POLAND TODAY magazine #11 by Poland Today

Former President Kwaśniewski talks about Poland’s chance for unity in an exclusive interview. page 24

Expo Real 2015: Special focus sections on commercial real estate and the hotel market. pages 29-48

Polish scientists are helping the police catch drunk drivers with innovative use of lasers. page 54

Vote of no conﬁdence?

q4 2015 issue No. 11

Poland Today presents an analysis of the country’s political environment ahead of critical parliamentary elections

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pages 14-28

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a family receives an emergency kit from PAH. Thanks to the generosity of PAH SOS Club members we were the first international NGO in 2013 to provide help to those in need in the north of Syria.

table of contents

editorial

IN FOCUS

08-13 LEADER

14-28

Vote of no confidence

Poles will vote in parliamentary elections on 25 October. All indicators currently point to a decisive defeat for the country’s ruling party, Civic Platform. Despite a strong economic track record, the party has failed to inspire an electorate that feels progress has not been fast enough. The first beneficiary of this sentiment was Andrzej Duda, who won the presidential elections in May. Poland Today takes a look at the political situation in the country – how we got here, where we stand now, who the main players are and why the youth vote could prove decisive

In desperate need of geopolitical thinking

Poland needs to be more decisive when it comes to matters of national interest, says Bogusław Chrabota, editor in chief of leading daily newspaper Rzeczpospolita, in a special opinion piece for Poland Today

29-38

In this special edition of Poland Today’s Urban Issues real estate supplement, we take a look into the country’s commercial property market, with an analysis of where investors are heading and where the opportunities lie. We also talk with a number of experts in the industry, including both real estate and financing executives from BNP Paribas, developer ECE Projektmanagement, and Xcity, which manages property owned by Polish State Railways

HOTEL SECTOR IN FOCUS

The politicians that are making waves ahead of the 25 October parliamentary elections

One of the most attractive sectors in Poland’s commercial real estate market is hotels. As the office and retail pipelines become increasingly crowded, hotel development and investment present interesting opportunities for profit. International brands are expected to begin establishing themselves in the country while the budget niche, especially, still has room for new investments. We talk to several experts in the sector, including those from Orbis Group, Christie + Co and Sheraton

The faces of the election

Duda’s regional focus

President Andrzej Duda’s first trips abroad signal the direction his foreign policy will take

Through the eyes of the young A young man from Britain canvasses young Poles to understand their take on politics and culture

A chance for unity

Former President Aleksander Kwaśniewski talks about the challenges facing Poland and its new president, Andrzej Duda, in this exclusive interview with Poland Today editor in chief Richard Stephens

Table of contents

URBAN ISSUES: EXPO REAL 2015 EDITION

39-48

ENERGY IN FOCUS

49-53

Poland’s energy sector is at a crossroads: dependent on coal for the foreseeable future, energy producers will have to find ways to be more efficient, innovative and diversified. Billions of złoty are already being pumped in to build new capacity, and there’s more to come as the country’s ageing generation units and grid infrastructure will have to be modernised. Energy expert Filip Elżanowski offers his thoughts Poland’s options in the sector

SCIENCE & TECHNOLOGY

Laser tagged

Polish scientists from the Military University of Technology in Warsaw are finding ways to use lasers to help police fight the scourge of drunk driving in Poland

ARTS & CULTURE

Poland’s Ansel Adams

A selection of photos by Paweł Pierściński, showing the Polish countryside in dramatic contrast

Our exclusive interview with former president Aleksander Kwaśniewski. page 24

Poland’s energy sector is at a crossroads. page 49

A record medal haul for Poland’s athletes in Beijing. page 62

It happened in ... October 1 October, 1814. The Congress of Vienna officially opens

Eyewitness: Waldemar Świto

Waldemar Świto never fought in World War II, but he has battled its political and social consequences ever since

SPORT

Poles shine at world athletics championships

Poland was led by a strong showing from its hammer and discus throwers

EVENT REVIEW

For Poland, opportunity checks in

Plenty of room for growth remains in the country’s hotel markets, and new niches are set to emerge

Foreign capital flowing in

table of contents

Central and Eastern Europe’s real estate markets are awash with investor money

Tony Blair talks up business services in Poland

The sixth annual ABSL conference welcomed the former UK prime minister to Kraków

The ‘indispensable’ conference The Economic Forum in Krynica proved once again that it is the premier event for discussing politics and economics in Poland

The battle for $1 trillion

Experts at the ULI Competitive Cities conference explained how cities can best attract investment

IMPRESSIONS

Poles are curious, not hostile

Poland Today sits down with Marie Aimée, a Rwandan living in Poland, to ask about her experiences in the country

Polish scientists are using lasers to catch drunk drivers. page 56

Who are the politicians making waves ahead of the election? page 18

A lot has happened since

the last issue of Poland Today magazine was published at the beginning of the summer. Since then, we have agreed a strategic partnership deal with Gremi Media, owner of Rzeczpospolita, Parkiet, Bloomberg Businessweek and other titles, both in print and online, as well as a thriving events business. With our international reach and their strength in Poland, we believe there is a strong synergy. The partnership opens up great opportunities for reaching a far wider audience with our magazine, newsletters and events, and for developing our projects to their full potential. We believe that together we can help raise the profile of Polish business around the world, and help foreign investors who do business – or would like to do business – in Poland. In partnership with Gremi Media, we will also be better able to fulfil our aim of projecting Poland around the world by organising events where we will showcase the investment opportunities in this country and provide a forum for meeting potential partners, suppliers and clients. We start this series of events close to home, with ‘Primetime Poland in London’ on November 30. On top of that, Poland Today, in partnership with Rzeczpospolita and several top international organisations, will organize the ‘Poland & CEE Day’ on Wednesday 16 March 2016 at the MIPIM real estate fair in Cannes. Wherever we go, Poland Today and our partner titles will provide a platform for Polish companies and international companies present in Poland, to raise themselves above the crowd. Today, the image of Poland on the international stage is a mixed bag. There is a lot of good, but there are also elements which take away from its overwhelmingly positive story. Poland Today will always endeavour to highlight the positive, while pointing out possible solutions to the negative. In doing this we will continue to be ‘internationally engaged’ and carry out our mission of ‘bringing Poland to the world and the world to Poland.’ This is an exciting time for Poland Today as we take the steps that will enable us to reach our full potential. We invite you to join us along the way.

Richard Stephens

Publisher Poland Today

Publisher’s note

HISTORY

editorial

‘The perceived lack of progress in raising wages and increasing opportunity for Poland’s youth led them to vote en masse for Law and Justice’s candidate for president, Andrzej Duda’

Change is in the air. If the polls are to be believed, Poland

Andrew Kureth

Editor’s note

is editor of Poland Today. Originally from the United States, Andrew has been living in Poland since 2001 and has covered the major political, economic, business and social stories in the country for over a decade. He has written for numerous global media, including the Financial Times and Politico Europe. Andrew graduated from Kenyon College in Ohio.

will have a new prime minister-elect after parliamentary elections on 25 October. As Poland Today goes to press, the opposition Law and Justice (PiS) party looks set to trounce the ruling Civic Platform by more than 10% of the vote. From outside, it’s a stunning turn of events. Just four years ago, Civic Platform became the first party since Poland’s transformation to win a second term in power. It has presided over eight years of uninterrupted growth – including throughout the global economic crisis – and a stupendous rise in living standards that has led some economists to say that Poland is experiencing a “new golden age.” But a closer look reveals cracks in that image. Civic Platform’s reform efforts have been half-hearted, while those that have been successful, such as raising Poland’s retirement age, have proved deeply unpopular. The perceived lack of progress in raising wages and increasing opportunity for Poland’s youth led them to vote en masse for Law and Justice’s candidate for president, Andrzej Duda, in May. The same now looks set to happen in parliament. In this issue we take a look at the personalities making waves in the election (page 18) as well as President Duda’s foreign policy (page 20). We also talk to former President Aleksander Kwaśniewski (page 24) in an exclusive interview. Additionally, we present an opinion piece by Bogusław Chrabota, editor in chief of one of Poland's leading daily newspapers, Rzeczpospolita. He takes stock of Poland's missteps in foreign policy over the past quarter century, and explains why the country's leaders desperately need to think more in geopolitical terms (page 16). Aside from politics, this issue is chock-full of business content, with three special focus sections. In our Urban Issues real estate supplement, we look at the opportunities in Poland’s commercial property sector (pages 29-38) ahead of the Expo Real fair in Munich. We also present a special section on hotels (pages 39-48), which is turning out to be one of Poland’s most dynamic markets, and on energy (pages 49-53), where the country is at an important crossroads. In our Science & Technology section we report on how Polish scientists are working on a device that uses lasers to help catch drunk drivers (page 54), while in Sport we recap Poland’s successful showing at the World Athletics Championships (page 62). In Impressions, we interview Marie Aimée, a Rwandan living in Poland (page 74), who explains that while some things about Poland were difficult to get used to, the move has ultimately proved positive for her. Change, as the saying goes, can be good.

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in focus

Golden throwers:

Polish athletes delivered their country’s best-ever showing at the World Athletic Championships in Beijing this August. Led by gold medalwinning hammer throwers Anita Włodarczyk and Paweł Fajdek, as well as Piotr Małachowski who won gold in the discus, Poland came in sixth overall at the games, with a silver and four bronze medals to go along with its three golds. see page 62

Poland to take 7,000 refugees Europe’s refugee crisis was the hottest topic of public debate in Poland in September. Emotions ran high, and politicians used the humanitarian disaster to score political points ahead of elections in October. A majority of Poles oppose allowing the refugees to settle in Poland, especially if it is required to do so by the European Union. For weeks, Poland resisted Brussels’ calls for a quota sys- Polish, international media New US ambassador sworn in tem that many say tramples on indi- go wild for Nazi ‘gold train’ vidual countries’ sovereignty. Early in Paul W. Jones, a long-serving American September, Prime Minister Ewa Kopacz Polish and international media were diplomat, has become the United States aligned Poland with the other countries sent into a tizzy in late August after two Ambassador to Poland, replacing in the Visegrad Group which, along with men, one from Germany and the other Stephen D. Mull, who had held the posiPoland, includes the Czech Republic, from Poland, informed authorities in the tion since 2012. Hungary and Slovakia. The countries south-western city of Wałbrzych that “I’m honored that the US Senate issued a strongly worded statement they knew the location of a lost Nazi confirmed my nomination as the next saying they would not agree to a quota train which potentially contained many Ambassador to Poland,” Jones wrote on system for accepting refugees. valuable items, including, possibly, gold. Twitter after his confirmation hearing. However, Kopacz seemed to soften During World War II, the Germans He was sworn in on 11 September. Poland’s stance as time wore on. Her dug miles of secret, underground tunAmbassador Jones most recently close political ally and predecessor, nels in the area, according to historians. served as principal deputy assistant Donald Tusk, who is now president of Local legend has long held that a train secretary of state for European and the European Council, was tasked with with valuables was driven into one of Eurasian Affairs. In that position, he was coordinating an EU-wide response these tunnels and sealed inside as the responsible for all aspects of US polto the crisis and needed the support Nazis retreated from Poland in 1945. icy and operations in Europe, particuof Poland to push through a resolution. There are no historical records of any larly Russia and Ukraine. Prior to that, From an initial figure of 2,000 refugees such train, however. he served as ambassador to Malaysia that Poland was willing to take, Kopacz Two radar images – one released by from 2010-2013. finally suggested that the country the two men, the other by newspaper Jones has served in many other could resettle as many as 13,000. She Gazeta Wrocławska – appeared to show capacities for the US State Department, seemed to be swayed by arguments that a train was indeed hidden under including as deputy chief of mission at that if Poland would ever require help the earth near the city. However, the the US mission to the Organization for with a potential flood of refugees from images seemed to show that the train Security and Cooperation in Europe Ukraine, it needed to show solidarity is carrying a group of tanks. In addition, (OSCE), as well as at the US Embassy with Europe on the issue of migrants the men revealed that the train was not in Skopje, Macedonia. in a tunnel as such, but was simply burfrom the Middle East and Africa. Jones also served at the OSCE mission in Sarajevo, Bosnia and Poland therefore sided with the ied underground. Poland’s culture ministry, which has Herzegovina in 1995, helping to implemajority of EU countries at an extraordinary meeting in Brussels when they also been involved in the investigation, ment the Dayton Peace Accords, as used the ‘nuclear option’ – a majority said that the location was revealed to well as at the US embassy in Moscow vote instead of unanimous consensus the two claimants as a deathbed con- from 1992-94. Jones will do well if he can win over – to push through quotas. Poland broke fession by one of the men who had with its Visegrad Group allies on the helped to hide it 70 years ago. the hearts of Poles as well as his preThe area has now been sealed off by decessor did. Ambassador Mull was issue, all of which, along with Romania, the Polish military as they inspect the known for his affability and his ability to voted against the quotas. According to the system for allo- site for chemical weapons or explosives. speak Polish well. Under his watch the cating the refugees, Poland will The men, who later revealed them- embassy frequently released humorous take in about 7,000, just over half as selves as Andreas Richter and Piotr videos of staff attempting to say Polish many as Kopacz had once suggested. Koper, are entitled under Polish law words, something that endeared them Nevertheless, she was roundly criti- to a reward worth 10% of the value of to many Poles. cised for voting in favour of the quotas, any recovered artefacts. The news sent When it was revealed that Jones had especially by Beata Szydło, the opposi- treasure hunters from around the world been tapped, Mull wrote on Twitter that tion candidate for prime minister, who to Wałbrzych, which took the opportu- US President Barack Obama had made a “great choice”. called the decision a “scandal”. nity to promote tourism in the area.

photos: Kai Pfaffenbach (Reuters), Leonhard Foeger (Reuters), Krystian Maj (Forum), Paul Jones' FB fanpage

news briefs by Andrew Kureth

10 in focus

‘No’ to refugees: The issue of Europe’s

refugee crisis met with heated debate in Poland. While some in the country believe that Poland should welcome families from war-torn countries with open arms, the majority of Poles oppose bringing immigrants with such different backgrounds and cultures into the country. On September 12, competing rallies were held in Warsaw. While the pro-refugee gathering was attended by around 1,000 people, the antimigrant demonstration (pictured) attracted around five times that many.

Snapshot

Photo by Jacek Łagowski (Forum)

IN FOCUS

compiled by Andrew Kureth

The Economist Resistant to migrants, Poland debates the meaning of ‘solidarity’

When European Union interior ministers met to discuss a plan to redistribute 120,000 asylum seekers between them, Poland, the largest and most powerful of the EU’s central and eastern members, quietly helped to shelve it. Unlike other central and eastern European leaders, Poland’s prime minister, Ewa Kopacz, has not indulged in populist anti-migrant rhetoric. But Poland wants full control over which asylum seekers it lets in. The prospect of accepting large numbers of Muslim refugees in the name of European solidarity seems to be a step too far for a country whose politics were already shifting to the right.

New York Times Poland versus Greece

Paul Krugman of the New York Times points out that while low productivity exacts a price from any economy, it does not normally, or need not, create financial crisis and a huge deflationary depression. Consider, in particular, a comparison between Greece and Poland. Poland is a country with lower productivity than Greece. But Poland has not had a Greek-style crisis, or indeed any crisis at all. Instead, it has powered through the turmoil of recent years. What’s the difference? The main answer, surely, is the euro: by adopting the euro Greece first brought on massive capital inflows, then found itself in a trap, unable to achieve the needed real devaluation without incredibly costly deflation.

Global news review

Financial Times Risk aversion hampers further economic progress in Poland

Innovation has been an oft-repeated theme in Poland for years, but the message is slow to filter through. The most deeply rooted problem is risk aversion, especially in government organisations meant to promote innovation. Maciej Sadowski, chief executive of Startup Hub Poland, which works to match high-tech start-ups from around the region with funding and mentoring, argues that many government officials still shy away from uncertainty. “Some high-ranking officials have told me that they could not support our project because their success depended on not making any mistakes. It was depressing,” he says.

The Wall Street Journal Poland’s ruling party suffers setback in referendum

Poland’s ruling camp suffered an embarrassment when the country’s electoral committee said voter turnout in a government-backed referendum was less than 8%. The referendum was called by former President Bronisław Komorowski as he tried to salvage his reelection bid in May. The referendum cost about $22m to organise. Voters were asked to decide if they wanted to change the electoral system to introduce single-member districts in hopes of making the system less partisan, reduce state financing of political parties and force courts to side with taxpayers when their disputes with tax authorities were in doubt. Voters approved the measures, but the referendum isn’t binding because turnout was so low.

Reuters Russia summons Polish ambassador over removal of Soviet-era statue

Russia summoned Poland’s ambassador in midSeptember to protest at the removal of a statue of Soviet General Ivan Chernyakhovsky in the

Polish town of Pieniężno. Chernyakhovsky was the youngest ever general in the Red Army and a decorated commander in its massive westward advance on Nazi Germany that helped end World War II. He was among those responsible for disarming and arresting thousands of Polish underground army soldiers towards the end of the war, many of whom were sent to Soviet prisons or labour camps, and died there. This earned Chernyakhovsky the nickname ‘executioner’ in some parts of Poland.

The Local Sweden and Poland agree closer military ties

NATO member Poland has signed a deal on military cooperation with non-member Sweden amid concerns raised by increased Russian military activity in the Baltic. “Once a sea of peace, the Baltic has become a sea of danger,” Polish Defence Minister Tomasz Siemoniak told reporters at a joint press conference in Warsaw with his Swedish counterpart Peter Hultqvist. Stockholm has said it will boost defence spending by 11% over five years and reinforce cooperation with NATO as a whole, as well as with its individual members. The deal with Poland comes as a new poll suggests more Swedes are now in favour of joining NATO than against the idea, representing a rapid shift in public opinion.

Yahoo! News Canada Twins separated at birth after WWII reunited

Two twin brothers finally found each other and shared their first hug after being separated for nearly 70 years. Jerzy Skrzynecki and Lucjan Poznański, both 69 years old, were born in Kassel, Germany. After being freed from a labour camp, their mother gave birth to the twin boys in 1946, but became ill and couldn’t care for her babies. The Polish Red Cross took the boys to Poland where they were adopted by two different families. Skrzynecki later moved to the US, while Poznański remained in Poland. The men were reunited in September this year after a search by the Red Cross. “In my heart I always had a feeling that I did have a twin brother,” Poznański said. “I don’t care about winning the lottery. I just want to have my brother by my side.”

Washington Times Poland’s Gdańsk shipyard celebrates a comeback

Thirty-five years ago it was a symbol of defiance against communist oppression. Fifteen years ago it appeared to be a victim of remorseless capitalist competition. Today, the former Lenin Shipyards in Gdańsk is a symbol yet again, this time of a flourishing Polish shipbuilding industry that has survived and unexpectedly thrived in a brutally competitive industry. After the collapse of Poland’s socialist economy following the dismantling of the Soviet empire 26 years ago, the Gdańsk shipyards seemed on the brink of bankruptcy, technologically far behind rivals in Europe and Asia. But despite today’s sluggish global economy, Polish shipbuilders have hired thousands of employees in recent years, bringing the $2.6bn industry’s workforce to around 31,500.

Voice of America Poland’s pro-defence forces hold first nationwide rally

Hundreds of members of pro-defence forces marched in downtown Warsaw in mid-September to show their readiness to defend Poland if needed. The Federation of ProDefence Organizations was formally initiated

in cooperation with the armed forces in March, in response to grassroots actions by ordinary Poles and paramilitary organizations. It includes scouts and high school students who want to join the police and the military. Around 50,000 people belong to the federation now, and the number is expected to grow to about 100,000 next year.

Politico Europe Poland lags in data on health quality

Poland has significant work to do to comply with news rules under the EU’s cross-border health directive, with patients still sceptical of lax standards and dodgy quality. The health ministry has accredited just 203 hospitals out of a total of roughly 800 in the country, and the ministry’s standards are somewhat lower than those found in western EU states. “Patients who may want to come here have no idea about the quality of care they will receive,” said Grzegorz Byszewski, a representative at the Employers of Poland, a business lobby group.

The Slovak Spectator Road to nowhere

Today’s crisis in Poland’s state coal sector offers lessons that future Slovak leaders might be wise to take note of. As Slovakia moves towards greater reliance on the automotive industry, it is worth considering the political distortions a single powerful industry can cause. Though the situation in Slovakia is different – the auto industry is firmly in private hands – like Polish coal, the needs of Slovak carmakers will increasingly dictate state policy.

AccuWeather.com Poland drought reveals buried 20th-century artefacts

After waves of searing heat that spanned the summer, drought in Poland reached critical levels. But the dry conditions led to the unearthing of historic artefacts buried in the terrain of the Vistula River near Warsaw. A Soviet fighter plane, with human remains of the pilots, was one of the historic findings from late August. Other recently discovered remnants include pieces of the Poniatowski Bridge from the early 19th century.

