WBJ March 2017

WARSAW

BUSINESS JOURNAL C o m m e n t a r y | Te c h

MARCH 2017 ~ No. 36

N e ws | Re a l E s t a t e

For daily news visit us at wbj.pl

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

A superior design of Opera Software office in Wrocław fitted out

by REESCO

FITTING OUT THE FUTURE OF OFFICE DESIGN

IN THIS ISSUE 7

IN REVIEW News highlights from the previous month from wbj.pl

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FEATURES Sharing economy 28 Furniture exports 32 Social media mining 36

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COMMENTARY

A Lawyer’s view on the construction law changes from PATRYCJA KAŹMIERCZAK and on the apartment rental market by JAN WSZOŁEK. Minister of Infrastructure and Construction ANDRZEJ ADAMCZYK on gov’t housing policies. Talent mobility expert AHU YILDIRMAZ on generational changes. JANUSZ STEINHOFF’S take on the energy market. Perspectives on the smog mask market from MATEUSZ JASIŃSKI. Deputy Mayor of Warsaw MICHAŁ OLSZEWSKI on Warsaw’s expansion plans and environmental policy

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LOKALE IMMOBILIA Real estate news 44 Warsaw office towers 48 Open space offices 52 Warehouse investment 62 Residential investment 66 Real estate financing 69

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LIFESTYLE

Vienna House 73 Wrocław 75 Robert Mielżyński 76 Business Lunch 78 Events 80

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MARCH 2017 W B J

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FROM OUR EDITOR

Building a Better Warsaw

BY MORTEN LINDHOLM

WHEN VALKEA ASKED ME to once again lead Warsaw Business Journal through 2017, after five years of watching it from the sidelines, I had some reservations.

Now, 60 days into the year, I am pleased and extremely satisfied with the mission we are on. I have had the pleasure of meeting many professional partners of WBJ during that time and I am now more confident than ever about the goals we have set out to accomplish.

We have decided to thoroughly revamp the magazine – its title, its content, look, and the accompanying news website to highlight the most important business stories and offer you industry insights into the Polish market and its future. Our reporters and editors have carefully selected interviews, reports, news, investigations and success stories of people, companies and sectors that we believe will provide you with both entertainment and food for thought.

The March issue of WBJ is in large part devoted to the real estate industry, with insightful reports and interviews about all of its sub-sectors. We also discuss the energy industry, the housing market and the notorious smog problem that is closely related to both these sectors.

Our editors also focus on industries ranging from furniture exports, through social media mining, to the Polish market for services such as Uber and Airbnb.

Enjoy WBJ’s fresh design and the rich and interesting content – we wish you great success and look forward to hearing from you with feedback, stories and other tips and ideas at editor@wbj.pl.

Morten Lindholm Editor-in-Chief/Publisher mlindholm@valkea.com

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

azdrodowski@wbj.pl

Michael Evans Copy Editor

Kevin Demaria Art Director

Contributors

Ewa Boniecka Karolina Papros Sergiusz Prokurat Dominika Tkaczyk Kamila Wajszczuk Alex Webber Sales

Justyna Lund jlund@valkea.com Katarzyna Pomierna kpomierna@valkea.com Julita Pryzmont jpryzmont@valkea.com PR & Marketing

Agata Wolny awolny@valkea.com

Meet the WBJ team

Magdalena Czopur Subscriptions

mczopur@valkea.com

ECONOMICS & MANAGEMENT EDITOR Sergiusz Prokurat is a PhD Economist and lecturer at universities in Poland and Spain (the Euroregional University of Economy in Poland, Lazarski University, Universidad de Granada, Universidad de Jaume I). Author of the best-selling book “Work 2.0: Nowhere to Hide.” He writes about economic science and practical management methods.

TECHNOLOGY EDITOR Dominika Tkaczyk holds a PhD in Computer Sciences. She is an Assistant Professor at the Interdisciplinary Centre for Mathematical and Computational Modelling at the University of Warsaw (ICM UW).

She writes about data science and artificial intelligence, new possibilities created by data-driven research and their role in modern business and society.

BUSINESS & MARKETS EDITOR Karolina Papros is an Associate at a leading HR consultancy firm. She specializes in Global Mobility.

Karolina holds an MA in Applied Linguistics (University of Warsaw) and in Society and Politics (Center for Social Studies, IFiS PAN/Lancaster University). She writes about business, markets & industries, and human resources.

POLITICS EDITOR Ewa Boniecka is a veteran journalist with a degree in journalism from the University of Warsaw. Her career includes several stints as a foreign correspondent in London, New York and at the UN. She has published several books about living in English-speaking countries as well as a collection of interviews with politicians. She interviews top politicians, ambassadors and businesspeople.

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Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com Magda Gajewska Event Director, Valkea Events

mgajewska@valkea.com Contact: phone: +48 22 257 75 00 fax: +48 22 257 75 99 e-mail: wbj@wbj.pl

WBJ.pl WarsawBusinessJournal

@wbjpl

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COVER IMAGE: courtesy of Reesco

28th–29th March 2017 Sheraton Warsaw Hotel TELECOMMUNICATIONS

AND MEDIA WORLD

NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

“Without Solidarity, perhaps European unity, the end of the Cold War wouldn’t have occurred so quickly, nor German reunification. From this time, we realized how important pluralistic societies are, how important independent justice systems and media are –- because those are the things that were missing back then,” Germany’s Chancellor Angela Merkel commented on recent EU criticism of the Polish government concerning its approach to the rule of law, and reforms of the media and judiciary systems.

- ANGELA MERKEL

ENERGY

PGE with PLN 2.45 bln net profit in 2016 – preliminary results WSE-listed utility PGE sported PLN 7.39 billion in EBITDA and PLN 2.45 billion in net profit in 2016, indicating PLN 1.25 billion in Q4 net profit, PGE said in a market filing citing preliminary estimates. The company’s 2016 CAPEX is estimated at PLN 8.15 billion. PGE produced 53.67 TWh of power last year, the firm also said.

SHUTTERSTOCK

ENERGY

TAURON estimates PLN 102 mln net profit in Q4 WSE-listed power group Tauron had PLN 102 million net profit, PLN 882 million EBITDA and PLN 4.5 billion in revenues in

Q4 2016, the company said in preliminary financial results. For the whole of 2016, the company’s revenue stood at PLN 17.6 billion with PLN 378 million net profit and PLN 3.3 billion EBITDA. Tauron will publish its Q4 report on March 15.

q/q and 11.5 percent y/y) in fee income.

For 2016, the net profit stood at PLN 601.6 million (a 4 percent drop y/y).

FINANCE

Between January and December 2016 Poland exported goods worth PLN 798.2 billion and imported products with total value of PLN 777.54 billion, according to the national statistics office GUS. The surplus of PLN 20.659 billion was more than twice as big as in 2015 (PLN 9.86 billion).

Exports grew by 6 percent last year, while imports increased by 4.9 percent y/y.

Developed countries accounted for 86.2 percent of total exports and for 67.9 percent

BANK HANDLOWY with PLN 130 mln net profit in Q4 WSE-listed Polish unit of Citigroup, Bank Handlowy had PLN 130.3 million net profit (10.2 percent y/y growth), slightly beating the PLN 127.8 million consensus, according to the lender’s preliminary financial report.

Considerable cost cutting and below expectation loan loss provisioning helped Bank Handlowy overcome a shortfall (6.6 percent

ECONOMY

POLAND RECORDS PLN 20 bln surplus in foreign trade in 2016

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In Review of imports. Germany remained Poland’s top trade partner with a 27.3 percent share in exports and 23.4 percent share in imports.

Russia’s share in Poland’s exports inched down by 0.1 pp to 2.8 percent, while its share in imports decreased by 1.5 pp to 5.8 percent.

Guillaume Duverdier, beer sales in Poland should be similar this year to 2016 levels.

In volume terms, Żywiec sales increased by 0.6 percent to 11.7 million hectoliters in 2016.

1.8%

ITC

ASSECO buys Stone River for $102 mln WSE-listed IT giant Asseco’s Israeli unit Sapiens has acquired US company Stone River for $102 million. Stone River specializes in solutions for the insurance sector and has 200 clients in the US. Stone River sported an estimated $80 million in revenues in 2016. The transaction is expected to boost Sapiens’ profits as of Q3 2017, the company’s market filing said.

inflation in January (y/y, GUS)

2.7% FMCG

BIEDRONKA with €10 bln sales in 2016

ECONOMY

BANKRUPTCIES on the rise in January In January this year, 69 Polish companies were declared bankrupt, which is a 44 percent rise y/y, according to a report issued by Euler Hermes. The highest number of bankruptcies was recorded in the manufacturing sector – eighteen, up from eight last year.

According to Euler Hermes, this was caused by lack of investment and delays in tender procedures. This could impact the sector throughout the year as many construction companies, especially regional ones that work on road tenders, will have difficulties staying afloat.

FMCG

ŻYWIEC with PLN 272.6 mln profit in 2016 WSE-listed Żywiec (the Polish unit of Heineken) suffered an 8.6 percent y/y decrease in net profit to PLN 276.6 million.

Revenues declined by 23.6 percent y/y to PLN 2.39 billion due to the sale of distribution unit Distribev, the company said in a market filing. According to Żywiec CEO

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TRENDING STATS

Portuguese Jeronimo Martins, the operator of grocery chain Biedronka, has released its preliminary financial results for its Polish operations. Biedronka’s EBITDA stood at €707 million (10.3 percent increase y/y), while like-for-like sales rose by 9.5 percent.

Total sales increased by 6.3 percent y/y and amounted to €9.8 billion. The whole group’s sales reached €14.6 billion, representing a 6.5 percent increase y/y. At the end of 2016, Biedronka had 2,772 stores across Poland with plans to open in over a hundred new locations. Jeronimo Martin’s other Polish chain, Hebe chemist, posted €122 million in sales last year, while its losses stood at €15 million.

TELECOMS

ORANGE with PLN 1.9 bln net loss in Q4 WSE-listed telecom Orange Polska posted a PLN 1.9 billion net loss in Q4, due to a PLN 1.79 billion impairment. Adjusted EBITDA for the quarter was at PLN 640 million and PLN 3.16 billion for the whole year (10.1 percent drop). Revenue for 2016 fell to PLN 11.53 billion (a 2.6 percent drop). For this year, Orange expects a decline in adjusted EBITDA to PLN 2.8-3.0 billion. CAPEX will hold at around PLN 2 billion. “We will face continued pressure on our revenue,” CFO Maciej Nowohoński said.

Q4 2016 GDP growth – flash estimate (y/y, GUS)

4.6%

seasonally-adjusted industrial production increase in December (y/y, Eurostat)

4.5% increase in employment in January (y/y, GUS)

4.3%

wages growth in January (y/y, GUS)

4,277 PLN

average salary in the enterprise sector in January (GUS)

FINANCE

KRUK to continue with M&As, 10-20% growth predicted for 2017 – CEO WSE-listed debt collector Kruk is considering further takeovers, both on domestic and foreign markets, the company’s CEO Piotr

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In Review Krupa told the Polish Press Agency. “We are looking at more acquisitions on the German, Spanish, Italian and Polish markets.”

Krupa also expects this year’s net profit to grow by 10-20 percent. “History shows that we can grow annually by ‘high teens’ in percentage terms when it comes to net profit. We would like to maintain this trend in 2017,” he said.

company’s three North American mines and result from new lower estimates on copper prices, plus revised views to mine lifespans, production volumes, reserves, costs and ensuing reductions in planned lifetime CAPEX, management said. The expected life of Sierra Gorda is now estimated at 24 years instead of 40, while copper production is expected to reach 4.35 million metric tons instead of 10.75 million.

FINANCE

BANK PEKAO with better than expected Q4 results WSE-listed Bank Pekao edged out consensus expectations with a PLN 494.7 million net profit, down by 5 percent q/q. Analysts expected profits of PLN 479 million. For the whole of 2016, the company posted a PLN 2.28 billion profit (down 0.6 percent y/y), which according to the bank’s CEO Luigi Lovaglio, will be tough to beat this year.

FINANCE

POLISH BANKS with nearly PLN 14 bln in profits last year – KNF The Polish banking sector had PLN 13.91 billion in net profits last year, according to data released by the financial watchdog KNF, which is a 24.3 percent increase y/y.

Such a good result is mostly from the sales of Visa Europe to Visa Inc., from which Polish banks got some PLN 2 billion. Income from interest reached PLN 38.06 billion (7.6 percent growth) while profits from provisions fell by 5.4 percent to PLN 12.6 billion.

According to most experts, without the boost from Visa Europe sales and the latest regulations concerning the banking sector in Poland (banking tax, Swiss franc denominated housing loans, etc.) such a good result in 2017 will be impossible to beat or even maintain.

ITC

SII POLAND to increase employment by 400 this year MINING

KGHM with $1.242 bln in impairments against foreign assets WSE-listed silver and copper producer KGHM will write $1.242 billion in impairments including tax impact against foreign assets, including $1.03 billion for its Chilean mining operations in Sierra Gorda, the firm said in a market filing. Besides the Chilean copper mine, the impairments include the

IT and engineering services and solutions provider Sii Poland is planning to enlarge its team by nearly 400 professionals this year, the company said. It currently employs 2,700 experts in eight branches in Poland.

“The fastest growing markets in IT in the past year proved to be in Warsaw, Gdańsk, Wrocław and Kraków. In 2017 the company anticipates continued stable development, as evidenced by the constant availability of jobs and the large potential in such locations

as Katowice, Lublin, Łódź, and Poznań,” said the director of HR, Joanna Kucharska, as quoted in a press release.

ECONOMY

Poland offers 30-YEAR BONDS Poland’s finance ministry launched bonds maturing in 30 years on February 16 to meet investor demand for long-term debt.

“We had queries from several domestic investor groups interested in long-term debt, including an insurance company,” Deputy Minister Piotr Nowak said. The issue was part of the auction of several other bond series worth PLN 4-7 billion.

AUTOMOTIVE

Poland’s new CAR REGISTRATIONS rise 17.2% in January – SAMAR Poland’s new passenger car and van registrations rose by 17.2 percent y/y in January, which is the best result for that month in 16 years, a report from market researcher SAMAR showed. Month on month; however, that figure shrunk by 15.4 percent.

The y/y number has been growing for 22 consecutive months. “Currently, corporate buyers are the driving force of registrations.

They bought 27 percent more passenger cars in January than a year ago,” SAMAR said in a statement. Top-selling car models were the Skoda Fabia and Skoda Octavia, followed by the Opel Astra.

QUOTE “EU companies and citizens will start to reap the OF THE benefits the agreement offers as soon as possible...”

MONTH EU Commission President Jean-Claude Juncker said after the European Parliament voted in favor of the landmark CETA free trade deal, between the EU and Canada, with 408 votes for, 254 against and 33 abstentions.

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Commentary EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

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The government’s housing policy has ambitious goals, and the means to achieve them – Minister of Infrastructure and Development Andrzej Adamczyk explains

Never before has the smog problem in Poland received as much media coverage as in the winter of 2016/2017. Are Poles ready for respirator masks? – We asked Mateusz Jasiński from DragonMask

Is Poland’s energy policy reasonable?

Can the country afford to limit its coal dependency?

Former Deputy PM and Minister of Economy Janusz Steinhoff sheds light on Poland’s energy market

Millennials are undoubtedly more mobile, open to project work and interested in their employers’ social media presence – HR expert Ahu Yildirmaz explains labor market trends

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Lawyers’ views: Institutional apartment rental is gaining traction – Jan Wszołek from WKB law firm explains more. Patrycja Kaźmierczak from KRS Kancelaria details how the recent changes to construction law make real estate investments easier.

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Deputy Mayor of Warsaw Michał Olszewski highlights the city’s appeal to investors and comments on environmental law changes and gov’t plans to expand Warsaw’s metropolitan area

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WBJ COMMENTARY | OPINION Whether a planned change will be significant or insignificant is still decided by the designer. He or she is the one that makes the classification and in the case of an insignificant deviation, includes its description and Advocate, specialist the drawing concerning the deviation in the construcin construction law tion design. The construction supervision office; howand real estate trading law. Owner ever, still has the right to reject this classification. This of KRS Kancelaria is confirmed by the judgment of the Regional AdminLegal Office istrative Court, court file No. II SA/Gl 95/16: “Making the classification by the designer is not binding either for administrative architectural-construction bodies or for the construction supervision office. Incorrect acknowledgement by the designer that the deviation is insignificant, does not prevent the construction authorities from taking possible legal action, and any damages incurred as a result of the incorrect classification of deviation may become the basis for any civil law claims the investor may have against the designer.”

In case of any doubt that the designer may have THE AMENDMENT TO THE CONSTRUCTION LAW DATED JANUARY 1, 2017 towards the classification of deviation, it is advisable to consult an attorney specializing in construction law.

WAS DESIGNED TO IMPROVE THE LEGAL STATUS OF THE INVESTOR The legislator still considers the following deviations as significant: • Change in the scope of the plot or land development onducting a construction investment is such design a dynamic process that deviations from the • Change of the characteristic parameters of the strucbasic construction design are quite frequent. ture: volume, built-up area, height, length, width and Obtaining approval for a secondary design is the number of storeys a long process that could hinder the execution • Change in the provision of the necessary conditions of construction work. Investors or contracfor the use of the structure by disabled people tors, in order to be able to pursue the process • Changes in the intended use of the structure or its of investment in accordance with the schedule, often part request amendments, which can result in the accrual • Changes in the provisions of the local area developof penalties or even denial of a final permit for the ment plan or the zoning permit investment.

Significant deviation from the approved construcThe amendment to the construction law dated Janu- tion design or other conditions of the building permit ary 1, 2017 was designed to improve the legal status of is allowed only after a decision to change the building the investor. The provisions of the amendment clarify permit. Therefore, this is the same procedure as for doubts concerning the interpretation of significant and obtaining a building permit. In this case, the designer insignificant deviations from an approved construction must make a construction design covering the scope of design. the intended changes. Such a design must be submitAccording to the adopted amendments, alterations ted to the supervising office with an application for a such as a change of height, width or length of a structure change of the building permit. And, unfortunately, we that is not linear are no longer deemed significant devia- have to wait. tions from the construction design, if the deviation does not exceed 2 percent of the dimensions specified in the construction design and satisfies other conditions (e.g. it does not increase the scope of the impact area of the structure, is not within the range of deviations specified in the law and does not violate building regulations).

These conditions must be met jointly.

The new rules allow for more possibilities when it comes to an insignificant deviation. Until now, any change in height, width and length of the structure was considered a significant deviation. These parameters can now be changed, if other requirements referred to in article 36a section 5a (as indicated above) are met, without the necessity to change the building permit and therefore, without having to instigate the administrative procedure and suspend construction.

Patrycja Kaźmierczak

Change in the construction law

C

“In case of doubts that the designer may have towards the classification of deviation, it is advisable to consult an attorney specializing in construction law.”

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Apartment rental business – a developing trend

DESPITE POLES’ PREFERENCE TOWARDS OWNERSHIP, THE RENTAL MARKET IS GROWING. UNTIL RECENTLY THE MARKET WAS CORNERED BY INDIVIDUAL INVESTORS, BUT NOW INSTITUTIONAL FINANCIERS ARE GAINING GROUND

Jan Wszołek Advocate, Counsel Member of the Real Estate and Property Development Practice

WBK Wierciński, Kwieciński, Baehr

F

or years, owner-occupiers have dominated the Polish housing market, which is a key difference between Poland and other European countries, especially Western Europe, where rentals play a bigger role. Poles often decide to buy properties despite the burden of a long-term mortgage. This attitude arises from cultural and social factors, although it is also a consequence of the government’s housing policy. For years ownership has been preferred by the government and perceived by society as the most secure option for occupiers. However, more people argue that the housing policy of the government needs to be changed (in particular, diversified) as regards housing supply.

