Echo Polska Properties excited about prospects for Poland’s real estate market in the wake of Brexit

Posted On Thursday, 11 August 2016 13:32 Published by
Rate this item
(0 votes)

Echo Polska Properties (EPP), which lists on the JSE in September following a listing on the Euro MTF market of the Luxembourg Stock Exchange (LuxSE) in August, remains excited about the prospects for the Polish real estate market despite the current volatility in Europe and other markets around the world.

Hadley_Dean

The decision by the UK to exit from the EU has sent many markets across Europe into a tailspin – but Poland’s real estate market stands out as a strong growth avenue for investors. 

“We believe our upcoming listing on the JSE comes at the perfect time as many local investors seek to diversify by gaining exposure to offshore property. We believe Poland’s strong domestic economy will continue to drive development and growth potential for investors,” says Hadley Dean, CEO of EPP.

He says the Polish economy is expected to offer strong GDP growth, backed by a skilled labour force and sophisticated banking system, with infrastructure development continuing to cement a firm foundation for jobs and economic expansion.

Prof Marek Belka*, former Prime Minister and Finance Minister and until recently the President of the Polish Central Bank, says a June forecast by the Organisation for Economic Co-operation and Development (OECD) holds that Polish GDP could increase from around 3% in 2016 to 3.5% in 2017 – which is up from only 1.3% in 2013. 

He says the increase in economic activity and infrastructure development will continue to drive prospects in the real estate market, and particularly in the retail sector.

“Economic activity in Poland continues to expand. Rising employment and wages, higher social transfers and low energy prices are expected to support faster consumption growth, which in turn drives the growth potential of the retail property market,” he says.

“Retail sales in Poland are growing at around 5.5% in 2016, while they have actually averaged 7.20% from 2001 until 2016,” he says.

Dean says 25 international brands entered the Polish market for the first time last year, while those already in Warsaw looked to expand their footprints. 

“We saw brands like Jacadi and Dairy Queen enter our market in 2015, while expansion outside of Warsaw took place by the likes of Sportisimo and Esprit Bodywear. These are all good portents for the growth potential of the sector, as is the fact that vacancy rates remained flat at just under 3% for the eight largest Polish cities,” says Dean.

While a vote for Brexit, a slowdown in China and other emerging markets and weaker global trade could affect exports, Poland’s real estate market is one of the sectors on the rise.

“Office space in Poland, for example, is almost 60% cheaper than in London, and international banks are already using Brexit to reason to accelerate their take up by snapping up this cheaper space" says Dean.

Currently, EPP owns 6 office and 10 retail properties with a gross leasable area (GLA) totalling 446,400 square metres. The buildings are located in major cities across Poland, and were all built by Echo Investments, the biggest real estate developer in Poland and one of the key shareholders of EPP. 

EPP has a 25% development profit participation in and has also secured the right of first offer from Echo Investments to purchase another 7 properties (known as ROFO projects) with a total GLA of approximately 200,000 square metres. The ROFO projects are at various stages of construction and are set to be completed between 2016 and 2018. 

In addition to organic growth of its property portfolio, EPP has significant growth opportunities embedded by virtue of the extensions, reduction in vacancy rates and arrangements regarding the ROFO projects.

The value of EPP’s initial portfolio as at 30 June 2016 was EUR 1.2 billion, with retail properties comprising 77% of the initial portfolio by market value.

The dual listings on the JSE and in Luxembourg are anticipated to provide EPP, in which South Africa’s Redefine Properties (JSE: RDF) holds a strategic 49.9% investment, with significantly improved access to expansionary capital.

“When combined with these dual listings, the pipeline of opportunities for our fund remains extremely exciting as they are earnings accretive. This is why the fund has the potential to double in size in coming years from now,” concludes Dean.

Further information on the capital raise and placement of shares to be undertaken by EPP to coincide with its listing on the JSE will be available during an investor roadshow in August. The opening date of the private placement is expected at the end of August and the closing date of the private placement in early September. The listing is then expected by mid-September, subject to final approvals.

Last modified on Friday, 12 August 2016 20:41

Most Popular

Three stocks to boost your portfolio in 2020

Jan 22, 2020
Dr Adrian Saville CEO Cannon Asset Managers
After enduring a trying decade under the mismanagement and malfeasance of Jacob Zuma,…

Africrest Properties completes mixed-use development, Stanley Studios in Johannesburg

Jan 21, 2020
39 Stanley Avenue
What could be better than living in an extremely well-priced apartment or working in…

New hotspots driving cost hikes in key data centre markets - thriving market in South Africa

Jan 21, 2020
Dan Ayley Turner and Townsend
Major global data centre markets are seeing soaring construction costs as development in…

Equites Property Fund Limited to develop a R1.3 bn warehouse for Pepkor

Jan 21, 2020
Andrea Taverna Turisan  CEO Equites Property Fund
Equites Property Fund Limited (Equites) today announced an agreement with leading…

2020 Commercial Property Themes –Electricity supply and cost will be a key wildcard for the Commercial Property Sector this year

Jan 23, 2020
John LoosFNB
Will electricity supply reliability and cost increases become a key issue again in 2020?

Please publish modules in offcanvas position.