The Associated Press Polish explorer says he’s found alleged Nazi shelter

A Polish explorer has claimed that he has found a massive underground structure in south-western Poland that, he says, the Nazis built to protect thousands of people. Krzysztof Szpakowski told a news conference that he has no doubt as to his find, which he says was based on evidence that he has gathered for decades. Wałbrzych regional authorities said they have officially registered his information and are seeking state funds for the exploration.

Daily Mail Tiger kills keeper at zoo in Poland

A rare tiger has mauled an experienced keeper to death at a zoo in Poland as his horrified colleague looked on. It is thought Ryszard Pakla died ‘virtually instantly’ after the Sumatran tiger attacked him at about 7:30 a.m. in Wrocław Zoo, in the south-west of the country. His colleague, who managed to shut the gate before the animal attacked him as well, could do nothing to save the keeper, who had 20 years of experience working with animals.

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14 leader

Vote of no confidence

15 leader

photo: Szymon Laszewski (Forum)

Poles will vote in parliamentary elections on 25 October. All indicators point to a sound defeat for the ruling party. Poland Today takes an in-depth look at the political situation â&#x20AC;&#x201C; how we got here, where we stand now, who the main players are and why the youth vote could prove decisive.

in desperate need of geopolitical thinking

leader

The editor of leading daily newspaper Rzeczpospolita gives his view on Poland’s fractured foreign policy over the past 25 years

In a book titled ‘Jaruzelski: A Paradoxical Life’ by Paweł

Boguslaw Chrabota is editor

photo: Michał Tuliński (Forum)

in chief of Rzeczpospolita, a leading opinion-forming daily Polish newspaper. He earned a law degree at Jagiellonian University in Kraków. From 1990 to 1993 he worked for Polish public television station TVP. Later, he was a member of the team that founded the first Polish private television station, Polsat. In 2014 he was decorated by President Bronisław Komorowski with the Order of Polonia Restituta.

Kowal and Mariusz Cieślik, which came out this year, there are a number of passages that stand out. The authors describe the way the elites of the Polish People’s Republic (PRL) handled its eastern neighbour. Naturally, everything east of the Elbe happened in the shadows and as prescribed by the Soviet Union. It was the Communist Party of the Soviet Union that dictated politics and settled social, military and economic matters, while USSR’s leaders exerted constant pressure on the associated regimes. All of that is well known, but it is shocking how the question of “what will the Soviets say?” loomed over nearly every decision – and all the indecision – of Poland’s rulers. The question was not always answered quickly. That’s why the PRL was like a giant bound by a million ropes. Without some extra slack it could barely move. The ropes were in the hands of the Kremlin. It was the constant question of how it would respond that prevented the leaders of the socialist states from making any risky moves. Meanwhile, Moscow either kept silent or made more or less unintelligible gestures. Rarely, particularly after Khrushchev, did they make direct threats. More likely they sent signals of mild annoyance, pieces of ‘friendly’ advice or veiled threats. Poland’s tragedy was that the fear and inability to act translated into a complete standstill while the country fell into ruin. It wasn’t until Gorbachev’s perestroika that Poland received a clear signal from the Soviets: you’re on your own. We are backing off. And then it started.

torture. It’s not about whether these acts were justified in the fight against terrorism, but that they were impossible in the US, but not Poland. All because of the Polish elites’ semi-colonial mentality.

Lingering traces

It has been a quarter century since the transformation, and now a new generation has grown up. There are new ways of thinking. The trauma of the past should have gone by with the generation of the founding fathers, but its traces still linger. You can still see the ropes binding the giant. Let’s go back to the year 1999. Poland is joining NATO. Polish television is showing historic images of the Polish flag being raised at NATO’s headquarters in Brussels. In Warsaw, the navy blue banner of the alliance is fluttering. Brussels breathes a sigh of relief that the Warsaw Pact has finally been broken. Warsaw breathes a sigh of relief: we are safe. But are we really? Poland gains the status of a member of the alliance, but the alliance has already made engagements that discriminate against its new members. The “Founding Act on Mutual Relations, Cooperation and Security between NATO and the Russian Federation” of 27 May 1997 excludes the possibility of creating new bases on their territory and cuts them off from nuclear weapons. Regardless of whether we, back then in late 1990s, want bases and nukes. The deal excludes that possibility and makes us a buffer zone. It’s a paradox: as a member we are bound to meet all our obligations towards our partners, but our rights are severely limited. Are there Shadow of the red cloud historical analogies? It’s not too hard to find them. Now the year is 2004, the sunny, early days of May. All of After the revolution of 1989 both those who had been removed from power and those who took over were children Warsaw is celebrating Poland’s EU accession. “Poland of the Polish People’s Republic. They were raised under the is returning home,” say politicians. After short transition perishadow of the same red cloud. They were accustomed to fear ods the freedom to travel, work and invest will finally make us and evasion. That is, I believe, what slowed down Poland’s a part of ‘the West’. From now on, there will be nothing but political changes and the process of settling the score with development. Really? It was hard to grasp back then but now communism. We wanted to get rid of socialism, but were still it’s clear. Integration without adopting the euro will forever afraid of Moscow’s response. There were still thousands of push us into the background. Our own currency offers the Soviet soldiers stationed in Poland. We were bound by a web short-term advantage of flexibility. But in the larger perspecof Comecon-era economic relations. The former could give tive it means lower credibility. To make up for it, we would us a bloodbath, while the latter could starve us. We needed have to be a real economic tiger. But we are not. Slovenia Lech Wałęsa’s boldness and courage to send the Red Army joins the euro zone in 2007, Slovakia in 2009, the Baltics back home and knock on NATO’s and the EU’s doors, which join between 2011 and 2015. Poland won’t move forward. up till then had been firmly shut. It soon turned out that the The prospects for joining the euro zone are passing us by, doors were open wider than we had expected. Polish political along with the right social climate for it. Where would we be elites were in awe: we could act without restraint. now had we decided to adopt the euro quickly back in 2004? And yet, something from the previous trauma remained. The question will remain unanswered. Wasn’t that the reason why the US forced the rulers of the The euro matter has been shelved. Poland is no longer Republic of Poland to grant their CIA bases in Kiejkuty nearly undecided – it says a firm “no.” I see this as a means to a selffull sovereignty? Weren’t they so eager to surrender sover- destructive end, increasing the distance to the centre of our eignty over a piece of Polish land because they were afraid “planetary system” that is Germany and France. of the American response? Had a new Big Brother replaced the old one in their minds? The result was that we were The Siberian bear awakes treated like a banana republic, where you could do things Finally, Russia. The Siberian bear woken up by Vladimir that were banned in civilized countries such as the US, like Vladimirovich. The strangest country in the world. A military

‘We need to be the smart kid in Europe, not the slow one’

17 leader

power whose most recent success was the heroic conquest of South Ossetia and the bloodless accession of the Crimea, as well as ‘playing stupid’ in eastern Ukraine. “We’re not really there” shouts KGB colonel Putin over the voices of media from all over the globe that have already proven Moscow’s involvement in the conflict. At the same time, Russia bans Polish apples and pork, and condemns itself to isolation and economic sanctions. Putin may be the only guarantee against anarchistic revolt and kleptocracy in Russia, but his politics is too near to the standards set by his great ally, Kim Jong-Un, the ugliest dictator in the world. All of this is happening right next door, but we don’t have a missile shield, nor do we have NATO bases. Americans come and will continue to come here, but the 1997 deal with Russia still holds. At the same time, the issue of refugees shows how horribly undecided we are. Prime Minister Ewa Kopacz is in favour of Poland taking in refugees when she is in the country and against bringing them in when she is outside of it. The leader of the opposition uses phrases straight out of the manual of a xenophobe. The Christian nation puts its (illusory) safety ahead of the teachings of Christ, while politicians racing for parliamentary seats treat this crucial issue as a tool to elective office.

We are on our own Poland needs to think more in terms of geopolitics. To be clear, it’s not only about the Ministry of Foreign Affairs and the Ministry of National Defence. Geopolitics is also, or maybe mainly, a clear point of reference for decisions and policies within the country. Without a geopolitical reflection, there is no debate about the national interest. Looking at it from within is a fundamental mistake. We need to look it from outside and over time. That’s why the call for think tanks to become more active in the field seems to me to be essential. We need to make up our minds on the implications for our national interest in European matters such as the Grexit and Brexit. Each perspective ought to be thoroughly analysed: what it means, how it can pose a threat and what opportunities it may bring. The conclusions of these discussions should become our contribution to the policies of the major international communities we are a part of. We need to play our own game and promote our own ideas. We need to be the smart kid in Europe, not the slow one. And we can’t wait for any Soviets or Americans, because we are and always will be on our own with our problems.

by Bogusław Chrabota

NATO ACCESSION: A SECURITY LANDMARK Poland withdrew from the Soviet-led War-

saw Pact in 1990. Following a nerve-racking period of insecurity that served as a testament to the country’s determination to shift its focus from east to west, Poland joined the North Atlantic Treaty Organization on 12 March, 1999. Joining NATO provided Poland with a degree of security that it had never enjoyed before.

A guarantee against anarchy in Russia? Perhaps

that’s what Vladimir Putin is. But his foreign policy has grown ever more menacing by the year – something that continually raises fears in formerly Russian-dominated Poland.

Since its transformation in 1989,

Poland has entered Western institutions such as the EU and NATO – the question is whether the country can begin to identify its interests based on geopolitical realities, writes Bogusław Chrabota.

18 LEADER

The faces of the election The politicians that are making waves ahead of the 25 October parliamentary elections

Ewa Kopacz Prime Minister Ewa Kopacz, 58, has had

On 25 October, Poles will go to the polls to elect a new parliament.

According to opinion surveys, the opposition Law and Justice party, led by former prime minister Jarosław Kaczyński, looks set to win the most votes, potentially even securing a majority.

But if Law and Justice does win, the next prime minister will not be Kaczyńśki, but his hand-picked candidate Beata Szydło. Szydło will

have to manage a host of unknowns, however, since several new parties have appeared and seem to have enough support to enter parliament.

Beata Szydło According to the polls, Beata Szydło, 52, a coal miner’s daughter from Poland’s industrial heartland in the south of the country, will be the next prime minister. Her rise has been meteoric – she was a mostly unrecognised parliamentarian from the opposition Law and Justice (PiS) party until earlier this year, when she was thrust into the spotlight after the party’s leader, Jarosław Kaczyński, tapped her for the candidacy. The decision to put Szydło forward came after her success managing the campaign of Andrzej Duda, who won a surprise victory over incumbent Bronisław Komorowski in May’s presidential elections. It was a canny move for Kaczyński, a controversial figure who is distrusted by 49% of Poles, according to a recent survey from pollster CBOŚ. Just 23% of respondents said they don’t trust Szydło. Though the face at the front of the party has changed, the policies largely haven’t. PiS holds to the left on economic issues but to the right when it comes to social issues. It is proposing a new tax on banks and supermarkets to fund spending plans that include more aid to farmers, tax breaks for entrepreneurs and a handout of 500 złoty per child for poor families. The party has the support of conservative Catholic organisations such as Radio Marija, opposes civil unions for same-sex couples and is staunchly anti-abortion.

a difficult run since coming to power a year ago. She succeeded Donald Tusk – who led the Civic Platform (PO) party to two parliamentary election wins in 2007 and 2011 – just as a heavy bout of PO-fatigue was setting in across the country. Two months after she was sworn in, her party only just barely won elections for city and provincial legislatures. Her proposals to reform Poland’s mining industry met with huge opposition, and she was forced to back down. Her party’s preferred candidate lost the presidential election in May, and now her party is on the verge of losing control of parliament for the first time in eight years.

Leszek Miller One of the most experienced politicians

Those eight years have seen unprecedented success for the Polish economy, the only one in Europe that did not see recession during the global economic crisis in 2009. Poland’s gross domestic product has grown by 63% since 2007, while foreign investment has flowed in – it reached $14bn last year, 20th-highest in the world.

in the field, Leszek Miller, 69, has been politically active since the 1960s. Back then, he was an activist and functionary in the communist Polish United Workers’ Party. After Poland’s transition to democracy in 1989, he became active as a social democratic politician, eventually rising to the leadership of the Democratic Left Alliance (SLD) in 1999.

But young Poles, especially, are disenchanted. Wages are still around two-thirds those in Western Europe, and can be much lower outside of the country’s main cities. Despite being highly educated, many young Poles feel they can only get ahead if they move out of their home country to places like Britain or Germany in search of well-paying jobs.

He was elected prime minister when the SLD won elections for Poland’s parliament in 2001, and oversaw Poland’s accession to the European Union in 2004. By then, however, he had become bogged down in a series of corruption scandals, and was forced to resign on 2 May 2004, one day after Poland joined the EU.

Kopacz has addressed this disillusionment with policy proposals that have struck voters as ‘too little, too late’. In mid-September her party presented its platform, which proposes to eliminate payroll contributions to social security and health care, rolling those payments into a single income tax. The plan has even been praised by some Civic Platform critics, but sceptics have asked why the party waited until it was losing by more than 10% in the polls to make such proposals.

A series of younger leaders were then chosen to take the reins of SLD, none of which had much electoral success. By 2011, Leszek Miller was back at the head of the party. But despite his considerable experience in Polish politics, he has struggled to offer policies that gain traction with Polish voters. His credibility was severely shaken earlier this year when his choice for the party’s candidate for president, Magdalena Ogórek, fared more poorly than expected, bringing in just 2.4% of the vote. With his party seemingly spiralling downward on the momentum of the presidential elections, Miller has decided that a coalition with one of his bitterest political enemies, Janusz Palikot, is the best chance for ensuring his party still remains relevant.

Szydło is an ethnographer by education. From 1998-2005 she was mayor of Breszcze, a small mining town in southern Poland. She first entered parliament in 2005.

by Andrew Kureth

19 photos: Adam Chełstowski (Forum), Łukasz Dejnarowicz (Forum), Krystian Maj (Forum), Bartlomiej Kudowicz (Forum)

LEADER

Support for the various political

parties in Poland, September 2015

33% – Prawo i Sprawiedliwość (PiS) 22% – Platforma Obywatelska (PO) 8% – Zjednoczona Lewica 7% – KORWiN 6% – Nowoczesna 6% – Polskie Stronnictwo Ludowe (PSL) 5% – Kukiz’15 2% – Partia Razem Source: pollster Millward Brown, 21 September 2015

Janusz Palikot

Paweł Kukiz

For years Poland’s ‘enfant terrible’,

Formerly a singer for a rock group

Janusz Palikot, 50, knows how to stir controversy. In 2007, as a Civic Platform politician, he made waves at a press conference brandishing a gun and a sex toy. Later, he split with the centre-right party to start his own, one that positioned itself on the far left on social issues and offered little in terms of economic policy. The party, first named Palikot’s Movement (Ruch Palikota), and then Your Movement or Your Move (Twój Ruch), brought Poland’s first openly gay (Robert Biedroń) and first openly transsexual (Anna Grodzka) lawmakers into Poland’s parliament when it won 10% of the vote in the 2011 elections. His most talked-about policy suggestions included taxing the Catholic Church and legalising marijuana – neither of which have ever got very far. His controversial, confrontational style meant his grouping couldn’t hold together, with several members – including Biedroń and Grodzka – defecting. Traditional leftist voters in Poland view Palikot with scepticism: he is a former entrepreneur and publisher of a right-wing weekly magazine. He and leader of the post-communist Democratic Left Alliance, Leszek Miller, have had a famously antagonistic relationship. Nevertheless, as his poll numbers continued to drop, he has decided to join forces with Miller in the United Left (Zjednoczona Lewica) grouping, which includes several other left-wing parties, including Poland’s Greens.

called ‘Breasts’ (‘Piersi’), Paweł Kukiz, 52, stunned Poland’s political establishment in 2015 when a wave of disenchantment with the country’s main parties swept him to third place in May’s presidential elections. He took 21% of the vote in the first round. On policy, Kukiz has called for reforms that would make politicians more responsive to voter demands than to party positions. His main proposal has been the introduction of single-mandate voting districts, also known as ‘first past the post’ style elections. The US and the UK use such systems, whereas Poland combines votes for particular politicians with votes for a party to determine who enters parliament. But whether Kukiz’s voters really want such a reform or were simply lodging a protest vote is unclear. In a referendum that would have expressed popular support for single-mandate districts in early September, less than 8% of Poles voted. Nevertheless, Kukiz’s grouping, called Kukiz’15, is expected to win about 5% of the parliamentary vote, according to recent polls. That will be enough to get into parliament.

Ryszard Petru An economist by profession, Ryszard Petru, 43, jumped into the parliamentary election campaign after Civic Platform’s preferred candidate for president, incumbent Bronisław Komorowski, lost to Law and Justice’s Andrzej Duda in May. A disciple of Leszek Balcerowicz, the architect of Poland’s post-communist economic reforms, Petru formed the Modern (Nowoczesna) party, which touts liberal economic policies such as low taxation, less regulation and more flexible labour laws. Those were previously the calling-card policies of the ruling Civic Platform, which has tacked more to the centre during its eight years in power. That has left its more fiscally conservative followers disappointed and looking for a standard bearer. Petru may just be their man – his party is expected to receive about 6% of the vote in the October 25 parliamentary elections, enough to receive a few seats in parliament.

Young and restless: Poland’s young voters had a surprisingly big impact on the outcome of the May presidential election, and are expected to be a huge factor in the October parliamentary elections. What are their views and values? For the answer, see page 22.

20 Dudaâ&#x20AC;&#x2122;s

regional focus

President Andrzej Dudaâ&#x20AC;&#x2122;s first trips abroad signal the direction his foreign policy will take

photos: Krystian Maj (Forum), Ints Kalnins (Reuters)

LEADER

There will be no revolution in Poland’s foreign policy, Andrzej Duda announced on the eve of his presidential inauguration in August. There would just be “corrections,” he said, “sometimes deep”. His words came amid questions about what sort of president the 43-year-old Duda, of the right-wing Law and Justice party (PiS), would be at home and abroad. Would his presidency mark a return to the more confrontational foreign policy associated with veteran PiS leader Jarosław Kaczyński, whose party was last in power from 2005 to 2007? Or would he strive to maintain Warsaw’s close relations with Berlin? This early into Duda’s presidency, many questions remain. Nevertheless, the first weeks already contain clues. Announcing Duda’s foreign visits for the first hundred days of his presidency, Krzysztof Szczerski, the presidential minister for foreign affairs, said that they aim to “show the main directions” of Duda’s foreign policy. Duda himself warned against reading too much into the order of the trips, adding that he views it “more pragmatically”. Still, his first two trips abroad – to Tallinn and Berlin – sketch out two key vectors in his foreign policy, and set the tone for the months ahead.

More broadly, Duda’s Estonia trip highlights his foreign policy’s focus on the region stretching from the Baltic States in the north to the Visegrad Group (Poland, the Czech Republic, Slovakia and Hungary) in the south. In Tallinn, he called for a “Chain of Freedom” across central Europe that would implement “a certain dream, a great ideal of creating and building a community”. Duda’s schedule already includes opportunities to share this vision, first with the three other Visegrad presidents in the Hungarian resort of Balatonfüred in October. At the start of November, he and his Romanian counterpart Klaus Iohannis are co-hosting a broader meeting of central European presidents in Bucharest ahead of the next NATO summit, which will take place in Warsaw in July 2016.

