Ultimate Real Estate Guide 2022 by graphicep

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TABLE OF CONTENTS Editorial

Regional Quotes

Regional Investment CEE investment shows signs of increased activity

Regional Logistics Industrial markets continue to boom

Regional Retail & Last Mile High demand generating positive organic evolution of the retail and logistics sectors

Regional SEE High demand for product in SEE

Regional Office Meet Blue Office

ESG Feature Building towards an ESG-compliant industry

Sustainability Green Buildings Sustainability accreditations central to successful projects

Poland Investment Poland’s investment market is attracting more investors

Poland Office Regional office development outpacing Warsaw

Poland Warehouse & Logistics The industrial market continues to break all records

Baltics Investment Investment property deals smash through €1 billion ceiling in the Baltics

Hungary Overview Hungary attracting investors

Czech Republic Overview Czech seen as leading investment destination despite limited product

Slovakia Overview Investment volumes for Slovakia increasing

Romania Overview Romania investment could break €1 billion threshold

Regional SEE Real Estate Awards EuropaProperty announces short-list for the 17th annual SEE Real Estate Awards

Regional CEE Retail Awards IMMOFINANZ, Trei Real Estate, and the CCC Group all win big at the 14th annual CEE Retail Awards

REAL ESTATE EVENTS CALENDAR MARCH 31, 2022 17th annual SEE Real Estate Awards, Bucharest www.seerealestateawards.com APRIL 27-28, 2022 CREtech, London www.cretech.com APRIL 28, 2022 Coffee with Craig Show, Warsaw www.coffeewithcraig.com

Ultimate Real Estate Guide 2022

MAY 17-18, 2022 CEE GRI, Warsaw www.griclub.org

OCTOBER 20, 2022 4th annual CRE Awards, Budapest www.creawards.net

MAY 18-19, 2021 MAPIC Italy, Milan www.mapic-italy.it

OCTOBER 27, 2022 12th annual CEE Investment Awards, Warsaw www.ceeinvestmentawards.com

JUNE 13-15, 2022 REBEC XV, Belgrade www.rebec.rs OCTOBER 4-6, 2022 Expo Real, Munich www.exporeal.net

NOVEMBER 29 - DECEMBER 1, 2022 MAPIC, Cannes www.mapic.com

PAGE 10 CEE investment shows signs of increased activity

CEE is continuing to be seen as an attractive investment destination as the region offers standing assets in addition to a pipeline of asset grade products to meet investor demand. With a substantial amount of domestic and international capital looking for a home, investors would certainly consider investing if the right asset or platform were available, particularly in the office and industrial sectors.

Industrial markets continue to boom The industrial market in Central Europe is booming from a demand and development perspective and is seen by analysts as the sector in the most positive position for the post-coronavirus period. Positive indicators for the industrial sector are attracting a growing number of investors and the resulting yield compression.

Building towards an ESG-compliant industry Environmental, Social and Corporate Governance has moved to the top of the agenda for the real estate industry. More and more investors are revealing their net-zero commitments and are investing more in ESG credentials to mitigate the impacts on the environment from the industry. Further, investment strategies will be closely connected to the purchase of products and cooperation with the businesses that meet relevant ESG criteria.

Poland’s industrial market continues to break all records Poland industrial sector’s growth continued at a great pace in 2021, resulting in almost €3 billion transaction volume, the highest result in history. Last year Poland’s warehouse and industrial sectors were characterized by increased liquidity, largely on the back of the growing e-commerce industry. Another visible trend was the significantly growing number of investors looking for JV opportunities, as investors find it difficult to acquire standing assets and look for higher returns.

EuropaProperty announces short-list for the 17th annual SEE Real Estate Awards Semi-final results are now in for the 17th annual SEE Real Estate Awards representing the most outstanding and accomplished projects, companies, and individuals throughout South-eastern Europe in 2021. The anticipated celebration, which will be attended by some of the region’s leading firms and individuals, will take place on March 31, 2022, at the Radisson Blu Hotel, Bucharest, Romania.

LEASING NOW

VIA UNA Office & Retail Prague

LEASING NOW

Widok Towers Office & Retail Warsaw

Editorial Gary J. Morrell

Editor

In this post-COVID era, developers and associated companies of the property industry have to operate in a rapidly changing environment concerning planning, financing, design, leasing, property management, investment and an exit strategy. From a positive perspective, developers will need to deliver higher quality and sustainable assets with more imaginative and well-considered designs to be commercially successful and add to the infrastructure and the architectural look and feel of the wider locational environment. Further, projects conforming to ESG credentials will provide an exit with a sale to investors. Office developers are some of the winners in the current environment, although, now there are more complex demand and take-up expectations regarding tenant specification that extends to staff requirements in response to possible hybrid working habits and sustainability regulations. However, planned projects are going forward despite a fall in the number of new speculative projects in response to more uncertain market conditions. The industrial market is the clear winner for the post-pandemic era due to the increasing use of e-commerce and the growing need for a quick and efficient delivery infrastructure and multinationals outsourcing light industrial and assembly facilities to the CEE region. However, rising construction costs and increasing difficulties in sourcing development plots around strategic cities and transportation hubs are becoming harder. Tenant specification has become more complex, and demands for sustainable accredited space is becoming the norm. Retail has the most uncertain position, and developers and asset owners need to provide an environment with more emphasis on the quality of retail and other offerings and a tenant mix that meets changing consumer demands with more imaginative concepts and omni-channel synergies.

Central, Southern & Eastern Europe’s Ultimate Real Estate Guide Volume 42, Number 1, March 2022 Publishing House Kitbridge Media Sp zo.o. Kaleńska 5, 04-367 Warsaw, Poland Publisher Craig Smith craig@europaproperty.com +48 577 100 620 Editor-in-chief Winston Norman winston@europaproperty.com +48 506 535 293 Editor Gary J. Morrell gary@europaproperty.com +36 70 319 9068 Journalists Gary J. Morrell Winston Norman Elie Issa Alex Webber Ewan Jones Poland Country Manager Sylwia Gajda sales@europaproperty.com +48 501 091 751

The hotel sector has also been severely hit by COVID, although analysts expect the return of tourists and business traffic. Again, hotel operators will need to provide a more imaginative offer that meets the needs of guests and other customers.

Hungary Country Manager Gary J. Morrell gary@europaproperty.com +36 703 199 068

In conclusion, although the markets have become more challenging, the new environment encourages and necessitates the development of more well-conceived and imaginative projects.

Administration admin@europaproperty.com Subscription subscription@europaproperty.com Art Director Daniel Zbroszczyk graphic@europaproperty.com

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A senior gathering for invested real estate professionals to foster dealflow

17 - 18 MAY

RAFFLES EUROPEJSKI WARSAW POLAND JOIN THE DISCUSSIONS

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Quotes Dieter Knittel

Head of CEE Real Estate Finance International, Deutsche Pfandbriefbank 2021 was a good year for the real estate investment market in CEE with around €11 billion traded and with a continued upward trend, but understandably still below the five-year average. Poland achieved an investment level of around €6 billion, followed by the Czech Republic with over €1.7 billion, Hungary with around €1.2 billion, Romania around €0.9 billion and Slovakia €0.8 billion. CEE markets show robust economic fundamentals with a solid GDP and rental growth. More local money especially in the Czech Republic and Hungary is chasing product. Warehouse and office assets are the most sought-after asset classes with almost 3/4 of the market share in transaction volumes. Prime office yields in capital cities and in logistics continued to decrease across CEE. However, Eurozone interest rates are rising, which may lead to a change in this trend. Bank financing is available across CEE. ESG is becoming an important element across the sector. Given continued investor interest in CEE, we expect similar investment levels in 2022. It will be interesting to see where yields are going.

Liad Barzilai

Group Chief Executive Officer (CEO), Atrium European Real Estate Limited This year’s real estate market has begun where last year’s left off with positive trends in transaction volume and continued investor appetite mainly focused on logistics, the residential sectors and retail parks and convenient centres. The CE region continued to attract well-known investors and has seen the entrance of new capital. Atrium European Real Estate has continued to implement its retail strategy building on strong locations in leading cities across the region. Our retail team has quickly adapted during the pandemic allowing us to maintain great offers for local communities and introduce new brands. The popularity of the residential sector continues with high investment activity, increasing volumes and the entrance of new investors. Atrium made good progress in executing its residential diversification strategy, which is targeting the creation of a portfolio of more than 5,000 residential for-rent units in the large cities of Poland by the end of 2025.

Martin Erbe

Head of Real Estate Finance International Clients Germany, CEE & Benelux Helaba Whether for developers, portfolio holders or banks, the topic of ESG is determining the market and will ensure a realignment of the entire industry. Until now, properties were already divided into different quality classes (e.g. Core or Value Add), but now the sustainability of the property will come more and more into focus. The consequence: good properties will remain tradable and financeable, while a direction must be found for less “green” properties. Costly refurbishment or rather a demolition? The banks are increasingly forced by regulation to accelerate this process through their financing conditions or by limiting them for non-green assets. If real estate was previously more of an investment with a corresponding long-term strategy then the topic of sustainability could lead to a complete rethinking and could be a total game-changer for the entire industry.

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Quotes

Feature

Arvi Luoma

Founder & CEO, Blackbrook

Beds and sheds have been a strengthening theme throughout the pandemic and as we are hopefully reaching the end of the pandemic turmoil, the tailwinds from e-commerce and modern supply chain requirements are expected to continue for the foreseeable for industrial & logistics. But while a general sector play has worked well for many - as a result of the flood of capital in such a short space of time - looking forward investors, as well as local authorities, are increasingly focusing on ESG. This not only means environmental certifications and sustainability, but also the broader impact on local communities. This will lead to more challenging permitting and zoning processes, as well as tougher financing criteria, making development more complex, especially on a speculative basis where a clear end-user is not in place or where a proposed site is near population centres. Particularly, as a result, developers and occupiers need to consider deeper questions on the overall carbon footprint of new builds versus optimising existing assets and using technology to increase efficiency and cost-effectiveness.

Nebil Şenman

Managing Partner, Griffin Capital Partners The CEE region has emerged from the pandemic in better condition than other regions in Europe. This is one of the reasons why foreign investors have their eye on CEE, and especially Poland, as their preferred investment destination. The majority of the larger, and leading institutional investors, are able to raise significantly more funding and liquidity, and are looking for attractive risk-adjusted return opportunities. Some sectors came out of the pandemic with better results than others. For example, the logistics market in Poland recorded over half of the whole investment volume. However, the focus of investors was not equal in all sectors. Logistics and residential sectors are at the forefront. I think in 2022 we should also finally see more activity in the office and also to some extent in the retail sector. When talking about risks and challenges, it is worth paying attention to the tense international situation and disturbances in world trade that affect global value chains. It is necessary to continue working on the image CEE region as a stable, growing market in which investors can feel safe.t

Wolfgang Molnar

Executive Director, Erste Group Commercial Real Estate, Erste Group Bank AG The CEE economies have started to recover from the pandemic. This means there is a new post-COVID reality and it is not 100 percent clear what that looks like. Additionally, the situation we are facing is comparable to high inflation, which will most probably stay and influence the economy and the real estate industry. Other topics like construction costs, business interruption, shrinking working age and therefore less manpower, and the reallocation of capital will have an influence as well. Furthermore, even those who have tried to avoid it have realized that ESG/going green, establishing a list of environmentally sustainable economic activities will have a heavy influence on the real estate sector. In respect of real estate investment, we now see an increase again in all CEE countries, where for the time being the main winner is logistics, because of e-commerce, with offices also performing well. All other commercial asset classes (retail, hotel) are recovering slowly. Finally, it seems that investors and banks are mainly focusing on plus transactions, which are fulfilling ESG criteria

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Regional

Investment

Váci Greens F, completed by Atenor

CEE investment shows signs of increased activity Gary J. Morrell

Poland continues to dominate CEE investment in terms of volume, with the lowest yields in the region along with the Czech Republic, although differing yield profiles concerning country and sector are available to investors if the right product can be sourced. “Transactions in Poland confirm the fact

Ultimate Real Estate Guide 2022

that investors are targeting CEE,” commented Jeff Alson, head of Poland & CEE capital markets at Cushman & Wakefield. “Prices reflect the industrial rental growth in the Czech Republic and there are indications that this trend will apply to Poland as well. Office investment demand remained stable

across the CEE region, albeit with the market failing to offer a large supply of the ‘perfect product’. Retail is now showing signs of greater liquidity across CEE.” Hungary, Romania and Bulgaria provide a further yield spread for investors. However, all markets suffer from a limited supply of

Investment

Regional

Hunter REIM disposed of two retail parks to Centerscape Investments.

products that is limiting investment activity. The investment markets look relatively positive for 2022 as international investors are returning and Intra-CEE investors are rivalling European investors. Commercial property investment volumes for 2021 increased by 7 percent on the previous year according to Cushman & Wakefield. However, this figure remained 15 percent below the five-year rolling average. The total Central European (Poland, Czech Republic, Slovakia, Hungary, and Romania) investment volume for 2021 is €11.7 billion according to Colliers figures. “Provided that there are no major political, economic or social upsets during the year then we could surpass the levels seen during the last two years and be looking at the pre-pandemic 5-year average of around €11-13 billion,” commented Kevin Turpin, regional director of Capital Markets at Colliers. “Investor appetite and capital is certainly there to make this happen, probably many times over, but we will see if supply comes out to meet it.” Poland dominated CEE market investment market activity, amounting to €9.4 billion; the country recorded 58 percent of the volume. This was followed by the Czech Republic with 17 percent, Romania with 9 percent and Hungary and Slovakia both with 8 percent according to Cushman & Wakefield. As has been the trend throughout the coronavirus period, the industrial and office sectors dominated market activity with 44 percent of the total market activity. A low supply of available products is a key factor in limiting investment activity in many sectors and countries, notably the Czech Republic.

With the scarcity of products combined with strong demand, there was yield compression in all sectors. Colliers have recorded the lowest yields in Prague at 4.25 percent compared to 4.7 percent for prime Warsaw office. “The end of 2021 even brought about some record

yields in the market history, particularly in the industrial and logistics sector, where levels of 4.0 percent were recorded in Poland and the Czech Republic, with a narrowing spread of circa 75-100 basis points over the key German markets. Prime offices in several markets have also seen small inward

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pfandbriefbank.com

Regional

Investment

A2 Warsaw Park

movements as investors go after assets with strong tenant covenants and longer income. The retail (shopping centres) and hospitality sectors will need to produce more evidence to see where investor appetite is so for now, we expect those to remain largely stable,” commented Kevin Turpin. The dominance of domestic capital is seen as a possible challenge to the role of foreign investors while at the same time enhancing the security of the investment markets by making them less reliant on positive sentiment from international investors. In both Hungary and the Czech Republic, domestic capital constituted more than 50 percent of investment volume. Further, domestic investors are looking at the possibilities in other parts of the region with the lack of opportunities in their domestic markets and in effect becoming CEE investors. In the period from 2017 to the third quarter of 2021 Hungary recorded the highest proportion of acquisitions undertaken by domestic investors at 46 percent of the €58.8 billion transacted over the period followed by the Czech Republic with 38 percent and Bulgaria with 27 percent according to Colliers. Poland recorded the lowest proportion at 2 percent and 98 percent of transactions were recorded by international investors. “In terms of investors type, we see all types of investors being active in the region, from core and core-plus funds, through to REIT investors, private equity and opportunistic funds, ending with family offices. In terms of capital sources investing into CEE, there is appetite and activity from a wide range of geographies including the Americas (10.9 percent), Asia Pacific (7.3 percent) and the

Ultimate Real Estate Guide 2022

CEE Prime Office Yields Source: Cushman & Wakefield

Czech Poland Hungary Slovakia Romania

4.00 percent 4.5 percent 4.75 percent 5.25 percent 6.5 percent

Middle East and African region (5.9 percent). But it was Western European (36.2 percent) and Central European (32 percent) capital that continued to dominate CEE volumes in 2021 with a share of almost 70 percent overall,” said Kevin Turpin. “CEE investors are already looking elsewhere in the region and were behind almost 10 percent (circa €582 million) of the investment volume in Poland in 2021. Otherwise, they will initially be looking to markets like Germany, Austria and elsewhere in Europe,” he added. As evidenced by recent CEE commercial office transactions, ESG investing (the integration of environmental, social and governance factors into the acquisition and exit process) is increasingly a concept and code of practice that has been adopted by investors as a central part of their investment

strategies in both the top end and value-add sectors of the office market. Investors have yields and return on investment as a central priority, although commercially successful investment standard buildings need to have attained sustainability accreditation and this is now an integral part of the leasing process and asset management. Further, investors need to look to a longerterm rise in the value of an asset and the prospect of new national and international sustainability regulations. ESG investment strategies in all areas of investment are seen as necessary to combat climate change and pandemic issues. In this way, building owners need to adopt a longer-term strategy concerning the sustainability of an asset and ESG issues.

