WBJ Observer July 2016

20 PAGES 25 PAGES

july-august 2016

Number 07/08 (29/30)

OF REAL ESTATE N EWS

REAL EST A NEWS TE

PLN 24.50 (VAT 8% included) ISSN 2353-3714 INDEX-RUCH-332-127

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Legia is the project dariusz mioduski:

Defense sector

of my life

Poland a n d NATO Sp e c i a l R e p o r t T h e s tat e o f th e P o l i s h defense industry >>23 Car fleet management Going green >>48

july/august 2016

also in this issue:

• C o m m e n t a r y • To u r i s m • Te c h • N ew s • L i fe st y le • F i n a n ce

IN THIS ISSUE

23-36 53-73

20-21

dariusz mioduski 6

37

6-14 In Review Latest news 15 Dateline 16 Economy

38-40 Smart houses 41 Stack Overflow interview 42 IT contracts

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44

commentary

feature

18-19 Law MAR regulation

44-45 Tourism Do it yourself

news

defense today Lokale Immobilia

tech insights

47-51 Finance & Investment 74- 75 E vents Manufacturing Excellence Awards 76 Events ReDI

77

lifestyle

77-78 Gadgets 79-80 Lifestyle Summer in Warsaw

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Visit our site - wbj.pl For latest news, features and commentaries.

Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Editor-in-Chief, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Michael Evans Copy Editor Journalists Daria Mamont dmamont@wbj.pl Wojciech Rylukowski wrylukowski@wbj.pl Tomasz Chwinda Art Director tchwinda@valkea.com Aleksandra Szydło Graphic Designer aszydlo@valkea.com Contributors Ewa Boniecka Małgorzata Krakowska Vedika Luthra Karolina Papros Sergiusz Prokurat Adam Zdrodowski

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commentary / ON INFORMATION TECHNOLOGY

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commentar y / O N I N FORMA T I O N T E C H N O L OGY

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Dear Readers Jacek Ciesnowski, Editor-in-Chief, Warsaw Business Journal Group

This double issue coincides with one of the biggest events held in Poland this year – the NATO Summit. Especially for this occasion we’ve prepared a report on the state of the Polish defense sector – it’s exports potential and the ongoing modernization plan.

When this issue goes to press, football fever in Poland is at boiling point. The national team is going strong in the European championship and we still don’t know how this journey will end.

To stick with the football topic, we also decided to speak with the owner of the biggest club in Poland. Dariusz Mioduski, the majority owner of the team, explains how different running a sports team is from operating in a “regular” industry.

Summer is upon us and most of you will probably be off on your holidays. Will you be using tour operator services, or are you more of a “do-it-yourself” person? Find out how the market is changing and why it has never been easier, and cheaper, to book

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your dream trip by yourself.

In our Lokale Immobilia section we write about how some real estate niches, like nursing homes, can present attractive investment opportunities and how the trends in residential real estate have changed over the course of last few years.

This issue is missing one of our permanent fixtures – the ranking. Due to the hard work of our Book of Lists team and some technical issues beyond our control, we decided to push back the annual launch to September and give everyone more time to make sure the collected data is up to date. So, to avoid any confusion and publishing data that two months from now could be outdated, we've decided to skip the ranking this time. But no worries, you’ll have plenty of data to analyze in September.

lll INREVIEW news

News highlights of the past month

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n June 23, 51.9 percent of Britons voted to leave the European Union in a historical referendum which has sent shockwaves throughout Europe.

The president of Poland Andrzej Duda commented on the UK's decision with the assertion that Poland will work to retain the closest possible economic and political ties with the UK and the European Union.

The EU “needs to do everything to avoid a domino effect,” Duda said. The Brexit referendum result constitutes “a great challenge and a huge question on how to move forward on European issues.”

Duda said that European leaders should analyze what made Britain vote to leave.

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“Maybe (the EU) imposes too much on its members, maybe citizens believe that it does not operate in a democratic way and they have no right to speak on matters important to them, maybe they believe that too many decisions are taken arbitrarily in Brussels,” Duda said.

Meanwhile, Prime Minister Beata Szydło asserted that Poland will table proposals and reforms for the EU to be stronger.

Poland's interest will be to avoid “a Europe on the basis of small clubs or groups that unite to their own similar political interests.”

Szydło's “United Europe of Sovereign States” will be designed “for the EU

to become stronger, to develop and to be an EU which unites its 27 member states.”

Speaking of economic affairs, Deputy Prime Minister and Development Minister Mateusz Morawiecki proclaimed that the UK leaving the EU will not affect Polish GDP or the zloty.

“A British exit from the European Union will not have any major impact on Poland's economic growth and volatility in the złoty will subside. I'm not concerned about the continuation of economic cooperation with the UK, which is Poland's No. 2 export partner, with Poland sending goods there worth €11 billion a year, as free trade is also in the UK's interest,” Morawiecki said.

Image: Shutterstock

President Duda: Poland will keep closest possible ties with UK

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Aegon to manage Nordea’s OFE fund

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resident Andrzej Duda and President of the People’s Republic of China Xi Jinping have signed a strategic partnership deal which states that both countries view themselves as long-term and stable strategic partners.

“Both countries, in the spirit of mutual respect, equal treatment and mutually beneficial cooperation, will strengthen their cooperation in political, economic, social, cultural and other areas ... as well as raise the level of bilateral relations in a comprehensive manner to ensure benefit for both nations,” the deal read.

Speaking after a meeting with President Duda, Xi Jinping said his visit is the first trip of the General

Secretary of the Communist Party of China to Poland in 12 years. The chairman said that he reached an agreement with Andrzej Duda over formulating a Chinese-Polish cooperation plan, establishing a steering committee for industrial cooperation, developing communication and information exchange, as well as strengthening investment in infrastructure and logistics.

“I am convinced that Poland may continue to play a huge role in linking China with Europe,” Jinping said.

Meanwhile, deputy Minister of Development Radosław Domagalski added that Poland is ready to open special zones dedicated to Chinese investors and that Poland may become China’s gateway to Europe.

Deflation to hold until Q3 - FinMin Deflation may hold until Q3 2016, the Ministry of Finance told PAP in a commentary on May’s inflation results.

Meanwhile, the Ministry of Development said it expects the inflation rate to stand at -0.7 percent y/y in June and 0.2 percent m/m.

In mid-June, the Central Statistical Office (GUS) informed that Poland’s inflation rate stood at -0.9 percent in May year-on-year. On a monthly basis, prices in Poland grew by 0.1 percent, in line with the flash estimate at 0.1 percent.

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Sejm elects Glapiński as new NBP governor

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ith 284 MPs voting for, 124 against and 34 abstaining, the lower chamber of parliament has chosen presidential candidate Adam Glapiński as the new president of the central bank NBP. He will replace Marek Belka, whose sixyear tenure ends this month.

Glapiński is a central bank board member and a former member of the Monetary Policy Council (RPP). He also worked as an advisor to late president Lech Kaczyński.

In his latest public speech he claimed that if he became the president of the central bank he would protect the bank’s independence. He was also in favor of incorporating the financial watchdog KNF into the structures of the NBP. In March, Belka told private radio broadcaster TOK FM that Glapiński would make a good president of the bank.

“I hope he will continue the present policy. I sincerely wish ... him this,” Belka said.

Image: Shutterstock

Poland and China sign strategic partnership deal

egon PTE, which manages Aegon OFE private pension fund, has signed an agreement, according to which it will manage the pension fund currently governed by Nordea, Aegon said .

“I am very pleased with the agreement, which will allow us to take over management of the Nordea pension fund. This transaction will help us improve the quality of customer service and strengthen our market position. After the accord is closed, existing customers of Nordea OFE will become Aegon clients,” said Michał Biedzki, head of supervisory board, Aegon PTE. After the merger, Aegon PTE will manage assets worth PLN 12.4 billion, compared with the PLN 5.9 billion it presently manages.

news

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news

Tesco to open major distribution hub in Poland T

esco is to open a major new distribution hub in Poland, ending speculation that the grocer was gearing up to abandon the Eastern European market, British newspaper the Telegraph said.

The new center will be located in Poznań and will be Tesco’s main warehouse for the region, servicing 140 of its stores from September.

Adam Manikowski, chief executive of Tesco Poland, said the new center, which is being developed by UK-based developer SEGRO, will reduce the annual mileage of its lorries by 12.9 percent.

Tesco closed nine of its stores in Poland in the last financial year, and expects to reduce its footprint further in the current year, according to its latest results statement.

A spokesman for Tesco said that the opening of the new distribution hub indicated that it was “business as usual” in Poland.

LNG terminal officially named after Lech Kaczyński

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PLN 3.5 billion Gowin in FT: Poland should buy up foreign banks Foreign capital “definitely has too much power” in the Polish banking industry, Minister of Science and Higher Education Jarosław Gowin told British newspaper the Financial Times, arguing that the state should act to increase the level of Polish ownership as part of a program of “economic patriotism.”

“We should use the opportunity that some of

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the foreign banks are in trouble, and move to renationalize them,” Gowin said. “In that transition phase, the Polish state may buy up these banks … but only to privatize them later.” “[But] if I had the choice to sell a bank to a foreign investor or a Polish investor, and if the conditions are comparable, even if the Polish investor is my steadfast opponent, of course I would prefer to sell it to the Pole,” Gowin continued.

The official also suggested that the government was concerned with the dominance of foreign companies, mainly German, in the country’s media market.

“Why would I assume that German owners of Polish newspapers are less patriotic than me?” he said. “I assume they are wonderful German patriots and whenever there may be any collision of national interests they would try to smuggle the German point of view [into their newspapers].”

Images: Shutterstock

The project is worth

n Saturday, June 18, an official ceremony, attended by Prime Minister Beata Szydło, President Andrzej Duda and Law and Justice chairman Jarosław Kaczyński, was held in Świnoujście, during which the LNG terminal was named after late President Lech Kaczyński.

Jarosław Kaczyński said that his brother initiated many projects to enhance Poland’s energy security and the construction of the LNG terminal was one of them.

“As the president of Poland, I am here to thank a visionary who inspired patrioticallyoriented, Polish politicians to execute this project,” said President Duda.

Meanwhile, the first tanker with a commercial delivery of 210,000 sqm of liquefied natural gas from Qatar berthed at the LNG Terminal in Świnoujście on June 17, GazSystem, the terminal operator informed.

The delivery of LNG took place under the long-term agreement with Qatargas.

The LNG terminal in Świnoujście features an unloading jetty for large LNG tankers, two storage tanks and a regasification train. The terminal’s initial regasification capacity will be 5 billion cubic meters per annum.

The project is worth PLN 3.5 billion and is Poland’s flagship investment aimed at diversifying gas supplies, reducing dependence on Russia.

news

Venice Commission criticizes surveillance powers in Poland The Venice Commission, an advisory group to the Council of Europe, has criticized Poland’s new law regulating police surveillance powers stating that it leaves too much room to breach the privacy of individuals.

The international human rights

commission said Polish rules on covert surveillance “in some respects are still insufficient to prevent excessive use and unjustified interference with individual privacy.”

However, the watchdog noted that the recent changes to the law on the

Polish police were adopted following recommendations by Poland’s Constitutional Tribunal in 2014.

In November, the commission criticized Poland for effectively paralyzing the nation’s Constitutional Tribunal.

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Poland to send up to 210 troops to fight against ISIS Poland will send two military contingents of up to 210 soldiers and deploy four F-16 combat planes in a reconnaissance role to Kuwait and Iraq to fight against the so-called Islamic State, Paweł Soloch, head of the Na-

tional Security Bureau said.

The Polish forces will not participate in combat missions. The contingent, composed of up to 150 soldiers, backed by four F-16s, will be deployed to Kuwait tasked with reconnaissance missions.

Another 60 soldiers will go to Iraq to train and advise local special forces.

Soloch informed that Prime Minister Beata Szydło has already filed a motion with President Andrzej Duda for approval of the mission.

The Council of Ministers has approved a proposal to raise the minimum monthly salary to PLN 2,000 in 2017, a hike of 8.1 percent from PLN 1,850 in 2017. The proposition is higher than the Labor Ministry had opted for and it has also surprised unions, which pushed for a raise of the minimum salary to PLN 1,970 in 2017.

“Driven by the responsibility for the state budget, the financial situation and the fate of Polish citizens, thinking about the dignity of Polish citizens, the government has decided that next year the minimum salary will amount to PLN 2,000,” said Prime Minister Beata Szydło.

Labor Minister Elżbieta Rafalska expressed her satisfaction that the proposed sum is higher than she had hoped for. “Raising the minimum salary is very good news for Poles,” she said.

Now the project will go to the Social Dialogue Council, consisting of representatives of unions and employers’ associations. Should they fail to work out a compromise, the governmental proposal will go through.

Meanwhile, Rafalska said that Poland is considering introducing a minimum hourly wage of PLN 13, and not PLN 12 as it was earlier said.

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Images: Shutterstock

Gov’t tables proposal to raise minimum salary to PLN 2,000

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3.9% is the amount by which the Polish economy will grow, according to 2017 budget forecasts.

Warsaw Stock Exchange makes deal with Chinese Haitong Bank On June 20, the Warsaw Stock Exchange (WSE) and Haitong Bank signed a cooperation agreement which provides mutual exchange of information concerning the situation on the capital markets in which both parties operate, a statement informed.

“China is still one of the fastest growing economies in the world and a place where financial centers of global importance are developing dynamically.

The aim of the agreement with Haitong Bank is to initiate a closer, mutually beneficial relationship,” proclaimed Małgorzata Zaleska, CEO of the Warsaw Stock Exchange, who signed the agreement on behalf of the WSE. According to the official, the agreement will improve the understanding of the situation on the markets in which Poland operates, and will deepen relationships with key stakeholders in the People’s Republic of China.

Haitong Bank is the first global capital markets player with an Asian owner that carries out large-scale operations in the area of investment banking in Poland.

The President of the People’s Republic of China Xi Jinping paid an official visit to Poland on June 19-21.

New anti-terrorism rules: mass gatherings to be banned On June 22, Polish President Andrzej Duda signed an anti-terror bill into law.

The bill comes into force as Poland prepares to host a NATO summit and the Roman Catholic Church’s World Youth Days in July.

The new law will allow the interior minister to ban mass gatherings and events if a third- or fourth-level terror alert is declared.

The government says the measures will increase the efficiency of Polish antiterrorist operations and improve coordination between security services, while opposition politicians and human rights organizations have criticized the law, and called on Duda not to sign it, claiming the new rules will limit citizens’ rights.

Earlier in May, the Council of Ministers of the Republic of Poland adopted an anti-terrorism bill. The bill gives many rights to the Internal Security Agency (ABW), which is to be the main actor in anti-terrorism policy in Poland.

55% is how many Poles have assessed the presidency of Andrzej Duda positively, according to a poll by CBOS. PLN 3 billion is how much Poland will allocate from EU funds to the development of start-ups.

PM Szydło: Poland to reduce CIT for small businesses to 15% “Poland will reduce the corporate income tax (CIT) for small firms from 19 percent to 15 percent as of January 1, 2017,” Prime Minister Beata Szydło, along with deputy Finance Minister Wiesław Janczyk, announced during a press conference.

The lower CIT rate is for companies with annual turnover of up to €1.2 million (PLN 5.28 million). The officials hope that lowering the tax will encourage entrepreneurs to exit the shadow economy.

Ministry of Finance officials said they expect the reduction to have a neutral effect on public finance as the resulting PLN 270 million annual gap in CIT receipts would be offset by additional receipts from tightening the tax system.

In that version of the bill, the changes would apply to 90 percent of CIT payers.

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I Te w / sb o/ dsy n la epas shi ontg n

Got ink?

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Image: Shutterstock/De Visu

This picture, taken during the International Tattoo Convention in Krakรณw, shows a father and his daughter during the festivities.

Calendar August-September August 4

Charity Beach Volleyball Tournament Event: This is the 7th annual charity beach volleyball tournament organized by the commercial real estate sector. This year, the proceeds will be donated to the Foundation Society of Friends of The Children’s Memorial Health Institute. All funds raised will be spent on vehicles which will be used to transport blood and medicine.

Location: La Playa Bar, Wybrzeże Helskie 1/5, Warsaw Web: jll.pl

September 4

Poland Business Run Event: Poland Business Run is a charity business relay race, currently in its third edition, which will start off at the same time in all the participating cities across Poland. The run combines the idea of helping others with the promotion of a healthy lifestyle and a sense of fun. The goal of the initiative is to help the beneficiaries of Jasiek Mela's Beyond Horizons Foundation. The foundation supports amputees whose lives have changed dramatically due to an accident or a disease.

