resulted in an increase of effective rents. Depending on the size of the requirement and stage of a project, effective rents in H1 2011 were approximately 10-20% lower than the asking rates. West South East 1999 In H1 2011 due to growing demand and decreasing availability of offices, prime asking rents (for A class office buildings) in the city centre increased slightly (by €1-2 per sq m per month) and have reached €24-26 per sq m per month. In non central subzones they remained at €14-16 per sq m per month. For B class properties asking rents reached €19-22 per sq m per month in the city centre and €12-14 per sq m per month in other locations. Non Central (f) Forecast 5 Office Market - Warsaw Table 1 Office buildings completed in H1 2011 Office area (sq m) District Developer Vacancy at completion date Platinium Business Park IV 13,000 Upper South GTC 0% Mokotowska Square 8,500 City Centre Yareal 88% Pałac Młodziejowskiego 5,000 City Centre Mermaid Properties 39% Racławicka Point 1,900 Upper South Capital Park 10% Building Source: DTZ Research, WRF Table 2 Major pipeline office projects scheduled for delivery in 2011 Office area (sq m) District Developer Mokotów Nova I 26,000 Upper South Ghelamco Equator II 21,000 South West Karimpol JM Tower 16,500 City Centre JM Invest Libra Business Centre B 15,600 South West Mermaid Properties Hortus 10,200 City Centre Nieruchomości Powiśle Prosta Tower 8,400 City Centre Marvipol Development Building Source: DTZ Research, WRF Table 3 Major leasing transactions signed in H1 2011 Office area leased (sq m) Building District Type of transaction Telekomunikacja Polska 43,700 Miasteczko TP South West Pre-let Ernst&Young 11,000 Rondo 1 Core Renewal Frontex 8,800 Rondo 1 Core Renewal + expansion PTK Centertel 8,700 Renaissance Plaza West Renewal ING Usługi Finansowe 6,000 Hortus City Centre Pre-let Sygnity 5,600 Kopernik I South West Renewal MSD 5,400 Warsaw Trade Tower City Centre Renewal + expansion GlaxoSmithKline 4,400 Cirrus Upper South Renewal Emerson 4,400 University Business Center II Upper South New transaction PolskaPresse 3,200 Empark Saturn Upper South Renewal Kapsch Telematic Services 3,100 Poleczki Business Park Lower South New transaction Tenant Source: DTZ Research, WRF www.dtz.com 6 Retail Market Supply The total supply of modern retail stock (defined as retail schemes exceeding 5,000 sq m GLA delivered after 1990) in Poland totalled 10.5 million sq m at the end of H1 2011. 71% of the total modern stock is located in shopping centres which translates into approximately 7.5 million sq m. Figure 13 Annual retail supply by size of the city sq m 1 000 000 800 000 600 000 DTZ forecasts that the new supply by the end of 2011 will reach approximately 500,000 sq m GLA, which will bring the annual volume of retail completions to around 800,000 sq m. The major ones include: Millenium Hall in Rzeszów, Kaskada in Szczecin and the extension of Echo Shopping Center in Kielce. Currently there are some 900,000 sq m under construction with opening scheduled between 2011 and 2013. Major examples of retail projects planned to be delivered after 2011 include Galeria Katowicka in Katowice, City Center in Rzeszów, Alfa Grudziądz in Grudziądz and Galeria Olimpia in Belchatów. Such extensive pipeline proves that confidence is returning to developers in the Polish market. 400 000 200 000 Over 400,000 200 - 400,000 100 - 200,000 2011f 2010 2009 2008 2007 2006 2005 2004 2003 0 2002 Cumulatively, new projects delivered in H1 2011 including new shopping centres and extensions, as well as retail warehouses amounted to approximately 290,000 sq m, which constitutes 53% of the annual supply in 2010. New stock includes 16 new projects and 5 extensions of existing schemes. Major completions in H1 2011 include: Galeria Słoneczna in Radom, Turawa Retail Park in Opole, Morski Park Handlowy in Gdańsk, Galeria Leszno in Leszno, Galeria Twierdza in Zamość and Centrum Gołąbkowice in Nowy Sącz. Below 100,000 Source: DTZ Research Figure 14 Modern retail space type in major agglomerations 100% 80% 60% 40% Only 32% of supply delivered in H1 2011 was situated in eight major Polish agglomerations with populations exceeding 400,000 (Fig.13). More resistant to economic slowdown and benefiting from high purchasing power of inhabitants, markets in larger cities were in the past more attractive for developers which stemmed from a steady demand from retailers. However the growing trend of developers’ interest in smaller cities is noticeable. Almost 50% of deliveries in H1 2011 was completed in cities with inhabitants’ number below 200,000 such as Nowy Sącz, Leszno, Ostróda or Słupsk. The markets in large agglomerations are diversified in terms of competitiveness, retail density (sq m per thousand inhabitants, purchasing power per inhabitant and quality of the retail space). 