Investment

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CHRISTOPHER MERTLITZ Head of European Investments, W. P. Carey Global markets are increasingly developing a preference for asset-light business models. Where once the strongest businesses would be those with a high volume of assets, today the most successful ones are often those with none. In a real estate context, this means that companies are looking to divest their owned real estate and reinvest proceeds back into their core businesses. There has never been a better time to do this with allocations to real estate continuing to increase, driving significant competition for assets across the market. Private equity firms are looking to take advantage of the strong income and defensive qualities of assets, further depressing yields. However, for now, this competition remains outweighed by the volume of corporates looking to undertake sale-leaseback transactions themselves, providing an opportunity for everyone in the market. The macro-economic conditions will also present a serious challenge to the fundamentals of the real estate market. Cost inflation and the potential for interest rate rises will further eat into yields at a time when they are already compressed. From an owner-occupier perspective, this means that all-equity buyers will be a safer counterparty to work with on future deals as they are less dependent on the fast-changing borrowing conditions in the debt markets.

KEVIN TURPIN Regional Director of Capital Markets, Colliers In general, we are quite optimistic about the coming year. There has been a lot of money raised, for both core and also opportunistic funds. Funds are really in an investment mood. There are of course the usual obstacles, which affect every cycle, like rising inflation, increasing construction costs, lack of product etc. But all of these can be mitigated. The dark clouds overhead, however, may include some political challenges in the region, or other unforeseen external events, but today it is not possible to predict what will really happen.

PIOTR TRZCIŃSKI Head of Investment Poland, Savills Investment Management In the post-pandemic world of persistent inflation, high stock market valuations and a volatile bond market, real estate continues to offer diversification, attractive returns with little correlation to liquid asset classes, a hedge against inflation and capital value protection. With almost €6 billion transaction volume, in 2021 Poland has witnessed a resurgence of investor activity with confidence returning and investors seeking to increase their weightings primarily towards logistics and living sectors. I am pleased with our annual result in Poland where we have transacted over €280 million primarily in the logistics sector acquiring prime assets like Castorama BTS, A2 Warsaw Park and 7r Beskid Park II on behalf of our clients. Thanks to these acquisitions as well as value-accretive asset management the value of portfolio we manage in Poland has surpassed €1.7 billion as at January 2022. Going forward we will continue to explore opportunities in the logistics and the living sector as cornerstone themes of our investment strategy notwithstanding tactical acquisitions in other sectors like convenience retail.

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Logistics

Developers are essentially working on BTS developments with a speculative element

Industrial markets continue to boom Gary J. Morrell

The industrial market in Central Europe is booming from a demand and development perspective and is seen by analysts as the sector in the most positive position for the post-coronavirus period. Positive indicators for the industrial sector are attracting a growing number of investors and the resulting yield compression. However, industrial park owners tend to hold onto their assets and therefore the sector suffers from a low supply of available product. However, there have been several industrial portfolio transactions concluded over the past year.

Central European industrial stock (Poland, the Czech Republic, Slovakia, Hungary, Romania) stands at over 40 million sqm according to Cushman & Wakefield. Continued low vacancy rates and rising rental levels are forecast due to high demand. In Prague and

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Budapest vacancy rates stand at below 3 percent. Although in the current market environment it can be difficult to differentiate between speculative and BTS projects, developers are essentially working on BTS de-

velopments with a speculative element. As with other property sectors, tenant specifications have become more complexed and developers are committed to the construction of BREEAM and LEED accredited complexes.

Logistics Poland and the Czech Republic continue to be the dominant Central European markets. Both countries benefit from their geographic locations in major logistics and industrial networks, notably within proximity to Germany. Poland is by the far the biggest industrial market in CEE with total stock of over 21 million sqm in different logistics hubs across the country and a vacancy rate of 6 percent according to JLL. According to Avison Young, the industrial market in Poland is breaking all records. “The industrial sector’s growth continued in 2021, resulting in almost €3 billion in transaction investment volume - the highest result in history,” said the consultancy. Industrial stock in the Czech Republic is close to reaching the 10 million sqm benchmark. Demand remains high with a vacancy rate of 1.6 percent according to Cushman & Wakefield. For 2022 1.5 million sqm of space is planned with 1.1 sqm currently under construction. Romania is emerging as a major industrial and logistics market with over 4 million sqm of stock. Major developments are also ongoing in the different areas of the country, an indication that a regional industrial network has emerged in the country outside the capital, Bucharest. CTP is planning a €300 million regional network of parks that will bring its total space in the country to 2.5 million sqm according to the company. Total modern industrial stock in the Budapest area stands at over 2.4 million sqm according to the Budapest Research Forum (BRF), consisting of CBRE, Colliers, Cushman & Wakefield, Eston International, JLL and Robertson Hungary. There are few, if any, existing logistics building with more than 5,000 sqm of available industrial space and an overall vacancy rate of 2.6 percent. Hungary is a developer-led market and is mainly limited to the Budapest area, although a functioning commercial industrial market is developing in industrial hubs outside the capital. As industrial/logistics looks set to be a clear winner in the post-coronavirus period, developers who have traditionally been active in other mainstream sectors, such as office and retail have undertaken industrial projects. This adds to the specialist regional industrial/logistics parks operators such as Prologis, CTP and Panattoni. HelloParks, a member of the Hungarian Futureal Group, is developing the HelloParks logistics network. HelloParks Maglód is under construction on a 46-hectare site as part of the first phase of the project, located in

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Central Europe Industrial Stock Source: Cushman & Wakefield

Czech Republic 9 billion Hungary 2.4 billion Poland 21.5 billion Romania 5 billion Slovakia 2.6 billion

the vicinity of Budapest. According to local reports, the €40 million industrial and logistics centre will have a total area of 193,000 sqm of BREEAM accredited space when fully completed. “HelloParks aims to increase Hungary’s regional competitiveness with highly competitive and efficient mega parks that also focuses on sustainability,” commented Rudolf Nemes, managing director of HelloParks.

“The developments can strongly support Hungary in becoming a real logistics centre, as these facilities can attract new customers with regional outreach to the domestic market.” HelloParks aims to become one of the key players in the dynamically growing industrial and logistics market, first in Hungary and later on in the region. “The rapid development of e-commerce and the relocation of pro-

s at Join u nnes, a C , MIPIM .3.2022, 8 1 , .– 5 1 R7.E2 stand Riviera ce Espa

www.erstegroup.com

Let’s build Central Europe together. Real estate financing and project development requires more than just knowledge: It requires a partner who believes in your projects just like you do. That’s why Erste Group Commercial Real Estate focuses its services on a wide variety of offerings beyond just financial solutions for new perspectives in real estate. Time to believe. Time to invest.

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Logistics

Romania is emerging as a major industrial and logistics market

duction capacities have started a new trend of establishing regional EU centres. We are constantly exploring further expansion opportunities in the Budapest agglomeration as well as the catchment area of large rural cities,” added Rudolf Nemes. Industrial developers and park operators are developing more highly specified and sustainability accredited projects in response to changing tenant demands and environmental regulations. Further, the leading national and regional industrial park developers and operators are seeking third party sustainability accreditation such as BREEAM and LEED. Tenants are looking to save on utility costs, recognise the importance of staff wellbeing, the provision of green areas, locational demand with the provision of bicycle changing facilities and electric charging units and

Hello! Parks, new logistics venture by Futureal

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observe precautions concerning safety and the need to reduce the carbon footprint of their projects. In this sense parallels can be seen with office development and the need to adhere to environmental requirements and to produce sustainable, well-designed and highly specified products in response to tenant and staff demands. CTP is developing by BREEAM in-use Excellent for buildings across its Central European portfolio. Further, the company is emphasising energy efficiency and the use of solar panels in its portfolio. Prologis is developing under a least BREEAM Very Good accreditation for its entire portfolio. “We have been following our crisis-proof strategy to be present and develop on key markets, but we are not only developers, but long-term owners and managers of our properties. Our industrial

real estate expertise spans real estate operations, development services and sustainable development. We are taking care of our customers’ needs, their growth, as well as the local communities. Customer satisfaction has always been a top priority for us, to offer more than just a warehouse building,” commented Zsuzsanna Hunyadi, leasing director at Prologis Hungary. Panattoni has achieved BREEAM Outstanding accreditation for its park in Cheb in the Czech Republic. The company is committed to zero carbon energy emissions by 2025 and is aiming for BREEAM accreditation for its entire portfolio. However, developers face challenges in the development and construction process in an increasingly competitive and demanding market. For example, labour availability, costs, material and sourcing development plots with direct road and public transport links. “The main challenge at the moment is the increase of hard-cost due to raw material shortage, limited production capacities and increase of demand. Furthermore, it might seem there is endless of land to acquire, however ready to go plots are hard to find. Based on our experience, permitting is not an issue as long as there is a common understanding and support from the local municipalities,” concluded Rudolf Nemes on the development process.

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A holistic approach to real estate The Polish Real Estate Guide 2022, which is EY’s flagship annual publication, provides an extensive overview of key market trends in all property sectors along with a robust presentation of the most important tax, legal and assurance changes that affect real estate market players.

Despite the pandemic, in 2021 the real estate market in Poland bounced back relatively quickly from the prior year’s drop. It attracted €5.9 billion in 2021, with the warehouse and logistics sectors spurred by the growth of e-commerce accounting for 54 percent of the market share. Over the next couple of months, EY expects the investment activity to remain strong across all the sectors, yet the office and warehouse market segments are still likely to retain their top positions in terms of capital allocation. With rising prices per square meter in big cities, the private rented sector (PRS) is becoming a hot topic as an alternative asset class. There have been some changes in demand patterns for office and retail. Implementation of a hybrid work model is well underway with a shift in office require-

ments towards more flexible lease terms and changes in the function of space. There is a shift in the structure of demand for retail space with a focus on convenience and mix-use schemes. Across all the sectors, there is demand for space that meets high ESG standards, which are becoming a key differentiating factor for occupiers as well as investors who put a higher price tag on such assets. The year 2021 brought important changes in the Polish regulatory system. Companies operating in the real estate market will be directly or indirectly affected by the new laws and regulations which came into force last year. The most notable ones include: - The amendment to the Code of Administrative Procedure, has a significant impact on the reliability of business transactions.

- The amendment to the Public Procurement Act, with a wide spectrum of changes including a new threshold for public procurement projects, distinct rules for national and EU procurement projects, mandatory digitalization of national procurement processes, etc. The coming year is certainly going to offer interesting opportunities in the sector but will also bring some challenges, as changes in demand patterns are accelerating. Fine-tuning to the new normal, staying agile and viewing the sector holistically is the way to go forward successfully. The Polish Real Estate Guide 2022 sheds some light on how the market will evolve over the coming quarters.

ROBERT SNINCAK Head of Investment Operations Central Europe, CBRE Investment Management CEE investment markets are developing rapidly post-pandemic. Demand for the logistics sector continues to break records, and investor appetite remains strong. This will stay with us in the post-Covid economy, but the market cannot grow at this pace forever. Until now, demand has been outstripping supply, but with so much new space under construction, supply will soon need to be tapered. Meanwhile, interest in the retail sector is growing. The damage here has not been as bad as anticipated, with some retailers managing to successfully combine the advantages of traditional brick-andmortar retail with online shopping models. Post-lockdown footfall figures show that people still like shopping, and there are significant opportunities if you know where to look. The PRS sector continues to evolve, throwing up new opportunities for investors interested in long-term growth. And though pricing for office assets remains compromised, the sector still offers strong fundamentals, especially those buildings that are best-in-class and with excellent sustainability credentials.

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Retail & Last Mile

Mixed-use retail schemes backing onto urban logistics are a great solution for omnichannel retailers

High demand generating positive organic evolution of the retail and logistics sectors Winston Norman 2021 was certainly starting to look a little more optimistic for the retail industry than it was in 2020. The already heavily disrupted sector has continued to fight to survive amid significant restrictions. This is in addition to other factors such as manufacturing and issues in supply chains, the adoption and adaptation of e-commerce or omnichannel operations, the lack of availability of labour and rising costs across the board, to name just a few.

Despite the ongoing pandemic, a positive bounce in GDP has been seen. Yet the combination of the growth in inflation, and problems relating to the global supply chain, which add to the growing cost of products

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and resources, all contribute to the challenges faced by producers, retailers and ultimately, this passes on to the consumer. However, although times continue to be very testing, the fight and innovation that

has materialized in the industry are encouraging because retail is changing faster than ever, from shopping centre experiences to e-commerce expansion.

Retail & Last Mile

Regional

The synergies between retail and urban logistics are becoming a growth area

RISING INTEREST IN MIXED-USE OPPORTUNITIES Much has been written recently about the opportunities in retail parks, urban logistics and multi-let light industrial, mostly viewing these as separate sectors. It is expected that in 2022 we’ll see rising interest in mixed-use schemes that combine the best elements of all three. At first glance, there is commonality – all three require urban infill locations with good transport links. But experts believe that more synergies can be realised by thinking more broadly of retail parks, urban logistics and multi-let light industrial as convenience real estate. These mixed-use convenience real estate projects offer the opportunity to create several synergies. For investors, they offer more flexibility in sourcing sites and more choice about the combination of schemes that can be accommodated on a plot, thus maximising the value that can be created from the land. For tenants, whether they be retailers, logistics companies or small businesses, the site becomes more of a go-to destination and therefore a more attractive place to work, with employees enjoying the daily shopping needs, services, restaurants and cafes offered onsite by the retail park. In terms of e-commerce, the synergies between retail and urban logistics are increasingly becoming a growth area and an investment opportunity. Mixed-use schemes which offer a retail park open to consumers at the front, backing onto urban logistics units, are a great solution for omnichannel retailers by offering a front-to-back retail and logistics/returns operation, catering for future-oriented last-mile fulfilment.