Eye on Germany

Less than a week after Tallinn, Duda was on a plane to Berlin. For all the curiosity surrounding his first trip, the one on 28 August was to be the real test. Some observers in Poland and Germany were concerned that Duda’s presidency would be characterised by the anti-German paranoia they saw in PiS’s previous stint in power. To some extent, these concerns Spotlight on regional security were amplified by a widely cited interview with Szczerski Duda’s decision to start with Estonia in daily newspaper Rzeczpospolita raised some eyebrows. Duda’s predea few weeks after the presidential eleccessor Bronisław Komorowski, who tion. There, Duda’s right-hand man for foreign affairs set out four “conlost the presidential election to him in May, commented that Tallinn is “a pretty ditions” for good relations between city, a nice city” and that Estonia is an Warsaw and Berlin: Germany respectimportant partner in NATO and the EU. ing the rights of Poles, including Poland Still, he suggested that his successor in the Ukraine peace talks in Ukraine, “supplement it with a European accent”, agreeing to NATO bases in Poland and pointing out that he had made imporbeing more understanding towards tant trips to Paris, Berlin and Brussels Poland’s reliance on coal. early in his term. Amid this sense of expectation, both All the same, Tallinn was an apt, Duda and his German hosts paid tribif unusual, choice. The date of his trip, ute to the importance of Polish-German 23 August, was a symbolic one for relations. “I have absolutely no doubt Poland and Estonia. It was the 76th that our great task, my task on the anniversary of the Molotov-Ribbentrop Polish side, is to build the best-possible Pact, the non-aggression agreement strategic relations with Germany,” the signed between the Soviet Union and Polish president said in Berlin. In turn, Joachim Gauck, Germany’s largely cerNazi Germany in 1939, leaving them to carve up the countries lying between emonial president, greeted Duda’s decithem. These days, it is the European sion to visit so early into his presidency Day of Remembrance for Victims as “an important signal”. of Stalinism and Nazism. Duda was not just in Berlin to Duda and his Estonian counterpart, exchange pleasantries, though. His talks Toomas Hendrik Ilves, were quick to draw parallels between with Gauck and Chancellor Angela Merkel covered tough World War II and the security situation in Central and Eastern topics such as Europe’s migration crisis and the security Europe today. Their statements reflect a shared anxiety about situation with Russia. Here, differences became apparRussia’s growing assertiveness since it annexed Crimea in ent. Duda replied to Gauck’s calls for solidarity amid March 2014. Poland and Estonia are better off today than Europe’s migration crisis by pointing to the volatile situathey were 76 years ago, Ilves pointed out – they are both tion to Poland’s east. Unless the conflict in eastern Ukraine is members of the EU and NATO now. Nonetheless, both presi- brought to an end, Poland could see an increase in refugees dents used their meeting to call for a greater NATO presence from the country, he warned. along the alliance’s eastern flank. Permanent NATO bases or The situation in Ukraine is closely linked with Duda’s equipment in the region are “justified not just in historical but demands regarding security. Firstly, he said that Poland ought to be included in the Ukraine peace talks, rather in present-day terms”, Duda said. than the current Normandy format, which comprises the President Duda’s leaders of Ukraine, Russia, France and Germany. Secondly, first trip abroad he has called for NATO bases to be placed in Poland was to Estonia, on – a demand that Berlin has been deaf to so far, apparently out the 76th anniversary of concern that it would irk Moscow. of the Molotov-RibAll the same, Duda went home feeling that he had “found bentrop Pact. Both presidents used their understanding” on the German side, as he put it. His visit meeting to call for had got his dealings with Germany off to a positive start, a greater NATO despite earlier concerns. “I am only just beginning this work, presence along the but I see a good forecast for the future,” he said following his alliance’s eastern flank. meetings in Berlin, pointing out that it was just his first visit to Germany as president. Annabelle Chapman

‘Permanent NATO bases or equipment in the region are justified not just in historical but in present-day terms’

21 LEADER

Germany visit:

Newly elected President Andrzej Duda arrives in Germany on his second official trip, in August (opposite page). Both Duda and his hosts paid tribute to the importance of PolishGerman relations. Duda’s talks with President Joachim Gauck and Chancellor Angela Merkel covered topics such as Europe’s migration crisis and relations with Russia.

Annabelle Chapman is a

Warsaw-based journalist. Her articles from Poland and Ukraine have featured in The Economist, Foreign Policy, Newsweek and Foreign Affairs, among others. In Warsaw, she is also English-language editor at Polityka Insight, a think-tank. She has a degree in Politics, Philosophy and Economics and a masters in Russian and East European Studies, both from Oxford University.

22 LEADER

Through the eyes of the young A young man from Britain canvasses young Poles to understand their take on politics and culture

It is a commonly held belief that

Liam Frahm is an

intern with Poland Today based in the United Kingdom. He is looking forward to building his experience with the magazine in his gap year. He is interested in international affairs, politics and economics and will be studying politics at university next year.

young Poles are disillusioned with the political establishment and the political process in Poland. Some have suggested that the disaffection might stem from a lack of full engagement with political candidates or government, a feeling that the government is responsible for the lack of opportunities for the youth, or a simple lack of understanding of politics in general. The belief that Poland’s youth are frustrated with their country’s political establishment has gained a lot of traction this year, following Andrzej Duda’s victory over Bronisław Komorowski in the presidential election in May. Could this disconnect with the political process be the result of growing up in a capitalist society and not having experienced life under communism? Some older Poles believe that it stems from not fully understanding the importance of democracy.

clear that some see Duda as a breath of fresh air in Polish politics, compared to Komorowski, who was described simply as ‘embarrassing’ by one young woman. Many young Poles feel that Komorowski made no attempt to engage with them during the election campaign. This lack of engagement was a major contributing factor to the political frustration of several young Poles I spoke with. It is apparent that even though their beliefs may be based more on emotion than policy, the younger generation of Poles did play an active role in the country’s democratic process.

Bright future

While some in Poland may voice concerns for their country’s future, every single young person I interviewed spoke very positively of their experience of growing up in Poland and looked optimistically to the future. I had heard about a trend for young Poles to migrate abroad to study or to work, so it Passionate opinions wasn’t a surprise to find that some Poles The majority of younger Poles I spoke wanted to do this. One person was hopwith did seem indifferent to day-to-day ing to study in the United States with Polish politics, regardless of whether it a scholarship for basketball, while othis reported in print newspapers, maga- ers wanted to study at universities in zines or on social media. However, I was the UK, the Netherlands and elsewhere. surprised to find that most young Poles However, I was surprised by how I interviewed actually voted in the 2015 many people wanted to study in Poland, presidential election. And while I ini- at the University of Warsaw or the tially thought that this could have come Jagiellonian University in Kraków. Also, from a sense of obligation to be part of the democratic process, I was again surprised to find that those who had voted expressed very passionate opinions about the candidates. I wanted to understand their reasoning and soon discovered that some of their opinions were founded more on emotion than specific policies. For example, some young Poles criticised Komorowski as boring and unengaging, not for any specific policy. It is

‘Even though their beliefs may be based more on emotion than policy, the younger generation of Poles did play an active role in the country’s democratic process’

23 LEADER

Culture clash? With Instagram, Facebook, Twitter and YouTube, young Poles use the same social media as much of the Western world. They listen to British and American pop music produced in the English language and stream American TV over the internet using sites like Netflix and Hulu. But despite adopting many aspects of international culture, they also seem to enjoy Polish culture. Younger Poles appear to engage with Poland’s rich and diverse history. On 1 August, I watched a young Polish girl place a candle at the foot of the Uprising Memorial in Krasiński Square.

POLITICAL REVOLUTION? The youth vote played an enormous role

in Poland’s presidential elections in May. Not only did many young Poles vote for challenger Andrzej Duda over incumbent Bronisław Komorowski, delivering Duda the victory, many others voted for rock singer Paweł Kukiz, an independent who came in third in the first round of the election with 21% of the vote. Both Duda’s victory and Kukiz’s strong showing were surprises, considering they were relative unknowns on the political scene just a few months prior. The question now is whether Polish youth will continue to be actively engaged in the political process, and how Poland’s politicians will work to address the issues that are important to them.

I saw that a lot of younger Poles were in Piłsudski Square when the 5pm siren rang out across the city. Despite having access to the usual international fast food outlets, they also continue to enjoy traditional Polish food. Some who I interviewed expressed a passion for Polish TV and cinema. While some could argue that Polish culture has been diluted by the introduction of international culture, I would argue that it has been enhanced. Certainly, social media seems to have improved the ability of younger Poles to communicate with friends and connection to the internet has allowed them to access international media to complement existing Polish news, music, TV and cinema. Despite the possibility that young Poles may feel disillusioned with the political process, there is every sign that they remain excited about the future of Poland. by Liam Frahm

Culture concerns:

While some older Poles may worry that the country’s youth are swimming in a flood of global cultural fodder flowing out of media like Facebook and YouTube, our reporter found that these tools gave young Poles new avenues through which to find and absorb Polish cinema, television, music and art.

photo: mediaphotos

many were not interested in working abroad and wanted to remain and work in Poland. In one group, for example, three young women told me that they wanted to join the Polish army after they finished at school.

24 A chance for unity leader

Former President Aleksander Kwaśniewski talks about the challenges facing Poland and its new president, Andrzej Duda, in this exclusive interview with Poland Today editor in chief Richard Stephens

President Duda just took office in August. What advice would you give him in his role on the international stage?

Interview by Richard Stephens

Publisher & Editor in Chief, Poland Today

Jarosław Kaczyński said, that Germany created the problem and so it’s up to Germany to deal with it, then later if we do have to cope with Ukrainian refuLet me start with his role in Poland. gees and ask for help from the EU, the Firstly, I really hope he will act on his Germans might say: “Poland supported promise that he would work to build the Maidan protests, so it’s your probunity. He has rightly pointed out that lem, not ours.” Of course it’s necessary Poland is divided, that the politi- to defend the country’s interests, but cal scene full of conflict. That’s why today that should be done by recogI think he should work to be presi- nising that we are part of the European dent of all Poles, as he said he would. Union and so the problems of Italy, Unfortunately, the first days of his presi- Germany or Greece are also ours. dency have shown that while the slogan was good, the implementation of the What would you say to idea has been poor. I’m dismayed by the those Poles who believe that lack of contact between the president bringing in refugees might be a and prime minister. threat to their national identity? This is, of course, a problem for Polish society today. Poland has You believe the lack of contact never in its history been as homogeis President Duda’s fault? Yes, and I think it signals that he is neous as it is now. Before World War not interested in unity, though he said II Poland was one of the most multihe was during the campaign. After the cultural, multi-religious countries in election, he should have invited the Europe, with huge Ukrainian, Jewish, prime minister to discuss the problems Belarusian, Lithuanian and German facing the country, especially when it communities. During the war the Nazis comes to international issues. It is too killed three million Polish Jews, and early to see what he wants to do inter- then Stalin, Roosevelt and Churchill nationally, but I’ve seen some positive changed our borders. Now we are the elements. His first visit to Estonia on the most homogeneous society in Europe anniversary of the Molotov-Ribbentrop and we have difficulty managing multiPact, especially under the current cir- religious cohabitation and multicultural cumstances, was a nice gesture. I feel co-operation. the same way about his visit to Germany, Many years before this refugee criwhich is not only the most important sis I proposed to former President Lech country in the European Union, but Kaczyński, then to former President Poland’s main trading partner. But Bronisław Komorowski, that the presiI haven’t seen good ideas from him dency should start a public debate for solving Europe’s refugee problem. about migrants. Poland’s demographic I don’t see enough solidarity. Instead, trends are worrying – it is necessary to I see a kind of Polish egoism, which is accept migrants for economic reasons. wrong. Poland is not on the front line Moreover, because of the Ukrainian criof the refugee problem, but we should sis, we have to accept migrants from state that we are ready – within reason Ukraine. Now we have the refugee cri– to support those who are. sis and it’s very important to talk about what it means for us in Poland; how to be open but keep our cultural identity. President Duda has said that The West has experience, and it would Poland has its own problem be great to invite some expert voices on its eastern border, with the from France, Germany, Italy or the UK Ukraine crisis. Isn’t that true? In my view, we should look at it from to help manage this situation. Poland has the chance to do things another perspective. At the moment, we don’t have a problem with Ukrainian right because the pressure to take in refugees, but we could have one in the migrants right now is relatively weak – foreseeable future, so it’s necessary to any pressure would come from Ukraine, show our solidarity with Europe now. and that is not such a problem since But if we say to Europe what [opposi- over 100,000 Ukrainians already work tion party Law and Justice chairman] in Poland. I believe the strong Catholic

Refugee debate:

Former President Aleksander Kwaśniewski points out that due to Poland’s worrying demographic trends – it has one of the world’s lowest fertility rates – migrants are needed for economic reasons. He says previous presidents should have started a public debate on the topic.

‘I don’t see enough solidarity. Instead, I see a kind of Polish egoism, which is wrong’ President Aleksander Kwaśniewski Aleksander Kwaśniewski was president of Poland from 1995 to 2005. He was known

for his active role in foreign policy, helping to manage Poland’s relationship with Russia as it reeled from the collapse of the Soviet Union, pushing for NATO and EU membership and leading Poland’s activity in helping to negotiate a resolution to Ukraine’s Orange Revolution in 2004-2005. He also helped to bring about a new Polish constitution in 1997 which replaced the modified Stalinist document that had been in use up to that time.

photo: Filip Ä&#x2020;wik (Napo Images / Forum)

26 leader

Church and our extremely difficult language will preclude a huge wave of migrants. It is much more a question of helping the countries that are affected by migration.

President Duda is relatively inexperienced. Do you think he is his own man, or are there other politicians behind him pulling the strings?

Trash talking Poland? While on

a visit to the UK in mid-September, President Andrzej Duda said he didn’t “have the courage” to urge Poles there to come back to their home country, because its economic development was “mainly in statistics.” Former President Aleksander Kwaśniewski says that in his view, a president abroad should use the opportunity to talk up his country’s positive aspects rather than focus on its weaknesses.

Duda wasn’t one of the leading personalities in his party – it would be difficult even to find him among the 10 most influential people in Law and Justice before the election. I think he will soon realise that being president of a big country like Poland brings with it a lot of power. He has enough instruments at his disposal to be strong and influential. He can be the lead person in foreign policy, in defence, in a dialogue with Polish public opinion. If he understands that the president must be independent and must be a strong personality with his own ideas, ready to debate these ideas with people, he can be successful.

Poland’s relations with Russia seem more complex than its relations with Germany. How would you advise President Duda to deal with Russia? Germany is more important because over the last 35 years Poland and Germany have fostered very good relations. So my main advice for Duda would be for him not to spoil that relationship. With Russia, it’s both more and less difficult, because it’s hard to imagine how relations could be much worse. In my opinion it would be too much to expect new initiatives from Duda’s side. However, because Russian diplomacy and politics are tricky and devoid of sentimentality, I could see a situation where Russia might be interested in improving relations with Poland. If Poland becomes a troublemaker in the EU, then it could be an interesting partner for Russia, because Russia doesn’t like the EU. But that is probably the worst scenario imaginable at this point.

What are the main challenges facing Poland now and in the future? I think Poland, after a very successful 25 years, needs some new ideas. I think the main problem is that after a quarter century of success we have new challenges and to some extent our resources, like low labour costs, and well-educated workers, things that have helped us grow, are now nearly exhausted. Now we need to think more about high-tech capacity and education that is more relevant to the labour market. We don’t need more lawyers, we need more engineers, more IT specialists. Young Poles are dynamic and we should develop top-notch universities

‘It’s necessary to defend the country’s interests, but today that should be done by recognising that we are part of the European Union’ for them. At the moment even welleducated people have trouble finding a job. We have to convince young people that they have a chance to stay and work in Poland.

Speaking of young people getting jobs, President Duda was in the UK recently and was not particularly positive when talking about opportunities for young people in Poland. What is your take on what he said?

Former President Aleksander Kwaśniewski believes

that if Poland will want help from the European Union in the future in dealing with issues like the Ukraine crisis, it must help shoulder the burden of other EU challenges, such as the current influx of refugees.

His approach is confusing, because during the campaign he said he would do everything possible to make Poland a promising place for young people. Now that he’s president he says, “As long as we have this government we can’t change the situation.” It’s the second time he has said something negative about the country abroad, because in Germany he said that Poland has a problem with justice. My opinion is that the president should rather showcase Poland as an attractive place for investments, for tourism and for travel – not talk about its weaknesses.

In many parts of the world people still don’t have any idea about modern Poland. If you were in charge of a marketing campaign for Poland, what would you say? First of all, it’s not as bad as it was. When I first visited the US years ago, people didn’t know Poland. I met a rich man in Miami who said he knew Poland, and he loved a certain city there. I asked which one – Kraków? Gdańsk? No, he said, Budapest! But this has changed, first because of Pope John Paul II, then Solidarity. Now it’s not such a complete unknown. The image of Poland has been good for the last few years. That is why I am concerned about what is happening now. The negative attitude towards refugees that we hear from some people is totally counterproductive. It is a return to Western stereotypes about Poland as some kind of nationalist state. If I were responsible for marketing Poland I would show how much we have changed, that it is an interesting place with huge potential and very energetic young people. We have to promote our modern culture: Polish film, Polish music, an excellent art scene.

interview by Richard Stephens

New ideas needed: Poland’s biggest chal-

lenge will be to find a way to move beyond growth fuelled by low labour costs and increase high-tech development, says former President Aleksander Kwaśniewski. One area to focus on is education, and adjusting the system to the needs of a technologybased economy. “We don’t need more lawyers, we need more engineers, more IT specialists,” says Kwaśniewski.

photo: Filip Ä&#x2020;wik (Napo Images / Forum)

Urban Issues: Expo Real 2015

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In this special edition of Poland

Todayâ&#x20AC;&#x2122;s Urban Issues real estate supplement for Expo Real 2015, we take a look at the countryâ&#x20AC;&#x2122;s commercial property market, with an analysis of where investors are heading and where the opportunities lie. We also talk with a number of experts in the industry, including executives from the development side and the financing side.

Poland real estate: more to discover page 30

For retailers, e-commerce is nothing to be afraid of page 32

Redefining Polish cities page 34

Exciting prospects page 36

Appetite for construction

photos: Wojciech Krynski (Forum)

page 37

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Poland real estate: more to discover The Polish commercial real estate market has matured, but it still has plenty to offer

Poland’s

Grażyna Błaszczak has covered

Urban Issues: Expo Real 2015

economics for daily newspaper Rzeczpospolita since 2001. She specializes in residential and commercial real estate, as well as construction and investment financing. She is the managing editor of the newspaper’s real estate supplements and its real estate pages in its economic section. She is also managing editor of the newspaper’s real estate website

property market is flourishing. Developers are rapidly constructing office buildings and warehouses, while shopping centre owners are transforming their malls to remain attractive in the era of e-commerce. A wave of foreign investors are scouring the market for opportunities. For the first time, investors have made more purchases in Poland’s regions than in the capital. “We see great interest among investors in all sectors of the Polish commercial real estate market,” said Charles Taylor, managing partner at Cushman & Wakefield in Poland. “It is worth noting that investment activity in the office market has moved to regional cities, where in the first half of 2015, there was, for the first time, a transaction with a higher value than in Warsaw. Today the most popular investment location in the office sector is Kraków,” he added. The first half of 2015 alone saw the sale of 21 properties with a total value of €794m. In the office sector, investors have put up €374m, in the retail segment they have spent €271m, and in the industrial and warehouse sector they have bought assets worth some €149m. “Almost half of the transaction volume in the first half of 2015 came from American investors, who have increased their share of the Polish market by 14% over 2014,” said Piotr Kaszyński, director of capital markets at Cushman & Wakefield. “The share of German investors decreased by 15%, and domestic investment remains approximately 9%.” Offices: supply and demand growing In the first half of the year, the office market in Poland slowed down and developers were increasingly willing to construct office buildings outside Warsaw. “The fast-growing supply accompanied strong demand both in Warsaw and regional cities. In only six months new space increased by nearly 145,000 sqm in the capital, and in the largest regional cities investors completed about 155,000 sqm of office space,” said Elżbieta Czerpak, director of market research at Knight Frank. “This is in response to growing demand for new office space.” In Warsaw the volume of lease transactions in the first half of 2015 increased

by 50% over last year, while in regional It is also worth noting that more than cities the growth was about the same. 36,000 sqm of office space leased in However, due to the large supply of the first half of the year was to public office space in Warsaw, landlords and institutions and state-owned compadevelopers have had trouble maintain- nies. That shows potential in this seging rental rates. ment of the market, experts say. According to real estate consultancy “The expected increase in leasing activity, due to the expiration of JLL, in Warsaw alone approximately 10-year contracts signed in 2006- 320,000 sqm of modern office space 2008 and five-year contracts signed will be added in 2015, with around in 2011-2013, when demand was high, 450,000 sqm coming online outside has begun,” said Richard Aboo, a part- the capital, mostly in Kraków, Tri-City ner at Cushman & Wakefield. He added and Wrocław. In the year ahead market conditions that a greater number of office lease agreements were also concluded in in all the major cities in Poland will give regional markets. “The strong demand tenants the upper hand. They will use leads us to believe that in 2015 tenants their position to negotiate discounts in regional cities will sign contracts for and lower maintenance fees. more than 400,000 sqm. Prospects are also promising for emerging markets Warehouses: a booming market like Lublin and Szczecin, whose advan- The warehouse market has been in top tages include the low cost of skilled form since the beginning of the year, workers and low land prices,” he added. both in terms of supply and demand. There has been almost no vacancy in recent years, so developers are starting to build more boldly, without pre-leases. “The first half of 2015 ended with very good results for investors in the industrial-logistics market. Since the beginning of the year the supply of modern warehouse space has increased by 460,000 sqm, with a further 730,000 sqm under construction,” said Patrick Kurowski, director of industrial and warehouse space at CBRE. He added that developers have become more intrepid about venturing into markets previously overlooked when choosing locations for new investments. “There’s the very rapidly growing eastern region around Lublin and Rzeszów, and then Szczecin – all have seen a steady increase in demand for logistics space year after year,” said Kurowski. According to CBRE, as much as 1.3m sqm of space was leased in the first half of 2015, an increase of approximately 20% compared to the same period Construction work on the Hampton by last year. Experts expect this trend to Hilton Warsaw City Centre, in 2012. More continue for the rest of 2015. Polish international brands are expected to make real estate consultancy AXI Immo caltheir way into the Polish hotel market, while culates that 63% of transactions so far new investors from Asia and the Middle East mull buying up existing properties. Many accounted for new lease agreements developers are also thinking about adapting and expansions. Most of the space well-located, older office buildings into hotels. – 270,000 sqm – was leased in the Most operators want to be present in the centre region around Warsaw. of Warsaw, but so far obtaining attractive plots has proved difficult, say experts. “The current economic growth is more robust than in the previous business cycle. Inflation remains low, there’s a

‘Almost half of the transaction volume in the first half of 2015 came from American investors’

The Plac Unii shopping centre (left), in Warsaw.