50% out of over 6.4 million sq m located in eight major agglomerations is occupied by large scale big boxes (food operators, DIY, electronic appliances etc.) either stand alone or located in traditional shopping centres (Fig. 14). The most mature markets in terms of diversity of operating formats are Wrocław, Warsaw and Tricity. www.dtz.com 20% 0% Stand alone retail warehouse Large scale operators in shopping centres Shopping malls within shopping centres Retail parks Outlets Other Source: DTZ Research 7 Retail Market Demand and Rents In recent quarters DTZ recorded a gradual return of retailer confidence and increased activity on the market; however their position was still very strong. The majority of anchor tenants are still selective in terms of retail schemes, preferring operating projects to those in the pipeline and demanding high fit-out contributions. Hypermarket, supermarket and DIY operators remain very active in 2011 and present a more flexible approach to new locations and smaller cities. Figure 15 Prime retail rents in H1 2011 € per sq m 100 90 80 70 60 50 40 30 20 10 The good macroeconomic situation in Poland in times of economic slowdown in comparison to other European countries has supported the perception of economic stability. This fact encourages international players to enter the Polish retail market. The following chains have announced they will open stores in 2011: Answear, Arqueonautas, Catimini, Centro, Desigual, H3, Jula, LC Waikiki, Lindex, Oviesse, Redgreen, QQ-Duck and Toys R Us. Retail chains are still eager to expand via franchise, enabling the minimisation of costs, as well as the desire to enter smaller cities. There are also many established retail chains planning to expand their operations in Poland, profiting from the current economic climate such as 5-10-15, Cinema City, Deichmann, Diverse. Douglas, H&M, Komfort, L’Occitane, Max Mara, New Yorker, Rossmann, Takko Fashion and TK Maxx. 0 Kraków Łódź Poznań Szczecin TriCity Upper Silesia Warsaw Wrocław Source: DTZ Research Table 4 Major retail schemes completions in H1 2011 Scheme City GLA (sq m) Units Galeria Słoneczna Radom 42,000 170 Turawa Retail Park Opole 38,000 70 Galeria Leszno Leszno 32,000 110 Galeria Twierdza Morski Park Handlowy CH Gołąbkowice Zamość 27,500 80 Gdańsk 26,000 35 Nowy Sącz 17,900 50 Source: DTZ Research Prime properties continued attracting high interest from both operating players as well as from new entrants. Therefore prime rents in shopping centres remain stable in 2011 (Fig. 15). In the secondary properties, new lease agreements were concluded at levels lower by 10 - 20% which resulted in a growing discrepancy between prime and average rents. In H2 2011, DTZ forecasts further and stronger retailer expansions, which together with the delivery of high new supply, will result in a rather organic and slow growth in rental levels. This increase will mainly apply to well perfmorming schemes. Among recently rising trends, DTZ has recorded growing interest from landlords in redevelopment and repositioning their activities with the aim of increasing their proactive retail asset management of existing projects. There is still development potential in smaller convenience shopping centres designed for people in larger cities who want to do their daily shopping close by and save time, or retail parks located within smaller cities suburbs. www.dtz.com Table 5 Major pipeline schemes scheduled by end of 2011 Scheme City GLA (sq m) Units Millenium Hall Rzeszów 55,600 250 Galeria Kaskada Szczecin 43,000 140 Echo Dekorada (extension) Kielce 40,000 60 Plaza Toruń Toruń 40,000 140 Galeria Ostrovia Ostrów Wielkopolski 37,200 100 Jantar (extension) Słupsk 23,000 90 Source: DTZ Research 8 Warehouse & Logistics Market Stock The modern logistics market slightly increased in the first half of 2011 and reached the level of 6.6 million sq m (Fig. 16). Due to a continued low development activity originating from the second half of 2009, the new supply in H1 was lower than 100,000 sq m. Developers still deliver mainly built-to-suit schemes and refrain from speculative investments. On the Polish modern logistics schemes map there are 1 still five hot spots namely Greater Warsaw , Central Poland, Upper Silesia, Lower Silesia and Poznań Region. Emerging locations such as the regions around Kraków, Tricity or Szczecin still remain on the radar of many developers and tenants. Figure 16 Modern warehousing supply and take–up sq m 1 800 000 1 600 000 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0 2005 2006 2007 2008 2009 2010 2011(f) Annual supply Take-up Demand expressed by the space being transacted reached 300,000 sq m in Q1 2011, which was around 100,000 sq m lower than in the same period last year. However in Q2 2011, take-up significantly increased and achieved a record level of 500,000 sq m. The actual figure of nearly 800,000 sq m in H1 2011 therefore proves the situation is positive on the logistics market in Poland. The largest transactions still apply to built-to-suit schemes and renegotiations. Tenants chose mainly outlying Warsaw regions and Upper Silesia (Fig. 17). Vacancy Rates and Rents Relatively stronger demand translates into a gradual decline of vacancy rates. We estimate these dropped from 15.3% at the end of 2010 to 13.5% in H1 2011. The available modern logistics stock amounted to