Institutional investors have recently been taking more interest in the housing rental segment, which used to be dominated by individual investors. The demand for rental housing has always existed, but institutions were drawn to investments in other market segments. Undoubtedly, one of the watershed moments for the rental housing market was the creation of the state-controlled Rental Housing Fund. The Fund’s goal is not only to build a rental housing portfolio, delivered to it by developers under the turn-key model, but also, indirectly, to change the way institutional landlords are perceived by society and on the real property market. WKB is proud to have provided legal services to the Fund and to support the creation of the rental housing portfolio, and pleased that it had an opportunity to bolster its experience in this newly-emerging market segment.

The pioneering activities of the Fund have attracted the attention of many investors and developers to the rental housing market. Investments in rental housing estates enable developers to diversify their business, and may improve and stabilize their cash flows. Investment funds also see opportunities and are now more and more interested in such ventures. Investors focusing on niche projects, such as modern halls of residence for students, have also appeared on the market. Meanwhile, the government has announced its “Apartment+” program, which aims to provide affordable rental housing with an option to buy in the long run. Nevertheless, while there is demonstrable interest on the supply-side, social attitudes remain a barrier. In a country where ownership was an obvious preference until recently, there is still some work required to convince people of the advantages of renting from an institution. Advantages such as mobility, the ability to change premises to suit current needs, the possibility to opt for individual layout and finishing, and access to necessary repair and maintenance services, to name a few.

Overall, it seems that this emerging market segment has interesting prospects, which should be supported by changes to the law, and especially by the liberalization of rental regulations, which ought to make this sector even more attractive to investors.

“In a country where ownership was an obvious preference until recently, there is still some work required to convince people of the advantages of renting from an institution.”

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SHUTTERSTOCK

WBJ COMMENTARY | INTERVIEW

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INTERVIEW BY BEATA SOCHA

A major undertaking

WBJ TALKED TO THE MINISTER OF INFRASTRUCTURE AND CONSTRUCTION ANDRZEJ ADAMCZYK ABOUT THE HOUSING MARKET IN POLAND, THE GOVERNMENT’S NATIONAL HOUSING PROGRAM, ITS GOALS AND TIMEFRAME. WE ALSO ASKED THE MINISTER HOW THE GOVERNMENT IS MAKING REAL ESTATE INVESTMENT EASIER FOR PRIVATE INDIVIDUALS, AS WELL AS HOW IT IS TACKLING THE SMOG ISSUE

WBJ:

Poland trails the rest of Europe in terms of the average number of apartments per 1,000 people (in 2014 the number stood at 364). What are the most urgent residential requirements that need to be met?

Andrzej Adamczyk: The biggest problem is the insufficient availability of apartments for people with a low or average income. The market offers apartments for sale that are targeted at relatively well-off people, who are also creditworthy. But the government’s role is to make an offer to those who are not creditworthy.

We need apartments for rent. We need to build an institutional market of apartments for rent and facilitate the delivery of social and municipal housing. We need to strive to improve the technical conditions in the apartments already available and first and foremost to make them more energy-efficient. Such actions not only improve the comfort of living, but also help save on electricity bills and help protect the environment.

In order to close the gap to the EU average, the government adopted the National Housing Program last September. It involves building 2.5 million apartments by 2030, both through the developer market and with state aid. How many units should be provided by the state?

The National Housing Program involves apartments built for rent but with a purchase option. It will build residential estates on areas owned by the State Treasury to meet the needs of society. Similarly, municipal and social housing will also respond to social needs. The planning and construction law and offering people a savings mechanism for housing purposes will also improve the situation of the commercial housing market, including the developer market. We need this complementary and flexible solution to meet the target.

Will the apartment blocks built between the 1960s and 1980s from pre-fabricated concrete be replaced with newer technology buildings?

All analyses indicate that apartments built with pre-fabricated concrete technology can be used for many years, provided they are properly maintained. What is necessary is a non-invasive way of checking if the structures binding the pre-fabricated elements, as well as other structural elements, are sound. One of the priorities of the National Housing Program is to support building apartments with all the instruments at our disposal.

Most likely, we will gradually withdraw some buildings from use, where renovation is not feasible for economic or technical reasons. We have estimated that this could be the case for approx. 300,000 apartments by 2030. Therefore, at least that many new units should be delivered through the National Housing Program.

The MdM subsidy program for apartments purchased from developers is all but finished. Will it be replaced with a new instrument?

Implementing the National Housing Program is the result of a change in

the philosophy of solving housing issues. We won’t encourage young people to become dependent on long-term mortgages. We want to offer them apartments for rent. At the same time, we want to encourage our citizens to save money to meet their housing needs. After the MdM program comes to an end in 2018, we are planning to launch our program that supports saving. This type of solution is aligned with the government Strategy for Responsible Development.

How many municipal apartments are needed? How much of this demand has already been met?

According to the Central Statistical Office, there were over 163,000 families on waiting lists for municipal housing, including nearly 94,000 waiting for social housing. Municipalities build 2,500 apartments each year, which shows how insufficiently the needs are met. One of the main goals of the National Housing Program is to provide all families in need of a government-subsidized apartment with a suitable offer by 2030.

Do you think that the municipal apartments that already exist could be used more efficiently?

We are working on it. We have prepared an amendment to the law protecting tenants as well as the apartment stocks of municipalities.

We propose solutions that will give municipalities more flexibility in managing apartments at their disposal. These proposals have received support and a favorable reception from local governments, because they will also allow them to increase the number of municipal apartments built.

We will support all initiatives for creating social apartments and municipal apartments, as well as apartments built by cooperatives. We are introducing legal changes that will tap the potential of development cooperatives to build new tenements.

The Apartment+ program, which is also part of the National Housing Program, is aimed at helping Poles make regular savings on so-called

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WBJ COMMENTARY | INTERVIEW

Individual Housing Accounts.

How exactly is it going to work and who is the target of this offer?

The offer, which will allow people to set aside money on Individual Housing Accounts, is our response to public demand. The support system for people saving money for a dwelling will help them acquire their own apartment or house, or help them construct one. People will be able to open Individual Housing Accounts in banks or cooperative financial institutions (SKOK). The savings, up to a certain amount, will not be subject to capital gains tax.

Additionally, people who meet certain income and family-status criteria will receive a bonus sum that will be added to their savings. People will be able to open their accounts starting in 2018 and the subsidy system will be launched in 2019.

cooperation of both the government and local administration. We stand a chance of winning only if we coordinate our actions to limit emissions in all sectors of the economy.

First and foremost, we need to limit the need to use transport by careful spatial planning and avoiding urban sprawl. Secondly, we want to limit the need of using private transport by providing a well-designed network of public transport. Local governments are responsible for that to a large degree. Spatial planning must support the development of cycling and walking – the environmentally friendly modes of transportation. We also have to consider possible social effects and not reduce the accessibility of suburban areas or limit mobility.

The government’s housing policy supports initiatives aimed at increasing the energy efficiency of homes, The Apartment+ program is also which account for 30 percent of all supposed to create downward energy consumption. On the one pressure on apartment prices on hand, new technical regulations the developer market. Do you impose lower emission limits on new think apartment prices are too buildings. On the other hand, the high in Poland? government is supporting thermoApartment prices are determined modernization and refurbishing of by the market and they vary greatly the existing housing stock. One of depending on location. I think the core instruments the Ministry of that they are too high compared Infrastructure and Construction has to people’s incomes. According to at its disposal is the Thermo-modthe diagnosis that was a part of the ernization and Refurbishing Fund, National Housing Program, the aver- which offers subsidies to cover a part age pay in most voivodship capitals of the costs of e.g. insulating buildcould cover no more than 0.5-0.65 ings or replacing old and inefficient sqm of a new apartment! One of the heaters. According to preliminary government’s goals is to improve this data, in 2016, the fund paid out indicator.

2,630 subsidies for a total of PLN 152 million for thermo-modernizaLocal authorities announced tion and refurbishment undertakalarmingly high levels of smog ings worth PLN 903 million. The many times throughout last winter, refurbished buildings house 70,000 in Warsaw, Kraków, Wrocław apartments. and in many other Polish cities.

One of the main causes of smog Since the beginning of the year is the poor quality of fuel used by there have been more amendments homeowners. Is the Ministry of to the construction law, which Construction involved in finding a make many procedures easier and solution to the smog problem? faster, including the reconstrucLimiting the amount of harmful tion of small utility buildings, emissions from transport is one approving detached houses for of the priorities of the Transport occupancy, building road exits Development Strategy, which we are etc. What is the purpose of these in the process of updating. Fighting changes? Will there be more? with pollution in cities requires the The proposed changes will undoubt-

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BUILDING STATS

2.5

million new apartments will be built by 2030

163,000 families are on waiting lists for municipal housing

.5 .65 to

sqm of an apartment is how much the average salary can buy in most voivodship capitals

edly make the investment process easier. An investor with a completed architectural design will be able to launch construction much sooner.

Obtaining a permit of occupancy in the case of small changes to the original design will also be easier. These changes were necessary because investors expect certainty and uniformity of the law and its application.

Our main goal is a thorough reform of the spatial planning and construction system that we are implementing in the planning and construction law. It’s a major undertaking. The draft bill was prepared over a period of nine months. We have completed consultations with other ministries and with the public.

We are now working on implementing the changes that were proposed during these consultations.

We are also preparing an amendment to the technical construction laws. The changes will make the regulations more transparent, eliminate outdated rules and make the current regulations more in line with advancements in technology. The amendment should come into force by the end of the year.

We also want to make changes to the technical construction regulations that will improve the safety of the structure, its use and the fire safety of buildings. To deal with the problem, we created an advisory team last year that comprises representatives of institutions which bring together all major utility providers representing the construction and the non-governmental sector.

“We won’t encourage young people to become dependent on long-term mortgages. We want to offer them apartments for rent.”

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WBJ COMMENTARY | ASK AN EXPERT

Understanding the mechanics of the labor market

EMPLOYERS REMAIN CONFIDENT THEY ARE COVERING ALL THE BASES IN ATTRACTING AND RETAINING TALENT. MEANWHILE, EMPLOYEES, PARTICULARLY THE MILLENNIAL GENERATION, ARE INCREASINGLY MOBILE, DEMANDING AND WELL INFORMED. WBJ TALKED TO AHU YILDIRMAZ, VICE PRESIDENT AND HEAD OF THE ADP RESEARCH INSTITUTE, ABOUT WORKER MOBILITY, GENERATIONAL CHANGES, PROJECT WORK AND THE ROLE OF SOCIAL MEDIA IN RECRUITMENT

Job market

LEGISLATIVE REFORMS TRY TO KEEP PACE WITH A RAPIDLY CHANGING ECONOMY, BUT THEY TEND TO FALL A FEW STEPS BEHIND. THE EMERGENCE AND DEVELOPMENT OF NEW TECHNOLOGIES IS

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GOT TALENT?

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INTERVIEW BY BEATA SOCHA

WBJ:

Most developed economies are tackling problems such as an ageing workforce and a talent shortage. How is CEE faring compared to other world regions?

Ahu Yildirmaz: Many companies across the world think they are succeeding at talent management.

Through our research, we know that globally, 74 percent of employers say they are a strong performer in terms of talent management.

European employers rate themselves much lower – only 67 percent say they are strong performers in this regard. Companies are focusing on career planning and performance management to deliver a return on investment in talent management in the future. In my opinion, Europe is consistent with this global view.

How are generational changes affecting the labor market? Where are these changes headed, particularly in Europe and in CEE? Younger workers tend to be more focused on career development.

Still, many in the world today (employers and employees) think everyone should always be looking for the next opportunity and that workers need to leave to advance and make more money. So, it is no surprise to me that younger workers are the most likely to be active in looking for a new position. Globally, 35 percent of Millennials say career advancement opportunities are the reason they choose to stay with their employer, compared to 23 percent of Baby Boomers – in Europe, 18 percent of Millennials say this, compared to 8 percent of Baby Boomers.

Additionally, 28 percent of European Millennials say that a lack of career development opportunities would make them leave their job, compared to 18 percent of Baby Boomers. Millennials are also most

likely to say they are actively searching for a new job. Some 33 percent of global Millennials say they are searching – in Europe this ratio is slightly lower (30 percent).

On the other hand, in terms of perceptions about what is actually affecting the job market, younger workers are closely aligned with older workers. Globally, workers see the economy (global and local) and the political environment as having the most significant impact on the job market. In Europe, workers are also very concerned about immigration and the automation of work.

How much do employees know these days about their potential employer when applying for a job?

Employees are certainly able to gather more information about potential employers than ever before. Using big data (such as from Glassdoor. com), organizations are producing lists like “Best companies for promotions,” and “Best companies for camaraderie.” Social media of course allows employees to connect with current employees for more information and to find out personal information about the people they might be working with. I think the top factors that influence taking a new job are career development, the work itself, work hours, company reputation and flexibility. In Europe, additional benefits packages also become important.

People these days often have more than one job, or several simultaneous projects they are working on.

What ways of working are going to be prevalent in the next few years?

Our latest research shows that people care about the actual work they do, working hours and flexibility, so we could surmise that if they can, people will gravitate towards

Thirty-eight percent said that companies are already exclusively hiring contract workers on a projectby-project basis, and an additional 50 percent said they will in the future

jobs that offer these elements.

From the first edition of the Evolution of Work study, we know that 85 percent of workers around the world think all work will be done from a mobile device. And we know that 49 percent think employees are already able to work from anywhere in the world. An additional 46 percent think this will happen in the future.

The Evolution of Work global study 2016 also predicted a shift to contract work – 38 percent said that companies are already exclusively hiring contract workers on a projectby-project basis, and an additional 50 percent said they will in the future.

This research also indicated that 44 percent think employees are already working where skills are needed, rather than remaining loyal to one employer, and an additional 49 percent thought this will happen in the future.

Has employee mobility changed over the past years?

We found that when it comes to a new job opportunity, workers tend to consider jobs that are similar to what they do now. Globally, only 16 percent said they would consider a job outside their industry (26 percent in Europe), 15 percent outside their geographic location (13 percent in Europe). Only in North America are Millennials the most likely to consider jobs outside their geographic location – close to 25 percent of them declared such willingness.

Would you say that CEE (and Poland in particular) is a “net exporter” of skilled employees?

We can say so. European employees are very highly skilled and they adapt faster to the evolving global workplace. In my opinion, in the near future we shouldn’t expect any significant changes in this respect.

Ahu Yildirmaz Ph.D., Vice President and Head of the ADP Research Institute. Dr. Yildirmaz earned a doctorate degree in Economics from the Graduate Center of the City University of New York and a bachelor’s degree in economics from Bosphorus University in Istanbul, Turkey.

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WBJ COMMENTARY | INTERVIEW

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INTERVIEW BY EWA BONIECKA

Polish energy challenges

JANUSZ STEINHOFF, DEPUTY PRIME MINISTER AND MINISTER OF ECONOMY IN JERZY BUZEK’S GOVERNMENT (1997-2001) AND CHAIRMAN OF THE BOARD OF THE NATIONAL CHAMBER OF COMMERCE, TALKED WITH WARSAW BUSINESS JOURNAL ABOUT THE CONDITION OF THE POLISH ENERGY INDUSTRY, THE CHALLENGES FACING THE COUNTRY IN RESHAPING ITS ENERGY MIX AND THE EU’S ENERGY POLICY

WBJ:

What state would you say the Polish energy sector is in?

Janusz Steinhoff: Energy self-sufficiency in our country compared to the majority of EU countries is quite high. That is because more than 85 percent of the energy in Poland is produced from solid fuel – hard and brown coal. The extraction level of those fuels fully covers the needs of the electro-energy sector. The problem with Polish electro-energy is the low efficiency of a significant number of manufacturing plants, which is linked to excessive CO2 emissions. That is why we have to implement a broad program of modernizing and developing subsectors that produce electrical energy. The program also concerns investing in subsectors for the distribution of energy and developing renewable energy, which should be around 15 percent of our energy mix by 2020.

Poland has the biggest mining industry in Europe and coal is our basic source of energy, while the European Union and the rest of the world are moving away from coal mining. How should we shape our energy strategy to

secure our energy independence and to be able to compete on international markets?

There is a debate in Poland right now about our energy strategy until 2020 and about the final shape of our future energy mix. There is a question about whether we should proceed with the plan to build a nuclear power plant, and about the pace at which a partial replacement of solid fuels with renewable energy should take place. In the near future, I do not expect a drop in coal use because a sudden elimination of coal from our energy mix is not possible or economically justifiable. The economy will ultimately determine when and how the replacement of coal takes place; i.e. the cost of obtaining coal, the costs imposed by existing laws and regulations on CO2 emissions and other environmental implications.

The Polish mining sector is going through a program of reconstruction now and the aim is to ensure the profitability of functioning mines.

According to the framework that has been worked out by the government and accepted by the European Commission, it will be necessary to

liquidate unprofitable mines. Our experience, and that of other EU countries show that it is a difficult process, particularly in terms of social reception.

I have personal experience in that matter from my time in Jerzy Buzek’s government in 1997-2001. We undertook the reorganization of the mining sector in a timeframe much shorter than the reforms that took place in the UK under Margaret Thatcher. In a period of four years, 23 mines were partly or completely dissolved in Poland, which resulted in redundancies of over 100,000. I would like to stress that unlike in the UK, our reforms did not result in social unrest. As a result of the program, our mining sector became profitable and later – once the market situation improved – it was able to generate high profits.

What is your view on building a nuclear plant in Poland?

I already mentioned the current plan concerning our energy policy until 2050. But I would refer now to an existing document that was approved by the previous government in 2009 that envisaged building two nuclear plants in Poland. At that time it was planned that in 20 years nearly 16 percent of the energy produced in Poland would come from nuclear sources. The problem with building a nuclear plant in Poland is linked with the very high costs of such an investment, and the catastrophe of the nuclear plant in Fukushima is still very fresh in our minds.

Our agreement with Gazprom ends in 2022, we have a working LPG terminal in Świnoujście and there are plans to build the Baltic Gas Pipeline. What is your opinion on ending our dependence on gas from Russia?

Let’s look at the facts. The government has announced that it does not intend to continue its 1993 agreement with Gazprom because of the conditions of delivery set when it was signed. Now, that agreement is unfavorable for our country due to economic reasons and the matter

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WBJ COMMENTARY | INTERVIEW

“I do not expect a drop in coal use because a sudden elimination of coal from our energy mix is not possible or economically justifiable.”

of security of delivery. Because of recent investments, we have the technical possibilities to import gas from countries other than Russia.

We have a gas terminal that can deliver 5-7.5 billion cubic meters of gas, we have established gas pipelines on our southern and western borders and the so-called virtual and physical reverse flow service at the Yamal pipeline [the virtual reverse flow allowed Poland to purchase gas from the west, but the gas had to be physically collected at the eastern border, whereas the physical reverse flow allows Poland to buy and collect gas from its western neighbor, thus increasing energy security – ed.]. And there are ongoing talks about returning to the project (it was abandoned in 2002) of connecting Poland with gas sources in the Norwegian shelf in the North Sea through Denmark as part of the Baltic Gas Pipeline. So I think that in the future the delivery of gas to Poland from Russia will have a different character; in the form of short-term agreements – of course if the conditions are competitive.