RETAIL INVESTORS AND DEVELOPERS’ CONFIDENCE TO BE RESTORED IN TRADITIONAL RETAIL? There is a recovering interest in retail investment, with a particular focus on convenience, standalone supermarkets and retail warehousing. A balanced position of shopping centres and more attractive shopping centre yields are conducive to the return of

investment capital to the retail sector, however, rising costs of energy, the cost of living driven by the higher cost of clothes, food and footwear and anti-inflation measures may slow down consumer demand, which may adversely affect the turnover of popular chain stores and extend the ‘wait-and-see’ approach to this asset class. Nonetheless, e-commerce positioned itself in retailers’ business and customers’ pref-

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Retail & Last Mile

Sustainability is now the new currency in real estate

erences and is expected to intertwine with the traditional way of buying things, and it’s only up to retailers to choose the way it will integrate the omnichannel approach in their selling strategies. Just to have a global perspective: the e-commerce penetration will push online sales to $3.9 trillion by 2025. DIGITAL AND LEISURE INVESTMENTS TO DRIVE RETAIL DEVELOPMENT Many retailers wish to stay in brick-andmortar stores with an intensified digital interaction with customers. In some areas footfall in shopping centres has fallen compared to the pre-COVID period but the turnover of tenant retailers matches the results of 2019 or are even higher. Developers and asset managers need to work with retailers on omnichannel strategies. The future of retail will be a successful combination of offline and online. Investors, owners and developers will need more creative and recreational activities for customers in shopping centres. Investing in new food court concepts and mixed-use schemes could better accommodate the new market developments. ECONOMIC DOWNTURN POTENTIAL TRIGGER FOR RESTRUCTURING OF THE RETAIL SECTOR A timely report by the Urban Land Institute (ULI) sets out the potential triggers for the required restructuring of Europe’s retail real estate sector. This report becomes even more salient following a rapidly emerging decline in economic sentiment and performance, identified as one of the stronger

Ultimate Real Estate Guide 2022

triggers, due to the COVID-19 (coronavirus) outbreak. While the operational performance of retail real estate has been sufficient so far to avoid too much distress in the market, the lockdowns and reduced economic and consumer activity in many countries across Europe have led to a faster decline in retailer performance and consequent further losses for retail property. Once the situation will have become more stable and clearer, this could see more properties coming to market and pricing at a level where higher-risk capital would be prepared to invest. Some argue that for centres to be resilient in the future they must find affordable and sustainable rental levels to bring about a new status quo. The winners in the resulting restructuring are expected to be experience-led dominant shopping centres and strong neighbourhood schemes focused on convenience shopping. The problems are to come for the “lost middle”: centres that lack the pull of a destination but are too much effort for the local shoppers. Despite the uncertainty, many owners of struggling centres have been looking at strategies to revitalise existing retail schemes to preserve value as well as more radical repurposing solutions for others. There is no universal solution, but there are effective approaches to be taken on a property-by-property basis. Owners can revitalise stronger locations with food and beverage and leisure uses, or look at repurposing for others. Retail adviser Chris Igwe of Chris Igwe International, stresses the importance of consumer experience: “Online retail can’t compete on experience. A successful place needs to offer buzz, entertainment, an opportunity to chat, variety, things to touch,

things to taste and more. Even in an era of same-day deliveries, only a shop can give you instant gratification. But delivering all of that, making it relevant and keeping it fresh means active management.” “However, for retailers to be able to deliver on this experience, there needs to be an alignment of interest and a mutual understanding between tenants and owners or investors on what constitutes the optimum rent levels that are sustainable in a market that has changed dramatically, especially from a structural perspective.” AN INCREASING FOCUS ON SUSTAINABILITY Sustainability is now the new currency in real estate. The market’s perspective on sustainability has moved from a ‘nice to have’ to a key requirement, with green credentials now seen as a premium for commercial property. This is a trend that will continue to gather momentum, fuelled by the demands of institutional investors, the desire of companies to become greener, and government initiatives to combat climate change. The adoption of metrics such as GRESB performance, BREEAM ratings and CRREM alignment, and the inclusion of solar panels, EV charging stations and LED lighting into designs and refurbishment plans have taken off in recent years as part of a larger Net Zero Carbon roadmap. The real estate market has recognised the importance of ESG and sustainability in driving long-term value for stakeholders and society by ensuring assets are ‘future proof’.

We represent the entire industry says the Polish Council of Shopping Centres HOW IS THE SHOPPING CENTRE MARKET CHANGING AND WHAT EuropaProperty talked with Krzysztof Poznański, managing director at the IMPACT DOES THIS HAVE ON THE Polish Council of Shopping Centres about the challenges and opportunities on ASSOCIATION’S OPERATIONS? Poland’s retail market in the post-covid era.

AFTER ONE YEAR IN THE PRCH, HOW utilities and services, and thus increases DO YOU ASSESS THE SITUATION IN the maintenance cost of shopping centres. Salary costs are also going up. 2022 THE INDUSTRY? The retail property market has been significantly affected by the pandemic. After four lockdowns, around 145 days of shutdown, the losses of the centres amounted to about PLN 6 billion, which is about half of the annual revenues of the owners and managers of shopping centres. During lockdowns, shopping centres, depending on their type, based on statutory regulations arbitrarily introduced by the government and parliament (Article 15ze of the so-called Covid Act), lost most of their rental income while having to bear the costs of maintaining the centres. Unfair government interference in the business relationship between landlords and tenants has shaken relationships built up over the years. The lockdowns and the pandemic caused a decline in shopping centre footfall and turnover, which the industry is now painstakingly rebuilding. We have also seen rising inflation since last year. It translates into an increase in the price of

Ultimate Real Estate Guide 2022

welcomed us with numerous challenges. At the same time, the pandemic period provided an opportunity to pursue the mission of shopping centres as places integrated into the urban fabric, cooperating with local communities.

SO, WHAT DOES THE FUTURE HOLD FOR SHOPPING CENTRES? We are optimistic about the future as we see the footfall rate increase steadily, and by December 2021, shopping centres were generating turnover at pre-pandemic levels. Shopping centres are changing and of that, we have no doubt. They are keeping up with consumer needs and habits. This applies both to the need for modernisation, redevelopment and the introduction of new technologies, combining sales channels, as nowadays brick-and-mortar and online sales are merging and shopping centres are implementing omnichannel sales tools.

The Polish shopping centre market can now be considered mature. The PRCH Retail Research Forum report for H1 2021 states that the retail saturation level is 328 sqm GLA per 1,000 inhabitants. The result is comparable with the EU averages. Most developments nowadays are retail parks located around new housing estates or in smaller towns, and outlet centres, often on the outskirts of cities. Starting a major project usually involves the construction of a premium-class mixed-use centre that is very modern and can attract a unique tenant mix. Changing needs and the passage of time make redevelopment a must. Some shopping centres are getting old. This means that assets have to keep up with new trends and technologies.

HOW HAVE RECENT YEARS CHANGED THE ROLE OF THE ASSOCIATION? The PRCH has actively participated in activities aimed at informing the authorities, state bodies and institutions about the situation of the industry. Our Association is the link between the different sides of the market. We represent the interests of the entire industry. We bring companies together, we promote joint action, we lobby for the best solutions, we observe, and constantly monitor legislation. In addition, we build the image of the industry through active media

relations. The pandemic has bolstered these activities, proving that there is a real need for industry representation in times of crisis. However, in everyday life, under normal conditions, crises must be prevented, and here I see a significant role for the PRCH as a negotiator, interlocutor, initiator of dialogue and promoter of good practice.

WHAT IS THE PRCH PLANNING FOR THIS YEAR? This year PRCH is going to continue its long-standing tradition and announce the 13th edition of the Retail Awards competition after a year’s break. We want to invite retail chains, shopping centres, outlets, retail parks and new retail concepts as well as – for the first time – service providers to participate. We will continue to focus our activities on 3 main areas: sustainability, safety and accessibility of shopping centres, and the future of retail.

HAS THE PRCH CHANGED STRATEGY REGARDING MEMBERS?

ITS ITS

We represent the entire industry, companies with different types of activities. These include landlords and managers, tenants, investors and investor services, banks and financial institutions, developers, general contractors, consulting companies, manufacturers and service providers to the shopping centre industry. Our goal is to integrate, exchange information, diagnose needs and build relationships in order to pursue the interests of companies gathered around the sector, as well as to build a coherent image. We would like to invite you to become a member, to contact us and to participate in the 13th edition of the PRCH Retail Awards.

Krzysztof Poznański, managing director at the Polish Council of Shopping Centres

More information about the PRCH can be found on www.prch.org.pl

Ultimate Real Estate Guide 2022

Regional

SEE

Point Centar Zagreb by Bluehouse Capital

High demand for product in SEE Gary J. Morrell

Serbia, Croatia and the wider SEE region are continuing to attract a growing number of international developers as well-conceived projects in the region offer a yield premium on the more established CEE and Western European markets for investors, albeit with more expensive financing and a low supply of available investment-grade assets.

CBRE sees all commercial sectors in SEE (Serbia, Croatia, Bulgaria and Slovenia) as quite active with the largest share attributed to the office sector for 2021. This was largely due to the acquisition of the GTC office portfolio by Hungary’s Indotek Group. Investment volumes are expected to be similar to 2021 at around €950 million, which is still

Ultimate Real Estate Guide 2022

below the volumes achieved in 2016-2018. For 2021 an estimated €377 million was in the office sector, €310 in retail, €200 million in industrial and €70 million in mixed-use. CBRE expects that retail will be strong in 2022, underpinned by portfolio deals across the region.

Further, logistics has been on the rise over the past year and is expected to maintain this momentum. As elsewhere in CEE, due to the lack of product and high demand, the sector could become the driver for development in the coming years according to analysts. The total investment volume for Croatia in 2021 was €700 million according to Colliers

SEE Croatia, representing a 40 percent year-onyear increase. “Volumes, though robust, failed to underscore the true scope of demand, as investor interest is meeting limited supply. Office and logistics are still the primary focus for many investors, but the majority of transactions were recorded in the hotel and retail sectors where there was more supply,” said Klara Matić, head of investment advisory services at Colliers Croatia. In the most significant deal for SEE in 2020 the Hungarian investor, Indotek Group purchased the GTC Belgrade office portfolio for €267 million. The agreement covers the sale of 11 buildings within five business parks with a total 122,175 sqm GLA, located in the New Belgrade business district. GTC, one of the major developers in Belgrade, is further planning the 16,000 sqm GTC X in new Belgrade. The office development cycle in Belgrade is seen as quite strong with 220,000 sqm currently under construction or refurbishment, but the increase in demand will overcome the risk of any significant changes or oversupply as the office market lies on strong fundamentals according to CBS International. In the retail sector, the 30,000 sqm Delta City shopping centre in Belgrade was purchased by investors. Traditional in-store shopping is still very popular in Belgrade and Serbia as stores continue to recover to pre-pandemic levels according to analysts. The importance of physical stores is confirmed by the increased footfall in key shopping centres during 2021. In Croatia, the Poseidon Group sold its retail portfolio in several secondary cities to private investors. “Since the market segments are in different stages of development, there is an obvious lack of products in the industrial segment, in particular of modern logistics facilities. From a long-term perspective, the office market will continue to be the main focus of the investors primarily due to its healthy fundamentals. Demand has remained strong despite the overall situation, with IT sector as the key demand driver, and above-all stable vacancy rates,” commented Srdjan Teofilovic, head of capital markets & investor services at CBS International, member of Cushman and Wakefield Alliance. In Zagreb Logistics Park Zagreb has been acquired by investors. Further in Bulgaria CTP acquired two logistics developments for redevelopment purposes. “Over 2021, the industrial market continues to demonstrate resilience to the chal-

lenges posed by the COVID-19 pandemic and effects of supply chain disruptions. Figures confirm the positive growth in terms of strong absorption and increasing demand for larger spaces, as well as a boost of speculative supply, particularly in the Belgrade area,” added Srdjan Teofilovic. Foreign capital accounted for 75 percent of investment volume for Croatia in 2021 as the largest transaction was the purchase of the Sunce Hoteli (BlueSun Hotels and Resorts Brand) by the Croatian arm of the UAEbased investment and development company, Eagle Hills. Sunce Hoteli comprises 11 hotels and a camp in Dalmatia as well as an airport and a large landbank on the island of Brac. With the deal, Eagle Hills is continuing to expand its presence across SEE. “There are various investors active in SEE, from opportunistic to those buying core properties, from those looking for yield compression to long-term holders. Local accumulation is still limited and without the process of institutionalisation, it will continue to lag behind the foreign especially when it comes to the large-scale transactions, however domestic demand dominates in small to medium tickets. Foreign buyers traditionally pay more attention to green building

Regional

certification; however, it is becoming a more important topic for the local buyers as well, especially since there is growing pressure from tenants for energy efficiency certified office space,” said Srdjan Teofilovic about the type of investors active in the SEE region. The latest transaction in Zagreb was the sale by Bluehouse Capital of the 13,500 sqm Point Shopping Center. The complex has been operating successfully with long-term international and Croatian brands according to CBS International, who acted for Bluehouse. Current hotel yields for Croatia are put at 6.7 to 7 percent for hotel compared to 7 percent for office, logistics and retail. The resilience of the hotel sector and recovery from the coronavirus crisis is seen as resulting in high demand for hotel products from investors. CBRE estimate prime office yields at 8 percent for Belgrade compared to 7.75 percent for Zagreb. With measures relaxed across the region and increasing investor activity, the highest yield changes were noted in the industrial sector where yields compressed by over 100 basis points in a year. Also, the yield for retail parks in Serbia and Bulgaria have been compressed as well as shopping centres in Belgrade, underpinned by the recent uptrend.

GTC Green Heart in Belgrade

Ultimate Real Estate Guide 2022

Regional

SEE

Prime office yields remained stable in the majority of markets,” according to CBRE. The consultancy has recorded 61 percent of the €950 million in investment volume for 2021 for Serbia, 25 percent for Croatia and 14 percent for Bulgaria.

“With numerous ongoing projects now being announced, the SEE region is set to continue its growth path. In terms of new market development, Serbia and Bulgaria will remain leading markets, followed by Croatia and Slovenia. Investment turnover

and leasing levels are already in the recovery phase and expected to keep an uptrend in 2022,” concluded CBRE.

SRDJAN TEOFILOVIC Head of Capital Markets, CBS International We are confident that the positive sentiment from the previous year will continue in 2022. Serbia’s record numbers in 2021 with an investment volume of nearly €470 million will be difficult to reach, mainly because this is due to the largest-ever office transaction, but we do expect that the interest for properties will continue to be high.

KLARA MATIĆ Head of Investment Advisory Services, Colliers Croatia

Supported by a V-shaped economic recovery, strong CRE fundamentals and scarce inflation, we are seeing high investor demand and continued downward pressure on yields. Rising construction costs will delay the development of new supply and product. This could strengthen the existing core and core-plus property values in particular and reinforce the seller’s market.

ANNA DUCHNOWSKA Managing Director – Investment Management, Europe, Invesco Real Estate While 2021 Central European investment volumes of €9.4 billion could not recover to their pre-pandemic levels, we have noticed a clear shift in patterns. For the first time, logistics was the largest sector in terms of transaction volume in the region, reaching a substantial 38 percent share, overtaking the traditional leader, offices with 32 percent, and recording a further substantial inward shift over the course of the last quarter. At the same time, the emerging institutional residential sector has seen its second strongest result in history. In the office sector, the focus will be on high-quality, flexible office spaces, in order to meet the future requirements of collaborative working in the post-COVID world. Coupled with good ESG and WELL credentials, which in our belief will be a key parameter going forward in keeping institutional assets future-proof and attractive for its occupiers and the capital markets, also in light of the EU’s taxonomy. The PRS sector is clearly very attractive from the risk-return perspective, at the same time the limited number of established products with a proven income stream remains to be a limitation for more sizable transactions. In retail, we remain very selective.

Ultimate Real Estate Guide 2022

2022, Volume XV th th June, 13 -15 THE LARGEST SEE REAL ESTATE EVENT

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O ffice

Blue City Offices

Meet Blue Office Winston Norman

Warsaw’s office market is going through some changes that have seen the supply of modern office-space trail off over the last couple of years creating a rather sizable gap between supply and demand. According to market analysts, finding a new office has now become more challenging. Today, tenants are interested in buildings with green certificates and offer the best technological solutions and a range of amenities to office users.

One such project set to benefit is Blue Office, a B+ class office space located in the Blue City Shopping Centre complex at Aleje Jerozolimskie 179 in the capital. The facility offers over 32,000 sqm of office space for rent, in modules from 500 sqm to 4,500 sqm, split over five floors. Due to its proximity to the shopping centre, tenants of the office complex have access to numerous facilities, such as shops, restaurants, coffee shops, a medical centre and a

Ultimate Real Estate Guide 2022

fitness club. Additionally, Blue Office offers several innovative facilities which enhance employee well-being and comfort at work, such as a green relaxation zone and chillout room, two leisure zones, natural greenery in common areas, access to the terrace, and space for corporate events. The location of Blue Office guarantees fast and convenient commute times for employees to and from the city centre, convenient public transport, good access to the railway

and bus station (10 bus lines), proximity to the international airport, entrance to the S2 ring road and the A2 highway, facilities for cyclists, a free car park for employees and visitors and a planned tram line. Blue Office offers large office spaces (up to 4,500 sqm on one floor) that allows the distribution of employees at safe distances from each other. A large number of lifts and three entrances (from the street, through the shopping centre and from the car park) pro-

O ffice vide easy access in the office centre. In addition, the space is much higher than in other office buildings (up to 4.6 m), which, combined with a very high ventilation capacity of 30 cubic metres per person at a density of 10 sqm per person, enables optimal air circulation. Amenities close at hand in the Blue City shopping centre include, 25 cafes and restaurants offering cuisine from all over the world, a Helios multi-screen cinema and the children’s play area Inca Play. Also available is an innovative entertainment concept for integration events and meetings with clients. Employees also have access to two modern shared spaces: a leisure space with a games room, and green space on the terrace of the shopping centre. A fitness club is located on the 3rd floor of the complex. There are also many sports and recreation facilities near the Blue Office building: two big parks with leisure infrastructure, swimming pools, tennis courts, bowling alleys and a trampoline park. These give excellent opportunities to spend after-work time with your colleagues, rare in other business quarters of the city. Another benefit is Project Neighbour 2.0 is an exceptional loyalty program created for and targeted at the staff of companies based in the Blue City office complex. The program

Regional

Blue City Offices

offers special discounts at the shops and catering facilities of Blue City Shopping Centre and allows employees to take part in various special events, use free parking and special employee zones. To keep up with the latest trends Blue City underwent many changes, which not only strengthened its position as one of Warsaw’s top work and leisure destinations but also led to it becoming a truly unique location in the city.

