Hadley Dean. Picture: SUPPLIED
Hadley Dean. Picture: SUPPLIED

Polish real estate will continue to outperform West European and many developing markets in 2020 regardless of the chaos caused by the coronavirus outbreak, Hadley Dean, the outgoing CEO of property specialist fund EPP said.

Speaking after the release of the company’s financial results for the year to December 2019, Dean said it is unlikely that the effects of the virus will derail rising consumer spending and general economic growth in Poland.

“I think the Polish success story is too strong and that as long as citizens are careful and practice good hygiene day to day, things will be OK,” Dean said.

Over the past decade-and-a-half, the country has grown about 4% a year on average, more than three times the EU average of 1.2%. Polish GDP was 44% of the EU average in 2004, compared with 67% in 2018.

“But while as a management team we may feel that the crazy level hysteria around coronavirus is unwarranted and that the outbreak can be managed in Poland, we don’t know what the government and others in Europe will do,” said Dean.

“The US just stopped travel to Europe, which is extreme. We are continuing to operate as we normally do as a business and most of our tenants’ customers are Poles using our shopping centres and offices, so we are not reliant on tourism,” he said.

EPP, the only specialist property fund on the JSE, opted not to give guidance to the market for its 2020 year, because of the uncertainty around the potential effects of coronavirus.

Dean said EPP, which owns 25 malls and has assets worth €2.6bn (R47.6bn), had met its targets in 2019, declaring a dividend of 11.62 euro cents per share as it entered Warsaw’s retail market for the first time since listing nearly four years ago.

The flagship Galeria Mociny shopping centre, of which EPP owns 70%, was opened in May. This is the most modern shopping centre in Poland, with 75,000m² of retail space, including more than 220 shops and 40 restaurants. It is home to Poland’s first Primark store.

Dean said EPP had continued to benefit from healthy retail conditions in Poland, the first former Soviet bloc country to be graded by the FTSE as a developed economy back in 2018.

Retail sales in the EPP portfolio grew 4.8% in 2019 despite Poland’s Sunday trading ban. Like-for-like net rental income increased 3.3% and more than 110-million people visited the company’s centres in 2019.

“Only two countries on earth had achieved GDP growth every year since 1990: Poland and Australia. I wouldn't be surprised if Poland stands alone with this ongoing record over the next few years,” he said.