Location: Various cities throughout Poland Web: polandbusinessrun.pl/en

September 1

Book of Lists gala Event: Celebrating the best of Polish business. The annual event celebrating the launch of the Book of Lists publication.

Certificates will be handed out to representatives of the companies that take first place in respective rankings, in addition to other special awards and distinctions.

Location: Centre for Contemporary Art, Ujazdowski Castle in Warsaw Web: Bookoflists.pl

September 6-8

Economic Forum in Krynica Event: Participants of this year’s event, aptly titled “United or Divided? Europe in the Face of the Challenges of Tomorrow,” will discuss major current economic, social and political issues.

Location: Krynica-Zdrój Web: forum-ekonomiczne.pl

September 8

IT Future Expo Event: The 6th edition of the B2B meeting of the IT sector. It is a platform where companies promote the latest solutions and technologies from the sector.

Location: PGE National Stadium, Warsaw Web: warszawa.itfuture.pl

September 28-30

European Forum for New Ideas (EFNI) Event: This year’s EFNI will focus on what is most important for the development and the future of the economy and society in Europe and Poland. It will offer debates on what endangers, shapes and influences the economy, and what can and should be done by entrepreneurs.

Location: Sopot Web: efni.pl/en W B J O B S E R V E R • j u ly / a u g u s t 2 0 1 6

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news / economy

facts and figures Data overview for May

Warsaw Stock Exchange as of May 2016 Number of listed companies:

-0.9%

487

was Poland’s CPI inflation

TRADE VOLUMES

9.1%

3.5%

y/y industrial output growth

sHares

registered unemployment rate

PLN 72.97 billion Bonds

PLN 479 million

4.7%

y/y retail sales growth

futures

2.88 billion Labor costs up

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-1.34%

PLN 13.5 billion

budget deficit at the end of May

Deflation holds

Year-on-year CPI inflation in Poland, May 2015 – May 2016 -0.5

Down to one-digit rate

Poland’s registered unemployment rate, May 2015 – May 2016 11.5 11

-1 10.5

“Any course of action with regard to conversion [of FX mortgage loans] - be it via the NBP or directly on the market - destabilizes the złoty. There is no way of getting around it.” newly appointed NBP President Adam Glapiński said.

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Image: NBP

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Jun. ‘15

Data source: Central Statistical Office (GUS), Warsaw Stock Exchange

Nominal hourly labor costs in Poland grew by 3.3 percent year-on-year in Q1 2016, the EU’s statistics office Eurostat said. Wages grew by 3.3 percent and non-wage costs also rose by 3.3 percent.

According to a study by the Central Statistical Office (GUS), the monthly net income per person in Polish households in 2015 (including non-wage earners) was PLN 1,386.

WBJ OBSERVER • june 2016

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commentary / LAW

Marta Midloch Legal counsel Member of the M&A/Capital markets practice WKB Wierciński, Kwieciński, Baehr

AHEAD OF THE IMPLEMENTATION OF THE MAR REGULATION – IS THE POLISH CAPITAL MARKET READY? The implementation date of the Market Abuse Regulation (MAR)1 is fast approaching. The MAR, which will apply directly to each EU Member State without requiring the states to introduce laws that implement it, will come into force entirely on July 3 and will bring about significant changes to the functioning of, among others, companies traded on regulated markets and listed in alternative trading systems. This date also marks the implementation deadline for the Market Abuse Directive (MAD II)2, a supporting directive to the MAR. MAR introduces a material change with regard to the disclosure requirements of issuers, which themselves will determine whether events should be considered as inside information. It will significantly increase the liability of not only companies themselves, but also, among others, board members of publicly traded companies.

At the same time, it will abolish the dualism in Polish law, which is connected with the requirement to publish current and inside information under separate legal bases. The MAR regime, consisting of MAR and MAD II, strengthens the system of uniform and severe sanctions, administrative measures and criminal sanctions for certain violations.

In light of the previous information, a question arises as to what extent the market (and especially the issuers) is ready for the imminent changes?

Notwithstanding the fact that the MAR will apply directly in the Member States, Polish legislation requires certain changes involving the repealing of a part of statutory and/or secondary legislation, as well as amending numerous national law provisions, which would be contrary to the MAR, or would hinder the effective application of that regulation with respect to administrative sanctions. As regards administrative sanctions enumerated in the MAR, the Member States are obliged to ensure (by way of national policy framework) that they are applied at least at the level stipulated in the MAR (this is particularly related to much more severe financial sanctions for certain violations than those currently provided for in Polish law). With respect to criminal sanctions, the Member States (including Poland) are obliged to transpose the MAD II Directive into national legislation.

The state of the legislative work relating to the adaptation and

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implementation of the above-mentioned regulations into national law is not sufficiently advanced to – most probably – allow Polish legislators to make amendments by July 3, 2016. The bill which amends the Act on trading in financial instruments and amending certain other acts is currently at the stage of giving opinions and agreements at government level.

The extent to which the provisions of the regulation on current and periodic information will apply3 has not yet been decided.

The regulation should be repealed in most part as the catalogue of current information contained therein will be replaced with a single definition of confidential information contained in the MAR. Taking into account that the MAR provides a significantly elevated (compared to the current) level of responsibility of issuers and members of their bodies, transitional provisions which shall be implemented by the new Polish regulation are of crucial importance.

Under these provisions it will be possible to determine liability for infringements committed before the introduction of legislation ensuring the use of MAR or implementing MAD II. If the Polish regulations do not come into force before July 3, 2016, there will be a situation in which, on the one hand, the requirements of the MAR will already be applicable, but regarding administrative sanctions and penalties, the national legislation will still refer to the legal status that existed before July 3, 2016. This could raise doubts as to the possible liability rules for breach of the MAR during the period before the entry into force of the relevant provisions of national law.

In this regard, an important indication will be announced on the website of the PFSA (the Polish Financial Supervision Authority), concerning the position of the PFSA Office. The PFSA announced that if by July 3, 2016 the Polish legal system has not adapted to the MAR, the Office of the PFSA is going to publish their position on the rules of procedure in such a situation on their website. The position of the PFSA in this regard is very important and anticipated by the issuers.

Regardless of the risks associated with the fact that on July 3, 2016 Polish legislation may not be adapted to the MAR regime, the question remains of how issuers from the regulated market and alternative trading system will be prepared for their new responsibilities?

commentary / law

Fulfillment of new responsibilities will probably be easier for those issuers who have, in advance, developed internal procedures and regulations to support the qualification of certain information or events as confidential information.

Even if the companies develop and implement internal systems related to the identification of significant and precise events that can be classified as confidential, and specify the catalogue of such events using appropriate analytical tools, there are some risks associated with the fact that issuers will treat this kind of catalog of the price-setting events as the sole source of information obliga-

tions. Past practice indicates that some of the issuers limited their reporting to the current information that was listed in the above regulation, without identifying other information that met the criteria of confidential information, and which should be disclosed to the market. Such an approach, in light of the new regulations, may be risky and costly. Hence, it is advisable that issuers remember that even the best-prepared internal rules or individual reporting standards should be an important, but not exclusive, tool supporting the identification of specific information concerning the issuer in terms of their accuracy and price-setting factors. u

Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC 2 Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (market abuse directive) 3 Regulation of the Minister of Finance dated 19 February 2009 in regard to current and periodic information disclosed by issuers of securities and conditions for recognizing as equivalent information required by laws of a non-member state

Image: Shuttesrock

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interview / Dariusz Mioduski

Managing emotions

Dariusz Mioduski is a lawyer, who after years of working in construction and energy sectors, decided to switch to football. He talks about how difficult it is to manage such a polarizing brand as Legia and why, despite not making any money on it, he is loving it. He also talks about how he played basketball with Barack Obama and how he almost became a member of the government

i n t e r v i e w B y J a c e k C i e s n ow s k i

Then why even bother investing in sport?

I never looked at my investment in Legia from a pure business standpoint. Of course, I want to build the value of the club, but most of all, I want to make it much better. I believe that we can be one of the top 30–40 clubs in Europe. But Legia is also a chance to make an impact as a social project. We can positively affect the community, help others, make a difference in the lives of many young people. Finally, it is the fulfillment of my passions and dreams. All my life I have been close to sport.

How different is managing a sports club from managing a business in a more traditional sector, like banking or construction? In sport, there are so many factors

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that you cannot predict. You can buy a player for a million hoping you’ll sell him for much more in a few seasons, and that player can get seriously injured during his first training session.

Increasingly, managing a football club requires similar skills as managing a “normal” business. This is why in the top sports organizations in the world you see world class managers. However, the difference and difficulty of managing a sports club is that you can’t rely simply on your business and management skills. You have to realize that you are managing a business of emotions and unpredictability. A good business plan and good execution are not enough. The ability to deal with external pressure from fans and media and its effects not only on management, but on all parts of your organization is critical. Luck plays a huge part not only in winning matches, but also in avoiding injuries. Finally, the pressures and events of what is going on in society generally gets reflected in the stadiums and in emotions and the behavior of your fans, who for most part believe they know what to do better than you. This affects your decisions on a daily basis. No “normal” business has that.

Then why bother with football? You won’t make money on it, it’s unpredictable and can be very negative.

Because this is not only about making rational decisions, but also following your

passions and doing what you love. And also because you realize how much good you can do through sport, particularly through such a strong brand like Legia, with millions of fans and followers, how much you can influence your community, how many young people you can help to make their lives better, how much joy you can help to give to all those, for whom Legia is one of most important things in their life. What can be better than that?

Do you ever see yourself not owning Legia?

Legia is the project of my life. It doesn’t have a timeline or deadline. As long as I feel that I can add value and as long as it gives me joy and satisfaction, I can’t see myself not owning it. However, I have learned over the years that life plays its own scripts. You may be forced to do things you don’t want to do. More realistically, I can imagine that in the future I could invite someone to join me if it might make the club significantly better.

Running Legia can be time consuming. Do you have time for anything else, business-wise?

Legia takes up much more of my time than I originally anticipated. Especially now, that I am leading the project of creating our new training and development center. I do find time for other business activities and I am involved in a few investment projects,

Image: Legia Warsaw

WBJ Observer: Is it possible to profit from sport in Poland?

Dariusz Mioduski: From sport, maybe yes, but if you are asking if one can make a profit from owning a football club in Poland then my opinion is no. That is, of course, if your aim in owning the club is to improve its sporting performance, training and stadium facilities, and the quality of management and staff. Any increased revenues will have to be reinvested and the potential for substantial overall increase of revenues in the Polish football industry is also limited in the short term. In the long term, however, you can certainly increase the value of the club.

interview / Dariusz Mioduski

but it is often at the expense of my family and personal time. Thankfully, now Legia is also a big part of our family life. My wife chairs Legia Foundation and it has become a full time job for her as well. She and the team are doing fantastic work with our community.

Your life has had many turning points. I’m sensing the most important period was your time spent at Harvard.

I guess I’m one example of the American dream. My family moved to the US when I was 17. We had nothing, and in a short time I had this rags to riches story of my own.

From working at McDonalds to finishing the best school in America. Being an immigrant makes you humble, but on the other hand if you succeed, you can be sure that you can succeed anywhere. It also makes you grateful and you want to help others. On my path here I’ve met many people who’ve helped me, without them I wouldn't be here. That’s why I want to give something back.

During your time at Harvard you met US President Barack Obama.

A funny coincidence, but true. A few evenings a week a group of 20-30 of us would go to the gym to play pick up games. One of them was this tall, black young man, who became the US President. He was a year ahead of me but I remembered him not only because he was quite good, but also because someone told me that he was the President of Harvard’s Law Review (the oldest operating student-edited law review in the United States). You had to be the best student in your year to lead such an esteemed publication.

You were also close to entering politics.

During my university days I thought that one day I may decide to enter into politics.

As an idealist I believed that this was the most effective way to change things for the better. Emigrating from a communist regime I was very conservative in my views. I even established a Republican Party club at my university and helped on a couple of congressional campaigns. But then, after a few years of work, I realized that there are other ways and politics was not the only way to effect change. After working for many years in the Polish energy sector, I did have a proposal to become a deputy Minister of Privatization responsible for the energy sector, but the partners in the London law firm, where I was working vetoed those plans. I think I was lucky again, as that government was dissolved after six months. u

W B J O B S E R V E R • j u ly / a u g u s t 2 0 1 6

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defense today

commentary / law

Army modernization program Is PLN 130 billion not enough?

Jan Parys: Poland has a deeply rooted military culture

Polish defense sector Ready to export?

s e ct i o n pa r t n e r WBJ OBSERVER • may 2016

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D e f e n s e / a r m y m o d er n i z a t i o n p l a n

The PLN 130 billion dilemma B y jac e k c i e s n ow s k i

On one hand, experts are saying that it is not enough and we need to be spending more. On the other, so far Poland has only spent a portion of the funds earmarked for this objective

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In such an environment it’s a big surprise that Poland is lagging behind when it comes to actual spending. The biggest tender to date, for helicopters, even though it was decided in 2015, is still being negotiated and looks like the tender process will be issued again.

Still, many, including the current leadership, have called for an even bigger increase in spending and are labeling the current plan as insufficient and chaotic. “We combined all the different plans together, for choppers, tanks, missile defense system and others. We added up the figures and

the result was PLN 130 billion,” said Krzysztof Krystowski, the President of the Board and the Managing Director of PZL-Świdnik.

Too many cooks Despite all of that, the Polish Army can’t even spend all the funds they currently have. In the first three years of the current modernization plan, only 70 percent of the earmarked budget was allocated.

And that’s only providing that the expenses for 2016 are fully covered.

Images: Shutterstock

When, a few years ago, the Polish government announced the new army modernization plan worth PLN 130 billion, arms producers worldwide immediately saw dollar signs. With recent geopolitical changes in the region, the need to increase spending is socially accepted and justified. According to a recent survey by the Boston Consulting Group, 24 percent of Poles feel that conventional war is a valid threat, while 26 percent are afraid of hybrid war. Only 27 percent of respondents think that Poland is prepared for military conflict.

interview / jan parys

The reasons for such a delay are multiple. First and foremost it’s bureaucracy and a lack of manpower.

“The French Agency responsible for buying military equipment has 1,500 workers, the Polish one has only 400,” said Wojciech Pawłuszko, an expert from the Lesław A. Paga Foundation. The same conclusions were presented in the recent report “Strategy of the Polish defense industry,” compiled by the National Centre for Strategic Studies. “The number of administrative organs involved in acquiring military equipment makes managing and coordination very difficult,” the report read, mentioning a staggering 15 bodies that can be involved in the process. On top of that, the whole process takes ages, each step of the tender procedure can take up to 18 months according to Polish law and with the seat of the minister of defense changing hands every 18 months on average, the delays can be even longer.

Another fault of the system is the lack of a coherent, well-thought out plan on what the army actually needs. Very often the description of the equipment in the tender looks like a patchwork of ideas from different departments, often impossible to fulfill.

“I understand that the army might have different needs when it comes to equipment. They can write it down in the tender process, but you can’t order producers to include every single thing in the finished product. We have to prioritize and the army should choose a producer which can implement most of the things. Sometimes it’s impossible to have everything,” said Krystowski.

Past burdens While many things have changed in Poland since the fall of communism, the defense sector is still dragging its feet. Until 1989 Poland mass produced various military equipment, mostly based on Soviet Union licenses. The bulk of production was sold to other member states of the Warsaw Pact. In 1987 there were as many as 250,000 people employed in the sector. The restructurization process continues to this day. Currently, the biggest state-owned defense group Polska Grupa Zbrojeniowa (PGZ) encompasses 64 companies with 20,000 employees, which seems too big for such small demand.

technology. Only 2 percent of R&D military projects are implemented. There’s a lack of funds earmarked for investment in innovative technologies, and there is no long-term cooperation with universities. On top of that there is significant bureaucracy involved which hampers R&D. The process from concept to execution in this sector takes years. This deters many investors from entering the industry and keeps spending on R&D below 1 percent of GDP. All of this marginalizes Polish companies. Even though they receive preferential treatment in tenders, they don’t even participate in them, because there are no Polish-made planes, tanks or submarines.

The answer to this might be offset (arrangements in which the seller of a product or service agrees to buy products or services from its client as an inducement). But with limited innovations, it’s often difficult for Polish companies to bring anything else to the table but servicing, refurbishing or assembling services. Transfer of technology, as part of the offset agreement, will be hard to enforce, making such agreements more of a marketing tool rather than a crucial boost to the military sector.

After the fall of communism, the country was left with huge production facilities, but no products and markets for them, as all countries in the Eastern bloc wanted to obtain more modern weapons from the West. After Poland joined NATO, the Polish Army had no other choice but to replace outdated Soviet equipment with that which met Alliance standards.