Do you believe in creating an energy union in the EU? I believe in the common sense of Europeans. I believe in creating an energy union because I think that it is in our common interests to build a consistent and competitive market for electricity and gas. In doing that, we can take care of energy security for the benefit of a competitive European economy, and therefore standards of living will increase.

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The government is currently promoting the development of the electricity power market in Poland. What does that mean for consumers?

It is one of the means of maintaining continuity in the delivery of electricity, because any break in that delivery brings enormous losses in the economy. It must be taken into consideration that using electric energy varies according to the seasons. It is necessary to keep reserves in production, and the so-called wholesale electricity market is also necessary. This system involves paying producers to keep a set amount of electricity in reserve, ready for delivery in times of need.

But citizens have to pay for it?

Yes, but it is the rational solution.

The associated costs are relatively small and incomparable to the losses connected with an energy shortage.

So is a rise in energy prices inevitable?

Yes, but the costs of energy are in its production – the environmental costs and those set in regulations. In Poland the costs of electric energy are burdened by taxes, the costs of CO2 emissions and the cost of renewable energy sources᾽participation in the energy mix.

How do you assess the realization of the EU’s climate and energy package?

In terms of global warming, there is no question that the protection of the environment is necessary. But it

is a global, and not a local problem that has to be dealt with through effective mechanisms approved by all countries in the world. Europe was at the forefront of climate action counting on the support of other countries. As a result of being leaders in those efforts when others have not followed, we have effectively limited the competition of our economy and lowered the living standards of our citizens. Europe is only responsible for 10 percent of CO2 emissions so we do not influence a significant reduction in CO2 on a global scale. At the same time, we are witness to the allocation of emissions to individual countries that are not subject to similar restrictions on emissions as we are in Europe. It is really sad.

But the agreement on climate change was not only signed by European countries, but by many others too.

Yes, and it gives us hope that we can maintain global solidarity in this matter and return to honest competition in the world economy. Competition has to be based on common standards in the protection of the environment. Unfortunately, the signals coming from the US are testing my optimism on that matter.

EDITOR’S NOTE A few days after the interview with Minister Steinhoff, the current Minister of Energy Krzysztof Tchórzewski announced that the project of building Poland’s first nuclear plant will be postponed. He said that traditional coal-powered plants are better in terms of energy effectiveness. The cost of building a nuclear plant would be about PLN 5-6 billion and he added that this money should be raised

by Polish energy holdings, because the investment in a nuclear plant could not be financed from the state budget.

Minister Tchórzewski added that it didn’t mean that Poland will not have a nuclear plant, but that there are other investment priorities in the energy sector.

INTERVIEW BY BEATA SOCHA

Dragon masks

AS POLISH CITIES BECOME INCREASINGLY POLLUTED, POLES ARE TAKING TO RESPIRATOR MASKS. WBJ TALKED TO MATEUSZ JASIŃSKI, FOUNDER AND OWNER OF DRAGONMASK, WHICH IS WELL POSITIONED TO TAKE ADVANTAGE OF THE EMERGING MARKET

WBJ:

This winter we᾽ve hardly had a week without a smog alert in at least one Polish city, not only in the largest agglomerations that have long been known to be polluted but also a number of smaller cities and towns across the country. Have you recorded an increased interest in respiration masks?

Mateusz Jasiński: Indeed, lately the problem of air pollution in Polish cities has received a lot of media attention.

Unfortunately, the problem has always existed but was barely noticed. In fact, it wasn’t until the Polish Smog Alert and its campaigns that people became aware of the problem and started looking for solutions. As awareness increased, so did the demand for products that protect people from the dangerous consequences of living in a polluted area. That’s why there is now greater demand for masks, particle absorbing plants and air purifiers.

When did you establish the company?

We’ve had smog masks in our offer for three years, but Dragon masks are a new project. Our company employs people who are physically active all year round and that is why we decided to create our own anti-smog product that would fit our criteria. We realized that for some people, wearing a mask is a necessity. That’s why, apart from a high-quality filter, a mask should be well fitted and aesthetic. During the winter months, it practically becomes part of your outfit.

Until recently, wearing a mask wasn’t a very common occurrence and people who wore them were subject to curious looks. That’s why we have created two mask models: the more subtle one for everyday use and the sporty one typically used by people who spend their time actively.

How are the casual and the sports masks different?

Who are they for?

Casual masks are intended for everyday use for people who are not particularly active, both children and adults.

They are made of cotton and have a single exhaust valve and a replaceable N99 filter. They are comfortable, subtle and ideal for commuting to and from work, school and for walks. The sports masks are made of neoprene and are designed for people who are more active. They have two exhaust valves and a replaceable N99 filter. You can do sports in them; however, it may take a little time before you get used to breathing through it – as is the case with any respirator mask. The choice of an anti-pollution mask is a very individual matter. It needs to fit your face perfectly to provide protection. We have plans to expand our collection each season with new models.

What exactly do these masks protect us from?

They protect us from many pollutants, especially PM10 and PM2.5 particles. These particles are so small they can easily get to our lungs. It is the valves and the filter that determine how effective a mask is. Our filters have been tested by the Central Institute for Labour Protection – National Research Institute, which ensures that our masks protect against 99 percent of PM1, PM2.5, PM4 and PM10 particles. Exhaust valves are also an important part of the design: you need to check how they are attached and the quality of the membrane so that air is sucked through the filter and not through a leaky valve.

A person wearing a mask is almost a daily occurrence in many Asian cities. Do you think that Poles’ perception of the issue will also evolve, and will wearing a mask become something natural?

It’s true that even last year a person wearing a mask on the street was an unusual sight. This winter, however, due to the wide media coverage, air pollution masks in the most polluted cities in Poland have become commonplace.

Seeing a person wearing one also gives us a stimulus to think about the threats that increasing pollution brings and perhaps it will make us realize that we are to a large degree responsible for the air quality around us.

What is the air quality of Polish cities compared to other European cities?

According to WHO reports, Poland is, unfortunately, high up on the list of the most polluted places. We alone are to blame for that. The awareness of the threat is growing, as is the will to effect change.

We all hope that the energy policy of our country will finally take into account the smog problem and provide real solutions. Do you think that the air quality will start to improve at some point?

We believe that the air quality will remain unchanged for the time being, but at some point it will start to gradually improve. It will take a long time though. In the meantime, we need to continue to demand action, e.g. remove bureaucracy and facilitate the installation of gas heating systems. There are plenty of houses in Poland that still use old coal-fired heaters. They are largely responsible for the air pollution. We need to continue to press the matter further and never stop fighting for our air quality.

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WBJ COMMENTARY | INTERVIEW

MICHAŁ OLSZEWSKI, THE DEPUTY MAYOR OF WARSAW, SPOKE WITH WBJ ABOUT ADMINISTRATIVE CHANGES IN WARSAW, INVESTMENTS IN THE CITY, CHANGES IN THE LAW LEADING TO UNCONTROLLED TREE FELLING AND WARSAW’S ASSETS BEING SHOWCASED AT THE INTERNATIONAL INVESTMENT FAIR MIPIM IN CANNES

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WBJ:

The ruling Law and Justice (PiS) party has proposed an administrative reform of Warsaw whereby it would be transformed into a single metropolitan area by engulfing 33 small towns and municipalities. What is your view on that?

Michał Olszewski: I think that the authors of that project did not aim to create a metropolitan area – and even if they did, it is a mistake to think that administrative law can create such a metropolis. The process of creating a metropolitan area anywhere in the world has always been a gradual process that takes many years. Metropolitan areas have developed from the bottom up and were never simply implemented by law. Nowadays, cities in Europe are developed by improving their inner infrastructure and not by territorial expansion.

Another thing is that we are living in a city that already has a very large territory. Its border is five times longer than that of Paris, while it has much fewer residents. Past experiences of creating metropolitan areas show that territorial expansion has always been connected with economic factors and was in the best interest of both residents and local business. Creating a metropolitan area artificially by law and ignoring the economic and social

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A beating heart on the Vistula

INTERVIEW BY EWA BONIECKA

reality and the aspirations of local governments will not bring good results.

There is also another issue to be considered. According to the European Charter on Local Government, which Poland has signed, such fundamental changes may be challenged by the Council of Europe. Many local governments have expressed their concern that we are already pushing the envelope with our legislation so much, that it may finally burst.

Warsaw has been the target of many property funds, with capital coming to the city from as far away as Asia and South Africa. How are the authorities trying to make Warsaw even more attractive for real estate investors?

The direction we took 10 years ago: investing in basic infrastructure, such as the subway and the road network, has proven to be successful and has made Warsaw very attractive for investors. Warsaw today is one of the most rapidly developing European cities and remains in the lead in Central and Eastern Europe.

We want to continue to make investments that could improve city transit. The largest portion of our city budget will be invested in public transport. Another important element in our investment policy is the protection of the environment, which includes, among other things, the construction of a waste incineration plant.

Warsaw is taking full advantage of its setting on the Vistula River. The Vistula waterfront is the largest recreational space in Warsaw. There are many attractive places being built for people who enjoy nature, sports and recreation. There is also emphasis on developing local centers in various parts of the city – places where residents can rest, meet, play, and make their everyday lives more enjoyable. Such local centers are also important for foreign investors who are looking for a profit but also for quality of life in various parts of the city and are interested in learning characteristic aspects of architecture, atmosphere and community.

How far along is the city hall in preparing spatial plans for investments in Warsaw?

We are now close to having 40 percent of spatial plans adopted for the entire city, even more in specific districts. For instance, in the Wola district, 70 percent of spatial plans are already adopted. As much as 60 percent of building permits are granted on the basis of spatial plans, [which facilitates the process significantly – ed.].

Obtaining a building permit in some districts (e.g. the southern part of the inner city) takes a long time, as investors also need to obtain a decision from the curator of historic buildings.

A few months ago, the Sejm passed a law that allowed the uncontrolled felling of trees on privately owned (but not only) land. It could lead to Warsaw losing its great asset of being regarded as a “green city.” How do you assess that situation?

This law and the way it was passed is outrageous. The fact that it was accepted without consultation with us

“Warsaw’s border is five times longer than that of Paris, while it has much fewer residents.”

and all local governments is scandalous. The Mayor of Warsaw has issued an appeal to the members of parliament to amend the law. But as we speak, trees are still being cut down all over the city. And the green environment in Warsaw is one of the great treasures that we managed to preserve in spite of the city’s troubled history. When the majority of European cities entered the period of dynamic development in the 1950s and 1960s some eliminated a lot of trees – Warsaw was still recovering from the disaster of war. We did not regulate the Vistula River and its left bank is naturally preserved, with such green treasures as the Mazowiecki National Park and the Kabaty forest. Our goal is to preserve all those natural treasures. We are now at such a stage of Warsaw’s development that we must have instruments that allow local governments to protect the green environment and regulate how many trees we are going to keep in the city. But the project of PiS members of the Sejm, which became law, convinced residents that they could cut down trees on their land. Unfortunately, many people do not realize that trees not only have environmental value but also contribute to cleaning the air in the city.

Between March 14-17, 23,000 real estate professionals from 90 countries will visit the international MIPIM fair. What is Warsaw showcasing in Cannes?

We will base Warsaw’s promotion on three important elements. First, we will present the image of Warsaw as a dynamic, beautiful city – one that is open to the international property market.

Secondly, we will present our various local firms.

Some of them are small and innovative companies, for instance MO61 Perfume Lab, founded by young people in 2014 on one of the most fashionable streets in Warsaw, where anyone can create their own custom fragrance.

The third important element of our plan for MIPIM is presenting concrete indicators for investors by circulating publications, and demonstrating various possibilities for investors operating on the international property market. I want to add that MIPIM is not a trade fair; business is rarely concluded there. It is a place where assets and visions of cities from all over the world are presented. Warsaw will be there to show off to international developers that it’s an exciting city worth investing in.

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POLISH SHARING ECONOMY ON THE RISE Instead of buying a car, you can borrow one from a neighbor.

Instead of looking for a hotel in Warsaw, rent a room from a local.

Instead of calling a taxi, get picked up by someone who has free space in their car. All this has never been so easy. Here comes the era of the sharing economy, which is not an insignificant piece of news, but a clear trend that is developing along with the mobile internet market and the increasing confidence of Polish society

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SHUTTERSTOCK

by Sergiusz Prokurat

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SHARING ECONOMY

T

he sharing economy consists of connecting people via Web platforms, allowing them to provide services or share their assets, resources, time, skills or capital without any transfer of property rights.

The essence of this phenomenon is that private individuals can share their assets – real estate, vehicles, media content – to compete with traditional entrepreneurs.

For example, in the US, users can rent cars from one another (Relayrides.com, Whipcar.com), share bicycles (Liquid.com), exchange things for a certain amount of time (SnapGoods.com and NeighborGoods.com), rent parking spaces (Parking Panda), take care of a pet in the absence of its owners (Dogvacay.com), or perform odd jobs (TaskRabbit.com). The craze

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associated with the sharing economy has now come to Poland. Poles acquire knowledge on Wikipedia, travel with BlaBlaCar and search for accommodation through couchsurfing.com. It is highly popular to rent urban bikes via Veturilo.

Other solutions based on this model are co-working, consisting of a shared rental of an office, Parking Panda, which allows renting one’s own backyard as a parking place, iParkomat helps find parking places, Feastly is used for ordering shared meals, or Walutomat, where you can exchange currency. There is also a social currency exchange platform, Trejdoo; Give Your Box, a social delivery service; Wolneauto.pl, a platform for renting cars; Wymiennik, a social service allowing

the exchange of goods, services or skills, where instead of money they use “alterkas,” a type of currency used to maintain balance between giving and taking.

All of these are the components of the sharing economy. Although the percentage of Poles who take advantage of what technology brings is slightly lower than the European average, it is still an increasingly popular phenomenon that has reached 20 percent of Polish internet users – as is shown by the “TNS Polska POLSKA.JEST.MOBI2015” report. The study conducted by the European Commission and TNS Poland proves it has already entered the lifestyles of 28 percent of the EU population and the sharing economy is identified as one of the most important

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“The sharing economy has many advantages, such as building social ties and trust between people.”

trends in the development of services and mobile technologies. This is confirmed by the report entitled “(Współ)dziel i rządź!”

[Share and conquer!], published in 2016

by PwC, which shows that approximately 40 percent of adult Poles have heard of sites where private individuals provide paid services, e.g. BlaBlaCar, Airbnb, Uber, JadeZabiore, or Polak Potrafi. No wonder that by 2025 the global value of this market may reach $335 billion. “I have noticed that people are now more keen to benefit from the sharing economy, because these are places where we can get what we are interested in through people-to-people cooperation and not in the form of a product or a service. I think it gives great opportunities. Just recently, via Jadezabiore, I sent a Christmas package to my mum, as the traditional post is congested again. If I go somewhere, it is faster and cheaper to use services such as Uber or BlaBlaCar,” said Aleksandra Jezierska, an enthusiast of new technologies, working in the IT Department at one of Warsaw’s banks.

The simplicity of the solution is that in most cases everything can be done directly with a mobile phone. The key aspect of the success of this idea is the development of the internet, especially its mobile solutions. An increasing number of internet users with different needs can easily find one another. Accessing the network with a mobile device allows one to communicate at any place or time and creates interesting opportunities.

A

ccording to the generally accepted definition, the sharing economy is focused mainly on warranting profits for both parties. The buying party will benefit from the offered service, e.g. inexpensive accommodation or package delivery. Firstly, according to the report of a research institute in Paris, IDDRI, it can save households 7 percent of their expenditure. Secondly, this model of earning is also an opportunity for service providers. “The sharing economy is a manifestation of ubiquitous digitization being of revolutionary importance. It is the initiation of the prosumer era – almost every consumer can become a producer by using commonly available platforms,” said Jan Fabisiak, SCCD think-tank expert. Transparency and confidence are in price. Therefore, the people responsible for managing platforms develop a system of reputation, in the form of a star rating

and commenting system.

The models of the sharing economy gain popularity among consumers by precisely answering their key needs, which is particularly important for the young generation, i.e. the need for a low price, the need for personalization and the need for convenience. This is made possible thanks to an effective combination of resources (such as a car, apartment or skills) with the demand for such services.

However, it is not that simple. Because it is one thing giving an occasional lift to random passengers, and another thing making money out of an all-year-round apartment rental. It is difficult to distinguish who is doing it on the principle of barter or community exchange of goods and who is doing it to make a profit.

In 2015 in Poland, huge controversies accompanied the arrival of the US-based Uber. The platform connects car drivers with people who want to use them as taxis. The company and the driver share the profits. In the US, Uber has proved to be competition for taxi drivers. In Poland the scale of the company’s operation is so far quite small but doubts are of similar pertinence, just as in the case of Airbnb.

Taxi drivers do not like the fact that a private person can take customers, while they had to get a paid license. Taxi drivers have gone as far as attacking Uber drivers with paint. The issue of legal liability remains an open question.

Opponents of the sharing economy highlight that it is a sphere located somewhere between a scantly regulated activity and using private ownership and a strictly controlled service activity. As a consequence, in the case of Airbnb or

Uber, it manifests itself as follows: these companies act as an intermediary for sharing private property – homes or cars – and make profit from it. While competing directly with hotels or taxis, they do not pay the same taxes (e.g. for employees) or insurance, and they do not need to comply with safety procedures. Many industries can feel the transformation and pressure made by the sharing economy, including the banking, hospitality and logistics sectors.

We do not always have to buy and own in order to use certain goods. Sometimes the best option is shared use. The sharing economy very often offers a more optimal use of resources, however, firms do not share their resources at all. When companies cease to be communities of users and transform into corporations, they become a threat for entrepreneurs subject to restrictions they do not have to comply with – which leads to unfair competition and a reduced inflow to the National Treasury, because all the inflow goes where the company is registered.

The problem has been spotted by Polish fiscal offices, which have identified Uber drivers and checked whether they have a registered business activity.

The sharing economy has many advantages, such as building social ties and trust between people. We sometimes, quite altruistically, hand over our time or money to someone we do not know – but whether it is safe or not to take a stranger in for a night or use Wikipedia, relying on the knowledge and earnestness of Wikipedians, depends on the honesty of other people. Poland has been waiting for such social innovation for too long.

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GOING WITH THE TRENDS POLAND HAS BEEN ONE OF THE WORLD’S TOP FURNITURE EXPORTERS FOR MANY YEARS. IT IS ALSO A WELL-KNOWN PRODUCER OF WINDOWS AND DOORS, ESPECIALLY ON EUROPEAN MARKETS. WITH CONDITIONS ON BOTH MARKETS FAVORABLE, THE INDUSTRIES ARE SET FOR FURTHER EXPANSION AND PREPARED TO FACE NEW CHALLENGES

By Kamila Wajszczuk

CHANGING HABITS

Polish furniture and home furnishing companies have a strong market to serve − even locally − as research shows that Poles are increasingly keen to buy. This is largely fueled by a growing real estate market, as well as trends transforming in line with the current generational exchange.

“The younger generation wants to follow the latest trends and fashion in furniture, consequently they are willing

to change furniture more often, the opposite of their parents, who would buy furniture for their whole lives. This is an opportunity for the manufacturers, especially for international players that bring their own collections to Poland.

