Warsaw treasures, or the capital tempting the investors

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Centre of Warsaw
Centre of Warsaw
London, Munich, Berlin, Paris and Warsaw – these are 5 most attractive European agglomerations to invest in, according to CBRE data. Office workers from the capital know that “their time is now”, so they tempt the investors with tasty morsels.

- Warsaw is a preferred place for real estate investments in Central and Eastern European region – that was the comment on the report’s conclusion made by Mike Atwell, Head of Capital Markets, CEE in Polish CBRE. The capital’s office workers know that. Each month there is new information on bids, the promotion machine also started working. – Presentation of Warsaw’s offer on trade fairs in Cannes and Munich surely influences the international rankings – says Agnieszka Kłąb, spokesperson for the City Hall. – According to Cushman & Wakefield data, the capital is a Central European leader on the commercial real estate market – over 40% of investment sales of 2012 occurred in our city. The transactions’ worth amounts to 1,52 milliard Euro, which is more than the sum of the sales in Czech Republic, Romania, Hungary and Slovakia. It is true that the city offers investors a full spectrum of real estates: from empty lots, through tenement houses and palace complex to a jewel in the crown – Plac Defilad.


The palace worth a million more a year


In the queue waits Pałac Szaniawskich on Miodowa 8 street. A few years ago, some offices of the City Hall were located there, however, office workers had to move out when the place caught the eye of Qatar sheikhs who wanted to locate their embassy there. The transaction was never made, as the Qatari resigned. The palace is still waiting for a new tenant. In late March a statement of the real estate was published. The asking price? The City Hall demands 21 million zł, which means that the worth of the palace is rising almost 1 million a year, as in 2007 its worth was estimated at 17,5 million zł. The bid is planned for the third quarter of the year. According to the experts, that investment can turn out profitable. The transactions, made in the previous years in Warsaw market affirm that there is a demand for such investment products – says Beata Sójka-Celińska, Capital Markets Group, Cushman & Wakefield. She also presents some examples: Pałac Młodziejowskiego (located on Miodowa 10), renovated by Mermaid Properties and sold for 22 million Euro to German IVG fund, or the purchase of real estates on Aleje Ujazdowskie 10, also made by IVG (the transaction was worth 18 million Euro), or Pałac Małachowskiego, recently purchased by Kulczyk Silverstein Properties. According to C&W expert, the prestige of a place is raised by its attractive localisation. The investors are still looking for the office spaces located in Warsaw COB (Central Business Area). It is also important to note that the supply for historic places is limited, which means that historic places become unique products – she recapitulates.


Expensive renovation of a tenement house


Kamienica Wolfa Krongolda, another historic place is put up for sale. Over 100 year old real estate (its construction finished in 1899) is in a need of a general repair. The building has been empty for the last ten years. During the last bid, none of the investors decided to renovate it. The asking price was then 15 million zł.


Currently the real estate is being legally prepared to be sold in a way of unlimited spoken bid. The bid is to take place in the second half-year of 2013 – inform spokespeople of the City Hall. They do not tell the price just yet. It is only known that the investor will have a discount as the place is registered on the list of historic places. However, the tenement house is deteriorating with every year. The complete renovation of a real estate, supervised by the historic places conservator, can be a long-lasting and expensive procedure. Costs of making the space more effective and making it A Class office building standard can be higher that the costs of constructing an office building “from the scratch”. Developers take that risks, hoping to create exclusive office buildings, which will then attract both tenants and investors – notes Beata Sójka-Celińska, C&W.


A few streets further, on Próżna street, Warimpex had a similar problem while renovating La Palais. In turn, Reinhold successfully renovated Kamienica Lipińskiego on Aleje Jerozolimskie and sold it to Union Investment. – The said tenement house on Złota 83 street is located near to Wola, a district, which is now a big construction site and is developing quickly. In a few years it might become a new COB. For now, however, the immediate surroundings of Złota invokes a lot of objections, and the proximity of other office space projects is a competition for the planned investments – stresses C&W expert.


Jewel in the crown for 70 million


A flagship offer for Warsaw is a part of Plac Defilad. The area is located along Marszałkowska street, opposite Galeria Centrum and amounts to 5,800 m2. It was appraised for 70 million zł. According to the town planning, potential investors can build commercial buildings, offering spaces which are commercial, administration and office, gastronomic, finance and banking, exhibiting and cultural. According to the experts, the problem here can be precisely the plan. Low buildings, dedicated to services and culture, restrict the size of the investment. Income from the rent can also be restricted, which in turn influences the real worth of the area.


The location in the Warsaw and COB centre, in perfectly accessible, recognisable and noticeable place is unique and highly attractive. Additionally, the area is claim-free, which in this localisation is very rare – lists the representative of Cushman & Wakefield and sums up – These kinds of real estates should be popular with the investors, and the confirmation of this thesis can be, for example, the sale of 1,7 hectare area, belonging to PKP, for 171 million zł. The place had similarly interesting and close localisation, on the crossing of Chmielna street and Aleja Jana Pawła II.


It is worth to look further than the city centre


The capital’s offers consist not only of the centre and its surroundings. There are two areas waiting for a buyer on the border of Ochota and Włochy districts. Building lot number 8/9 has almost 7,500 m2, building lot number 8/6 has 1,500 m2. Town planning anticipates to have office services and hotel spaces there, but it is not an obligatory design. The estates will be prepared to be sold after the local town planning design for Wiktoryn area will be approved. The design will be publicly announced in near future (third quarter of 2013). In the south, there is a real estate to be bought, located on Baletowa 172. The area was an object of a bid in 2012, but the bid ended negatively. The decision for the continuation of the bidding procedure has not yet been made. If it will be continued, the most likely date for the bid is the fourth quarter of 2013 – the office workers inform. Decision of WZ for this lot plans a office and service building, high up to 10,5 metres. The lot has 3,500 m2.


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