44 REurope Number 69 - October 2010 REurope Number 69 - October 2010 45

expert opinion

Economic Report Interview with Jean-Marie Andreassier New landmarks holds its leading position on the property market in the Central European property market

prime properties, which are single-hand - and tramway stations must be fully inte - HOW IS THE PROPERTY MARKET IN POLAND tain, overly ambitious development projects stores. Only a few very large shopping centres edly driving the market. grated into medium- and long-term DOING TODAY? helped stabilise the market and relaunch prop - in Warsaw can handle higher rents. In strong growth areas, such as China, strategies. The duration of leases I must point out that Poland is the only erty development for the years to come. Then, you must be very vigilant regarding the robust 10 to 20% per annum rise in becomes a key element, and the French European country that did not experience a property rights with cadastral situations that property prices is the precursor to a 3-, 6-, 9-year lease exception becomes a recession in 2009. Nevertheless, the property AND WHAT ABOUT THE PROPERTY require in depth audits. In any event, we use stampede of investors, which will add handicap when faced with 10-, 15- or market had a difficult year. The level of invest - MARKET? international companies with strong local fuel to a speculation fire fed by gearing. even 20-year leases in other countries. ment in this type of asset fell from 5.2 billion Retail property was not spared by the brutal expertise, especially in sourcing assets and Many funds are raising capital for this Above all, it is necessary to learn how to Euros in 2006 to 700 million Euros, which is its slowdown in real estate transactions in 2009 performing legal due diligence for acquisi - area, and barring political intervention to manage in mature areas with weak asset lowest level since 2004. Yet, the fundamentals (335 million Euros versus approximately 2.5 tions. The best way to take advantage of control prices, nothing will be able to value growth tied in part to weak rent remain solid, and the sharp 2009 decrease can billion Euros in 2006). However, the yields Poland's dynamism, yet avoid the many traps, stop the momentum that has been build - revaluations. The gearing effect will be be explained mostly by the extreme caution remained fairly stable because the fundamen - is still via indirect investments through proper - ing over these past few weeks. In short, more restrained. The margin of safety on exercised by international investors. tals are solid. The commercial property market ty funds or other vehicles. large masses of capital are leaving for the hedging debt through rents will Poland in particular can rely on its local con - is in fact closely tied to the health of commer - strong growth areas, and for mature require a much less daring LTV ratio than sumption: with 40 million inhabitants, it is the cial activity, which is rather promising. Foreign HAVE YOU OBSERVED A REBOUND IN THE countries, the allocation is very selective. in the past. 6th most populous European country. It distribution companies, such as , NUMBERS OF PEOPLE GOING TO SHOPPING Commercial property is a particularly The recent half-year property results very boasts many cities with over 300 000 inhabi - , and Real, confirm their desire to CENTRES? attractive asset class because it is defen - clearly demonstrate that the best results tants including Warsaw, Cracow, Poznan, Lodz, remain in the country on a long-term basis. After a general decline in 2009, we did witness sive in the event of decline, but capable have been obtained by managers who Wroclaw, Katowice, and Gdansk. Local companies, such as Biedronka, Empik a rebound in the first nine months of 2010. We of taking advantage of rebounds with a have opted for a very basic, very spe - This local consumption sustained property and Piotr i Pawel, are becoming stronger each observed two main changes in consumer by Baptiste Lietaert, new phenomenon: the quality of the cialised policy. More than ever, perform - demand and helped avoid the worst, especial - day. For example, Biedronka published excel - behaviour: Head of Corporate Finance Holfidis Asset retailer is becoming a determining factor. ance will be the result of grouping techni - ly in the residential sector: the Poles are still lent half-year results, proving the relevance of • Consumers are once again purchasing local Management Competitive differences distinguish cal and financial know-how with an quite demanding of more comfortable and their business model. The Polish company has products.

themselves quickly. The market share of appropriate strategy. more spacious housing. Housing inherited demonstrated its optimism by opening 67 • There is high demand for discount stores The year 2010 is coming to an end and the best retailers soars while that of the from the communist era no longer satisfies a stores since the beginning of the year. Another and products. wait-and-see has gone from being a tran - more fragile retailers erodes daily. Three Polish middle class that wishes to conform to positive sign is that 80% of retailers in the tex - sitional policy to being a strategy in its to four years are all that is needed to European standards. The drop in prices seen tiles / clothing sector foresee improved sales HOW DO YOU FORESEE ACQUISITION YIELDS own right. Investment capital is increas - reconfigure the landscape. The duration In mature countries, since the crisis and the relinquishment of cer - in the second half of 2010. Nevertheless, we CHANGING OVER THE NEXT SIX MONTHS? ingly abundant, while investment tools of a lease is no longer enough; hence - “ have observed a readjustment of rental prices, After a slight comeback in 2009, the yields are with good visibility are increasingly rare. forth, the tenant needs to be a market property prices are and renters of the highest-priced properties now shrinking, especially in prime retail prop - The government bonds that offer the best leader. stabilising. However, are renegotiating their leases. erties in regional capitals (Warsaw, Poznan ratings are no longer reassuring. Moreover, the retailers, and more specifi - “ and Cracow). Today, this type of asset is nego - Derivatives and alternative management cally the most robust ones, do not hesi - with this stability REGARDING THIS OBSERVATION, WHAT ARE tiated at around products await rules that will inevitably tate to leave a site, region or country if comes a clear THE MAIN RISKS RELATED TO COMMERCIAL 7 - 7.5%. There is still an abundant selection of limit their performance. New solvency the results are too slow to come. More PROPERTIES? assets on the market, and it is more necessary regulations will limit the effects of gear - than ever, property investments will need segmentation that You must be very watchful of the rent levels. than ever to be demanding and to respect cer - ing and the scope of institutional partici - to fully integrate the business and the Even if the rent/turnover ratio can be higher tain rules: pation. In this context, shares are regain - performance of their renters into its benefits prime than in the more mature countries due to the • High quality locations ing some colour and the property market strategy. Although caution is appropriate properties, which are low employment costs, the ratio must remain • Reliable tenants and longer-term leases should recover its position as the star of for traditional concepts, boldness consistent with the local purchasing power. In • Sustainable rent levels. long-term investment tools. becomes a requirement for new types of single-handedly driving this way, we target a maximal rental value of By respecting these three basic criteria, assets In mature countries, property prices are commerce. Drive-throughs, e-commerce, the market Jean-Marie Andreassier, Non-executive 200 Euros per year and per m for medium of outstanding quality can be found today and stabilising. However, with this stability workplace commerce, commuter com - Director Holfidis Asset Management sized (<50,000 m ) shopping ce²ntres and 100 produce an attractive yield for the investor of comes a clear segmentation that benefits merce, and commerce in subway, train (Former Director Carrefour Poland) Euros per year an²d per m for commercial about 8.5%. ²