The challenge for the furniture producers is the shift towards smaller furniture, which is cheaper and thus more affordable so it is exchanged more frequently,” said Elvio Andrade, research manager at Euromonitor International.

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GOING WITH THE TRENDS

LEADING POSITION Biggest window and door exporters in EU (2015) Source: ASM-Centrum Badań i Analiz Rynku

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country value (€ mln)

Poland Germany Italy Austria The Netherlands

recorded by home furnishings in 2015 was, however, a much better performance than the marginal decline observed over the previous five years. Nonetheless, faster value sales growth was partially inhibited by the popularity of cheaper products, the quality of which has gradually increased over the past five years.

CHALLENGES ABROAD

Of course, neither local nor international players depend solely on the local Polish market, instead they depend heavily on exports. Polish producers have long es-

share in total EU exports (%)

1 546.5 21.2 1 524.8 20.9 541.1 7.4 345.6 4.7 324.7 4.5

tablished their position on many foreign markets. Nothing is settled once and for all though and they may have to face new challenges in the coming years.

“The turbulent political events of 2016 − the UK with Brexit and just recently the US election have challenged important export markets without clear economic repercussions in the medium term, but if these political situations make Polish producers return to Poland, it could boost the local furniture market and help to compensate for the potential losses in exports,” Andrade added.

SHUTTERSTOCK

Total domestic retail value of the furniture industry reached PLN 16.07 billion in 2015, according to Euromonitor International data, and it is set to grow slightly to PLN 16.32 billion in 2016 and PLN 16.58 billion the following year. The company expects a value compound annual growth rate (CAGR) of 1 percent at constant 2015 prices over the next five years.

The research firm’s experts stress that 2015 was a difficult year for small Polish home furnishings manufacturers. Larger players continued to expand their distribution chains, offering their furniture not only in specialized branded stores, but also widening the range of other multibranded furniture stores. Major players have continuously expanded their product portfolios by offering new collections, reflecting consumers’ changing preferences.

Moreover, international players offering some significantly different styles and fashions have become increasingly popular, which leads to the diminishing power and ability of smaller domestic players.

The 1 percent current value growth

According to B+R Studio, an analytical company focused solely of the furniture sector, exports of furniture from Poland grew to €8.71 billion in 2015 compared to €8.08 billion a year earlier.

The figure is expected to reach as much as €9.68 billion in 2016 (representing 1.11 percent growth).

The company sees favorable prospects for Poland’s furniture exports. However, it expects the average value of furniture exported from Poland to decline slightly to €263 per kilogram compared to €267 in 2015.

Germany remains the biggest export market for Polish furniture, with a value of €3.24 billion in 2015 and a growth forecast of 1.1 percent. Similar growth is projected for sales to export market number two − the United Kingdom. In 2015 exports to the UK reached €726 million. Czech Republic is third on the list with €533 million in 2015 and an expected growth of 1.46 percent. The highest projected growth is for exports to Spain (eighth in the ranking), which are expected to rise by 1.51 percent from the €218 million recorded in 2015.

“It is worth noting that the data used for the forecast does not include the period when citizens of the United Kingdom voted to leave the European Union.

This means that the current growth rate of Polish furniture exports to the UK may slow down. The forecast for exports to the United Kingdom is €799 billion.

The uncertainty of the UK’s economic situation may contribute to consumers postponing furniture purchase decisions,” B+R Studio’s report read.

At the same time, exports of Polish furniture to Norway are expected to decline by 0.97 percent and a similar trend is forecast for sales to the US, which are predicted to drop by 0.98 percent.

An even more significant drop is expected for exports to Russia, mirroring the situation in many other sectors of the Polish economy. “The forecast for the value of Polish furniture exports to Russia in 2016 is €75 million. For comparison, it equaled €124 million in 2015. The situation may be a result of a devaluation of the ruble and the uncertain economic situation in Russia,” the report explained.

DOOR TO EXPANSION

Just like in home furnishings, Poland holds a leading position in the window

BRIGHT OUTLOOK Poland’s furniture exports Source: B+R Studio

year

value (bln)

2014 €8.08 2015 €8.71 2016 €9.68

growth y/y 1.14% 1.08% 1.11%

THE BUYERS Top export markets for Polish furniture (2015)

country

Germany United Kingdom Czech Republic France The Netherlands

value (mln) €3,244 €726 €533 €521 €443

and door sector. In 2015, the country held top position in Europe in terms of window and door exports, according to data compiled by ASM-Centrum Badań i Analiz Rynku, with a total value of €1.55 billion and a 21.2 percent share, the only serious competitor being Germany with €1.52 billion and a 20.9 percent share.

The sector differs from furniture and furnishings in that customers usually make their purchases once every few years. However, the current good prospects of the construction sector and the present trend for energy efficiency contribute to a positive outlook.

Total production volume in Poland amounted to 20.9 million windows and doors in 2015 and grew by 4.5 percent y/y. Total exports amounted to 9.7 million pieces, ASM data also showed.

Jacek Woźniak, a board member at the Polish Window and Door Association (PoiD) and head of sales at door manufacturing firm Porta KMI Poland, stressed that the situation of the sector in Poland is influenced by the condition of the domestic construction sector and the state of the world economy. “Right now, Poland is the leading window and door producer in Europe, especially when it comes to PVC products,” he said.

The future of the sector will depend both on domestic demand, stimulated by new construction and refurbishing

projects, and on exports. “There are several possible development scenarios, both pessimistic ones that assume a loss of stability in the world economy, and optimistic ones that assume growth acceleration stemming from the use of EU funds. It is now hard to say which one of them will come true, as we still lack information, for example, on the final form of Brexit,” the expert explained.

In his opinion, EU regulations on energy saving solutions in construction are bound to have a major impact on the sector’s performance. “To meet the regulations, investors will have to use modern windows and doors, with very good thermal insulation properties. However, if these investments are to be carried out, a support system is necessary,” he remarked.

EU funding from the so-called 2021 perspective is likely to help develop not only the production of standard windows and doors, but also garage doors and window blinds. Each of these elements contributes to the energy-saving qualities of a building.

Another trend is the increasing popularity of large glass elements in construction. Producers must work on fulfilling both customer expectations and energy-saving requirements.

The industry also needs to work on improving the quality of assembly work and on the education of specialized workers, Woźniak added.

Yet another difference between the two sectors is that while furniture produced in Poland is usually sold abroad under foreign brands, windows and doors are often marketed as Polish.

“Polish producers are not afraid to conquer European or world markets with products that combine high quality with a price that is favorable for investors abroad. Windows and doors marked ‘made in Poland’ may be found in buildings practically all over the world,” Woźniak added.

This is especially true for several major domestic companies, which entered foreign markets many years ago and are now strengthening their position. “The Polish window and door sector is now reaping the harvest of investments made several years ago, such as new production plants, modernized production units and the use of the most up-to-date technologies,” Woźniak said.

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TECH

SHOW ME YOUR SOCIAL NETWORK AND I’LL TELL YOU WHO YOU ARE...

BY DOMINIKA TKACZYK

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SOCIAL MEDIA

O SHUTTERSTOCK

ver the last decade social media has revolutionized the way people all over the world interact with each other, resulting in new types of data being produced every day at an unprecedented rate.

Interesting patterns found in our private networks of friends and the content we share and consume are used extensively by companies, governments and nonprofit organizations for decision making, targeted marketing and providing personalized customer experiences. What kind of information are we giving away through social media services and what are its positive and negative uses?

Some say that if you are not on Facebook, you don’t exist. An exaggeration perhaps, but indeed it is hard to imagine our everyday life without social media anymore. Services like Twitter and Instagram have quickly become an easily accessible channel for anyone to share information with the world, effectively taking over a large fraction of our social activity, including conversations with friends, meeting new people, dating, exchanging opinions and seeking advice.

One of the side effects of this revolution is millions of individuals leaving huge amounts of personal data on the internet. New types of data related to peoples’ interests, opinions and preferences, and their networks of friends and followers are widely available to data miners nowadays. The need to understand this data has brought brand new challenges and opportunities for inter-

CAREFUL ANALYSIS OF THE NETWORKS OF FOLLOWERS, THEIR POSTS AND COMMENTS CAN HELP TO IDENTIFY TRENDSETTERS AND EARLY ADOPTERS, WHICH ARE OFTEN THE BEST INDIVIDUALS TO TARGET WITH NEW PRODUCT CAMPAIGNS

disciplinary researchers, including, but not limited to data analysts, sociologists and psychologists. Social media data is also a rich source of valuable information for various businesses and public sectors institutions.

Due to the volume of available social media content, the only sensible way of processing it is with the use of intelligent automated algorithms, such as machine learning and natural language processing methods. Every day, automated agents harvest data about internet users and process it in order to create personal profiles of the individuals or obtain patterns from peoples’ opinions and browsing behavior.

PERSONAL TOUCH Equipped with the information we leave (intentionally or not) on the internet, machines are able to provide a personalized user experience for us. For example, Google’s search engine uses information about its users to refine the results of searches, especially when the search query is ambiguous. For example, searching for “ruby” (which can mean a programming language or a gemstone, among other things), a person subscribed to many mailing lists on software development will most likely get different results to a person who has shown interest in minerals. An interesting experiment is to compare the search results of our favorite queries between Google and DuckDuckGo.com, which is a search engine known for not storing or using any personal information about its users.

Similarly, personal information can be used for targeted marketing. The interests

and needs expressed by our online behavior, including the pages we visit or comments we make, are an important indicator of the types of products we might be interested in more than others.

Also, our demographic details such as age, sex or wealth can often be deduced by intelligent algorithms from the posts we leave on forums and blogs, or from our photos. This information can be used to assign users to customer segments and target them with specific ads, resulting in more profit compared to displaying ads at random.

Social media can also be mined for information about various future events such as concerts, sports events or conferences. This information is also very helpful in advertising specific hotels or flights to select groups of people.

Credit and insurance companies can also use the information mined from social media data to assess the credibility of potential customers, get more insight about their financial or health status and history. This information can then be used to decide about the types of products and their parameters that are offered to people.

An interesting research area is the analysis of how new information spreads on social networks. It is a pretty wellknown phenomenon that people differ a lot in how much they influence others and how willingly they try new products or services. Careful analysis of the networks of followers, their posts and comments can help to identify trendsetters and early adopters, which are often the best individuals to target with new product campaigns.

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SOCIAL MEDIA MINING

ALGORITHMS WILL ALSO ASSUME WE ARE SURROUNDED BY PEOPLE SIMILAR TO US, SO WE MIGHT WANT TO BE CAREFUL ABOUT ADDING RANDOM OR UNKNOWN PEOPLE TO OUR CIRCLES

THE WISDOM OF THE CROWD Apart from using social media data to populate databases of peoples’ personal profiles, another important research area is mining general trends or patterns for a larger group of people, ranging from groups distinguished with some demographic criteria, through populations of regions or countries to the entire population of internet users.

This can be viewed as an alternative form of market research or polling.

The posts, comments, tweets or reviews we leave on the internet contain useful information about our opinions on products, services, and even entire companies. Even though natural language is not so easily understood by machines, modern algorithms are able to grasp the opinions expressed in the text to some extent. With the right natural language processing tools, companies can automatically monitor people’s subjective responses on a large scale, or even extract more detailed information about exactly what people like or don’t like. This important feedback can be used for decision making related to selling or marketing strategies.

Social media is also a rich source of valuable information for law enforcement agencies and governments. They use social media data to mine information about breaking news events in real time; activist protests, general global trends and moods, and also political movements in order to prevent and fight crime and monitor social moods in general.

CONSULT AN EXPERT BEFORE USE There are important issues related to social media mining that should always be considered by all parties involved: companies

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using the results for decision making, data analysts and, last but not least, users sharing information about themselves online.

First of all, it should be noted that not all data is equally available to mining algorithms due to privacy settings. For example, anyone can access the vast majority of Twitter posts. Twitter went even further by launching a machine-friendly firehose to maximize the accessibility of its data to automated algorithms. On the other hand, Facebook content is often shared only between closed groups of people. It does not, however, mean that Facebook data is not mined at all. The difference is only related to who mines the data: the content in closed platforms is usually only mined by the owning companies, while public services such as Twitter, forums and blogs can be processed by virtually anyone with internet access.

Building people’s personal profiles based on their social media activity may also suffer from data decentralization.

Since different platforms have different themes and are used for different purposes, one can only gain a partial picture about a person from mining their activity from one database, while aggregating information from multiple sources results in a much richer profile. This requires automatic identification of the same users across multiple platforms, and ideally multiple devices used for browsing.

Analysts should also be very careful in drawing general conclusions from the information mined from social media. An average social media user is not an average person in general. As a result of working with a non-representative (biased) sample, the findings obtained from social media

data cannot be directly generalized to the entire population.

USER BEWARE Mining social media data can be viewed as beneficial not only for companies and agencies, but also for internet users, who get recommendations carefully tailored to their needs and personalized user experience.

However, there are particular risks related to sharing information on social media, and everyone should be aware of them.

First of all, we should remember that anything we put online can be mined, from the text and images left on public websites to private conversations and our connections to other people. Of course, in general, processing is not done by humans, but rather automated agents building personalized profiles of us or searching for general patterns. Even though algorithms are not judgmental, sometimes you might be better off keeping specific personal details off the internet.

We should also be aware that automated algorithms are in fact blind tools. They do not understand sarcasm or have sense of humor, so joking online about bankruptcy or drug abuse might not be a good idea. Algorithms will also assume we are surrounded by people similar to us, so we might want to be careful about adding random or unknown people to our circles.

Social media is a great and efficient way of communicating in the modern society, but it is a good idea to treat it with a touch of caution. After all, the information we share can be used by intelligent algorithms to influence decisions that might affect us one way or another. And we most likely won’t have a chance to voice our objections.

C Y B E R AT TAC KS

CYBER ARMS RACE

Companies spend millions on security software; meanwhile hackers are still on the winning side of the fight. Often, entrepreneurs don’t realize what they should be protecting and how to go about it. WBJ talked to Michał Kurek, director at the IT Risk Management Department of EY, about the most common cyber threats and the mistakes companies make. INTERVIEW BY BEATA SOCHA

WBJ: EY’s latest cybersecurity report indicates that companies in Poland are aware of the risks and are trying to invest in increasingly advanced security features against hackers. Who is winning in this “arms race”?

Michał Kurek: Unfortunately, I won’t hesitate in saying it’s the hackers. As much as 57 percent of organizations admitted to having experienced a significant security incident over the past year.

Companies are aware of the unfair fight they are in. Although most of them (53 percent) increased their spending on cybersecurity, as much as 86 percent admit their current security measures are insufficient. Given the scale and the complexity of today’s cyber threats, it seems that the situation won’t be changing any time soon.

SHUTTERSTOCK

What threats are considered the most dangerous for a company?

The respondents of our survey point to two main sources of threats: malware (52 percent) and phishing (51 percent) ­– that is tricking people into disclosing their personal data by means of spoofed emails. The largest percentage of companies (55 percent) stated that employees unaware of cyberthreats are the weakest link in the security of global organizations. The latest wave of attacks where hackers claimed to be the president of companies shows that these statistics are not far from the disconcerting reality.

What do hackers stand to gain through such attacks?

The main goal of cyberattacks is financial gain. It could be through stealing money from bank accounts or by tricking people into making bank transfers (45 percent of respondents), as well as by stealing intellectual property or other valuable data (42 percent of companies). Hackers also make millions these days by collecting

ransoms from companies attacked by malware that encodes their data and effectively blocks the company’s access to it.

What type of losses (loss of data, denying user access, bad PR) can hurt companies the most?

That depends on what the company does. That’s why it is so important that companies understand what their assets are and keep in mind how much they’re worth when designing a security system. It can be a surprisingly difficult task. After all, how do you measure the cost of damage to a firm’s reputation, which takes years to build and only seconds to ruin?

How are companies trying to protect themselves from cyber threats?

Companies are aware of the fact that they cannot be fully immune to hackers’ attacks. What they need is to implement effective processes of detecting cyberattacks and responding to them. Our study shows that there is still a lot to be done in both areas: 44 percent of companies don’t have dedicated teams for monitoring security and 42 percent have not prepared a communication strategy in case of a successful attack.

What mistakes do entrepreneurs make in the area of cybersecurity?

The biggest mistake is seeing security as the sum of money spent on it, and not how the funds are put to use. Consequently, companies keep buying new security solutions without backing them up with appropriate processes. That’s why it is important to invest in people in the first place. Tools should only be employed for support.

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WBJ PRESENTS

BROUGHT TO YOU BY T-MOBILE

AT T-MOBILE, WITH JUST ONE CALL, YOUR ISSUE IS SOLVED

How will T-Mobile attract entrepreneurs in 2017? What will be the key aspects for the brand?

In our new campaign addressed to T-Mobile’s business customers, Bogusław Linda sings “Don’t worry, be happy.” And that’s the primary message we want to send out to the market. Our goal is to remove all the worries that entrepreneurs may have regarding telecommunication services and resolve their issue at the very first contact. Our experiences with introducing this standard for small and medium-sized enterprises have been positive and now we want to implement this approach for all business customers. We strive to offer comprehensive support to entrepreneurs when it comes to software and device configuration. For this reason, we have launched remote IT support service. For a small fee, equivalent to two IT specialist consultations, customers may receive complete IT support for two years. And our support does not end there – our experts specialize in particular services, available to assist and advise entrepreneurs when they decide to expand their business and introduce new technological solutions.

What services can T-Mobile offer to entrepreneurs who want to expand their business?

First of all, our experts will provide advice on how "Our experiences with introducing this standard to select the right solutions and optimize costs for small and medium-sized enterprises have associated with implementing new technologies been positive and now we want to implement or IT solutions. It is very important to make the right choice when it comes to parameters such as this approach for all business customers," says connection quality and capacity, computing power Marta Szwakopf, B2B Marketing Director at Tor required storage space at a data center, as this will Mobile Polska allow entrepreneurs to avoid unnecessary expenses.

We always propose tailor-made solutions that fulfill entrepreneurs’ needs within their specific busiIn November 2015, T-Mobile promised small and medium-sized enterness sectors. With our own fiber-optic network, prises that nine out of ten issues would be solved with only one phone call. top-quality mobile network and data center, we Has that promise been fulfilled? stand out in the market by being able to provide In 2015, we carried out an in-depth analysis of the market and researched our customers with a comprehensive range of telecomcustomers’ expectations regarding their use of telecommunications services. munications services, such as car fleet monitorCustomers complained about their needs not being appreciated or taken seriing, virtual servers or cybersecurity. A full service ously by operators. By acknowledging their needs, we were able to change our package from just one vendor is very convenient approach both in the services being offered and to customer support. As part for entrepreneurs. Combined with our consultants’ of our campaign “Stali mają lepiej” [“Regular customers have it better”], we expert knowledge and top-quality customer care, provide entrepreneurs with deals that are always better than the last one, as well this option makes our offer unique. The most useas priority customer care. The key factor was in solving nine out of ten issues ful and interesting services that we provide to our reported by customers during the first phone call. A year later, I am pleased to customers include mobile advertising, helping reach say that we have fully delivered on our promise, as at the end of 2016 we were the appropriate target audience at the right time and successfully resolving nearly 99 percent of customer issues during the first place, and big data analysis, enabling a thorough contact call. We want to be known as the highest quality provider of customer analysis of data before making important business support, network and services as our distinguishing feature in the business decisions – e.g. the impact of a potential location for services market. an investment project in terms of its profitability.

