Report: The situation in the investment land market in the warehouse and production sector in Poland August 2013

Transcription

1 Report: The situation in the investment land market in the warehouse and production sector in Poland August 2013

2 I. MARKET TRENDS 1. Consolidation of prices There has been a progressive increase in supply in this segment since the crisis in The last few years have seen prices decline slowly, and we are now witnessing their consolidation. The average price per sqm. of land in locations deemed to be good for logistics operations ranges between PLN 130 and PLN 160 depending on the region. The price of land is a component of the cost of real estate development and is reflected in rents, which for long time have been stable at a low level. We can say that the market has adjusted to the land development market, which does not mean that there are no extreme situations. 2. Purchase a small plots for specific investments Currently, we are not seeing large purchases of several dozen hec tares. Developers rather, if they have large land banks, such as Prologis or S egro, are seek ing to sell. Other developers are building projects specifically ordered by clients, and therefore on areas of 5 to 10 hec tares. Individual clients who invest for their own use are also interested in land up to 5 ha. The average price per sqm. of land in locations deemed to be good for logistics operations ranges between P L N a n d P L N depending on the region. 3. Better prepared M ost of the land is better prepared in legal and technical terms than a few years ago. O wners have realised that in a situation of oversupply, the attrac tiveness of land is determined not only by its location, but also by its proper preparation. Private owners are facing competition from municipalities, economic zones and institutions, which in the economic downturn are tending to sell their real estate portfolio. Institutional land is usually better prepared than that belonging to private owners. I t must be said that this applies to parcels up to 10 hec tares; above this size and the situation is generally more difficult. Fragmentation of land, a large number of owners of small plots and a lack of agreed development plans significantly increases the process of obtaining large with a large acreage. 4. The conditions for the attractiveness of investment plots A good location and communication links with the plot are necessar y conditions for the sale of a plot for a warehouse and logistics projec t. The new configuration of roads and highways has affec ted positively or negatively on the attrac tiveness of cer tain land plots. For example, land in the vicinity of Błonie along National Road No. 92 has lost out to Pruszków located near the A2 motor way. Only land situated near major transportation hubs, along motorways and dual carriageways has the opportunity to be sold for production and warehouse investments. I n addition, another requirement is for good access roads to main roads and to the plot. Today, land for investment, in addition to good price and being fully prepared, should also have an access plan. Without this, a plot has little chance of being sold. Today, land for i n v e s t m e n t, in addition to good price and being f u l ly p r e pa r e d, should also have a n a c c e s s p l a n. Without this, a plot has little chance of being sold. 1

3 II. WHERE IS THE HIGHEST AND LOWEST SUPPLY? OVERVIEW OF KEY REGIONS 1. Warsaw Within the city boundaries, the supply of land for warehouse and logistics projec ts is low and prices are the highest in the countr y, even in industrial areas such as Targowek Przemysłowy, where the price per sqm. is about PLN. This is due to increased competition from the residential and office sec tor. Last year in the Warsaw market, more than 85% of land sale transac tions concerned these sec tors. Residential investments are crowding out industrial investments, even in historically industrial distric ts, good examples of which are Żoliborz/Bielany and Służewiec, where brownfield sites are being taken over by the residential sec tor. M oreover, other problems include the use of land, the lack of local development plans for individual distric ts, forms of ownership of ten less preferred by buyers, i.e. freehold, and the general disapproval of the authorities to this type of investment in the capital. A. Districts of Warsaw on the right bank of the Vistula and the surrounding area This area has been a big disappointment for the market. O ver the years of highest growth, large areas along the S8 highway nex t to the R adz ymin ring road had no local zoning plans and it seems to have missed its moment. Today it is a location with high supply, but low interest among buyers due to weak demand from tenants. For example, a planned projec t by Goodman has not not found the right customers over a period of t wo years. The location that was to compete with expensive Żerań has not been a success and will probably supply the end user market. The average rate per sqm. of land within a distance up to 25 k m from Warsaw in the above area is around PLN , with actual transactions occurring at even PLN However, within the city boundaries on the right bank of the Vistula, plots in Żerań and Targówek are enjoying interest among buyers as well as the area around Mark i, which direc tly borders the Warsaw agglomeration. However, the supply of land intended for industrial projects in this area is very limited as is the acreage of available land. The prices of plots up to t wo hec tares in these sites reach PLN per sqm. Therefore, the development market there is not growing as rapidly as in locations to the west and south of Warsaw, where road infrastruc ture is better and the prices are comparable or lower. I n distric ts on the right side of the river and the surrounding area we can obser ve only a few investments by individual clients for their own needs. However, within the city boundaries on the right bank o f t h e V i s t u l a, plots in Żerań and Targówek are enjoying interest among buyers as well as the area a r o u n d M a r k i, which directly borders the Warsaw agglomeration. B. Districts of Warsaw on the left bank of the Vistula and surrounding area Within the city boundaries, land around Okęcie Airpor t is enjoying a lot popularity, but the supply is very low, and the rates are the highest in the city - PLN per sqm. However, just outside the city in the municipality of R asz yn prices are 2

