Warsaw Business Journal April 2017

WARSAW

BUSINESS JOURNAL

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

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

APRIL 2017 ~ No. 37

INTERNET OF THINGS BOOM What Does a Lower Retirement Age Mean for the Economy?

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Interview with architect Czesław Komorowski of Epstein who talks about modernity in Warsaw and one of his latest projects, Astoria Premium Offices

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APRIL 7

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

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FEATURES

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COMMENTARY

Venture capital guru ANDREW ROMANS’ view on Polish tech firms’ potential, Japan’s Ambassador to Poland SHIGEO MATSUTOMI about Japanese business in Poland and vice versa, Warsaw City deputy mayor MICHAŁ OLSZEWSKI discusses business environment for SMEs, head of COMARCH TECHNOLOGIES about the Internet of Things craze, tech wizards from DEMANT TECHNOLOGY Centre on the realm of possibilities of internet-connected hearing aids

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LOKALE IMMOBILIA Real estate news................... 48 Office design trends.............. 52 Epstein interview................... 56 Echo Investment interview.. 58

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LIFESTYLE Spring fashion pics............... 68 Travel: Poznań........................ 69 Neo-bistros............................. 70 Museums in Poland............... 72 Events...................................... 76

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BOTTOM PHOTO KEVIN DEMARIA; TOP: HATSUNE MIKU, THE STATE ETHNOGRAPHIC MUSEUM IN WARSAW, PHOTO BY ŁUKASZ ZANDECKI

Venture Capital ...................... 28 Internet of Things ................. 30 Retirement age....................... 34 Spirits exports........................ 38 Private banking ..................... 42

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FROM OUR EDITOR

Blue Skies Over Warsaw Morten Lindholm

BY MORTEN LINDHOLM

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

ISN'T IT AMAZING what a blue sky can do? A crack of light and all of a sudden there's a new energy in the air: plans, both great and small, feel like they're coming together. Wishful thinking? Certainly not. This issue our editorial team measures the rising temperature of the Polish business world whilst also putting the latest real estate trends under the microscope, gauging investor appetite and learning more about relations with Japan.

Ahead of you this edition, Nicklas Lindberg talks about trends in real estate while Mariusz Lasek, head of Comarch Technologies – one of Poland's true success stories – guides us through the Internet of Things.

And it's not just domestic companies on the lookout for technical talent in Poland: Demant Technologies have entered the local R&D market seeking to ultimately improve healthcare all over the world.

So far, so bright, but will the lowering of the pension age dampen the economic mood? That's another topic tackled inside.

Last, but by no means least, in co-operation with our long-term partner CEEQA, the WBJ team is proud to present its latest trend and status report regarding the current state and future of real estate in CEE & SEE. On a final note, we're delighted to announce another increase to our print run. Complementing our usual distribution channels, we've now also added over 100 coffee shops in Warsaw and beyond as subscribers – good times for us, good times for you. Enjoy the read and see you next month.

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 Santiago de la Presilla Magdalena Iwańska Karolina Papros Sergiusz Prokurat Alex Webber Sales

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

Agata Wolny awolny@valkea.com Magdalena Czopur Subscriptions

mczopur@valkea.com Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com

Meet the WBJ team

Magda Gajewska

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.

Contact:

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

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PORTRAIT BY KEVIN DEMARIA

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.

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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

Be careful the bridges you burn, because once they are gone you can never cross them again,” European Council President Donald Tusk warned the Polish government about its diplomacy tactics. Former Polish PM Donald Tusk has been re-appointed as the European Council President for a second two-anda-half year term. Tusk’s candidacy was supported by all the member states, except Poland. “I want to cooperate with every member of the European Council and I will do everything I can to protect the Polish government against political isolation in Europe,” Tusk said after the nomination.

- DONALD TUSK

AIR TRAVEL

SHUTTERSTOCK

Poland approves plans to build CENTRAL HUB AIRPORT The Polish government has recommended building a new centrally located hub airport. The facility would be situated between Warsaw and Łódź, and is expected to cost PLN 20-30 billion. It would service some 50 million passengers per year. The airport should be operational “within a decade from now,” according to the Minister of Infrastructure Andrzej Adamczyk. The leader of the ruling Law and Justice party, Jarosław Kaczyński, recently supported the Central Polish Airport idea; “Poland should have a new, centralized airport with global connections, so Poland won’t become a province,” he said, hoping that such a facility would

become a hub for the CEE region. The idea was also promoted by the state-owned airline LOT. There are currently three passenger airports located near Warsaw and Łódź servicing some 16 million passengers per year combined.

grow. In 2016 Polish automotive exports reached a record §high level of €23 billion.

The car parts and accessories segment accounted for 44.28 percent of that figure.

AUTOMOTIVE

AUTOMOTIVE

FIAT to produce Panda exclusively in Poland – sources

Polish automotive exports could grow by 9-10 percent y/y to over €25 billion in 2017, Automotivesuppliers.pl forecasts. The growth should be driven by increasing demand for car parts from Germany and growing production capacities in Polish factories.

With the expansion of the Volkswagen plant in Września and the increased production of the Crafter model, car exports should also

According to daily Rzeczpospolita, Fiat will announce its decision to shift Panda production exclusively to Poland in September this year. The move will cost Fiat Chrysler PLN 1.5 billion with 800 new workplaces being created at the Tychy plant. “The move was obvious for quite some time, but we’re also fighting to produce another model there,” Henryka Bochniarz from the plant’s management board said. The extended pro-

CAR EXPORTS to surpass €25 bln in 2017

W B J APRIL 2017

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In Review duction should start in 2019-2020. Fiat’s Italian plant in Pomigliano, from where the manufacturing will be transferred, will make one of the company’s premium models instead.

M&A

PZU gets anti-trust approval for Bank Pekao takeover WSE-listed insurer PZU secured approval from the anti-trust watchdog UOKiK’s to buy a 32.8 percent stake in Bank Pekao, meeting one of the conditions for the deal to go through, PZU said in a market filing.

PZU and state fund PFR paid PLN 10.59 billion for the stake. The last major hurdle required for the transaction to go through is gaining consent from the Polish financial market regulator KNF. PHARMA

POLAND adopts new pharmacy ownership law

BANKING

KNF: tough year ahead for the banking sector Polish commercial banks will suffer a 12.3 percent y/y decline in 2017 net results, but the increase in net interest and fee incomes will reach over 6 percent, the financial market regulator KNF said. Last year’s results have been padded by the revenue from the sale of Visa Europe, in which Polish banks had stakes. Without the extra income, the banks will suffer losses the KNF argues. In 2016, the sector showed 8.2 percent growth in net profits, while it lost 6 percent from fees and interest income. In 2017 this trend should be reversed. In its latest report, the KNF said banks expected their interest income to increase by 6.3 percent in 2017 and their income from fees and commission to rise by 6.5 percent this year, with costs up by 4.1 percent.

Poland’s Deputy PM Mateusz Morawiecki said after his meeting with the US Energy Secretary Rick Perry that both sides will work on a deal to export US LNG to Poland. “The word agreement is probably premature. Understanding? Absolutely,” Morawiecki said during his visit to the US. Poland would like to import US LNG to its terminal in Świnoujście in order to cut imports from Russia. But first it needs to clear a few legal hurdles as US federal law requires the Department of Energy to grant export authorizations to countries that do not have a free trade agreement with the US. Then the matter of the price need to be settled. “The average price is lower than what we can obtain from Texas in the US. There is a little way to go, but I hope we will find common ground,” Morawiecki said.

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unemployment rate at the end of February (GUS)

4%

average salary increase in February (y/y, GUS)

seasonally adjusted retail trade growth in February (y/y, Eurostat)

2% ENERGY

MORAWIECKI: We have ‘understanding’ with the US on LNG exports

8.5%

6.9%

Polish parliament has adopted a new bill that will restrict the right to open a pharmacy only to professional pharmacists. The new regulations also impose geographic and demographic limits on the number of such facilities. After the bill comes into force, a permit to run a pharmacy will only be granted to authorized pharmacists or companies owned by pharmacists and operating exclusively in that sector. The bill will now be discussed in the Senate, where amendments can be proposed.

ENERGY

TRENDING STATS

Poland expects to have FIRST NUCLEAR PLANT by 2030 According to Minister of Energy Krzysztof Tchórzewski, Poland could build its first nuclear power plant by 2030. “If we make a decision now on building a power block, then it would be operational by 2030, the minister said in an interview with wnp.pl.

According to Tchórzewski, the 1,200 MW block would cost PLN 24 billion, which is more than double than the cost of a coal power plant with similar capacity, but cheaper than an off-shore wind farm. The nuclear plant could improve Poland’s power mix, allowing Poland to meet EU requirements concerning average emissions, the minister indicated.

STOCK EXCHANGE

WSE CEO steps down before assuming office Newly appointed Warsaw Stock Exchange CEO Rafał Antczak has stepped down from

inflation in March (y/y, GUS)

1.2% industrial output growth in February (y/y, GUS)

3.1%

the increase in euro-denominated exports in February (y/y, Export Credit Insurance Corporation (KUKE) SHUTTERSTOCK

WBJ

the role before he even assumed the post citing personal reasons. Antczak was appointed CEO back in January, but his nomination had to be approved by the financial market regulator KNF, as he did not have the required three years of experience in financial market institutions. The KNF had not approved Antczak’s nomination following his appointment by the Ministry of Development. Antczak was supposed to replace the current CEO, Małgorzata Zaleska, who will now remain in her post.

told the British daily. “Since we took power in Poland, the government under my direction has made it clear that we will not accept such a solution because we recognize it as a bad thing, especially for Europe,” Szydło explained. In 2015, EU leaders decided that the bloc’s member states would redistribute 160,000 asylum seekers, mostly from the Middle East, among themselves in order to alleviate pressure on Greece and Italy where most of the migrants arrived. According to the EU plan, Poland is set to accept 6,200 asylum seekers by September.

IMMIGRATION

SZYDŁO: Poland won’t give in to blackmail over migration Polish PM Beata Szydło said that Poland won’t be forced by Brussels to accept migrants from the Middle East. “I am resistant to ‘blackmail and pressure,’ which are used in Brussels,” Szydło said, commenting on the recent article in The Times, which reported that Poland and Hungary could be forced out of the EU if they do not comply with the EU migrant relocation policy.

“They will have to make a choice: are they in the European system or not? You cannot blackmail the EU, unity has a price,” a source

ECONOMY

Moody’s upgrades Poland’s GDP forecasts Ratings agency Moody’s has upgraded Poland’s GDP forecast for 2017 to 3.2 percent, from the previous 2.9 percent. The agency decided to upgrade the forecast after recent positive economic data. “The Polish economy is showing signs of a nascent turnaround of last year’s real GDP growth slowdown,” the agency said, attributing it to increased household spending. Deputy PM Mateusz Morawiecki called the upgrade “prudent” and repeated his claim that Polish economy will grow by 3.6 percent this year.

QUOTE OF THE MONTH “Poland strongly condemns crimes committed against civilians and calls for the entire international community to engage even more strongly in the restoration of peace in Syria, to stop the madness of war, to interrupt the spiral of violence.”