This is a unique point in Polish history, Warsaw has money, ambitious plans and high demand. Now it’s time to reform the aspects that stand in the way, and the road to modernization can become an open highway.

Innovate and create The sector is one of the last few that still remains in Polish hands, whether state or privately owned.

It also allows for some state protectionism and security against foreign takeover. This all makes it a perfect candidate to boost the whole economy.

Unfortunately one key component is missing –

WBJ OBSERVER •march 2016

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interview / ryszard kardasz

Creating our own chances I n t e r v i e w b y w oj c i e c h r y lu kow s k i

WBJ Observer: Your company can be considered a success compared with other Polish defense companies. PCO is making a profit and has competitive products, how did you get to this position?

Ryszard Kardasz: The defense sector found itself in trouble after the fall of communism, since nearly all products were produced on Soviet licenses. Left without a product offer, overstaffed, and with declining exports, the industry had to be redefined. The process of setting out the path of development after 1989 took a very long time, with the first several years having been wasted. Although some efforts

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were being made in the interim, the first, very general proposal on how to upgrade the army was tabled in 2009. The 14 areas of growth were not precise and lacked detailed definitions of what the army wanted to get. Nonetheless, it was the first vision of where the industry should head. When it comes to PCO, we didn’t wait for our chances, we created them on our own. When I came here 11 years ago, the company was in crisis, indebted, and there were no competitive products on offer. With help from gifted engineers from the R&D department, we defined a catalogue of products that luckily fitted well with the needs of the Polish Army. At that time, Poland was participating in military missions in Iraq and Afghanistan and soldiers admired the equipment of the US Army. Optoelectronic sensors were seen as something that was not necessary, but greatly improved the efficiency of the weapons, so they wanted them. In the opinion of troops who came from Afghanistan, our night-vision devices are as good as those of the American army. Technically, they are on par with them, so there are big possibilities for exports.

The Polish defense sector doesn’t seem to have good publicity abroad. Where do you want to sell your products?

We can’t say Poland is not present anywhere and we have poor recognition. In countries where we have sold weapons, like Malaysia or Indonesia, we are viewed positively. Of course, global giants compete there, and without bigger budgets for promotion we will not do much. So where are our export opportunities? Definitively in former Eastern Bloc countries, in India, in some Arab countries, Algeria, Vietnam, and CEE countries. Many of those still use the weaponry that was bought from the USSR. The feature of these devices is that they can be modernized.

And the upgrade mainly means installing optoelectronics, which definitely increases the quality of the weapon. So, there is a chance of becoming present in those markets, we have made some sales to Vietnam, we are active on

the Ukrainian market, in Algeria and in Saudi Arabia. We monitor the global market, but it’s difficult to compete with the US, whose influence is very strong, or with global giants that have been present on the market for several decades.

PCO is the leader of a consortium working on a system called Tytan, can you tell us something about it?

Advanced Individual Battle System Tytan is a project carried out by a consortium of 13 companies, mainly from the PGZ group, as well as research institutes and Military University of Technology in Warsaw led by PCO, whose responsibility it is to manage the project, integrate the whole system, and to provide optoelectronic sensors. The Ministry of Defense has promised to order 14,000 units worth PLN 4 billion.

Does cooperation with the world of academia help in developing innovation?

Before I answer that, I have to mention who funds R&D activities in Poland. Some time ago, the army withdrew from sponsoring it and passed the responsibility onto the National Center for Research and Development (NCBR), which wasn’t very well prepared for the role and initially the money allocated was wasted.

The army didn’t have control over the projects, they were not coordinated properly, and most of them ended up on the shelf. Academics were not interested in the commercialization of the projects, because their job is appraised based on the number of publications and participation in R&D projects, and not their commercialization.

Images: PCO

WBJ Observer talks with Ryszard Kardasz, director of the board of PCO S.A., Poland’s biggest producer of optoelectronic devices with the use of laser technology, nightvision and thermal imaging technology, about innovation, sector consolidation and chances for exports

interview / ryszard kardasz

The situation has improved recently as the Defense Ministry has put its people onto the NCBR and they are trying to impart control over the R&D process. I demand this kind of control, because I need to be told what the clients’ demands are. Our R&D team is composed of civil engineers, who didn’t serve in the army. Although they know their job, they have to be told exactly what is expected of them. An officer who was in Iraq or Afghanistan knows best what he wants and should be present at every stage of the production, starting with the plan, through the

prototyping, up to the commercialization of the product. If this process is lacking, the work may be futile. With that help, we can make production faster, cheaper and more in line with clients’ demands.

How do you assess the consolidation of the sector?

I am for the consolidation. If the sector has to be state-owned, there should be a structure that acts as a subsidiary between the ministries and companies. Such a subsidiary would be more

competent than civil servants. The positive side of the latest attempt of the consolidation is that the industry is under the defense sector. It may not be transparent as it’s also our customer, but I believe that this model works better. I hoped for improvement in the cooperation with the ministry, that relations will be based on trust, respect and ceded powers. The industry is more competent and knows better, thus it should have a say in such aspects as the choice of a foreign partner. It ought to be approved by the ministry, but our role in the process should be increased.

WBJ OBSERVER •march 2016

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Defense / polish sector

Defense industry on a path towards recovery The Polish defense sector is in fairly poor condition: marred by nearly non-existent exports, mostly uncompetitive products and dearth of innovation.

That situation is a consequence of historical factors still haunting the industry, thus, in order to get the full picture, one has to look back to the past – to the Warsaw Pact period Soon after WWII, the reconstruction of the defense sector required previously unheard of amounts of money. The country saw the second wave of increased spending on armaments in the 1970s, and one decade later, the sector reached the peak of its capabilities. In the heyday of the industry there were 82 strategic defense companies, more than 600 cooperators and 10 research and development centers, according to Jakub Jaworski from the Polish Chamber of Defense Manufacturers. Poland’s capabilities were impressive: the sector could produce 300 class T tanks, 160 jet fighters and transport aircraft, 350 helicopters, or 700 anti-aircraft missiles a year.

It shouldn’t come as a surprise, therefore, that in 1985 Poland was the fifth biggest weapons exporter in the world. Most of the production, however, was sold to the Warsaw Pact countries, as the Soviet Union, a mighty patron, required each member to work out a specialization within the alliance – one country could only make a final product with components supplied by other states.

For example, parts to assemble a tank in Poland were imported from East Germany, Romania, Bulgaria, Hungary and the USSR. The defense

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industries in the Soviet bloc states and its satellites were coordinated by the USSR, whose aim was to prevent them from fully developing their defensive potential and becoming independent. That is also why weaponry across the bloc was usually made on Soviet licenses.

Hard Landing The reality of the cold war forced Poland into excessive spending on armaments, which was said to stand at 12-15 percent of the annual budget. Overgrown and overstaffed (with around 250,000 people working in the industry at its peak), the defense sector found itself in trouble after communism collapsed. Since bonds with former allies became more lax, and demand for weapons fell, it was evident that the sector needed to undergo significant restructuring to become competitive. Although efforts have been made throughout the 1990s and 2000s to upgrade the industry, results have not, so far, been satisfactory.

According to analysts, the reasons behind the flop were manifold, including a lack of coordination between ministries, insufficient financing of restructuring programs, insufficient control over money transferred to the troubled companies, or inadequate spending on R&D. A report by the National Center for Strategic Studies (NCSS)

enumerates further problems. The way the industry is managed is determined by its ownership, thus it falls victim to the interplay of interests and lack of coordination between ministries responsible for defense, the treasury and the economy. Changing political powers have different plans for the state and the economy, which undermines the continuity of development. Additional weakness stems from management structures oriented at keeping control over companies and not their real transformation towards increased competitiveness. One of the few positive outcomes of restructuring over the past years has been scaling down employment, but it wasn’t enough to turn around the fate of the business.

The transformation undermined Poland’s weapons exports. According to an annual report by the Ministry of Foreign Affairs, Poland sold armaments abroad worth €395 million in 2014. The bulk of that sum (€294 million) accounted for exports of aircraft, unmanned aircraft, and airplane engines and components. In fact, this positive result was achieved by cooperators or subsidiaries of foreign producers operating in Poland, such as PZL Świdnik owned by AgustaWesland, or PZL Mielec, a unit of Sikorsky. Considering that the remaining €100 million included the sale of old, decommissioned weapons, “the real” value of Polish defense companies’ exports is estimated at around €30-

Image: Shutterstock

B y Woj c i e c h R y lu kow s k i

interview / jan parys

WBJ OBSERVER •march 2016

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Defense / polish sector

€40 million, a figure as low as at the beginning of the 1990s. It wouldn’t be an exaggeration to say that weapons exports are close to extinction.

Ambitious aims

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Positive signals Despite the grim overall situation, positive signals are even coming from stated-owned companies. For example, Huta Stalowa Wola has developed RAK self-propelled mortars, the first weapon of its kind completely designed and produced in Poland since WWII. Recently launched, the “Regional Security Assistance Program 2022,” aimed at supporting exports, stipulates providing loans to the Visegrad Group members (the Czech Republic, Slovakia and Hungary), the Baltic States, as well as Romania and Bulgaria so that they will be able to purchase Polish arms. The program’s goal is also to bind and coordinate the defense potential of all the countries in the region. There are initial indications that such a program could work. In July 2015, Poland and Slovakia signed a letter of intent regarding cooperation in the defense industry, and as a result, the southern neighbor will buy 30 Rosomak Scipio vehicles for PLN 120 million. Meanwhile, Bulgaria, which is striving to cut dependence on Russia, has signed a €6 million deal with Poland to service its MiG 29 fighter jets. Further successes should come as the PLN 130 billion modernization program announced by the government kicks in. Of course, one swallow doesn’t make a summer, but combined policies may bring tangible results, and Poland may be able to rebuild its defense sector so that, once again, it can become one of the driving forces of the economy.

Images: Shutterstock, WB Group

The government is making efforts to turn the fate of the industry around and to help it bounce back. One of its latest policies is the renewed attempt to consolidate state-owned companies into one entity, something that has previously failed twice. This time, with the newly created Polska Grupa Zbrojeniowa, the situation is expected to be different. In September 2015, the head of PGZ, Wojciech Dąbrowski, announced at a defense fair in Kielce that the company “wants to act as an innovative supplier of specialized systems” and said that it will have revenues of PLN 12 billion in 2030, with the majority of the sum expected to come from exports. The company wants to introduce 100 new products in the next 15 years and become the 10th biggest weapons producer in the world. Whether these big words become reality is still an open question.

The potential success will likely boost production volumes and capabilities of private companies, who may become associates of the state-owned giant. And the private companies are already faring relatively well. In 2014, 13 of them generated revenues of PLN 870 million, and employed 5,000 people. The leading manufacturer, WB Group, is successfully licensing the technology it had designed itself to international markets. The company’s biggest success is the sale of a license for Fonet, a digital internal communication system, to the US Army and several dozen other countries. Apart from that, the firm is already cooperating with state-owned companies. In tandem with Huta Stalowa Wola, it is developing an unmanned gun turret, and recently it has become part of a consortium with PGZ to run in a tender for the Battlefield Management System for the Polish Army.

WBJ Observer presents

Missile defense advances to better protect Europe B y W e s K r e m e r , P r e s i d e n t , R ay t h e o n I n t e g r at e d D e f e n s e Sy s t e m s

Russia’s agitations, from the annexation of Crimea to its testing of its weapons in Syria, have sent a message to NATO members. In the Middle East, Iran has the largest ballistic missile arsenal in the region, capable of reaching Turkey and Eastern Europe, and non-state actors like ISIS have unknown capabilities but could reach Europe if they acquire missiles. While we are all working to avoid any form of conflict, the risk remains real.

A wide range of missiles could be used against Europe, including higher tier exo-atmospheric, long-range missiles and lower tier shorter-range rockets and missiles launched from aircraft, helicopters and unmanned aerial vehicles (UAVs). These weapons affect the entire continent, not just countries closest to conflict zones.

The best response is built on interoperability, with a “layered defense” that combines different types of protection to intercept and eliminate attacks coming at varying speeds, altitudes and distances. By connecting their missile defense systems, NATO member states can share information, make collective decisions and take swift action, whether through land- or sea-based systems. The result is a shield of protection necessary to ensure European security and safety.

W B J O B S E R V E R • j u ly / a u g u s t 2 0 1 6

BROUGHT TO YOU BY RAYTHEON

In an increasingly difficult security context, NATO and its members are working around the clock to protect against threats which seek to disrupt European security and safety. In addition to challenges from well-known adversaries, Europe is facing new, non-traditional risks, which could target the continent in multiple ways, including through the use of short- and long-range missiles.

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WBJ Observer presents An example of layered defense might involve a missile launched to target a central European country, which “en route” would travel over southern or eastern European countries. Interoperable, layered systems work together to detect the threat and use defensive systems from multiple locations to determine the best way to eliminate it, rather than relying upon only one country’s capabilities. This means that the missile can be intercepted and destroyed well before it approaches its target using the most effective method.

We already see many benefits from interoperability. Five NATO members currently use the Patriot missile defense system manufactured by Raytheon, with Poland potentially joining in the coming years. Turkey requested help to protect itself from the threat of Syrian missile attacks, so NATO installed Patriot systems from Germany, the Netherlands and the US in Turkey and connected them to the wider protective system. It provided military commanders across Europe with an early warning and defensive capability if a threat developed and needed to be addressed immediately, either in Turkey or as part of a wider attack.

In addition to providing better security, interoperable systems provide significant cost and efficiency benefits. User nations can take advantage of a mature training and support structure, learning from each other’s best practices. And at a time of new spending pressures as a result of the refugee crisis and continued austerity in some countries, the cost savings from sharing missiles and components, conducting joint testing exercises and coordinating on logistics and maintenance are considerable.

For the past 30 years, the US has led missile defense efforts in Europe. But Europe’s commitment to missile defense is being tested, and it will be an important topic at the upcoming NATO Summit in Warsaw. The nature of the threat to Europe requires urgent action and smart funding commitments. Investing in development projects that may never be operational, even after decades of research and development, is a luxury that Europe cannot afford. Similarly, Europe cannot afford an untested system that lacks broad international support and could potentially drop a booster rocket on the area it is supposed to be defending. Instead, Europe needs immediately available, well-connected systems that can be continually upgraded, while maintaining their compatibility with existing technology. That will ensure Europe has a strong, effective network to protect its people across the continent, now and for decades to come.

BROUGHT TO YOU BY RAYTHEON

Raytheon’s SM-3 missile defense system is already deployed on US Navy ships in the Mediterranean as part of the Aegis program. NATO announced that the first Aegis Ashore site had become operational in Romania using land-based SM-3s. Shortly after, Poland and the US held a ceremony at Redzikowo to mark the beginning of the second site construction. The land-based system is part of NATO European Phased Adaptive Approach (EPAA) program to protect allied member-states from missile attacks. The Polish site will host

the fire-control installation with the land-based Aegis C3 suite and several Raytheon SM-3 missile launch modules. Other countries are now weighing their own investments to complement these systems.

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commentary / law

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june 2016 • WBJ OBSERVER

interview / jan parys

I n t e r v i e w b y E wa b o n i e c k a

Jan Parys, the defense minister in Jan Olszewski’s 1991 government, and now the head of the political cabinet of foreign minister Witold Waszczykowski, sat down with WBJ Observer to talk about Polish priorities in shaping the European and defense strategy, the challenges now facing the European Union and the government’s attitude towards the debate going on in Brussels about the future of the European Community WBJ Observer: Polish foreign policy is linked to our strong presence in the European Union, which is underlined by the Law and Justice (PiS) government. But all members of the EU are aware that the European Union is now facing various kinds of crises and there are questions being raised about its future. So, what is our country’s strategy in such a situation?

Jan Parys: In the European policy of Law and Justice (PiS), the most important issue is conducting an honest debate about the future of the European Union; without it, none of the problems – financial crises, economic growth, refugee influx – will be resolved. The current situation, in which the EU has taken so many competencies upon itself, while the existing legal setup of the community does not provide the EU with effective mechanisms to act, leads to confusion in the member states. Reforms are needed in the EU’s structure. Recent opinion polls show that the citizens of eight EU member states would like to conduct referenda on their country’s membership. It shows that euro-sceptic opinions are strong in some member countries and that many Europeans think EU authorities do not have the mandate needed to resolve the difficult challenges presently facing the community.

There are also complaints that the European Union is suffering from a deficit of democracy, the basis on which the community was built.