approximately 900,000 sq m, which represents a decrease of above 100,000 sq m in comparison with Q4 2010. The region characterised by the highest vacancy rate was again Warsaw Zone 3 and the lowest indicator was recorded in the Poznań region. Annual take-up Source: DTZ Research Figure 17 Take-up by region – H1 2011 Warsaw Zone III 3%3% 3% Upper Silesia 22% 6% Central Poland Warsaw Zone II 9% Lower Silesia Warsaw Zone I 11% 18% Poznań Region Kraków Region TriCity Region 12% 13% Other Region Source: DTZ Research From the beginning of 2009, headline rents have slightly decreased by €0,7 in Warsaw and €0,2 per sq m per month regionally. In Q4 2010 they stabilised around €5.3 per sq m per month in Warsaw and between €3.00–3.30 per sq m per month in regional locations. In H1 2011, headline rents in Warsaw remained at the same level, however in other regions they slightly grew to €3.30–3.50 per sq m per month. 1 Due to its maturity the Greater Warsaw area is divided into three zones: Zone 1 – In-Town – schemes located within the Warsaw boundaries, Zone 2 – City Fringe – warehouses located within 15 – 30 km of the city centre, Zone 3 – Outlying – Logistic/warehouses situated within 30 – 50 km radius of the city centre. www.dtz.com 9 Warehouse & Logistics Market Table 6 Examples of logistics transactions – H1 2011 Q Region Building Tenant Size (sq m) 2 Warsaw Zone 3 ProLogis Park Sochaczew Procter&Gamble 49,740 2 Central Poland Panattoni Radomsko Manuli Hydraulics Manufacturing 35,000 2 Warsaw Zone 3 ProLogis Park Teresin Solid Logistics 30,000 1 Upper Silesia ProLogis Park Chorzów ID Logistics 20,200 1 Lower Silesia ProLogis park Wrocław V ND 19,100 2 Lower Silesia Panattoni Gorzów Wielkopolski Faurecia 17,600 2 Kraków Region Kraków Airport Logistic Centre Valeo 17,400 1 Warsaw Zone 3 ProLogis Park Błonie Rhenus Contract Logistics 17,100 1 Warsaw Zone 2 Panattoni Park Święcice Tech Data Polska 16,600 1 Upper Silesia ProLogis Park Sosnowiec Wincanton 16,600 2 Central Poland Tulipan Park Stryków Hellmann Worldwide Logistics 15,000 1 Poznań Region ProLogis Park Poznań II ND 13,500 2 Poznań Region Panattoni Park Poznań I Arvato Services 12,600 1 Warsaw Zone 1 Annopol Logistic Park Ruch SA 12,100 1 Upper Silesia ProLogis Park Chorzów Latex Groehl Gerard 11,600 1 Warsaw Zone 2 ProLogis Park Nadarzyn ND 11,200 Source: DTZ Research www.dtz.com 10 Investment Market The majority of transaction volumes in the last 18 months accounts for new, higher quality properties including the best shopping centres in Poland. However, the lower grade properties in secondary cities were also purchased by those investors with rather opportunistic strategies. The investment market in Poland is dominated by foreign players. French, German and Austrian investors remain most active, but after years of absence, we can see investors from the Netherlands and USA returning to the Polish market. German property funds active during the market slowdown mainly in the office sector are now considering retail properties. Yields Transactions recently completed show some downward shift in yields. This is strongly connected with the overall perception of the Polish economy and also returning confidence in the occupier markets. Currently prime office and retail yields are oscillating between 6.25% and 6.50%, which shows a drop of some 250 bps. Prime logistics yields stabilised at the level of 8.50%. We also noted an increase in the number of transactions involving shares allowing partial ownership. These deals are often concluded under special conditions including lower yields (Fig. 19). €m Volume of transactions Number of transactions 2011 f 2010 2009 2008 2007 2006 2005 2004 2003 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2002 Investors’ interest in previous years was evenly distributed between retail and office properties. This trend remained and we estimate that 47% of the total volume of transactions during the first six months of 2011 accounts for office properties, 43% for retail and another 10% for logistics properties. Investment volumes in Poland 2001 Transaction activity in the Polish market evidently indicates that the recovery on the commercial property investment market that started in 2010 has continued into 2011. The first half of 2011 ended with a transaction volume of €1.1 billion. This constitutes almost 60% of the total volume recorded last year. There were relatively large transactions finalised which meant that the average deal size increased to €60 million from €40 million in previous years. Given the strong pipeline of transactions, DTZ foresees the investment volume in 2011 reaching approximately €2.5 billion (Fig. 18). Figure 18 2000 Investment activity Source: DTZ Research Figure 19 Prime investment yields 14% 12% 10% 8% 6% 4% Office Retail Logistics Source: DTZ Research Yields for the secondary assets are on average 100 -125 bps higher. DTZ expects further yield compression in the coming quarters both in the prime and secondary segments. www.dtz.com 11 Disclaimer This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ. © DTZ July 2011 www.dtz.com