- President Andrzej Duda

W B J MARCH 2017

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EUROPEAN ECONOMIC CONGRESS

OVER 100 thematic sessions

10-12 May 2017

International Congress Centre in Katowice, Poland

700 speakers

TOP BUSINESS MEETING IN CENTRAL EUROPE

The European Economic Congress is a forum for an open debate, based on reality in which Poland builds economic relations in Europe, enriched with a global context with new events devoted to young entrepreneurs.

3 DAYS of debates

OVER 8000 guests

News and agenda: www.eecpoland.eu/2017/en/ Facebook and Twitter: @EECKatowice #EEC2017 #EKG2017

Commentary EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

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Venture Capitalists are eyeing CEE and Polish tech firms. What do they have to offer? – VC leader Andrew Romans explains

When will the Internet of Things revolution unfold and what will it bring?

– Mariusz Lasek, head of Comarch Technologies shares his views

Poland and Japan have more in common that one would think – interview with Japan’s Ambassador to Poland Shigeo Matsutomi

Hearing aids are becoming tiny computers to make the lives of the hearing-impaired easier. What can they do? – we asked Sławomir Kwasiborski and Tomasz Frydrychewicz from Demant Technology Centre

12-17

Find out lawyers’ views on VAT reverse change, restitution claims and new investor protection regulations, finance experts chime in on cashless payments and Poland’s wage growth

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WBJ COMMENTARY | OPINION

VAT reverse charge in construction services

Tomasz Wojdal Head Legal Advisor at KRS Kancelaria Legal Office

THE NEW VAT REGULATIONS HAVE INTRODUCED IMPORTANT CHANGES TO HOW INVOICES ARE ISSUED AND WILL LIKELY HAVE SIGNIFICANT IMPACT ON THE FINANCIAL FLUENCY OF SUBCONTRACTORS

S

tarting from January 1, 2017, amendments were introduced to the Value Added Tax Act (VAT Act) concerning the taxation of goods and services, in particular the taxation of construction services in Poland. These services are covered by the so-called VAT reverse charge mechanism. This mechanism states that a service provider does not charge VAT because the settlement of the tax rests on the purchaser of the service. Pursuant to the introduced provisions in the VAT Act, the reverse charge mechanism must be applied under the following conditions: • The purchased services are one of the construction services that are listed in Annex 14 of the VAT Act. • The entity providing the services is registered as an active VAT taxpayer (which is not exempt from VAT) and has the status of the subcontractor for construction work.

• The purchaser (buyer of the services) is an entity registered as an active VAT taxpayer.

THE EFFECTS OF THE CHANGES As of January 1, 2017, subcontractors are obliged to issue VAT invoices without charging VAT. The invoice must include a statement on the application of the VAT reverse charge mechanism. In practice, the contractors also require a statement in writing that the subcontractor is an active VAT taxpayer.

The new laws have affected the financial fluency of subcontractors, which are often obligated to purchase building materials and pay VAT. On the other hand, they receive payment without VAT (due to application of the VAT reverse charge mechanism). This results in a VAT excess for reimbursement to the subcontractor.

It should be taken into account that the standard time limit for a VAT refund is 60 days. Moreover, as a rule, such a VAT refund is preceded by a tax control or verifying actions that lead to the extension of the deadline for VAT refunds. In practice, this may mean trouble for the financial fluency of subcontractors.

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SETTLEMENT OF VAT FOR SERVICES AT THE TURN OF 2016/2017 It should be noted that the old law applies to the performance of construction services performed until December 31, 2016. This means that subcontractors for such services should issue an invoice with VAT, even if the invoice is issued in 2017.

The key issue is to determine the actual date of performance of construction services. According to the interpretation provided by the Ministry of Finance, the performance of the service is recognized when the construction work is actually performed. The date of preparation of the acceptance protocol is not of importance. In practice, to determine the date of performance of construction services, the recommended solution is to include a statement on the acceptance protocol of works (if it is made in 2017) saying that the works were performed by the end of December 2016. Then the subcontractor is entitled to issue an invoice for their services with VAT. In the case that the acceptance protocol indicates that the construction services were performed after January 1, 2017, then it is necessary to issue invoices without VAT, with information on the application of the reverse charge mechanism.

The above issue is rather important, because the legislator has not introduced any transitional provisions in this respect.

FORECASTS The new regulations are not precise. They do not contain a definition of a subcontractor and there is a lack of transitional provisions. It is not clear how the new law will affect the financial fluency of subcontractors in practice. Time will tell how the new rules affect the entire construction industry.

“The new laws have affected the financial fluency of subcontractors, which are often obligated to purchase building materials and pay VAT.”

The cash market in Poland

DESPITE THE RISE OF CASHLESS PAYMENTS, THE NUMBER OF CASH MACHINES IS GROWING STEADILY. ATMS ARE NO LONGER ONLY FOR CASH WITHDRAWALS AND DEPOSITS, THEY ARE ALSO INCREASINGLY OFTEN INTEGRATED WITH MOBILE TECHNOLOGIES

Maciej Żołyński General Manager Cardtronics Poland

A

s consumers, we are able to choose from an increasing number of payment forms – from cash and payment cards to mobile wallets and applications. Consumers choose the solutions that are most convenient for them, allowing themselves to be guided by individual preferences. They seldom stick to a single method of payment, but they always take care to have cash handy or quickly accessible.

Close to 85 percent of consumers utilize at least two methods of making payments every month, with 55 percent utilizing three methods – as shown by a study conducted by Cardtronics on the US market. Cash takes a prominent place in the payment method mix and is used by consumers on a daily basis. In practice, it is the most frequently used payment form – representing 89 percent of transactions for traditional retail stores, as compared to 74 percent for debit cards and 66 percent for credit cards. Some 18 percent of those making payments choose mobile applications, with 17 percent making use of mobile wallets.

Considering the declarations of close to 85 percent of respondents, who believe that cash will never fall out of use, the cash society is “holding strong.” A report by RBR states that in 2010, despite a sharp increase in the volume of cashless payments amounting to 7.6 percent y/y, cash machines are able to stand their ground globally, and their use is rising at the same pace as cashless payments. Furthermore, analysis by RBR shows that until the year 2020, the number of ATMs will rise to four million. In comparison with 2014, this means an increase in the number of units by 37 percent. It must be noted; however, that this growth will be highly varied – the fastest growth will be in China (up to 550,000 units by 2020, more than in all other global markets combined), by 10 percent in the UK and 1 percent in the US – with some European markets experiencing a negative trend. The average for Central and Eastern Europe foresees growth of about 3 percent. According to data from the NBP, the number of ATMs in Poland increased by 8 percent over one year, amounting to 22,300 in 2015.

It seems that theories about the disappearance of cash transactions are rather improbable. Despite the growing popularity of new technologies, and the fast development of the FinTech sector, consumers are still fond of cash. Services available through ATMs, which are gradually becoming multi-functional machines, are developing just as quickly as cashless payment methods.

The option of withdrawing money is the most popular, but merely one of many functions available. ATMs can already be integrated with mobile devices to enable account handling or submitting applications for new

services. The role of ATMs is also changing. Banks are increasingly installing these units at their outlets, facilitating the transfer of customer services from the clerk desks to the self-service area.

While considering the above facts, I remain a fervent advocate of the introduction of advanced global cash market standard developments in Poland. The Polish Ministry of Development is actively working on a “Cashless Poland” program in order to limit the cash in circulation, and we think that proper ATM market regulation could positively influence this program. At Cardtronics, we strongly favor paving the way to introduce an ATM “surcharge fee” system, allowing end users a set of strategic advantages such as increasing the minimum cost of cash withdrawals, limiting the number of cash withdrawal transactions and the cash value in circulation.

Secondly, creating a simple and open deposittaking ATM scheme for any bank and any customer, would perfectly align with payment regulations and integration mechanisms. Increasing the deposited cash value and taking it off the streets would close the gaps in the free cash circulation system and permit perfect adjustment to Anti-Money-Laundering processes and regulations.

“The role of ATMs is also changing. Banks are increasingly installing these units at their outlets, facilitating the transfer of customer services from the clerk desks to the self-service area.”

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WBJ COMMENTARY | INTERVIEW Kamil Osiński Advocate, Partner, Head of Real Estate at Kochański Zięba & Partners

Restitution claims – time for verification

UNDER THE NEW ENACTED LAW, THE ACCURACY OF RESTITUTION DECISIONS WILL BE VERIFIED. WILL IT HELP TO FINALLY REMOVE THE FORMER IRREGULARITIES OR WILL IT CREATE NEW ONES?

D

espite the passing of a substantial period of time since World War II, restitution claims still remain a controversial matter, not only from a strictly legal point of view but also on the basis of social-economic relations, having a significant impact on the real estate investment market in Poland.

In addition, public opinion has recently been swayed by some examples of irregularities concerning restitution claims. In many cases the true beneficiaries of a number of laws adjusting the “old” legislation to the new constitutional norms, which equipped the former owners and their legal successors with legal instruments allowing them to effectively assert their rights, are the “professional” entities that handle restitution claims.

Consequently, some of the real properties were probably returned, or compensation provided to their supposed original owners for, in what would be considered, doubtful circumstances or in violation of the law.

Due to the above, at the beginning of this year, Polish Parliament enacted a special Act on the specific rules of removal of the legal effects of restitution decisions concerning Warsaw real properties issued in violation of the law1. On the basis of the Act, a special Government Commission will be entitled to verify the accuracy of restitution cases conducted over the last 20 years in Warsaw.

The Commission, in particular will be entitled to: • Issue administrative decisions (as a collective body); • Turn to the public administrative authorities for information, explanations and files of each administrative proceeding regarding restitution claims; • Turn to a prosecutor to secure evidence or a refund of the equivalent of the undue performance; • Initiate proceeding ex officio; • Enter a caution in the land and mortgage register kept

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for a particular real property stating that a proceeding before the Commission has been imitated; • Establish a restriction on the sale of the real property.

In addition to the above, proceedings before the Commission will take precedent over other proceedings, run before public administrative authorities or even the Supreme Court, which will be subsequently suspended.

As a result of the proceedings, the Commission will: (a) uphold the restitution decision; (b) revoke the restitution decision in whole or in part and rule as to its merits; (c) revoke the restitution decision in whole and refer the case back for rehearing or (d) state that the decision was issued in violation of the law if the restitution decision created irreversible legal effects. With regards to the latter, the Commission will oblige the beneficiary of the restitution decision to refund undue performance calculated on the basis of prices from the date of issuance of the decision by the Commission, with consideration of the factual status of the real property from the date that it was taken over.

The general sentiment in the market is that no one doubts that some solutions aimed at verification of the accuracy of restitution decisions should be provided.

However, there are serious concerns as to whether the current existing instruments provided in the Administrative Procedure Code and Civil Code could be deemed as unsatisfactory and should be replaced with a separate act. Moreover, the actions undertaken by the Commission will have a significant influence on the principal rule of the administrative proceeding, i.e. reliability of the administrative decision.

As a result, despite the fact that the main aim of the Act may be considered justified, the provided solutions, the broad competences of the Commission, and the fact that the Commission will be political in nature, may create additional threats and exacerbate the risks involved in restitution matters.

1 Polish: Ustawa o szczególnych zasadach usuwania skutków prawnych decyzji reprywatyzacyjnych dotyczących nieruchomości warszawskich wydanych z naruszeniem prawa (Parlimentary Printed Matter No. 1056).