Room for retail “The Warsaw agglomeration is the largest

Experts say that despite a large number of malls in the city, there is still plenty of room for more retail development, since saturation levels are still lower than in many other Polish cities.

retail market in Poland, offering more than 1.11m sqm leasable space in shopping centres,” said Anna Bartoszewicz-Wnuk, director of market research at consultancy firm JLL. “Residents of Warsaw have the highest annual purchasing power in the country. Despite this, the capital is one of the least saturated locations in the country for shopping centre space,” she added.

The Vitkac mixed-use building (below),

reasonable growth of credit and declining deficits, plus private consumption is growing steadily. All of this indirectly translates into dynamic development of the industrial real estate market in Poland,” explains Renata Osiecka, managing partner at AXI Immo. Estimates show that the amount of warehouse space delivered to the market in 2015 exceeds 1m sqm.

photos: Krzysztof Wojciechowski (Forum), Grzegorz Klatka (Forum)

Shopping centres: the e-commerce question Some 867,000 sqm of retail space is under construction in Poland at the moment, all of which is due for completion before the end of 2017. In total the country has 12.95m sqm of retail space. Developers are clearly favouring smaller cities over the larger cities – they account for 60% of new space. Patrycja Dzikowska of Cushman & Wakefield points out that the maturation of the market and rising retail space prices mean increased competition for landlords. Offering a particular challenge are the older-generation schemes, whose profile and commercial offering no longer meet changing consumer needs. “E-commerce, including mobile commerce, is increasingly penetrating the traditional trade,” said Marek Noetzel, head of retail at Cushman & Wakefield. “We are seeing a strong trend of brands going into multi-channel distribution – the so-called ‘omnichannel’ – combining sales in stores with online shopping.”

Hotels: time for new brands New Asian and Middle Eastern investors are finding their way into the hotel sector in Warsaw, while developers are also thinking about adapting welllocated, older office buildings into hotels. “Traditional operators, among others, are trying to find a place for

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in the centre of Warsaw. It combines retail and office space. Office vacancy rates are rising in Warsaw, and developers are increasingly willing to construct office buildings outside of the capital.

themselves mainly in the budget segment, with two- or three-star hotels,” said Adam Konieczny, managing director for Poland at Christie + Co. “Firms representing the ‘long-stay’ segment, a new element in the Warsaw market, are also coming in,” he added. “Most operators want to be present in the very centre of Warsaw, but obtaining an attractive plot is very difficult. Perhaps now it will be easier because the office market has been saturated. Many office developers have secured land for investment in the centre or on the outskirts of the city, and are considering designating portions of these sites for hotel operations,” said Konieczny. He notes that operators of twostar hotels, such as Motel One or B&B Hotels, are choosing top locations. An increasing number of visitors, who until now have stayed in five-star hotels, are looking to benefit from attractive budget hotels, he said. Konieczny also pointed out that there is increasing interest from Asian investors and operators, both from the Middle and Far East. “Certainly investors from that region are interested in multi-functional projects that have an appropriate business scale, where components include hotel, serviced apartments, ordinary flats and offices, and sometimes leisure,” he said.

by Grażyna Błaszczak

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For retailers, e-commerce is nothing to be afraid of The rising tide of e-commerce won’t destroy bricks and mortar operations, but it will force them to become more tech savvy

What is the view of the e-commerce trend in Poland’s commercial real estate market?

Poland Today speaks with Patrick Delcol,

CEO for Central and Eastern Europe at BNP Paribas Real Estate, about his view of the country’s retail market.

BNP Paribas Real Estate is a partner

Urban Issues: Expo Real 2015

of Poland Today’s Expo Real 2015 Edition of Urban Issues.

E-commerce in Poland has been growing at more than 20% annually over the past three years and it still has very good prospects ahead. Will that have a negative impact on the traditional shopping trends? That is something that has been on everybody’s minds – at least all the players in the retail sector. There were even fears that e-commerce and online shopping could wipe out physical stores. I am now of the opinion that some sectors, such as CD and DVD sales, for example, may be impacted forever, but more generally that several shopping methods can complement each other rather than compete with each other.

Warehouse and logistics players must be very happy about the trend. Is that the case? Absolutely. Living in Poland and observing the UK for example, you could basically expect that sooner or later the same growth phenomenon of warehousing dedicated to e-commerce would occur. Please remember the 2009 crisis in that sector in Poland when we faced a vacancy rate of around 19%. None of the big logistics firms were building a single square meter of speculative supply, which after six years now is only slightly restarting. The sector however remains mostly dominated by build-to-suit products, which is symptomatic of a risk-averse market. Accordingly, the vacancy rate has fallen dramatically in that period and yields have compressed.

Four or five years ago, the warehouse sector didn’t seem very confident. Didn’t they see the e-commerce boom coming? I think they knew what was happening, which was a growth in the sector mostly driven by e-commerce, and that it would come to Poland – and that’s what we’re seeing. As I said, e-commerce has been key to the growth in the logistics and warehouse sectors, whether via retail operators directly (25% of the market) or indirectly via third party logistics companies (30% of the market). The thing with e-commerce is that when you look for data,

you realize first that there is a lack of data or the data are very quickly outdated, even in the UK or US markets. As said before, I am truly convinced that online shopping is in fact a tool of diversification for retailers. Indeed, you see more and more online retailing groups in the US opening physical shops themselves.

requires of them a much more acute sense of asset management, a much bigger investment in new technologies. Digital departments of retail development and management groups have started implementing various service applications. These new technologies create an experience, and the shopping center is always an experience.

Why is that?

What about in terms of shopping centre space? Will malls have to downsize?

Online retailers, whether they have shops or not, must have a complex logistics system. But on top of that, they have to have be able to distribute their products. They have to end up bringing the goods to the customer. Not all retailers are able to deliver their products – some ask customers to pay extra for quick delivery to their home, and not all consumers are willing to do that. Moreover, retailers fear that the percentage of returns will be high, and that they will have to start managing a stock of returns. When you have bricks and mortar you can handle the returns.

Who is generating demand for space? Mostly the e-commerce players. You still have the background of the automotive and industrial sectors, but most of the growth has come from the e-commerce sector. There is an additional 700,000 sqm to be delivered by the end of this year. All together we’ll end up with 10 million sqm of warehousing while at the moment we are at around 9.3 million. Importantly, the supply is based on the true demand and net absorption, because the vacancy rate has hardly moved. It is holding at 5.6%, which shows that the horizon for warehouse construction is pretty bright – they can keep on going. It’s mostly build-to-suit, and that comes mostly from the groups that are the outsourcing parties for the online retailers or for the retailers themselves. The trend right now is that retailers are starting to outsource everything that distribution entails, so they can concentrate on the sales.

Should shopping mall owners be worried about the e-commerce phenomenon? Not in the sense that they will have to close down tomorrow, but they should be worried in the sense that it

There is no evidence that shopping malls should think about downsizing. Some of the stores may be impacted. Book stores, for example, were expected to encounter problems, but many of them are indeed doing well at the moment, and even new book stores are opening with a totally new experience and a face-lifting. That may sound surprising, but it’s all about the experience. What is clear is that the retail world has to adapt to the new technologies. Any center management has to be even more client-oriented than it may have been. Please keep in mind, on the other hand, that e-commerce from a brand perspective is not a risk-free adventure for retailers. Any mistake is likely to cost retailers a loss of reputation, because consumers are often not ready to forgive an online mistake. That is the reason why retailers tend to use their best staff for that segment, making it the most expensive. Anyway, in Poland, we are still far away from the Western European standards characterizing what is expected to be the online versus total country sales proportions. Poland is estimated to be at about 4%, while UK is over 13%, Germany over 10% and Norway at 9%.

Will Poland hit these levels in the years ahead? Yes. The point is that our current online demand growth has been very similar to Germany and the UK a couple of years ago. But then it began to stabilize. Even if we come from further away in terms of disposable incomes, it is however more likely that the “online threat” scenario become more of an “integration of online and bricks and mortar” scenario.

photo: BNP Paribas Real Estate

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Redefining Polish cities Xcity Investment wants to use Polish Railways’ properties to create projects that will add dynamism to urban areas

Xcity is a newcomer to the Polish real estate market. Can you tell us a bit about its origins?

Poland Today speaks with Maciej K. Król, CEO of Xcity Investment, a new player

Urban Issues: Expo Real 2015

on the Polish real estate market whose assets offer rich opportunities for developers and investors with the vision and ambition to change Polish cities

Xcity Investment is a new company in the portfolio of PKP SA, the Polish State Railways company. We were formed in order to manage real estate projects on PKP properties in a much more efficient way than was done previously. Our experience in joint venture projects has shown us that doing it this way is more profitable and socially useful than just selling land owned by the company. We have nearly 100,000 hectares of land in cities throughout Poland, a significant portion of which have great potential for development.

‘Our ambition is to redefine the cities around Poland, and we have the assets to do it’

I say “has a chance” because Xcity analyses the concept, but also the investor’s credibility, experience and financial situation. But generally what I would like to emphasize here is that Xcity is very open to new solutions. Our ambition is to redefine the cities around Poland, and we have the assets to do it. We just need the right partners.

Most of the projects you currently have in your portfolio are residential, office and retail schemes. But there are also some hotels. Do you find this sector attractive?

Poland is perceived as a very interesting country for hotel investments. There is big interest for new investments from the international chain hotels and new global players that haven’t yet entered the Polish market. We know that some of those companies have very strict and specific criteria for the locations of their hotels. I imagine that plots in the they are located in transportation hubs. city centres will attract their attention. That means they are very attractive The fact that they are also transporbecause traffic is one of the key fac- tation hubs creates additional value. tors that influence the value of project There is a good fit between railway stainvestments. tions and hotels, since passengers value Big projects, such as Centralna Park proximity to both. Already we are planWhat would you say to foreign in Warsaw or Gdynia Międzytorze ning to include hotel facilities in several investors to attract them? in Tri-City, offer unique opportunities of our ongoing projects. Poland is an attractive market and for developers who have the ambition the best opportunities are in the cities to create space and not just to build it. What would you say to investors – and not only in the big ones. There is A project located on over 14 hectares, who might be wary of co-operating such a dynamism in the air in the urban like the one in Gdynia in the very centre with a state-owned company? environment. Inhabitants demand of the city, has the potential to change I think that we have already proved something special from developers now. the dynamics of the entire city. our credibility through the realisation Projects in the smaller cities are very of several projects and by signing new They want destinations that look great and offer experiences. Expectations attractive because most of these cities investment contracts. The investors are rising along with standards of liv- are in an active phase of development. that we already work with can coning, and this offers exciting challenges Also, these markets are not as crowded firm that we are a reliable business for everyone involved in the real estate as the major cities. Railway stations partner. Because of the size, location industry. One of the biggest advan- have a historical and kind of sentimental and the importance for the local comtages of our projects is their conveni- value for inhabitants. Our investments munity, we build good relations with ent location, and that is the feature that have the chance to redefine those the local authorities. both investors and users most expect. locations by adding new functions that That also has a positive impact on meet the needs of the customers. the joint venture projects that we exeDo you see the same level of intercute with our partners. Xcity is responest from investors in small-scale Does that mean that an investor sible for providing the land. The investor projects in smaller cities as you see can put forward a concept that brings in its know-how and becomes in large projects in the bigger cities? differs with your initial assumptions? the project leader. The investor or invesWe deal with different groups of In other words, could you agree to tors are selected through a comparison investors interested in investments the development of a hotel rather of the concepts, within set business criin smaller and larger cities. We find than a shopping centre if that’s teria, and should have a proven track both groups very active in looking for what seems to be the need? record and financial stability. new business opportunities. All our proThe more the project meets market jects, no matter whether they are big needs, the more successful the busi- Is the fact that Xcity is a PKP or small, have one thing in common: ness will be. The concept for the devel- SA company an advantage? opment of the space depends on the Definitely. Public transportation, investor’s vision. We always look for the including rail, is crucial to the future Xcity Investment concept that provides the best long- development of the country. Xcity was term urban and functional solution not only established in order to make Xcity Investment is a company belonging to for the particular location, no matter a profit. First we want to use the full PKP SA, the Polish State Railways company. It conducts commercial development projects whether that is hotel, shopping centre, potential hidden in PKP properties. on property owned by PKP. Xcity’s portfolio residential or office. Rail infrastructure is developing very already features 15 investment projects at variWe believe that this approach will fast in Poland and will continue to do ous stages. By the end of 2018 it plans to start always give everyone the best busi- so for several more years thanks to EU another 25. In total, the 40 projects have an estimated value of over €8.84bn. ness results. Every proposal that funds. The idea is that profits from Xcity aligns with these assumptions has will contribute to the further developa chance to be selected. ment of the railway sector in Poland.

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Xcity Investment is a partner of Poland Today’s Expo Real 2015 Edition of Urban Issues

Above left: Centralna Park

is located at the intersection of Aleja Jana Pawła II and Aleje Jerozolimskie in the heart of Warsaw. The scheme will provide class-A office space and newly created public space. It will be connected to Warsaw Central Station.

Left: Gdynia Międzytorze is

photos: Xcity

one of Xcity's inprogress projects. Located just outside of the city centre of Gdynia, on Poland's northern Baltic coast, the project includes residential developments, commercial buildings, parking lots and comprehensive transport infrastructure.

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Exciting prospects The redevelopment of existing schemes and new development in suburban areas provide opportunity in Poland’s retail property market

How attractive is the retail property market in Poland at the moment, compared with other European markets?

Poland Today talks with Leszek Sikora, managing

director at developer ECE Projektmanagement Polska, about the country’s retail property market n Poland.

ECE Projektmanagement Polska

is a partner of Poland Today’s Expo Real 2015 Edition of Urban Issues.

In our view, Poland now has very limited potential in terms of new development opportunities, particularly in the segment of the dominant innercity shopping centres. The purchasing power, although constantly on the rise, still does not guarantee, on average, an optimum effectiveness of top-quality retail assets. At the same time, the inflow of capital from all over the world is proof of investors’ confidence in the Polish market. Since joining the EU in 2004 Poland has established itself as a stable and predictable country. The political risks seem to be of secondary importance, as the very modest reaction to the Ukrainian conflict has shown. The transaction cap rates would rather place Polish assets closer to German levels than those of the emerging markets. At the same time, as we predicted several years ago, prime retail product in the Polish market is scarce after several major transactions took place recently.

What are the prospects for the Polish market within the next few months?

Urban Issues: Expo Real 2015

We are optimistic about the future of the market in the nearest future. ECE manages a portfolio of well-established centres in proven locations of major cities, so we can see how the daily work on improving their performance pays back in the medium-term perspective.

We have been witnessing a comeback of retail developers to the largest cities in Poland for some time now – will this trend continue in the near future? The deeper the market, the safer the investment. The trend is obvious, given the overall demographic developments – the attractiveness of the major urban centres to the young population, and the concentration of service centres and industries in and around the strongest cities.

What about the smaller urban centres – is the retail property market there already saturated? I don’t think so. The key, however, is to tailor the product to the purchasing

‘The key is to tailor the product to the purchasing power of a given market’

What about the ageing existing shopping centres in Poland – is their repositioning going to remain one of the most important areas of activity for retail developers in the country in the near future?

This is a very exciting point in the development curve of the Polish retail market. It is still at a lower maturity level compared to Western Europe, and yet there are already candidates to be restructured and repositioned. We see major competitive advantages Room for more space for ECE in being able to provide our investors with a full range of analyThe total supply of existing modern retail sis and restructuring programmes space in Poland amounted to 12.54m sqm at the with the help of our own resources. end of Q2 this year, according to a recent report by JLL. By mid-year, a total of 590,000 sqm of There are centres in Poland that have new retail space was under construction. With proven performance track records, its average shopping centre space saturation but which are not living up to customratio of 233 sqm per 1,000 inhabitants, Poland is above the European average of 198 sqm, ers’ expectations any more. These are but below the Western European average complex projects. It is also exciting of 260 sqm, the JLL study said. to see how ECE’s strength of leasing revives such a facility by remodelling power of a given market. As an exam- the tenant mix. ple, a few years ago it was hardly imaginable that the major popular fashion What are ECE’s development brands would expand to smaller towns. plans in Poland for the near future? Now we see them enter cities with We plan to acquire existing centres populations below 100,000 – and the with value-add character, as well as reception seems satisfactory. complete extensions and restructurings of existing centres both from our own portfolio and for third-party invesIn Warsaw, construction has just started on a new shopping tors. However, we take a very selective approach to new developments. centre project which will be the

first large-scale scheme in the city since the opening of the Złote Tarasy mall in 2007. Is there still room for new major retail developments in the Polish capital?

Yes. Warsaw can accommodate more schemes. No one should be carried away by its power though – it is a very competitive market and any new shopping centre must not take shortcuts on its functionality and offer.

Which types of retail formats is there still room for in the Polish market? The strongest markets will see some top-in-class outperformers in terms of architecture, size and offer. Improving road infrastructure around major cities will open up some new possibilities for large formats in suburban areas. There is still space for combining the nodal points of public transportation with retail schemes, which will be the vehicle to sneak into the centres of the cities.

ECE Projektmanagement One of the largest retail developers and

managers in Europe, ECE Projektmanagement currently manages a total of 196 malls in 16 countries. These house approximately 19,500 stores and comprise around 6.5m sqm of leasable space. It is now designing and developing 15 shopping centres across the continent, including Zielone Arkady in Bydgoszcz (pictured above), scheduled to open in November.

Appetite for construction Banks have become eager to lend again in Poland’s real estate market

director of the real estate financing department at Bank BGŻ BNP Paribas, about his view on the market in Poland.

What are the biggest trends you see currently when it comes to real estate financing in Poland? What is the sentiment of the market? There is an appetite for real estate lending among the banks. We see margin erosions combined with strong competition for the best quality projects. Lending criteria have become less tough than in previous post-crisis years, which is resulting in much better conditions offered to clients.

photos: Bank BGŻ BNP Paribas, ECE Projektmanagement, Jerzy Dudek (Forum)

What types of commercial projects are most attractive at the moment to lenders? What types of projects are most likely to receive financing? Core assets remain the most attractive assets to lenders and they will most likely receive financing from domestic or foreign banks. However, banks have their own strategies and may view certain markets or certain assets quite differently. Regional cities may be viewed as being too small and not liquid by the some lenders, especially from abroad, whereas these markets would be very attractive for others. Our bank is focused on developing a well-diversified portfolio combining office, retail, logistics and residential projects. It is focused on being quite diversified geographically as well – we don’t only concentrate on Warsaw.

Many in the market say that there is a lot of foreign investment money coming in to Poland. How has this affected your business, and how long do you expect this trend to continue? There is capital inflow into real estate markets recorded in Europe as a whole. Low interest rates have encouraged investors to seek new investment possibilities. Poland is currently closely linked to global trends. On one hand, the availability of such liquidity in the

The ‘omni-channel’ trend: An increasing

Polish market is the effect of both the maturity and positive perception of the Polish market and the Polish economy, and on the other hand results from still higher yields that can be achieved compared to alternatives in Western European markets. From our perspective a larger base of potential clients is of course welcome, as diversification remains the key principle within our bank. However, we have also noticed the growing number of projects being financed either fully from equity or with the use of capital obtained from sources other than the banks. Still, banks remain the key provider of funding and I do not expect this trend to change in the medium term perspective.

Worries about supply outstripping demand in the Warsaw office market have grown of late. What is your view, and how is it affecting your lending strategies? Indeed we are looking very carefully at the Warsaw office market, which is facing a record vacancy rate. Having said that, I should however point out that take-up has been growing as well, and in the case of well-located, attractively designed buildings of good quality the situation is not that difficult. I do think that in the office segment the market is coming back to its basis, where to achieve success the project has to offer real value added over the competition. A proper location, convenient connection to public transport and access to additional services have recently become more important. Older buildings, especially those which did not offer top quality right from the beginning and are less efficient compared to newly erected projects, will suffer the most and need to offer significant concessions to attract tenants.

Bank BGŻ BNP Paribas Bank BGŻ BNP Paribas provides services to both individual clients and businesses, offering a wide range of loans, savings and investment products. For businesses, it also provides financing solutions for activities in both the Polish and international markets. The bank is active in the real estate and agriculture sectors and has a wide offer for private banking clients.

number of retailers are focusing on combining the in-store experience with online shopping. Still, a physical presence, where clients can touch, try on, or just see certain products is still a must in a majority of sectors in the Polish market, says Marek Kowlaski of BGŻ BNP Paribas.