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Section Partner

48

New office skyscrapers in Warsaw

BUILDING IN BRIEF (Cosmopolitan Twarda 4) - fully glazed facade allowing excellent view of Warsaw - consierge services - designed by renowned architect Helmut Jahn 44 storeys 160 meters tall 236 apartments

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Office fit-out trends

62

Investment transactions in warehouse property market

66

Institutional investors in rental housing sector

69

Real estate financing

UPCOMING

SHUTTERSTOCK (2)

A record 534 submissions have been made to this year's CEEQA Awards competition.

Legendary American singer Macy Gray will performing at the 2017 CEEQA Gala

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LOKALE IMMOBILIA | NEWS

DOM DEVELOPMENT to step up investment activity in 2017 Warsaw Stock Exchange-listed residential developer Dom Development will put a total of approximately 3,600 apartments in 23 projects on sale this year, provided that the market situation does not deteriorate, said Janusz Zalewski, vice president of the management board and financial director at the company. The developer is thus likely to reach the highest level of investment activity in its whole history in 2017, Zalewski noted. He added that the majority of the planned schemes would probably be launched in the first two quarters of the year. Dom Development, which is currently mostly active on the Warsaw market, wants to also focus on two major regional markets in 2017. The company is already present in Wrocław, but it intends to step up its development activity there in the coming months. Jaroslaw Szanajca, the management board president at the developer, said that Dom Development is now looking to acquire more land in the city. He added that in total the company wants to spend approximately PLN 300 million on the purchase of new sites across Poland in 2017. By the end of H1, the company expects to enter the Tri-City through the acquisition of part of the Euro Styl capital group, which is active in the residential market in the area.

RED expanding Nowa Papiernia project in Wrocław Developer RED Real Estate Development has launched construction work on the second phase of its Nowa Papiernia residential project in downtown Wrocław, with builder Dorbud acting as the general contractor for the scheme. In this phase of the development, called Ultra Nova, the company will develop two buildings with a total of 156 apartments (including a number of so-called ‘soft lofts’), which are scheduled to be completed in March next year. The first phase of the investment, which was completed in 2015, comprises 129 housing units. Apart from Wrocław, RED Real Estate Development is also present in the residential markets in Warsaw (project Alpha Park) and Poznań (project Red Park).

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“The sales in 2017 will be mainly driven by the behavior of customers buying homes for cash, as primary residence or as investments.

Both groups will probably continue to be very active on the market, while sales will be only slightly lower than in 2016.

The drop in demand from private buyers should be partly offset in the coming two years by purchases made by institutional investors” – Kazimierz Kirejczyk, managing partner, president of the board, at REAS.

PRESS MATERIAL

Residential

Logistics PANATTONI to develop Amazon logistics center in Silesia Industrial space developer Panattoni Europe will develop a 135,000-sqm logistics center in Sosnowiec for e-commerce company Amazon. The project will be the first investment of Amazon in Silesia and the fifth scheme developed by Panattoni Europe for this client. The development will sit on a 21-hectare plot of land located close to the Panattoni Park Sosnowiec I/II logistics parks and is scheduled for completion in October this year. The project is expected to feature a BREEAM certificate for energy efficiency and environmental performance. Panattoni Europe earlier developed Amazon logistics centers near Wrocław, near Poznań and in Czechia, with a fourth scheme now under construction near Szczecin. “The new investment by Amazon in Poland is important not only for us as the developer, but also for the whole region. Such a vast undertaking is bound to impact on the growth of Silesia.

This is already our fifth joint project, so at Panattoni Europe we are immensely proud to be able to satisfy the requirements of such an innovative and global player as Amazon,” said Robert Dobrzycki, the CEO at Panattoni Europe.

5.7 million sqm

the amount of industrial space leased in Central and Eastern Europe (Poland, Czechia, Hungary, Slovakia and Romania) in 2016 Source: Cushman & Wakefield

BRIEFS FM LOGISTIC COMPLETES EXPANSION PROJECT IN BŁONIE Logistics operator FM Logistic has added an additional 14,000 sqm to

its distribution center in Błonie, near Warsaw, to reach a total of 68,000 sqm. The expansion cost PLN 29 million. The recently delivered facility offers storage space for pharmaceutics, medical products and cosmetics. It can be divided into eight separate pharmaceutical warehouses, as per the new specifications of logistics firm DPD.

PROLOGIS TOUTS 2016 LEASING ACTIVITY IN POLAND, CEE Logistics space developer Prologis leased 1.8 million sqm of warehouse space in Central and Eastern Europe last year, which brought the occupancy level across the company’s portfolio in the region to a record-high 96.4 percent. In Poland, the developer signed lease agreements for a total of 900,000 sqm in 2016 and the occupancy level reached 94.8 percent. At the end of 2016, Prologis held 4.5 million sqm of logistics assets in CEE.

Investment market “The significant increase in Q4 2016 activity demonstrates that the CEE market is picking up momentum with growing depth and diversity.

2017 will be characterized by scarcity of stock across Europe relative to large equity allocations. Investors will follow occupier trends in search of sustainable value so CEE offices and logistics look particularly attractive with absorption exceeding supply and rents bottoming out in core locations” – James Chapman, partner CE, capital markets, Cushman & Wakefield

WARIMPEX sells five hotel assets in Poland Vienna and Warsaw Stock Exchange-listed developer and investor Warimpex has sold its stakes in a total of eight hotels in Czechia, Poland and Romania to the Thai developer and investor U City for a combined €180 million. Five Polish assets – andel’s by Vienna House Łódź, andel’s by Vienna House Kraków, Vienna House Easy Chopin Kraków, angelo by Vienna House Katowice (50-percent stake) and Vienna House Amber Baltic Międzyzdroje – are the subject of the transaction, which is expected to be finalized by summer this year. Warimpex CEO Franz Jurkowitsch said that the company is taking advantage of the increasing attractiveness of investments in hotel property in Central and Eastern Europe. He added that the transaction will allow Warimpex to focus on new projects that could potentially be developed in cooperation with U City, which has just launched its operations in the region. Poland is to remain one of the key markets for Warimpex. The company is currently developing new schemes in Łódź and Kraków, and is analyzing a number of other development opportunities in the country.

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LOKALE IMMOBILIA | NEWS

Retail BRIEFS

GLIWICE SHOPPING CENTER TO BE REVAMPED

PLATAN MALL IN ZABRZE TO BE EXTENDED The Platan shopping center in Zabrze is going to be extended and modernized later this year, with Rockcastle, the owner of the mall, planning to launch construction work on the project toward the end of Q2 or at the beginning of Q3. The company is now in the process of selecting the general contractor for the planned scheme, said Dominik Piwek, head of marketing and PR at Rockcastle Poland. In an investment valued at approximately €40 million, Platan will gain an additional 11,000 sqm of leasable space, which will allow the mall to accommodate around 30 new tenants. Opened for business in 2003, the Platan shopping center currently houses a total of almost 80 stores and points of service over its 31,000 sqm of space.

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TH REAL ESTATE and NEINVER secure financing for Poznań outlet center Acting on behalf of a joint venture set up by developer Neinver and financial services organization TIAA, real estate investment management company TH Real Estate and Neinver have secured a total of €344 million in bank financing for five outlet centers across Europe, including for Factory Poznań in Poland. In November last year, the joint venture signed a preliminary agreement for the acquisition of a portfolio of six outlet centers from the IRUS European Retail Property Fund, which is co-owned and managed by Neinver, for a total of more than €700 million. Three “The Style Outlets”branded outlet centers in Spain, two “The Style Outlets”-branded outlet centers in Italy and the Factory Poznań outlet center in Poland were the subjects of the transaction. The financing was granted to the three Spanish centers, the Polish center and one of the Italian centers. Factory Poznań, which offers 14,200 sqm of leasable space, obtained funds from a consortium led by ING Bank.

“This transaction, which might be the region’s largest real estate deal of the year, signifies yet another milestone for CPI Property Group that underscores our ability to deliver exceptional transactions within the current competitive environment” – Martin Němeček, the CEO of CPI Property Group on a framework agreement for the purchase of a portfolio of retail assets located in Czechia, Hungary, Poland and Romania from two funds managed by CBRE Global Investors.

PRESS MATERIAL

The CH Forum shopping center in downtown Gliwice, which this year celebrates its tenth anniversary, will soon be thoroughly modernized. The modernization project, prepared by the renowned Chapman Taylor architectural studio and scheduled for completion in the autumn, provides for extensive changes in the interior of the mall. With its 43,000 sqm of retail space and 140 tenants, CH Forum is one of the largest malls in Silesia. The shopping center is owned by DEKA Immobilien and managed by JLL.

Office Construction begins on VECTOR + office project in Warsaw Investor City Level has launched construction work on its Vector + office project in Warsaw. The scheme will be developed near the intersection of Al. Prymasa Tysiąclecia and ul. Obozowa in the north-western part of the fast-developing Wola district of the city and is scheduled for completion at the beginning of 2019. “Vector + waited for its time,” said Krzysztof Grucela, the president of the management board at City Level. He added that the construction of the building had been coordinated with the development of key transport infrastructure investments in Wola, including the second subway line. The Vector + project, which was designed by the JSK Architekci architectural studio, will comprise a total of 13,500 sqm of leasable space, including approximately 1,000 sqm of retail and service area. The scheme is being commercialized by Colliers International.

1.34 million sqm

the amount of office space leased in Poland in 2016 Source: JLL

“Interestingly, seven of the nine transactions for more than 10,000 sqm signed in Poland [in 2016] were for properties in regional cities. Once again demand was driven by companies from the modern business services sector, which accounted for 59 percent of all of the deals in markets outside of Warsaw” – Karol Patynowski, director of regional markets, JLL.

CONNECTING PEOPLE & PROPERTY, PERFECTLY. www.KnightFrank.com.pl Reklama_.indd 1

27.02.2017 14:03

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LOKALE IMMOBILIA | OFFICE

TOWERING AMBITIONS A number of new office skyscrapers are due to be completed in Warsaw in the coming years. With the Polish capital already seeing record-high supply volumes, will the market be able to absorb the new space?

BY ADAM ZDRODOWSKI

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PROJECTS GALORE

HB Reavis earlier this year officially announced the start of construction work on the Varso office project in downtown Warsaw. It will include what is to be the tallest building in Poland and one of the tallest office skyscrapers in Europe. The scheme will comprise a total of approximately 140,000 sqm of leasable space in three buildings, the tallest of which will stand 310 meters tall, including an 80-meter spire. The development, which is valued at around â‚Ź500 million, is scheduled for completion in 2020.

Also in the center of the Polish capital, Griffin Real Estate plans to develop an office tower with around 35,000 sqm of GLA. The company is now in the process of securing administrative permits and preparing the site for the planned high-rise. Yet it is in the Wola district of the city, with its proximity to the downtown, land availability and good public transport infrastructure, that the eagerness of developers to launch large-scale office investments has been the most pronounced.

Golub GetHouse and Mennica Polska are currently developing the Mennica Legacy Tower project in Wola which will comprise a total of around 65,000 sqm of office space in a 130-meter tower and an accompanying lower building. A 130-meter high-rise will also be part of the ongoing Spark scheme by Skanska Prop-

IMAGES COURTESY OF DEVELOPERS

T

he office property market in Warsaw has continued to see very intense development activity in recent quarters, with a record amount of space having been completed in the city in 2016. Judging by developers’ plans, annual supply volumes are set to stay at a high level in the coming years. In spite of recurrent worries about the market already being overheated, a number of skyscraper projects have been launched in the Polish capital in the last few months, and even more are in the pipeline. Experts argue that high-rise office schemes in central Warsaw still make good business sense.

erty Poland. The same company is to start building the skyscraper for its 84,000-sqm Generation Park complex near Rondo Daszyńskiego.

Also in the Rondo Daszyńskiego area Ghelamco Poland is now developing its The Warsaw HUB scheme, which will comprise three towers and deliver a total of approximately 113,000 sqm of space in late 2019. And on an adjacent plot, Karimpol is planning a 195-meter project called Skyliner, which will comprise more than 43,000 sqm of office space. The company is currently in the process of selecting the general contractor for the scheme, said Harald Jeschek, managing partner at the group.

RECORD SUPPLY

All of this is amid already record-high supply volumes and rising vacancy rates. Last year the supply of new office space in Warsaw was 65 percent higher than the annual average recorded in the city in the years 2011-2015, according to a recent report by Cushman & Wakefield. A total of more than 400,000 sqm of office area was completed in the Polish capital in 2016, with over 200,000 sqm located in central locations, the study said. Two office towers – Warsaw Spire A (59,000 sqm) and Q22 (46,400 sqm) – were added to the office stock in the city center in the period.

Demand was also high and amounted to more than 750,000 sqm.

Nevertheless, at the end of last year, the vacancy rate in central Warsaw reached 17.3 percent, a four-percentage point increase y/y, according to Cushman & Wakefield data. By comparison, the vacancy rate for the whole city amounted to 14.2 percent (up 2 pp y/y), while the vacancy rate for non-central locations stood at 12.9 percent (up 1.1 pp y/y). The developers of the new office towers planned in Warsaw do not seem to have been put off by this.

Buildings left to right: The Warsaw HUB, Spark, Mennica Legacy Tower, Varso and Skyliner

OPTIMISTIC DEVELOPERS

Stanislav Frnka, country CEO at HB Reavis Poland, argued that the location of the Varso project, in a place where three innercity Warsaw districts meet, distinguishes the scheme from the other under-construction and planned skyscraper developments in the Polish capital. In his opinion, the location in the very center of the city, just next to the main railway station in Warsaw, cannot be compared with locations in the Rondo Daszyńskiego area where many of the other office towers are to be developed.

Besides, Frnka pointed out that there has been talk of potential threats to the office market in Warsaw for a long time now, but so far those threats have not materialized.

“We are aware of the cyclical nature of the market and are prepared for its temporary fluctuations,” he said. According to Frnka, there are already tenants interested in taking up

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LOKALE IMMOBILIA | OFFICE even 10,000-20,000 sqm of office space in the Varso project. “We are sure that by the time construction work finishes in 2020, a considerable portion of the space in Varso will have been leased,” Frnka said.

Jeroen van der Toolen, the managing director of Ghelamco in Central and Eastern Europe, was equally optimistic. He claimed that the situation in the office market in Warsaw is still conducive to large investments. “However, these need to be well planned projects,” he said. He noted that the Warsaw market has been defined not only by record supply volumes, but also by record leasing volumes. According to van der Toolen, it is rather some of the older office buildings in Warsaw that have been under pressure and have been facing vacancy problems.

In his opinion, the large supply of new office space in downtown Warsaw is a natural thing as the area offers the best transport infrastructure. On the other hand, the city center has been expanding westward into the Wola district, which is a positive phenomenon, he said. Van der Toolen revealed that over 95 percent of the office space in Warsaw Spire has already been commercialized.

“It is an excellent result when we consider that only a few years ago hardly anyone believed that Warsaw was ready for such a big office investment,” he argued.

130 130 130 195 310

Meter Mennica Legacy Tower

LOW VACANCY

Meter Spark

Meter The Warsaw HUB

Meter Skyliner

Real estate market analysts seem to agree that there is still room for new office skyscrapers in the Polish capital. “There is business justification for the development of new office towers in Warsaw,” claimed Mateusz Polkowski, head of research and consultancy at JLL. “The low vacancy rate in the Rondo 1 building and the successful commercialization of new office towers – Q22 and Warsaw Spire – show that skyscraper projects attract tenant interest,” said Paweł Dobrowolski, a senior property negotiator in the office agency of CBRE. This is all despite the fact that due to design and technical challenges, the construction costs of office towers are much higher than those of regular office schemes. This, of course, translates into higher rents, noted Piotr Capiga, a negotiator in the office department of Cushman & Wakefield. Admittedly, in these projects the rents tend to vary greatly depending on the given floor. The rents for space on the top floors may be even 20 percent to 25 percent higher than rents for space on the lowest floors.

Capiga pointed to the relatively high occupancy levels in the existing office towers in Warsaw. “When one takes a closer look at the vacancy rates in high-rise buildings, one can easily see that these are significantly lower than the current market average of 14.2 percent,” he said. Arguably, changing tenant preferences are

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Meter Varso

one of the main reasons for this.

Prestige comes at a price, yet lease transactions of the last few years show that some of the new office towers in Warsaw have been able to attract tenants who previously leased space in non-central locations.

According to Polkowski, the profile of skyscraper tenants has changed – these are no longer only law firms and consultancies. While non-central locations are still a cheaper option, other firms also now see investment in a more expensive office as a way of gaining a market edge.

Dobrowolski argued that in the current market situation tenants are often able to move to more attractive locations and keep costs at a similar level. This is because the solutions employed in new buildings allow for a more efficient use of space.

Of course, even with more groups of tenants now generating demand in central Warsaw, the ability of the area to absorb new office projects is not unlimited. “You cannot deliver say, 300,000 sqm to the market in a year as this would result in the deterioration of market conditions,” Polkowski said. Office skyscraper projects are, by definition, large-scale schemes.

With the existing stock in Warsaw now at over 5 million sqm, each such building increases the supply by at least one percent, Capiga noted.

On the other hand, it still remains to be seen whether all of the announced skyscraper projects in Warsaw will be developed and, if they are, whether they will actually comprise office space. Some developers, at least, have been considering alternative options. According to information obtained by WBJ, the Roma Tower project that BBI Development intends to develop in the downtown of the Polish capital is now going to offer hotel space and rental apartments, rather than office space as was originally planned.

which should lead to maintaining the supply/demand balance.

The market is not overheated

WBJ talked to Harald Jeschek, managing partner at the Karimpol Group, about the office property market in Warsaw and the company’s planned Skyliner office skyscraper project in the Wola district of the city INTERVIEW BY ADAM ZDRODOWSKI

I am convinced, and it is already visible, that Wola and the area around Rondo Daszyńskiego will develop into a new part of the city center within the next few years

WBJ: Approximately 407,000 sqm of new office space was completed in Warsaw last year, which is the highest annual supply level to have been recorded in the city since 2000. Is the office market in the Polish capital not overheated at the moment?

Harald Jeschek: We have been faced with this question for a few years, but what we have witnessed is that developers generally build what is needed on the market. In Warsaw, business and modern services for business are developing dynamically, which shapes tenants’ demand. Primarily, this is the result of the natural expansion due to economic growth. Secondly, it is also caused by the need to replace older, lower standard offices with newer ones in better locations. If we look at a large number of B-class offices, we see the potential that can be realized among companies in search of more representative, higher standard buildings, which could also provide better efficiency of performance.

Even though supply levels are high, I believe we cannot talk about the overheating of the Warsaw office market at this point.

Will the recent intensive leasing activity in Warsaw continue this year?

Nobody is able to predict the shape of the economy as a whole. However, Warsaw’s business environment is well diversified in various economic sectors, many of them growth areas. With these prerequisites, Warsaw businesses will be able to profit further from a general positive development of the economy. On the supply side we can see a certain decrease in new projects,

The office map of Warsaw has been changing, with developers and tenants now increasingly shifting their attention to relatively new locations such as the Rondo Daszyńskiego area. In which office locations in Warsaw do you expect to see the most development activity in the near future?