“The general sentiment in the market is that some solutions aimed at verification of the accuracy of restitution decisions should be provided.”

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WBJ COMMENTARY | OPINION Agata Szczepańczyk-Piwek Legal Counsel, Member of Banking & Finance Practice, WKB Wierciński, Kwieciński, Baehr

Monika Obiegło Lawyer, Member of Banking & Finance Practice, WKB Wierciński, Kwieciński, Baehr

MiFID II: A drive towards greater investor protection

POLAND WILL SOON ADOPT AN EU DIRECTIVE THAT WILL INCREASE TRANSPARENCY ON THE INVESTMENT MARKET. INVESTMENT FIRMS WILL HAVE TO CHOOSE WHETHER THEY PROVIDE INVESTMENT ADVICE ON AN INDEPENDENT OR NON-INDEPENDENT BASIS AND WILL HAVE TO PRESENT A LOT MORE INFORMATION TO THEIR CLIENTS

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n May 15, 2014, the European Parliament adopted the Directive 2014/65/EU on markets in financial instruments (“MiFID II”). The directive will bring about fundamental changes to the investment services industry. One of the principal objectives of the MiFID II is to guarantee investors a uniformly high level of protection in relation to investment services. What are the most significant investor protection changes in MiFID II? The basic novelty introduced by MiFID II in this area is the institution of “independent investment advice.”

Generally, investment advice can be considered as “independent” if it meets the following requirements: (i) a sufficiently diverse and wide range of financial instruments available on the market must be assessed by the investment advisor; (ii) such financial instruments must not be provided solely by the investment firm itself or by entities with close links with the investment firm, or entities with close legal/economic relationships (such as contractual relationships) in so far that independence is at risk of being impaired; and (iii) the firm must not accept and retain fees, commissions or any monetary or non-monetary benefits paid or provided by any third party (e.g. product providers), with only minor non-monetary benefits being allowed.

MiFID II also imposes new requirements on investment firms to provide appropriate information in a timely manner to clients or potential clients in relation to the investment firm and its services, the financial

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instruments and proposed investment strategies. In particular, investment firms will be required to inform clients about financial instruments, including the performance of the instrument in different market conditions, the risk associated with investments in financial instruments, the legal nature of financial instruments, guarantees and capital protection and the information whether or not their advice is provided on an independent basis. Moreover, information on all costs and associated charges, including charges related to investment and ancillary services, the cost of advice and the cost of financial instruments must be disclosed to investors.

To further protect investors, the directive prohibits firms remunerating or assessing the performance of staff in a way that conflicts with the firm’s duty to act in the best interests of their clients or which incentivizes staff to sell particular products or services.

Given the above, we can say that upon its application, MiFID II will strengthen the protection of investors and increase clarity to clients as to the service they receive. MiFID II is required to be transposed into Polish law by July 3, 2017 and regulatory authorities and market participants need to comply with MiFID II by January 3, 2018.

“The firm must not accept and retain fees, commissions or any monetary or non-monetary benefits paid or provided by any third party (e.g. product providers), with only minor non-monetary benefits being allowed.”

Poland’s success story – wage growth

POLAND WILL SOON CELEBRATE THE 13TH ANNIVERSARY OF JOINING THE EUROPEAN UNION. AN INFLUX OF NEW ROADS, IMPRESSIVE GROWTH AND SOARING FOREIGN TRADE HAVE ALL BEEN ACKNOWLEDGED IN SEVERAL REPORTS. STATISTICAL DATA SHOWS THAT THE COUNTRY HAS GAINED A COMPETITIVE EDGE IN THE FREE EU ECONOMIC ENVIRONMENT. BUT IN THE END, PEOPLE ANTICIPATE ONLY ONE CHANGE – WAGE INCREASES

Marcin Lipka Chief analyst at Cinkciarz.pl

S

tagnant salaries are a widely discussed worldwide topic. According to March data from the Office for National Statistics (ONS), British real average weekly earnings dropped 10 percent between 2007 and 2014. Despite the recent upturn, they are still at 2004 levels. Moreover, according to the US Census Bureau, men over the age of 18 receive a lower median annual wage in current dollars than their counterparts did in 1974. In Poland it is another story entirely..

PURCHASING POWER SOARED Contrary to the UK and the US, Polish paychecks have risen significantly no matter which measuring medium is used. Currently, the minimum monthly wage is PLN 2,000, (around €460 or $500) while in 2003 it was around PLN 800 (€180 or $206 at average 2003 exchange rates). The lowest monthly income has risen by 150 percent in nominal terms, and if we adjust it to inflation, the increase would be at 90 percent. The average gross monthly salary has almost doubled over the course of 13 years – from PLN 2,377 in February 2004 to PLN 4,305 last month.

Polish wages look encouraging when compared to other countries that also joined the EU in 2004. According to €ostat estimates, net earnings 13 years ago for a single person receiving 80 percent of the average wage (usually also median value) were €6,500 when expressed in the purchasing power standard (PPS).

Employees in the same statistical category were getting €6,200 in Hungary, and €7,400 in the Czech Republic.

The latest €ostat data shows that in 2015, median earners made €9,300 in Hungary, €11,500 in the Czech Republic and €12,200 PPS in Poland. As a result, Poles enjoyed the highest growth in purchasing power in comparison to peer countries and can afford more goods and services than those of other major CEE economies. The wage gap between themselves and their German counterparts has also decreased significantly.

On the PPS basis, Poles currently receive 51 percent of the average German income, while in 2003 it was only 38 percent.

“Poles currently receive 51 percent of the average German income, while in 2003 it was only 38 percent.”

EQUALLY DISTRIBUTED GROWTH Over the last 13 years, Poland has enjoyed robust and recession-free GDP growth. What is even more important is that the fruits of this economic development have been distributed fairly equally with a large boost in the purchasing power median. This increases the odds that future growth will also benefit this inclusive society.

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17

WBJ COMMENTARY | TECHNOLOGY

"YOUR COFFEE IS READY " " THE DOORBELL IS RINGING "

"SMOG LEVELS ARE HIGH TODAY"

"BATTERY IS LOW"

COURTESY OF WILLIAM DEMANT

"FOOD DELIVERY IS ON THE WAY"

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INTERVIEW BY BEATA SOCHA

Hearing-enabled

HEARING AIDS THAT CAN ORDER THEIR OWN BATTERIES, TURN ON THE TV AND LET YOU KNOW WHEN THE WASHING MACHINE HAS FINISHED ITS CYCLE? THANKS TO APPLYING IFTTT TECHNOLOGY, SOFTWARE ENGINEERS WORKING ON PROGRAMMING HEARING AIDS ARE MAKING ADVANCES INTO ADVANCED AUTOMATION. WBJ TALKED TO SOFTWARE ARCHITECT SŁAWOMIR KWASIBORSKI AND TOMASZ FRYDRYCHEWICZ, TEAM LEADER FOR IFTTT AT DEMANT TECHNOLOGY CENTRE, THE WARSAW-BASED R&D CENTER OF DANISH HEARING AID GIANT WILLIAM DEMANT

WBJ:

You use the If This Then That (IFTTT) technology in your hearing devices. What does it do?

Sławomir Kwasiborski: The IFTTT technology makes using the hearing device a lot easier. Many tasks that users have had to do by themselves are now completed without their active involvement. We can activate a program for when the user is working, or a program that will activate on its own when the user gets home.

The hearing aid adjusts to what you are doing and to the environment you’re in.

Can the hearing aid turn on the TV and the coffee machine as soon as I enter the house for example?

S.K.: Of course it can. IFTTT allows the user to perform operations that are as complex as we need them to be.

By default, though, the hearing aid uses the technology to perform tasks that are somehow connected with it. For instance, if the battery in the device is starting to run low, the program can order us a new one.

Tomasz Frydrychewicz: The integration of hearing aids with home automation system is very interesting. IFTTT became popular a while back in smart home solutions. For example, the doorbell rings and the user of our hearing aid gets a message on his/her device; or when the user turns his device on in the morning, IFTTT can automatically switch on the lights. New things and new commands are added all the time.

For example, if the smog level in the city exceeds a certain level, the user can get a message saying “Don’t even

think about going jogging today!” or something similar.

450 That’s the number of service providers who use IFTTT, including Amazon’s Alexa, enabling voice control

100 That’s how many times per second the hearing device scans the environment

1.2

billion

That’s how many operations per second the chip in the hearing aid makes

Can the user take advantage of programs that other people have come up with?

S.K.: Absolutely, and that is what makes the technology so powerful. Different users come up with different ideas on how they can use their hearing aid and then create their own Applet, as IFTTT rules are referred to, which they can publish.

The list of published recipes is very long, from the most basic ones to some very complicated stuff.

So it’s like augmented reality installed on your hearing aid?

T.F.: Yes, something like that.

Does one need to be able to program to use this tech?

T.F.: No, but IFTTT is undergoing a transformation. Right now it is based on simple rules where you just choose a condition in which the rule will be activated and the reaction that is supposed to happen. This will change soon and there will be options to use filters, changing how our rule is activated. That will require more understanding of the technology. I think that an 80-year-old user of our hearing aids might have a problem with using the technology. However, the simple rules will still continue to be available.

S.K.: Usually, an older person has someone who can help them with the tech. Even though we try to make our hearing aids as userfriendly as possible, their use is still not always intuitive for the elderly.

Also, the IFTTT technology in the

hearing aids can help the people who take care of the elderly: e.g. they can create rules that will let them know what is happening, like when the battery is running low etc.

How are your hearing aids controlled? Do you need constant access to the internet?

S.K.: All devices that use IFTTT rules need an internet connection.

But the hearing aid also has a Bluetooth connection. So the hearing aid can communicate with the phone, and then the phone can access the IFTTT service via the internet.

T.F.: Of course, the hearing aid itself does not need the internet. You can use Bluetooth on your phone to change programs on the hearing aid or control the volume for example.

How big are time lags in communication with the hearing aid?

T.F.: It depends. You can’t treat the technology as a real-time system.

Usually, the lags are small – up to a few seconds. But there are quite a few elements in between: the activity supplier service, trigger supplier service, our service that brings them together, the IFTTT service, and of course the hearing aid itself.

There are many links in the process.

Can this technology be used for other applications as well?

T.F.: All I can say for now is that we are working on applications that will facilitate scientific research.

It will collect and supply data for scientific studies done in Denmark at Eriksholm Research Centre, which is part of the William Demant Group.

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19

WBJ COMMENTARY | INTERVIEW

Far apart but not that different

WBJ TALKED TO SHIGEO MATSUTOMI, JAPAN’S AMBASSADOR TO POLAND, ABOUT POLITICAL, ECONOMIC AND DEMOGRAPHIC CHALLENGES, AS WELL AS OPPORTUNITIES OF TIGHTER ECONOMIC COOPERATION BETWEEN THE TWO COUNTRIES

WBJ: World politics is currently driven by challenges such as the election of Donald Trump as US president, Europe after Brexit, tensions in Asia and the Middle East. How does the situation affect Japan’s policies?

Shigeo Matsutomi: We have to face reality and this certain level of instability in the international environment. Japan has a long-standing defense alliance with the US, and approximately 40,000 American soldiers are stationed in Japan. Now, the Japanese government wants to increase our defense budget and efficiency, although to a limited extent, in view of the growing threat of the North Korean nuclear missile program, and because of concern regarding China’s assertive activities in Asia. This budget increase will also enable Japan to make a better contribution to global peace.