Blue City has been honoured many times for its comfort and convenience as well as its friendly approach to its tenants and customers. Blue City also cares about the environment; the project holds the international ecological certificate BREEAM in use. Blue City is the investor and developer of the project.

Blue City Offices

Ultimate Real Estate Guide 2022

ESG

Feature

The industry needs to decrease properties’ environmental impact

Building towards an ESG-compliant industry Winston Norman

Environmental, Social and Corporate Governance has moved to the top of the agenda for the real estate industry. More and more investors are revealing their net-zero commitments and are investing more in ESG credentials to mitigate the impacts on the environment from the industry. Further, investment strategies will be closely connected to the purchase of products and cooperation with the businesses that meet relevant ESG criteria.

This will have a significant impact on the shape of the real estate market in 2022. Falling in line with new sustainability demands, trends and regulations and ESG-related aspects are having an increasing impact on decisions made by investors. This is influenced both by the growing awareness in terms of sustainable development and environmen-

Ultimate Real Estate Guide 2022

tal impact, and also by the need to comply with ESG reporting requirements. “ESG is becoming more important and it’s gone from being an outlier in the rank of criteria for investors to one of the first questions asked,” commented Fraser Watson, director in Savills CZ&SK Investment Advisory. “How this plays out in terms of pricing is yet

to be seen; however, the most ESG compliant properties will probably benefit from a (slight) premium, rather than properties that aren’t as ESG friendly being discounted.” Recently, firms have been announcing ambitious science-based targets to reduce greenhouse gas emissions that are approved by the Science Based Targets initiatives, and

Feature pledging to reach net-zero emissions targets across their entire value chain by 2050. In this way, VGP and Allianz Real Estate entered into a new 50:50 joint venture with a €2.8 billion investment target. The ESG setup for the new partnership aims to encompass Carbon Risk Real Estate Monitor and EU Taxonomy compliance, on a best-efforts basis, the use of Sustainable Certification including high BREEAM or DGNB ratings, and EPC criteria, among others. The new joint venture will concentrate on the acquisition of income-generating assets developed by VGP in Germany, the Czech Republic, Slovakia and Hungary. Jan Van Geet, Chief Executive Officer at VGP, said “Having a partner who shares our commitment to sustainable and responsible building and investment practices, we are very pleased we have been able to agree to an ESG framework for this new joint venture which appreciates and is aligned with our long-term commitments. With a portfolio of prime and certified warehouses under construction and an enviable land bank, the new joint venture benefits from our significant Grade A pipeline.” According to Jan Van Geet, VGP has made significant progress towards its Sustainable Development Goals and is on track to achieve carbon neutrality by 2025 and 50 percent gross reduction by 2030 under scope 1 and 2. With regards to the sustainable building target, the Group aims for BREEAM Excellent (required minimum BREEAM Very Good) or DGNB Gold for all new constructions started up in 2022. In the CEE region, property owners or occupiers can receive specific and individual recommendations on decreasing the environmental impact of their building, and help

ESG

ESG is the blueprint to doing what’s right

with their implementation. They will benefit not only from the lower burden their property generates but also from its higher operational efficiency, getting their buildings ready to meet future demands and regulatory requirements and keeping them on a competitive level. “With buildings generating a significant portion of the world’s carbon emissions, we recognize the vital role we play in shaping a sustainable future for the real estate industry,” commented Jonathan Hallett, Head of Central & Eastern Europe, and Cushman & Wakefield. “We will therefore focus efforts on reducing emissions from our operations (direct emissions and those from purchased heat and electricity) and the facilities we manage on behalf of our clients, real estate owners and occupiers. We will assist them in setting their sustainability targets and crucially help them achieve them.” There is no question that the industry is on the right track in its efforts to achieve

Actual progress towards sustainable development goals is crucial

ESG-compliant buildings and neighbourhoods. But despite all the joy, it is only an intermediate step, especially as investors are realising more and more that it is not done with the trade and that its responsibility doesn’t end at the property line. Put more simply: Those who have started early with the time-consuming collection of data, directly or based on energy performance certificates, can carry out the “rollout” to the portfolio more quickly. “Nowadays, there’s a high focus on the ESG requirements of properties,” commented Jeroen van der Toolen, managing director of Ghelamco, Poland. “Tenants look at the whole sustainability element of the projects. As a result, we place a high value on developing cutting-edge solutions in our buildings in terms of environmental, social, and corporate governance. This aspect is currently receiving special attention not only from investment funds but also from banks.” Throughout Central and Eastern Europe, portfolio managers and owners are facing the major challenge of making their portfolios climate-neutral; there are many challenges from energy and operating cost management to all sustainability and ESG issues. The regulations show that anyone who doesn’t get on board the sustainability train soon is running the risk of not getting where they’re going. The European Commission’s carbon targets will not be achieved without substantial energy changes in the building stock. VGP has announced significant growth in renewable energy power generation. According to the company, as of 1 January 2022, all of its European offices switched to renewable energy as a Virtual Power Purchase Agreement was reached with Scholt

Ultimate Real Estate Guide 2022

ESG

Feature

Energy, an independent energy supplier, and ACT Commodities, the European energy trading house, to provide solar energy from VGP’s existing solar farm on the roofs of VGP Park Nijmegen, Netherlands, to VGP offices across Europe. The agreement covers VGP’s 20 offices across 12 countries. Additionally, it is envisaged to include VGP’s new offices in Serbia too. Many market participants have announced ambitious decarbonization goals. Implementing these pledges will require solving multiple challenges – from identifying and validating technologies that can efficiently reduce emissions at scale, updating underwriting approaches to account for meeting environmental targets, and aligning interest among all stakeholders, including in-

vestors, tenants, financiers, and authorities. Investors, as well as local authorities, are increasingly focusing on ESG. This not only means environmental certifications and sustainability, but also the broader impact on local communities. This will lead to more challenging permitting and zoning processes, as well as tougher financing criteria, making development more complex, especially on a speculative basis where a clear end-user is not in place or where a proposed site is near population centres. Particularly, as a result, developers and occupiers need to consider deeper questions on the overall carbon footprint of new builds versus optimising existing assets and using technology to increase efficiency and cost-effectiveness. Investors and developers

who are experienced in addressing ESG and technology requirements, and operate at the forefront of future-proofing assets (both old and new) will be best positioned going forward. The real estate sector must get more and more involved in urban planning processes to establish the overall context. It is another building block on the journey towards ESG-compliant urban transformation and tackling climate change. The involvement of the entire sector in both strategic and operational sustainability issues is a key step towards helping the industry to achieve its sustainability goals.

MACIEJ PIOTROWICZ Head of Living Investment, NREP The build-to-rent sector share many challenges with build-to-sell – limited supply of land, raising interest rates, inflation of construction costs. In addition, international investors need to take into account the volatility of exchange rates, especially that, unlike many other real estate asset classes, PRS assets provide cash flows in local currency. At NREP we believe that rental market growth in Poland has strong macro foundations, and in addition, raising interest rates and recently risen purchase prices can give an extra boost to the rental demand. There also see some opportunities brought to the market by the pandemic. Given the lower volume of international travellers, some hotel development projects are put on hold. We hope this will increase the supply of interesting plots that we could utilize for building serviced apartments under our co-living concept. Regarding sustainability and ESG, many market participants have announced ambitious decarbonization goals. At NREP, we pledge to decarbonize our real estate portfolio well ahead of the IPCC’s target date of net zero by 2050, and become carbon neutral already by 2028.

KATARZYNA ZAWODNA-BIJOCH President and CEO, Skanska’s commercial development business unit in CEE We have observed an increase in investor activity over the last 12 months. They have been searching for new investment products more frequently, and their expectations of building quality are on the rise, particularly in terms of the ESG criteria. We are convinced that top quality, healthy and sustainable offices are the future. The adjustment to the new reality is still underway – it is a long-term process. The main goal of developers should be the deepest possible understanding of clients’ needs and a close dialogue, which allows to jointly develop tailor-made, safe solutions that meet their requirements – in terms of creating attractive workplaces, encouraging employees to return to their offices as well as developing futureproof projects that investors are interested in. The current macroeconomic situation is dynamic and full of challenges.

Ultimate Real Estate Guide 2022

The Leading Retail Property Event in Italy 18-19 May 2022

Superstudio Maxi Milan, Italy

Change the rules of the Italian retail property industry The must-attend event for retail property players, in vogue retailers, restaurant chains, leisure operators and digital players looking to create sustainable and proﬁtable lifestyle destinations in Italy.

Sustainability

Green Buildings

No business operates in a vacuum and a company must take responsibility for the environment in which it is active

Sustainability accreditations central to successful projects Gary J. Morrell

As companies are developing hybrid working models for the post-coronavirus period, which involves a combination of both traditional office attendance and home office working; sustainability accreditation and the provision of amenities in reaction to developing tenant and staff demands is more central for the commercial success of office projects and the availability of an exit strategy with a sale to investors. In this way, developers are increasingly designing projects for double sustainability accreditation following the WELL interior and wellness orientated system, this is also focused on upgrades of older stock that are being redeveloped to achieve accreditation and other market sectors such as logistics. Although WELL-certified projects are in the single figures across the region a growing number are registered or pre-certified for WELL accreditation.

Ultimate Real Estate Guide 2022

Green Buildings Tenants appear to be settling their office operations with the advent of hybrid office use and will utilise this form of operation in the longer term. Further emphasis is placed on communal areas, collaborative spaces and meeting rooms. All these processes are fundamentally changing the layout and look and style of offices. “Probably less space is needed, but more flexible and higher quality places/offices areas will be the future trend,” commented Zsombor Barta, president of the Hungarian Green Building Council. “The trend had already started before the pandemic to develop or re-style the office to create more interactive and flexible places, where creative ideas can be grown, human interactions are possible and diverse working places are integrated. This trend is becoming even more important for the future. Also, the time has passed for over-crowded and fully packed offices – mainly because of hygienic and pandemic issues.” Both the number of new green buildings and the “greening” of existing buildings has continued to grow dynamically. In particular, the industrial market is experiencing a real boom, not only for new developments but also for green logistics and manufacturing sites according to Colliers Hungary. The leading national and regional industrial park developers and operators are seeking third party sustainability accreditation such as BREEAM and LEED as tenants are looking to save on utility costs, recognise the importance of staff wellbeing, the provision of green areas, locational demand with the provision of bicycle changing facilities and electric charging units and observe precautions concerning the coronavirus and the need to reduce the carbon footprint of their projects. CTP is developing under BREEAM in-use Excellent for buildings across its Central European portfolio and Panattoni aims to achieve emission neutrality for all its buildings by 2025 and is aiming for BREEAM accreditation for its entire portfolio. 7R, the Polish developer of warehouse and production facilities, delivered nearly 400,000 sqm of BREEAM-certified space in 2021, doubling the company’s annual result y-o-y. In the last 12 months, 7R has divested 17 projects to investment funds and real estate companies for a total of nearly €400 million. The amount of space the tenants occupy has also increased, totalling 500,000 sqm. The portfolio of properties managed by 7R now exceeds one million sqm.

Sustainability

Sustainability Certified Office Buildings in CEE Source: Green Building Council

Czech Hungary Romania Poland Slovakia

BREEAM

LEED

WELL

498 202 359 1,246 133

69 70 75 230 22

3 2 1 8 2

“2021 was a record-breaking year for 7R and is confirmation that our business is moving in the right direction. Investors are looking for high quality products that provide returns over the long term and, very importantly, meet ESG standards. Our cooperation with the largest global investment funds shows the strength of 7R’s real estate portfolio,” commented Łukasz Jachna, Chief Capital Markets Officer, Member of the Board at 7R. As a continuation of the promotion and exchange of ESG knowledge, 7R began cooperating on the European Sustainable Business Network platform at the beginning of 2022. “The social responsibility of developers and owners is demonstrated by the fact that more and more buildings are being awarded

the Access4you certificate, which is a trademark of Hungarian origin but registered as a European trademark. Access4you certifies the accessibility of buildings for different user groups with special needs,” added Colliers. With a higher focus on health and wellbeing and buildings’ internal health, the hygienic situation is certainly in focus now. “I think, these new requirements related to the building’s hygiene and the building user’s health and wellbeing will be shortly integrated into the already well-known certification schemes, probably with a higher weighting than before,” said Zsombor Barta. Skanska has undertaken the development of H2Offices, its tenth office project in

Corvin Innovation Campus by Futureal

Ultimate Real Estate Guide 2022

Sustainability

Green Buildings

Hungary with the retail area and restaurant regarded as one of its most important features according to the developer. “H2Offices is also designed to obtain WELL and LEED certifications and is already pre-certified for WELL and Access4you Gold. In 2021 our global group climate goals have been updated, which means that by 2030 we will be able to reduce our emission by 70 percent and in 2045 we aim to reach zero emission,” said Skanska. Research indicates that the office is seen as an attractive workplace location despite pandemic concerns, although changes in office set-up and design are required by staff. According to the evolution of working condition needs in the face of pandemic –

a study by Skanska in CEE, a survey among people in CEE, nearly half of office workers in Poland, Romania, Hungary and the Czech Republic go to the office every day, and now they have specific preferences regarding their workplace. These include a quiet space and high office standards (for example safety, relaxation, and working in the open air), which are the most frequently indicated key factors in the region that motivate people to work from the office. The study was conducted by the research and analysis company, Zymetria on behalf of Skanska. “These expectations will transform the approach to managing office buildings with a growing focus on hospitality aspects. Therefore, we are heading towards high-quality

spaces with maximum flexibility as only the most outstanding buildings will be able to attract companies and fulfil their needs,” concluded Arkadiusz Rudzki, executive vice president for leasing & sales at the Skanska commercial development business unit in CEE.

MÁTÉ BIHARI Leasing & Sales Director, Horizon Development A couple of years ago an easily accessible, high-quality building with some services was easy to lease. Tenant expectations have certainly changed during the last two years, and now they include flexibility (both in layout and contractual terms), compliance with values and priorities of ESG (Environmental, Social, and Corporate Governance), and the preference for workplace consultancy, as well as integrated design & build services. With clear ESG expectations guiding their search for the ideal office space, tenants place great emphasis on sustainability these days. Creating sustainable buildings is critical for us as a developer. Beyond targeting the LEED Gold and WELL environmental ratings, we also plan to obtain the Access4You certificate to ensure that people with special needs can also make use of our properties.

HUBERT ABT CEO & Founder, New Work On the investment markets only ESG compliant buildings will make it to the shortlist, as investors and banks will only lend money for sustainable and green building investments. As a result, investors and operators need to adapt to the standards for impact investments which are defined as investments made with the intention to generate positive measurable social and environmental impact alongside a financial return.

Ultimate Real Estate Guide 2022

Poland

Investment

Core office properties fulfilling ESG criteria continue to be sustainable long-term investments

Poland’s investment market is attracting more investors Winston Norman

The Polish investment market has quickly adjusted to the changes caused by the pandemic. Around €5.7 billion was invested into Poland’s commercial real estate market in 2021; about €2.2 billion of this was recorded in the last quarter alone, marking a massive uptick in closures across all sectors. The strongest of which was the continued interest in the logistics and industrial sector.

“Investors follow global trends and growth patterns, looking for stable returns and growth opportunities to protect the capital against inflation, as well as for ESG compliance,” commented Michał Stępień, Associ-

Ultimate Real Estate Guide 2022

ate, Investment at Savills Poland. “Industrial is still in the spotlight with offices right behind. There is also a recovering interest in retail, with a particular focus on convenience, standalone supermarkets and retail warehous-

ing, nevertheless, due to limited supply of relevant investment products, the retail sector accounts for less than 14 percent of the investment volume.”

