Real estate market: summaries and forecasts

Ten post dostępny jest także w języku: polski

Przemysław Felicki, director in the capital markets department and Piotr Karpiński, head of real estate management at CBRE, summarized the real estate market in 2020 in terms of investments and real estate management. 

Investments

Przemysław Felicki, Director in the capital markets department at CBRE

Despite the turbulence caused by Covid 19, the investment market will have a good overall result in 2020. In the first months of the year, the value of transactions reached EUR 1.7 billion, and in July-September it fell to EUR 1.1 billion. This is an effect that could have been expected and the same is true for the European markets.

In the investment market, the situation is somewhat different for each sector. The logistics are best. The pandemic has increased interest in investing in this area. We have a record volume and compression of interest rates. There is also a growing interest in flats for rent – there is a surge in ongoing transactions and ongoing sales of larger project portfolios. Demand for office buildings is more selective, but still significant. Investments in the office sector are partly limited, as investors are waiting for decisions and movements of tenants and analysing whether and how the demand for offices will change. However, this trend is not expected to continue in the long term and already in the first half of 2021 we expect tenants to return to their offices and transactions in this market segment to grow. The retail sector faces the greatest challenges, which has to face the greatest constraints and development of e-commerce. In turn, despite this, warehouses benefit from the growing power of online shopping. The attractive location of Poland as a transport hub of Central and Eastern Europe is also an advantage for this investment area.

A positive phenomenon that we observe on the investment market during the pandemic is the growing number of transactions with Polish capital and the growing number of Polish players who carefully invest their funds in smaller investments. New investors from abroad are also appearing.

In 2021 we expect increased investor activity, especially from the end of the first quarter, when the market should slowly begin to recover from the pandemic.

Property management

Piotr Karpiński, Head of Real Estate Management at CBRE

Since February this year, the commercial property market has been experiencing an earthquake in the area of facility management. The pandemic has meant that, practically overnight, various types of solutions, in accordance with the regulations, had to be implemented in shopping centres, parks and hotels. This has had a lesser impact on offices and warehouses, although the process of change, which is still ongoing today, has also begun in them.

The greatest challenge for property managers was to develop appropriate procedures from scratch. These were needed immediately, which required intensive cooperation between property owners, managers, tenants and lawyers. The operational functioning of the facilities changed very quickly. The first package of changes introduced a sanitary regime, the rules of cleaning and security were changed, masks appeared, an appropriate communication campaign was necessary. In shopping centres and hotels, restrictions had to be respected and, at the same time, business continuity had to be maintained. Everything took place under great time pressure.

An important challenge was also cost optimisation, related to the slowdown in business. The so-called covid annexes to agreements in shopping malls, offices or hotels were intensively renegotiated. The operating costs of the facilities were optimised, such as media consumption, adjustment of ventilation and air conditioning. During the greatest restrictions and slowdown in business, the composition and number of services in the facilities was reduced and their contracts were negotiated. Thanks to these measures, the costs were reduced by as much as 15-20%.

Additional activities, mentioned above, were undertaken in parallel with the core activities related to property management. This required a great deal of commitment and additional teamwork. Especially since many of them operated in a home office mode. It was important not only to organise the work properly, but also to have mutual empathy. Building managers were on the front line in these situations, so the commitment and support of each team member was crucial.

Despite the growing experience of functioning in a pandemic, facility management still requires more time and work. Optimism and greater calm are expected in the spring. We hope that, thanks to the vaccines, the virus will let go a little. We expect the situation to improve around April and May.

Source: CBRE