My World: June 2021…

This is part of a series of articles where our contributors describe how they think things will look a year from now.

The first few weeks of lockdown were surprisingly productive for First Property Group. Despite all the obvious challenges, and after a final flurry of Zoom and WhatsApp calls, we closed the sale of a Tower block in Warsaw and netted a €20 million cash windfall with the entire team working from home – not bad! Twelve months earlier, I would have struggled to imagine such a scenario, and making predictions at this turbulent period is difficult, to put it mildly. But here goes. 

By June 2021, I suspect we will have seen the worst of the inevitable recession resulting from the global economic shutdown, although its aftereffects will continue for a decade or more. First Property should have weathered the storm, in part due to the cash pile we have just accumulated, but also a likely boost to our earnings from ultra-low interest rates. 

During the last recession, Poland fared very well; rent payments in our portfolio held up and, with dropping interest rates, the cost of our debt reduced dramatically, driving up our profits. I expect a similar outcome for Poland this time. Its economy is likely to come under a little more strain but it has fiscal headroom and it should recover fast. Borrowing in Euro denominated debt and investing in high yielding Polish commercial property should be a winning strategy – subject to choosing the property well.