Investment During the final quarter, as well as throughout 2021, the main source of profit for investors in Poland was undoubtedly the logistics and industrial sector, which is continuing to surpass its records. Compared to 2020, it grew by 13 percent. BNP Paribas’ Real Estate Poland report indicates that investors have invested nearly €3 billion in warehouses, logistic facilities and industrial space, which is more than half of the total investment volume. “Despite the impact that the pandemic has left on commercial real estate, the past year can be assessed with a shy dose of optimism,” explained Mateusz Skubiszewski, Head of the Capital Markets Department, BNP Paribas Real Estate Poland. “Investors, developers, tenants as well as real estate users to a greater extent got used to the situation, as well as to the multitude of changes dictated by the health crisis. Many industries have rebounded and are now focusing on catching up. We can also see that transactions are accelerating and revival is visible in all investment sectors. Although it is difficult to unequivocally judge as to the resulting phenomena of the pandemic, and thus the development of economies and various markets, the common denominator for 2022 may be further optimism and caution in making decisions.” A positive sign for retail saw transactions in that sector slowly gaining a foothold after a challenging couple of years. “Last year, an increase in footfall was observed in shopping centres, although there is still a gap with the levels of 2019. Turnover, whose levels approached periods before the health crisis, helped in making up for the losses after the lockdowns. A positive signal was the increase in the average expenditure of people visiting retail facilities, which was a direct consequence of less frequent visits, but a much larger basket of goods purchased when visiting such retail locations,” said BNP Paribas Real Estate. 2021 saw continuing lower investment volumes in the retail market, however, Avison Young indicates, the structure of transactions changed visibly. After shopping centre deals almost disappearing in 2020, in 2021 there were 12 large‑scale shopping centres sold in highly attractive locations in the largest cities. Those were all sold at attractive pricing with the opportunity to create value or for redevelopment. “On the other hand, the amount of retail parks acquired confirms demand for such assets, even in smaller towns,” comment-

ed Michal Cwiklinski at Avison Young. “Due to lack of larger retail parks in main cities, investors are turning to smaller projects in secondary locations which resulted in lower volume and high liquidity.” Michał Stępień added: “A balanced position of shopping centres and more attractive shopping centre yields are conducive to the return of investment capital to the retail sector, however, rising costs of energy and anti-inflation measures of the Central Bank may slow down consumer demand next year, which may adversely affect the turnover of popular chain stores and extend the ‘waitand-see’ approach to this asset class.” Karolina Wojciechowska, Senior Consultant, Capital Markets at BNP Paribas Real Estate, commented: “The pandemic has very rapidly created new habits and purchasing expectations. Retail parks benefited the most from quick, convenient shopping close to home. However, one cannot ignore the fact that after removing various restrictions, most of us were quite eager to return to large, multi-functional shopping centres having the broadest retail offer.” BNP Paribas Real Estate indicates that the majority of money was spent on projects located in Warsaw, in fact, more than 70 percent of the overall transaction volume. In total, throughout 2021, more than 40 purchase and sale agreements were concluded for more than 60 office buildings. The largest transactions were: the sale of the flagship Metropolitan office building, which was transferred to the American headquartered Morgan Stanley for over €240 million and HANSAINVEST Real Assets acquiring the Generation Park Y, the last

Poland

building of the Generation Park office complex in Warsaw. The transaction volume was €285 million, which makes it the largest office sale in the history of Skanska’s commercial development business unit in CEE and at the same time the largest sale in the office sector in CEE in 2021. “This transaction confirms that foreign capital flows to CEE regardless of the pandemic, and investors find our region attractive, thanks to A-class products and economic potential. Over the recent months, the demand for core office buildings has increased significantly in Europe,” added Adrian Karczewicz, Head of Divestment at Skanska’s commercial development business unit in CEE. The average capitalization rates for the best assets remained unchanged in the last quarter. In the case of offices, they amounted to 4.7 percent, while warehouse facilities without an e-commerce operator were 4.5 percent in Warsaw and about 4.75 percent in zones outside of Warsaw. Only the rates for logistics facilities with an e-commerce operator were squeezed, approaching a level of 4 percent. Over the last three months, the capitalization rates for the best retail parks have been 7 percent, while for shopping centres it has been estimated at 5 percent. Experts from BNP Paribas Real Estate Poland emphasize that in 2021 the majority of capital that was committed to Poland came from Europe, about 40 percent of the total, with Germany as the leader. Subsequently, 26 percent were North American investments. 13 percent accounted for Asian countries, mainly Singapore, South Korea and China.

Skanska Generation Park Y, Warsaw

Ultimate Real Estate Guide 2022

Poland

Investment

The majority of money was spent on projects located in Warsaw

Analysts predict a greater demand and return to the quality office sector in 2022. The investment market in this sector has not come to a halt, the forecasts for 2022 seem optimistic.

“Core office properties fulfilling ambitious ESG criteria continue to be sustainable longterm investments, particularly new developments in dynamic markets such as Warsaw

or comparable metropolitan areas,” said Nicholas Brinckmann, Speaker of the Board of HANSAINVEST Real Assets.

JEROEN VAN DER TOOLEN Managing Director, Ghelamco At the moment there is a shortage of good office products in Warsaw. In recent years, we saw a lot of new office projects under construction in the capital, and there was a question: who would rent all these towers? But even during the pandemic, they were rented out. Demand during the pandemic was higher than we expected. The demand was created by both new tenants entering Poland and companies active in the country. And a lot of companies saw that during the pandemic, working from home in Asia was not as easy as in Europe. So now we can see the first wave of companies that are bringing new shared services centres to Europe, and one of the obvious choices is Poland. From this perspective, Poland is the winner. But there is a problem for Warsaw. At the moment, we don’t see a lot of building permits, and as a result, fewer projects are under construction. The supply of office space is now very low, so the vacancy rate will drop in the middle of this year to something like 6 percent in the city centre for proper quality office space. I think until 2025 there will be a shortage of modern, good-quality office space, so rents will rise.

Ultimate Real Estate Guide 2022

Poland

O ffice

Vacancy rates on the rise, again

Regional office development outpacing Warsaw Winston Norman

Poland’s main regional cities now account for three times more sqm under construction than the capital, Warsaw. Poland’s largest regional office markets include Kraków, Wroclaw, the Tri-City, Poznan, Katowice, Lodz, Lublin and Szczecin. At the end of 2021, the total stock of office space in Poland stood around 12.2 million sqm, with the largest regional cities increasing their share to around 49.5 percent.

At the end of Q4 2021, almost 1.2 million sqm of modern office space was under construction across key Polish markets, the same as a year ago. As much as 871,000 sqm is under construction in regional markets with around 400,000 sqm scheduled for completion in 2022. Warsaw, on the other hand, is facing a 12-year low in developer activity. Only 310,000 sqm is under construction, the

Ultimate Real Estate Guide 2022

lowest total since 2010 and according to JLL, this could lead to a demand-supply gap as early as 2023. “The pause in investment decisions following the outbreak of the pandemic has meant that the pace of development in the capital’s market has slowed significantly,” said Mateusz Polkowski, Head of the Research and Consultancy Team at JLL. “This allows

us to expect a rather sizable gap between supply and demand over the next year. Demand for premium office space will increase as interest grows in buildings developed following ESG requirements and principles, and which offer the best technological solutions and a range of amenities to office users. These, however, will not be coming onto the market quickly enough, which is why rental

O ffice rates in prime buildings are expected to rise.” According to BNP Paribas Real Estate, the freezing of office projects or their postponement, together with amended or revised developers’ plans and the switch of some investments into multi-purpose facilities, will significantly reduce new office supply in the coming years. The expected effect will be a significant change in the supply-demand relationship, and compounding that, a change in the overall business relationship between landlords and tenants. “The supply gap, expected for 2023-2025, will not only leave its mark on the level and the demand structure but will also be a significant contributor to a hike in rental rates,” commented Mikołaj Laskowski, Head of Office Agency, BNP Paribas Real Estate Poland. “However, even though the market is not a bed of roses today, some development companies are not only not suspending their projects, but are also planning their investments, so that they can fulfil the impending supply void as best as possible, and in this way influence the decisions of lease postponement by companies. From a perspective of catching up, the upcoming quarters will certainly foster a significant increase in processes and negotiations that are protracted and even unfrozen from past.” In 2021, around 550,900 sqm of modern office space was delivered in Poland. Ac-

cording to JLL, this was about 20 percent less than the year before. 2021 saw 16 buildings completed in Warsaw, with 324,600 sqm available to tenants. The largest ones included Warsaw Unit (56,400 sqm, Ghelamco), Skyliner (44,700 sqm, Karimpol) and the Generation Park Y tower (44,000 sqm, Skanska Property Poland). Outside Warsaw, most new supply was recorded in the TriCity (73,200 sqm), Krakow (60,700 sqm) and Poznan (37,500 sqm). Poland’s office market saw leases signed for a total of 1.24 million sqm last year. Warsaw, with 646,500 sqm of leased space, recorded a 7 percent increase in demand compared to 2020. Although the result of eight regional cities – 594,500 sqm – was on a par with the previous year, Q4 saw a marked increase in tenant activity. Last year the activity of companies from the modern business services sector increased. Tenant interest in flexible space was also noticeably higher, especially in Warsaw’s central locations. However, the increased activity from the modern business services sector in the regions in H2 2021, coupled with the sector’s announcements of further activity in the Warsaw market and the significant scale of ongoing processes, may well have a positive impact on lease transaction volumes in the next few months.

Poland

Flexibility has turned out to be the most important word for all market players. BNP Paribas Real Estate underlines that the situation in 2022 will be comparable. The longing for ‘normality’ and a return to offices is reflected in the growing demand for flexible space. Flexible space is also of interest to corporations as it can give them room to either expand or act as a ‘holding pattern’ while awaiting completion of their permanent office location. The transition period may also be regarded as the time, which companies need to work out and implement their post-pandemic work model. There are many indications that for many firms the hybrid model will be the preferred format, which will significantly influence demand for office space in the next 2-3 years. “Some companies are still at the stage of developing new work environment strategies and are not able to estimate the demand for offices in the long term. On the other hand, we observed an increase in the number of lease transactions at the end of the year, which augurs well for the entire domestic office market,” commented Tomasz Czuba, Head of JLL’s office agency. The office sector remains one of the pillars of Poland’s investment market. In 2021, the volume of transactions exceeded €1.7

Skyliner by Karimpol

Ultimate Real Estate Guide 2022

Poland

O ffice “The vacancy rate was largely influenced by decisions made by tenants, who with the increased frequency selected the option of extending their existing contracts with simultaneous optimization of space, rather than the alternative of changing office addresses. We envision, that in 2022 the litmus test for the office market, will be how the market reacts to a return to office desks and further decisions on methods of working within remote or hybrid models, which ultimately will be dictated by the way the pandemic develops,” concluded Małgorzata Fibakiewicz, Head of Business Intelligence Hub, BNP Paribas Real Estate Poland.

The SKYSAWA development in Warsaw

billion, of which as much as 72 percent was accounted for by Warsaw. Krakow ranked second in terms of investment activity and attracted nearly 16 percent of capital located in the office segment. “Prime buildings continued to attract investors throughout the year, primarily in Warsaw. These are predominantly well-located A-class buildings that guarantee long-term income and a stable lease structure. The bullish sentiment that investors displayed at the end of the year, looks set to contin-

ue in 2022. Transactions already finalized in January allow us to assume that the current year has the opportunity to become one of the office market’s best for total transactions value,” commented Marcin Sulewski, Head of Office Investment, JLL. The increase in 2022, for base rental rates and operating costs, will also be influenced by, among others, a rampaging inflation rate that includes all cost categories, an increase in utility costs, escalating tax burdens, as well as a rise in building material costs.

MARCIN SULEWSKI Head of Office Investment, JLL Prime buildings continue to attract investors, primarily in Warsaw. These are predominantly well-located A-class buildings that guarantee long-term income and a stable lease structure. The most interesting transactions that were finalised in 2021 included the sale of Echo Investment’s Warsaw Brewery Malthouse Offices in the Warsaw Brewery complex in Wola. The facility was acquired by Deka Immobilien for €152.3 million. In the regional markets, the biggest transaction was the acquisition of Buma Group’s portfolio by Partners Group in Krakow and Wroclaw which totalled over €200 million. The bullish sentiment that investors displayed at the end of the year looks set to continue in 2022. Transactions already finalized in January allow us to assume that the current year has the opportunity to become one of the office market’s best for total transactions.

Ultimate Real Estate Guide 2022

O ffice

Poland

KATARZYNA CHWALBIŃSKA-KUSEK ESG & Sustainability Lead, Savills Net zero emissions are the key sustainability requirement on the European commercial property market. Investment funds and international tenants expect low emissions and plans for achieving them in Poland too. We are already seeing how asset portfolios and the availability of financing for non-ESG compliant real estate are changing. We are now on the brink of a major transformation. Reducing our emissions and carbon footprint is key to ESG policies and should be an inherent part of any real estate strategy. It is therefore advisable that investors and asset managers measure the carbon footprint of their buildings and assess the climate risk of new acquisitions. Looking ahead, building a competitive edge in real estate will largely require implementing climate tech solutions.

AGNIESZKA GIERMAKOWSKA Research & Advisory Director, Newmark Polska Despite recent market developments, leasing activity remains healthy in the regional city office markets and is expected to continue to accelerate, driven by the anticipated growth of the business services sector. Similarly as with the capital, regional cities are also experiencing an increased appetite for premium quality and high tech offices.

Ultimate Real Estate Guide 2022

Poland

Warehouse & Logistics

Panattoni Park Tychy DC2 Logistics Park was built for the international retail chain Action

The industrial market continues to break all records Winston Norman

Poland’s industrial sector’s growth continued at a great pace in 2021, resulting in almost €3 billion transaction volume, the highest result in history. Last year Poland’s warehouse and industrial sectors were characterized by increased liquidity, largely on the back of the growing e-commerce industry. Another visible trend was the significantly growing number of investors looking for JV opportunities, as investors find it difficult to acquire standing assets and look for higher returns.

“The industrial and warehouse sector in Poland is in a phase of rapid growth and expansion with record-breaking levels of occupier demand, new stock being added to the market, projects under construction and investment deals,” said Jakub Kurek, Head of Industrial and Warehouse, Newmark Polska.

Ultimate Real Estate Guide 2022

BNP Paribas Real Estate indicates that investors have invested nearly €3 billion in warehouses, logistic facilities and industrial space, which is more than half of the total investment volume in Poland for 2021. Some of the biggest investment transactions were the sale of the EQT Exeter port-

folio to GIC, the Nexus Portfolio purchased by CBRE IM or Elite Partners Capital’s Portfolio acquisition by Blackstone. According to Avison Young, the strongest presence in 2021 on the industrial investment market was from Asian investors (almost 28 percent of the transaction volume) and entities from

Warehouse & Logistics the USA (responsible for almost 25 percent of transaction volume). Savills, together with Eastdil Secured, advised Macquarie Capital Principal Finance and Elite Partners Capital on the sale of a pan-European logistics portfolio, Elite Logistics Fund I to Blackstone European Property Income Fund (BEPIF) for €520 million. The portfolio, aggregated over two years, includes 12 logistics and industrial assets in the UK, Poland, Spain, Germany and the Czech Republic. They are currently predominantly occupied by major 3PL operators and includes BTS dedicated to a global food and beverage leader. John Palmer, Head of Industrial Investment, Savills Poland, commented: “Over 40 percent of the total GLA of these assets are located in Poland, in Mszczonów near Warsaw and Gdańsk. This highlights the growing demand and importance of the Polish market for investors in the warehousing and logistics sector”. A growing trend in Poland’s market is the formation of Joint Ventures. A recent deal announced saw a joint venture between Partners Group, a leading global private markets firm, and investment manager Peakside Capital Advisors with a group of additional third-party co-investors acquire a portfolio of warehouse properties located in and around Warsaw and will represent around 150,000 sqm of modern logistics space once repositioned. Rahul Ghai, Managing Director and CoHead Private Real Estate Europe at Partners Group, said: “We see a strong thematic investing opportunity in Polish warehouse properties, which is underpinned by the growing demand for urban logistics assets

serving e-commerce that facilitate the delivery of smaller and more fragmented orders with shorter delivery times.” The JV is planning to refurbish and redevelop the properties to create high-quality, efficient logistics and warehouse space with robust ESG credentials. The facilities are ideally located to serve the needs of occupiers from the e-commerce sector, which is underpinned by strong structural tailwinds. The JV aims to grow the new platform by acquiring further logistics assets for sustainable (re-)development. Lucas Krupp, Private Real Estate Europe at Partners Group, added: “We look forward to working on our value creation plan, which will focus on raising sustainability standards across the portfolio. We also continue to monitor for further investments in the logistics space across the CEE region.” Roman Skowroński, Managing Director of Peakside Capital Advisors in Poland, said: “Some time ago, we decided to expand our business model in Poland, setting out to build a portfolio of warehouse and industrial properties. The acquisition of this portfolio marks our first step into the broader industrial market in Poland to complement our other activities in Europe.” In another JV, warehouse developer MDC2 reached an agreement with Fortress REIT Limited, South Africa’s largest owner and developer of core, premium-grade logistics real estate on MDC2 Park Łódź South, to be developed by MDC2. The project offers a leasable area of up to 80,000 sqm of modern, environmentally sustainable logistics space, the completion of which is planned for Q3 2023.

