Investors move into Polish real estate

By bne IntelliNews June 11, 2015

bne IntelliNews -


Investors are pushing into Poland's real estate sector and developers are hunting capital, as the country's residential and commercial segments look set to rise on the back of sustained economic growth.

Developer Atal announced on June 11 that it will debut on the Warsaw Stock Exchange on June 15 after closing the books on its IPO on June 3. The company raised PLN143mn after setting a price in late May of PLN22 (€5.3) per share.

The weight of demand saw Atal trim allocations by 80%, the company said. The float was originally announced in the summer of 2014.

Atal posted net profit of over PLN136mn last year, representing growth of over 300% y/y. Although figures from Q1 are not yet available, the company sold 470 apartments in the first four months of 2015, the best result in its history. 

The raised capital is set to power land acquisitions and development projects, mostly in residential real estate segment, which appears to be regaining stability recently. Polish demand for mortgages is increasing on the back of growing wages, persisting deflation, and record-low interest rates.
The previous day, a joint venture of funds owned by Oaktree and Pimco completed the takeover of a stake in listed developer Echo Investment. 

Oaktree's Griffin Topco III Sarl and Pimco's LVS II Lux XX Sarl have used an entity called Lisala to take over the 41.55% stake in Echo from founder Michal Solowow. Lisala secured financing for the deal from state-controlled insurer PZU’s Universum fund. 

The new owners said they plan to continue working with Echo’s current management, but the company’s strategy will be reviewed in the next few months. 

“It is likely that Echo’s portfolio of retail real estate would find a buyer quickly,” suggested Tomasz Buras, managing director of real estate broker Savills' Polish business, noted in March as the deal was arranged.

Retail real estate projects in Poland have long benefited from strong consumption appetites. A tightening labour market and growing confidence are only likely to extend that trend. 

Domestic demand - and private consumption in particular - is forecast as the major driver in the country's ongoing economic recovery. Coming off economic expansion of 3.5% in 2014, growth came in 0.1 percentage point better in Q1 and there is strong expectation that momentum will push onwards in the medium term.

That not only has investors looking for a piece of the action. The commercial real sector as a whole is seeing increased interest from lenders, according to a recent report from property consultants JLL. 

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