There is a reason why tenants are now focusing on certain new locations. That’s because tenants now have an increased choice of office space. In such a situation tenants will move their businesses to a location that gives them the highest level of services, accessibility and general attractiveness. One such location is Rondo Daszyńskiego, which has benefitted from improved public transport due to the second metro line. This attracts development from all sectors of real estate, and it is this mix of office, retail and residential that makes the location attractive. I am convinced, and it is already visible, that Wola and the area around Rondo Daszyńskiego will develop into a new part of the city center within the next few years.

Your planned Skyliner project in Warsaw is one of a number of new high-rise office schemes planned for the rapidly developing Rondo Daszyńskiego area. Aren’t you afraid of the increasing competition in this part of the city?

As I said before, one of the key factors of Rondo Daszyńskiego as an office location is the mix of functions in the area. We are not speaking about a pure office district with people commuting from far away but an area that offers living, working and shopping within one part of the city. Such conditions will contribute to further growth in the area. This also means more competition of course, which is a driving factor.

When will the construction work on Skyliner be launched and when is the building due to be completed?

Construction has already started, with the 30-meterdeep outer walls and the external connections – work which has been completed and represents the first step of the investment. In the second step, we are currently holding a tender for the selection of the general contractor. This phase involves intensive planning work and optimization. As soon as the general contractor is selected, there will be a construction schedule in place and the delivery date of the building will be established.

Have you signed any tenants for this project yet?

We have seen a lot of interest from across the whole business spectrum. We are in the selection process for a number of interested parties with large space requirements that could become anchor tenants in Skyliner.

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LOKALE IMMOBILIA | OFFICE

SHHH, I’M WORKING! Originally envisioned by architects and designers as democratic, liberating and uniting, contemporary wall-free

offices seem to have veered from this idealistic vision. Is open space synonymous with spaciousness and flexibility, or is it only a cost-cutting exercise depriving employees of privacy and exposing them to constant noise and distraction?

BY KAROLINA PAPROS

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O

pen space offices in Poland might be regarded as a 21st century innovation since this trend came to Poland from Western Europe after the turn of the century. The concept was revolutionary in theory as its original intention was to improve workflow and communication among office workers, as well as to promote greater integration. “Open space became popular when international corporations entered the Polish market,” explained Marta Janiszek, head of Design at fit-out firm Interbiuro. “On the one hand they were following a trend, on the other, open space meant financial gain: an office divided into rooms requires more space than an open space for the same number of employees.”

Several years after they made their first appearance on the Polish market, open space offices evoke mixed feelings among employees. On the one hand, they admit that it has improved communication and integration. “However, as office space became more common, an increasing number of disadvantages became apparent: noise, problems with concentration, decreased efficiency and lack of privacy,” stated Janiszek.

OPPOSITE PAGE SHUTTERSTOCK; THIS PAGE COURTESY OF TETRIS

OPEN SPACE – EVIL INCARNATE? In 2009, Austrialian scientists confirmed that working in an open space decreased productivity, caused higher levels of stress, provoked conflict and increased staff turnover. It also impinged on people’s privacy, and instilled a feeling of insecurity. Stress is caused by fear that you are being monitored all the time, while frequent interuptions cause irritation and problems with concentration.

“It took me a long time to get over stress and insecurity is-

Stanley Black & Decker offices

by Tétris

sues when I was making a phone call. I could not bear that others were listening to my every word; judging my level of English or the way I speak with clients. At first, I locked myself in conference rooms but staying there for eight hours a day made no sense.

Now, I am more self-confident, but I still feel uncomfortable when I dial a client’s number,” confided Zofia, a sales rep in a Warsawbased corporation, who works directly with clients on the phone for the majority of her working hours.

Open space has also been known to be conducive to infection.

“I am not a big advocate of open space, especially in winter, when the flu spreads like wildfire. Last winter one colleague came to the office with a cold. It started an avalanche of sick leave – over the following week, eight out of ten members of my team were ill. In this respect, an open space is worse than public transport,” stated Michał, who works for an international company.

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LOKALE IMMOBILIA | OFFICE

The most recent research, conducted in 2016 by scientists in New Zealand reached similar conclusions. Their analysis concerned not only open-plan offices, but also the hot-desking policy, i.e. when multiple employees use a single desk or workstation during different time periods. It is perceived as particularly dehumanizing because it deprives employees of the possibility to individualize their workstation by keeping a few personal items around. Rachel L. Morrison, who was responsible for the study, reported that “in shared working spaces there were increases in ‘employee social liabilities;’ distractions, uncooperativeness, distrust and negative relationships. More surprisingly, both co-worker friendships and perceptions of supervisor support actually worsened.”

POLISH WAVE OF OPEN SPACE

However, according to a recent joint report by Skanska and JLL prepared under the patronage of ABSL, the general trend for offices in Poland is an open-space main floor with separate conference and meeting rooms. The majority of business services companies surveyed in the report follow exactly the same trend. Only 13 percent operate in offices with a cellular layout, i.e. rooms occupied by a few employees only.

Furthermore, over 70 percent of business services centers operating in Poland are planning to expand their office space in the next two years.

The report concludes that comfortably designed office buildings in a great location with a modern fit-out can be the company’s competitive advantage in attracting highly qualified employees. “In recent years, tenants have become increasingly aware of market forces: companies fight for highly specialized employees, who quite often

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Above two decide to accept a job offer factoring in not only the location of the office, but also the building it- photos: Philips self and the amenities the office offers,” Janiszek office by Reesco explained. “The dynamic Millennial generation, whose expectations of their workplace and work environment are much higher than before, is taking over the job market,” she added.

SOME LIKE IT HOT

More and more companies in Poland carefully weigh the pros and cons of open space.

Arkadiusz Rudzki, leasing and asset director at Skanska Property Poland, added: “We are noticing growing interest in modern working environments arranged in accordance with the concept of offices adjusted to the ‘activity based workplace’ philosophy. Approximately 10 percent of BPO/SSC centers questioned operate in a working environment that provides relaxation zones, creative working areas, hot-desking etc.

We believe that such solutions will continue to gain popularity in the future.”

Even though not universally liked, hot-desking is a great cost-cutting and space-saving strategy, since only around 70 percent of available desks are normally utilized. To make up for this potential inconvenience, employers offer other amenities to their employees, e.g. a games room or a bigger kitchen. “Open space is no longer synonymous with crammed offices where people struggle to find their own space. It is now a place of co-working, of exchanging ideas and teamwork dedicated to specific tasks,” explained Agnieszka Kawęcka, head of Business Development at fit-out company Reesco.

The younger Y generation, which is already the major age group in the workforce, seems particularly well suited to working in cleverly de-

signed open spaces. “The Y generation doesn’t need a fixed work station. They just need a comfortable place to put their laptop and a coffee mug, and good headphones. That’s why modern offices feature, besides rows of desks, swings, hammocks and even park benches,” added Kawęcka.

IT firms are known for having a laid-back atmosphere, which is often reflected by their working space. “IT firm Sage was even more radical with their design. We put additional work stations in the form of bikes that allow you to charge your laptop or your phone,” said Danuta Barańska, creative director at fit-out firm Tétris.

ESCAPE NOISE TO MAKE NOISE

Even in the most comfortable office there must be a place where a person can be alone, or in a small group. Companies increasingly turn to fit-out firms specializing in creating “tailor-made” offices, with just the right amount of desks, and a perfect balance between private and shared areas. “Calling a client, collecting necessary data to prepare a report, analyzing assigned tasks – these are some of the activities that require at least temporary ‘alienation.’ Currently, places that allow this look like little enclaves, similar to British phone booths in the middle of the crowded City,” Kawęcka added. Phone booths are definitely catching on. A Finnish start-up has come up with soundproof Office Phone Booths and meeting pods in order to “escape noise to make noise” as the company’s slogan says.

Protecting employees from noise seems to be one of the top concerns for companies. Mixing up quiet spots with bigger areas for collaborative tasks, brainstorming and teamwork is where modern offices seem to be headed. But there are other solutions worth looking into.

“Acoustics are very important in an open space, as evidenced by increasingly popular noise cancelling solutions, many of which are offered by Polish producers. Examples include noise blocking wall panels mounted both on walls and ceilings, as well as screens made from soft fabric, forming 360° cubicles,” Barańska explained.

There are also more technologically advanced innovations, such as the so-called Sound Masking System, which consists of speakers emitting radio waves at frequencies similar to human speech.

Above two photos: Opera Software’s Wrocław office

by Reesco, designed by mode:lina™.

The office is the winner of the Finest Interior Award Best Office Interior Frankfurt am Mein 2016

This technology effectively mutes surrounding voices, allowing us to work in peace, as well as limiting how much of what we say can be overheard and discerned by others. “It makes open spaces more friendly and comfortable for employees,” summarized Barańska.

HOW CHANGE IS MADE

Just as is the case with any change, even the best open space design takes some getting used to.

“Change management – how the adaptation process to the new setting is implemented – is particularly important. It’s not true that working culture will change on its own. Some people will accept the new environment, others will struggle with it,” stated Barańska.

Taking into consideration the growing costs of office space rental and the development of communication technology, traditional brick-and-mortar offices may be replaced by remote work or by a new generation of offices, such as those that offer a lot of greenery and attractive places that foster creative thinking. “A flexible working style, with employees spending only a part of their work time in the office, is the future. Offices will provide space conducive to the exchange of knowledge and experience,” said Janiszek.

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WBJ PRESENTS

BROUGHT TO YOU BY TÉTRIS

OPEN BOOK, OR A STRESS-FREE APPROACH TO THE NEW OFFICE INTERIOR FIT-OUT A new interior fit-out standard is entering the Polish market – the Open Book approach. Its aim is to eliminate understatements and underestimations that may result in additional costs incurred by organizations refurbishing their offices or opening new ones. Paweł Brodzik, the managing director of Tétris, tells us more.

The new offices of Stanley Black & Decker are a flagship project of the Open Book approach in Poland…

Our largest Open Book project last year was the JLL offices (13,700 sqm). However, the Stanley Black & Decker project was the first one. We were responsible for its entire scope in the Design&Build model. We completed the arrangement of three floors within three months, which was possible, in part, thanks to working on open books. Time was What does Open Book mean? It’s not a new concept... of the essence to our client, as was the design. Open In the fit-out business, where the cost assessment is difficult and labor-intenBook procedures allowed us to complete the project sive, this approach is very rare. Open Book means working on open books from under the estimated budget. the very start of the project. As a result, the client is informed about the prices of all products and services, they agree on a markup negotiated with the conHow was that possible? tractor, which is then added to each invoice for goods and services. Remunera- Thanks to our effective negotiations with suppliers. tion levels for individual staff members engaged in the project are frequently And our client, having access to detailed prices and negotiated. All this is to rule out any potential grey areas in the budget context, products, was able to choose between the desired and to effectively define scopes of responsibilities. materials and their less expensive replacements.

Thanks to the Open Book approach, everything was Which means that the contractor is responsible for what is specifically clear throughout the project. defined in the scope. What happens when the client has inadequately assessed his needs?

Is it an isolated case? Project costs are typically This is the secret of the new approach to Open Book, promoted by Tétris. underestimated by 10-20 percent, not vice-versa.

Working on open books refers to the scope negotiated in the framework of the With the Open Book approach, the issue of unGuaranteed Maximum Price. Speaking in plain language, we, as a contractor, derestimation does not exist. Tétris analysts make help our clients estimate the total cost of a project. This is much easier in the sure that the project valuation is realistic, as do the Design&Build model, which includes both the design and the actual works. client’s consultants. The strength of this solution lies We take responsibility for the final result – a high-quality space. Clients may in the reliability and transparency of actions. In one work directly with us (new Stanley Black & Decker offices) or employ external case our client awarded us 50 percent of the amount consultants as project managers (Sage offices). In both cases the completion of that we saved during our negotiations with supplithe project in the required scope and time frame is guaranteed. ers. With GMP, clients are fully protected.

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LOKALE IMMOBILIA | RETAIL

ROOM FOR MORE WBJ sat down with Paul

Kusmierz, the president at Master Management Group, to talk about the current situation in the retail property market, the under-construction Galeria Młociny shopping center in Warsaw and the company’s further development plans in Poland INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

IMAGES COURTESY OF DEVELOPER

Is retail still an attractive asset class compared to the other commercial asset classes?

Paul Kusmierz: Well, if you look at the past seven to ten years, retail has outperformed offices and logistics in Poland and CEE. Retail chains are still looking to expand and retail sales seem to be increasing. In Warsaw, the demand from tenants is huge and their willingness to pay the relatively high rents is very visible. In regional cities we have also been seeing improved sales and footfall in our malls. If you take the rising wealth in Poland into consideration, retail still makes sense, but of course it has to be in the right location. In some of the large cities, including in Poznań, there is probably already too much retail space.

However, in many secondary cities across Poland there is still room for more retail space, especially in retail parks that support the major existing shopping centers.

How can you gain an edge in a market that has been defined by growing competition?

I think it comes back to location. If you have the right location and you want to have a competitive scheme, you have to be dominant. When you enter a secondary or a tertiary city, you have to be the largest and most dominant in that particular location. This may mean different

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LOKALE IMMOBILIA | RETAIL things in various locations, but generally speaking a dominant shopping center usually features a cinema, a hypermarket and some of the major international fashion brands. The center also needs to be accessible, both by car and by public transport.

such potential tenant, but I do not want to reveal any further details until the actual lease agreement with that brand has been signed.

How have shopping centers in Poland changed in recent years?

Many of the existing shopping centers have been enlarged. Developers have been adding new stores, but also some of the main tenants have increased the amount of space they occupy in malls. So there has been take-up from current tenants, and we have also seen new brands enter Poland and those that are already present in Poland have expanded across the country. Shopping centers are now also increasingly becoming lifestyle centers – if you look at food courts, for example, they have expanded to accommodate more restaurants and offer much more choice.

Are you planning any other shopping centers in or outside Warsaw at the moment?

We are planning a 27,000-sqm shopping center in the Legionowo suburb of Warsaw, which will be accompanied by a 4,000-sqm retail park. We have already acquired the site and we are now waiting for the final building permit. We want to launch construction work on the project later this year.

Is it large or small cities that offer the most room for expansion at the moment?

There are still many opportunities in Warsaw – approximately 15 major retail projects are currently being planned in the city. When it comes to smaller cities, there is still some room for development in cities with populations of between 50,000 and 100,000, but this gap is now closing fast.

Where we have been seeing a lot of growth is secondary retail in secondary cities – retail parks with a few thousand sqm of leasable space, located adjacent to dominant shopping centers. We will continue to see a lot of development activity in this segment of the market in the coming years.

What is driving the huge demand for retail space in Warsaw?

It is a combination of two major factors. On the one hand, when you look at the purchasing power and the existing supply of retail space in Warsaw, the market is still much less saturated than the markets in some of the largest regional cities, including in Poznań and Wrocław. On the other hand, Warsaw keeps attracting new inhabitants, new residential developments are springing up across the city and it continues to grow. We talk to a lot of retailers and when we ask them where they would like to be, Warsaw is usually their first choice.

The Galeria Młociny project that you are developing in the Bielany district will be located relatively close to another scheme now under construction in northern Warsaw. Aren’t you afraid of competition from the other mall?

I think that the Vistula is a natural division and if you look at the catchment area on our side of the river, there are enough residential areas there to support our mall. Thousands of new apartments are now under construction in this part of Warsaw and even more are in the pipeline. This means tens of thousands of new inhabitants in the long term. We believe that the huge industrial area located north of our project will sooner or later be zoned for residential use and redeveloped. There is also enough differentiation between the two shopping centers. We aim to have the best fashion offering in Warsaw, but there will also be a major lifestyle component in the shopping center. Significantly, our mall will be located next to one of the largest transportation hubs in Warsaw so it will be well connected with the other parts of the city.

What is the current leasing level in the mall?

We have already leased more than 40,000 sqm, or approximately 55-60 percent of the total amount of the space available in Galeria Młociny, which is far beyond our previous projections for this stage of the development and leasing process. We want to secure international brands that are not yet present in Poland. We recently signed a letter of intent with one

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If you look at the past seven to ten years, retail has outperformed offices and logistics in Poland and CEE

LOKALE IMMOBILIA | LOGISTICS

WBJ sat down with Robert Dobrzycki, CEO of Panattoni Europe, to talk about the current trends in the warehouse property market in Poland and the company’s development plans in the country INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

A total of more than 3 million sqm of warehouse space was taken up in Poland in 2016, according to the latest report by JLL. Will this record-breaking leasing activity continue this year?

Robert Dobrzycki: In our opinion, the strong demand for warehouse space in Poland will continue for at least the next two to three years. The two main drivers of demand are the automotive sector and the e-commerce sector – in both cases the demand is mostly generated by companies from Western Europe, particularly Germany. Poland’s proximity to the strongest economy in Europe is a major asset here. Of course, in the long run, we also expect the e-commerce market in Poland to grow further and generate domestic demand for warehouse space.

Does the demand from German tenants mostly affect logistics markets in western Poland?

Yes, but in western Poland there have been problems with access to workforce for some time now, and

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The strong demand has translated into intense development activity in the sector – at the beginning of the year, a total of 50 projects were under construction across the country, according to JLL. Are speculative schemes back in the market?

Developers today are indeed more willing to build on a speculative basis than a few years ago. We are also developing speculative space in a number of locations in Poland; however, we are not talking about whole speculative projects here, but rather about parts of buildings that are developed on a speculative basis along with the space in the buildings that has been preleased. This allows developers to minimize risks – it is worth pointing out that despite the large supply of new space, the vacancy rates have not gone up.

Investors have increasingly been interested in logistics assets in Poland – the transaction volume recorded in 2016 was actually the highest in the history of the Polish market. Do you see prospects for further growth here?

Yes, I think the volumes will keep rising. The warehouse property market now seems to have the best growth prospects of all the real estate sectors in Poland.

Investors see the already significant and constantly growing demand for warehouse space that is being generated by the e-commerce sector, partly at the expense of the retail property market, and act accordingly. We see a lot of investor interest in warehouse buildings, which comes not only from traditional directions, but also from completely new markets.

You have mentioned logistics locations in eastern Poland. Panattoni has launched new projects in the Lublin and Rzeszów areas in recent years – has this proved to be a successful move?

Yes, absolutely. Potential tenants view the locations very positively, both in terms of the access to labor force and their connections with other parts of the country. In Rzeszów, new transport infrastructure is already in place, while in Lublin it will be completed soon. These are very promising markets with a lot of growth potential. Białystok will be the next expansion target for us in eastern Poland – we are already talking to landowners in the area and to potential clients who may be interested in leasing warehouse space there.

What about emerging logistics locations in other parts of Poland?

IMAGES COURTESY OF PANNATONI

TIME FOR SECONDARY LOCATIONS

German customers have been venturing farther and farther east into locations in central and even eastern Poland. The development of new transport infrastructure in Poland in recent years means that distance is not a major issue for those customers any more – what counts is the proximity to labor markets. Besides, some German tenants plan to service not only German, but also Polish customers from their logistics centers in Poland in the future.

Our development strategy for this year generally envisions increased focus on some of the secondary cities across Poland – we believe that locations such as Rzeszów, Lublin, Białystok, Toruń, Bydgoszcz, Szczecin, Kielce, Olsztyn, Opole and Zielona Góra have the potential to accommodate new logistics space and this is where we want to be very active in the coming years.