Poland

“MDC2 Park Łódź South, due to its central location, is a strategic fit for Fortress REIT as it sits in the heart of Poland’s main distribution hub,” said Hadley Dean, Founder of MDC2. “This project perfectly fits Fortress REIT Limited strategic investment profile,” commented Maciej Tuszyński, Managing Director Europe at Fortress REIT Limited. “MDC2 Park Łódź South shall not only provide the highest standard of the modern big-box logistic facility but will also contain solutions addressing environmental responsibility as well as sustainable building features sought for by the tenant.” MDC2 Park Łódź South is designed with ESG at its core and MDC2 will certify the project to BREEAM New Construction Excellent. ESG is a cornerstone of developer and investors strategies today. MDC2‘s stated strategy is that all buildings developed by the company are to meet the best practices and requirements of sustainable construction, i.e., 95 percent of construction materials per project are recyclable and roofs of its buildings are designed to be PV ready. ČS nemovitostní fond (CS Real Estate Fund), managed by REICO, is expanding its portfolio to include Poland with the addition of the second phase of the Panattoni Park Tychy located between the Polish cities of Tychy and Bieruň. The fund purchased the property from a joint venture of the leading logistics developer Panattoni Europe and investment and asset management company Griffin Capital Partners. Panattoni Park Tychy DC2 is a newly built premium logistics property that was completed in the second half of the last year. It comprises primarily warehouse premises

Park Tychy

Ultimate Real Estate Guide 2022

Poland

Warehouse & Logistics

Partners Group and Peakside invest in Warsaw

with an aggregate leasable area of 60,700 sqm, which, together with the DC1 building acquired by CS Real Estate Fund last year, exceeds 115,00 sqm. Panattoni Park Tychy DC2 logistics park was built to suit a single tenant, the international retail chain Action, which operates nearly 1,700 stores across the European Union, primarily in France, Belgium, the Netherlands, Germany, Austria, Czech Republic, and Poland. “The acquisition of the Panattoni Park Tychy DC2 represents a substantial increase in industrial exposure for the ČS nemovito-

Ultimate Real Estate Guide 2022

stní fond. We are also creating room for expanding our loan book at favourable financing terms with a positive impact on fund return,” said Tomáš Jandík, Chairman of the Board of Directors of REICO IS ČS. The property is located in an attractive submarket of Poland’s Upper Silesia Region, the second largest industrial logistical area in all of Poland, and currently accounts for 18 percent of the entire offer of industrial areas in the country. “Sustainable logistics and distribution parks are in demand in Poland, with more

clients looking to have a robust and localised supply chain. For the next decade, the Polish logistics market will continue to outperform Western European countries in the growth of both total activity and net absorption,” concluded Hadley Dean, the Founder of MDC2.

Baltics

Investment

Jin&Jan in Vilnius

Investment property deals smash through 1 billion ceiling in the Baltics Winston Norman The real estate market in the Baltics saw record activity in 2021, with the total value of commercial investment transactions doubling from the year before to €1.5 billion. The highest-value deals were closed in Latvia, says international real estate advisory firm Newsec.

Last year, Latvia recorded €610 million, Estonia €447 million, and Lithuania €444 million worth of transactions. The record results flowed from excess capital, global trends, and a positive mood in the market. Investors actively sought out properties, and only lack of supply prevented an even bigger investment deal total. “The transaction volume of €1.5 billion is a record for the Baltic region. Not lowering that bar in 2022 will be important to keep foreign investors’ attention,” commented

Ultimate Real Estate Guide 2022

Neringa Rastenytė-Jančiūnienė, the Head of Capital Markets at Newsec in the Baltics. “Previously, investors were hesitant to come to the Baltics due to the small deal volume, which for the last several years stayed below the level of €800 million. Passing the €1 billion limit has broken a certain psychological barrier.” International investors are most keen on properties in the logistics, office, and residential rental segments. Investors with private capital, meanwhile, are most interested

in small retail buildings such as neighbourhood shopping centres and retail parks. “We’d never seen so many people seeking to invest in real estate as last year. Everyone was investing in 2021 – funds, private individuals, asset management companies, and businesses. For instance, in Estonia, twothirds of deals involved non-professional buyers. There were more transactions than in earlier years, but they were smaller. Thus, average deal size, which in 2020 was €50

Investment million, in 2021 was just over €23 million,” explained Rastenytė-Jančiūnienė. The office segment shows growth potential While the office segment in the Baltic countries is experiencing a golden age, there is a significant lack of properties available for sale. “The office segment is showing stability, having maintained a transaction volume of €300 million last year. But its potential is like a ticking bomb. Occupancy of business centres is now extremely high (in Vilnius, class A office vacancy is only 3.4 percent) and take-up is at record levels. For instance, on the Vilnius office market, 30 percent more space was leased out in 2021 than in 2020. The market is being held back by a shortage of new properties for sale that is attractive to investors. If there was more supply, we’d see even higher transaction volumes in this segment,” said Rastenytė-Jančiūnienė. In a recently closed transaction, EfTEN United Property Fund acquired the Jin&Jan class B business centre in Vilnius from a fund managed by the institutional asset management group East Capital Real Estate. The deal size is confidential. The Jin&Jan office building opened its doors in 2008. The business centre is in a rapidly developing part of the Lithuanian capital, near the city’s Western bypass, where office clusters are forming and drawing increasing interest from tenants. The facility’s 3,700 sqm of space is fully occupied. Industrial real estate meets expectations According to Newsec, the logistics sector lived up to expectations in 2021, with three times as much investment as in the previous year. But Rastenytė-Jančiūnienė warns that unstable relations with China may soon be reflected in the industrial investment property segment, especially in Lithuania. “While industrial property flourished last year, Lithuania’s conflict with China is now a source of tension for market players and it is precisely logistics and manufacturing that could be affected most. Eyeing the geopolitical situation, investors may start taking a more cautious view of such properties and put purchases on hold. Current tensions are not yet reflected in deals, where there is inertia. But in such an uncertain situation, any clear forecast of what developments lie ahead is difficult,” Rastenytė-Jančiūnienė stressed. Retail is gradually recovering The Newsec expert points to recent scepticism concerning large shopping centres

since very few such transactions are taking place in Europe. For a while, there were neither sellers nor buyers on the market; the segment stagnated temporarily. What revived it was the Akropolis Group’s acquisition of the Alfa shopping centre in Latvia, which ended up being the biggest transaction in the Baltics. Last December, KS Holding, a real estate company co-owned by Kesko, Arturas Rakauskas and Zabolis Partners, sold Ozols shopping centre in Riga to the investment fund Titanium, a new player in the Baltics. The 30,000 sqm shopping centre Ozols is the Kesko-Senukai flagship in Latvia. The SC currently serves as Senukai main e-shop pickup point in Riga. Ozols SC is special for its unique feature, a big oak growing in the middle of the complex. The asset was awarded the BREEAM In-Use “Very Good” environmental certification. KS Holding acquired the property in 2016 and undertook a massive redevelopment project by changing an outdated shopping centre’s Azur concept into a brand new DIY destination store as well as enlarging the GLA. The property is anchored by Kesko-Senukai and RIMI supermarket on a long term basis. According to Andrius Švolka, Head of Transactions at Newsec, selective retail type of real estate in the Baltics is still well demanded by both local and international investors. This property checks majority of the requirements from an investor perspective such as new construction, leading tenants (Senukai and Rimi) operating in resilient segments (DIY and grocery), long WAULT, BREEAM certification, good location, etc.

Baltics

“Having survived the pandemic, retail properties have reaffirmed their liquidity: the value of property deals in this segment was twice as big in 2021 as in 2020. We notice that with the easing of tensions due to COVID-19 uncertainties, this segment is recovering, and smaller, neighbourhood-type shopping centres have become a desired commodity,” added Rastenytė-Jančiūnienė. Residential is still-maturing but is a very promising investment segment The residential rental property segment in the Baltics still has room to grow. Investments in this type of real estate in 2021 totalled about €110 million, or some 8 percent of the value of all deals in the region. In other countries, meanwhile, like Finland for example, such properties accounted for 37 percent of all investment transactions in 2021. “This is still a very young segment in the Baltic countries. We think the number of residential rental investment transactions will grow this year, and such arrangements will gain momentum in 2023-2024. Seeing the segment’s potential, we plan to give it more attention this year,” said Rastenytė-Jančiūnienė. In conclusion, Newsec points out, that the investment property market will be active in the first half of this year just from the inertia built up in 2021. However, moving on to the second half of the year, though, the market may face challenges – amid possibly rising interest rates and increasing geopolitical uncertainty, investors may put plans on hold.

Ozols sold to Finnish investor

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Hungary

O ver view

Szervita Square by Horizon Development, purchased by Union Invest

Hungary attracting investors Gary J. Morrell

Hungary is expected to attract more international investors, particularly to the office and industrial sectors. Although local and regional investors are expected to remain dominant on the market. The industrial sector is going through a development boom while office development is more restrained, although there is a substantial pipeline. Shopping centre development is limited to refurbishments with only one major completion in recent years.

Developers are undertaking more sustainable and imaginative office designs to meet changing demands from office occupants. Total modern office stock in Budapest now stands at close to 4 million sqm according

Ultimate Real Estate Guide 2022

to the Budapest Research Forum, BRF (consisting of CBRE, Cushman & Wakefield, JLL, Colliers International, Eston International and Robertson Hungary). The overall vacancy rate has increased to 9 percent and is ex-

pected to increase further. However, the relatively small pool of Hungarian and regional office developers operating in Budapest

O ver view have been undertaking restrained development policies for several years and therefore oversupply is not expected. Established office developers are going ahead with planned office projects, although the leasing process can be longer and more protected. Cushman & Wakefield have traced a potential pipeline for the year at 350,000 sqm, 56 percent of this is already pre-let. There is currently 512,000 sqm under construction, of which 226,000 sqm is preleased, with a further 435,000 sqm planned. Colliers have traced 19 Budapest office projects due to be completed this year and a further 11 in 2023. With the completion of the 50,000 sqm MOL Campus, Budapest will see its first skyscraper. In an investment deal at the top end of the market the commercial component of Horizon Development’s LEED Platinum certified mixed-use property, Szervita Square was purchased by Union Investment. “We are re-entering the Hungarian property investment market with the current purchase of Szervita Square Building. This exceptional technical and aesthetic quality downtown Budapest asset with its diverse tenant mix and over 95 percent commercial occupancy level convinced us to return to Hungary,” said Adam Irányi, head of investment management Europe at Union Investment, on the deal. Total investment in Hungary for 2021 was around €1.4 billion according to Tim O’Sullivan, head of investment properties at CBRE Hungary. The office sector is expected to continue to dominate investment activity, followed by industrial, although industrial assets are highly sought after the sector is lacking in available investment-grade assets. Retail has been a big loser regard to investment volume since 2019. “The investment volume for 2021 ended significantly higher than initially expected at €1.4 billion. Early 2022 is characterised by a limited number of open tenders and despite the significant number of off-market deals, I expect 2022 to close at roughly the same level or slightly below unless a large asset or portfolio transacts. The parliament elections in April are also explaining the slow start of 2022. Investors will have more clarity soon. That will help,” commented Benjamin Perez-Ellischewitz, principal at Avison Young Hungary, on investment prospects for the year. As activity in the office market is limited by a low supply of available investment-grade assets in addition to a restrained develop-

Hungary

BudaPart GATE by Property Market

ment pipeline, investors are increasingly looking at value-add possibilities in earlier generation office stock and older historic buildings that require renovation. The pan-European real estate investment manager, Europa Capital acquired the 12,500 sqm Akadémia Business Center, located on the bank of the Danube in the historic centre of Budapest, in partnership with ConvergenCE, acting as asset managers. The acquisition has been completed on behalf of Europa Capital’s latest value add fund, Europa Fund VI. “The objective is not only to create a building suitable for modern occupiers but also to transform the asset to a Net Zero Pathway, removing the reliance on greenhouse gases. The building will also be targeting both BREEAM, WiredScore and WELL certification,” said Europa Capital. CBRE put current prime office yields at 5.25 percent and stable, 5.75 percent for industrial and compressing fast and shopping centre yields at 6.25 percent and under pressure. A significant yield gap between Hungary and the Czech Republic and Po-

land remains. “The difference is relatively stable at 100-150 basis points, the yield gap with Czech is larger and there has been no change throughout the pandemic,” commented Gábor Borbély, head of business development & research at CBRE Hungary. Prime offices in the CBD can command lower yields with Szervita Square reported to have been transacted at a sub-5 percent yield. The purchase of the 20,000 sqm Budapart Gate by S-Immo from Property Market has also seen foreign capital acquiring prime office stock. Domestic investors have continued to dominate market activity despite increasing competition in the Hungarian markets from international investors. Of the investment activity traced for 2021, 70 percent was undertaken by domestic investors compared to 30 percent represented by cross-border activity. In a major logistics transaction, the developer and investor Wing purchased the Airport City Logistics Park from CPI, located in the neighbourhood of Budapest Liszt Ferenc International Airport. The business park con-

Ultimate Real Estate Guide 2022

Hungary

O ver view

tains almost 44,000 sqm of warehouse buildings and 8,000 sqm of offices in six buildings. “In line with its premium quality the transaction was carried out at a 5.6 percent yield, which is the lowest ever rate in the Hungarian industrial and logistics property market,” said Wing on the deal. There is around 286,000 sqm of industrial space under construction in the Budapest area and a total of 640,000 sqm planned according to CBRE. Total modern industrial stock in the Budapest area stands at approaching 3 million sqm according to the

Budapest Research Forum (BRF). In a significant development for the industrial market central Hungary is seeing growth in the regions. Cushman & Wakefield have traced a total industrial stock of space outside of the capital of 120,000 sqm. Foreign investors active in Hungary 24 percent were from the Czech Republic, 23 percent from Austria, 22 percent from Germany and 14 percent from the UK. Online penetration into Hungarian retail is expected to continue its dynamic growth from 10 percent in 2021 to a forecast of 14

percent in 2025 according to Euromonitor. At the same time turnover in Budapest, shopping centres is 25 percent down on 2019 levels. In the absence of a shopping centre pipeline owners are undertaking the refurbishment of older stock. Refurbishment is ongoing in 15 percent of stock while 35 percent is partially refurbished and 6 percent is fully refurbished according to CBRE.

VALTER KALAUS Managing Partner, Newmark VLK Hungary The Budapest office market is recovering from the COVID stage. Although new construction and refurbishments have slowed down a bit, they have not stopped. There are still quite a few new projects on the horizon. Tenants are typically searching for increased flexibility in terms of both sizes of the office space and lease term. Larger tenants are gravitating towards a safe solution, therefore approximately half of the lease transactions are renewals. The internal configuration of the offices is changing as activity-based working is taking over. There is an increased need for safety in the buildings, so touchless entry, fresh air supply and properly working HVAC systems are key to providing what tenants are looking for. ESG is becoming one of the key decision-making factors, most players pay a lot of attention to an ethical, sustainable and transparent way of working. This trend will be a dominant factor soon.