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The citizens of member countries feel that they are ignored by representatives in the EU, who seem out of touch with ordinary Europeans. Such feelings between Brussels and European societies do not strengthen solidarity in the European Union. Accordingly, a comprehensive debate about the future of the European Union is surely needed.

We have touched upon certain internal problems in the EU, which are also linked to the growing influence of anti-European parties in some member states. But Poland is one of the strongest pro-European countries in the Union, while still maintaining its national identity. What are the repercussions for the development of the European Union?

The European Union is a community of nations, and stressing the importance of national identity in each member has nothing to do with nationalism. Every nation has the right to take care of its own identity and to be proud of it. Being a member of the EU does not mean that we forget who we are. The European Union is strong when its members are strong as individual nations. It is naive to think that the EU could ever develop into a federal state. The integration of the community is based upon the will of the members to care for their strong national identities, and Poland’s position in the EU is based on that principle.

It is dangerous for the European Union, not only in terms of what Russia is doing in Ukraine, but also its general hostile policy towards the West. Russia wants to change the architecture of security in Europe and is threatening to use force – even nuclear weapons – to realize its goals. So far, the European Union has conducted a common policy towards Russia, while there are some differences in opinion about how to react to Russia’s behavior. So, a debate about the EU’s eastern policy and the stance towards Russia could take place, but I would not fear that different members could present various attitudes in such a debate. The important matter is the final conclusion; we have to work out a common decision based upon facts, and not ideology or the specific interests of individual countries. If such a debate is based on facts, it will be much easier to reach a consensus. The policy of imposing sanctions against Russia is effective and painful for Russia. The European Union is aware of it and so far has shown solidarity and a common stance on prolonging the policy of sanctions. Until the time that the war in Ukraine is ended by Moscow, the EU’s policy towards Russia will remain common and firm.

What influence does Poland have in shaping EU policy towards Russia?

We cannot say that we know everything about Russia, but we certainly know more than many Western countries, which often have naive beliefs about Russia. We are Russia’s neighbor and carefully observe what is occurring there; many countries listen to our arguments, specifically because they are rational arguments.

We certainly have influence on the EU’s policy towards Russia; still, we must realize that it has certain limits. Our mistake was that Poland was not present in signing the Minsk agreements concerning the Ukrainian crisis; a direct consequence of the role played by minister Sikorski at the time of the crisis, which was not regarded positively by many countries.

It leads to the question about relations between the EU, the US and NATO. What role

Image: Jan Malinowski/WBJ

Poland’s role in Europe

The European Union has to react towards the hostile policy of Russia, which is threatening international order and behaving aggressively towards Ukraine.

Will solidarity in responding to Putin’s policies be upheld in the EU, while some members present a different attitude towards the policy of sanctions against Russia?

interview / jan parys

do they each play in the face of the current dangerous policy of Russia and tensions in the world?

It is difficult to imagine a Europe that would distance itself from the US. We share common ideas, democratic values, and we have built the Atlantic Alliance together. It is obvious for Europeans that the US is the architect of the Western world, and in spite of certain anti-American sentiment in some European countries, that understanding is common in the EU. In Poland, the close and deep ties with the US are held in great regard.

In the field of security, the protection given to Europe by the US, which is the main contributor to NATO, is essential for Europeans. The EU is not building its own army, but providing national armed forces to function in the framework of NATO. Having said that, there is urgent need to increase military budgets in member states, which decreased after the cold war period. We have to develop better and closer cooperation between national armies and contribute more to the strengthening of NATO. It is necessary to increase the number of conventional military forces in Europe because it will lower the risk of using nuclear weapons in defense. Relations between the EU, the US and NATO are linked and interdependent, and have great significance, especially now, in the face of Russia’s aggressive policies towards the West.

NATO is currently increasing its presence in CEE and is doing so significantly in Poland.

You took part in the ceremony laying the cornerstone for the construction of the antimissile shield in Redzikowo. What were your personal feelings at that moment?

That moment, when we were first considering building an anti-missile base in Poland, was very moving for me. I remember that when, in 1992, I began to talk about Poland moving nearer towards NATO, I was met with ridicule, there were voices that said it was impossible, that it was madness. Still, we joined NATO and the base in Redzikowo, which will begin operating in 2018, is a strong first signal that Poland is not treated by NATO as a periphery area, but as a country vital to strengthening the whole of NATO. Through establishing the base in Redzikowo, it is confirmed that any attack on us will be treated as an attack on the American garrison, and that Americans will defend Poland. The installation of the anti-missile base in Redzikowo is important for the security of the whole of NATO’s Eastern Flank. It is well-known and respected in the Alliance that Poland has a deeply rooted military culture ready to defend our independence at all costs.

Nevertheless, I want to point out that in my opinion there are still too few NATO bases in our part of Europe. When we look at the map we see that the bases are located in Western Europe. It is important and fortunate that the American and NATO antimissile base is located in Poland and that NATO is drawing conclusions from Russia’s aggression towards Ukraine.

The installation of the anti-missile base in Poland has aroused pointed and hostile reactions from Russia. How could it be reflected in Russian policy towards our country?

The policy of Russia towards Poland is part of Moscow’s policy towards the West, and there is now a freeze in relations between Russia, the US and the

European Union and a cooling in our bilateral relations. The Russian reaction to the building of the base in Redzikowo is predictable as part of Moscow’s confrontational stand against NATO. However, Russia is our neighbor and we have to maintain working bilateral relations, which is not easy in the face of Russian behavior. Our eastern neighbor is aiming for the restitution of imperial status and Poland, in connection with the West, is treated by Moscow as the first obstacle.

It has been recognized for hundreds of years, since beginnings of geopolitical strategy, that Poland is the heart of Europe and in that sense, whichever power controls Poland has influence over the whole of Europe. We are located between East and West, and Poland knows from historical experience that we cannot stay in a grey zone ­– we must be connected with the West. After the collapse of communism, Polish society overwhelmingly supported pro-Western policy and we have consequently followed such proWestern policy and linked our security with our membership in NATO. Poland is strengthening its army and trying to invest more than otherWestern countries.

Such pro-Western political strategy is shown in our attitude towards Ukraine and its aspirations. The most important matter for us is to attain peace in Ukraine in a framework of respect for international principles and providing security for Ukraine and Europe. Poland is involved in reaching such aims, yet it is seen by Russia as an affront to its political aims perceived as Polish hostility towards Russia.

We have talked about many aspects of Poland’s role in Europe. I would like to ask you how you view the future of the European Union, are your prevailing feelings optimistic or pessimistic?

As far as the future of the European Union is concerned, I am an optimist, because I believe in Europe. I think that the EU is a crucial mechanism needed for the survival of Europe. When there are so many discussions about what to do with the EU, it is proof of concern about the structure and evidence that there is a willingness to improve it.

I think that such a debate is needed from time to time to correct the functioning of a big structure – it is common in big international bodies. For the EU, it is time to respond to new challenges and new situations. Hence, anyone who claims that maintaining the status quo is most important, and departing from it would be a catastrophe, is misled. Everything is in our hands. Still, we have to take care that reforms in the EU are not left in the hands of ideologists, but in the hands of people who are able to think rationally and who are ready to build a mutually prosperous and fair Europe.

WBJ OBSERVER •march 2016

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commentary / defense

Przemysław Kosek Special Projects Director S&T Services Polska Sp. z o.o.

ERP/PLM IT systems for Defense Industry – the key challenges

First, manufacturers in this industry often need to simultaneously manage many different projects that draw on the same resources and require similar materials. Particularly nowadays, it’s not uncommon to have several projects with deadlines that might conflict and delay each other. This situation, unless properly managed, could even jeopardize national security. One is expected to find a way to manage the entire enterprise in a way that minimizes those conflicts. And the only solution is a proven and properly implemented ERP/PLM (Enterprise Resources Management / Product Lifecycle Management) IT system with multi-project management capabilities built into the core feature set of this system in a way that makes those capabilities intrinsic to the manufacturing process. Such a system makes it possible to run multiple projects with tight cost and schedule control, at the same time maintaining contractual and military regulatory compliance within a single enterprise.

The second key challenge is that defense industry contractors have to manage a very deep and com-

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plex supply and cooperation network because of the nature of the products they build, plus the long lifecycle that they are subject to after they are delivered.

This cooperation starts at the CAD/CAE stage and lasts until the life-cycle of the manufactured product ends.

Design and development cooperation requires control of the multi-CAD and multi-domain design processes, including mechanical, electronics, software and simulation data and management of that data from a single secure source. The quality of the data should be validated and the completeness of design data should be secured before the release to manufacturing. Moreover, it is not sufficient to manage just the date and quantity, but the contractor needs to uphold quality and contractual requirements imposed by the military customer.

The ERP/PLM solution addresses the needs, constraints and requirements of this network and provides the efficient management of cooperation. As a result, mechanical, electronics, software and simulation data, as well as documents and bills of materials (BOMs) are managed and shared in a single environment. Standardized workflows and processes can be extended to suppliers and subcontractors. Therefore, combination of the ERP solution and PLM system enables the life-cycle of a military product to be fully managed – from the concept/design stage to the final scrapping after many years. And, last but not least, a really experienced ERP/PLM implementation partner is strongly recommended, for there is no room for experimentation.

Image: Shutterstock

The Polish Defense Industry is currently undergoing substantial and fundamental changes. The emerging challenges require the proper response – particularly concerning how to satisfy growing Polish Armed Forces needs and simultaneously how to improve business efficiency.

Accordingly, defense manufacturers face challenges unparalleled in any other sector. I’d like to focus on two of them.

Tech Insights

section partner

Tech / Home automation

By Beata Socha

Standard is key?

W

e have been promised intelligent homes for the past thirty-plus years. The first computers capable of controlling lights and other home devices were already available in the early 1980s. “There’s a book on home automation using the Timex Sinclair 1000, a computer launched in 1982 that had 2 KB of memory! If you could control your home with that thing, why haven’t we come further with the processing power we have available now?” mused Jon von Tetzchner, co-founder of Opera Software, and most recently of Vivaldi Technologies.

Some say a revolution in home automation technology is happening right before our eyes. “Automation has been present for many years. However, it was very complicated and thus expensive and inaccessible to many groups of people,” said Mikołaj Pertek, sales development manager for Poland at Fibaro, one of Poland’s market leaders, which has recently launched its first outpost in Silicon Valley. “Over the years many barriers to the development of intelligent homes have been overcome.

New wireless communication protocols have been developed, data transfer has accelerated, electronic components have become more compact, manufacturing technologies have been improved,” he explained and added, “Finally, the whole world started using smart phones which are used as control panels. As a result, we now have an IoT revolution.”

Others say the development in the home automation department will be more gradual. “There will be no revolution, only evolution which is already taking place,” said Marcin Fryszkowski

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from FDtech, a Wrocław-based home automation systems producer. “In 2014 there were 2 billion devices connected to the internet, in 2020 there will be 8 billion. Last year the average household used 10 control devices (remotes, smart phones, tablets, cameras, control panels), and the number doubles every three years. This growing trend brings us closer to an omnipresent internet,” he summarized.

The market is clearly growing. It is no longer only the most upmarket and luxury apartments that are furnished with intelligent home systems. Mainstream developments increasingly boast home automation solutions as well.

Yet, there is still a widespread conviction that the big breakthrough that will make intelligent home systems commonplace in most homes is still ahead of us. Von Tetzchner considers the lack of standardization to be the root of the problem. Consider the internet. “The reason why the Web is so successful is because it was done at CERN and the guys responsible for it decided not to patent it. They decided that everyone could develop the Web, and they were just providing a great tool,” he explained.

Standard wars There are many who believe that at least some form of standardization in intelligent home solutions will eventually emerge out of free market solutions.

“Several major producers in the market, including ABB, Bosch and Cisco, have undertaken to create a common standard. They called their project Mosaiq. It is a fully open platform for intelligent homes, which – thanks to the co-operation of many partners, could

be the foundation for a future innovative standard,” said Fryszkowski.

But, considering how long it is taking the market to find a common standard, maybe it could use a push, or at least a gentle nudge, to get to the desired place, like was the case with smart phone chargers. Back in the early 2000s there were several proprietary charger standards available on the market.

Even though some standardization of chargers towards the micro USB port started as early as the mid-2000s, it wasn’t until the EU’s 2009 initiative, aimed at cutting back on electronic waste by making micro-USB ports a common external power supply standard, that all (but one) producers of mobile devices saw the benefits of conforming. Granted, a common standard meant your client could easily switch to another producer, but given how quickly the technology was developing back then, it could also mean you had better chances of regaining ground with a new product launch. Unsurprisingly, the only straggler remaining is Apple with its Lightning port charger, which many claim to be superior to USB. The giant may be forced to comply with the standard as soon as 2017, at least in the EU market. But based on how it has observed (or ignored) other EU regulations, e.g. warranty laws, it may take more time.

There are plenty of examples where a single standard eventually prevailed over its competitors. Standard wars have been commonplace since the late 19th century, when the standard rail gauge that was dominant in the US railroad system eliminated the wider “Russian” gauge that had initially been preferred in the South. Similarly, Tomas

Images: Shutterstock

The home automation market could see a major breakthrough once a unified standard of communication between devices is achieved.

But is the lack of standardization the only obstacle producers will have to overcome?

Tech / Home automation

A whiff of the future

The mobile revolution clearly created a much-needed push for the development of the home automation market.

Some of the cutting-edge solutions being showcased right now include apps which activate when you point your smart phone at the thing you want to control. You don’t have to swipe your screen and look for the right app for the windows, lights or air conditioning. You just point at the window and an app pops up allowing you to open the shutters. Point at the door and it asks if you want to unlock it.

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Edison’s alternating current managed to push direct current out of the market in 1880s, albeit with some controversial scare-tactic marketing. Since then, we’ve seen many, sometimes superior, technologies succumb to a competitor, like Betamax to VHS in the 1980s or even more recently HD DVD to Blu-ray.

Last man standing?

Somehow, home automation seems resilient to the “winner-takes-all” rule of technology standards and several solutions have been developing without a single victor coming out on top. “Naturally, users don’t want to have dozens of different applications and remote controls. … There will certainly be more standardization in time, but eventually there will be several solutions on the market that will develop in parallel,” stated Pertek.

Fryszkowski, on the other hand, draws a clear distinction between home automation systems and Internet of Things technology and claims that while “devices created with the Internet of Things in mind still lack standardization, … in the case of intelligent homes, standardization is commonplace.” He added that, “in the home automation market there are many producers active in each home automation system (for example there are over 300 manufacturers making devices for the KNX system, and several dozen producers are active in the Z-Wave and ZigBee systems).”

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What effects?

One reason why there is no single unified standard in sight (and there may never be) could be what economists call “network effects.” Simply put, it means that “early choices, such as the QWERTY typewriter keyboard, lock in the market [making] new entry, especially against established networks with proprietary technology ... often nearly impossible,” wrote Paul Klemperer, member of UK Competition Commission and Edgeworth Professor of Economics, University of Oxford.

It is clearly imperative that people sending each other e-mails use the same protocols. Similarly, it seemed reasonable to replace your Betamax recorder with a VHS one to be able to tap into the collection of local video rental stores (back when those still existed). But is it really necessary for my mobile phonecontrolled home automation system to be compatible with my neighbor’s?

Given how much fuss has been created around the security of these systems, making all systems compatible might even be perceived as unwise.

The human factor Perhaps standardization is not the missing component for the home automation market to gain momentum.

The real barriers could be much more prosaic and simultaneously more difficult to address. How do I know that the

automatic lock on the door only opens for the people it is supposed to? What if it is hacked and overridden? These are some of the questions consumers of home automation technologies tend to ask.

Producers are fully aware that security is essential and they are making it their no. 1 priority. The system offered by Fibaro is “based on the Z-Wave protocol, which has top-notch security features, and the data is stored in the control unit which can be disconnected from the internet if need be,” explained Pertek.

Then there is also the issue of privacy.

Tell someone that their home will recognize their voice and act on vocal commands such as “turn up the music” and “make coffee, black, two sugars” and they swoon at the wealth of possibilities. But tell them that the system could potentially be used as a hot mic to record every conversation they have inside your home, and they are the first to join the Luddite camp.

Given all the bad press surrounding surveillance methods, producers may have a hard time convincing their clients that they are safe and their systems offer absolute privacy. As much as possible in today’s world, at least. After all, your mobile phone can be used to listen in on your private conversations, even when turned off. Perhaps, one day there will be a market for intelligent home systems that are furnished with wireless signal jamming technology. u

Images: Shutterstock, Stack Overflow

Tech / Home automation

tech / interview

Monetizing community talent Most programmers know that if they have a coding problem, they will likely find an answer on Stack Overflow. WBJ Observer talked to Jeff Szczepanski, Chief Operations Officer of Stack Exchange, a company that was built on the Stack Overflow platform i n t e r v i e w b y b e ata s o c h a WBJ Observer: You have managed to build a large corporation around Stack Overflow.