4 now much lower, at a level of about PLN per sqm. The problem with this location is the availability of land over 5 hectares. Outside the city, in the main warehouse locations such as Błonie, Pruszków and Ożarów Mazowiecki, the supply of plots with attractive characteristics such as a regular shape, access to infrastructure and with local plans is relatively high. Changes in methods of distribution, timing and the effec tiveness of deliveries have meant that the potential interest in land for produc tion and storage investments end at a radius of 20 k m from the borders of Warsaw. We can see that investment plots located at road to Poznań around Błonie have lost their attractiveness in favour of Pruszków due to the opening of the motor way A2 and the large supply of warehouse space in the area. Currently, the transac tion price near Błonie stands at PLN per sqm., while in Pruszków the price is PLN 150- per sqm. Currently, the transaction price near Błonie stands at PLN per sqm., while in Pruszków the price is PLN p e r s q m. 2. Upper Silesia In comparison with other regions, across the Silesian agglomeration the supply of land with good investment characteristics is quite low. The intensity of b u i l d i n g, t h e e x c l u s i o n o f l a r g e a r e a s d u e t o m i n i n g d a m a g e o r c o n t a m i n a t i o n from earlier activities such as smelting and the high competitiveness from o t h e r p r o p e r t y s e c t o r s a r e a l l f a c t o r s s h a p i n g t h e l o w l e v e l o f s u p p l y. T h e a v e r a g e p r i c e p e r s q m. o f l a n d f o r i n d u s t r i a l i n v e s t m e n t i n a g o o d l o c a t i o n i n Silesia is PLN 120- per sqm. The Upper Silesian industrial market is divided into sub -regions located along the north-south transport axis along the E75-S1, from the north around Czeladź, through M ysłowice, and fur ther south around Tychy and even as far as Bielsko -Biała, and the east-west axis along the A4 highway around Chorzów and Gliwice, where there is also fairly large demand for industrial land. The Upper Silesian industrial market is divided into sub-regions located along the north-south transport axis and the east-west axis. I n addition to Chorzów and Gliwice, the greatest interest in land located near the junc tion of the A1 and A4 is at the S ośnica junc tion. However, the supply of plots in this location is low due to the large urbanised areas nearby, mak ing it one of the most expensive locations in Silesia. The situation is similar in M ysłowice, where the S1 and A4 intersec t. Prices of investment plots at the S ośnica junc tion and around Mysłowice are in the range PLN 160- per sqm. I n the major towns of Upper Silesia we can see an increased demand for land for industrial projec ts in inner city locations. I nvestors within the city want to pursue urban distribution centre projects, which are usually intended for companies ser ving the local market where the key issue is the time and convenience to reach the customer. These brownfield sites are acquired by the demolition of existing real estate on the plot. This t ype of land of ten requires additional investments that will create the required parameters of purity and capacity of the land and the relocation or removal of existent infrastruc ture on the plot. When buying this t ype of plot it is necessar y to budget for the additional costs as well as the additional time for proper execution of works and the completion of administrative procedures. 3

