POLAND Trends and Developments Contributed by: Radomił Charzyński, Kamil Majewski, Olga Durawa and Filip Widuch, Greenberg Traurig LLP
Introduction The Polish real estate investment market in 2023 was predominantly characterised by the conse - quences of the Russian invasion of Ukraine as well as post-pandemic economic turbulence – both of which brought a significant market slow - down and uncertainty. The above-mentioned factors, to an extent affecting the wider European and global mar - kets, have resulted in: • an increase in energy, materials and labour prices; • a decline in GDP of 0.21% year-on-year (which has now stabilised); • high inflation (Harmonised Index of Consumer Prices, or HICP) of 10.82%; • a drop in domestic consumption; and • increased financing costs. Consequently, the volume of commercial real estate transactions in 2023 decreased by 68.1% year-on-year to EUR1.8 billion. According to the latest market forecasts, the unfavourable economic trends of 2023 are expected to reverse (although predictions vary as to how long that process will take) and the outlook for the second half of 2024 brings cau - tious optimism to the Polish investment mar - ket. This is related to the anticipated growth in household consumption, rising incomes and a decrease in global and European interest rates (the Polish investment market is largely financed in euro currency). The volume of transactions (with the industrial and logistics sectors most in demand) is predicted to increase, with intensi - fied activity in the second half of the financial year. Although the volume of transactions may transpire to be lower than the record volumes of pre-pandemic times, investment activity is pre -
dicted to remain high in terms of the number of deals but to be dominated by smaller projects. In addition, the new Polish government – elect - ed in Q4 of 2023 – has announced various new economic programmes as well as amendments to the law and tax system. These are mostly designed to tackle the impact of high inflation, stimulate economic growth and improve condi - tions on the Polish real estate market (in particu - lar, the residential market). By way of example, the new government intends to resume work on establishing a legal frame - work for REIT funds – ie, real estate funds with preferential tax treatment that invest in various types of properties and pay dividends to private investors with certain regulatory protections. If introduced to the Polish system, REITs are likely to boost transaction volumes on the commercial real estate market. As in previous years, investors, developers, financing banks, tenants and consumers from all parts of the real estate market are paying more attention to ESG. The requirements of institu - tional buyers have made ESG factors a prereq - uisite to be considered at the design stage of projects. When searching for the right leasing/ investment opportunities, tenants and poten - tial buyers treat ESG issues – and the related reputable certification, such as BREEAM (Build - ing Research Establishment Environmental Assessment Method), which has already been a standard requirement in many sectors for some time – as one of the key commercial elements of the deal, which they are ready to factor in the increased price. Logistics (Industrial) Sector Based on strong fundamentals, the logistics sector once again proved to be the most sta -
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