How, other than those pesky pop-up banner ads, do you monetize a platform that is essentially a free learning tool for programmers?

Jeff Szczepanski: It’s mostly done through sourcing tools that allow employers to hire programmers from our community. So our platform not only helps programmers learn through questions and answers, but also to find new jobs and opportunities. We think of Stack Overflow as a talent community, much like recruiters use LinkedIn to recruit people. We do that for programmers in a way that is more friendly for them.

mary Stack Overflow in English, but there are also Russian, Portuguese, Japanese and Spanish versions of Stack Overflow.

When was Stack Overflow launched?

Originally it was launched in 2008. The beginning of building a revenue-based business out of it started in 2010.

How many of your users generate content?

About 5-10 percent, while the rest are mainly consumers of the content.

Was it easy to scale the business up?

From the company point of view, Joel was looking for someone who was familiar with the community. He was looking for someone who wasn’t going to sell out the community he had built simply for monetary gain, but to respectfully scale a business out of the platform.

How many users do you have?

For Stack Overflow we have about 40 million monthly unique visitors. We think there are about 15 million professional programmers using the site at least once a month, many of them several times a day.

Where are they from?

Approximately 75 percent of our users are from outside the US. We operate the pri-

How is the Stack Exchange developing now?

Stack Overflow was the first site that we built specifically for programmers. Once we had some success with it we started building other sites. Altogether all our sites operate within Stack Exchange. Now we have 150 other Q&A communities, from IT, through cooking, math, finance and other disciplines.

How many users do you have altogether?

About 120 million monthly unique users.

How is looking for answers on Stack Overflow better than simple “Googling”?

It’s actually very common that a person types a question into Google and one of the top hits is an answer on Stack Overflow.

That’s how we get most of our traffic. In this sense Google is the front-end of our product.

You used to be a programmer yourself before you became a manager. What was the transition like?

I was the founder and Chief Technology Officer of a company called Allworx Corp, and one of the early users of Stack Overflow, back when the company had only one or two employees. I was familiar with Joel Spolsky, the founder of Stack Overflow. When he decided to raise venture capital to develop a business out of it, I joined their team.

Do you miss programming?

Now that the company has almost 300 employees I don’t program anymore. I spent 20 years doing technical development.

Sometimes I do miss it. There is this intellectual complexity involved in programming that you don’t find in management.

In Poland one of the common issues of the IT job market is that good programmers don’t want to be promoted. They are paid well doing the technical things and they are simply uninterested in advancing in the hierarchy. How would you encourage a programmer to become a manager?

It’s important for companies to foster their tech talent and to provide them with both technical advancement and managerial advancement. I think that there are two classes of developers: there’s the class that is basically only interested in solving the technical problems and there are also developers who are more about helping users with their problem. I have found that the latter make the best team leaders and managers.

We’ve done some psychographic persona research. We’ve found there are different types of programmers: firstly, there are innovators, who like to solve new problems that no one has solved before. Secondly, there are pragmatists who aren’t so much about the tools as they are about making a living out of it. The third group consists of ladder climbers, who see programming as a step towards to becoming a manger. Then there’s a group of technologists who love to play with different new gadgets, and finally there are those who are all about the cause, like building wells in Africa or sharing digital content etc.

It is important in terms of hiring decisions to know what type of persona your company is looking for.

In your experience do non-technical people make good managers in IT? Engineering managers don’t need to be good programmers but they definitely need to understand the system and the processes. u

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commentary / LAW

Piotr Kowalski Kancelaria Pałucki Trusiński Prawo i Podatki sp. j.

Legal adviser, member of the Regional Chamber of Legal Advisers in Warsaw.

IT law specialist.

FINDING APPROPRIATE BALANCE IN ESTABLISHING CONTRACTUAL PENALTIES IN IT CONTRACTS The presence of various, and frequently excessive, contractual penalties in IT contracts (e.g. with the objective of implementing and then maintaining a specific computer system) is a regular phenomenon in the current market situation. A sensible ordering party will not agree to enter into a contract in which contractual penalties – as an effective mechanism protecting its interests and aimed at preventing specific behaviours of an unreliable contractor – are not provided for. On the other hand, the multiplicity and amount of contractual penalties in some contracts may indicate that the object of the contract is merely the initiation of imposing such penalties, which unfortunately distorts the idea of this institution.

IT contracts, unlike other contracts in business transactions, provide leeway as far as establishing various contractual penalties is concerned. For instance: in service level agreements (SLA) there are frequent penalties referring to the severity of a defect (e.g. critical – preventing the functioning of the system, and non-critical – defined as the remaining cases), and response time and the channels through which they were reported (e-mail, telephone, etc.). Thus, it is possible to obtain a few different penalties for the same incident. It is worth underlining that sometimes a software defect is caused by the failure of the ordering party and not of the contractor, e.g. the existing system has not been upgraded to a version enabling the implementation of a specific module. It must be kept in mind that in this type of agreement, the parties usually submit the status of an entrepreneur (persons running a business activity), and Polish legislature requires such entities to take special precautions since they are “professionals.” This repeatedly causes problems in providing effective explanations that a specific defect or delay arose from circumstances beyond a given party’s reasonable control.

Therefore, where does this “appropriate balance” lie in establishing contractual penalties?

Firstly, the parties ought to exercise common sense at the time of negotiating the contents of the agreement. It is important to

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remember not to double contractual penalties, assign the contractor with deadlines or periods that are possible to meet, and the amount and method for charging contractual penalties must refer to the agreement value and its importance to the interests of the ordering party. The agreement ought also to provide for the cooperation principles of the parties and reporting the problems or risks noticed at every stage: starting with the analysis, through implementation, collection, and maintenance of its object – this will prevent a situation in which the ordering party is not adequately prepared to commence or continue a process. For this purpose, the parties ought also to appoint teams to handle a given contract (with powers to modify its scope), as well as the personnel authorised to report the risks noticed to the other party.

In the event of circumstances justifying a penalty, the agreement should provide for a mechanism enabling the contractor to submit explanations, simply speaking: provide it with a chance to defend its position. In response to such explanations (a written application) the Ordering Party should be entitled to withdraw from charging penalties. As far as larger contracts are concerned, the parties should consider the introduction of an impartial and professional entity, which, against specific remuneration and within a set time, would assess the source and causes for a given defect – without the need to take the case to court (which due to the participation of court experts may generate high costs and which may be exceptionally time consuming).

Finally, if a given case cannot be settled amicably, the contractor must bear in mind that it is entitled to apply to the court to moderate the contractual penalty. Nevertheless, in such a case it should be able to demonstrate that one of the following circumstances occurred: its obligation has largely been fulfilled, or a respective contractual penalty is grossly excessive (the assessment of “gross excessiveness” is carried out by the Court).

However, it does not change the fact that most risks related to the imposing of contractual penalties may be neutralised by the parties, which may provide for flexible and comprehensive contractual provisions. u

commentary / it

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feature / turism

One click away Summer is upon us and everyone is planning their holidays. Each new year brings a host of reasons to choose a particular destination. According to a KPMG report, Poles spent about PLN 20.2 billion in total on vacations last year, and this year the figure will rise to PLN 31.9 billion. But only a portion of it will go to tour operators A survey conducted for Mondial Assistance by pollster Ipsos Polska revealed that as many as 17 million Poles will go on vacation during this holiday season, which nearly half of the Polish population and 9 percent more in comparison with 2015. The majority of them (73 percent) will spend their holidays domestically.

The average budget allocated by Polish households for this year’s vacation grew from PLN 1,321 (in Q3 2015) to PLN 1,490 per person for domestic trips and

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from PLN 2,608 to PLN 2,922 per person when it comes to traveling abroad.

The top destinations among Poles have also changed, mainly due to the complex geopolitical developments in many countries and the threat of terrorism in previously popular regions.

“In such turbulent times, as Polish customers see them, they come to the conclusion that it would be more peaceful to travel somewhere close, in their homeland,” said Krzystof Piątek, the President of the Polish Tour Operators Association (PZOT).

As a result, safety fears have caused a slump in tourist traffic to countries such as Turkey, Egypt and Tunisia.

So, instead, Spain (including the Canary Islands) and Croatia will be the most popular tourist destinations among Poles in summer 2016, followed by Italy and the previous “travel-leader,” Greece. While Greece has been on many Poles’ to-visit list for decades, with its glorious white sandy beaches and incredible local food, it’s now deemed to have a general threat of terrorist attack for tourists.

“We believe that a substantial contributing factor is the ongoing chaos in Greece,” said Tomasz Frączek, board chief of travel insurance company Mondial Assistance.

“It’s not cheap, and then there’s the immigrants, refugees who have been coming into Europe via Greek islands – this does not encourage many people to spend their long-awaited vacations there,” he explained.

However, a close neighbor of Greece and Turkey – Bulgaria, is appearing on Poles’ journey wish lists more often. Sofia, the center of the Balkan Peninsula, attracts

Images: Shutterstock

B y Da r i a M a m o n t

feature / tourism

tourists with a wide scale of holiday opportunities midway between the Black Sea and the Adriatic.

Magdalena Plutecka-Dydoń, PR Manager at Neckermann, one of the biggest tour operators in Poland, noted that sales of trips to Bulgaria have tripled since 2015.

Moreover, Plutecka-Dydoń mentioned that Bulgaria, along with Croatia and Italy, will be the most popular countries among Poles who travel by car.

Speaking of modern destinations for summer 2016, Poles are keen on two fashionable trends – Malta and the Dominican Republic. The youth contingent chooses Malta not only because of the magnificent landscapes, but also for its language camps, which many Polish citizens attend in order to combine holidays and English language courses.

Additionally, travel agencies state that high competitiveness in the airline industry, along with oil and fuel price decreases, will lead to price-cutting during summer 2016, so every traveler will save up to PLN 150 on each reservation.

New season – new flight routes Today, flying to Poland has become much easier due to the large number of airports around the country and the increased

number of airlines that run busy flight schedules to them. Airports are situated in the vicinity of most of the largest cities in Poland and they are serviced by many international flight operators.

Many airlines, including small domestic carriers with few planes, and full-service international operators with hundreds of aircraft, have focused precisely on summer 2016. That is why almost every month, well-known airlines announce the launch of new flight routes to and from Poland.

Statistics say the most well-liked and popular airlines among Poles are Polish LOT, German Lufthansa and low-cost carriers Ryanair and Wizz Air. And all of them have been pretty busy this summer season announcing new routes.

For instance, LOT will get you to Nice or Tokyo directly from the Polish capital.

Meanwhile, Ryanair launched flights to the capital of Northern Ireland, Belfast.

Hungarian Wizz Air announced new flights as well, including to Croatia, Dubai and Ukraine.

Do it yourself Nowadays, finding a way to book cheap flights and accommodation has never been easier. More tourists implement “do it yourself” online travel bookings instead of

going to travel agencies. Thanks to services such as Skyscanner and Airbnb, finding the cheapest or most convenient solution is just a click away.

That’s why, besides the aforementioned global giants, many local equivalents are gaining popularity, such as fly4free or flipo.

“While planning their holiday trips, Poles rely above all on their own experience,” a report by the worldwide professional service company KPMG revealed. “As much as 67 percent choose a place they know personally. As many as 61 percent make decisions based on recommendations from family and friends. But the internet is also an important planning tool with 60 percent of Poles using the web when planning,” it found.

So, customers conduct online research in order to book their journey by themselves.

They find tickets, book hotels (and sometimes meals), and rent a car via special websites.

If you are continuously hunting for the best travel deals from Poland, you have probably heard of booking agents and search engines such as flipo.pl, fly4free. com, or scyscanner.net, which offer some cheap flight tickets, promoted accommodation, and error fares.

Error fare flight is a term most travelers have already heard of. It means what it implies. Everything behind all airfares is still driven by humans, and this is the key factor in why the error fare actually occurs.

One of the most common samples is when fuel surcharge, airport taxes or other fees are not added to the final price before the travel agency or airline is alerted. If you are wondering to which destinations you may book an error fare flight, it is completely unpredictable for an obvious reason – the airfares are randomly “screwed up” during the implementation process making it difficult to predict where the next crazy rate may appear. So, it may be surprising, but error fares are usually found on long distance routes from Europe to Asia or America.

If you’re patient and know where to look, you can find real bargains such as a roundtrip ticket to Tokyo for PLN 800, or flights to the US from various cities in Europe for less than PLN 1,500. With such bargains you have to take into account long layovers, extra fees for luggage and transport to other countries as most such fares are for routes from and to different European cities. u

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commentary / law

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june 2016 • WBJ OBSERVER

FINANCE

commentary / law

& INVESTMENT

WBJ OBSERVER • may 2016

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finance / car fleet management

With rising fuel prices and concern for the environment on the up, the global automotive industry is undergoing a truly green tech innovation. While plug-in hybrid cars are becoming increasingly popular among European fleet operators, the hype that drives the Polish fleet sector is not as green as it would seem

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The greener, the faster, the better Only in 2015, the National Central Vehicle and Driver Register (Centralna Ewi-

Image: Shutterstock

B y m a ł g o r z ata k r a k ow s k a

The ambitions of Poland’s new government to ditch diesel-fueled road transport in favor of hybrid and electric cars follows global trends in taking on air pollution. The new policy line that is aimed at transforming the automobile industry into an eco-friendly sector is not without consequences for the tastes and preferences of the commercial customer. And so, car fleet operators are among the first users within the automobile sector who are seeking to boost the numbers of electric or hybrid vehicles as part of their fleet.

However, trends that influence the sector’s new business strategy are not driven exclusively by political plans for the reduction of pollution, and go beyond futuristic design frills.

Images: Shutterstock

The Green Wheels Craze

finance / car fleet management

industry leaders such as Lexus or Toyota, have been adjusting significantly to global trends. For example, Toyota has sold more than 8 million hybrid cars until now, and Volvo plans to sell 1 million electric and plug-in hybrid cars by 2025.

On the other hand, CO2 limits are not the main reason for car fleet managers to focus on green tech. “While internal combustion engines of conventional vehicles are powered only by diesel or gasoline, hybrids have an additional electric motor and a battery that can be powered by electric energy,” Dojs said. Gasoline-electric or hybrid cars are more cost-effective because the engine construction can achieve better fuel efficiency. “Our employees often have to cover a distance of hundreds of kilometers,” as Olgierd Kasparek from Easy Rent A Car informed in a press release. “For car fleet operators, it is essential to cut costs, save money, and provide the greatest comfort possible.”

However, global trends don’t always translate into local ones. Sector experts notice that the eco-trend is more popular among foreign fleet operators who require vehicles to be sustainable and eco-friendly.

“That’s because of their internal policies, which are based on western regulations requiring vehicles to have CO2 limits. For the majority of national fleet operators, the eco vibe is not just hype. “Polish car fleet companies do not see CO2 limits as their main priority. Local operators want their vehicles to drive economically, and to be cost-efficient rather than environmentally sustainable,” as Dojs observed.

Car fleet managers choose hybrids because they are excellent for city driving.

According to a survey carried out by Alphabet Polska among fleet managers, more than 50 percent of vehicles travel less than 100 km daily. As Łukasz Kotowski, tech journalist writing for popular Spiderweb.pl said, the costs of running a gasoline or diesel engine are 1.5 times higher than for cars equipped with a hybrid engine. “Hybrid engine performance helps you save a lot of money,” he added.

Are government incentives for plug-in hybrids coming soon?

The high price for plug-in hybrids, and the lack of incentives still remain the main disadvantage. For example, the price of a Vol-

Image: Shutterstock

dencja Pojazdów i Kierowców; CEPiK) reported that fleet operators registered 98 electric cars – 25 percent more than the year before. The popularity of hybrid cars among car fleet operators is also rising. In 2016, CEPiK registered more than 3,100 hybrids. Compared to last year, the number is higher by 40 percent. Why do car fleet operators choose hybrids over conventional cars?

With motor vehicles producing around 15 percent of the EU’s carbon dioxide emissions, road transportation is the largest single source of air pollution. Car fleet companies aim to restore the confidence of consumers by complying with EU environmental requirements for the automobile sector. Models like the Volvo V60 Plug-in Hybrid or the Lexus GS are “green,” with CO2 emissions that are under 120 g/km. “Nearly all international car fleet companies endorse corporate responsibility through environmental sustainability, and so it is natural on the part of their philosophy to become environmentally friendly,” said Stanisław Dojs, PR Manager at Volvo Cars Polska.