BENJAMIN PEREZ-ELLISCHEWITZ Principal, Avison Young Hungary There is such a quantity of liquidity that the market will remain very active and pricing sharp in the medium term. The return of liquidity (at some point) on the hospitality and retail segments will also help sustain the total investment activity which is now very dependent on the office segment on our market. Last year local investors accounted for 70 percent of the acquisitions. We expect their share to stay in the 60-70 percent range in the short term. Among the foreign investors, Austrian, German and Czech investors were the most active.

Ultimate Real Estate Guide 2022

For further information please contact:

Czech Republic

O ver view

Parkview by Skanska in Prague

Czech seen as leading investment destination despite limited product Gary J. Morrell

The Czech Republic continues to be the leading CEE investment destination along with Poland and could be considered the most stable CEE country due to its low-risk profile and low yields. However, investment activity is limited by a low supply of asset grade products to meet strong investor demand. As a result, investment fell for the second year in a row in 2021.

Last year saw €1.5 billion of deals, this represents an 18 percent increase on the previous year, although a 43 percent decrease on the pre-pandemic year, 2019 according to Cushman & Wakefield. “Demand for Czech commercial real estate remains strong. The Czech market is established as a highly sought-after market, providing solid returns to existing investors,

Ultimate Real Estate Guide 2022

well protected against market fluctuation, supported by strong international and local capital, with rental growth prospects in several segments and still attractive yield returns in comparison to western European markets. Appetite for assets remains strong, with lack of products seen in all segments,” said CBRE in the Czech Republic on prospects for the investment market.

According to Josef Stanko, an analyst at Colliers in the Czech Republic, the total investment volume could exceed €2 billion for 2022. Last year, the office sector dominated investment activity with the most significant deal being the purchase by Deka of Parkview in Prague 4 for €77 million from Skanska. The transaction is the second CEE transaction be-

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Czech Republic

The demand for industrial properties continues to far outweigh investment opportunities

tween the parties over the past 12 months. The LEED Platinum and WELL accredited complex, designed by the New York-based Meier & Partners, was completed in 2020 and is close to being fully let. Skanska, as a long-term developer in the Czech Republic, has gone on to undertake the construction of the first 28,000 sqm phase of the 35,000 sqm Port7 on a brownfield site in the Holesvice district of the capital. The largest recent office transaction outside the capital was the acquisition of the 30,000 sqm, fully let Karolina Park in central Ostrava by the Czech Rt Torax Group from the Czech developer and investor, Passerinvest Group for €80 million. Passerinvest is currently developing what could be the tallest building in the Czech Republic on an adjacent plot. In another deal, the regional developer/ investor AFI acquired Avenir Business Park from Tristian Capital Partners in Prague 5 for a reported €67 million. Another major office transaction at the end of 2021 was the sale by CPI Property Group of the Generali Česká HQ in Prague 4 to Generali. This property is occupied on a long-term lease by Generali’s insurance branch and the new owner has already announced an upcoming refurbishment to bring the project up to current standards. The Prague office market has recorded some of the lowest delivery levels recorded in the history of the market in the coronavirus period. Total modern office stock in Prague stands at around 3.7 million sqm and vacancy at 7.8 percent, the highest level

since 2017. Currently, there is 200,000 sqm of space under construction and expected to be completed in 2021-2022 according to the Prague Research Forum (PRF), consisting of CBRE, Colliers, Cushman & Wakefield, JLL and Frank Knight. Supply in the office market is at its lowest level for the past five years as the pandemic has forced developers to postpone projects, says Cushman & Wakefield. The pipeline for this year stands at a low 76,000 sqm in nine buildings. The 2023 pipeline stands at 140,000 sqm, according to developer schedules. The Czech developer, Crestyl is scheduled to complete the first 25,000 sqm of the Dock in Five development in Prague that will consist of 85,000 sqm of riverfront office space and 8,700 sqm of retail when completed. Penta has started construction of Masarycka A & B, a 23,000 sqm office component of the development on a brownfield site in central Prague adjacent to the Masaryk railway station. This office, retail and hotel project includes the renovation of the railway station in conjunction with Czech Railways. The project is due for completion in mid2023. The demand for industrial properties continues to far outweigh investment opportunities and Colliers estimates that prime industrial yields have fallen to 4 percent, which is the same as prime office yields, and the lowest in the CEE region. Retail properties have remained relatively stable, except for very sought-after retail parks where record demand is driving up prices. Therefore, prime retail park yields have moved to 5.5 percent for those assets with the best loca-

tions and tenant mixes according to Colliers. Modern industrial space in the Czech Republic is expected to surpass 10 million sqm this year according to the Prague Research Forum (PRF), consisting of CBRE, Colliers, Cushman & Wakefield and JLL. A new record annual volume of 1.5 million sqm of space is expected to be delivered to the market in 2022. As of the turn of the year, the overall vacancy rate in the Czech Republic stood at a record low of 1.6 percent. Over one million sqm of space is under construction in the Czech Republic and new supply is failing to keep up with demand according to Cushman & Wakefield. CTP developed the CTPark Bor, located close to the German border, to full capacity, which at around 600,000 sqm of GLA is the largest CTP logistics park in the Czech Republic and the second largest in the CTP portfolio. The latest letting is for a 60,0000 sqm unit to the American GXO Logistics. The residential sector, specifically rental apartments has started to see increased activity with €125 million or 19 percent of the total investment in the first half-year according to JLL. For example, Pergamenka, consisting of 164 units in Prague 7 was purchased by the Swedish Heimstaden from the residential developer, Finep for around €45 million. “The big question lies with the prime residential yield,” said Josef Stanko at Colliers. “In Prague, where the prices per sqm are the highest, investors can achieve something between 2 and 4.5 percent. With the increasing prices of construction, it is also difficult to predict the yields for future PRS projects,”.

Ultimate Real Estate Guide 2022

Czech Republic

O ver view

As the product is becomingly increasingly difficult to source investors are looking at the investment possibilities in the residential sector where demand is high and prices are rising.

The hospitality sector is picking up with the lifting of COVID-related restrictions and analysts are optimistic concerning the possibility of a full recovery. Interest from investors in hotels is returning and the ex-

pectation gap between buyers and sellers is narrowing. However, there are few hotel assets on the market, concludes Cushman & Wakefield.

CTPark Bor

JOSEF STANKO Research analyst, Colliers Czech Republic If the investment market maintains its current momentum, we expect the transaction volume in 2022 to reach somewhere between €2 and €2.4 billion. Investors should keep their eye on office and industrial assets. These, as last year showed, will always be a good, lower-risk choice, with stable yields and some rental growth upside.

Ultimate Real Estate Guide 2022

For further information please contact:

Craig Smith: +48 577 100 620 craig@europaproperty.com Sylwia Gajda: + 48 501 091 751 sales@europaproperty.com

Slovakia

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Eurovea in Bratislava by JTRE

Investment volumes for Slovakia increasing Gary J. Morrell Slovakia is attracting both local and international investors to its capital markets, although further development of the investment market is limited by the small size of the country, and in common with other countries in the region, Slovakia suffers from a low supply and availability of investment-grade assets. However, significant office, mixed-use, industrial and retail park development is ongoing and could provide products to meet the strong investor demand.

The total investment volume for Slovakia for 2021 exceeded €750 million according to Cushman & Wakefield, this surpassed the volume of annual investments in the pre-pandemic era. Deals were concluded in the office, industrial and retail sectors in both Bratislava and regional cities outside the capital. Both domestic and Czech capital has played a significant role in the completed transactions. Colliers estimate that domestic capital has accounted for 20 percent of investment volume since 2017 and local investors are expected to maintain their dominant position on the investment market. Demand remains strong for office, industrial and retail park stock but supply is limited in what is a relatively small market. Slovakia

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accounted for 8 percent of CEE investment volume for 2021, a similar volume to Hungary and Romania. A major investment deal for 2021 was the purchase of the 56,600 sqm Aupark Bratislava shopping centre from Unibail-Rodamco by Wood & Company and the Slovak investor, Tatra Asset Management, who acquired an initial 60 percent of the complex for €270 million. According to the agreement, the remaining 40 percent will be purchased over 2022, 2023 and 2024 and the total stake will constitute €450 million. “This acquisition is one of the largest transactions in the history of the Slovak market and confirms confidence in the future development of the real estate market and shop-

ping centres in Slovakia,” commented Cushman & Wakefield. Yields for retail parks and stand-alone retail is at 7 percent with the potential for further reduction. At the same time, shopping centres maintain a yield of 6 percent and are stable. In another office deal, Wood & Company completed the acquisition of BBC 1 & 1 Plus project from CA Immo. Further, outside the capital in Kosice the Czech and Slovak investor, Intefi Capital purchased the Cassovar Business Center 1 for €30 million. The complex consists of 13,000 sqm of office space and 7,000 sqm of retail. Prime shopping centre stock totals 1.3 million sqm. A further 160,000 sqm is under construction including the 70,000 sqm Nivy

O ver view Mall and 25,000 sqm Eurovea extension in Bratislava. In another significant office deal, the Slovak-based JTRE sold the 17,000 sqm Zuckermandel office and retail development, part of a wider 60,000 sqm mixed-use complex, to Erste Realitna Renta. The deal sets a new prime yield on the Bratislava office market according to consultants. The total volume of investment in the office sector reached €105 million in 2021, despite the smaller number of projects available for sale. The activity increased at the end of the year, when several properties came on the market, the possible successful transactions of which will be completed only this year. However, newly built, fully leased office buildings with contracts concluded for more than 7 years with strong tenants continue to attract institutional investors at an achievable yield below 5.25 percent, said Cushman & Wakefield on the office market, which is 0.50 percentage points lower than in the same period last year. The Bratislava Research Forum (consisting of CBRE, Colliers, Cushman & Wakefield and JLL) puts total office stock in Bratislava at almost 2 million sqm, around 65 percent of which is class A, and 35 percent or 675,000 sqm is sustainability accredited. The overall vacancy rate stands at around 12 percent. The largest recent industrial transaction is the purchase by the Australian Cromwell European REIT from the Czech-based Arete group of a portfolio consisting of 11 properties, the major part of which, at 93,000 sqm is spread in four locations across Slovakia. In another industrial deal, CTP further expanded its presence in Slovakia with the purchase of Immorent Zilina, a combination of standing assets and development land. The purchase consists of existing buildings in addition to the possibility of the development

Slovakia

Zilina Industrial Park by Cromwell Property Group

of 145,000 sqm of space on completion. CTP plans to expand its portfolio in Slovakia to 1 million over the next two years. “The industrial real estate sector continues to expand and enjoys the greatest interest of foreign investors among all segments of the real estate market. The total amount of investments in industrial real estate was €289 million, which is the most in the history of the Slovak real estate market. The broad presence of international investors in the sector provides exceptional liquidity, which, combined with the low perceived risk of these assets, is pushing for a further decline in the achievable prime yield. Prime yield for logistics properties has fallen to 5.25 percent with a positive outlook for this year,” said Cushman & Wakefield. In the residential sector, JTRE completed the almost three-year construction of Klingerka, Bratislava’s tallest residential building, on the site of a former factory. The acquisition of the Mercure Bratislava Centrum Hotel by the CPI Property Group provides evidence of the continuing investment interest in hotels in Slovakia, despite the significant

impact of the pandemic on this market segment. Colliers put prime office yields at 5.5 percent and falling, industrial at 5.75 percent and falling and shopping centres at 6 percent and remaining constant. “Office and industrial yields continue to compress while retail maintains a stable position,” said the consultancy. “2021 confirmed the attractiveness of the Slovak commercial real estate market for both domestic and foreign investors. The growth of the capital strength of domestic and regional investors, especially real estate funds managed by local management companies, gives the market the necessary liquidity. At the same time, it is clear that the uncertainty caused by the pandemic in 2020 was fully accepted as part of the risk, without any impact on yields,” concluded Marián Fridrich, head of Cushman & Wakefield Slovakia.

MARIAN FRIDRICH Head of Slovakia, Cushman & Wakefield Total investment in commercial real estate in Slovakia in 2021 was around €750 million, which exceeded the volume recorded in the pre-crisis year 2019. Last year we recorded 21 transactions, five more than in the previous year. Prime yields decreased over the past year, confirming the attractiveness of investing in the commercial real estate market in Slovakia. On the back of the investment activity in 2021, we expect the trend to continue in 2022. Local and regional investors are likely to maintain a dominant position in the capital markets. We see activity across all segments with offices to show a larger share of closed deals for the year.

Ultimate Real Estate Guide 2022

Romania

O ver view

Globalworth Square in Bucharest

Romania investment could break 1 billion threshold Gary J. Morrell

Development activity and investment market liquidity has remained relatively strong in Romania despite the pandemic. The country has some of the most attractive yields in the region concerning the quality of assets, while compression is expected for premium assets, which are attracting increasing interest from investors.

An estimated 54 investment transactions were completed last year, double the number of completed deals compared to the previous year. The total investment volume reached €916, a similar volume to 2020, according to Cushman & Wakefield Echinox. “Investor interest in real estate assets remained at a high level in 2021 amid a relative re-balancing of the relationship between

Ultimate Real Estate Guide 2022

landlords and tenants, an aspect which is meant to ensure a stable financial flow for investors,” commented Cristi Moga, head of capital markets at Cushman & Wakefield Echinox. “In a generally positive climate, we expect a higher number of landlords to re-evaluate the opportunity to commence a selling process, which would increase market liquidity. A part of the market with high

potential are sale & lease back transactions, as the owners of various businesses will benefit from such deals, as they will be able to finance their core businesses by disposing their real estate portfolios. In 2022, we can expect new record deals, which would contribute to exceeding the €1 billion transactional volume.”

O ver view Anca Merdescu, director of investment & debt advisory at Colliers Romania, commenting on prospects for investment for the year, said: “If we take into account the high activity levels seen at the start of the year (with several deals already closed in the first month of the year), it is looking like 2022 could finally break the €1 billion threshold.” In a major office transaction in Bucharest S-Immo acquired the 38,000 sqm second phase (Campus 6.2 and 6.3), consisting of two interconnected buildings from Skanska for €97 million. Campus 6 is a phased, 81,000 sqm office project and the first WELL accredited office development in Romania according to Skanska. The first 22,000 sqm phase of the project was sold to CA Immo for €53 million. Total office stock in the Bucharest office market stands at over 3 million sqm with an overall vacancy rate of 13 percent. Further, there is a massive pipeline of 250,000 sqm, although several projects are expected to be pushed back. The largest pipeline project due for completion this year is the 35,000 sqm phase 2 of the One Cotroceni Park in Bucharest by One United Properties. The project, on a five- hectare site, will consist of 80,000 sqm of office space, 15,000 sqm of retail and 850 residential units. The office component will be both LEED Platinum and WELL accredited.

Colliers expects that given the large office projects on the table likely to exchange hands this year we will likely see this asset class deliver a much bigger share of the year’s overall turnover, with industrial and retail to follow from a distance. “As usual (and this is particularly true for industrial), many landlords/investors in Romania tend to be long-term holders and the secondary market is not as active as in many other countries, hence the market should not judge on the strength of investor demand solely by deals closed,” the advisory said. In the industrial sector CTP acquired four assets across Romania from the British company Catalyst. As industrial developers and park operators CTP is a long-term asset holder. The company is presently the largest industrial park operator in Romania. Industrial stock across the country stands at over 5 million sqm with a 6 percent vacancy rate. JLL put prime office yields at 7 percent, industrial at 8 percent and shopping centres at 7.25 percent. Traditionally Romania has provided a yields premium on the more established CEE markets. Colliers estimate prime office yields at 6.75 percent for office, 7.75 percent for industrial and 6.75 percent for shopping centres. “The economic moment (high inflation coupled with decent economic growth) is quite favourable for the so-called ‘hard as-

Romania

sets’, which include real estate, fully hedged against CPI spikes. And as Romanian assets have lagged behind other CEE peers this past economic cycle, we would likely see room for downward yield changes in the coming year, particularly for office and industrial yields. While the positive price action for industrial assets will likely be more generalised, we expect a more nuanced dynamic for office assets; prime, income producing buildings will likely do better than those needing capital to be turned around, leading to a wider gap between the best offices and the rest,” commented Anca Merdescu. Cristi Moga expects further yield compression in 2022. However, the yield spread of around 100-130 basis points with the established Central European markets remains, although this relatively high differential could facilitate compression. “Amid the EU directives, all buildings getting approved after 2021 will adhere to a set of minimum standards, meaning that the at least the large developers will strive to maintain an edge over their competition. Hence, investments in quality: we are already noting that quite a lot more of the real estate projects delivered recently are obtaining higher ratings for green building. Also, developers aiming to remain above the pack and have differentiating factors over their competitors will be striving to obtain more niche certifi-

P3 Bucharest A1

Ultimate Real Estate Guide 2022

Romania

O ver view

cations, particularly with regards to the social aspect of ESG,” added Anca Merdescu. Concerning the profile of investors, the proportion of local investors has been around 20 percent in recent years. “If we were to look at recent years, the average share of domestic investors in total has hovered around 20 percent, with a peak of 28 percent in 2019. It is important to note that

only recently did the local real estate market start seeing more and more domestic investors active and we view this trend as a sign of capital accumulation; this process takes time, bearing in mind the Romanian economy only just took off after joining the EU in 2007. Either way, as the Romanian economy continues to expand in the following years and ‘produce’ wealth for local entrepreneurs,

so too will their need to park excess cash, hence, more domestic investors,” concluded Colliers.

