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Fprop CEE Snapshot

Q1 2020


Country Manager: Przemyslaw Kiszka


Country Manager: Catalin Ana


Credit Rating:

S&P: A- outlook stable (Oct 18)

Government debt as % of GDP:
Low at c50% of GDP. Constitutional limit = 55% then 60% of GDP.

c. 37.9m (2019). Broadly stable.

Credit Rating:

S&P: BBB- (Dec 2019) 

Government debt as % of GDP:
Low at 37% of GDP.

c. 19.7m (2019). Slowly decreasing.



  • Yields for good secondary property attractive at ≥7.5% p.a.;
  • Transaction volumes in 2019: c€7.8 billion (2018: c€ 7.2 billion);
  • Healthy banking market. Typical senior loan margins of 2-2.5% p.a. above EURIBOR.




  • Yields for good secondary property attractive at ≥8.5% p.a.;
  • Transaction volumes in 2019: €1.06 billion (2018: c€900 million). Average deal size c€31 million;
  • Bank lending margins reducing. Typical senior loan margins of 3.2-3.5% p.a. above EURIBOR.


  • Total stock: c11.1m m2. Of this c5.6m m2 is in Warsaw (up from c3m m2 in 2008) and 1.4m m2 is in Krakow (around double that of 5 years ago);  
  • New development: 350,000 m2 expected to be completed in Warsaw in 2020 (2019: 162,000 m2). Around 780,000m2 is under construction;
  • Prime yields: 
    • Warsaw: 4.75%;
    • Major regional cities: 6%;
  • Vacancy rates:
    • Warsaw: 7.8% / 435,100 m2, a new record low since 2012. Forecast to further decrease in 2020 as 69% of new supply is pre-let; 
    • Regions: varied.
  • Rent levels:
    • Warsaw: €18-24 per m2 per month for Prime,  €12-18 per m2 per month for Secondary. Rents beginning to rise due to falling vacancy rates and increased cost of construction (up 15-20% since 2012);
    • Regions: €10-15 per m2 per month.


  • Total stock: c3.16m m2 in top 5 cities, of which c2.5m m2 is in Bucharest;
  • New development: 254,500 m2 in 2019 in Bucharest and 160,000 m2 in regions (2018A: c200,000 m2 in Bucharest and 90,000 m2 in regions) – around half of modern office stock in Bucharest is now Class A;
  • Prime yields: c7%;
  • Vacancy rates: Bucharest c9.3% with wide spread between submarkets ranging from 12% to 3.5% in CBD. Lower for regional cities;
  • Rent levels:
    • Bucharest €10-18.5 per m2 per month (unchanged); 
    • Regional cities €9-15 per m2 per month but upward pressure;
  • Demand for office space remains strong supported by 5% growth in office workers in 2018 (30,000 new jobs = 300,000 m2). Key drivers: IT&C and professional services continuing to expand at double digit rates (10-11% in 2018).


  • Total stock: c14.7m m2 (of which 10.2 m2 in shopping centres); 
  • New Supply: shopping centre development declining (169,000 m2 delivered in 2019) BUT development of retail parks and retail warehousing is increasing (up 29% to 210,000 m2 in 2019) as is development of smaller convenience centres (138,000 m2 in 2019);
  • Prime yields now 4.9% for shopping centres and 6.8% for prime retail parks;
  • Vacancy rate: Warsaw 1.9%, 18 largest cities c4.0%;
  • Rent levels: Warsaw €100-130 per m2, regions €45-60 per m2 for shopping centres, €9.5-12 per m2 for retail parks;
  • Purchasing power per inhabitant: +7.7% yoy 2017-18 (+5.5% 2016-17);
  • Retail sales growth: 6.5% yoy (as at Apr-2019);
  • In 2019, 20 international brands opened their first stores in Poland, including Hermes, Monki, Weekday and Under Armour;
  • Sunday trading restrictions introduced wef Mar-2018 - negligible impact discernible so far. 


  • Total stock: 3.65m m2 of which 2.3m m2 in Bucharest;
  • New Supply: c332,800 m2 in 2019. (2018: 144,000 m2 , 2017: 100,000 m2);
  • Prime yields: c6.50%;
  • Vacancy rate:  Bucharest 4%;
  • Rent levels: €65-75 per m2 for shopping centres, €8-15 per m2 for retail parks;
  • Purchasing power per capita: +15% yoy 2018-2019;
  • Salaries continue to increase rapidly at 14% yoy in nominal terms and 10% in real terms (as of November 2019); 
  • Retail sales growth: 6.5% yoy (as at Nov-2019).

Track Record:

  • Fprop has been earning >15% pa. ROE from leveraged rental income for many years;
  • The income return of FPAM funds invested in Poland and Romania ranks No.1 versus MSCI’s Central Eastern European (CEE) Benchmark over the three and five years to 31 December 2018.
Fprop CEE Investment Strategy & Property Requirements

Investment Strategy:

  • Targeting higher yielding commercial property to generate a minimum IRR & ROE of 15% p.a. (geared);
  • Add value where possible, including by ancillary development;
  • Apply leverage – it is possible to fix interest rates on loans for >5 years at close to 0%. 

Property Requirements:

  • All sectors considered but focus on offices, retail and mixed-use;
  • Lot sizes ≥€5m with no ceiling;
  • ≥7.5% net initial yields - unless partially vacant, in which case lower.

Fprop Diary

Early April Financial Year End Trading Statement.

Contact Fprop:

Jeremy Barkes
Director, Business Development
+44(0)20 7340 0270
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