The Swedish company, as well as other

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Image: Shutterstock

finance / car fleet management

vo V60 plug-in is PLN 280,000 (around €65,000) and rates for a Toyota Prius begin at PLN 120,000 (approx. €28,000).

“Our national tax policy with regard to cars is swimming against a green tide,” Michał Zwyrtek, senior manager from PwC admitted. “There are no tax-related or financial incentives such as reduced highway tolls for hybrid-powered vehicles,” added Dojs from Volvo Cars Polska.

International car fleet companies operating in Poland can afford expensive hybrids that comply with emission regulations, but Polish car fleet operators are often on a tight budget when it comes to buying modern vehicles. Zwyrtek identified the national tax system as one big paradox.

“Taxes on passenger cars that are ecologi-

cal are not determined by EU directives, but are levied in the form of national excise duty. Commercial customers must pay 3.1 percent extra for cars with an engine capacity below 2,000 cm3, and 18.6 percent of the tax base for vehicles with an engine capacity above 2,000 cm3,” he explained. As a consequence, owners of “green cars” such as the Volvo V60 Plug-in Hybrid or the Lexus GS 450h with an engine capacity above 2,000 cm3 pay higher taxes.

So far, only the Ministry of Environment has launched an environmental program that minimizes the effects of air pollution.

The new plan, however, deals exclusively with public transport. As Joanna Józefiak, the deputy advisor to the Minister of En-

vironment said, the main reason why the institution decided to focus exclusively on the incentives for public transport was the biggest efficiency of that sector.

But are hopes for government incentives for plug-ins fading? Perhaps not, the Ministry of Finance said that the initial work to change the current tax system to become more eco-friendly was being done.

“The Ministry of Finance is considering potential changes in existing tax rules for passenger cars that would include new factors like CO2 emissions and engine capacity.” According to the Press Office, the complexity of the issue is tremendous and the ministry avoided any definite answer as to when the tax benefits would be announced under the new scheme. u

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lokale immobilia / ON INFORMATION TECHNOLOGY

14th-15th September The Westin Warsaw Hotel

IV EDITION

Smart City, Smart Citizen, Smart Life STRATEGIC PARTNER

PARTNER

IV EDITION kontakt@mmcpolska.pl | tel. +48 22 379 29 47 | en.smartcityforum.pl 52

may 2014 • WBJ OBSERVER

July/August 2016 Alternative appeal Despite a number of schemes in the pipeline, the demand for senior and student housing projects far outstrips supply > 60

20 pages of real estate content

Season opening with occupancy and daily rates increasing, the hotel market is preparing to launch a slew of new schemes > 66 Price of experience How much have buyer expectations changed in the residential market over the past decade? > 70

lokale immobilia / news

l office

l residential

Warsaw office stock reaches 4.75 mln sqm – C&W

2017 “Apartments for the Young” funds to run out in July

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otal modern office stock in Warsaw reached 4.75 million sqm at the end of Q1 2016, with ca. 75 percent of that space located in the central core and fringe zones, as well as Upper South and South West, according to Cushman & Wakefield’s “Skyline Tracker Warsaw – Spring 2016.”

Despite growing vacancy rates, which reached 14.1 percent at the end of Q1 2016 exceeding 2011 figures by almost 7.5 percent, there has been a visible trend of increased developer activity, reflected in high supply levels. This trend might continue for the next three to four years, subject to demand levels and absorption rates.

In the years 2012-2015, 1.12 million sqm of modern office space was delivered to

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the Warsaw market, accounting for almost 24 percent of the capital’s total stock.

Between January and May of this year, over 170,000 sqm was completed, with a further 700,000 sqm under construction (this figure is similar to those recorded in recent years). As much as 240,000 sqm is at the final stage of fit-out and preparation for handover. At the same time, around 220,000 sqm is being developed within recently started projects that are currently at the ground works stage.

Approximately 330,000 sqm of new office space is to be added to the market in 2017, and a further 260,000 sqm in 2018.

However, the completion of some of the investments might be delayed in case of adverse lease market conditions. u

By the end of July, the government’s “Apartments for the Young” program will run out of funds for 2017, real estate developer Robyg said. This year’s pool of funding amounted to PLN 730 million and was distributed at the beginning of March. In 2018 the pool amounts to PLN 761 million. u

Images: Shutterstock, Newoffice Poland, Waryński SA, Tensor

> LO K ALE I M M O B ILIA

lokale immobilia / NEWS

l office

Tensor office scheme in Gdynia opened

l Office

EQlibrium topped out

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eveloper Grupa Waryński has topped out the EQlibrium office complex located in Warsaw by the junction of ul. Jana Kazimierza and ul. Ordona.

The EQlibrium office scheme will offer 10,500 sqm of class A office space and underground parking for 113 vehicles. The first tenants will move into the building in January 2017. Budimex is the general contractor of the project.

“The Warsaw market has a lot of new office supply coming, but we do not consider it to be saturated. There are locations with underdeveloped infrastructure, like parts of Mokotów, which are losing tenants. Meanwhile, our project – EQlibrium – is situated in a very attractive location – with convenient access to the railway and buses and it is even close to the subway system. This part of Wola is a budding district that is poised to grow, and we are present here both with residential and office developments,” said Mirosław Łoziński, CEO of the company.

The building is currently 45 percent pre-leased. Its tenants include consulting firm SGS Polska, as well as fitness club 24 Seven and kindergarten Ala ma kota. u

Euro Styl has opened the Tensor office complex, which is located on ul. Łużycka in Gdynia, before the completion of the entire project.

The developer decided to bring forward the opening due to the rapid pace of the leasing process. “Taking into consideration agreements signed, as well as a letter of intent, we have leased 90 percent of the 19,700 sqm GLA in Tensor.

This is a very good result at this stage of the project – the last of Tensor’s three buildings is to be completed as soon as next year,” said Mikołaj Konopka, the vice-president of Euro Style.

Tensor is a complex of three buildings named X, Y and Z. Its gross leasable area will amount to approx. 19,700 sqm.

Tenants include Maersk, Best, Thai Union, PPG, ADVA Optical Networking and Loconi Intermodal.u

7th edition of

Charity Real Estate Beach Volleyball Tournament Followed by: ‘After-Sports-Party’ Thursday, 4 August 2016, La Playa Music Bar, Warsaw

Honorary Patronage:

The money raised will go to the Children’s Memorial Health Institute, to purchase two specialised medical vehicles, for the distribution of tube-feeding nutrition packs all across Poland.

To join the evening party each person is obliged to buy and wear an open bar bracelet.

To order please contact (25.07-01.08): manager@laplaya.pl or +48 883 868 118

More information on jll.pl/volleyball

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lokale immobilia / news

l residential

First Apartment+ units to be ready in 2019 Infrastructure Minister Andrzej Adamczyk told broadcaster TVN 24 that the first beneficiaries of the new “Apartment Plus” housing scheme will receive the keys to their dwellings in mid-2019.

The program will enable Poles to rent apartments at attractive rates of PLN 10-20 per sqm in a formula leading to ownership.

“The main pillar of the program is the creation of a housing fund. The State Treasury will put state-owned land into the fund and thus apartments built on it will be cheaper,” Prime Minister Beata Szydło said, while presenting the program.

The scheme is dedicated to the middleclasses and low-income earners in every region of the country. u

l industrial

Panattoni completes another stage of Bombardier factory

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Budimex gets a PLN 118 mln contract Listed builder Budimex has signed a contract with dairy group Mlekpol for the construction of a production and storage facility, the company informed in a market filing.

The net value of the agreement stands at PLN 118 million. Works will start in mid-June and last until September 2018.

Budimex Group is the biggest Polish construction group. The company is part of the Ferrovial Group, one of the world’s largest companies operating in the infrastructure sector. Budimex has been listed on the Warsaw Stock Exchange since 1995. u

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tracks on which elements of train car bodies will be brought in. At present, work is continuing on the paint shop – completion of this stage is planned for this July, and it will take another month for Bombardier Transportation to connect technical appliances.

The Wrocław investment is implemented in the build-to-own (BTO) formula – where the client orders a facility that it will subsequently own. Panattoni Europe anticipates completion of the work by July 2016. u

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Valad secures €117 mln for Centrum Janki expansion Valad Polish Retail Fund, managed by Valad Europe, has secured a €117 million loan for the 20,000 sqm expansion of the Centrum Janki commercial center on Warsaw's outskirts. The loan has been jointly underwritten by Pbb and HSBC. “Centrum Janki occupies a prime location in an established retail destination, south of Warsaw. The decision to invest in Cen-

trum Janki was based on its dominance of the local market as well as the improved accessibility provided by new infrastructure,” said Karol Pilniewicz, Valad Europe’s CEE director.

The 46,000-sqm center will be expanded by 20,000 sqm, thus 83 units and 2,843 parking spaces will be added.

Centrum Janki was opened in 1999.u

Images: Panattoni, Vliegen Partner

l construction

anattoni Europe has announced that another stage of development has been completed at the manufacturing hall for Bombardier Transportation.

The new facility, totaling 19,377 sqm, will make modern body shells for passenger trains, including ICx high-speed trains. The manufacturing section of 18,357 sqm will be divided into a laser welding room and a paint shop. Eight months after entering the building site, Panattoni Europe has completed works on the welding room, which features

/ EL W AW l o k a l e Ci OmMmMo Eb Ni lT iAaR Y/ N S

Saller Group Triumphantly Opens Galeria Głogovia

P R O M O T I O N A L F E AT U R E

The opening of Galeria Glogovia on March 17 dominated the first quarter of 2016 at Saller Group. This 22,000 sqm retail space, located in the southwestern part of Głogów on ul. Piłsudskiego, drew over 500,000 visits since opening. Regional authorities and Saller Group’s management board attended the official opening ceremony.

The Piotr i Paweł grocery market anchors the retail center. The day before the official opening, Cinema 3D screened its first movie, the latest entry in the iconic Star Wars franchise. The following day, starting 9 AM, customers could shop at Reserved, House, Cropp, Sinsay, Drogeria Rossmann, Martes Sport, Seastar Blue, C&A, Kolporter, CCC, Nouveau, Planet Tours, Pepco, Esotiq, 4F, Diverse, Kubenz, Briju, Lodziarnia Sopelek, Apart, Giacomo Conti, Empik, Deichmann, Textil Market, Media Expert, Gold Kebab, Big Star, and Smyk. Over the next three to five months, other retailers and service providers including the largest fitness center in Głogów (1,200 sqm), KIKO Plus, as well as New Yorker, Szachownica, and Cleopatra will join the ranks of Galeria Glogovia tenants.

Visitors will have access to free parking spaces for up to 800 cars and, for those without automobiles, public transport offers stops right next to Galeria Glogovia. For more information about the facility please visit: galeriaglogovia.pl.

The opening was a huge success as Galeria Glogovia is the premiere complex and modern retail facility in the region, there being a significant distance from bigger cities. Half a million customer visits since the opening certainly confirms the scheme’s business plan.

In the near future, Saller Group will launch a number of other projects in Brzeg, Gryfino, Oława, Pruszcz Gdański, Radom, Toruń, Sulechów, Wałbrzych and Żory. These retail park projects, ranging between 2,500-12,000 sqm, will include refurbishing, expansion, renovation or building from scratch, and are planned for 2017-19.

In addition to the aforementioned plans, Saller Group is continually looking for opportunities to acquire land plots, projects and other completed investments.

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lokale immobilia / news

l office

Cube office scheme to be built in Służewiec Anti-monopoly watchdog UOKiK has approved the foundation of the Quadrat Postępu SPV company by Eiffage Immobilier Polska and Avestus Real Estate for the construction, commercialization and sale of the Cube office building.

The scheme will be located at ul.

Postępu 5A and will have an area of aprox. 21,000 sqm, while a hotel of approx. 6,000 sqm is to be built adjacent to the office building. There is currently an office building at ul. Postępu 5A, which is the head office of the Polish companies of the Eiffage group, as well as the site of a number of warehouses and a car park. All these buildings are to be demolished.

According to the environmental documentation, the office section will have seven floors (and will be more than 30 meters in height), while the hotel will have nine floors and will be 32 meters tall. The hotel section will include a restaurant area, a bar and a conference room. The project will also involve the construction of an underground car park. u l logistics

l office

Hines delivers first stage of Proximo, announces phase two

R

eal estate investor Hines has officially opened the first stage of its office scheme Proximo, located in Warsaw’s Wola district, at the Rondo Daszyńskiego subway station.

The building offers 28,400 sqm of leasable space over 13 floors, more than 65 percent of which has already been leased. The building’s tenants include Stanley Black & Decker, Grupa Pracuj, Takeda, Manpower Group, Six Payment Services, Axa Assistance, Hines, Fox Networks Group Poland, Rossmann, Jean Louis David, Green Caffe Nero and Olimp.

The building features 2,000 sqm of retail space.

The investor has also announced plans to launch the second stage of the Proximo project in Q3 2016. “Given the condition and dynamics of the Polish market, we intend to remain an active player here,” said Lee Timmins, CEO, Eurasia Region at Hines.

The second stage will feature 20,600 sqm of GLA, plus 207 parking spaces. The second stage was designed, similarly to the first phase, by architectural design studios Rolfe Judd and Pininfarina, while Hochtief Polska will reprise its role as general contractor. u

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The global food, snacks and beverage corporation has announced that it is selling its four logistics centers in Poland featuring a total space of 17,000 sqm.

The facilities are located in Tomaszów Mazowiecki (a warehouse and production hall – 11,000 sqm and a storage hall – 4,700 sqm), Bielany Wrocławskie (4,300 sqm) and Ciechanowiec (2,100 sqm).

Jartom is advising Pepsico on the transactions. “Clients look for logistics centers located in urban areas close to major transport corridors in Poland. PepsiCo’s centers are located in important places on Poland’s warehouse map,” said Kamila Branecka, director, Jartom Real Estate. u

Images: Proximo Office, Shutterstock, Skanska, Euro Real Estate Investment

Pepsi puts logistics centers on sale

lokale immobilia / NEWS

l Investments

Focus Estate buys Galeria Sandomierz

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uro Real Estate Investment has sold Galeria Sandomierz, a commercial center in southeast Poland, to Focus Estate Fund, Cushman & Wakefield, who represented the buyer, informed.

Galeria Sandomierz is the only modern mall in Sandomierz and its surroundings. The commercial center, which was opened in 2009, offers 4,400 sqm of commercial space and 160 parking spots.

The facility is 97.5 percent leased.

“It’s our first transaction on the Polish commercial center market. We have ambitious plans, soon we will conclude a few other transactions in Poland and the Czech Republic,” said Andriy Kozin, managing partner of Focus Estate Fund.

l Office

Skanska starts construction of Spark office project

S

kanska has commenced construction work on the first phase of the Spark office project, which will be developed on the so-called Serek Wolski area at the cross section of ul. Okopowa and ul. Towarowa, the company said.

In total, the project will consist of three office buildings, including a 130-meter high tower. After completion, Spark will provide its tenants with approx. 70,000 sqm of leasable space, which is more or less the equivalent of ten National Stadium soccer fields. u

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Angel Care in Wrocław

A viable alternative Student housing, senior centers and other alternative asset classes seem to have a great future in Poland

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Images: Angel Care

b y A da m Z d r o d ow s k i

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lokale immobilia / investment

With the global markets being awash with money, investors are ready to consider investing in alternative assets, a trend that was widely commented on during the latest edition of the MIPIM property fair in Cannes, France. In Poland, this is still a nascent sector, but one that seems to have a very promising future ahead of it. Developers are already churning out new student and senior housing projects across the country, with many more schemes currently in the pipeline.

An attractive product “The list of the investment products in the property market that attract investors around the world has been expanded in recent years and includes healthcare facilities, nursing homes, rental apartments and dormitories,” said Tomasz Trzósło, managing director at JLL in Poland.

Joanna Mroczek, a senior director, research and marketing department, at CBRE, also enumerated amusement parks, sports and cultural facilities, infrastructural projects, data centers, parking lots, self-storage warehouses and real estate debt among alternative assets.

In the opinion of Trzósło, the main reasons for the investor interest in the emerging sector are the growing number of available alternative assets and the investment characteristics of those assets, that is the fact that they are defined by long-term lease agreements with operators. It is also worth noting that commercial assets in the main asset classes – offices, warehouses, shopping centers and hotels – are becoming more expensive, Trzósło said.

For their part, developers build assets of this kind in response to new social trends, but also because they are aware of the existing – and growing – investor interest which is making the market more liquid and means they will be able to exit their projects, Trzósło added. Indeed, a poll conducted by CBRE at the beginning of this year among more than 400 funds and investors showed that 56 percent of the entities are already present in the alternative assets market, whereas 57 percent are actively looking for new investments in that market.