Vitantis Shopping Centre sold by Revetas Capital

ANCA MERDESCU Director of Investment & Debt Advisory , Colliers Romania The repricing of risk and other post-pandemic trends will greatly influence the appetite and value of real estate investment in 2022 and beyond. Based strictly on the major deals (mostly office related) we are aware of at the start of the year that 2022 has the pedigree to be the best year post-2008, maybe the best in the history of Romania in terms of overall volumes. In 2022 we see a growing pool of investors; in recent years, despite the economic uncertainties, we have had quite a few notable investors join the market. We expect this to continue and maybe see even a few large institutional investors pull the trigger on a local asset.

Ultimate Real Estate Guide 2022

For further information please contact:

Craig Smith: +48 577 100 620 craig@europaproperty.com Sylwia Gajda: + 48 501 091 751 sales@europaproperty.com

Regional

SEE Real Estate Awards

EuropaProperty announces short-list for the 17th annual SEE Real Estate Awards Winston Norman Semi-final results are now in for the 17th annual SEE Real Estate Awards representing the most outstanding and accomplished projects, companies, and individuals throughout South-eastern Europe in 2021. The anticipated celebration, which will be attended by some of the region’s leading firms and individuals, will take place on March 31, 2022, at the Radisson Blu Hotel, Bucharest, Romania. “I’m very happy to welcome back the 17th annual SEE Real Estate Awards & CEO Networking Forum to Bucharest!” remarked Craig Smith, publisher and founder of EuropaProperty, the leading commercial real estate media house, which organises the SEE Real Estate Awards Gala & CEO Networking Forum. “Now senior players from these dynamic SEE real estate markets are readying themselves for the region’s premier commercial real estate event. After a challenging couple of years, it pleases me greatly that we have received so many nominations. The spon-

Ultimate Real Estate Guide 2022

sors, attendees and judges are senior-level European or Central European directors, which affirms the SEE Real Estate Awards as a true industry landmark event,” he added. With the commercial real estate investment, development, office, industrial and retail sectors once again posting positive market indicators in Romania and the SEE region this year’s event promises to be one of the most important and talked about with key local and international players already in or wanting to enter these promising markets participating.

Romania in particular has re-emerged from the crisis in good form. The country offers both development and investment opportunities, and it has potentially higher returns, albeit with more perceived risk than the more established CEE markets. Market leaders in both development activity and pure investment will compete for awards in the office, retail, warehouse and residential sectors. The semi-final results have been narrowed down, by an independent jury of judges, from a field of over 400 nominated companies and projects to determine the following semi-finalists:

SEE Real Estate Awards COMPANY OF THE YEAR Retailer AC Fashion Ice&Roll MOBIA Starbucks Professional Service Provider Brisk Group BuildGreen Consulting New Work Offices Sixense Architectural Firm Adest Architecture AMA Design Chapman Taylor Lemon Interior Design Construction Firm Bog’Art Hidro Top Construct Masterbuild Project Management Firm Brisk Group Fortim Trusted Advisors Optim PM Sentient Vitalis Consulting Property Management Company CBRE Cushman Wakefield Echinox Fortim Trusted Advisors Lion’s Head Investments Square 7 Law Firm Dentons Filip & Company Penkov, Markov & Partners Popovici Nitu Stoica & Asociatii RTPR Stratulat Albulescu Tuca Zbarcea & Asociatii Wolf Theiss Rechtsanwalte Agency Adventis CBRE Conadi Cushman Wakefield Echinox Fortim Trusted Advisors Griffes

Bank Erste Group Bank AG First Bank pbb Deutsche Pfandbriefbank Raiffeisen Bank Investor Adventum Group AFI Europe Fortress REIT Lion’s Head Investments Mitiska Reim Revetas Capital Prime Kapital W. P. Carey Investment Deal Acquisition of ELI Park by Fortress REIT Adventum Group acquired Hermes Business Campus AFI Europe acquired 2 land plots for Residential for Rent Disposal of Vitantis shopping centre by Revetas Capital Indotek Group acquired GTC office portfolio in Belgrade KESZ Group acquired 16,000 sqm plot in the Petrom City area Sale of Park Lane Office Center to SAP Sale of The Light One by River Development

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Residential Developer BLD Homes Forty Management Investments Forte Partners Gran Via Liebrecht & Wood One United Properties Park Lane Speedwell Retail Developer AFI Europe GTC IMMOFINANZ Prime Kapital Square 7 Warehouse Developer Element Industrial VGP Group WDP Group Office Developer AFI Europe Atenor Group Forte Partners GTC IMMOFINANZ One United Properties Park Lane Developments Prime Kapital Speedwell

PROJECT OF THE YEAR Retail Project Baia Mare Shopping Park - Square 7- Romania Barlad Value Centre - Prime Kapital - Romania East Gate Mall - Balfin - Albania FASHION HOUSE Pallady - Fashion House Group - Romania Prahova Value Centre - Prime Kapital - Romania VIVO! Baia Mare - IMMOFINANZ - Romania Residential Project Arcadia Apartments Domenii phase 1 and 2 - DVD Residential Imobiliare - Romania Aviației Park - Forte Partners - Romania Atria Urban Resort - Cityring Development - Romania Gran Via Park - Gran Via - Romania Slow Life District - BLD Homes - Bulgaria The Ivy - Speedwell - Romania TRIAMA Residence 1 - Speedwell - Romania Refurbishment Project Dacia One - Atenor Group - Romania Megapark - Park Lane - Bulgaria Radisson Blu Hotel - Revetas Capital - Romania VIVO! Baia Mare - IMMOFINANZ - Romania

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Mixed-use Project Electroputere Parc - Catinvest - Romania ONE Cotroceni Park (phase 1) - One United Properties - Romania ONE Tower - One United Properties - Romania Record Park - Speedwell - Romania Warehouse Project ELI Park 3 - Element Industrial - Romania Profi regional logistic warehouse for Oltenia - WDP - Romania VGP Park Bucharest - VGP - Romania Office Project Advance Business Center II - GTC - Bulgaria Dacia One - Atenor Group - Romania J8 Office Park - Portland Trust - Romania Millo Offices - Forte Partners - Romania myhive S-Park - IMMOFINANZ - Romania Park Lane Office Center - Park Lane - Bulgaria U Center Phase 1 - Forte Partners - Romania

OVERALL AWARDS Professional Lucian Azoitei - Forty Management & Investments Doron Klein - AFI Europe Razvan Nica - BuildGreen Mihnea Serbanescu - Cushman Wakefield Echinox Alex Skouras - Alesonor Silviu Stratulat - Stratulat Albulescu Professional Woman Tanya Kosseva-Boshova - Lion’s Head Antoanela Comsa - Gran Via Fulga Dinu - IMMOFINANZ Mariana Garstea - Sixense Andreaa Paun - Griffes Emma Toma - AFI Europe

Future Project Central District Lagoon City - Forty Management & Investments - Romania GTC X - GTC - Serbia Liziera de Lac - Liebrecht & wooD- Romania Mall Moldova - Prime Kapital - Romania ONE Cotroceni Park phase 2 - One United Properties - Romania Paltim - Speedwell - Romania Tandem Office Building - Forte Partners - Romania

CEO INVESTMENT FORUM

CEO MEETING POINT

To complement the 17th annual SEE Real Estate Awards Gala, EuropaProperty is organizing a series of discussion panels that will provide a current analysis of the rapidly developing markets of South-eastern Europe from the perspective of commercial real estate investors, developers, and consultants active in the SEE region, in addition to offering the opportunity to meet and network with leading market players. The panel discussions will examine the office, retail, industrial, hotel/leisure, investment and residential markets of Romania, Bulgaria, Croatia and Serbia. The schedule includes morning and afternoon networking coffee breaks, lunch and a closing cocktail reception.

EuropaProperty is assembling online the largest group of real estate investors, which are all at the top of their fields and working in the region. Some with regional experience and others with specific country or sector experience. We have many investors, developers, bankers, financiers, asset managers, CRE owners and professional service providers attending. This exciting new platform allows you to network right away with fellow jury members and attendees. You can message each other, arrange virtual meets, discuss hot topics and plan your schedule for the ‘Live & Online’ SEE Real Estate Awards Investment Awards & Conference.

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As with all EuropaProperty events, the 17th annual SEE Real Estate Awards and Forum will pride itself on an unrivalled format that brings together top professionals in an environment conducive to offering the opportunity to meet and network with leading market players.

RADISSON BLU HOTEL BUCHAREST, ROMANIA

For further information please contact:

Craig Smith: +48 577 100 620 craig@europaproperty.com Sylwia Gajda: + 48 501 091 751 sales@europaproperty.com

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CEE Retail Awards

IMMOFINANZ, Trei Real Estate, and the CCC Group all win big at the 14th annual CEE Retail Awards Investor and developer IMMOFINANZ, Retail Group CCC, and developer Trei Real Estate all win multiple accolades at Central Eastern Europe’s top retail awards ceremony.

Recognizing the importance of Central Europe’s retail markets EuropaProperty was proud to host the 14th annual EuropaProperty CEE Retail & Marketplace LIVE & ONLINE. The spectacle was witnessed by a select crowd of retailers and associated industry professionals; who gathered to see the top-performing companies from the region recognised for their phenomenal achievements in the retail real estate sector.

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Winston Norman

CEE Retail Awards Currently, the retail industry is going through unprecedented challenges. In this way, the CEE Retail Awards and Marketplace recognised and appreciated those who have remained faithful to their core values in the face of the crisis and unfavourable market situation. Overall Retailer and Newcomer of the Year awards went to the off-price retailer HalfPrice, which was recognised by the jury for their expansion and confidence throughout a challenging 2021. Fashion Retailer of the Year (over 600 sqm) was received by SinSay and Guess picked up the Fashion Retailer of the Year award for under 600 sqm. Accentuating the strength, brilliance and resilience of the retail sector, many retailers were highlighted on the night. Online Retailer went to the eobuwie.pl and MODIVO platforms. Other major winners for the retailer-specific awards included: Zabka, the con-

venience retail store chain, one of Europe fastest-growing retailers, won the Specialty Retailer Award, and Cosmetics Retailer went to Rossmann. Multi-disciplined investor, developer IMMOFINANZ was recognised by the jurors for its investment and development success in the region. Throughout 2021 the company has continued its strategy of seeking investment opportunities in development projects, for example, continuing its successful STOP SHOP brand of retail parks and VIVO! shopping centres. The company won the Investor and Developer awards respectively. The company was also recognised for innovation and forward-thinking practices that have shaped the changing face of the retail industry over the last year. The company walked away with the Retail Innovation award for its new concept Top on Shop by IMMOFINANZ which

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combines residential with retail development. Putting his achievements firmly in the spotlight, Trei Real Estate’s Jacek Wesoloski was named this year’s Industry Professional. The Jury recognised his strong leadership skills under challenging market circumstances while continuously delivering the developer’s popular Vendo Park formats in Poland. In this way, the company received the Retail Park Developer award. The developer also picked up two project awards in the Retail Park and Small Retail Project categories – Vendo Park Chorzow and Vendo Park Piekary Slaskie, both delivered in 2021, were both winning projects at the event. 2021 was a good year for retail park and convenience store development in Poland and the project award winners reflected the changing dynamics of the country’s retail development market. Many of this year’s

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nominees formed extensions, refurbishments, and new retail park concepts. Equilis and Acteeum Group’s Galeria Andrychow won Retail Project of the Year in the medium category. Other projects recognised on the night included MMG Ciechanow from the Master Management Group, which won the Refurbished Project award and the Expansion Project of the Year went to Designer Outlet Warszawa by DWS Group and ROS Retail Outlet Shopping. Another project winner highlighting the new development trends on the market was Echo Investment’s hugely popular and spectacular multi-functional development in the centre of Warsaw, the Warsaw Brewery, which was awarded Mixed-use Project of the Year. Also in Warsaw, Wilanow Park by NHood won the Future Project award. Futureal’s Etele Plaza in Budapest won Retail Project of the Year in the large category and Centrum Praskie Koneser by Liebrecht & wooD Group and BBI Development in Poland, one of the best retail destinations in the region, received the coveted Ultimate Retail Destination award. Many industry leaders and associated companies from the real estate industry

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were also awarded on the night. Sierra Balmain picked up the Asset and Property Management of the Year awards, highlighting the growing importance of good asset management, and the extensive nature of the firm’s retail portfolio under management. Global consultants CBRE picked up the Agency of the Year award. Additional company awards were presented to Dentons, one of the world’s biggest law firms, which received the Law Firm of the Year award. Tax and Financial Adviser of the Year once again went to TPA Poland and Professional Service Provider of the Year went to MK Illumination. Cushman & Wakefield topped a successful year of growth and walked away with the Project Management Firm award. The event is the only one of its kind with a real focus on the retail market with awards for top retailers, innovators, developers, bankers, projects and specialized service firms. Bank Pekao was voted Bank of the Year and Shopping Centre Director of the Year was once again awarded to Blue City’s Yoram Reshef. EuropaProperty’s esteemed panel of highly-respected business leaders from around the region judged the nominations for the

awards categories on their merit and positive impact on the market. World-renowned audit firm EY monitored the scoring and voting process. The CEE Retail Awards and Marketplace once again enabled the industry’s key players to come together. The event proved itself as an unmissable opportunity to showcase the company and its services to the real estate sector and wider industries, as well as strengthen business partnerships and ensured unrivalled coverage and exposure. Bringing people together has never been more important and this year’s CEE Retail Awards and Marketplace created a unique opportunity and platform for everyone to be entertained and share the experience of a highly coveted event, whilst learning about the developments and trends which will help shape the sector going forward.

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CEE Retail Awards 2022: Full List of Winners Professional Service Provider MK Illumination Tax & Financial Adviser TPA Poland Project Management Firm Cushman & Wakefield Law Firm Dentons Property Management Company Sierra Balmain Shopping Centre Manager Yoram Reshef - Blue City - Blue City Agency CBRE Bank Bank Pekao Asset Management Firm Sierra Balmain Investor IMMOFINANZ Retail Park Developer Trei Real Estate Developer IMMOFINANZ Expansion Project Designer Outlet Warszawa - DWS Group/ROS Retail Outlet Shopping - Poland Refurbishment Project MMG Ciechanów - Master Management Group – Poland

Retail Project Small Vendo Park Chorzów - Trei Real Estate - Poland Retail Project Medium Galeria Andrychów - Acteeum & Equilis - Poland Retail Project Large Etele Plaza - Futureal - Hungary Specialty Retailer Żabka Cosmetics Retailer Rossmann Fashion Retailer (Under 600 sqm) Guess Fashion Retailer (Over 600 sqm) SinSay Retail Innovation Top on Stop by IMMOFINANZ Online Retailer eobuwie.pl and MODIVO Newcomer HalfPrice Overall Retailer HalfPrice Ultimate Retail Destination Centrum Praskie Koneser - Liebrecht & wooD Group/BBI Development - Poland Professional of the Year Jacek Wesoloski - Trei Real Estate

Future Project Wilanow Park - NHood - Poland Retail Park Vendo Park Piekary Śląskie - Trei Real Estate - Poland Mixed-use Project Warsaw Breweries - Echo Investment - Poland

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