5 3. central poland The main locations for logistics in the region are Łódź, Stryków and Piotrków Trybunalsk i. I n recent years, thanks to its central location at the junc tion of the A1 and A2, Str yków has come to the fore. The local authority has used its chance and has gradually prepared successive areas for investment. The average price of land in Stryków is in the fairly high range of between PLN 150 and 170 per sqm. The development of warehouse and production projects around Stryków has adversely affec ted the attrac tiveness of Łódź. I n the city and the surrounding area there is a lot of supply, and investors have a ver y wide range of offers, of ten brownfield sites. Currently, the price of land within the city boundaries, in the historically industrial areas such as Teofilów and Widzew, has dropped slightly and is now in the range of PLN -200 per sqm. However, prices are still high and not ver y competitive. I n addition, it should be noted that the available investment areas are plots up to 5 ha. I n r e c e n t y e a r s, thanks to its central location at the junction of the A1 and A2, Stryków has come to the fore. The third sub -region is the area around Piotrków Tr ybunalsk i, a market that has suffered the same fate as Błonie. Piotrków during times of prosperity attracted several warehouse and manufac turing projec ts, but now, despite the high supply of land, including land banks, there is a lack of buyers, with demand has drif ted over to Str yków. Today it is a local market, where oppor tunities for growth come from projec ts that suppor t local businesses. I nvestment plots can be purchased here at a price of PLN per sqm. 4. Wroclaw This is a market with huge potential. In recent years major changes in infrastructure have meant that this is the region most preferred by investors. The proximity of the border with Germany and the Czech Republic, the motor way and the motor way ring road around Wroclaw and the large labour market mean that af ter a few quiet years investment land has regained its attrac tiveness. I n the region, there is a large supply of land prepared for development, in good locations and with good communication. O ver the last few years prices soared and were in the range PLN Prices have fallen slightly recently and remain at a level slightly above the national average at PLN per sqm. I nvariably, the plots that enjoy the greatest demand are by the Bielany junc tion, where industrial land is expensive due to high competition from the commercial sec tor. Another attrac tive location is the Nowa Wieś junc tion where the A4 meets the A8 ring road. Here, the prices are slightly lower at PLN due to the large supply of well-prepared plots. Prices have fallen slightly recently and remain at a level slightly above the national average at PLN per sqm. 4

6 Another place where investors are interested in is towards the north-east of Wrocław, an area the advantages of which are appreciated by S egro and Goodman. The small supply of land in the area is causing the prices to remain in the range of PLN per sqm. 5. Poznan I n the Poznan area, as in the Wroclaw area, there is a large supply of high- quality investment plots. The region currently has close to 1 million square metres of modern warehouse and produc tion space. Prospec tive investors are look ing mainly at plots at motor way junc tions and on the S11 express road. It can be said that municipalities competing for investment are effectively managing their land supply polic y by harmonious work on plans and infrastruc ture development. Attractive locations for investment are areas in municipalities adjacent to the A2: Kórnik (G ądk i) Komornik i, N iepruszewo and Tarnowo Podgorne. The average transaction price in these locations is around PLN 150- per sqm. 6. Tri-City I n the case of Tri- City, supply is slightly lower, but this is due to the increased interest of buyers and the hilly terrain, which disqualifies a significant por tion of land for warehouse and produc tion investments. M oreover, the large investments announced and launched by Goodman in the por t area a target of 40 hec tares and a similar scale in Pruszcz by SEGRO have exhausted demand in the region for now. Currently, the demand is for smaller plots up to 5 ha for BTS projec ts or end users. Prices are quite high: PLN -230 per sqm. 7. Krakow, Rzeszów and Lublin I n smaller markets, supply is diverse. I n the historically most difficult market in terms of supply, Krakow, there are new locations in municipalities adjacent to the ring road, as well as in post-industrial areas of the city. Land prices in these locations, as compared to other regions, are relatively high in the range PLN per sqm. Potential customers are interested in locations as close to the city as possible or within it, where there is a lot of competition from other real estate sectors. I n addition, there are problems associated with unregulated ownership and highly fragmented plots. Attractive locations for investment are areas in municipalities adjacent to the A2: Kórnik (Gądki) K o m o r n i k i, Niepruszewo and Tarnowo Podgorne. I n s m a l l e r m a r k e t s, supply is diverse. In Rzeszów, the supply of larger plots is limited, there are no local plans and potential areas for investment can be found in the surrounding municipalities. Prices are expensive at around PLN 160- per sqm. Lublin has relatively well- developed urban locations suitable for industrial projects; however, the supply of land is limited and prices are high at PLN 200 per sqm. Chances to change the situation in the region could come with the construction of the ring road, which will increase the competitiveness of areas in the municipalities adjacent to Lublin. 5

7 average Prices of land for development in the regions PLN/sqm Warsaw city Warsaw and surrounding area Silesia 50 Central Poland Wroclaw Poznan Tri-City Krakow Rzeszów Lublin S ource: AXI IMMO 6

8 Axi Immo Group Sp. z o.o. 7/9 Czackiego Street Warsaw ph office@axiimmo.com