“In the current low interest rate environment, large capital-rich institutional investors such as pension funds look for sustainable income-producing assets with low risk profiles,” according to Maximilian Mendel, partner, transaction advisory, at REAS. The residential real estate market – including the private rented apartments sector, retirement living and student housing – fits perfectly into their profile as these cash-flow generating asset classes presently offer higher returns than the commercial property market, Mendel said.

“Moreover, due to the dispersed tenant structure in these asset classes, the vacancy risk is much lower,” Mendel added, pointing to the risks related to the potential loss of an anchor tenant in a shopping center or a built-to-suit warehouse building. According to Mroczek, investment in private student housing and healthcare facilities in Western Europe offers yields of up to approximately 6 percent, which is around 200 basis points more than in the case of the best office buildings.

No longer alternative In the opinion of Mendel, in many countries student accommodation and senior housing are no longer perceived as alternative asset classes, but rather as parts of the mainstream investment sector. The UK remains one of the largest markets in this regard, with the combined value of the investment in student housing exceeding $6 billion last year. “The interest in investing in Continental Europe has increased over the years, too,” Mendel said.

According to Mendel, in the mature markets around the world, the student housing sector shows very strong fundamentals as there is very little existing supply and the student demand for quality product remains strong. Mendel argued that with populations across Europe ageing, the demographic potential for senior housing is even bigger than that for student accommodation. Admittedly, the management of investments in the senior housing sector is more demanding, Mendel said.

“These cash-flow generating asset classes presently offer higher returns than the commercial property market.

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The CBRE poll showed that apart from real estate debt, student halls of residence are the most popular alternative asset class in Europe. The lack of public spending in the sector is attracting private capital, with the market growing fast in the Netherlands, the UK and Spain.

In markets including Germany and the Netherlands, private investment in medical care facilities has increased rapidly in recent years. According to the poll, 17 percent of investment funds are planning to invest in healthcare facilities or nursing homes.

Critical mass needed Whereas the investor activity in the alternative asset classes sector has been on the rise globally, the availability of alternative products in Poland is still very low. Meanwhile, there are investors in the country who would potentially be interested in such assets, Trzósło said.

“We know that the number of companies which want to build such products in Poland has been rising, but it will take time and critical mass for the product to be delivered. Only then will the demand of the investment market be fully satisfied,” Trzósło added.

Mendel noted that in recent years there has been a very positive change in the perception of Poland by investors interested in the residential sector. The demand fundamentals are robust due to the shortage of homes and the poor quality of the existing stock in the country. Residential development for sale has traditionally been strong in Poland, but the demand for rental housing has also been on the rise in the country for some time now. “The prospects for more specialized products also look promising,” Mendel said.

56%

of fund entities are already present in the alternative assets market, according to a poll by CBRE.

Leśny Dom Seniora

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Images: Leśny Dom Seniora

Ageing gracefully According to Sławomir Horbaczewski, a real estate market expert, senior housing and private healthcare facilities are a very promising property sector in a situation where life expectancy is increasing and the Polish society is becoming more and more affluent. In his opinion, the demand for services of this kind will continue to grow in the country, especially since competitive prices will likely also attract a number of foreign clients from markets including Germany and Scandinavia.

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New nursing homes are also in the pipeline and for good reason as the nursing care market is valued at PLN 5.5. billion. Local investors are going to open two facilities at Godów in Silesia this and next year, one of them dedicated to German clients. Next year, a project called Leśny Dom Seniora will open in Piastowo in the Kujawsko-Pomorskie Voivodship, offering 94 places in single, double and triple rooms, as well as a medical center and a spa. Altogether, Angel Poland has announced it wants to add some 2,000 places in 10 senior housing projects, targeting “middle-income retirees.” In April firm delivered its first Angel Care facility in Wrocław, which offers services starting at PLN 3,000 a month for a place in a double room.

Rising expectations The demand for student housing will also be on the rise. The existing dormitories of public universities in Poland can only house a small fraction of the student population of the country, which is one of the largest in Europe. The growing number of foreign students in Poland has also generated additional demand in recent years. Horbaczewski pointed out that many students today are very different from their counterparts a few decades ago in that they work and are well paid, and thus also have higher expectations with regard to the location and standard of their accommodation.

No wonder then, that the first private-run projects have already appeared to cater to their needs. Griffin Real Estate, one of the pioneers in this sector of the market, for one, has delivered three major student housing projects to date – in Poznań, Łódź and Lublin. For its part, Budner is planning a number of new schemes in Warsaw. It is expected that within the next few years new student housing investments will be developed in all major academic centers across Poland.

Andrzej Cytrycki, the person responsible for the development of the Student Depot chain of dormitories at Griffin Real Estate, which comprises the three above-mentioned

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schemes, said that the success of the facilities shows that there is huge growth potential in the sector. He added that the new developments have been particularly popular with international students. For example, in Lublin, students from Taiwan account for around 90 percent of all occupants, Cytrycki said.

Griffin Real Estate is now preparing to launch new student housing investments across Poland. Planned developments in Poznań, Kraków, Warsaw and Wrocław are expected to deliver a total of approximately 2,500 beds, Cytrycki said. More schemes are to be developed in subsequent years. Cytrycki added that Griffin Real Estate has the ambition to build, within the next few years, a portfolio of projects located in the main academic centers in Poland that would comprise a total of approximately 8,000 beds.

Real estate experts agree that new alternative assets in Poland have so far represented a drop in the ocean of demand. However, the schemes “act as benchmarks and pave the way for other investors,” Mendel said. u

Image: Shutterstock

lokale immobilia / investment

lokale immobilia / hospitality

Best season yet b y b e ata s o c h a

After a sudden growth spurt in 2012 and the subsequent slowdown, the hotel market in Poland is now gaining momentum, fueled by both business and tourism. Safety threats in Western Europe are also boosting the country’s attractiveness

P

oland’s hotel base has been growing at a varied pace since 2009. In 2015 it reached 32.6 million beds, recording a 9 percent increase on the previous year, according to Cushman & Wakefield. “The market is growing rapidly and many new investments have already been scheduled,” said Šárka Chapman, senior analyst for hotel properties in Poland’s Cushman & Wakefield office.

After a relatively moderate slowdown in 2009, the market recovered quite well over the next two years, with occupancy rising 7.1 percent and the average daily rate (ADR) increasing by 2 percent. Then, thanks to the Euro 2012 football championships, the hotel business saw a sudden surge in occupancy as well as a significant increase in the hotel base. As a consequence, 2013 and 2014 were a period of oversupply and a drop in the revenue per available room (RevPAR) to PLN 187, stated Chapman. Last year the RevPAR figure stood at PLN 205 and continues to grow in 2016. In May it saw a year-on-year increase of as much as 10.4 percent. Both the uptick in occupancy of 5.3 percent and a 4.8 percent higher ADR have contributed to the significant improvement.

Safety threats

The improving figures indicate the hotel business may expect a remarkably good holiday season this year. Conversely, recent terrorist acts and threats in Europe have proven quite beneficial for the hotel industry in Poland as it is seen as a safe destination, both for tourism and business. In 2016 the share of foreigners among hotel guests in Poland is expected to exceed 20 percent, according to the

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Hotel Sales & Marketing Trends 2016 report prepared by Profitroom and Deloitte, to a large degree due to the “geopolitical changes and other unexpected changes which have decreased tourists’ safety in locations until recently considered safe.”

Chapman agreed. “When choosing a holiday destination, tourists are increasingly concerned with safety and that is why we can expect a growth in occupancy levels, as well as higher ADRs at the Baltic Sea coast,” she said and added that the same trend is seen in the business travel segment. “In the MICE industry, where we can see a drop in RevPARs in Brussels by 13.3 percent, in London by 3.1

percent and in Paris by 12.4 percent (data for April 2015-April 2016), while Warsaw has recorded a 10.4 percent increase over the same period.”

Warsaw base

Warsaw remains by far the most popular destination, particularly for business travelers. It is dominated by 3-star hotels (60 projects), with the 5-star segment constituting only 10 percent. “Warsaw remains one of the most popular cities, particularly for business travel. As many as 139 hospitality facilities offer 15,000 rooms altogether,” said Chapman.

In May 2016 Warsaw’s market share

lokale immobilia / hospitality

in all hotel reservations made in Poland stood at over a quarter (25.6 percent), according to eTravel, which was, however, 1 percentage point lower than a year earlier. Wrocław and Kraków, on the other hand, recorded an increase in their market share: Wrocław was the city of choice for 8.2 percent of travelers (1 pp more than in May 2015), and Kraków – 6.84 percent (a 0.4 pp uptick y/y).

Images: Warimpex

Outside the capital

Wrocław has seen remarkable growth in recent years. According to a 2015 report on Polish major cities by PwC, the city recorded a 45 percent increase in real GDP between 2004 and 2012, as well as the sharpest drop in unemployment figures among all Polish cities, from 12.3 percent in 2004 to 4.3 percent in 2014.

The favorable business conditions, as well as tourist attractions, have made the city a highly attractive investment destination for hoteliers. A brand new Double Tree by Hilton hotel is to open in Wrocław for the summer season in the recently completed OVO Wrocław scheme.

32.6 million PLN 205

is how many beds are offered in all of Poland’s hotels in total

was the revenue per available room (RevPAR) in 2015

over 20%

of all hotel guests in 2016 are expected to be foreigners

10.4%

was by how much RevPAR in Poland increased between May 2015 and May 2016

9%

is by how much the hotel base increased in 2015

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lokale immobilia / hospitality

It features 189 rooms and suites on five floors of the building.

“Wrocław has been developing exceptionally fast as an attractive destination.

That is why the demand for top-notch hotel services in the city is increasing, particularly since Wrocław has been selected as the European Capital of Culture for this year,” said Matthias Herd, CEO of Double Tree by Hilton Wrocław. It is the first fivestar facility in the city. “We offer a 317sqm ballroom and the highest standard of hotel services, as well as many additional amenities, including a restaurant, a bar, a fitness club with a swimming pool, a spa and a casino,” Herd said and added that, “the economic growth will also benefit hotel facilities in other segments, as long as they are conveniently located for business trips and meet the essential needs of business and corporate travelers,” he added.

Top three

Market share of Poland’s top three hotel destinations in May 2016 Warsaw 25.6% Wrocław 8.2%

Kraków 6.48%

down 2 pp y/y up 1 pp y/y up 0.4 pp y/y

Source: eTravel

Countrywide investment

“Wrocław has been developing exceptionally fast as an attractive destination. That is why the demand for top-notch hotel services in the city is increasing, particularly since Wrocław has been selected as the European Capital of Culture for this year.

Matthias Herd, CEO of Double Tree

by Hilton Wrocław

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Resorts). In Poland the chain operates projects such as Andel’s Kraków, Andel’s Łódź, Andel’s Katowice, Vienna House Amber Baltic Międzyzdroje and Vienna House Easy Chopin Kraków.

Rupert Simoner, the CEO of Vienna House, also stated that “Outside the country’s capital there are interesting destinations with a great potential for both tourism and business travel. … That is why we are looking to invest not only in Warsaw, but also in smaller cities, like Rzeszów and Lublin.” He added that the chain wants to open four new hotels over the next four years in Poland. u

Images: Double Tree by Hilton

Developers and hotel chains are also looking at other regional markets increasingly favorably. Warimpex wants to develop its Vienna House Easy chain across the entire country. “It’s in the economy segment which has been very successful in Germany. Now we want to repeat that success in Poland,” said Warimpex’s CEO Franz Jurkowitsch, and added that, “We’re not only thinking of Warsaw, although the capital still offers a lot of room for such projects.”

Hotels delivered by Warimpex operate within the Vienna House chain (previously Vienna International Hotels &

commentary / law

Book of lists 2016-2017 guide to Polish business and industry available in september

WBJ OBSERVER • may 2016

15

lokale immobilia / residential

Demanding and prudent

Image: Shutterstock

b y K a r o l i n a Pa p r o s

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lokale immobilia / residential

Even though apartment sales continue to be historically high, the 2008 crash and subsequent recovery left buyers of residential properties more cautious. Where is the market now compared to where it was 10 years ago?

A

fter a historically good 2015, for residential developers the first quarter of 2016 shows no signs of slowing down. Developers sold over 14,300 apartments in Q1 2016, according to a REAS report on the residential market in Poland. Many of them used the MdM government subsidy program, and a significant share were also purchased as buy-to-let investments. Current apartment sales exceed even the hottest pre-crisis years of 2006 and 2007. But market realities have changed since then.

A decade ago, at the peak of the previous cycle, prices were rising at double-digit pace and buyers were willing to buy pretty much anything. “In the early 2000s, people were buying ‘only’ the apartment itself. They weren’t looking for additional amenities or upscale solutions. The architectural design didn’t matter either. The demand for apartments was enormous and many apartments were sold at the ‘hole-in-the-ground’ stage,” said Arei Koren, CEO of Okam Capital.

Trust issues

Post Lehman Brothers, the market naturally needed time to readjust to the new reality. But unlike in some other markets in Europe, like in the case of Spain, price corrections never went beyond several percent at the most. Prices have remained more or less stable since then, growing at a healthy pace of 1-3 percent annually.

Market participants had to readjust as well. With the experience of the first-ever market crash in Poland’s post-transformation history, Poles became more cautious and started exercising due diligence before

entrusting a developer with their life savings.

“After the crisis, clients are more careful and more selective in their decisions, they would usually prefer to buy comleted apartments or soon-to-be completed,” explained Eyal Keltsh, operational director of ROBYG. Trust, however, seems to be finding its way back to the market, particularly since a number of legal changes made investing in an apartment safer over the years. In 2011, the Developers Act introduced escrow accounts, protecting buyers’ money, specified the obligations of the developer in more detail and, most importantly at the time, stipulated that in case of a developer’s bankruptcy, the project’s completion and delivery of apartments to their buyers would be top priority.

Given that some projects devalued over the course of the downturn and that the currency risk inherently embedded in foreign currency-denominated loans materialized when the złoty depreciated against the euro and the Swiss franc, the Financial Supervision Authority issued another safety measure called the “S” recommendation that gradually decreased the maximum loan-to-value ratio from 100 percent to 80 percent in 2017.

All these safety measures seem to have done the trick, coupled with stable market growth over the past years. Poles are once again confident in the market and they do not shy away from buying a dwelling at the holein-the-ground stage. In fact, as Radosław Bieliński, press officer of Dom Development, pointed out, “in many locations we sell beyond 90 percent of all our apartments at the construction stage, which on average lasts 18 months. People trust developers that have been in the market for many years and that survived the 2008 housing market crash.”

Sense over sensibility

However, some changes in customer behavior seem to be of a more permanent nature. Before the crisis, with easy access to bank loans covering 100 percent of the purchase (or in many cases even more), Poles were eager to buy large apartments, and a two-room dwelling (a bedroom and a living room, as in Poland it is customary to include the living room in the count), of 60-70 sqm was not an unusual occurrence. This changed after 2008. With the additional restrictions introduced by banks and mortgages becoming more difficult to obtain, for the past several years “the most commonly sold flats were studios and compact two-room apartments with a size of some 40 sqm. This was due to the lower availability of loans and strict re-

quirements of banks,” explained Keltsh.

Currently, the most popular units across the country are of 35-48 sqm, with one or two rooms fitted in that space, as well as three-room units of 55-65 sqm. The need to economize has permanently changed the way apartments are designed. Now, being spacious comes second to being practical: a two-plus-two family would rather live in a four-room 80-sqm apartment than in a threeroom 75-sqm one. After all, an extra room is always handy.

A wider spectrum

The variety of properties available on the market has also increased. In 2006-2007 the market was more or less uniform with few projects standing out in terms of quality and design. Now there is an entire market spectrum: from popular dwellings, through the premium segment up to luxury skyscrapers in city centers, whose quality is on a par with what top European cities have to offer.

In general, buyers have higher expectations and far more sophisticated taste than a decade ago. They value additional amenities such as their own garden, a swimming pool in the building or a restricted-access playground. Additionally, they pay more attention to the standard of the building and a better quality of construction materials. “We do see that Poles buy more and more turn-key apartments. They also pay more attention to the quality of the materials used in the building, to the facade finishing, e.g. glass, stone, wood are valued more,” said Bieliński.

Today, future apartment owners also want to be a part of the design process. They value practicality and pragmatism and they want their dwellings to be functional. “Our clients pay attention to the practical aspects of the apartment, arrangement possibilities and a general comfort of living in the property,” concluded Koren. As Poles become more worldly, they want their apartments to offer the same interesting solutions or design features that they observed in other countries and, therefore, they tend to be more demanding clients.