The good thing about logistics is that, unlike retail, it does not need to depend on local demand, but rather on the local workforce.

In which of the established logistics locations in Poland do you want to grow this year?

We will continue to grow in all the largest logistics markets across the country – in Silesia, Wrocław, Poznań, Warsaw and central Poland. We will be developing new buildings within our existing logistics parks in these locations – in each of these markets we are able to offer new space to potential tenants. We expect that

large projects tailored to the needs of e-commerce companies will account for a significant portion of our development activity this year – we are currently talking to a number of companies from this sector.

In our opinion, the strong demand for warehouse space in Poland will continue for at least the next two to three years

Urban logistics has become a much-discussed issue in warehouse property markets globally. Would you be interested in the development of warehouse projects located within the limits of some of the largest Polish cities?

Yes, we want to grow in this sector too, even if these kinds of projects are a bit more difficult to develop than regular out-of-city schemes when it comes to securing land and building permits. There is more pressure on land prices in large cities and a logistics developer often has to compete for sites with a residential, office or retail developer. However, there is a lot of tenant demand for urban logistics space, and we are already looking for land for such projects in cities, including Warsaw.

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LOKALE IMMOBILIA | LOGISTICS

HUNTING FOR BOXES Logistics assets in Poland have become increasingly attractive to international real estate investors. The transaction

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he warehouse property market in Poland put up a record performance last year, with an unprecedented level of leasing activity having been recorded in the period. According to JLL data, lease agreements for a total of more than 3 million sqm were signed in the country in 2016.

The robust condition of the sector has led investors to start looking at logistics assets. Several large investment transactions, including portfolio deals, were closed last year and more acquisitions are now on the cards.

RECORD VOLUMES

Increased investor interest in the warehouse property sector in Poland has been visible since 2012, but 2016 proved to be a record year in terms of investment volumes, which were the highest in the history of the Polish market. According to Colliers International data, the combined value of the investment transactions signed in the sector last year amounted to almost €0.8 billion, thus accounting for around 17 percent of the total real estate investment volume of €4.6 billion.

By comparison, in 2014 and 2015 the investment volumes recorded in the warehouse property market in the country stood at €706 million and €467 million respec-

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tively. A total of 35 warehouse buildings with a combined area of 1.335 million sqm were sold in 15 investment deals in Poland last year, said Marcin Mędrzecki, associate director, investment services at Colliers International.

Two major portfolio transactions accounted for more than half of the investment volume recorded in the warehouse property sector in Poland in 2016. The P3 Logistic Parks portfolio was bought by Singapore’s sovereign wealth fund GIC for an estimated €285 million. CBRE Global Investors (CBRE GI) acquired the Hillwood portfolio for approximately €155 million. Other recent large deals in the sector included GLL’s purchase of two Amazon warehouses, each featuring over 100,000 sqm, in 20152016 for a total of approximately €140 million.

Michał Ćwikliński, the managing director and head of the investment department at Savills, said that much of the investment activity in the sector has been generated by specialized funds, which have major portfolios of warehouse assets and dedicated teams tasked with managing warehouse space. The most active markets, including Warsaw, Silesia, Wrocław, Poznań and central Poland have been attracting the most investor attention. Investors active in the warehouse property sector have been looking for acquisitions of at least €20 million, Ćwikliński said.

IMAGE COURTESY OF DEVELOPER

volume in the warehouse property sector in the country reached record levels last year BY ADAM ZDRODOWSKI

moving their service centers and production facilities to Poland, Worboys noted. “Warehouses occupied by longterm tenants with good agreements are increasingly popular with investors. And there are signs that this high level of demand for warehouse space will continue, and perhaps will even grow in the coming months,” he said.

According to Angeli, the pricing of Polish logistics assets is at a competitive level too, especially when compared to locations in Western Europe or even in North America, from where many investors originate.

“We see a very favorable value proposition for the Polish market,” he said. Last but not least, funds’ diversification strategies have also helped drive the demand. Investors acquire warehouse buildings as part of the process of balancing their commercial real estate portfolios, said Paweł Sapek, senior vice president and country manager at Prologis in Poland.

POSITIVE PROSPECTS

ATTRACTIVE ASSETS

For a number of reasons, including the nature of the product, warehouses have become a highly attractive asset class for international real estate investors. Warehouses are a “simple” investment product, compared to office and retail property, argued Ćwikliński. For instance, warehouse buildings are often leased out to one tenant for a long period of time. Consequently, logistics assets tend to offer relatively high yields to investors. “Well located, high-quality warehouses guarantee long-term, stable rental revenues,” said Mędrzecki.

“We are big believers in the Polish logistics story,” said Andrew Angeli, a senior director, EMEA strategy and research at CBRE GI. He pointed to the major infrastructure investment in Poland in recent years, and to the improved connections with the rest of the region and with Germany.

The domestic consumer market in the country remains attractive. “Logistics operators are keenly aware of this and are expanding their operations accordingly. So the demand side of the equation is undeniably favorable,” Angeli said.

Ian Worboys, CEO at P3 Logistic Parks, was of a similar opinion: he said that investors are interested in warehouses because occupier demand is high and growing. Increasing numbers of foreign companies are now

The increased investor interest in logistics assets is expected to continue this year. According to a recent report

by JLL, a number of portfolio transactions are now being negotiated in the sector, which allows one to hope that 2017 could end with another record transaction volume.

JLL experts noted in the study that in the last five years the value of investment transactions in the warehouse property market has tripled compared to the volumes recorded in 2004-2011. The market has become more liquid and thus also more attractive to investment funds. Ćwikliński argued that “the prospects for this year are as positive as last year.” He pointed to increased activity of new investors coming from markets including Austria, France, Italy, the US, South Africa, Malaysia and China, which also translates into interest in the warehouse market. “With occupier demand reaching record highs, warehouses have become more and more attractive to institutional investors. Everything indicates that this trend will continue and may even increase. We are certainly very optimistic and can see no signs of the market slowing down,” said Worboys.

All of this despite the fact that the shortage of prime logistics product has been a major problem for some time now. “A theme across Europe at the moment, which is certainly relevant in Poland, is the limited availability of welllocated modern logistics units,” Angeli said. “If you hold such product, there is little incentive to sell as there are few opportunities to recycle capital. The result is historically strong pricing being achieved for the best assets. We suspect this will endure over the coming years,” he added.

Yet, as the stock grows and new locations emerge, new investment opportunities will keep appearing. According to John Palmer, director, industrial investments and valuations, CEE at BNP Paribas Real Estate Poland, smaller markets will also benefit from the warehouse boom. The high development activity in markets including Szczecin, Lublin, Rzeszów, Toruń and Bydgoszcz could attract investor attention to those locations. The Polish warehouse property market remains attractive to investors because of its scale, dynamics and growth potential, said Palmer.

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LOKALE IMMOBILIA | RESIDENTIAL

AWBJGROWING NEWCOMER talked to Tomasz Konarski, the president of the management board at YIT Development, about the residential property market in Poland and the company᾽s investment plans in the country

WBJ:

Q4 2016 saw the best quarterly apartment sales results in the history of the Polish market according to REAS data. Do you think developers will manage to achieve equally as good sales in the coming months?

Tomasz Konarski: In its Q4 report, REAS stated that such high apartment sales may be difficult to achieve in the long term and I agree with this opinion.

Two major factors may negatively affect the demand for new apartments in Poland in the coming months. On the one hand, the subsidies granted within the government᾽s MdM program, which now account for between 15 and 30 percent of sales, depending on location, will soon no longer be available. On the other hand, there are signs that inflation and, consequently interest rates, are going to rise, which would make mortgages more expensive and residential property relatively less attractive for those buying apartments for investment purposes. Little will probably change in 2017, but I expect demand to slow down in the subsequent years.

Have investors been playing a major role in the market in recent months?

Definitely. At the moment, there are not many viable alternatives to real estate when it comes to allocating capital, and the property market is gener-

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ally perceived as stable and offering relatively safe investment opportunities. We have seen individual investors buy several (usually small and easily saleable) apartments in order to build rental apartment portfolios. There have also been purchases of larger packages of apartments made by institutional investors. We know of international funds that are interested in investing in the residential market in Poland. However, there is currently not much product available in the market for such investors – residential developers generally prefer to sell their apartments to individual buyers as this allows them to achieve higher profit margins.

With the market likely to be adversely affected by the above-mentioned factors within the next few years, do you expect developers to become more cautious with regard to launching new schemes?

IMAGES COURTESY OF DEVELOPER

INTERVIEW BY ADAM ZDRODOWSKI

I do not think that the potential threats will automatically translate into much lower development activity. The experience of the last few years shows that developers in Poland have been very flexible when it comes to reacting to changing demand. The market may be defined by a very large supply and very high demand, but it has also been very well balanced. It is worth pointing out that despite the extremely high apartment sales levels, apartment prices in Poland have been quite stable of late.

The prices of residential sites have gone up in recent years...

That is true, but it has happened at the expense of developers᾽margins and has not translated into an increase in apartment prices. We also need to say honestly that the standard of new projects has generally decreased since the pre-crisis years. Developers now build cheaper schemes in the same locations compared to ten years ago – it suffices to look at Warsaw᾽s Miasteczko Wilanów neighborhood and compare the prices and the architecture of the new projects there with the prices and the architecture of the projects built in the area a decade ago.

YIT, which has long been a major developer in its home market of Finland as well as in Russia and the Baltic countries, is a relatively new market player in Poland. Did you find our market, which you entered in 2015, very different from the other markets you are active in?

Indeed, there are some major differences between Poland and some of the other markets we are present in. Take the standard of newly built apartments for instance. Unlike in Poland, in most of the countries of Northern, Central and Eastern Europe new apartments that developers turn over to buyers feature much more than just white plastered walls – the internal doors and the tiles usually need to be in place too. Another thing is the construction technology employed by developers. In Finland, using prefabricated materials is the market standard.

In Poland, by contrast, where prefabricated building materials still bring about negative associations with the poor-quality apartment blocks of the communist era, the technology is virtually unknown. The first modern residential project of this kind is now being developed in Warsaw.

Mokotów district of Warsaw. What kind of scale of operations do you want to achieve in the country in the long run?

We want to be one of the leading developers in Warsaw, which means an annual apartment sales level of more than 1,000 units. Of course, in order to achieve this we need to have a sufficient number of projects in our portfolio. In 2017, we will complete the first phase of the three-phase Nordic Mokotów project and launch construction work on the second phase of the scheme. We have recently acquired land for our second residential development in Warsaw – Aroma Park – which will be located in the Białołęka district. The investment will probably be developed in four phases – we want to start developing the first phase later this year. As for future projects, we are constantly looking for new sites but have not signed any agreements yet. There is a lot of competition in the development land market in Poland and it is not that easy to acquire an attractive residential site at a reasonable price.

Are you planning to expand outside of Warsaw?

We are considering entering some of the larger regional cities in Poland; however, we have not made any concrete decisions here yet. For example, we have been looking at Gdańsk, but so far we have not acquired any sites there.

We want to be one of the leading developers in Warsaw, which means an annual apartment sales level of more than 1,000 units

How do you react to such regional market differences?

We tend to adapt to the specific expectations of the buyers in the particular markets in which we are active. Transplanting the solutions that proved successful in one market onto every other market that you enter does not always work.

You are currently developing your first residential project in Poland which is located in the

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LOKALE IMMOBILIA | RESIDENTIAL

The Catella Wohnen Europa fund bought 72 luxury apartments located on floors 11 through 19 of the iconic ZÅ‚ota 44 residential tower in downtown Warsaw last year.

RENTAL REVOLUTION? Foreign institutional investors

made two precedent-setting acquisitions in the residential rental property market in Poland in 2016. More major players are expected to enter the sector this year

BY ADAM ZDRODOWSKI

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he residential property market in Poland has increasingly been drawing the attention of foreign funds specializing in the building of rental apartment portfolios, with two groundbreaking deals having been closed in the country last year. Analysts say that residential rental property is a low-risk asset class that offers relatively high returns. With its stable economy and well-performing housing sector, Poland now seems to be a natural expansion target for investors hitherto focused on more mature markets in Europe.

While according to REAS data, buy-to-let investors currently account for more than 15 percent of new apartment sales in most of the largest Polish cities, the majority of those buyers are small-scale domestic investors. Until recently, except for the Rental Housing Fund of state-owned bank BGK, institutional investors were virtually absent from the rental market in Poland. Experts expect that last year’s entry into the country of the first private institutional players will give the sector a real boost.

ments that are to be completed in the acquired scheme later this year will be part of the rental housing portfolio of Bouwfonds.

“The market for this kind of transaction will certainly continue to develop, so we are open to further talks and are looking to launch other projects that will meet the expectations of funds,” said Mirek Bednarek, country manager Poland at Matexi. Bednarek added that the company has witnessed an increase in activity of foreign institutional investors in the residential property market in Poland, many of which are specialized funds, focused exclusively on the acquisition of residential assets.

IMAGE OPPOSITE COURTESY OF BBI DEVELOPMENT

UNPRECEDENTED DEALS

In July last year, Catella Real Estate, acting on behalf of the Catella Wohnen Europa fund, bought 72 luxury apartments located on floors 11 through 19 of the iconic Złota 44 residential tower in downtown Warsaw from investors Amstar and BBI Development. The buyer, for whom the acquisition – the first transaction of this kind to have been signed in Poland to date – marks its entry into the Polish luxury residential property sector, intends to rent the Złota 44 units on a long-term basis to clients, including top business executives and diplomats.

Xavier Jongen, member of the management board at Catella Real Estate, said that the company is planning further acquisitions in Poland.

The investor is primarily interested in Warsaw, but is also looking at large regional cities, including Kraków, Wrocław and Gdańsk. When asked about the current availability of the kind of residential property that Catella is looking for in the country, Jongen replied that the product is “close to non-existent if you are not interested in new developments.”

Also in July 2016, in another landmark transaction, Bouwfonds Investment Management, representing the Bouwfonds European Residential fund, acquired the under-construction Apartamenty Pereca project in the downtown of the Polish capital from developer Matexi Polska. The deal, done on a forward-funding basis, marked the first acquisition of a whole residential building by a foreign fund in Poland. The 193 apart-

Maja Biesiekierska Head of Advisory and Asset Management, Prelios Real Estate Advisory

WE CAN OBSERVE a growing interest in acquisitions of portfolios of apartments for rent from foreign investors. In the past there were only big players interested in this sector; however, recently we have been approached by more and more private investors from Iraq and Ukraine for example, who are interested in this sector.

Investment tickets start from a couple of million euros. The biggest interest is in apartments located in Warsaw city center, as well as the Mokotów or Wola districts, which are close to the center. Onebedroom apartments seem to be the most popular.

Easy access to an underground station is a very important factor as well. Although they are private investors, they take this business seriously. Many of our clients establish limited companies to run their businesses for them in Poland as they are planning to develop their portfolios in the near future.

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LOKALE IMMOBILIA | RESIDENTIAL RISING INTEREST

According to Maximilian Mendel, partner, transaction advisory, at REAS, the residential property market in Poland has been on the radars of investors for some time now, with the first transactions involving foreign funds that were signed last year having increased investor interest in the sector.

“I am sure quite a few new players will enter the market in 2017,” Mendel said. He added that REAS is currently talking to investors who have not yet invested in Poland, as well as to those who already hold commercial assets in the country and are looking to expand into the residential market.

What is important for investors, including funds, is low risk and high yields, and the premium residential property sector is seen as one of the most stable and most immune to economic fluctuations, said Rafał Szczepański, vice president of the management board at BBI Development.

Szczepański pointed out that luxury apartments in Poland, finished in accordance with the highest world standards, are still much cheaper than luxury apartments in Western countries – the prices in Warsaw are eight times lower than in

Karolina Kaim, Chairwoman of the Board at Tacit Investment

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London and three times lower than in Paris.

However, it is not only luxury property that institutional investors are expected to look for in Poland. “I think that it is only a matter of time before investment funds enter the mid-market sector,” Bednarek said. Mendel was of a similar opinion.

According to him, most institutional investors are interested in core products, targeted at tenants from the growing Polish middle class. “Luxury apartments are mainly seen as an attractive asset class to diversify a sizable residential investment portfolio,” he said.

The shortage of standing residential buildings owned by one landlord has been a problem, and institutional build-to-let investors and those ready to close forward commitment deals with developers still account for only a small percentage of the transactions in the market. This seems to be changing now, with investors increasingly appreciating the mutual gains that the cooperation with developers and involvement in the development of new tailor-made rental property can bring. “I expect this sector to grow dynamically in the near future,” Mendel said.

Customers who buy premium apartments may be divided into four major groups. The first includes customers who buy and move in immediately. The second group is people who intend to stay in them from time to time. Another group consists of owners who plan to move in in the future and rent their apartment until then. Finally, there are those who resolve to rent their apartments at once. Our experience has shown that the return on investment in premium apartments is approximately 5 percent per annum. This is a very good ratio compared to other methods of investing capital. It should be remembered that the value of good real estate increases over time and that premium apartments are safe, since the market is unaffected by turbulence. Among our customers there are those who buy more than one apartment; however, we deliberately refuse so-called package purchases, that is purchases of several dozen apartments carried out e.g. by funds. Such “wholesale” purchases adversely affect the real estate target value and indirectly also other customers’ investments.

Package transactions are carried out primarily in the lower market segments.

In our opinion, the premium apartment market will grow this year by 5 to 7 percent. Poland is witnessing a steady increase of wealthy people wishing to make safe investments and they are looking for high standards, the best location and a certain level of prestige when making their choice.”

LOKALE IMMOBILIA | FINANCING

BANKS KEEPING THE TAPS OPEN The prospects with regard to bank financing for the property market in Poland remain positive, with loan volumes having stayed at stable levels in recent months and banks now declaring their continued involvement in the sector for the near future BY ADAM ZDRODOWSKI

SHUTTERSTOCK

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he availability of bank financing to real estate developers and investors in Poland remained at a safe level in 2016.

The outlook for this year is also positive as leading lending institutions plan to continue to be active players in the property market in the country in the coming months. A survey conducted by KPMG among a total of almost 100 financial institutions in 21 countries and published in December last year actually found out that of all the analyzed countries, only in Germany and the UK is real estate financing more strategically important for banks than in Poland.

STABLE VOLUMES

Although no detailed, commonly agreed upon data on the volumes of bank loans granted in the real estate market in Poland in recent years is available, analysts are saying that in 2016 the availability of bank financing remained at a level similar to that seen in the previous year. According to Mira Kantor-Pikus, partner, director of strategic advisory in the capital markets department of Cushman

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LOKALE IMMOBILIA | FINANCING & Wakefield in Poland, generally speaking, financing volumes last year were at a safe level that allowed stable growth, but did not lead to an overheating of the economy.

Michał Białas, deputy head of the property and hotels department at Bank Zachodni WBK (BZ WBK), said that while the bank does not disclose data regarding the volumes of loans it has granted in recent years, its activity in the property market has been on the rise. Last year, BZ WBK was involved in transactions such as the refinancing of a retail portfolio for Echo Polska Properties and the acquisition of an office portfolio by Benson Elliot. The lender also financed office projects of developers, including Ghelamco, HB Reavis and Hines.

Piotr Piasecki, head of corporate finance CEE at JLL, described the current situation in the real estate financing market in Poland as positive. He pointed out that the market has already adjusted to new legislation, including the banking tax. On the other hand, other worries have emerged of late. “At the same time, there are new potential concerns regarding financing VAT on real estate transactions,” Piasecki said. Some bankers are also talking of the rising cost of bank financing in the Polish property market.

