Country Report Poland Q4-2018
“There are signs that recent positive developments will not continue in 2019.”

Dear readers,

we have known for a long time that the current real estate cycle is exceptional. However, the most recent news is still quite remarkable: In 2018, the returns on premium office properties in Warsaw fell by a huge 2.5 percentage points. At the same time, the transaction volume on the Polish real estate market rose from € 5.2 billion to € 7.2 billion, with the number of transactions growing by just less than 50 %. That means the demand for premium properties remains very high. However, we are now seeing clear signs indicating that those positive developments will not continue seamlessly. On the one hand, the Deutsche Hypo REECOX reveals an economic slowdown in all the European countries surveyed – and in some cases that negative trend is significant. On the other hand, the price of plots is so high here that the number of projects realised is declining. Irrespective of those trends, real estate companies are also suffering from increasing labour costs. The industry will face more challenges in 2019 than in 2018.


Your Beata Latoszek

Contact

Ms Beata Latoszek
Managing Director Poland

Phone: +48 22 828 02 53
E-mail: Beata.Latoszek@Deutsche-Hypo.de

Polish Real Estate Economy Index stands out positively

In the past the Polish Real Estate Economy Index displayed relatively low rates of growth. Its consistency over 2018 as a whole is nevertheless quite remarkable. While most of the other REECOX countries had clear negative trends, the Polish REECOX hardly fell compared to the same quarter in the previous year, with a decline of just 0.9 %. Its development in the fourth quarter, with a fall of just 0.4 % to 187.5 points, fits almost seamlessly into that picture.

Real estate index weakens at the end of the year

The basis for the recent stable trend was the Polish leading share index WIG 20, which ended the year at 2,276.6 points, remaining almost constant with growth of just 0.4 %. The consistent development of the Polish business climate as measured by the Economic Sentiment Indicator (ESI) also made a significant contribution to the robust Polish Real Estate Economy Index. It even rose slightly compared to the third quarter, by 0.1 %, to 107.8 points.

Those trends were not reflected by the Polish real estate index WIG Developers. The negative development observed since spring 2018 continued in the fourth quarter. At 1,911.7 points, the real estate index fell below the 2,000 point mark for the first time in a long period, representing a drop of 6.0 %.

Synopsis of Input Variables and Real Estate Economic Situations Q4-2018

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q3-1810/1811/18Q4-18Delta (%)
Q3-18 / Q4-18
DE
dodo
do
do
eq
do
312.8
306.0
308.2
298.2
-4.7
GB
dodo
do
do
eq
do
216.5
213.1
206.8
204.9
-5.4
PL
eq
do
eq
eq
dodo
188.3
185.6
188.8
187.5
-0.4
NL
dodo
dodo
do
eq
do
199.3
195.3
194.8
191.3
-4.0
FR
dodo
dodo
dodo
eq
eq
236.2
229.7
228.6
223.7
-5.3
ES
dodo
do
do
eq
eq
196.4
195.8
196.4
191.8
-2.3