From the lender’s perspective it is very important to realize what trends exist in the market and to understand how the situation will look in a few years’ time. We have noticed that some of the most popular office destinations thus far are becoming less attractive, which may influence rent levels and consequently the value of the assets located there, whereas new destinations with a lot of potential are appearing. We are still interested in financing office projects in Warsaw, but we concentrate on selecting the ones that in our view have a chance in today’s demanding market.

How is e-commerce changing the dynamics of the market in the country? E-commerce has been consistently growing in Poland. The ‘omni-channel’ offer, focused on combining in-store experience with online shopping, has become very popular, and consequently most of the retailers across different sectors have launched online shopping. On the other hand, a physical presence, where clients can touch, try on, or just see certain products is still a must in a majority of sectors. The growth of e-commerce also supports growth in the logistics segment, as an increasing number of stores want to move their distribution closer to the end client.

Bank BGŻ BNP Paribas is a partner of Poland Today’s Expo Real

2015 Edition of Urban Issues

Urban Issues: Expo Real 2015

Poland Today speaks with Marek Kowalski,

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Hotel sector in focus

HOTEL SECTOR in focus

One of the most attractive sectors

in Polandâ&#x20AC;&#x2122;s commercial real estate market is hotels. As the office and retail pipelines become increasingly crowded, hotel development and investment present interesting opportunities for profit. International brands are expected to begin establishing themselves in the country while the budget niche, especially, still has room for new investments.

Hot hotels: an overview of Polandâ&#x20AC;&#x2122;s hotel sector page 41

Trending up: an interview with Orbis Group page 42

Mix it up: an interview with Christie+Co page 44

Bring on the brands: an interview with Starwood Hotels & Resorts

photo: caracterdesign

page 46

Hot hotels

hotel sector in focus

As developers have raced to build

“However, developers and investors offices and shopping centres for the expect this gap in RevPAR between wave of investors coming into Poland’s Poland and Western Europe to shrink real estate market over the past few due to Polish society’s increasing affluyears, hotels have seemed like an after- ence as well as growth in both domesthought. No longer. With the glut in the tic and international demand. New hotel country’s office development pipeline project business plans incorporate that and shopping space reaching satura- assumption in their cash flow projection levels in many Polish cities, hotels tions – but these should also take into are the new hot commodity. consideration the increasing supply,” he It’s little wonder – Poland still said. However, the continuing growth offers stable economic growth: GDP in tourism is an optimistic sign, he said. is expected to grow by more than 3% Nevertheless, labour costs are also both this year and next. And economic putting pressure on hoteliers, with growth is tied closely to growth in the wages in Poland rising and Poles travtourism sector. Moreover, both busi- elling abroad in search of higher salaness and leisure travellers continue to ries. Any Pole able to work in a hotel visit Poland in increasing numbers. Total in Poland could probably do the same visitors to hotels in Poland rose last year in the UK, Germany, or Scandinavia by over 10%, while in Warsaw average – especially when it comes to nonoccupancy was as high as 80-90% in language dependent tasks such as some centrally located hotels, accord- cleaning – where wages for such work are much higher. According to CBRE’s ing to consultancy JLL. Investors have taken note, and have Thom, this is a trend that can be seen decided now is the time to buy. After a across the region. Warsaw, he said, saw down year in 2014, investment volume payroll costs per available room rise by in Poland’s hotel market is expected to 1.2% over the last 12 months in upscale pick up strongly this year, beating the hotels. That’s less than Prague’s rise figure of about €130m recorded in 2013, of 6.1% and Budapest’s of 8.6%, but in said Martin Thom, head of hotels valu- those cities the headline figure is lower ation for Germany & CEE at real estate – at €25 and €30 per room, whereas consultancy CBRE. in Warsaw it has already risen to €32. Hotel developers have not overlooked these trends, and continue Kraków edging ahead? to build. The supply of hotel rooms Warsaw and Kraków are the clear leadincreased by about 8% in 2014, though ers in the market. Warsaw benefits from this is expected to slow over the next its position as the economic and politifew years to 6-7%. The strong supply cal capital of the Central and Eastern has outstripped demand, putting pres- Europe region, with stable growth in sure on occupancy, and especially on corporate travellers. Kraków, with its average daily rates (ADRs) and revenue traditionally strong leisure tourism marper available room (RevPAR), two of the ket, is making inroads when it comes main measures of health in the industry. to business travellers as well. Its boomCurrently, RevPAR in Poland is around ing business services industry is fuelling 40-50% less than in Western markets, corporate travel to the city. said Jakub Kleban, national director of “Kraków is more diversified,” said the valuation department at JLL. Kleban. “There are more leisure travellers than in Warsaw, but over the past two or three years the business segment has also been growing in Kraków. The growth in demand is very strong, if not stronger than in Warsaw,” he added. However, Warsaw’s dependence on business travel could insulate it in certain circumstances. Political turbulence and natural disasters tend to have a more immediate impact on the leisure segment than on the business segment, Kleban pointed out.

‘The growth in demand is very strong [in Kraków], if not stronger than in Warsaw’

One thing Warsaw is certainly missing, however, is a modern conference centre. Regional cities, such as Kraków and Katowice, have recently built shiny new congress halls, able to hold tens of thousands of people – meaning they can host large-scale events. At the same time Warsaw’s only large conference venue, the nearly 50-year-old, 2,880-seat Sala Kongresowa (Congress Hall), is undergoing renovation and isn’t expected to open again until 2017, putting the capital at a significant handicap, experts say.

Budget opportunities Market players see the most room for expansion in the budget, or twoto three-star hotel, sector. Already, this sector represents the largest number of rooms in the Polish market – but most of these are in old, stodgy facilities that can be re-vamped by their current owners or taken over by international brands. Currently, Orbis’ Ibis brand dominates the market, and experts expect other global players in the budget market to take advantage of the opportunity, bringing many of Poland’s old communist-style budget hotels up to the standards expected by today’s travellers, especially millennials, who demand unique designs and plenty of internet access. Still, Maria Pütz-Willems, editor-inchief of HospitalityInside.com, said Poland can’t neglect the luxury side either. “Currently, there might be more space for budget and midscale hotels than for luxury. But you need luxury hotels to attract a different clientele and to get the hotel rates up,” she said. According to CBRE, gross operating profit per available room in the upscale segment was up by 7.5% in August 2015 over the same period last year. In general, experts are sanguine about the prospects for Poland’s hotel market moving forward. “In contrast to the UK, France or Italy, tourism does not focus on one or two cities but on more destinations,” said Pütz-Willems. “This is a great opportunity – Poland’s most attractive cities, such as Warsaw, Kraków and Gdańsk, have an excellent tourism image.” She just has one question, she said: “Why don’t you tell more people about it?”

by Andrew Kureth

Spotlight on hotels: Many of the

most important players in Poland's hotel market gathered in Warsaw for Poland Today's Spotlight Hotel Investment Poland II conference in June. At the conference, they held in-depth discussions on the emerging trends in the sector. see page 66

Hotel sector in focus

Poland’s hotel market is the new focus for investors

HOTEL SECTOR IN FOCUS

Trending up Growing GDP and a general uptick in activity in the hotel sector has Orbis optimistic about prospects in Poland and the region

We are speaking just after Poland Today’s Spotlight Hotel Investment Poland II conference. What was your impression of the mood at the event?

Poland Today speaks with Gilles Clavie, CEO of Orbis Group, about his view of the country’s hotel market

There is growing interest in the hospitality market in Poland and the Central and Eastern Europe (CEE) region. The strength of Poland definitely confirms the strength of the hospitality market. When you look at the link between the hospitality market indicators and GDP growth, they are extremely close. So as long as GDP growth is there, it is good for the hospitality market. We have been meeting a lot of potential franchisees who are taking advantage of EU funds to build their own hotel or complex. This is happening at a very good moment.

Good for you or for Poland?

Orbis Group is a partner of Poland Today’s Hotel Sector

Hotel sector in focus

in Focus section.

Both. We launched the ‘asset-light’ strategy three years ago and this strategy will continue in Poland even if we still look at any creative value project opportunity with our own finance. But at the same time we will push it in other (CEE) countries under the master license agreement we have signed with AccorHotels. This means we have more and more potential franchisees in the markets, which is good for them. I don’t see any clouds on the horizon for the time being. There is some positive collateral effect as we can meet more and more franchisees in the region, to develop their own business in these countries. There is a good connection and Orbis is definitely playing a hub role (for AccorHotels) in the region.

If people are expecting better markets further east, where are the tourists and business travellers coming from? Who will fill the rooms? If we are talking about Poland, we can see an improvement in the domestic market. I can explain it partly by the good financial condition of the country and GDP growth. Also, Poland’s infrastructure has been drastically improved with the Pendolino trains, the new airports, the visibility raised by Euro 2012 and the volleyball championships last year. Geopolitical issues in some countries were a constraint to going abroad as well. These things are playing a role in making the domestic market stronger.

‘The macroeconomics in CEE are favourable and this will drive hotel performance’ Outside of Poland, few know that the country has beautiful beaches, lakes and mountains. Do you see this changing? Does the government need to play a role in promotion? Yes to both. The Presidency of the European Union in 2011, the European football championships in 2012, the COP19 in 2013 and the volleyball championships in 2014 were so significant that they increased Poland’s visibility. As a Frenchman living in Poland for five years, I have observed the visibility and attractiveness of Poland before and after Euro 2012. Clearly there are projects in the future which will help increase the visibility of Poland: the handball cup next year, Wrocław as the capital of culture, the World Games in 2017. All these help improve the attractiveness of the market.

Orbis recently completed a major deal with AccorHotels. Can you tell us about that? After having looked for development opportunities, we have signed a master license agreement with AccorHotels which gives Orbis exclusive rights to operate and develop all the networks in 16 countries. Exclusivity is for 10 years minimum and the contract is for 20 years. So this is a long-term partnership and it gives a clear outlook for Orbis on a long-term basis. On top of that, we have bought five entities which were dealing with six networks already opened with Accor: in Bulgaria, the Czech Republic, Hungary, Macedonia, Romania and Slovakia, plus the four countries where we were already operating under the franchising agreement.

It was said at the conference that the brands are becoming less significant as online booking becomes more popular. What are your thoughts?

Brands still have a very strong impact on the decision and selection of a hotel. People who travel on business want to be accompanied throughout the customer journey, with fast check-in and check-out, a loyalty programme, quality food & beverages, etc. Brands offer this guaranteed and with these guarantees, brands still retain strong promise. The question is more about leisure clients who are looking for a good deal. They are not booking systematically through a platform, and here is a change in the behaviour of the client. There are new players on the market and here we need to look at what has happened on the market in terms of the individual clients to see how we should adapt.

A recent report found that the average daily rate in Poland last year dropped 1.5% to €61 per room. Has this been reflected in your business? I see it as an opportunity for the growth to come. We need to put everything into context. If we are mixing all the brands, mixing the clients, mixing the capability of the hotel, it doesn’t mean anything. If I look at what happened with Orbis, we are businessoriented, so we are developing the leisure part – mainly at the weekend. By default, as we in the market all know, leisure clients during the weekend pay less than the conference or business clients during the week for the same location. We have been able to add them on top of our typical weekday customers, so we are talking about incremental revenue. As I told you, accommodation is one part. Food and beverage is an increasingly important part for us and we see a clear possibility to develop the business here. In the first half of 2015 revenue per available room in Orbis Group increased by 12% – with the same number of hotels – over the same period last year.

What’s behind that impressive increase? There were two reasons. The first one was – and we are talking about the first quarter, so low season for the hospitality market – thanks to sales promotions, targeting weekends and leisure; all these activities helped us to raise occupancy during first quarter. The second reason is the market trend, which

One of Orbis’ most recognisable brands is the Ibis

hotel chain. The company has big plans for the brand in Poland – next year it will open one in Gdańsk and one in Wrocław (as part of a combined project) and will open another in Szczecin in 2017.

Orbis Group Orbis Group was founded in Lviv in 1920

and is the largest hotel group in Poland and Eastern Europe, according to its website. Orbis is the sole licensor of all Accor Hotels brands in 16 countries in Central and Eastern Europe, offering a total of around 19,000 rooms. It operates more than 100 hotels under brand names such as Sofitel, Novotel, Ibis and Mercure.

HOTEL SECTOR IN FOCUS

has been very positive since November, and this trend is continuing.

What is causing that trend? The macroeconomics of these countries are favourable and this will drive hotel performance. We have GDP growth, whatever the country, in Central and Eastern Europe. We are talking about 2.2% for the lowest up to almost 4%. In 2015, the forecast for GDP increase is between 2.2% and 3.5%. Poland is at 3.5% and Poland is 75% of our core business. So, as I told you at the beginning, the hospitality market and GDP growth are extremely close.

Orbis is the hospitality leader in the region. It benefits from the strong support from its strategic partnership with AccorHotels. We are hoteliers first and we want to have the best performing and most valued company on its market. That means we are improving the profitability of the group, which is already quite good but, thanks to our assets, we still have an opportunity for leverage. We will attract additional partners, investors, franchisees and so on. Definitely Orbis already is, and will be, the unbeatable player in the market. As leader, we will continue to invest, to innovate and to create value for all our stakeholders. We have a lot of projects relating to food & beverage, the creation of new products and services and the development of networks. This is for all countries over the Orbis perimeter. Certainly, the targets are very ambitious. Last but not least, we continue to invest. We are due to complete a new Mercure in Kraków and a new Ibis in Gdańsk, which will open next year. We will start a new Ibis Styles in Szczecin in the north, and it will open in 2017. We have an Orbis in Wrocław which is a very complex project. It will be rebranded as a combination: two hotels in one – a Novotel and an Ibis – to be opened in the first half of 2016. In Hungary and in the Czech Republic, a regular capex plan is dedicated to product improvement, while a buyback plan is under preparation for Budapest Hotels.

photos: Accor

In five years where do you see the company in Poland and in Central & Eastern Europe?

HOTEL Sector in focus

Mix it up As the hotel market in the region grows and matures, investors need to remember to diversify their offer

Hotel sector in focus

What were the main takeaways for you from Poland Today’s Spotlight Hotel Investment Poland II conference? Adam Konieczny: I saw a lot of new faces at the conference, people who had not been involved in the hotel sector in the past. That was a clear sign that the hotel sector is becoming more attractive for new companies. It means that other sectors, especially office, have become slightly saturated, and developers and investors are looking at hotels as an alternative to traditional real estate investments. It was also interesting to see a lot of representatives from new hotel chains that are not represented in Poland. It’s a very strong sign that these newcomers will establish themselves in Poland soon. Andreas Scriven: For me, the key thing was the shift in where investors are in the decision making process. Last year, it was people looking to invest in Poland. This time around, while there continues to be interest from investors looking to enter the market, it was people who had already invested in the country for a number of years who were saying it might be time to exit, given the improvement in market sentiment and increasing values across Europe. I think that investors liked the stability in GDP growth that Poland offered over the last decade. Previously, it was more a question of, ‘How can I get my brand into Poland?’ Now the discussion is more, ‘I’ve been in the market for three to four years – is now the time to take the money off the table?’ That is a positive sign of a more mature transactional market. I still think a lot of the international interest, as you would expect, has been focused on Warsaw. But there is now increasing attention on some of the prime secondary cities.

Poland is riding high now, but it is not a very ‘deep’ market. If there was an economic downturn, couldn’t that cause more serious problems than in a more established market? AS: You have to look at it on a location-by-location basis. You are absolutely right that a market like London or Paris has more levers that can be pulled if something goes wrong, but if you look at markets like Manchester or Birmingham, they are more at risk

Poland Today spoke with three executives from Christie + Co:

Andreas Scriven (above left), international managing director, Lukas Hochedlinger (above right), managing director for Germany, Austria & CEE, and Adam Konieczny (left), country head for Poland. The discussion focused on the state of the hotel market in Poland and the CEE region.

of being over-supplied with quality stock. We’ve also seen that in a market like Spain. So although the underlying demand profile may be more robust, the margin for error is actually lower than in a market that is still evolving on the supply side. Poland is very much an evolutionary hotel market. In terms of GDP growth, the Polish market has been much more robust than the vast majority of other markets, so I agree that this could change. It comes down to how deep the demand in each market is and whether you are very much dependent on leisure demand, which tends to be very price sensitive.

But isn’t Poland, more so than other European countries, more dependent on the corporate revenue? So if there’s an economic downturn in Poland, you can’t fall back on the tourism market like in France or the UK? AS: I think that the dynamic has changed as hotel investors and owners have gone from being long-term to more opportunistic. Somebody coming into Poland might have a three-year investment horizon, and the market is very attractive now.

What are banks in Poland seeing in the market and what sort of conditions do investors have to fulfil?

‘Other sectors, especially office, have become slightly saturated, and developers and investors are looking at hotels as an alternative to traditional real estate investments’

AK: At the moment it is possible to get development financing if you have the right project in the right location and it is supported by professional feasibility study. If you go to a specialised bank, the chances that you will get financing under acceptable conditions are high. The loan-to-value rates offered for hotel projects are good, sometimes even better than in Western European countries. A lot of Polish banks have a specialised hotel team and understand the issues. .

Which countries in Central and Eastern Europe does Christie see potential in? Lukas Hochedlinger: We are interested in all CEE markets. With our office in Vienna, we cover more or less the entire region. We have an office in Warsaw and, when it comes to the Baltics, we work out of Helsinki and Stockholm. Every market is different.

Christie + Co is a partner of Poland Today’s Hotel Sector in Focus section.

AS: I think one of our key roles is educating buyers and sellers around how wide that gap is and how realistic people’s expectations are. This is not a unique situation to CEE; it is throughout the market and it tends to accelerate and widen when markets shift rapidly. That is where we can use the significant amount of data that we have in terms of comparable transactions and trading information, to actually educate the parties involved.

What barriers to growth does the hotel sector in Poland & CEE still face? LH: When it comes to CEE, you have to be very selective with what market you are talking about. In some markets there are barriers while in others the doors are opening. Take Budapest, where they are currently building a huge congress facility: that is one thing that will boost tourism there. You also have to distinguish between leisure demand and business demand. The healthier the mix between leisure and business the better. If you only target one or the other, you are very dependent and you can easily be hit. Warsaw and Bucharest are very heavily dependent on corporate travel, so if their economies are hit, you will immediately feel it in hotels with lower rates and lower occupancy. It can be a vicious cycle. But if you can attract visitors with festivals, with congress centres, with new headquarters coming in, it becomes more stable.

Is it a surprise for you that Warsaw doesn’t have a modern congress centre? AS: Any big city without congress facilities is a surprise for me because it’s good business to have one. If you look at a small capital like Vienna, which is one of the top cities in terms of most international congresses in the world, being able to attract that many events, with something like 20,000-25,000 people each – it’s a no-brainer. AK: I think it is strange that regional cities in Poland like Kraków and Katowice have fantastic congress centres and Warsaw does not. There are congress centres under construction

The company was established in London in

1935 and provides professional brokerage and advisory services across Europe. In the hotel market, Christie + Co specialises in offering advice on buying, selling and, along with its sister companies, insuring hotels. In addition to this, it is active in a wide range of market sectors from dental practices and care homes to pharmacies and restaurants.

HOTEL Sector in focus

in a couple of other cities, like Lublin, so I think it is time to take a real decision in Warsaw. Now is the last chance to use EU money to support such a development.I think Warsaw authorities realised that they missed an opportunity when they visited the congress centres in Kraków and Katowice, and now Kraków is becoming a CEE hotspot for the meetings, incentives, conferencing and exhibitions market. Since Kraków and Katowice are only an hour drive away from each other, together they can organize significant events, which is something that Warsaw will be lacking in the years ahead.

You hear five-star hotel managers complaining about low prices. Is that sustainable in the bigger picture? AK: It is improving slightly now because there are more and more weekend tourists. But of course, to have a real boost in average daily rates, we need to have more large congress events.

Is that the only solution? AK: It’s not the only solution, but it is probably the easiest solution for the time being. You can construct a big congress centre, hire a good manager, and it will dramatically improve the hotel market. The market is changing, as there are more international flights coming to Warsaw and Polish regional cities. Gdańsk, for example, has a lot of low-cost flights to Scandinavian cities, especially in Norway and Sweden. We can see a significant number of Scandinavian visitors coming to Gdańsk, using five-star hotels and spending money on spas, food and beverages. This has dramatically changed the hotel market in Gdańsk. It is becoming one of the best markets in Poland. And it’s sustainable: in Norway alone, there are 10 different airports that you can fly to Gdańsk from. AS: It is always a matter of supply and demand. You may be able to increase demand by building a congress centre or with more attractive cheap flights. To drive average rates in the mid-term what will be needed is a strong corporate sector that is supported by increased leisure demand on the weekends.

photos: tomazl , Christie + Co

Is there a big gap in expectations between local players and the chains?