There are signs that bank financing in Poland is becoming more expensive, said Dieter Knittel, director at pbb Deutsche Pfandbriefbank. According to Knittel, financing conditions are now, generally speaking, becoming more challenging. For pbb, Central and Eastern Europe has been a core market for many years, and the bank has provided funding in all the major asset classes in the region. “We want to continue to be a very active player.

Poland is our single most important market in CEE,” Knittel said.

QUALITY MATTERS

The location and quality of a given asset, as well as a developer’s or an investor’s reputation and level of equity are some of the most important factors that lending institutions take into account when considering granting financing. In the opinion of Piasecki, factors such as the occupancy level and WAULT (weighted average unexpired lease term) in a particular asset still play a very important, but secondary, role. He argued that financing is currently available in all of the commercial real estate sectors.

Białas revealed that BZ WBK usually finances from 50 percent to 75 percent of the development costs or the investment value.

His bank, which finances both commercial and residential property, wants to increase

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its activity in the hotel and housing sectors this year. Asked about financing residential projects, Jarosław Szanajca, president of the management board at Dom Development, called the current situation “comfortable.” The most trustworthy developers in the sector can hope for a loan-to-value ratio of up to 80 percent, he said.

LAND (NON-)LENDING

What the majority of banks are reluctant to finance is development land. Szanajca maintained that even though Dom Development finances land purchases with cash, it would be able to secure bank support for such investments. Most of the smaller developers certainly do not have such an option. Kantor-Pikus noted that lending institutions usually expect developers to first make their own financial contribution to their projects before granting financing. Since the purchase of a site is the first phase of the development process, it is most often the contribution in question.

Admittedly, it is possible to resort to alternative financing tools here.

Developers can also finance purchases of land with loans granted by cooperative banks, but this rather applies to smaller projects located outside the major metropolitan areas, Piasecki said. Kantor-Pikus argued that renowned developers are able to finance the acquisitions of attractively located and zoned plots by issuing corporate bonds. These can be refinanced with bank loans after construction has started and a satisfactory lease or apartment sales level has been achieved.

ALTERNATIVE SOURCES

Sources of funding other than bank loans have increasingly been resorted to by developers and investors in the real estate market in Poland. But largely because of the higher costs involved, those “non-standard” financing tools are still mostly only available to large reputable players. Piasecki pointed out that even though alternative real estate financing sources are gaining in popularity, the majority of transactions are still financed by banks. “Alternative financing tends to be more expensive, mainly due to the associated risk factor,” he said.

Corporate bonds have become a popular alternative to bank financing in the past few years – indeed, developers have been some of the most active bond issuers in Poland in recent months. This is despite the fact that the interest on bonds is higher than the interest on bank loans. Ghelamco Invest, for example, which launched several bond issuance programs in the past, last month announced its plans to make a new public offering of bonds which will be valued at a total of between PLN 100 million and PLN 160 million.

One of the main benefits for developers of bond issues is the possibility to use the funds at their free will, Kantor-Pikus said. She also pointed to the prestige that comes with a debut on the public market, provided that the developer repays the bonds on maturity date. In Szanajca’s opinion, issuing bonds is usually a faster and easier way of securing financing than taking out a bank loan. Dom Development currently has outstanding bonds valued at a total of PLN 260 million, all of which are traded on the Catalyst bond market.

Kantor-Pikus also pointed to so-called forward funding – that is the funding of the development of a given project by the future buyer of that project – as another way of obtaining non-bank real estate financing. The investor transfers the funds to the developer in tranches, just like banks usually do. This kind of formula can be a convenient solution for both the developer, who secures the funds needed to complete his project, and the investor, whom it allows to have much more influence on the final shape of the scheme that he is going to acquire.

5 Pl. Konstytucji, Warsaw +48226292540 aioliinspiredbymini.pl Facebook.com/AIOLIxMINI Instagram: @aiolixmini Fresh from the success of AïOLI Cantine Bar Café Deli, the owners have opened a new venue in collaboration with the iconic car manufacturer, thus bringing together two brands with exciting results. It shares many of the traits that have made AïOLI Cantine Bar Café Deli so adored by Varsovians – the New York canteenstyle bustle, cool interiors and lively evening scene with its top DJs – but also takes influences from its new partner that stretch as far as four dishes inspired by Mini. Located on Plac Konstytucji, we’re sure this will soon join its sibling as one of Warsaw’s top spots.

9/11 Wierzbowa, Warsaw +48506100001 momu.pl Facebook.com/MOMU Instagram: @momu_pieczemy_dymem MOMU specializes in roasted food, utilizing traditional cooking techniques to create a top-quality menu. The kitchen’s wood fire oven enhances the flavor of MOMU’s meat, fish, vegetables, fruit and cheese, with no preservatives or enhancers. The restaurant takes pride in its regional menu, using only the best ingredients from Polish suppliers. Alongside the kitchen you’ll also find a fully stocked bar, with a variety of wine, beer and whisky specially designed to accompany your meal. MOMU is also home to a unique atmosphere, with daily performances from local musicians.

18 Świętokrzyska, Warsaw +48226572126 aioli-cantine.com Facebook.com/AioliCantine Instagram: @aioli_cantine AïOLI is a bar, café and deli, and was created with three factors in mind: a passion for good quality food, the joy of a Southern style of living and a love of beautiful interiors. The owners decided to combine these ideas; concentrating on achieving great quality through simple ingredients. Now one of the stars of the Warsaw gastronomic scene, it is known for its creative Italian cuisine with American influences, its industrial interior, and music from Warsaw’s best DJs – not to mention its signature AïOLI, a staple of southern European cooking. Our tip: try the Taleggio pizza.

2/4 Szkolna, Warsaw +48228281060 banjaluka.pl Facebook.com/BANJALUKA. WWA Instagram: @banjaluka_warszawa If you haven’t heard about Banjaluka yet, you should know that it has been on the Warsaw gastronomy map for over 13 years.

In the meantime, it moved from Mokotów to the city center. The food is inspired by the colorful, diverse (but still undiscovered) Balkans. The gourmet kitchen is open late into the evening and there is live music every day. The entertainment for children on Sundays is a big favorite with customers.

Life + Style

HOTELS IN DIGITAL AGE

Individuality is the key to gaining an edge in today’s hotel industry, says Rupert Simoner of Vienna House

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Life+Style formance of Vienna House; however, the final word has yet to be spoken. Our strategy is to grow, but we need to keep in mind what the market needs – it is important to analyze the potential for new hotels and to avoid possible oversupply. Right now we’re seeing a growing need for three- and four-star hotels, and that’s something we have kept in mind when planning our strategy.

One of a kind

What advantage do you have over the bigger chains?

We are far more flexible and able to adjust to the needs of our guests. We stand for individuality versus uniformity. Such features are perceived very positively, not just by our potential partners but also by our employees, who can show and share their talents at work.

Eschewing the grinding anonymity of the big chain brands, the Vienna House hotel group has blazed a trail in terms of both quality and individuality. CEO Rupert Simoner talks about the group’s further plans for Poland

How has the digital age changed the hotel industry?

Our task as a hotelier is to provide for the guest’s preferences, so once the individual became more digitalized, the hotel industry had to change its services in order to offer new technological solutions. Included in our digital strategy are, for example, complimentary wifi and the concierge app. This offers the guest a complete digital experience before they’ve even arrived. Once they’re here, the mobile concierge gives you all the information How do you plan on developing your you need: the weather, hotel info, the best local running portfolio in Poland? paths, room service, etc. You’re even able to chat with Rupert Simoner: We are open to opportunities in upreception. Furthermore, we’ll soon be implementing and-coming city areas, in districts with high potential, in online check-out. relaxed but chic properties, especially historic buildings with interesting stories: we love to transform buildings What else has changed that isn’t necessarily so obviinto non-standard hotels. ous to the outside observer?

We’re seeing a “customer centric” approach. Many hotels How would you define the state of the Polish hotel have realized the importance of putting the guest at the market? center of things. Therefore, all activities, from operation I’m very positive that it’s on the rise and that the through to service and marketing are being created to country is still perceived by investors as an interesting reach guests and create “experiences.” A hotel is no longer destination. We are currently very satisfied with the per- just a place to stay but a place that evokes emotions.

IMAGES COURTESY OF VIENNA HOUSE; OPPOSITE PAGE SHUTTERSTOCK

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Gnome man’s land

Both beautiful and bizarre, Wrocław has emerged as the city that has it all

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rapped within a ta ngle of ribboning rivers, Wrocław is a city of soaring spires and tight cobbled alleys. For so long known for its pristine Old Town, the city has now emerged at the forefront of Poland’s creative revolution – a point underlined by its newfound status as the 2016 European Capital of Culture

STAY

The historic Monopol (hotel.com. pl), a swanky ensemble of marble, walnut and modern trimmings, is the grande dame of Wrocław hotels.

Elsewhere, the chic Puro (purohotel. pl) is a design-minded hotel for the 21st century, while the Sky Tower (skytowerapartamenty.pl) offers luxury apartments in Poland’s tallest residential building.

EAT

A surprisingly large Korean population means this cuisine is well-represented by places such as Hikari. Big on red meat, Butchery & Grill caters to more atavistic urges, though for upmarket Polish in atmospheric surroundings, Jadka always hits the mark.

SEE

Beyond simply meandering around the Old Town, traditionalists appreciate the epic Racławice Panorama.

A spate of modern attractions have also made themselves known, among them the Centrum Historii Zajezdnia, which explores the story of post-war Wrocław, the stunning Afrykarium

aquarium and the high-tech Hydropolis water museum.

DRINK

The craft beer scene is cresting and while many rarely look beyond the Old Town’s copious choice, the outof-center Stu Mostów is an upscale brewery that should not be missed for a taste of true Wrocław.

DON’T MISS

Since 2005, over 150 gnomes have popped up like toast on the streets of the Old Town. Find out why and where at probably the only gnome information point in the world: krasnale.pl

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Life+Style

Grape minds

Credited as the creator of Poland’s wine revolution, Robert Mielżyński speaks about his flourishing empire

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PHOTOGRAPHS BY KEVIN DEMARIA

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here are many benchmarks on which to judge the development of modern Warsaw, and the birth and subsequent maturity of its wine scene is certainly one of them. Cast your mind back to the start of the millennium and you’d have found a situation that was more whine and dine than wine and dine. This, however, changed in 2004. It was then that the Mielżyński Wine Bar first opened for business, sparking a viticultural revolution in the process. Where wine was once viewed as something to be drunk in a funeral chapel or the back room of one of the city’s antiquated Old Town restaurants, here it was being presented as an everyday pleasure in a cool and trendy warehouse environment. The fashionistas loved it, but so too did everyone else. Warsaw’s love affair with the grape had begun.

“There wasn’t much else at the time,” remembers the founder, Robert Mielżyński, “so yes, we did create a bit of a trend.” Ever since, the name Mielżyński has become synonymous with quality: a yardstick against which all wine bars are measured. “We’ve become a proper brand,” says Mielżyński, “and not just a high-caliber brand, but a high-caliber Polish brand.” The so-called “Polish-ness” of the enterprise is something that Mielżyński proudly emphasizes. Born in Canada to émigré parents with aristocratic lineage, his father’s firm grew to become the largest importer of wine and spirits in the country. “For me though,” says Mielżyński, “the plan was always to complete the cycle and return to Poland.” As irresistible as the lure of the motherland may have been, kickstarting a wine revolution was by no means easy. “Don’t think this was a case of Robert arriving here with a silver spoon in his mouth,” says Mielżyński, “I came here with zero, the only head start I had on others was my wine education.”

A notorious perfectionist, Mielżyński is dismissive of the new breed of owners that see wine bars as a money-making vehicle. “This isn’t an industry for hobbyists,” he shrugs, “you have to be professional. If you think you can just sit on the sidelines and count the cash then you’ve got another thing coming. This is a real business: either you do it right or you don’t at all.” That means a punishing schedule. “You’re working day and night: bringing producers in, talking, negotiating, serving, learning, listening. And yes, it’s hard to listen to the negatives, but you have to. The success of our first branch wasn’t down to luck, it was because we are professional.”

Comprising three wine bars/stores (two in Warsaw, one in Poznań), this is a success story reflective of the “Poland of Now.” “What we’ve got is an emerging middle class,” says Mielżyński, “they’ve traveled the world and enjoyed the good things in life, and now they’re looking to get those same things here – that’s where we’ve stepped in.”

“The name Mielżyński has become synonymous with quality: a yardstick against which all wine bars are measured”

WARSAW DINING DESTINATION indoor food hall with exciting events, plus 19 great restaurants, cafes and speciality shops

Koszykowa 63

5 mins from Warszawa Centralna train station 200 parking places

www.koszyki.com |

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Life+Style

Out for lunch

BROUGHT TO YOU BY:

No longer content to serve last night’s leftovers, a number of restaurants have elevated the “business lunch” to an art

Stixx

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lthough there’s no such thing as a free lunch, the Polish capital has seen the increasing availability of the next best thing: the “business lunch.” Aimed at those with tight schedules (and in some cases tight pockets), a growing number of restaurants are offering cut-price set lunches to the suited and booted. This issue, we collect the best of the bunch

Dom Wodki domwodki.pl Dom Wodki has raised the bar: while its name conjures images of a budget shot bar, in actuality this is a dapper restaurant that reconstructs Polish cuisine into something special – expect traditional recipes updated for the modern palate.

Be warned, the irresistible selection of boutique vodkas often means that lunch morphs into something a little more lively. Lunch from PLN 29-30

La Rotisserie rotisserie.pl To its detriment, you would hardly say Rotisserie’s location on the fringes of the New Town is close to the CBD. Nevertheless, such is the quality that it’s worth extending your lunch break to experience the cooking of the acclaimed

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Pawel Oszczyk. Though simpler than the a la carte menu, the “straight from the market” lunch deal is still rather good.

Lunch from PLN 78-88

Nolita nolita.pl Rumors that Nolita’s culinary efforts finally stand to be rewarded with a Michelin star are gathering pace. Even without such an endorsement, there’s already many who regard this as Warsaw’s top dining room. Top class and elegant, yet current and contemporary, this stunning restaurant is full of big bang moments. The lunch deal makes it accessible to less generous expense accounts. Lunch from PLN 79-89

Stixx stixx.pl It’s as if Stixx was built with the idea of business lunches in mind. Designed to handle large volumes of traffic, this place strikes a balance between slick corporate and sexy cosmopolitan. Despite its diversity, the kitchen crew makes the international menu come together seamlessly while the location, right by Warsaw Spire, ensures a revolving crowd of international office workers. Lunch from PLN 19.90-29.90

The recently opened restaurant and bar Mokotowska 69 is the perfect place for those who enjoy refined food and excellent wine. The restaurant specializes in fish and seafood dishes and steaks made from American Black Angus certified prime grade by the USDA, Scottish Aberdeen Angus and highest quality Japanese Tajima-gyu cattle “Kobe-style” beef. The menu also offers seasonal and traditional Polish cuisine with a modern twist.

Above all else, the bar at Mokotowska 69 offers excellent wine. You can find everyday wine and holiday wine, easy wine and serious wine. The wine list comprises beverages from all over the world, bringing together centuries worth of traditions from Italy, France or Spain with the fantasy of winemakers from Chile, Argentina, Australia or the United States. ul. Mokotowska 69, 00-533 Warsaw www.mokotowska69.pl +48 22 628 73 84, +48 22 627 20 33

Call of nature

Daria Prochenka, the co-founder of Clochee, talks about the success of her groundbreaking natural cosmetics brand

What inspired you to launch Clochee?

Years ago my grandmother was diagnosed with cancer and one of the doctors explained to me how easily unhealthy ingredients can get through to the lymph nodes inside our body. I started looking for natural cosmetics, but in those days finding something that was natural, good, effective and elegant was practically impossible. Anyway, I told my friend Justyna and she surprised me by preparing a cleansing oil that was just right for my skin type. It was the prototype for our bestselling “soothing cleansing oil.” The feedback we got was great so we decided to join my business skills with her expertise and create Clochee. In Poland natural cosmetics are a fresh fashion. Our goal is to turn that fad into a habit.

What’s important when creating cosmetics?

We don’t rush: we want to produce cosmetics that we are proud of. That’s why we use certified ingredients, so that we know where the seeds, fruits or plants come from. Effectiveness is also very important in our cosmetics. Pleasant fragrances and elegant packaging are also important little details that complete the jigsaw.

What makes your products unique?

They’re eco-friendly and we don’t take shortcuts when it comes to ingredients: our cosmetics meet strict European standards. Our strength lies in the quality of our products.

Tel. 790 322 322, clochee.com

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PARTNERS

EVENTS

Warsaw Business Journal relives the most important recent business and industry events

THREE STAR CHEFS AT THE FRENCH-POLISH CHAMBER OF COMMERCE GALA The annual Gala of the CCIFP gathered more than 500 people from the French-Polish business community, as well as from the world of politics, culture and media. This year, the ceremony was not only an excellent business mixer, but it also offered outstanding culinary sensations.

The exceptional menu, combining Polish and French culinary traditions, was prepared by three top-tier chefs: Pierre Gagnaire, selected best chef in the world by the Le Chef magazine; Andrea Camastra, chef and co-owner of Senses – one of the two restaurants in Poland honored with a Michelin star in 2016; and Maciej Majewski, chef at La Brasserie Moderne in Warsaw. The Gala Diamond partner was Auchan Retail Polska and the Gold Partner was Michelin Polska – the publisher of the famous culinary guide that awards stars to the best restaurants in the world. The CCIFP Gala is one of the most important annual events organized by the French-Polish Chamber of Commerce which connects almost 460 Polish and French companies.

RETAIL EXCELLENCE HONOURED AT THE NINTH ANNUAL EUROPAPROPERTY CEE RETAIL AWARDS EuropaProperty’s ninth annual CEE Retail Real Estate Awards brought together some 450 top real estate professionals from CEE and honored key retailers and real estate companies. The Overall Retailer and Fashion Retailer of the Year went to New Look, while the Newcomer of the Year award was given to Forever 21. Other major winners of retailer specific awards included: Green Coffee Nero, Vapiano, Helios, Media Markt, Carrefour, SMYK, Douglas, Intimissimi, Yes, Kazar, 4F and H&M. Rockcastle was awarded the Retail Investor and Overall Company of the Year titles. Apsys once again picked up the Developer of the Year award, while Echo Polska Properties was recognized as the Property Management Firm of the Year. Other major accolades went to: Griffin Real Estate, Immofinanz, Katharsis Development, Real2B, Atrium European Real Estate, Acteeum Group, CBRE, Dentons, KPRF Law Firm, TPA, RegioPlan Consulting, Gleeds, Chapman Taylor, and ING Bank Śląski. GTC’s Jacek Wachowicz was named this year’s Industry Professional, while Blue City’s Yoram Reshef was honored as Shopping Center Director of the Year.

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THE ART of SLOW LIVING APARTAMENTY PRZY ŁAZIENKACH KRÓLEWSKICH Zapraszamy do oglądania wykończonych i wyposażonych apartamentów w sercu zielonego Mokotowa

ul. Podchorążych 83, Warszawa

T. +48 535 10 10 10

sprzedaz@tacit.com.pl

www.apartamentyparklane.pl