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287

Japanese companies are operating in Poland

3.6% of Japan’s GDP is invested in R&D

VS.

1%

of Poland's GDP is invested in R&D.

And on the economic front?

In early 2013, after two decades of economic stagnation, Prime Minister of Japan, Shinzo Abe, introduced a comprehensive economic policy package to revive the Japanese economy called Abenomics. Our GDP has been growing since then.

The Abenomics strategy represents expansive monetary policy, flexible financial policy and structural reforms. We rely on interdependence in international trade and we are developing economic relations with other countries.

We have to fight against the tendencies of protectionism in international trade, and Japan, which is a strong supporter of free trade and a member of the Trans-Pacific Partnership (TPP) of 12 countries, is now confronted with President Trump’s decision to withdraw from the TPP. Though the TPP is not dead yet.

Japan and Europe should join hands in trying to persuade the US of the benefits of free trade. Additionally, Japan and Europe should finalize the Japan-EU EPA negotiations as soon as possible.

Romania, Hungary and Slovakia. In that move, Asahi gained 30 percent of the beer market in CEE. Polish companies are also active in Japan. In my view, there is a great opportunity for more Polish exports to Japan, particularly food and pharmaceuticals.

Japan is acclaimed for advanced robotics. How have you achieved this?

The education system is a fundamental part of the success. In the age of mass production and automation, which in Japan’s case was 1960-1980, the economic system regained a large number of highly skilled workers. After the 1990s, when mass production shifted to a more IT-orientated, more tailored production system, the economy required more creativity, more uniqueness and imagination with a scientific and artistic mind. In short, we not only accommodate but also welcome eccentric geeks. The Japanese education system adapts to meet changing requirements by respecting individualism.

Next would be the focus on SMEs, which can be more creative and adaptive than state-owned After Poland joined the EU it enterprises (SOEs). In Japan, those experienced a surge of investbig appliance companies are shifting ments from Japanese firms. Do you think the inflow of capital will the emphasis of their R&D from in-house laboratories to more outcontinue?

Poland could be a major player in the sourcing and more networking with SMEs, both domestic and foreign.

European Union, and also in global The Polish government is very affairs. There are now 287 Japanese much aware of this trend and they companies operating in Poland are working very hard. As of now, and there are many joint ventures R&D investment ratios to GDP are between Polish and Japanese com3.6 percent in Japan and 1.0 percent panies. There is the Toyota factory in Wałbrzych, the Panasonic battery in Poland. We have to allocate more funds. factory in Gniezno and many other companies, particularly in rubber production, pharmaceuticals and the Japan is also known to have been service sector. The Japanese Bank of tackling demographic problems.

What is the situation now?

Tokyo-Mitsubishi has been active in Warsaw since 2001. It operates in Abenomics also focuses on changing our labor market. Japan’s labor 50 countries in Asia, Europe, North force peaked around 1998 and the and South America and supports whole population started to decline Japanese investments in Poland. around 2008. Abenomics set a Recently, Japanese company Asahi, one of the biggest beer producers target of a fertility rate at 1.8 and it in Japan, bought Polish beer produc- is currently 1.46.

Traditionally, Japanese women were ers Lech and Tyskie and also beer concerned with family and taking producers in the Czech Republic,

INTERVIEW BY EWA BONIECKA

BOTTOM PHOTO SHUTTERSTOCK; TOP: HATSUNE MIKU, THE STATE ETHNOGRAPHIC MUSEUM IN WARSAW, PHOTO BY ŁUKASZ ZANDECKI

care of children and did not enter in great numbers into economic activity. Now that is changing and there are many incentives to attract women to work in various sectors of the economy. We have a new target – 30 percent of management posts should go to women. As of now, the figure is at about 10 percent.

Japan is also trying to activate its senior workers (80 percent of retired people want to work) and increasing the number of expatriates through new, more flexible visas and even a green-card system for highly skilled professionals.

The Japanese government founded the Polish-Japanese Academy of Information and Technology in Warsaw. It is one of the best schools in the field. Are you still supporting it financially?

We assisted Poland in creating that institute in 1994, just after the transformation to democracy and a free market economy. Our government provided financial support and our experts were placed in the academy to conduct lectures. After 2004, when Poland became a member of the EU, our government stopped financing it, because Poland no longer qualified as an Official Development Assistance (ODA) recipient.

Now, the academy is financially independent and has many students, who after graduation are able to find attractive jobs. There are regular Polish-Japanese consultations for scientific and technical cooperation, and there is an exchange scheme for scholars and students.

How about cooperation in the cultural field?

It is very active. Classic and new Japanese films are shown in Poland, and Polish movies are screened in Japan. Many artists visit the country, and museums organize exhibitions of Japanese art. In Kraków, the Manggha Museum of Japanese Art and Technology was established with the help of Andrzej Wajda in 1994. I think that mutual interest is present in both of our societies, and knowledge about Japanese culture and tradition is evident in Poland.

HI-TECH & CULTURE

Hatsune Miku is a computer-generated musician, whose voice is synthesized by an application developed by Yamaha Crypton Future Media. Her name can be translated as “the first sound of the future.”

Created in Japan in 2007, she was named one of the most influential fictional characters by Time magazine. She can be seen in the State Ethnographic Museum in Warsaw wearing attire inspired by traditional Polish folk dress.

LIQUID GOLD In December 2016, Asahi Group, one of Japan’s largest beverage producers, acquired a portfolio of CEE beer brands from Belgium-based Anheuser-Busch inBev for €7.3 billion, the largest deal ever for the Japanese firm. The portfolio included Poland’s Tyskie and Lech, Hungarian Dreher and Czech Pilsner Urquell. The move boosted Asahi’s presence in the region, making it the largest Japanese brewer on the European market.

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21

WBJ COMMENTARY | INTERNET OF THINGS

A great revolution awaits

THE INTERNET OF THINGS, MEANING THE CONNECTION OF ALL DEVICES AND EVERYDAY APPLIANCES TO THE INTERNET AND ALLOWING THEM TO SEND AND RECEIVE DATA BETWEEN EACH OTHER, IS GETTING CLOSER TO BECOMING A REAL THING. WBJ TALKED TO MARIUSZ LASEK, HEAD OF COMARCH TECHNOLOGIES, ABOUT THE IT GIANT’S LATEST ENDEAVOR, CALLED IOT LAB, RECENTLY OPENED IN KRAKÓW, AS WELL AS ABOUT THE POTENTIAL BEHIND IOT TECHNOLOGY AND THE FUTURE OF POLAND’S IT MARKET

WBJ: Comarch has recently opened its new investment: an R&D

center called IoT Lab located in Kraków. What exactly will the lab work on? Only software solutions or also appliances using the Internet of Things technology?

Mariusz Lasek: That is a very good question as it points to the fact that both software and hardware determine how powerful and useful a product is. Our goal is not to produce hardware or software, but IT solutions that will address specific problems, challenges and improve

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400

Is the target number of employees in Comarch’s IoT Lab.

manufacturing or business processes.

IoT Lab is therefore complementary to Comarch’s vast R&D base, as it provides the missing component where IT meets hardware, as well as the appliances themselves. IoT solutions often use different technologies and interfaces from IT in general.

That is why it is important to be able to efficiently and effectively implement solutions for these particular environments and integrate them with regular systems, like ERP. Who will use the solutions that the Kraków IoT Lab develops, and what will they be used for?

It’s our strategic goal to create End2-End solutions, which means that the technologies being developed will be used as components for Comarch products, similar to Comarch beacon for example, which is integrated in many solutions of the capital group. Our “end-users” will include Smart Cities (e.g. SmartLighting and SmartParking), as well as Industry 4.0 (Asset Tracking and manufacturing processes optimisation by integrating assembly lines with ERP).

Our offer also includes Fast Prototyping for outside IoT clients. If a leading mattress producer decided to include sleep monitors in their prod-

ucts, we are ready to prepare the right components and even manufacture a small batch of up to 100,000 units.

The Internet of Things is not a new concept but its development rate is far from impressive. The biggest obstacles seem to be the lack of a common standard and security issues. How will you overcome these?

It is the same in IT as it is in IoT, integration and compatibility are the proverbial Achilles’ heel that often leads to delays in adoption. We handle the matter in two ways: we produce complete solutions, which puts the burden of compatibility on the supplier (which is us). We also monitor and co-create communication standards for IoT. Comarch is a member and a supplier for the OFC (Open Connectivity Foundation) and we provide tests for OFC compatibility.

Comarch invests 10-15 percent of its annual revenue in innovative projects. Is IoT Lab one of these projects?

The internet was a major revolution for the economy. There is no reason why IoT should not be the next big thing. While the internet connected devices that interacted with people, IoT is largely independent of the

INTERVIEW BY BEATA SOCHA

human component. The number of interconnected devices could go as high as 20, 30 or even 50 billion – far greater than the number of people.

This shows the scale of growth that is ahead of us.

ing awareness among doctors and patients alike.

“The number of intercon-

nected devices could go as high as 20, 30 or even 50 billion – far greater than the number of people. This shows the scale of growth that is ahead of us.”

How many people will the IoT Lab employ?

Our IoT team will include 400 employees, which shows how big the IoT Lab will also work on solutions scale of the undertaking is. We are for telemedicine. How is the segexpanding our service portfolio with ment growing in Poland? What type this investment as well as creating of solutions is Comarch developing new jobs in other industries. Elecfor telemedicine? tronic device production, logistics We have been developing mediand quality control have long been cal devices for many years. We’ve connected to ICT, but now we are invested millions in this strategy, also talking about industrial design, including several acquisitions we’ve 3D design, durability tests and memade. Just like IoT, our goal is to chanics – we are looking for entirely deliver comprehensive and intenew competencies, which is also grated technologies that will make good news for universities. healthcare more efficient, offsetting the shortages of medical staff and Comarch is one of the biggest IT improving patient comfort. Apart companies in Poland. A large part of from solutions for hospitals, we are the company’s revenue comes from trying to provide patients with medi- selling software and services on cal services they could use without other European markets. Will the leaving their home. We are also work- IoT Lab also produce solutions for BILLION ing on technologies that will make exports?

Is how many the interaction between the patient Poland has been too small for Codevices worldand the healthcare system easier. march for a long time now. Also in wide could Our objective is to deliver all of the the IoT business, we admit that we potentially be important information about the have global markets in mind. There’s connected to the internet. patient’s vitals before they even set no reason why we shouldn’t. Of foot in the doctor’s office. Demand course, we will also deliver products for these solutions is growing at an to the Polish market, which is open to increasing rate, fueled by increasinnovation, novelties and where we

50

have a lot of new manufacturing facilities. Also, labor costs are far lower in Poland than in Western Europe.

The cost and efficiency equation is different in Poland than in France or Germany. We are not hiding the fact that one of the aspects of implementing IoT is supporting and also sometimes eliminating the need for human labor.

Poland’s position in IT has been very strong. Many foreign firms locate their IT centers here. Is the country’s competitive advantage only the product of lower costs?

Is the competition of Romania, Ukraine, Russia or even India a threat to Poland’s position as an IT powerhouse?

