The fair was attended by the "haves and the have-nots," according to one participant Courtesy of Expo Real

The sentiment at the 14th annual Expo Real commercial real estate fair, held last week in Munich, Germany, was strongly influenced by the current economic crisis.

One international lending expert, Michael Kröger from Helaba, described the mood at the event as “mixed,” saying one of his American clients had called it a meeting of the “haves and the have-nots.”

Clearly, there are some players and countries who have more to worry about than others. But in general, the situation in Poland’s real estate market was not seen as dire. In fact, the majority of experts that Lokale Immobilia spoke with said the Polish market was one of the few that investors still felt confident investing in.

“For international investors, cities such as London and Paris are not more interesting than Warsaw,” Mr Kröger said.

Select markets favored

Nevertheless, the instability affecting European capital markets has made commercial real estate lenders and investors more selective in where they put their money.
CB Richard Ellis’ chief economist Peter Damesick said during a press conference that there is a “collective loss of faith and confidence in policy makers [that is causing a] fall in business confidence.”

In terms of specific countries, however, most of the unease was directed at those worst-affected by the sovereign debt crisis. Consequently, Mr Damesick said, investors are turning their focus towards “core assets in prime locations,” especially in Germany. The Nordic and Central Eastern European regions are also perceived as safer economies, he added.

Positive indicators

The overall volume of investment activity in commercial real estate in CEE increased by 49 percent year-on-year in the first half of 2011, according to analysis by CBRE. And that growth trend is set to continue, experts say.

According to Grzegorz Trawinski, head of corporate banking in Poland at Eurohypo, Poland has experienced a significant increase in investment activity, especially in the office and retail sectors. He said Eurohypo is looking at further “opportunities,” adding that in Poland there is especially high demand for development financing in cities with populations greater than 200,000.

Experts say there is still plenty to build in Poland and that the country should continue to see an inward flow of capital, especially as investors seek shelter in countries located outside of the euro zone.

The majority of experts Lokale Immobilia spoke with at Expo Real said that as long as the crisis does not spiral out of control and the Polish economy keeps showing steady growth, they do not foresee major changes in terms of financing in Poland next year. No one, however, wanted to estimate for how long they thought the uncertainty would last.

What the Polish exhibitors said

Poland had more exhibitors at Expo Real than any other country in CEE. Representatives from Poland included government bodies like the Military Property Agency (AMW), which held a joint stand with the German Federal Agency for Real Estate (BiMA). The two bodies finalized a joint cooperation agreement this September.

When asked about the partnership, the president of AMW, Krzysztof Michalski, said that the joint endeavor would allow AMR to “present real estate from Poland to potential investors from Germany and also to people who cooperate with BiMA, including a Canadian investment fund.”

Warsaw authorities, meanwhile, were keen to focus on the topic of underground parking space. Ernst & Young recently completed market research for the city to determine whether there is a need for such projects in the capital. The findings concluded that there is both demand and investor interest.

Paweł Pawłowski, the deputy director from the investor relations department at the City of Warsaw, said that his department is eying the construction of a total of six underground parking lots, estimated to cost around a combined zł.300 million. Tenders should start in 2012.