Christie + Co

hotel sECTOR IN FOCUS

Bring on the brands There is still room in the Polish market for new, international branded hotels

Has this year been a good year for the hotel market in Poland?

Poland Today talks with Gonçalo Duarte Silva, general manager of Sheraton Warsaw

and area manager Poland at Starwood Hotels & Resorts, about the current trends in the hotel property market in Poland and the company’s expansion plans in the country.

Yes, this year has been quite positive, more positive than the previous year. This is especially true for Warsaw, which has gained some additional international attention due to its recent growth history and a number of major sports events which have been held in the city, including the UEFA Europa League Final back in May. Occupancy has been very high – over the summer we managed to get some additional leisure business. The prices have been very competitive, with the market remaining very cost conscious. This year has been important for us because of our investments in some of our existing hotels in Warsaw. The Westin hotel went through what I would call a major renovation – all the public areas, restaurant, bar and the Executive Club Lounge have already been renovated and the guest rooms are being revamped right now. Also the Hotel Bristol has gone through a renovation process – we are currently finishing renovating the banqueting areas in the building. All this investment is yielding results.

Hotel sector in focus

What are the prospects for next year? The prospects for the near future are very good and I expect the situation in the market to remain positive in both 2016 and 2017. The real challenge now is to grow the business and the prices, and this can only be done through expanding and entering new markets. As Starwood we will continue working with our owners on investments in our product and carry on with renovation process at Sheraton Kraków. We are obsessed with making sure that we are constantly responding to the changing needs of travellers – making their stay in our hotels effortless. That is one of the reasons why we have just launched the Sheraton 2020 plan globally. This is our new vision of the most iconic brand, which will drive increased growth, deliver better returns for owners and investors, and create more consistent and relevant guest experiences worldwide. Here in Poland we are already working on implementation of this new vision in our Sheraton hotels to further elevate brand awareness and increase our market share.

‘I know that everyone is now talking about budget hotels ... but I think that Poland deserves much more than that’ Has the ongoing crisis in Ukraine affected the hospitality market in Poland? Not in any significant way. Admittedly, we have noticed a drop in the number of visits from affluent Russian guests, but this has not been a major problem for the market as a whole, since increased numbers of foreign visitors from other countries have compensated for the decrease.

photos: Starwood Hotels & Resorts

Where has the most demand for hotel space in Poland been coming from of late?

Starwood Hotels & Resorts One of the largest hospitality companies globally, Starwood Hotels & Resorts has a total of more than 1,200 properties in approximately 100 countries around the world, with internationally renowned brands including St. Regis, The Luxury Collection, Westin, Le Méridien, Sheraton, Four Points by Sheraton and Aloft. Starwood has been present in Poland since 1996 and currently operates a combined six hotels under three brands in the country: Sheraton in Warsaw, Kraków, Poznań and Sopot, as well as The Westin Warsaw and Hotel Bristol, a Luxury Collection Hotel, in Warsaw. In total, the company offers over 1,500 guest rooms in Poland.

but I think that Poland deserves much more than that. There is still room for four- and five-star hotels in the country, especially when it comes to lifestyle hotels that appeal to young people. I am convinced that our Aloft brand with its focus on design and music, as well as Four Points by Sheraton, which are not yet present in Poland, would be a perfect fit for the Polish market.

Where in Warsaw do you see room for new hotel projects?

hotel sECTOR IN FOCUS

The Sheraton Poznań (opposite

page) is the focus of a programme to make it even more attractive, says Gonçalo Duarte Silva, area manager Poland at Starwood Hotels & Resorts. The plan hopes to boost operations and revenues as it prepares for some construction in the city to be completed.

The Praga part of Warsaw is now changing fast and I think that it will be ready for new hotel projects in a few years. At the moment, the locations in the Polish capital where new schemes could be developed include Mokotów and the airport area.

Poles obviously still generate the most demand, but a lot of demand is currently also coming from the American and German markets. In Warsaw, the most demand is generated by the corporate sector – you have a lot of reservations over the weekdays, The hotel property investment whereas over the weekends the occumarket is still relatively small pancy rates are lower than you would in Poland – can we expect more We are also working on making our transactions in the coming months? expect. The situation looks different in the regional cities – while business offer in Poznań even more attractive We have seen a number of major visitors are also coming to these areas – we have a great location combined transactions in the hotel property in large numbers, the leisure business with an upscale product – the Sheraton market in Poland in recent years, but plays a bigger role than in Warsaw. hotel. Right now our strategy focuses of course it is true that investors, who Interestingly, there has recently been on getting ready for the end of city are looking at the returns, have mostly a significant increase in the number of construction to boost our operations been focusing on the office sector. hotel guests from the Middle East. I am in Poznań and drive revenues. I expect that in the coming years not talking about the sheikhs – although there will be less investment in office they are coming too – but rather about What about the prospects for the buildings and investors will focus more on the other asset classes, the regular Middle Eastern citizens from medium-sized cities in Poland? countries including the United Arab Are we seeing growth there too? including hotels. Another thing is that the owners and Emirates. Those guests are coming to Here the prospects will depend on Warsaw, but also to regional markets the further development of transport operators of many of the existing facilisuch as Tri-City and Kraków. We have infrastructure. Also, medium-sized ties first need to invest in their assets seen a major growth since the begin- cities will need to re-invent themselves – this is what we are doing now with our ning of this year – we are talking about in order to be able to attract more peo- hotels in Poland. double digits here. ple from outside. I am talking about city brand- Where in Poland does Starwood plan Which hotel markets in ing, about cities coming up with new to open new hotels in the near future? Poland are now putting up ideas on what they want to be and on At the moment, we are focusing on how they want to project their images the further development of our existing the best performance? Apart from Warsaw, Kraków is now abroad. We would consider expanding properties. For example, we are carrya very strong hotel market and is, in into some of the medium-sized regional ing out the programme for revitalising some respects, actually beating the cities in Poland, for example Lublin, but the Sheraton brand – within the next six Polish capital. Kraków is an attrac- it is still too early for that. years, we want all the Sheraton hotels to be fully renovated. tion because it features many wellpreserved, historic buildings and has Which types of hotel However, we are also thinking of expanding – we will definitely be a number of major sports arenas and products do you still see interested in the development, in cultural facilities. The city is currently room for in the Polish market? seeing even more visits than Warsaw. Poland needs more international cooperation with local partners, of Also, the Tri-City hotel market is put- branded hotels that offer standard new hotels in Warsaw, Kraków and ting up a strong performance – we are and unique service. I know that every- Zakopane. We also plan to introduce very happy with the performance one is now talking about budget hotels the Aloft lifestyle hotel brand, as well of the Sheraton Sopot Hotel. because those are easy to develop, as Four Points by Sheraton, to Poland.

Starwood Hotels & Resorts is a partner of Poland Today’s

Hotel Sector in Focus.

Energy in focus

ENERGY in focus

Poland’s energy sector faces some critical challenges:

Dependent on coal for the foreseeable future, energy producers will have to find ways to be more efficient, innovative and diversified. Billions of złoty are already being pumped in to build new capacity, and there’s more to come as the country’s ageing generation units and grid infrastructure will have to be modernised.

Feature: Polish energy at a crossroads page 50

Interview: More modern, more efficient

photos: Wojciech Matusik (Forum)

page 52

50 energy IN FOCUS

Polish energy at a crossroads Poland has no choice but to stick with coal, and energy companies will have to take on huge investments to make their production more efficient

While supporters

Aneta Wieczerzak-Krusińska

Energy in focus

is a journalist with nearly 15 years of experience. She started out with Radio Lublin, later moving on to press outlets. For the past four years she has written for daily newspaper Rzeczpospolita and business daily Parkiet, covering fuels, chemicals and energy. Her articles have also appeared in Bloomberg Businessweek Poland. She graduated from the Faculty of Political Science at the Maria Curie-Skłodowska University in Lublin.

of decarbonisa- coal-fired power plant in Łęczna, near tion point to the limits of traditional Lublin in the country’s east. As a direct energy production, conventional consequence of EU policy, the market power plants are going up in places value of such giants as Engie, EDF, RWE, like Kozienice, Opole and Jaworzno. E.ON and Enel have declined. Though such plants may have their It’s not just the big international drawbacks, without them there would energy companies that have been hit – be no power in Poles’ electrical sockets. Polish firms are being impacted as well. Poland’s energy market is seeing invest- “Returns on coal-fired power plants ments on a scale unheard of for dec- have fallen and will remain under presades. Apart from the above-mentioned sure well into 2016 due to low wholecoal-fired units, smaller gas blocks are sale electricity prices, fewer free CO2 going up in places like Stalowa Wola emissions allowances and increasing and Włocławek. By the end of 2019, support for renewable energy sources,” power plants producing over 5.8 giga- said Arkadiusz Wicik, a senior director watts (GW) of power will be given over at Fitch Ratings Poland. While conventional energy still plays for use, at a cost of about 30bn złoty. Much more investment will be needed a dominant role in the development though, because power companies will plans of Poland’s largest energy prohave to revitalise run-down plants and ducers – and in the government’s longadapt them to the European Union’s term strategy – the first signs of change increasingly restrictive demands. And have begun to appear. The role of coal that still doesn’t include the expansion is expected to gradually diminish, while and upgrade of Poland’s power grid. new coal-fired power plants are supposed to be more efficient and emit Growing demand less CO2. The problem, however, lies Big international energy companies are in Poland’s outdated generation units, putting coal-based projects in Poland most of which date back to the 1970s on hold, due to the financial risks posed and 1980s. by the European Union’s anti-coal policy. Upgrading them will cost billions. Such was the case with EDF’s planned Recently PGE recorded losses worth 0.9 GW unit in Rybnik, in Poland’s nearly 9bn złoty at its lignite blocks south-west, which was due to use a mix in Bełchatów and Turów. The underof biomass and coal. Engie (formerly construction unit in Turów must be GDF Suez) shelved plans for a 0.5 GW redesigned to meet the tightening requirements for the emissions of sulphur oxides and particulate matter. According to Stanisław Tokarski, president of the Society of Polish Power Plants and deputy head of Polish energy producer Tauron, the cost of bringing all of his company’s power plants into compliance with the new standards is estimated at 12bn złoty. With that in mind, he suspects that PGE’s write-down was only a prelude to more losses from other companies. Power

The Łaziska power station

in Poland’s south. Much of the country’s energy infrastructure – including its power plants – are outdated and desperately need modernisation. The Łaziska plant was built between 1967 and 1972.

Polish power producers: finding flexibility Flexibility does seem to be something Polish energy producers have begun to focus on. Both PGE and Enea have made the use of alternative sources of power an important part of their development strategies. Enea also hopes to increase competitiveness by integrating extraction into its business model – it made a tender offer for Bogdanka, Poland’s most efficient coal mine. There are also new ideas for the design of a 1 GW power plant in Ostrołęka which was suspended by Energa in 2012. Now, instead of one large block, two 0.5 GW units are envisioned. Sources also indicate that a biomass block at the Ostrołęka power plant is also being considered.

plants that do not meet the requirements will disappear. “Some 9,000 to 10,000 MW of production – or one-third of the installed power in Poland – could be shut down by 2022,” said Tokarski. Now, the industry is calling for investment incentives for new conventional power, in order to level the playing field with subsidized renewable energy.

Uncertain investments In this rapidly changing regulatory environment and these unfavourable market conditions, companies must decide how to replace the generation that will be shut down. The gap is not being filled – at least not quickly – by Poland’s long-delayed nuclear power programme. Experts say the country will likely not see any nuclear power produced until at least 2027, although the official launch date is still 2025. Nor is the construction of gas-fired plants enough to bridge the deficit. By 2028, new gas power plants are expected to account for just 4.1 GW. Experts agree that the real boom in natural gas-powered energy will not happen until Poland’s shale gas deposits are tapped. The problem is that nearly all of the large international players that entered Poland during the wave of shale-gas excitement over the past several years have now abandoned their concessions. Declines in gas

Below: a wind farm in Poland’s

Podlaskie region. Currently, wind energy accounts for about 4 GW in the Polish energy mix. Poland’s demand for electricity came to about 160 terrawatt hours in 2014, according to the country’s energy regulator.

At bottom: loads of Polish coal

wait to be transported at a cargo terminal in Poland’s northeast. With plentiful coal resources and change in Poland’s energy sector coming slowly, experts say the country will be dependent on the fuel for decades to come.

energy IN FOCUS

prices in the global market and a lack of tax incentives have done nothing to encourage their return.

photos: Wojciech Wójcik (Forum), Andrzej Sidor (Forum), Marek Kuwak (Forum)

Smaller and more flexible So it’s no wonder that coal is seen as the last, best option. But electricity providers will have to find ways to make their plants more efficient and flexible. “Coal will remain the main fuel in Polish power plants,” said Mikael Lemström, vice president for Poland at Finnish firm Fortum Heat and Power. “But in the face of challenges posed by the EU’s climate policy, the priority must be to build units that will burn coal efficiently. Cogeneration, in which both heat and electricity are produced, is one option. The second issue is to increase the flexibility of blocks that must complement renewable sources and provide energy when the wind does not blow and the sun does not shine,” he added. At its plant in Zabrze, Fortum decided to go with a flexible boiler that uses a mix of coal, biomass and waste from the local market. In Lemström’s view, the Polish market is evolving toward a system of more dispersed, smaller sources of power, although the large production units will not disappear completely. If Poland can manage to find ways to burn coal more flexibly and efficiently, there are tremendous opportunities for profit – for example in selling electricity to the country’s neighbour across the Oder. By 2022 all nuclear power plants in Germany will be shut down, and the country also wants to reduce coal-generated electricity. The result would be an energy deficit that Stephan Kohler, former head of the German Energy Agency, suggested could be filled by imports from none other than Poland.

Diversification is key Nevertheless, companies are diversifying their generation portfolios to minimise risk, and are building power plants that run on renewable sources. Currently, renewables account for about 6.2 GW in the Polish energy mix. Of that, over 4 GW comes from wind power. More could come from the country’s scattered, independent micro-producers – but so far they have not developed on a large scale. Poland’s new law on renewable energy sources, which comes into effect next year, could change that.

It is designed to provide support for household power generation by guaranteeing above-market rates for energy sold into the grid. Support mechanisms for large plants that produce green energy will also be modified. Still, experts predict that large wind farms will continue to dominate Poland’s sustainable energy market. That could pose significant risks. As wind farms increasingly compete with each other, prices will fall – making investing in new wind generation an unprofitable endeavour. “The government should foster the development of various sources that complement each other. In the long term, the diversification of renewable sources will improve energy security,” said Joanna MackowiakPandera, head of the Forum for Energy Studies. She points out that solar power can help meet demand during peak times in the summer, while wind can make up for deficiencies in the winter and biomass can be used year-round. For now, that’s just a vision of the future. Today, Poland’s power companies will have to spend money on innovation and new technologies. In a few years, their role in the market could be quite different than it is today. To remain competitive in this changing and increasingly liberalised sector, they will have to jump ahead.

by Aneta Wieczerzak-Krusińska

In the face of challenges posed by the EU’s climate policy, the priority must be to build units that will burn coal efficiently’

Energy in focus

More modern, more efficient An expert in energy law tackles the challenges facing the sector in Poland

What would you say is the biggest challenge facing Poland’s energy market? Is it lack of diversified supply, dependence on fossil fuels, outdated infrastructure, bureaucracy, or perhaps something else?

Poland Today speaks with Filip Elżanowski,

a specialist in energy law, about the state of Poland’s energy market

The Elżanowski, Cherka & Wąsowski law firm is a partner of Poland Today’s Energy in

Energy in focus

Focus section

In my opinion, the greatest challenge facing Poland is undoubtedly improving energy security as it is broadly defined. At the moment Poland is basically self-sufficient only in the field of coal because of its rich resources. In the gas and liquid fuels sector we are largely dependent on imports. In other words, Poland has security in the supply of some energy sources, like coal, but not in others. Moreover, we have a huge problem with outdated infrastructure. It is also worth mentioning that renewable energy sources face many barriers in Poland – from economic through technical to those related to grid-connection issues.

What do you think needs to be done to overcome those challenges? First of all – modernisation. Obviously, we also need to invest in new infrastructure, but the infrastructure that already exists must be modernised. We need to develop a modernisation programme that will be implemented systematically. We must also have in mind that every investment is subject to the legal conditions in the country. Having a proper legal framework creates energy security and ensures it in times of crisis. We need to be aware of that. Hence, there is a need for the law to be properly executed. This can be accomplished with help of specialists in the field of energy law. Finally, we should also seriously consider diversifying Poland’s electricity sources.

Poland looks to be married to coal for the foreseeable future. How long can this last before Poland risks running afoul of EU laws? We know that for the next 20 years the basic fuel in Poland will be coal and lignite. In the coming years we are not going to give up on this because the alternative energy sources are still too expensive. And Poland’s not the only one – many countries still have energy systems based on coal.

European Union policy should be more attuned to realities in the various member states. For example, the EU could do more to encourage Poland to increase its energy efficiency – something that is greatly needed. Currently, EU climate policy does not promote coal as a fuel – but it must be noted that a low-emission economy does not necessarily have to be a low-carbon economy.

Poland’s nuclear project continues to be delayed, renewables are still an insignificant part of the energy mix, shale gas seems not to have worked out – what is Poland’s most promising alternative to coal? Which alternative has the best chance of prospering in Poland?

The new LNG terminal in Świnoujście,

in Poland’s north-west, will allow the country to import liquefied natural gas from suppliers all around the world, including Qatar, Norway or even the United States. In turn, Poland will be able to diversify its sources, something of key importance, since it is heavily dependent on Russia for the fuel. The terminal is expected to come online next May, and should reach full capacity by 2018.

‘EU policy should be more attuned to realities in the various member states’ Filip Elżanowski Filip Elżanowski is a partner at the

Elżanowski, Cherka & Wąsowski law firm. He holds a Ph.D. in law, and is assistant professor at the University of Warsaw. He specialises in energy law, administrative law and legal proceedings, particularly in procedures for issuing administrative decisions, as well as in public procurement law, and investment processes.

Currently we have high hopes for natural gas. Thanks to EU regulations we can now import gas from the West. As a result, a Polish importer can buy gas in Germany through the Yamal pipeline. Poland will only gain full independence from gas imports from the east when the liquefied natural gas (LNG) terminal in Świnoujście finally comes online. Poland is currently finishing this huge investment. Through the LNG terminal we will be able to import gas from all over the world. That in turn will insulate us from the risk of adverse effects of any potential suspension of gas supplies by Russia.

What do you think should be the government’s biggest priority in terms of energy market legislative reform? The Polish government faces a huge challenge in having to negotiate solutions mooted by the EU Commission in relation to the proposed changes to the directive on the European Emissions Trading Scheme (EU ETS). Poland has many reservations about the proposed legislation. According to experts, it is difficult to find solutions in the proposals presented by the European Commission that would meet the problems that Polish business faces. In addition, the government continues to work on a draft law on energy efficiency. The need for functioning support systems in terms of energy efficiency obviously results from the cost of energy and CO2 costs.

photos: Bartłomiej Kudowicz (Forum), ECH&W

Internationally engaged

Poland Today at MIPIM 2016 15/16 March, Palais des Festivals, Cannes, France

Tuesday 15 March 19.30 – 21.30

Poland & CEE Executive Dinner

Network in a relaxed environment with the elite of the Polish & CEE real estate market and beyond. Maximum 25 guests, CEO and equivalent level only. Attendees will include senior city officials; real estate investors & developers; leading consultants; European, regional & local journalists.

Wednesday 16 March

Meet the world’s property elite in Cannes Poland Today, in cooperation with our partners Rzeczpospolita and Bloomberg Businessweek, will organize the Poland & CEE events at MIPIM 2016 that will bring together regional players and global investors eager to invest, develop and partner in this exciting, fast-growing region. For more information please visit our website www.poland-today.pl or contact us Richard Stephens (content), editor in chief, at richard.stephens@poland-today.pl, (+48) 694 922 898 or Magdalena Gawlikowska (sponsorship & sales), magdalena.gawlikowska@poland-today.pl, (+48) 602 223 634.