We have a lot of talented and very devoted people. It is no wonder that many global corporations choose Poland as the location for their IT centers. I would, however, prefer for Polish companies to offer their services to them.

It should be a priority to create structural support for original Polish businesses. After all, it’s a fact that some of the factors that determine Poland’s competitive advantage will change over time, and we cannot compare it to India when it comes to scalability. Price competitiveness is also a far more complex matter than simple hourly rates. We must not forget about aspects such as communication, cultural barriers and even loyalty and employee turnover. One thing is certain: we are an important player today but we need to build on our experience and skills to create businesses that are not based solely on the structure of labor costs.

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23

WBJ COMMENTARY | INTERVIEW

WBJ: In the “Grow with Greater Warsaw” (GwGW) project, Warsaw

and 39 neighboring communities will spend PLN 22 million on supporting the export activities of small and mediumsized enterprises. Why is it a good idea to develop the economy of the region in that particular area?

The value of local entrepreneurs' exports in 2015 amounted to PLN 72.5 billion, which represented 71.7 percent of the value of exports from the entire Mazowieckie voivodeship. Our local entrepreneurs export their products and services to as many as 208 destinations worldwide, and their main clients include Germany, the Czech Republic and the UK. So we may safely say that both Warsaw and the whole Warsaw agglomeration are based on export. That area of regional economy cannot be ignored and that is why we want to help that sector to reinforce its position in the world even more.

Win the world of business with Warsaw!

INTERVIEW WITH MICHAŁ OLSZEWSKI, DEPUTY MAYOR OF WARSAW

How would you encourage SMEs to take part in the project? How are you going to provide support?

Owing to the export potential survey that we carried out in 2016, we know not only what quantities of products and services are exported by our entrepreneurs to which destinations, but also how to design our specific supporting measures to ensure they are tailored to the needs of SMEs. Then we can truly help them begin or develop their export activities and build the brand of our region on a global scale. To enable them to achieve that goal, the project provides almost 100 percent financial support, professional consulting services and training with experts and, subsequently, the participation in international trade fairs, B2B meetings and international trade missions. Thus, we provide an educational and advisory module that will prepare our SMEs to conduct trade negotiations with foreign partners and, more importantly, thanks to our help, entrepreneurs, who are already very busy, do not have to worry about the whole logistics of the participation in trade fairs – we organise the stands, the catalogues, promotional films etc. Compared to competitive support programmes, Warsaw truly offers a lot as part of GwGW! What conditions must be met by companies that are interested in participating in the project? Do the participants have to incur any expenses?

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Naturally, in the phase of recruitment for the five support programmes (five sectors will receive support – Modern Fashion and Design, ICT Solutions and Electronics, Machines of the Future (Industry 4.0), Innovative Plastics and Sustainable Food Processing – Ed.) entrepreneurs will have to fulfill certain formal requirements. Our goal is to ensure that the companies interested in the program go through the simplest recruitment path possible. That is why, from the very beginning, we have been talking about three fundamental factors: the company must be a micro, small or medium-sized enterprise, it must come from the Warsaw agglomeration and must either already be or intend to become an exporter.

The City of Warsaw is the largest economic centre in Poland, but the project is carried out in collaboration with 39 adjacent communities. What is the role of the communities in the project? What goals will be achieved as a result of their involvement?

The City of Warsaw is the leader of the project and the 39 neighboring communities are the partners. Cooperation between the communities belonging to the Warsaw agglomeration is a very important element of the whole program. It will facilitate the reinforcement of the regional brand, the economic cohesiveness of the area and the development of joint synergistic operations of all the communities.

Warsaw is one of the first cities in Poland that recognized the need to invest in local businesses.

Supporting business activities, and especially export, at metropolitan level is still a novelty. What other measures are or will be taken by the City of Warsaw with a view to supporting the economic development of the region?

Warsaw is one of the first cities in Poland that recognized the need to invest in local businesses. It has created business incubators in the entrepreneur community: the Centre of Entrepreneurship Smolna and Centre of Creativity Targowa. Public consultations are currently underway concerning the function and operation of Centre of Creativity Nowa Praga – a complex of two buildings at 80 Targowa Street and 3 Inżynierska Street, which we are planning to open in 2022. Warsaw has also started a city acceleration programme – the first one in Poland – that is financed from local government funds, and consistently implements supporting policy for entrepreneurs. The city also provides a number of training courses and workshops, offers preferential rates when renting space to companies and is involved in the organisation of numerous events for entrepreneurs. We try to support our companies from the early development phase to stabilisation to international expansion, and it is that last phase that the Grow with Greater Warsaw program is dedicated to, so I would like to use this opportunity to encourage all local companies to participate in it. We are starting in 2018!

24-25 May 2017 Multikino Złote Tarasy Warsaw Poland

Leading Regional Technology Congress

/ftcongress

@ftcongress

www.f tcongress.com

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25

SHUTTERSTOCK

WBJ COMMENTARY | ASK AN EXPERT

The next big ideas won’t come from corporations

WBJ HAD THE CHANCE TO TALK TO ANDREW ROMANS, RENOWNED VENTURE CAPITALIST AND CO-FOUNDER OF RUBICON VENTURE CAPITAL, A VC FUND THAT SPECIALIZES IN TECH COMPANIES 26

APRIL 2017 W B J

INTERVIEW BY SANTIAGO DE LA PRESILLA

WBJ: How would you explain what you do for a living?

all pretty hot. But all of those are matched by Stockholm, which is Andrew Romans: We invest in start- incredible. Stockholm is totally ups. These are early stage companies, punching above its weight. they have typically been in existence If you’re talking to people in for less than three years and they Poland, you could say: “If Stockholm make some sort of product or service can do that, Poland should be able to that’s internet-related. They are high- do it too.” I’ve seen quite a few startgrowth companies we think might ups that have their development be the next Facebook, Google or engineers somewhere in Poland, it’s Amazon. Software is disrupting every not always Warsaw. I made a 24-fold industry, there’s almost no industry return, meaning that if you put in a that’s safe, no industry that is not hav- $1 million, you get $24 million back ing to change radically. in less than two years, on a company A country like Poland should not called One Page. They had full-time ignore what we’re doing here (Silicon employees that were all Polish. So Valley). China, for example, is benefit- Americans were flying back and ing from an arbitrary opportunity of forth to Poland. What I often see in low-cost labor: laborers have moved places like Warsaw is that you’ve got to the cities, they work in factories engineers working in agencies, makand make all these things that we in ing technology for somebody else. the US and Europe buy. At the pace Someone else owns the company, of things today, Chinese companies they’re getting the funding, coming will move to Vietnam or India in no up with the ideas, but the engineertime, so the Chinese are investing a ing/monkey-work is being done lot of money in start-ups that involve in places like Warsaw or Wrocław. robots, drones, artificial intelligence Eventually these entrepreneurs will and virtual reality, leading to an even start launching their own companies, bigger scale of automation. It’s very but this is going to take time. scary because all of these people are going to lose their jobs.

In terms of Europe, there’s criticism that Poland is big enough of a marWhat is the biggest headache for ket for a start-up to satisfy the needs EU-US investors, Brexit or Trump? of the national market, but not big I’m not a Trump fan, but I’m not so enough to disrupt the ecosystem sure he’s bad for venture capital per continentally. Do you agree? se. Brexit is unquestionably negaIsrael is the obvious example of the tive for VCs trying to raise money. opposite. Their domestic market is Start-ups need money and VCs raise so small that the companies are born money from whatever sources they global from day one. I remember can.

Israeli friends of mine making trips out to China long before the AmeriYou’ve lived in London for about cans. They were just more aware that 10 years. We know now it’s going to there was another world out there. be a hard Brexit. No single market Poland has a bigger domestic access. Where would you move your market, which is positive, but you company if you had to? should never be satisfied. Poland London is the number one location should think the same way – think measured by the number of VC of what the strategy is for winning financings, Paris is number two bethe world. If you want to win the cause of BPI France’s activity, which world, you have to take the United is basically their sovereign wealth States. fund. Most people would agree that Poland is a great place because the French economy is going to hell it’s relatively low-cost, and there’s very quickly, number three is a tie less of a talent war. In an American between Stockholm and Germany. start-up, when the going gets tough, Unlike France, Germany isn’t a engineers can just go across the single-capital ecosystem: Munich, street and meet other CEOs. I reBerlin, Cologne and Frankfurt are member I saw a chalkboard in front

of a restaurant in Silicon Valley that said: “We just raised $30 million and we’re hiring, come on in!” You can lose your technical team in six weeks. When you have your team in Poland, your engineers are probably die-hard loyal.

Poland should think the same way – think of what the strategy is for winning the world.

If you want to win the world, you have to take the United States.

82% of European start-ups are eventually acquired by American buyers

What do you think governments can do to prevent companies from selling off or moving to Silicon Valley/ NY, instead of staying in Europe?

Eighty-two percent of European start-ups are eventually acquired by American buyers. When you first hear that, you’d think that’s not at all surprising. Google and Oracle are the most acquisitive buyers. Nobody in Europe will buy your internet company. What does it mean if this statistic remains static for the next 30 years? Is everyone just going to keep being bought out by American companies?

What a government can pay attention to is having late-stage growth funding available for start-ups.

Instead of just being sold to Oracle, rate more money at the later stage at high valuations and then list on the stock exchange for when they launch an IPO. Skype could’ve raised a mega private round of $100 million and then said no to Ebay and go on to do a $500 million round.

You’re seeing that with some European companies like Spotify.

How do you get corporations to actually take big risks?

I wrote a book called “Masters of Corporate Venture Capital.” There is this massive company in China that was doubling its revenues every year and they asked me to advise them on setting up their corporate venture capital group, so I interviewed the top 20 CVCs out there and put it all in a report. I then went further, I actually did about 100 interviews.

If you’ve got a $50-billion company, and you take 10 percent of that and put it into next year’s R&D budget, you’ve got $5 billion of investment – all these people sitting in cubicles from China to Denmark. I personally don’t believe that the next big ideas won’t come from corporations’ R&D departments.

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TECH

ON THE VC RADAR Some of the most successful Polish tech companies have already been scooped up by international giants. But there are

hundreds more for the taking. Many have grown out of the Polish market and moved to bigger tech ecosystems, or set up offices there. Here are some examples of Polish high-tech firms, some of which are no more than a couple of years old. Some are only just coming out of the prototype phase, others have managed to grow their revenue fiftyfold over the past few years. They operate in different areas: software design, biotech, eco-engineering, and robotics, but they all have one thing in common: they use cutting-edge technology to deliver exciting and innovative solutions.

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V E N T U R E C A P I TA L

Codewise

Founded in 2011, Codewise has managed to grow its revenue by a staggering 13,052 percent over the period 2012-2015, according to Deloitte’s Fast 50 Central Europe 2016 ranking, making its CEO Robert Gryn one of top 100 richest Poles. Its flagship products include Zeropark, a performance traffic exchange, and Voluum, which provides a powerful suite of campaign management and analytics products across mobile and desktop. Headquartered in Kraków, with a second office in London, England, Codewise employs over 90 talented individuals from six different countries and supports customers in over 190 countries. “There’s so much talent in Poland. However, people are generally risk-averse and often don’t think on a global scale.

I would love to see this change,” said Gryn.

