7 minute read
Investment market
real estate market is expected to grow further in the near future, underpinned by very competitive returns in comparison with Western Europe,” Stempień said.
DOMESTIC DROUGHT
Investors from other Central and Eastern Europe region countries have become increasingly interested in the Polish commercial property market in recent years, but their share in the combined transaction volume remains rather small. In 2018, they invested approximately €200 million in Poland, accounting for around 3 percent of the total investment volume. Experts predict that they will remain relatively active in the country as their strategies envision the expansion of their existing portfolios.
Czech companies such as CPI Property Group have already made a number of major acquisitions in the Polish market. Czech investors are expected to close several sizable deals later this year, with Hungarian capital expected to become more active. By contrast, the activeness of domestic investors is still very low – Savills assesses that in H1 2019 they accounted for only 1 percent of the invested capital. Commercial property is relatively pricey for Polish investors, explained Michał Stępień, associate, investment, at the company.
He argued that legal changes are needed to improve the situation. For example, the law regulating FINNs (the Polish equivalent of REITs) could be modified so that they can also invest in commercial property, rather than just residential real estate. Of a similar opinion was Felicki, who said that giving Polish investors the proper tools to allocate capital would lessen the disproportion between foreign and domestic investors’ share in the market. “The potential that changes in legal regulations could unlock is huge,” he maintained.
US and Canada 27%
South Africa
8%
Domestic
19%
Source: Savills
Europe 46%
South Africa 15%
Middle East
5%
Asia Pacific 11%
Domestic
4%
Source: Savills Europe
39%
US and Canada
26%
Western Poland 26.54%
Poland 1.01%
Other countries
9.86%
CEE
1.71%
Africa
16.97%
Source: CBRE America
6.04%
Asia
37.88%
LOKALE IMMOBILIA | RESIDENTIAL IT’S ALL ABOUT THE GREEN STUFF
Green certificates are becoming more and more popular with residential developers in Poland, but they are still relatively rare when compared to the office market. Will certification ever become the standard in the housing sector?
BY ADAM ZDRODOWSKI
The number of certified residential properties in Poland increased by as much as 133 percent in the March 2018-March 2019 period, according to the “Polish Certified Green Buildings in Numbers” report published in April by the Polish Green Building Council (PLGBC). The organization’s data shows that in March 2019 there were 28 certified housing buildings in the country, of which 23 were certified in the BREEAM system and five were certified in the HQE system. The number accounts for 4.3 percent of all certified buildings in the Polish market.
The figure may seem unimpressive when one looks at the office sector with its 418 certified buildings (64.5 percent of the total). However, the upward trend is clearly visible – the residential sector’s share increased from 2.4 percent over the year in question – and is expected to continue. The history of residential certification in Poland is relatively short – the
Skanska employs a number of green building solutions in its residential projects, including air filters, photovoltaic panels and rainwater recycling systems
first two projects were certified in 2015 (in the HQE system). Three more schemes were certified in 2016 (two of them in HQE and one in BREEAM). In the following year, the number went up to four.
Last year was a breakthrough year, with 19 housing developments having been given green certificates. New residential investments are getting higher marks each year, with all of the projects certified to date located in either Warsaw (86 percent) or Kraków (14 percent). In terms of certification, the housing sector is 15-20 years behind the office sector, but buyers’ and developers’ interest in sustainable construction keeps growing, said Artur Łeszczyński, innovations and sustainability coordinator at Skanska Residential Development Poland.
GREEN LEADERS
The company – one of the leaders in green residential building in the country – believes that in a decade or so we will reach the point where BREEAM and other similar systems become key factors taken into consideration by clients making apartment purchase decisions. The developer, which has already secured several BREEAM certificates for its schemes, employs a number of green building solutions in its investments, including air filters, photovoltaic panels and rainwater recycling systems.
Other green residential certification leaders include Yareal, whose strategy envisions obtaining certificates for all new housing developments. The company has to date secured BREEAM certificates for six Warsaw projects. Three more schemes are now going through the certification process, with one of them expected to get Poland’s first BREEAM Communities certificate. For its part, Bouygues Immobilier Polska has been building its investments in line with the French HQE standard.
Łukasz Paryś, director of the developer’s Wrocław office, revealed that challenges include the need to meet the requirements of aged zoning plans and other planning regulations, which often do not provide for sustainable development. He complained that administrative barriers sometimes hinder, if not make impossible, the implementation of new interesting energy solutions. In his opinion, there is room for better cooperation between developers and local authorities in this regard.
28
the number of green certified residential buildings in Poland as of March 2019
Source: PLGBC
Very few people think about the future cost involved in the upkeep of an apartment
MARKETING TOOL
Kazimierz Kirejczyk, board vice president at JLL in Poland, argued that one can look at the potential advantages of green residential certification in two ways. On the one hand, the process is a tool allowing developers to create better buildings or even entire communities. It ensures that they keep quality at a high level. On the other hand, one can assume that certification is an asset making it easier for developers to sell their products. However, there are doubts as to whether buyers indeed appreciate the asset and are willing to pay for it.
Kirejczyk pointed out that the business model in the residential sector is very different from the business model in the office sector in that the developer sells its products to a large number of individual private buyers, rather than one long-term investor. The lack of developers’ conviction that the effort put into certifying a residential project will pay off in a situation when the vast majority of buyers do not want to shoulder the additional costs is the main barrier to certificates becoming more commonplace in the sector, he said.
Bartosz Turek, chief analyst at HRE Investments, also maintained that green certificates will not become the standard in the residential property market any time soon as most buyers still view price and location as the two most important factors while choosing an apartment. “Very few people think about the future cost involved in the upkeep of an apartment,” Turek said. He claimed that, for the time being, green residential certificates mostly play the role of an additional marketing tool.
GROWING AWARENESS
The situation could change as the public discussion about unfavorable climate change – and the influence that people’s everyday life has on it – continues. Perhaps sustainability-related arguments will make certification more attractive in buyers’ eyes in the near future. Katarzyna Szawłowska, an expert in the building consultancy department of Colliers International, believes that Poles’ growing awareness of ecological issues and healthy living means that green residential buildings have significant potential.
In her opinion, certified housing projects will become more and more available. She expects that residential schemes will in the future also meet the standards of such certification systems like WELL, which focuses on the well-being of buildings’ users. According to Kirejczyk, much will depend on how fast the prices of energy and water, as well as fees related to environmental pollution, go up. It remains to be seen if the costs of building materials start to include costs related to the exploitation of the natural environment.
Also, the ongoing development of the institutional rental apartment market in Poland could, in the future, significantly contribute to increasing the popularity of green residential certification in the country. For funds investing on a long-term basis, being able to estimate a building’s operating costs and optimizing building operation-related expenses is very important during the process of assessing the profitability of a real estate project, Kirejczyk noted.