Price vs. location

Warsaw, Poland’s capital and its biggest residential market, has probably changed the most. Okam Capital’s market research indicated that the most important criterion for Varsovians choosing an apartment is location (45 percent of all respondents considered it very important and a further 35 percent as important). “Location here involves

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Interestingly, the layout of the apartment matters more that the total area of the dwelling. Buyers are also willing to pay more for a higher quality of building materials. It is a particularly valid concern if you are buying an apartment with a view to resell it a few years down the road. A quickly deteriorating facade might not fetch you the desired price. u

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Images: Okam Capital, Shutterstock

convenient commuting, access to the necessary infrastructure such as schools, stores, parks and, preferably a quiet neighborhood,� explained Koren. Price, which until a few years ago was always the primary concern in apartment-purchase decisions is now the most important factor for only 40 percent of those polled. The location-price reversal is only true in Warsaw, though. In all other major cities, price still plays the most important role. Warsaw is also where the biggest units (of over 100 sqm) sell the best, although they constitute a relatively small percentage of the market, said Koren.

lokale immobilia / interview

Trust is back in the market I n t e r v i e w b y B e ata S o c h a

WBJ Observer : How much has the residential market in Poland changed over the past decade? Is it getting closer to being mature?

Radosław Bieliński: If we want to compare Warsaw to cities like London or Paris, we still have a long way to go. Twenty years ago we had mostly Social Housing Associations (in Polish TBS) doing the development. After 1990 the market slowly moved into the hands of the developers. Each year the market is maturing, getting us closer to Western Europe. We see more coherent and well thought-through urban planning in Polish cities that makes residential development more in tune with the fabric of the city.

Besides, supply and demand continue to be balanced. Over the last two years, developers have achieved the biggest sales volumes in market history.

In the boom preceding the crisis, that is in 2006 and 2007, it was the norm to buy an apartment long before the construction was completed. Then, soon after the crash, Poles had plenty of completed projects to choose from. Where is the market now?

We have a very healthy market now and clients have no fear of buying apartments at the early construction stage. This way they have a wide range of apartments to choose from and can select the layout of the apartment they like the most.

In most of our projects we sell above 90 percent of all our apartments at the construction stage, which on average takes 18

months. People trust developers that have been in the market for many years and that survived the 2008 housing market crash.

How have your clients’ expectations changed over the past decade? Have you noticed any signs of them getting wealthier?

While the percentage of apartments in the popular segment and in the upmarket segment have not changed, we do see that Poles buy more and more turn-key apartments. They also pay more attention to the quality of the materials used in the building, for the facade finishing, e.g. glass, stone and wood are valued more. They have become more demanding and willing to pay if the building is what they are looking for. Therefore, developers are creating living spaces that correspond with new generations’ needs and lifestyles.

And what are they looking for in terms of the size of the apartments?

Before the crisis, banks were happy to give large loans, with little or no down payment. Apartments then had bigger rooms than they do now. During the crisis, people started thinking more rationally: would I rather have three large rooms or four smaller ones? The market has shifted towards a more effective use of space, with more rooms fitted into the same overall area.

Which apartment sizes sell the quickest?

In our case, similarly to the market, the 40-50-sqm units are currently on top. These

units constitute about 55 percent of an entire project. Our clients are mainly young people, with the average age being 31. They are often at the beginning of their adult lives when they purchase their first apartment.

They live in it for a few years and then they swap it for a bigger one. About 10 percent of our offer is 4-5 room apartments and they are also in demand, as they sell rather quickly. They are for larger families.

How many of your clients use the MdM government subsidy program?

Currently, we have MdM apartments in four of our Warsaw housing estates. The number of these apartments depends on the current limits and varies from one quarter to the next. There were months when we had several hundred apartments in the MdM scheme, sometimes only 100 or so. In Q1, some 15 percent of the apartments we sold were financed with the MdM scheme.

The MdM program is not essential to our activity as our average transaction value strongly exceeds the market average of PLN 350,000. As much as 72 percent of our transactions go beyond PLN 350,000, including 21 percent of purchases worth over PLN 550,000. Additionally, we assist our clients in selecting the best mortgage offer as we have an in-house Credit Advisory Department. Over 80 percent of our customers take advantage of our advice.

How many of your clients pay in cash?

Compared to other competitors, we have higher prices, which in turn translates into a higher number of clients buying with cash rather than with bank loans. About 25-30 percent of all our apartments are paid for in cash. In the first quarter, the number of clients buying in cash increased to 35 percent. u

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Image: Dom Development

The past decade of residential development has seen a boom, a crash and a rather strong and rapid recovery. WBJ Observer asked Radosław Bieliński, press officer of Dom Development, where the market is now compared to 10 years ago

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Manufacturing Excellence on the up in CEE

T

his year’s awards were populated by winners from the automotive manufacturing industry, emphasizing the growing importance of that sector in the region.

Valeo Group, a leader in power and automation technologies that enables customers to improve their performance while reducing the impact on the environment, picked up awards in the Production Innovation, Quality Control and Customer Relationship Management/Customer Service/Customer Satisfaction categories, as well as Automotive Industry Manufacturer of

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the Year.

Marek Potoczny, Valeo’s Industrial Projects Leader, was named this year’s Industry Professional, topping off a very successful night for the group.

“It is a great honor and privilege to win at such a prestigious competition,” commented Potoczny. “They are all special and exceptional. Each one is a testament to the great determination and professionalism across the entire Valeo organization.”

Flex, a leading sketch-to-scale™ solutions company that designs and builds intelligent products for a connected world, collected three prizes on the

CEO Manufacturing Magazine and EuropaProperty.com have successfully completed another CEE Manufacturing Excellence & Industrial Property Awards for the fourth year in succession.

Held in Warsaw’s Intercontinental Hotel, the awards ceremony was witnessed by a select group of senior European and Central European Manufacturing professionals, affirming the event’s status as a true landmark occasion for the manufacturing industry

Images: Premier Media/ Europa Property

events / manufacturing excellence awards

events / manufacturing excellence awards

night. The company’s Vice President and General Manager Andrzej Połojko was voted Plant Manager of the Year, and they also collected Robotics/Automation Supplier, as well as the coveted Overall Manufacturer prize.

Nexteer Automotive, a global steering and driveline business, also collected three awards on the night, including Manufacturing Supplier, Information for Manufacturing Technology and another for Robotics/Automation.

On the industrial development side, Panattoni Europe was again voted Developer of the Year and picked up two project awards in the BTS small and large categories. Segro collected a project award in the BTS medium category.

Lynka, a manufacturer and supplier of corporate apparel, work wear, and promotional clothing and accessories, won two awards: one in the Sustainability & Environment category, as well the Textile Manufacturer of the Year. Other big manufacturing winners included Lotte Wedel, which won the Food Industry Manufacturing award, Recaro picked up the Supply Chain Management (SCM)/Logistics award, and Rockwool walked away with the Construction Industry Manufacturer of

the Year award.

Hays Poland picked up the evening’s first award in the Professional Service Provider category. Other Service providers awarded on the night included Cushman & Wakefield for Corporate Real Estate Consultancy, and BilFinger won in the Facility Maintenance/Property Management category.

The fifth annual CEE Manufacturing Excellence & Industrial Property Awards will be held on June 22, 2017 u.

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events / ReDI

Warsaw as a retail center in Central and Eastern Europe

D

uring the 3rd edition of the ReDI CEE Trade Fair for Retail Investment, which took place on June 1-2, 2016 at the PGE National Stadium in Warsaw, over 50 exhibitors presented a portfolio of more than 150 shopping centers from Poland, the Czech Republic, Romania, Belarus and Serbia. Over 1,400 representatives from the CEE retail market, including more than 400 retail brands, 550 investors, plus developers, as well as shopping center managers, discussed the future of the industry and held business talks for two days. Visitors from countries such as the Czech Republic, Hungary, the Netherlands, Romania, France, Germany, Italy, Turkey and Great Britain attended the event. Moreover, 30 media partners and 20 trade organizations were patrons of the fair.

The international character of the ReDI Trade Fair is highlighted by the engagement of a great deal of partners

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from outside Poland such as the International Council of Shopping Centres, the European Property Federation, and Eurelia, whose representatives were present at the fair. Of equal significance is the activeness of city authorities, which not only gave patronage to the fair, but also attended the event, seeking dialogue and promising business opportunities.

The ReDI Trade Fair is an excellent place and opportunity to exchange experience and knowledge. This year’s edition of the fair featured four panel discussions and two special report presentations. Panelists talked about key issues for the industry such as new retail brands and concepts in the market, they disputed elements of lease agreements and the current retail labor market. Analysts and researchers presented reports titled “A Tale of Four Cities, High Streets in the CEE Capitals” and “Child-friendly shopping centres.” u

Gadgets Technology to make your life easier

>>

We live in an age of gadgets: some are useful, but most are just a waste of time and money.

We sift through the latest available tech to pick those that we believe will help you live your life more comfortably and confidently.

>>

Hamilton Beach

Images: Hamilton Beach, Sphero, PRCH

SPRK+

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The SPRK+ was designed by the same company behind the Star Wars BB-8 robot toy. The plus model is controlled via Bluetooth, has a range of 30 meters and can move at 2 m/s. Paired with the Lighting Lab app it becomes a great educational tool. Children can learn programming, engineering and physics. Users can control the robot using mobile devices. The spheres can do almost anything you think of.

Price: $130

Sphero.com

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Even though everyone says that breakfast is the most important meal of the day, most of us don’t find the time to make it ourselves, opting for readymade dishes at gas stations or at the canteen. The Hamilton Beach Breakfast Sandwich Maker can make you a hot sandwich in less than 5 minutes. With a number of removable plates and baskets you can create an intricate calorie bomb with fried eggs, melted cheese and warm cold cuts.

If it’s a healthier option you seek for breakfast then a juice maker would probably be a better solution.

Price: $20

hamiltonbeach.com

Summer is upon us and if you’re one of the lucky few who owns a pool, the Solar Breeze Automatic Pool Skimmer might be the perfect solution for you. The solar powered device removes all debris from the surface, which in turn reduces the pool pump usage saving you money and time.

According to producers, the robot can clean up to 95 percent of all debris, including leaves, dust and even suntan oil.

Price: $640

solar-breeze.com

Images: Solar-Breeze, Kingii, Shutterstock

Solar Breeze

>> Kingii

The Kingii Wearable could be described as a parachute for swimmers. Whenever you encounter any trouble while in the water, you pull the lever to pierce the CO2 cartridge and fill the balloon, which once inflated can keep you safely above the surface. According to the producers, the whole operation takes just one second. The apparatus is equipped with a whistle so you can warn others that you need help and a compass in case you need to find your bearings.

>>

Price: $90

kingii.com

A higher class of swimming Imagine jumping into water in ordinary swimming trunks and stepping out in a distinctively colorful swimsuit. Instead of the plain and monochromatic old designs, you instantly have the most fashionable up-to-the-minute patterns on your swimwear. You can choose from fish, palm trees, or other holiday motifs on your trunks.

Such things are only possible with Ramatuelle. This French brand, specializing in beach wear for adult and young males (it offers complementary father and son sets), is famous for its swimming trunks that change color when they come into contact with water.

The new collection features all the latest trends and includes Paisley, camouflage, tropical accents, bright orange, or various pastel shades. Besides swimming trunks there are also fitted boxers and loose shorts on offer, as well as classic polo and t-shirts in case the weather on the beach is cooler than usual – perfect for trips to the Polish seaside, although you’ll look great in these garments wherever you go. No wonder – Daniel Craig’s James Bond proudly wears Grigio Perla shorts from Ramatuelle in the now iconic scene from “Casino Royale.” www.ramatuelle.pl Price:89€

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PROMOTIONAL FEATURE

L i f e st y l e / s u mme r i n wa r saw

b y v e d i k a Lu t h r a

Spending the Summer in Warsaw For when you feel like doing something a little less conventional

26th Mozart Festival in Warsaw

June 23-31 at the Warsaw Chamber Opera (Al. Solidarności 76b) Each year, the Warsaw Chamber Opera pays tribute to Mozart during the summer months. A selection of his most lauded works will be presented each day at the Warsaw Chamber Opera. The festival also features concerts in Wilanow and at the Palace on the Water in Łazienki park- an event on the “must attend” list for musicians and classical music enthusiasts.

Chopin Concerts

Throughout the summer in Łazienki park.

When tourists visit Warsaw during the summer months, they are encouraged to take a trip to Łazienki park, the home of some of the finest architecture, greenest landscapes and, of course, the Chopin concerts. Every year since 1959, skilled

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pianists have performed celebrated pieces

by Fredrick Chopin. The concerts take place on Sundays at 12:00 and 16:00 – follow the notes of the “Mazurek” to find your way to the main stage. If haven’t attended a Chopin concert during the peak of summer in Warsaw, you haven’t properly experienced the city.

Recognized as a popular Jazz festival in Europe, the Warsaw Summer Jazz days is a key attraction for tourists during July, as it also is for jazz-loving locals. The line-up includes a variety of artists from all over the world.

Warsaw Summer Jazz Days

July 7-10 SOHO factory (ul Mińska 25) For more details, visit warsawsummerjazzdays.pl

Rihanna in Warsaw

August 5 at the National Stadium Rihanna’s ANTI tour is most likely one of the most anticipated musical events of the year. After nearly a decade of successful singles and albums, Rihanna continues to captivate the masses with her lyrics and beats. You can catch Rihanna in Warsaw on August 5 at the National Stadium. Be sure to purchase your tickets well in advance.

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miaf iensts ye lc et i/o snu mme h e r r saw L r e iand wa

Warsaw’s “beaches”

Targ Śniadaniowy

Locations: Zoliborz, Mokotow, Goclaw Park, Ursynow For exact details visit targsniadaniowy.pl Warsaw’s breakfast market in Zoliborz began in 2013 and has since become a summer tradition. Due to its immense popularity amongst expats and locals, nowadays, several locations can be sought around the city during the weekends.

Unlike a traditional farmer’s market, vendors and local food suppliers at Targ Śniadanowy do not just sell produce, rather, they use that produce to create a drool-worthy meal right in front of your eyes. At this event, there tends to be a broad range of foods – from Ethiopian cuisine to Mexican. Typically situated in parks, Targ Śniadanowy is a great location for young children as well. Occasionally, other activities also take place during the event, such as yoga lessons – a great way to begin the day. Leave the dull, indoor breakfasts at home and make your way to Targ Śniadanowy.

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July 16 at the Hard Rock Café (Złota 59) No tickets to the 2016 Rio Olympics? No problem. On July 3, Warsaw Social is organizing a Rio-themed carnival with live samba bands, carnival dancers, outfits, raffle prizes and free alcohol. The event will take place on July 16 at the Hard Rock Café. For more information, visit the Facebook event of the same name.

Warsaw outdoor Color Explosion cinema Multiple locations around Warsaw at Lake Park Watching a movie inside a dark room on a warm summer’s day is no way to pass Wilanow the time so why not watch it outside?

June 23 marked the start of the outdoor cinema season in Warsaw’s parks. This event will last for 10 weeks during which 60 films from every corner of the world will be screened. For instance, at Pole Mokotowskie on Tuesdays, you’ll be able to experience a bit of Indian culture with Bollywood films. On Thursdays at Art Park Francatti, you’ll be able to delve into the world of French cinema. A movie screening is planned for almost every day, so no day is dull.

Lake Park, Rów Powsinkowy July 30 from 4-8 pm If you’re not sure how to spend Saturday evening on July 30, head over to Lake Park Wilanow, the district’s latest treasure, for good music, good vibes and loads of color sachets to throw around.

Images: Shutterstock

Multiple locations including near the Poniatowski bridge on the Praga side While I don’t have a specific event in mind in terms of the so-called “beaches” in Warsaw, they are some of the most popular summer destinations during July and August. There are plenty of smaller events and activities that take place each day by the riverside, such as amateur volleyball tournaments or parties if it something more specific you seek. Occasionally, food trucks are parked during the daytime so that cyclists and pedestrians can grab a bite before continuing on their way. But for something a little low-key, near the National Stadium, you can find hammocks, barbecue grills and booze (small bars, of course) stationed on the peripheries.

Perfect for soaking up some Vitamin-D on a relaxed summer day.

Warsaw’s Biggest Brazilian Carnival Party

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Międzynarodowa i krajowa sieć drobnicowa Zarządzanie łańcuchem dostaw Logistyka kontraktowa i magazynowanie Innowacyjne technologie informatyczne

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