09.30 – 10.30

CEE Breakfast Discussion Forum co-organized with RICS

Meet & discuss issues in the CEE markets with top regional market leaders. Open forum discussion, audience participation 10.45 – 12.15

The CEE Summit at MIPIM

Keynote speech and presentation followed by 2 panel discussions on the CEE markets 12.30 – 14.00

Poland Movers & Shakers Lunch Discussion Forum

Meet & discuss issues in the Polish market with city and regional authorities and leading market figures Open forum discussion, audience participation 14.30 – 16.00

Primetime Poland Conference, Keynote presentation followed by 2 panels covering the Warsaw w& Polish real estate market

SCIENCE & technology

Laser tagged Polish scientists are using lasers to help police fight the scourge of drunk driving

At first, Michał thought the bridge had collapsed. The blue, sweeping lights filled the whole area with an unnerving glow. Since the only place this road was leading to was the Siekierkowski Bridge, the only connection between Warsaw’s southern districts, the fresh visions of a burning Łazienkowski Bridge immediately sprang to his mind. He stopped, along with everybody else. Despite it being 4 a.m. on a Sunday, Michał found himself in a growing traffic jam. “There was no way to turn back, and no way to see what was happening in front of me. The whole situation seemed completely surreal,” he recalled. But it quickly became apparent that the traffic had not stopped completely. The cars appeared to be passing, one by one, through the barricade. Not a disaster area, then. “After about five minutes I got close enough to see what was happening. The police cars had blocked all the lanes except for the left one and they were letting cars through one by one – but only after a breathalyser test,” he said. A couple of cars, parked behind the checkpoint, appeared to belong to people who had failed the test. Michał knew he was safe. There’s no time to party when you have to get up at 3 a.m. For him there were no consequences other than a 20-minute delay getting to work. ‘Sober mornings’ – that’s what the police call their four o’clock drunk hunts. Sobriety control has become a staple of Polish traffic police work.

Revolutionary detection

Poland’s road safety problem Despite all efforts, Polish roads are

still among the most dangerous in the EU. In 2014 accidents in the Mazowieckie region alone killed 587 people. That’s 111 victims per million inhabitants, or twice the EU average. The number and the percentage of accidents caused by drunk drivers are falling, but Poland as a whole is, when it comes to traffic, still one of the three deadliest countries in the European Union (the others are Romania and Lithuania). Alcohol is one issue. Road quality is another, but with a growing network of expressways and highways, that too seems to be improving. What isn’t improving – at least not quickly enough – is drivers’ mentality. Almost 20% of accidents take place in ideal driving conditions, on straight roads and involve no inebriated drivers. The cause? Speed and bravado.

“Seven years ago we ran 1.5 million sobriety checks per year,” said Inspector Marek Konkolewski, a traffic safety expert who for the past seven years has been the face of Polish efforts to reduce the staggering death toll road accidents take each year in Poland. “Last year we ran over 9 million. We catch about 180,000 violators every year. That’s a lot, but I do believe our efforts are beginning to make a difference.” However, as traffic cops wearily admit, there’s still quite a few drivers out there who trust their luck rather than their brains. You know the type: the ones who think that a short drive after a beer or three won’t hurt anyone and certainly won’t end with a traffic stop – and a suspended licence. But their luck might be running out, because the current stop-and-blow tactics could soon be a thing of the past. That is all thanks to a little device under development at the Military University of Technology in Warsaw. Soon, police won’t have to rely on blind luck when hunting drunk drivers. They will know exactly whom to stop. “We tried to develop the instrument using simple, reliable and available off-the

Drunk driving is, unfortunately,

still a very big problem in Poland. But it has gradually been improving, say police. Part of the reason is ever-increasingly strict laws. For example, a blood alcohol level of 0.02% counts as a misdemeanor in Poland. In most EU countries the limit is set as high as 0.08%.

shelf elements,” said Dr Jan Kubicki, one of the creators of the device. The idea is as simple as it is revolutionary. A small box by the side of the road contains two lasers. It’s positioned in a way that allows the beams to pass through the windows of cars passing by. On the other side of the road, they hit a mirror and pass through the car again. A detector on the box checks whether both beams made it back. One of them – let’s call it a control beam – should pass through anything short of a solid surface undisturbed. The other beam the device emits is a bit different. It’s designed to be absorbed by alcohol vapours – for example the alcohol vapours coming out of the mouth of anyone who’s had a drink. A computer compares both beams and looks for the characteristic traces left by ethanol particles. “We can detect alcohol at concentrations as low as 0.1 milligram per litre. All we need is a few milliseconds and we can classify a car as suspicious,” said Kubicki.

‘A game-changer’

‘We can detect alcohol at concentrations as low as 0.1 mg per litre. All we need is a few milliseconds’

Obviously, there are dozens of scenarios that can explain the presence of alcohol in the air which don’t involve drunk driving: perhaps it’s the passenger who’s had a couple of shots; someone might have spilled beer on the carpet hours earlier; or the wiper fluid tank could be leaking. For that reason, the device is not intended to replace more traditional breathalysers, and its readouts could not be considered as court-admissible evidence. Instead, it would serve as a screening mechanism: Police would set it up several hundred metres ahead of their checkpoint and use it to determine which vehicles warrant their attention. “It’s a game-changer.” That’s what Konkolewski says about the possibilities created by the device. “This would be a bane to drunk drivers, especially combined with verification using topof-the-line spectrophotometric infrared devices. Right now too many potential drunk drivers make a quick right or left turn when they see one of our patrols. But thanks to this we could discreetly screen every vehicle and make sure violators don’t escape.” Catching them has been a priority for the Polish police for the past decade. In 2014 alone, people under the influence of alcohol were involved in over 3,500 accidents – that’s 10% of all traffic accidents in Poland. But the ones they were a part of seemed to have significantly graver consequences, with 470 deaths – almost 15% of the total death toll. The situation is grim, but, perhaps, not hopeless. “We’re slowly beginning to see some progress,” said Konkolewski “First of all, we don’t have a problem with social acceptance for drunk driving any more.

The ‘alco-lock’ solution In 2013 the Polish government introduced

a provision for people with previous DUI convictions to have their cars fitted with ignition interlock devices, or so-called ‘alco-locks’, which don’t let you start a car until you pass a breathalyser test. The idea is that anyone whose driving licence was suspended for a DUI could, after serving half their sentence car-free, apply for a waiver that would allow them to drive provided the vehicle was fitted with the device.

We’re keeping up the pressure on the roads with random checks, but we also handle prevention and education.” The number of accidents involving alcohol seems to be dropping, but for Konkolewski it’s not dropping quickly enough. “Now when we say we catch 180,000 violators every year, keep in mind that we have very tough alcohol norms in Poland, with just 0.02% counting as a misdemeanor when most EU countries set their limits as high as 0.05% or 0.08%,” he said. “But I, for one, am opposed to easing the norms. That could encourage people to experiment.”

Tweaking the technology That isn’t on anyone’s agenda right now. If anything, over the last two years, the laws aimed at drunk driving have become significantly harsher, with longer sentences and higher fines. The laser alcohol detector would fit in nicely with that policy. The early tests of the device were very promising, but a few problems quickly became apparent. “We used a helium-neon laser. Back when we started the project it was the optimal choice,” said Kubicki “However, it also makes the device rather large. But that’s not the real problem. The real problem is that the current configuration of the device only works reliably if we know the exact properties of the glass the beams are travelling through.” That, obviously, is a bit of a problem when you’re trying to scan thousands of vehicles of all possible makes and models. But Kubicki and his team are working on a new and improved alcolaser. It is based on a far superior cascade laser, which is both lighter and promises to rid the device of its Achilles heel. Small and universal is what they’re aiming for. They’re pretty close to their target. The first tests of the secondgeneration device could take place later this year. One of the commercial highway operators is very interested in testing the device on their roads. After all, a road that drunk drivers know to avoid is a much safer road. If the device becomes operational, it would make a lot of people think twice before even getting into a car after having a few drinks. And that’s even more important than catching them. It really would be a game-changer – in a very deadly game.

by Wojciech Brzeziński

science & technology

Wojciech Brzeziński is

a journalist with Polsat News, and a proud geek. He’s the creator of ‘Horyzont Zdarzeń’, the first weekly science and technology news show on Polish TV and the author of a number of technology-related articles in weekly newspaper Tygodnik Powszechny and monthly magazine Logo.

ARTS & CULTURE

PHOTO ESSAY

Poland’s Ansel Adams A selection of photos by Paweł Pierściński, the leader of the Kielce School of Landscape Photography, showing the Polish countryside in dramatic contrast

The Kielce School of Landscape Photography refers to both the canon

of photography produced by Kielce-based photographers from about 1955 to 1980, as well as to the group of artists themselves who produced such works. The term was coined in 1963 by Jan Sunderland – a well-known Polish photographer, artist and art critic – at the first Polish Landscape Biennale. The photographers of this school documented Poland’s industrial scenes, historical monuments and various aspects of social life in both urban and rural areas. However, the mainstay of the genre was landscape photography, particularly rural scenes from the area around the city of Kielce, in Poland’s south-central region. Paweł Pierściński, whose photos are shown here, is considered the founder and leader of the group, but core members also included Janusz Buczkowski, Wacław Cisłowski, Tadeusz Jakubik, Jerzy Kamoda and Jan Spałwan. The photos of Polish landscapes taken by Pierściński are strikingly reminiscent of those of famous American landscape photographer Ansel Adams.

‘Settlement in Stradów’ (‘Grodzisko w Stradowie’), 1967. This photo-

photos: Paweł Pierściński, courtesy of the Art Exhibitions Office (BWA) in Kielce

graph depicts the site of the remains of Poland’s largest early medieval settlement, in the village of Stradów, south of Kielce. It dates back to the eighth century AD.

‘Fir Trunks’ (‘Pnie Jodeł’), 1969. From

Pierściński’s series of photographs of the fir forests near Kielce. Pierściński wanted to document the Kielce region’s geological and biological forms, changes of the seasons, transformations in the area caused by people, and to reveal and display its beauty.

ARTS & CULTURE

‘The Slopes of Klonówka’ (‘Zbocza Klonówki’) 1967. From

Pierściński’s series of photographs of the Kielce region. Klonówka is a mountain in the Holy Cross range near Kielce. According to Pierściński, the main goal of the Kielce School was to systematically and regularly record the distinctive landscape in the area.

1 October, 1814. The Congress of Vienna officially opens

photos: Wkipedia

HISTORY

It happened in … October

Nearly every country, state

or principality in Europe was represented at the Congress of Vienna, but the most crucial negotiations were held between France, Austria, Great Britain, Prussia and Russia.

On 9 June 1815, the

Congress of Vienna decreed that the territory of the Duchy of Warsaw – the first official Polish state since 1795 – would be split between Austria, Prussia and Russia. Poles were deprived of their own country again, and didn’t regain it until 1918.

Ambassadors

from nearly every state in Europe gathered in Vienna on 1 October 1814 with the goal of restoring the balance of power on the continent after the Napoleonic wars. The Congress of Vienna, as it became known, centred around negotiations between France and the four Great Powers of Austria, Great Britain, Prussia and Russia. The countries wanted to achieve their goal through the redistribution of territory taken by Napoleon’s France and its allies. In the end, the Congress was a disaster for Poland. The Napoleonic creation of the Duchy of Warsaw – the first official Polish state since 1795 – was devoured by the three powers of Austria, Prussia and Russia, again depriving the Poles of a country of their own for the next 103 years. By early 1807, Napoleon had defeated Prussia and had advanced as far as the Russian frontier. In the sub-

sequent Treaties of Tilsit of that year, the Duchy of Warsaw was officially established. It was the first official Polish state since the Third Partition of the Polish-Lithuanian Commonwealth in 1795, when Polish land had previously been divided up between Austria, Russia and Prussia. The Duchy had been granted much of the land lost to Russia and Prussia in the Third Partition, with the notable exceptions of Gdańsk, which was made a free city, and Białystok, which was ceded to Russia. The Duchy’s territory was further expanded following Napoleon’s victory over Austria in 1809 when the lands of West Galicia, lost to Austria in 1795, were returned to the Duchy. While the Duchy may have only existed as a Napoleonic satellite state, many Poles hoped that loyalty to Napoleon would bring about greater independence. Nearly 98,000 Polish soldiers participated in Napoleon’s 1812 campaign into Russia, which Napoleon himself called ‘The Second Polish War’. However, following the defeat of Napoleon’s Grande Armée in Russia, Russian forces occupied Warsaw on 8 February 1813, assuming control of the Duchy. The Sixth Coalition, which included Russia, Prussia, Austria and a number of other states, then pressed on and invaded Germany in 1813 and France in 1814. Following the Treaty of Fontainebleau in April, Napoleon was forced to abdicate and was exiled. After the Treaty of Paris, signed in May 1814, the Bourbon monarchy was restored under Louis XVIII and the war was officially brought to an end. On 9 June 1815, the Congress decreed that the Duchy of Warsaw was to be split into three parts: first, the Congress Kingdom of Poland was established and placed under Russian influence; second, the Free Republic of Kraków was placed under the protection of Austria, Prussia and Russia; and third, the Grand Duchy of Poznań was returned to Prussia. While the decision allowed ‘Congress Poland’ to have its own government and institutions, this was soon ignored by the Russian rulers, and it became little more than a puppet state. A true Polish state only returned in 1918, in the aftermath of World War I. by Liam Frahm

60 HISTORY

Eyewitness: Waldemar Świto The political consequences of World War II kept Waldemar Świto and his father from ever meeting

Despite

Peter Narel is a

native Pole but has spent most of his life in the United States. He received his Bachelor's degree from Loyola University Chicago and went on to study for a Master's degree at the University of Warsaw. It was there that he met his Nepalese wife, with whom he now resides in New York City.

being just three years old when World War II ended, the events of that conflict have always been at the forefront of Waldemar Świto’s life. As with so many Poles born in the 20th century, Waldemar’s life has been perpetually shaped by the events of the war; beginning on one June morning in 1941 when four Soviet secret police arrested both his parents in their home in eastern Poland and sent his father and pregnant mother to separate forced labour camps in the Soviet Union in retribution for his father having fought against the Soviet invasion of Poland in 1919. Four months after the arrests, Waldemar Świto was born on a state-owned agricultural co-op in a village in the Altai Krai territory of the Soviet Union, which today is in Russia, on the border of Kazakhstan. While Waldemar’s mother struggled to raise her infant son and deal with the harsh realities of the labour camp throughout the war, Waldemar’s father was granted amnesty as a political prisoner through the 1941 SikorskiMayski agreement. He joined the newly created Polish Second Corps under General Władysław Anders, composed primarily of former prisoners. Thearmyin-exile travelled throughout the Middle East in the areas of present-day Iran, Iraq, Palestine and Egypt before joining with other allied powers and participating in several battles in Italy towards the end of the war. The army was ultimately transported to Britain and demobilised in 1946 – where most of its former members, including Waldemar’s father, settled and remained in exile, facing repeat deportation to Soviet labour camps if they attempted to return to their country. Back in occupied Poland, Waldemar and his mother had been repatriated. With travel restrictions making travel to

photo: Maciej Jarzębiński (Forum)

THE ANDERS ARMY In 1941, Stalin needed allies after

Germany’s invasion of the Soviet Union. Desperate for more forces to join the battle, he agreed to release Polish prisoners of war and allow them to form a fighting force. Under the command of General Władysław Anders, some 120,000 Polish soldiers and their families left Russia. Those of fighting age were sent to Central Asia, Persia, Iraq, and Palestine to join the British Army in Egypt.

Britain impossible, Waldemar grew up without his father – knowing him only through the letters and the occasional packages he sent from England. At school, Waldemar was forced to lie and say that his father had died in battle. Any chances of escaping abroad or living a normal life in Poland were marred by the fact that his mother began suffering from a number of illnesses due to the hardships she had experienced at the Soviet labour camp.

Dying wish denied Towards the end of his life, Waldemar’s father was desperate to see his son. Hoping that his cancer would finally convince the communist authorities in Poland to allow his son to come visit him before his imminent death, he sent Waldemar proof of his illness to present to the authorities and arranged all the other necessary formalities to facilitate the trip. The communist authorities in Poland, however, refused to issue Waldemar a passport. His father’s wish to see him before his death was never granted, but Waldemar was ultimately able to travel to Britain. Upon presenting the communist authorities with proof of his father’s death, Waldemar was finally issued a passport and was able to fly to England within 24 hours. He arrived there just in time for his father’s funeral. Despite the tragedy his family experienced at the hands of the Soviet Union, Waldemar bears no ill will towards the Russian people, who he says are “upstanding and kind” and who helped him and his mother survive at the labour camp during his early childhood. He even muses at how a nation of such predominately good people could have been responsible for such an “evil empire” – borrowing a term coined by US President Ronald Reagan. As World War II recedes further into the past, it can sometimes seem like distant history. But people like Waldemar remind us that there are still people alive today who experienced the war first-hand. Waldemar’s story in particular shows the repercussions that the war had, long after the armies had laid down their arms.

by Peter Narel

‘Waldemar grew up without his father – knowing him only through the letters he sent from England. At school, Waldemar was forced to lie and say that his father had died in battle’ Waldemar Świto in 2013 (left) and in 1947 with his mother (below).

HISTORY

Letters and packages were

Waldemar’s father joined the newly

the only contact Waldemar ever had with his father. The communist authorities made it impossible for Waldemar and his mother to travel to the UK to visit, and his father risked persecution if he returned to Poland.

photo: Waldemar Świto's archive

created Polish Second Corps under General Władysław Anders, composed primarily of former prisoners. The army-in-exile travelled throughout the Middle East in the areas of present-day Iran, Iraq, Palestine and Egypt before joining with other allied powers and participating in several battles in Italy – most famously at the Battle of Monte Cassino towards the end of the war.

SPORT

Poles shine at world athletics championships Poland was led by a strong showing from its hammer and discus throwers

Polish athletes excelled at the 2015 IAAF World Championships in Beijing in August. The Poles earned their best showing ever in the tournament, winning three golds, a silver and four bronze medals. Polish power throwers were the country’s greatest strength, with Paweł Fajdek and Anita Włodarczyk both winning golds in the hammer throw. Włodarczyk, who has been a force in the sport for years, came just 23 cm short of her own world record. Discus thrower Piotr Małachowski was the third gold medal winner. Poland also took a bronze in the men’s hammer throw (Wojciech Nowicki) and in the men’s discus throw (Robert Urbanek). Adam Kszczot earned silver in the 800m run, while Paweł Wojciechowski and Piotr Lisek both tied with France’s Renaud Lavillenie for the bronze in the men’s pole vault. It was the first time

Paweł Fajdek (above) won a gold

medal in the men's hammer throw. He attracted some unwanted media attention, however, when he accidentally left his medal in a Beijing taxi. The police recovered the medal a few hours later.

Anita Włodarczyk (right) continued

her domination of the women’s hammer throw event, coming just 23 cm shy of her own world record en route to her gold medal at the games.

‘Our athletes showed that they can win even when they are not favourites’ – Prime Minister Ewa Kopacz

Piotr Małachowski (below) completed

Poland’s trio of gold medals at the 2015 World Athletics Championships in Beijing in August with his victory in the discus throw.

Poland had ever won three golds at the tournament. The Polish team finished sixth in the medals table. In a humorous turn of events that received a lot of attention, Fajdek accidentally left his gold medal in a Beijing taxi during the tournament. Police were able to recover the medal for him within hours, but international media seized on the incident, with some reporting he had been drunk. Fajdek denied that version of events, however. When the athletes returned to Poland, they received a hero’s welcome, and were personally congratulated by Prime Minister Ewa Kopacz. “Our athletes showed that they can win even when they are not favourites,” she said. Polish fans are now eagerly awaiting the 2016 Summer Olympic Games in Rio de Janeiro, Brazil, hoping that the national team can repeat or even improve on its success in Beijing. by Andrew Kureth

photos: Kai Pfaffenbach (Reuters), imago/Xinhua

Internationally engaged

Primetime Poland in London Monday 30th November 2015, EY Office in London, 25 Churchill Place

The conference will bring together Polish and UK-based international business leaders to share their insights and experience. The speakers, including Jan Krzysztof Bielecki, Chairman of the Board of Partners at EY and former Prime Minister of Poland, will discuss what lies ahead for Polish business after the national election, as well as the investment opportunities hidden in Poland's real estate sector.

Ticket price: ÂŁ 325 / PLN 1650 net. Early bird rate (by 23 October): ÂŁ 250 / PLN 1250 net.

For more details please visit our website: www.poland-today.pl

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EVENT REVIEW

photo: ABSL

EVENT rEViEw

As part of our mission to bring Poland to the world and the world to Poland, Poland Today initiates, organises and grants media patronage to conferences that we believe help us achieve that goal. In this section, we provide a round-up of the conferences we have been a part of, with a view to providing an international perspective on Poland’s story. In this issue, we review Poland Today conferences that examined investment opportunities in Poland’s hotel market and in the wider real estate market across the CEE region. We also summarise the most important conferences across the country over the summer and into September, including the sixth annual ABSL conference, where Tony Blair was a speaker, as well as the Economic Forum in Krynica and ULI’s Competitive Cities conference.

