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The Warsaw Voice » Business » April 6, 2017
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Significant Rise in Retail Investment in Poland: Report
April 6, 2017   
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Investors in Europe’s retail sector are shifting their interest to some of the continent’s non-core markets among them Poland, according to international real estate advisor Savills.

Investment in Europe’s retail sector in the first three quarters of 2016 reached EUR 33.3 billion across the 15 markets that Savills covers, down 28 percent from a year earlier, the company says. The two largest markets, the UK and Germany, saw an overall drop in total turnover during this time period, by 18 percent and 46 percent respectively. Europe’s non-core markets in contrast experienced a significant rise in retail investment. These include Ireland (223 percent to EUR 1.46 billion); Poland (126 percent to EUR 1.4 billion); and Italy (119 percent to EUR 1.8 billion).

“The strong performance of some non-core markets such as Ireland and Poland in terms of the size of deals is likely to be attributable to the fact that these markets are slightly behind the core markets in the current investment cycle,” comments Eri Mitsostergiou, Director of European Research at Savills. “2015 was a record year for total investment volumes across Europe, underpinned by numerous mega deals and large portfolios, yet activity this year has been constrained by a lack of stock in core markets. It is the ready supply of retail product and in fact portfolios which is driving investors to the non-core markets.”

Warsaw shows bright prospects

The typical profile of investors looking into the Warsaw shopping center market is more opportunistic since most of the market’s strength is in retail prospects and potential returns. The annual retail sales volume in Warsaw is relatively small compared with other cities. Yet citizens of Warsaw spend a lot on retail, especially considering their GDP per capita (EUR 31,730), which is relatively modest compared with most other European cities benchmarked in the report. Last year, retail spending per inhabitant in Warsaw was EUR 9,740 on average, which was the fifth-best result of all 23 cities. Since retail sales are expected to increase fast in the next five years, by 5.6 percent a year on average, Warsaw may become the city with the biggest retail spending per inhabitant (EUR 11,650) by 2021. The existing stock is high (1.3 million square meters), one of the highest per inhabitant. It is also growing fast, with 19-percent growth planned until 2018. Nonetheless, the vacancy rate is low so far and international brands are actively looking into the market. Low unemployment, strong GDP growth ahead and a large population suggest Warsaw could compete with core markets in the short to medium terms.
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