SALESmanago

SALESmanago is a cloud-based online Marketing Automation platform used by over 5,000 companies all over the world, mostly B2C and online Stores that manage databases of over 200 million customers. The platform uses the power of real-time website and mobile application behavior analysis, which enables clients to fully personalize email marketing, dynamic website content, social media and mobile marketing. It recorded revenue increase of 976 percent in the 2012-2016 period, and placed 11th in Deloitte’s Fast 50 CE ranking.

SOME OF THE MOST SUCCESSFUL POLISH TECH COMPANIES HAVE ALREADY BEEN SCOOPED UP BY INTERNATIONAL GIANTS. BUT THERE ARE HUNDREDS MORE FOR THE TAKING...

NextBio

CodiLime

CodiLime provides professional IT consulting and software engineering services for global clients in three core areas: networks, security and Big Data Science & Deep Learning (through its deepsense.io subsidiary).

Established in 2011 by a group of Polish computer scientists and mathematicians, the company managed to increase its revenue by 5,038 percent between 2012 and 2016, which placed in in the second spot of Deloitte’s Fast 50 CE ranking. Currently, CodiLime’s team of 200 is comprised mostly of software engineers and data scientists who provide services to an impressive list of clients such as NTT, Intel, NVIDIA, IBM, Nielsen, AT&T, Hitachi and Juniper Networks.

Winner of InfoShare 2016 Startup Contest, Nextbio was founded in 2015 by scientists from Lublin, eastern Poland. The firm offers services including analyzing and identifying 100 percent of organisms in foodstuffs as well as determining their exact quantity. The DNA analysis methods used by the company are faster and more precise than traditional microbiological analysis.

ACR systems

The Polish start-up, built in a garage in Józefów near Warsaw, has decided to take on Hollywood. It produces advanced digital 3-axis camera stabilizers, which are exceptionally light (only 6.5 lb) and can be mounted on cranes and multirotor drones. It has already established a client base in Europe, as well as some investors. It now wants to increase its foothold in the US, as well as India.

Bin-e

Bin-e is an intelligent recycling trash can uses image processing technologies and sensors to recognize waste items and segregates them into suitable containers. It then compresses plastics and paper to save on space. The device is particularly promising, since 22 percent of Poles never segregate their waste and another 17 percent only do it occasionally, according to pollster TNS Polska. Scheduled to hit the market in 2017, the project has already won multiple awards, including the “Internet of Things Bootcamp for a Creative & Innovative startups,” held at Infoshare 2016.

Vbionic

Winner of the Polish Creative Business Cup at InfoShare 2016, vBionic is working on prosthetic hand that can be controlled in innovative ways: by blinking eyes using brain waves. The start-up wants to produce their cutting-edge tech at a price that would make it available to a wide range of customers.

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SHUTTERSTOCK

TECH

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AU TO M AT I O N

How many times have you forgotten to pay a bill, write an email, make a phone call or cancel an appointment? And every time you do, you probably say to yourself “I should get an assistant.” However, if for whatever reason hiring another human to share your workload is not the answer for you, perhaps hiring a machine is, or at least time-sharing it BY BEATA SOCHA

Do you remember PAC-MAN?

If you’re too young to remember it, you must have seen it in a movie or a TV show. The classic 1980s game keeps making comebacks in popular culture, a nostalgic nod to the wonders of arcade gaming.

Either way, everyone knows that the yellow circular character’s goal was to eat all the pac-dots in the labyrinth while avoiding being eaten by his four enemies (Blinky, Pinky, Inky and Clyde).

The interesting thing is that the enemies appear to be somewhat intelligent – when “awake,” they’d follow Pan-Man through the maze. By today’s standards, it’s hardly impressive. It would be fairly easy to program the game so that the enemies calculated the shortest route to Pac-Man at any given moment, but with 1980s computing power, it was not an

easy feat. The game’s creators came up with a rather ingenious way to do it. They programed Pac-Man to leave a trail – a “stench” if you will, that fades away with every move he makes and every second that passes. So when the enemies came across the trail, they just followed its gradient – the stronger the stench, the more recent the trail. That’s just one of many examples of how very simple rules can create seemingly intelligent behavior.

Imagine that you walk into your home and your house lights up immediately, your favorite relaxing music is already on and your cappuccino machine has just served you a cup of hot, foamy deliciousness. When you take off your coat, your TV switches on and lists all the programs it has tivoed for you in order of importance. While you’re watching, your phone chimes and reminds you

that ticket sales to your favorite band’s concert are about to start and you should log on the site to get the best seats. Half an hour later your phone chimes again to tell you that you’ve only walked 5,000 steps today and you may want to go out jogging, especially since it’s a warm and sunny afternoon. It seems too good to be true, but it isn’t. In fact, all of this is possible today.

We have been gradually automating our lives for years: a standing bank order to pay the rent, Google alerts telling you about the latest reports on a topic of interest, lights running on proximity sensors – all of these are in common use. Now, all these processes can be combined, intertwined and tweaked to your liking using very simple rules that altogether make for an excellent virtual personal assistant.

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TECH

HOW DOES IT WORK? An increasing number of manufacturers equip their products with technology that allows them to send and receive information and respond to it. The only question that remains is how they can understand the information they receive from other products and services, made by other manufacturers. Your phone, your dishwasher, your car and your thermostat all speak different languages and what they need is a universal tongue, a lingua franca if you will. There is a number of such platforms that can be used for that, but one in particular seems to be catching on more quickly than others: the If This Then That technology (IFTTT). There are already over 400 service providers that equip their products with IFTTT – which means that they can send and receive data from the IFTTT platform via the internet.

If you have two devices furnished with IFTTT, they will be able to communicate and respond to one another.

The way it works is quite simple. You create a rule, which are called Applets in the IFTTT language (previously also Recipes). One of the devices serves as a trigger

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The Internet of (vulnerable) things

As the Internet of Things market increases, so does the number of incidents involving breeches in security of internet-connected devices. Only recently, an industrial dishwasher-disinfector was discovered to have system flaws that allowed a hacker to access and plant malware on it, which could later be used to attack other devices in the network. Given that this type of dishwasher is almost exclusively used in restaurants and cafes, such a hack could potentially have dire consequences (e.g. the malware could compromise the conditions at which food products are refrigerated, which could lead to dangerous infections and poisoning). Earlier this year, IoT forums were buzzing about a brand of internet-connected teddy bears that had reportedly exposed over 2 million voice messages between parents and children to online hackers. There is no way of knowing how much of the information actually got into the wrong hands, but it’s not too difficult to imagine how it could aid criminals in planning e.g. a burglary or even a kidnapping.

and the other performs an action. Let’s say you are allergic to pollen. If the weather report says the level of pollen is high in your area, the weather website that supports IFTTT (e.g. Weather Underground) will know to initiate the rule. What it does is send your phone a message to notify you of the pollen situation, e.g.: “High pollen concentration. Take allergy meds.” This is called an action.

You can create rules for your social media accounts (e.g. if someone tags you in a photo, you can have it automatically saved to your dropbox), cars (if you’ve ever lost your car you’d be glad to have a map with your location emailed to you every time you park in the city), home appliances (you can tell the Alexa device to locate your phone, for instance), and much more. You can even trigger your phone to give you a phantom call if you are in a middle of an awkward conversation and in need of an easy way out. The collection of existing applets is growing at an astronomical pace. That’s because they are extremely easy to program, so anytime someone comes up with a useful new rule, they can make it available to all IFTTT

users. There are tens of millions of rules already in use. Most big internet services support IFTTT: Google Drive, Gmail, Dropbox, Facebook, LinkedIn, Twitter, Tumblr, Instagram, BuzzFeed, eBay, Craigslist – you name it.

SAFE AND COMFY Even if social media is unchartered territory for you, you’ll still find many uses for automated rules in your home. An automatic response in case of fire detection and flooding seems like a must in a modern home. Automation can also prevent burglary. After all, how satisfying is it to watch your security camera feed after your house has been broken into? But what if the system catches the perpetrator in the act and alerts you to their presence so you can in turn call the police? Smart homes with motion sensors can do that. “The system detects movement in the apartment while we’re away and sends an alert to your smartphone whenever something unsettling happens. This allows you to immediately take action and, for instance, notify the security in the building,” explains Mikołaj Pertek, developer market expert

AU TO M AT I O N at Fibaro. The system can check a number of conditions before sending the alert: if it’s night time and you’re at home, the system will ignore your stroll to the kitchen, but it will start beeping if someone opens the balcony door and enters your home.

Thermostats were supposed to be the ultimate solution to temperature regulation, but they are not impervious to human error and forgetfulness. If you open the window to get cool air, your thermostat will compensate for the breeze, using even more power. By applying a few simple rules, and allowing the thermostat to communicate with your smart home central computer “the devices will automatically respond to temperature changes resulting from opening a window, and will not try to heat a room when it’s inefficient,” said Pertek.

The number of possibilities that devices connected to the internet offer is expanding rapidly. All it takes it to turn on a few simple rules you can choose from a menu.

And yes, there are always safety concerns, as with every new technology. But with the number of things we deal with on a daily basis, automation seems like the only way to remain sane.

OUT OF THE BOX

Some automation rules can be very handy, others are a little out there, and then there are some that will make you smile and think: “What would anyone ever need that for?”

Here’s our selection of some of the more interesting IFTTT Applets.

SHHHH! TURN IT OFF!

Ever felt embarrassed in the movies when your phone suddenly buzzes, or worse, when your “Gangnam style” ringtone that you’ve been meaning to change in like forever goes off? You can create a rule that will switch your phone to mute whenever you’re in a place where phone use is frowned upon, like the movies, libraries or churches.

NEED COFFEE, NOW!

Would you like to literally wake up to the smell of coffee? You can hook up your fitness band Fitbit to your coffee maker so that when your pulse indicates you’re waking up, the machine will automatically start brewing you a nice hot cuppa joe.

THAT’S NOT VENUS

Imagine you’re looking up at the stars with a date. You point to a brighter dot flying overhead and you say: “Did you know that the ISS is flying above us right now?” Who wouldn’t be impressed? Or maybe you’d like to know when an astronaut is launched into space?

HONEY, DID YOU WANT ME TO GET SOMETHING?

Whenever you’re shopping your phone can automatically send a text message to your spouse asking them if they need anything from the store. Think about all those unnecessary repeat trips to the store you will never have to make again!

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JUGGLING WITH POLISH PENSIONS The retirement age in Poland resembles a roller coaster. Before society could get used to it being raised, it has been lowered again. The chaos experienced by the average citizen is enhanced by the government’s latest idea of making pensions conditional on a minimum of 15 years of fulltime employment. Money for pensions is already missing, so the government must now solve the problem it has created

By Sergiusz Prokurat

SHUTTERSTOCK

R

ETIREMENT is the ugliest word in the language claimed Ernest Hemingway, who loved to live and work, and for whom a pension was synonymous with sad old age. When in the 19th century, Otto von Bismarck, the Chancellor of the Reich, created a system based on the idea that pensions were to be paid out from taxpayers’ money, the beneficiaries were elderly people. Pensions were given to people who turned 70, while the average life expectancy was just 45. A pensioner was said to be someone who was physically unable to work. Today, however, a pension is understood as “a right to take time off,” which creates a situation in which pension systems, everywhere in the world, are unsustainable.