CONFERENCE

For Poland, opportunity checks in Plenty of room for growth remains in the country’s hotel markets, and new niches are set to emerge. see page 66

CONFERENCE

Foreign capital flowing in Central and Eastern Europe’s real estate markets are awash with investor money. see page 68

MEDIA PATRONAGE

Tony Blair talks up business services in Poland The sixth annual ABSL conference welcomed the former UK prime minister to Kraków. see page 70

MEDIA PATRONAGE

The ‘indispensable’ conference The Economic Forum in Krynica proved once again that it is the premier event for discussing politics and economics in Poland. see page 71

MEDIA PATRONAGE

The battle for $1 trillion Experts at the ULI Competitive Cities conference explained how cities can best attract investment. see page 72

Join us for our up-

coming events. For more information, visit poland-today.pl/events

EVENT REVIEW

CONFERENCE

For Poland, opportunity checks in Plenty of room for growth remains in the country’s hotel markets, and new niches are set to emerge

From left to right: Christian

Hribar, Worldhotels; Bruno Leroy, Choice Hotels; Murat Yilmaz, Starwood Hotels and Resorts; Małgorzata Morek, Orbis/Accor; Miguel Martins, InterContinental Hotels Group; Magdalena Sekutowska, Hilton Worldwide; Marcin Woźniak, IBB Hotel Collection; Adam Konieczny, Christie+Co

Right: Miguel

Martins, development director for Poland at InterContinental Hotels Group

Bottom (from right to left):

photos: Piotr Dziubak

Dorota LatkowskaDiniejko, Reino Partners; Agnieszka Kaczyńska, mLeasing; Izabela Kuszner, Bank Pekao/UniCredit Corporate & Investment Banking; Hubert Mańturzyk, Aareal Bank AG; Łukasz Krawczyk, Alior Bank; Agnieszka Starczewska, BGK

Poland still offers plenty of room for hotel Christian Hribar, director of hotel develdevelopment and investment, especially opment at Worldhotels, said that his comwhen it comes to the budget end of the pany is mainly focused on four-star hotels market, said participants in the Spotlight but it sees room for five-star hotels as well. Hotel Investment Poland II conference hosted by Poland Today in Warsaw in There are currently about 2,480 hotels June. Warsaw and Kraków are the two in Poland, offering a total of around most attractive destinations in the coun- 120,000 hotel rooms. Occupancy rates try, with the Polish capital urgently need- have been on the rise. In April they grew ing a new large-scale conference centre by an annual rate of up to 10%, said Jakub that would allow it to host more events Klimczak, business development manand generate additional demand for hotel ager at STR Global. Participants pointed out that the Euro 2012 football champispace, the participants said. onships, which Poland co-hosted with In his opening speech, Gilles Clavie, presi- Ukraine, were hugely beneficial for the dent and CEO at Orbis Group, said that visibility and perception of Poland abroad. there is still significant potential for the development of the hospitality market in Krzysztof Celuch, president at the Poland Central and Eastern Europe. “Stable eco- Convention Bureau, said that the increasnomic growth is encouraging many for- ing number of foreign students coming eign investors,” Clavie said. According to to Poland has been helpful. Those stuStephane Obadia, development director dents travel across the country and often at Algonquin, the hospitality market in stay in hotels, he said. Other niches could Poland is attracting an increasing num- soon emerge in the Polish hotel market: ber of new entities from diverse origins Andrzej Chełchowski, partner at Miller because of the potential for high returns. Canfield, argued that there is room for What also helps is the fact that the cost of hotels located near hospitals that could debt is lower than a year ago, Obadia said. be used by patients and their families. The representatives of a number of the Participants agreed that Warsaw and major hotel companies, including Motel Kraków are now the two most attractive One, Orbis and Starwood Hotels and hotel markets in Poland. Gonzalo Duarte Resorts, talked up their expansion plans Silva, general manager at Starwood Hotels in Poland. Most of the conference par- and Resorts Poland, stressed that Kraków ticipants agreed that there is still room is now booming and is actually beating for more budget hotels in the coun- Warsaw. Warsaw needs to generate more try. “Budget and economy hotels are the demand for hotel rooms, and for this to future,” said Johannes Bauer, head of happen the city should start hosting more asset management for CEE at S+B Gruppe. events, Silva said. by Adam Zdrodowski

EVENT REVIEW

Below (from left to right):

Andrzej Chełchowski, Miller Canfield; Astrid Schafleitner, Motel One; Łukasz Płoszyński, FocusHotels; Andrzej Michalik, PRC Architects; Sebastian Wolff, Hotels Asset Management; Johannes Bauer, S+B Gruppe AG

Left: Małgorzata

Dybaś, managing director, Poland, Hotels Asset Management

Below: Gilles Clavie, CEO, Orbis Group

Far left:

Adam Konieczny, country head, Poland, Christie+Co

Below (from left to right): Martin Schaller,

Union Investment Real Estate; Stephane Obadia, Algonquin; Wojciech Szybkowski, CEE Hotels & Leisure Group; Rudolf Grossmayer, UBM; Ascan Kókai, INVESCO Real Estate; Andreas Scriven, Christie + Co

Left: Gonzalo Duarte Silva, Area Manager, Starwood Hotels & Resorts Far left (from left to right): Gonzalo Duarte

Silva, Starwood Hotels & Resorts; Gilles Clavie, Orbis Group; Jakub Klimczak, STR Global; Andrzej Wójcik, Satoria Group; Rune Askevold, Puro Hotels; Krzysztof Celuch, Poland Convention Bureau; Wojciech Liszka, MPI Poland

CONFERENCE

Foreign capital flowing in

EVENT REVIEW

Central and Eastern Europe’s real estate markets are awash with investor money

Above: The Poland

photos: Piotr Dziubak

& CEE Summit attracted 145 highlevel decision makers from across Europe.

Central and Eastern Europe remains a highly attractive destination for international real estate companies, with investors continuing to allocate new capital and developers continuing to find new expansion opportunities in virtually all of the countries across the region. Poland is still the regional leader, with Warsaw seen as the top destination, said participants in the Poland & CEE Real Estate Summit, hosted by Poland Today and Property According to Patrick Delcol, CEO for CEE Investor Europe at the Bristol Hotel in the at BNP Paribas Real Estate, there is also Polish capital in June. a lot of investor interest in assets that offer the potential for the development of addiThere is now a lot of foreign money, tional space. However, shortage of proda considerable portion of it coming from uct is an issue, Delcol said. the United States, waiting to be invested in real estate in Central and Eastern Banks are again lending more (with loanEurope, participants said. German invest- to-value ratios reaching up to 70%) and at ment funds also remain active. Asian capi- a lower cost. Bank financing has become tal is already active in CEE, but it is often cheaper too, said Dieter Knittel, direcnot easily visible, being managed by fund tor of Europe real estate finance at pbb managers from countries such as the UK, Deutsche Pfandbriefbank. said Jos Tromp, head of research and conRegional leader sulting, CEE and Africa, at CBRE. Poland is still the clear leader in the ‘Platform’ is an important word among Central and Eastern Europe region in investors in Central and Eastern Europe terms of its attractiveness for real estate at the moment. Investors are interested in investors, for reasons including the size transactions involving the acquisition of a of the market and the fact that the counnumber of assets across Poland or indeed try offers opportunities in a number of the whole region, the participants in the large cities, rather than just the capital. conference said. The recent purchase by Although significantly smaller markets Oaktree and PIMCO of a major stake in than Poland, the Czech Republic and Warsaw Stock Exchange-listed developer Hungary now also remain attractive. “I Echo Investment is a good example of this would go to Poland, the Czech Republic trend. Echo Investment arguably has one and Hungary before going to Bulgaria and of the most attractive project portfolios Romania,” said Dennis Dart, a consultant among all the developers active in Poland. at Secure Legal Title.

Left: Jos Tromp,

head of research and consulting for CEE and Africa at CBRE

During his keynote speech delivered at the conference, Tomasz Marciniak, a partner at McKinsey & Company, pointed to the economic success story of Poland, noting that the gap between the country and the EU15 has, to a large extent, been closed over the last 25 years. According to official forecasts, the Polish economy should grow by around 3% annually in the coming years. However, Marciniak said he believed Poland could see GDP growth of as much as 4% in the coming years if a number of bold reforms were carried out in the country. In an optimistic scenario, “we can catch up with Spain in 10 years,” Marciniak said. He added that Poland currently needs a major multi-sector transformation program which could help put the country in the top league and make it the seventh largest economy in the EU. By 2025, Poland could beat countries such as Spain and Portugal in GDP per capita. However, for that to happen, a number of major sectors in the country’s economy, including mining and agriculture, will have to be thoroughly reformed and modernised. by Adam Zdrodowski

EVENT REVIEW

Left: Matthias

BrodeĂ&#x;er, head of transaction management international at HIH Global Invest, taking part in the Warsaw office breakout session

Below: Wolfgang

Molnar, senior account manager at Erste Bank

Left: Patrick Delcol, CEO for Central & Eastern Europe at BNP Paribas Real Estate Far left: Tomasz

Marciniak, local partner at McKinsey & Company

Above:

Robert Dobrzycki, managing partner for Europe at Panattoni

Below: Allan Saunderson, editor-in-chief of Property Investor Europe and Adrian Karczewicz, transaction director at Skanska Commercial Development Europe

Above: Victor

Constantinescu, partner & head of real estate at Biris Goran law firm in Bucharest and Konstantin Boyadzhiev, business development director at Galaxy Investment Group in Bulgaria

Left (above):

Jean-Bernard Wurm, co-founder and managing director at Secure Legal Title

Left (below):

Piotr Piasecki, head of corporate finance at JLL Warsaw

EVENT REVIEW

MEDIA PATRONAGE

Tony Blair talks up business services in Poland The sixth annual ABSL conference welcomed the former UK prime minister to Kraków

For the sixth year running ABSL, an organisation advocating for business services companies in Poland, held its annual conference in June. This year, the event took place in Kraków, the epicentre of Poland’s booming business services industry. The conference hosted some 1,000 business leaders and sector stakeholders, who gained the latest insights into the industry from over 80 speakers and nearly 40 presentations and panel discussions. Key influencers from the world of business and politics presented the latest megatrends within the sector and beyond. The highlight of the conference was a speech by former British Prime Minister Tony Blair. Blair told the audience that Poland should be proud of all of the achievements it has made so far – and mentioned the business services sector among its major successes. It’s easy to see why. According to the latest ABSL report, which was presented at the conference, over 150,000 specialists work in business service centres that have been established with foreign capital in Poland. In the last 12 months, the sector has added some 22,000 new jobs. The report also finds that employment in foreign-capital business service centres in Poland is expected to grow to as high as 250,000 by 2020.

photos: ABSL

One of the event’s plenary sessions focused on the changing role of Poland in the region and in Europe. Participants discussed ways that the country could boost its economic potential, and another panel asked how Poland could make its way into the prestigious G20 group of countries. Another major discussion revolved around the rise of technology, and how it is influencing innovation, leadership and the modern global environment. Other panel discussions talked about the top challenges for leaders in the business.

Around 1,000

leaders attended the sixth annual ABSL conference in Kraków. Networking events and tours of the city’s service centres offered opportunities to share best practices.

Business leaders

and sector stakeholders gained the latest insights on the industry from over 80 speakers and nearly 40 presentations and panel discussions.

The plenary discussions were complemented by breakout sessions, during which more specific challenges could be discussed. They focused around four main areas: fuelling growth and scope expansion, streamlining operations, talent management and making the most of technological trends. This year attendees could also take part in interactive ‘demo labs’ which gave them hands-on experience with technological solutions that are tailored specifically to sector needs. The conference also offered opportunities for networking, with leaders from the key sectors in the industry taking part. Tours of some of the city’s leading service centres offered additional opportunities to share best practices. by Andrew Kureth

MEDIA PATRONAGE

The ‘indispensable’ conference

EVENT REVIEW

photos: Economic Forum in Krynica-Zdrój

The Economic Forum in Krynica proved once again that it is the premier event for discussing politics and economics in Poland

For the 3,100 participants at the 25th Economic Forum at the mountain resort of Krynica-Zdrój, the news that Jarosław Kaczyński, chairman of the opposition Law and Justice Party (PiS) had been chosen by its panel as ‘Person of the Year’ caused barely a ripple of discussion. With so much on the agenda – conferences to attend, important people to buttonhole, parties to see and be seen at – there was little time to mull the award’s implications.

Prime Minister Ewa Kopacz (above) used her

speech to give a strong statement on the importance of Poland being open to migrants.

President Andrzej Duda (above) said

the euro zone crisis, the migration issue and the situation in Ukraine were among the main threats facing the EU.

was to reassure the business community. “Please do not be afraid. We are orientated In the Polish media, however, it caused towards the economy and entrepreneurquite a stir and briefly dominated the ship,” she said. news cycle. Despite the mild controversy, the episode confirmed that the Economic One of the main topics during the busiForum in Krynica is still the most indis- ness discussions was how to help Polish pensable event in the Polish business and companies develop in foreign markets. political calendar. At the forum President In a debate hosted by daily newspaper Andrzej Duda highlighted the falling birth Rzeczpospolita, Adam Purwin, president rate in EU countries, the euro zone criof PKP Cargo, said he believed Polish sis, the migration issue and the situation companies should start by concentrating in Ukraine as being the main threats fac- on neighbouring markets. “It is worth first ing the EU. He suggested these should be reaching for what is closest, [markets] countered by three pillars: unity between which we are closer to in mental and culcountries, security based on freedom tural terms,” he said. Krzysztof Domarecki, and a return to the roots of the EU being chairman of the supervisory board of Selena, a producer of chemical products a partnership of sovereign states. for the construction industry, agreed, sayPrime Minister Ewa Kopacz used her ing companies should concentrate on the speech to give her strongest statement yet familiar. “Medium-sized Polish compaon the importance of Poland being open to nies should focus on Europe for the next giving shelter to migrants, saying it came 10 years. Reaching further greatly complidown to a matter of decency and solidarity cates a company’s activities.” with EU partners. In a different panel discussion, howThe main aim of Beata Szydło, the Law ever, Deputy Prime Minister Janusz and Justice candidate for prime minis- Piechociński declared that reliance on ter in October’s parliamentary elections, the European market for Poland’s goods

was dangerous for exports. “A slump in Beata Szydło the German economy by 1% translates (above) assured into a decline of our GDP by 3%,” he said. representatives of business com“Our main task is to change the geographic the munity that they structure of Polish exports. By 2025 at the need not be ‘afraid’ latest, half of our exports should be to new of a Law and Justice markets and half to markets of EU mem- government. ber states.” Innovation was another topic covered at the event, and CD Projekt, the Warsawbased digital entertainment company responsible for the highly acclaimed video game The Witcher’ (‘Wiedźmin’), won the Eagle of Innovation prize. Professor Piotr Moncarz praised the company for opening the door for Poland’s IT industry to the global market. by Richard Stephens

EVENT REVIEW

MEDIA PATRONAGE

The battle for $1 trillion Experts at the ULI Competitive Cities conference explained how cities can best attract investment

Below: Valentino Castellani, former mayor of Turin, Italy

Right: Mike

Above: Rosemary

Feenan, international director of global research programmes at JLL, London, UK

Right: Mateu

Hernández Maluquer, CEO, Barcelona Global, Spain

Cities around the world are ultimately but also keep, talented young people. City competing for a finite amount of invest- authorities, he said, should concentrate ment, and they have to use all their on helping their seats of higher learning resources, assets and marketing skills compete effectively for top student talent. in order to attract as large a piece of The most effective single ingredient for this global pie as possible. That was the ensuring a university maximises its potenmessage from Rosemary Feenan, direc- tial for attracting the best students, he said, tor of the global research programme at is for the university to adopt English as its JLL, and an active member of the Urban primary language. Land Institute (ULI), at the first ULI Competitive Cities conference in Warsaw An example, he said, is the National early in the summer. “The battle for the $1 University of Singapore, which decided to trillion,” is how she put it. adopt an English-only policy a couple of decades ago and now features consistently Where do Warsaw and other major Polish in the top 25 universities in the world. cities stand in the crowd? In large part He contrasted this with German univerthat depends on who is doing the assess- sities which, he said, were once at the ing, but according to JLL’s Commercial top of the rankings but aren’t any longer, Attraction Index, Warsaw is in the top 100, due to the fact that the language spoken at 75th, while Kraków and Wrocław are is mainly German. in the top 300 at 179th and 252nd respectively. Tri-City and Poznań rank in the top Brian Field, senior economist at the 500, while Łódź makes it into the top 600. European Investment Bank, took up Valentino Castellani, the former mayor of issues of infrastructure and telecommuTurin, spoke from experience about the nications, while cities’ visual identificamix of both vision and hard-headed urban tion and their internationalisation were planning that were required to revive his discussed by Mateu Hernández Maluquer, once-troubled city – hit by the oil and the president of Barcelona Global. Debra automotive crisis in the 1970s and 1980s Mountford, a senior policy analyst at the – into a thriving modern urban environ- Organisation for Economic Co-operation ment able to host the Winter Olympics. and Development, spoke about leadership, partnership and organisation. The closHigher education, capacities and innova- ing remarks were given by Jordi Hereu, tion were the topics covered in a speech the former mayor of Barcelona, and was by Mike Emmerich, former CEO of New titled: ‘How I made my city competitive’. Economy, a policy advisory group for the ULI plans to organize the second annual city of Manchester in the UK. He told the edition of the Competitive Cities conferaudience that universities are a major fac- ence at around the same time of the year tor in ensuring that cities not only attract, in 2016. by Richard Stephens

photos: ULI

Emmerich, former CEO, New Economy, Manchester, UK

IMPRESSIONS

Poles are curious, not hostile Poland Today sits down with Marie Aimée, a Rwandan living in Poland, to ask about her experiences in the country

Marie Aimée grew up in Kigali, Rwanda.

She came to Poland in February 2011 to visit her brother who was studying here, and decided to stay. She studied international business relations in English at the University of Warsaw, earning a Bachelor’s degree in June last year. She is currently a teacher in a kindergarten near Warsaw. She wants to resume her studies and earn a Master’s degree. She says that her passion is kids, and that she wants to make teaching children English her career.

‘I was expecting so much hate from Poles, but I received so much love’

What had you heard about Poland before you came here, and how close was that to reality once you got here? Before I came to Poland I had heard that incidences of racism were quite high. Africans think that the whole of Eastern Europe is racist, and that includes Poland. Also, just in terms of size, Poland is more than 10 times bigger than Rwanda, so I was scared I would be lost in such a huge country. Of course I had also heard that it is super cold, so I was afraid of the cold. Most of my expectations have been met. I wouldn’t say that Poles are racist as such, but I know black people who have been beaten up. I often hear of people beaten up because of their colour. I personally don’t feel hostility from day to day – I don’t feel it at all.

What were your first impressions of Poland, and have those first impressions proved right or wrong? Well, it is huge, and it is cold in the winter – even autumn is cold – it’s never that cold in Rwanda, and for me the cold is hard to deal with. It’s been four winters but I’m still not used to it. Polish summers are very hot, which was a surprise because in my country it’s always between 19 and 29 degrees, so when it’s hot in Poland, it’s hotter than in my country.

What was unexpected about Poland? The difficulty of the language. Normally I’m good at learning languages – I speak French, English, a bit of Swahili, and my native language Kinyarwanda. Learning Polish for me was like a slap in the face – it is really hard. I speak Polish pretty well now and I want to be fluent.

photo: Magdalena Mikulska-Rekita

What was the thing that was hardest to adjust to when you moved to Poland? The hardest thing was the looks that I got in the buses, trains, when I was on a walk, things like that. People approach me on the bus asking to touch my hair. Kids have asked me if I used chocolate butter to make my skin dark. I used to comfort myself by saying that once in a while I’m a star. Still, the people staring at me was hard to absorb. But they were curious, not hostile.

What has been the strangest or most memorable experience in Poland? I was expecting so much hate from Poles, but I received so much love. I was just 18 and for my family I was just a little girl and they were scared that something would happen to me. But Polish people were always ready to help me, and I will always cherish that.

What are the most striking similarities between Poles and Rwandans, and what are the most striking differences? In Poland, no matter how small an amount of money you have, you can still buy food in a restaurant cheaply, and that’s the same in Rwanda. Then there’s the gossip. Both Poles and Rwandans gossip. I’ve lived in Belgium and they don’t gossip so much there. There are many differences. I find Polish people to be very individualistic. We are more collective. My family doesn’t finish at my grandmother. We have uncles and aunts, cousins, etc.

What advice would you give someone from Rwanda coming to live in Poland? With an optimistic attitude, patience, hard work and persistence, you can have a nice life here. The cost of living is low, even compared to Rwanda.

What advice would you give someone from Poland going to live in Rwanda? I would just say “go”. It’s a virgin country; there are so many opportunities. But make sure you speak English or French. You won’t find anyone speaking Polish.

In what ways has Poland changed you? I am more patriotic and I am more confident. But I can’t smile so much here. In Rwanda you even smile at strangers in the morning. Here everyone seems stressed or sad on the train in the morning. I don’t like it.

What keeps you here now? I teach English in a kindergarten, but I would like to resume my studies here. For now I don’t want to go to Rwanda because I’ve made friends in Poland and my brother is here. I’m happy here for now.

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