4.9 billion dollars (68 billion rands) - that is how much South African real estate companies invested in Europe in 2018. The Real Capital Analytics report shows that a large portion of that amount was invested in Poland.

South African investors are steadily accelerating their activities on the Polish market and - right next to those from Western Europe, USA and Asian countries - are becoming one of the key players to invest capital in Poland. As per the Real Capital Analytics report, in 2018 the companies from that sector invested approximately 1.47 billion dollars on the Polish real estate market, which equals to 30 percent of all total amount invested in Europe.

This amount includes, among others, the projects developed by EPP, the largest shopping malls owner in Poland, holding a portfolio worth some 2.6 billion euro. Last year EPP, whose shares are partially held by the South African investment fund Redefine Properties, began an acquisition process of 12 shopping malls and retail parks - the M1 portfolio. The acquisition has been divided into three tranches; two of them have already been completed, the final tranche is planned to be finalised in 2020. The total value of the transaction is 692 million euro. The EPP portfolio includes also several other shopping malls and 6 office buildings. The company plans also a multi-purpose project, Towarowa 22, whose estimated value is over 3 billion zloty, which makes it the largest commercial project in the history of the Polish market, explains Agata Karolina Lasota, Managing Director of LBC INVEST.

Apart from Redefine Properties, there is also a number of other listed companies who are active players on many European markets - such as Nepi Rockcastle and Vukile Property Fund, that spent 498 million euro to purchase the Spanish commercial real estate portfolio from Unibail-Rodamco. The South African companies invest abroad mainly in the commercial real estates (60 percent) and commercial and industrial properties.

Overseas operations are gaining popularity among South African companies. Last year, the investments in Europe were four times higher than those on the domestic market. This results mainly from slower economic growth in South Africa (currently 0.6-1 percent), political and legal instability, concerns related to the security of construction sites and higher taxes and municipal fees. These factors not only cause outflow of the domestic capital, but also discourage foreign entities from investments in South Africa, - Agata Karolina Lasota sums up.

The Polish market continues to offer a higher return on investment when compared to other European countries. For many years now, commercial real estates in Poland have attracted large international players who can count on a stable income from leasing. Developers benefit also from the Special Economic Zones Act that - along with highly-skilled staff - can translate into another large-scale investments in Poland and facilitate development of the office sector.


Aleksandra Matuła

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