Not everyone shares Hemingway’s opinion on pensions. For Polish citizens it is a highly controversial, and primarily a political issue. When, in 2013, the retirement age was raised, the elite argued in favor in quite a reasonable way – we live longer and work longer, and the aging of the population means that in the near W B J APRIL 2017

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JUGGLING POLISH PENSIONS

future a decreasing number of working people will have to maintain a large number of pensioners. Increasing the retirement age to 67 for men and women was meant to save state finances. This happens everywhere in the world – countries raise the retirement age because of the unsustainability of pension systems.

Nevertheless, the average Pole did not like the idea. A CBOS study conducted at the time of reform implementation in 2012 showed that only 15 percent of men and 8 percent of women were in favor of the change. It is hardly surprising.

Receiving a pension would resemble a game of roulette. According to the rules, losers (i.e. those who do not survive until retirement age) receive nothing, because everything goes to the broker, who for years collected contributions made by working people. This unpopular decision did for the government and left the door open for PiS, who promised to restore the lower retirement age of 60 for women and 65 for men. “We promised that when we took office we would restore the previous retirement age. And we kept our word. We have brought back social justice to Polish citizens,” said Prime Minister Beata Szydło. The new rules will apply from October 1, 2017.

Economists warn though that Poland is heading for financial disaster. Decline in revenues from contributions due to the increased number of retired people and increased expenditure means increasing the budget deficit by PLN 8 billion in the first year after lowering the retirement age.

Then the costs will grow exponentially.

During the first four years they will be as much as PLN 40 billion. After the 500+ Program – in which people get PLN 500 monthly for each second child, and which costs PLN 20 billion per year – it is another populist gift for society that is going to be maintained by future generations. Returning to a lower retirement age, despite longer life expectancy, will in a dozen or so years lead to an increased number of pensioners and, consequently, to a huge deficit, lower GDP and a decrease in the value of pensions.

On one hand, the present government is giving money away, and on the other hand, it is looking for a way to rescue state finances. The government proposes, among other things, that pension contributions should embrace all civil-law contracts and that people who have not made 15 years of contributions will not receive

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What are your Retirement plans? a pension. A full-time agreement, so desired among traditional Poles, who value stability, now turns out to be a worthless piece of paper. All this because under the pension scheme, the state that collects taxes, promises but does not guarantee pensions. “I do not believe that I will be granted any pension, although I’ve been a taxpayer for eight years,” said Aleksandra Jezierska, 32, a bank employee. Her contemporaries share that idea. Nevertheless, ZUS (the state pension provider) supposedly informs citizens about their account status. In fact, there is no money in the accounts and the presented figures are only accounting obligations. In the end, pensions paid out after several decades are going to be covered from the taxation of the future economy and the people working then, just as today’s pensions come from labor taxation. The decision of the Constitutional Court of February

7, 2007 assumes that – should the occasion arise – on the basis of standards and constitutional values, the privilege called a pension can be legally restricted.

The current pension scheme in Poland, in which the retirement age is of paramount importance, creates incentives for making politically questionable decisions. In addition, there are whole social groups that have obtained privileges they are not willing to give back, which is why they can reserve the time of retirement, i.e. a lower retirement age, or receive a higher pension. The shrinking group of the working and contributing, amounting to 16 million people, will still maintain the group of young, satisfied fortyishyear-old pensioners, including so-called “uniformed” pensioners.

The real issue, however, is that the retirement age exists at all. It is based on the assumption that there is universal old

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Denmark Britian Malta Hungary France Czech Republic Italy Bulgaria Croatia Austria Estonia Romania Latvia Cyprus Holland Germany Greece Poland Ireland Portugal Lithuania Spain

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INCREASE (2013-2040) IN ELDERLY AS A PERCENTAGE OF ALL CITIZENS

age. Meanwhile, the relationship between age, health status and one’s mobility is questionable. There is no typical old person. This is confirmed by publications

by David Bloom from the University of Harvard and John Beard from the WTO. It is difficult not to argue with that. We all know people who have an active professional life and work despite old age: Mick Jagger, the 73-year-old Rolling Stones frontman still performs, 84-yearold Warren Buffet works and still earns money. Even the new President of the US, Donald Trump, is 70 years old.

People in their 60s or above currently represent nearly one billion people in the world, and as the result of aging populations, by 2050 this group will double. Moreover, we live in times of a knowledge-based economy. If this pace of new technological development is maintained, soon many professions, such

as drivers or cashiers in shops will be automated and they will disappear from the market. The pressure on education and people with market-specific knowledge will increase. After some time we are going to reach the moment when respect for skills and knowledge will be valued more than the attribute of being young. A knowledge worker will always be worth money, regardless of age. In this case, can we see a fixed, uniform retirement age as an unnecessary concept? People have different organisms and talents. Why should age determine social usefulness? On top of that, the concept of retirement age is indeed a discriminatory idea.

The only hope is falling in love with one’s work. And with this, typical complaining Poles have a problem. It is no surprise that life is easier if you like what you do. Contrary to what one might expect, working people do not want to

retire once they reach retirement age. It is illustrated by the example of Koreans, who on average retire after turning 70, although the retirement age in that country is fixed at 60.

Debates on retirement age are ongoing.

Many countries have raised the statutory retirement age – it is a general global trend. On the other hand, some governments have already given up on the idea of sending an employee into retirement after reaching retirement age (the US, the UK, Finland), which gives employees more flexibility in shaping their careers in the later stages of their life, and the option to decide on how long they would like to remain in work. This is the first step in purging the retirement age completely, which has to take place one day, as in several decades Poland is going to become a pension society – with no option of enjoying retirement.

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POLISH SPIRIT(S)

by Karolina Papros

86

4th Poland’s place in the world in vodka production

FRANCE

23.1 UNITED STATES

3.5 CANADA

POLISH VODKA HAS BEEN A HOUSEHOLD NAME FOR DECADES. MEANWHILE, POLISH CIDER IS A RELATIVELY NEW CONCOCTION THAT IS WINNING OVER THE HEARTS OF POLISH AND INTERNATIONAL CLIENTS, WHILE POLISH BEER HAS ITS FANS EVEN IN COUNTRIES FAMOUS FOR THEIR OWN BEER BRANDS, LIKE GERMANY AND THE CZECH REPUBLIC The total value of the Polish spirits market has been growing for a few years now. Last year it stood at PLN 19.1 billion, in 2015 – PLN 18.6 billion and in 2014 – PLN 18.2 billion. The biggest increases in production last year were recorded in the premium vodka segment (an 11 percent growth compared to 2015) and in whisky (a 15 percent increase year-on-year).

Polish alcoholic beverages seem to be appreciated not only nationwide, but also worldwide. According to the Association of Employers of the Polish Spirits Industry (ZPPPS), Polish spirits noted an increase of 4 percent in export sales in 2016 to reach a value of €175 million.

Polish vodka, cider and beer are currently the most popular exported alcoholic beverages, while other types of alcohol are not faring nearly as well.

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3 UNITED KINGDOM

2.5 MEXICO

Source: ZPPPS, 2016

POLISH TOP VODKA CONSUMERS VALUE OF POLISH VODKA IMPORTS IN € MILLION

11

8.68

POLAND

CZECH REPUBLIC

10.89

8.52

GERMANY

BELARUS

9.03

3.81

SLOVAKIA

UKRAINE

EXCISE DUTY FOR A 0.5 LITER BOTTLE OF VODKA BY COUNTRY (IN PLN) POLISH AQUA VITAE Vodka, also known as aqua vitae, is a genuine Polish liquor, valued for its quality and authenticity like Scotch whisky or French wine. Poland is the largest producer of vodka in the European Union and the fourth in the world (after Russia, Ukraine and the US), as reported by the Ministry of Treasury.

The industry seems to have finally recovered from a blow it suffered in 2012, when a major hike in excise duties on vodka was introduced. In 2016 production increased by 3 percent year-on-year to a level of 98 million liters. However, it is still lower than before the duty increase: in 2011 Poland produced 110 million liters of vodka. Currently, excise duty represents 75 percent of the price for 0.5 liter of vodka, which translates into an average extra PLN 11 for a bottle. In Belarus, excise duty for a 0.5 liter bottle stands at PLN 8.52, in Slovakia – PLN 9.03, in the Czech Republic – PLN 8.68, in Germany – PLN 10.89, while in Ukraine – only PLN 3.81, according to ZPPPS. One of Poland’s most popular overseas vodka exports, Żubrówka (CEDC’s brand), has been produced in eastern Poland since the 16th century. Its flavor is derived from a type of grass from the Białowieża Forest – a blade of the grass appears in each of the bottles.

According to The Millionaires’ Club 2016 ranking, Żubrówka was placed in 31st position in terms of sales of all types of alcohol in the world. It was the highest score for this brand to date. Apart from Żubrówka, among the first 146 alcohol brands on the list are: other CEDC brands such as Soplica and Żytniówka, Krupnik and Sobieski (Marie Brizard’s brands), Żołądkowa Gorzka DeLuxe, Lubelska and Żołądkowa Gorzka (Stock’s brands), as well as Wyborowa (Pernod Ricard’s brand).

According to data provided by CEDC, over 40 million liters of vodka are exported each year, which is worth ca. €120 million. Over 60 percent was exported to EU countries, and around 20 percent to the US, where Polish vodka enjoys a strong market position as a premium product, 3 percent to Canada and 14 percent to the rest of the world.

The largest importers of Poland’s vodka are France (€86 million in 2016) and the United States (€23.1 million). Polish companies have invested heavily in long-term brand promotion and the strategy has borne fruit. Many Polish firms have distribution centers in France, which serve as hubs exporting Polish vodka to other countries. Other important export directions are Canada (€3.5 million), the UK (€3 million) and Mexico (€2.5 million). Polish vodkas and other spirit drinks also reach, in smaller volumes, markets as far away as Singapore, Hong Kong and Chile.

While some markets remain open and increase their imports of Polish spirits, others tend to close. Hungary used to be the third largest importer of Polish spirits but the government of Victor Orban introduced a health tax that discriminates against imported alcohol. As a result, Polish spirit exports to Hungary have declined by more than a half. The biggest potential, according to ZPPPS, is still in the US. A lot of money also awaits in Latin America and Asia, if Polish alcoholic beverage producers manage to build a stronger presence there.

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#EATAPPLES

What do we do with all the apples?

15.7% domestic consumption 24.1% exports 50.6% processed for juice

9.6% other forms of

processing Source: projections by orchard industry association TRSK

4.15 MILLION TONNES PRODUCTION OF APPLES IN POLAND

After the Ukraine-Russia conflict started in 2014, Moscow put a trade embargo on Poland’s apples. On a global level, Poland ranks fourth in terms of apple production and Russia was a major importer of the fruit. Due to the sudden surplus of apples, the consumption of apples became something of a patriotic act, with its own Twitter hashtag: #eatapples. This is how the Polish love of cider was born. However, the beverage had to overcome an image problem. Poles who still remember communist rule, also remember low-quality alcoholic beverages made from apples and known as “jabole.” The term had a pejorative meaning and was associated with socialist shabbiness.

Poland’s fruit suppliers and cider-makers consider their future bright, as the drink has grown rapidly in popularity across the country. All over Europe, cider and its pear equivalent, perry, are being sold as treats for sophisticates; including high-end bars in Warsaw. There is even the Lublin Association of Cider Lovers whose aim is to promote the Polish apple-growing region as a heartland of cider, similar to Italy’s Tuscany wine region.

Cider has an appeal as it has a relatively low calorie content (around 36-42 calories per 100 ml) in comparison to other alcoholic drinks. In 2014, cider maker Ambra told Polish national daily Rzeczpospolita that the country’s cider industry could be worth as much as PLN 1 billion (€250 million) within the next decade. Since it is a new category on the Polish market, local producers can export it to countries where cider has many fans, such as the US, the UK or Australia.

POLISH WINES MAKE IT BIG What kind of wine is produced in Poland?

Wines produced in Poland represent different styles and characters. They are made both from classic grape varieties “vitis vinifera” as well as from hybrids: from Rondo and Regenta, to Pinot Noir and Chardonnay. They are fermented using traditional methods.

Maciej Sondaj, Chairman of the Board at Winoblisko sp. z o.o.

Does the Polish climate allow the growing of premium quality grapes?

Absolutely. The Polish climate allows us to achieve exceptional results. Surprisingly, it’s no longer the sugar level in the fruit that is a problem, it’s maintaining the right level of acidity. Achieving a 15-percent wine is no longer an issue. 2016 was the hottest year in decades – global warming is a fact. However, the most important factors for wine grapes are the vineyard and its microclimate as well as the soil, the location, the slope and e.g. the proximity of a river.

How are Polish wines seen in Poland and in Europe?

We have been showcasing the Dom Bliskowice wines at the prestigious Raw Fair in London, Vienna and Berlin for years. Interest is enormous. A few weeks ago we were in Berlin at the unusual region wine contest. There were over a dozen brands, the jury included the German Sommelier champion as well as Gerhard Retter from Cordobar, one of the best wine bars in Berlin. Dom Bliskowice wine first made it into the finals and then won the entire competition, beating the Libyan Chateau Musar, which is well known in the Polish market. I think it’s a sign of the times.

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POLISH LAGER

2016, POLAND PRODUCED 40 MILLION HECTOLITERS OF BEER, A 2.1 PERCENT INCREASE Y/Y, WHICH MAKES POLAND THE THIRD LARGEST PRODUCER OF BEER IN EUROPE

Germany

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Apart from vodka, the other large category within the alcoholic drinks market in Poland is beer. The national market is dominated by Polish divisions of large multinationals. They have an advantage over local manufacturers as they have well-known brands, strengthened by some very successful marketing campaigns, not to mention economies of scale, and well-developed distribution networks. However, what can be observed recently on the market is consumers’ inclination to purchase products from smaller breweries and manufacturers, which use traditional technology and methods of production.

In 2016, Poland produced 40 million hectoliters of beer, a 2.1 percent increase y/y, which makes Poland the third largest producer of beer in Europe. Polish beer exports have also been increasing steadily over the past years: between 2010 and 2015 it increased by nearly 70 percent, as reported by industry association ZPPP Browary Polskie. According to KPGM’s report from 2014, the increase in the sales of Polish beer on some of the markets is influenced by the presence of Poles living abroad and current migration. Poles who work abroad eagerly buy products from their home country, which may explain considerable exports to the UK, Ireland, Germany, the US and Canada.

However, quite large volumes of Polish beer are exported to the Czech Republic, Slovakia, Hungary, Romania and Italy – countries with a relatively small number of Poles.

One of the reasons might be the fact that international brands are produced in Poland. Another is that Polish producers ensure high quality in their products, which usually stem from a long tradition and history, therefore they are eagerly consumed not only by Poles abroad, but also by international customers. Polish beer is sold in large quantities even in countries that are famous for their own beers and where beer consumption is high, like Belgium, the Netherlands or the Czech Republic. In fact, according to portaspozywczy.pl, the Netherlands holds first place in terms of exports value: €31.7 million and 36,200 tonnes. In terms of volume, Germany is first: 51,200 tonnes and €18.3 million.

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POLISH EVOLUTION 42

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Discretion, special treatment, fully customized offers, and asset & wealth management – these are just a few terms associated with “private banking.” Even though this kind of service has a long history in western europe, it is a relatively new phenomenon in poland. With the polish affluent class slowly emerging, private banking is here to stay and grow Text by Karolina Papros

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EVOLUTION OF POLISH BANKING

Private Banking includes a set of exclusive services and products offered by banks to their most affluent clients. “Private” does not refer to a non-incorporated banking institution, but to the personal approach that affluent clients can rely on, usually by having a dedicated bank advisor at their disposal. This individualized approach is a highly profitable branch of the banking industry and its popularity in Poland is growing fast. The services are offered by a growing number of brick-and-click banks and the number of customers who use this form of service is on the rise as well.

Services and products available under the label of private banking target wealthy individuals. They are often referred to as HNWIs (High-Net-Worth Individuals), usually defined as having investable assets of at least $1 million. According to a report

by Capgemini on global HNWI population, there were over 4 million HNWIs in Europe in 2015 (in comparison to over 15.3 million worldwide). Their wealth amounted in total to $13.6 trillion, which put Europe in third place, after Asia-Pacific and North America. As Capgemini reported: “Europe’s HNWI population and wealth both grew by 4.8 percent to 4.2 million and $13.6 trillion respectively, lower than the global average growth rates of 4.9 percent and 4.0 percent respectively, due to Europe’s ongoing fragile economic recovery.”

WEALTH THRESHOLD Poland has a rather modest population of HNWIs compared to Western countries, as merely 50,000 Poles (0.13 percent of the total population) have liquid assets of $1 million or more, according to KPMG. However, the term “wealthy individual” is customarily extended in Poland to anyone with an income of over PLN 7,100 a month. By that metric, over 1 million Poles

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(2.5 percent of Poland’s entire population) could be considered wealthy and could potentially be the target market for private banking services.

Nevertheless, among customers to whom the offer of private banking is directed, are not only the wealthy, but also those who have the potential to gain this status in the future, if certain saving strategies are applied. The criteria to become a client of private banking vary from bank to bank, but, in general, they are determined by the amount of investible assets or the amount of monthly revenue. The minimum threshold is much lower in Poland than in other mature economies as the Polish affluent class is still emerging. According to data gathered by Forbes, the threshold in Poland may start from PLN 400,000 at Alior Bank (other examples: PLN 600,000 at BGŻ BNP Paribas Private Banking; PLN 500,000 at Noble Bank); and continue up to PLN 3,000,000 (Citigold Private Client) or even more.

The number of wealthy clients that Polish banks have in their client portfolio oscillates between 4,000 and 7,000 per bank, with total assets under management reaching somewhere between PLN 7 billion and PLN 11 billion, according to information compiled by Forbes.

Poland’s adventure with private banking began in 1993 with the first bank – Bank Handlowy, which felt the need for an individualized approach towards high-net-worth clients and launched a higher standard of service available for selected clients, mostly for the top managers of companies which were at that time clients of the bank. Other banks followed suit, among them: BRE Bank (1995) and Bank Pekao (1997). Currently, the title of the Banker’s Best Private Bank in Poland is held by mBank, which is also the recipient of the Global Private Banking Award 2016.

THIS PAGE PAP; OPPOSITE PAGE SHUTTERSTOCK

The long lines of yesteryear, Bank PKO in Warsaw1996

Today’s ideal banking experience

ALL IN ONE The development of private banking services marks an important step in the development of the banking sector in Poland. Even though Poland has not yet reached the same stage of development in this field as the rest of the world, it is gradually catching up. Only some elements are adjusted to the local market, while the rest follow global trends. Thus, Poland’s private banking model closely resembles Western standards. The elements that are more specific for the Polish market include offering private banking as a part of general retail banking services.

In Poland, the same bank usually provides retail and private banking services under one brand with a certain range of products and services dedicated to HNWIs. However, Noble Bank seems to be one of the most interesting examples of branding as it has departed from this common combined approach of its leading brand (Getin Bank) and introduced a separate brand solely for the purpose of servicing a select group of wealthy customers.

Therefore, Getin Noble Bank was the first bank to cater only to affluent clientele in Poland.

POLISH GOLD STANDARD This is not the only difference between the Polish and Western European private banking markets. Polish HNWIs also seem to fancy short-term investments in contrast to their Western counterparts, who are in favor of long-term investments (those maturing over five years or more). Moreover, local wealthy individuals are not particularly eager to use the services of professional advisors and they prefer to make their own decisions regarding investment matters. In Western Europe, professional management is responsible for the largest share of assets. Customers of

private banking in Western Europe seem to prefer to leave their money in the hands of professionals as they are fully aware that investment decisions need professional knowledge, expertise and constant monitoring of market trends.

Naturally, the range of offered products and services varies from bank to bank, but in general they are tailored to Polish market reality: lower access threshold, a narrower range of products and services and more transactions on a smaller scale. The range of products encompasses, among others, current accounts, credit and debit cards (usually in gold or platinum standard), basic concierge-type services, fixed-term deposits, credits and loans, equities, foreign currency transaction, brokerage transactions, investment consultancy, insurance products, etc. All of them are offered by a designated relationship manager. “Other services include various loyalty programs, tax analysis, advice on legal aspects of inheriting assets in the particular financial system and more advanced matters, such as legal aid in restructuring client’s assets and his or her corporations,” Beata Majewska, head of private banking at Deutsche Bank, told Forbes.

It is not hard to predict how this branch of the Polish banking sector will continue to develop. However, it will be interesting to see how banks are going to deal with emerging HNWIs’ expectations, which wealth managers must, or at least should, meet.

Among them are: more frequent and more digital communication, risk compliance and honest advisors, as well as advisors who do not shy away from innovation. “We can see a rapid increase in clients’ interest in new technologies, particularly mobile, which allow them to use their accounts and offer immediate – preferably even real time – information on the current investment portfolio,” said Małgorzata Anczewska, head of mWealth Management.

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Section Partner

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Latest news in office, retail, logisitics, residential and investment

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Office building design trends

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Interview with architect Czesław Komorowski of Epstein

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Interview with Echo Investment CEO Nicklas Lindberg

F E AT U R E D

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– QUALITY IN THE MOST PRESTIGIOUS LOCATION

(Warsaw, ul. Wspólna 70) • A-class office building • Center of the center location • Over 14,000 sqm GLA • Office modules starting from 200 sqm • Latest technologies • Non corporate character • Delivery – end of 2018

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LOKALE IMMOBILIA | NEWS

PRESS MATERIAL

Office

AVESTUS to launch Imagine office project in Łódź in Q3 Developer and investor Avestus Real Estate will, in the third quarter of this year, launch construction work on its Imagine office project in Łódź, which will comprise a total of 14,500 sqm of office space and 2,300 sqm of retail and service area in two buildings. A third building will accommodate parking spaces for 356 vehicles.

The scheme is scheduled for completion at the turn of 2018 and 2019, with Colliers International acting as the exclusive leasing agent. Avestus is now in the process of obtaining a BREEAM Excellent certificate for energy efficiency and environmental performance for the development. Apart from the Imagine scheme, the developer is currently working on the CUBE mixed-use investment in Warsaw, which offers more than 21,100 sqm of GLA.

“The investment has redefined the image of Warsaw and has set entirely new standards in thinking about commercial construction” – Jeroen van der Toolen, managing director CEE, at Ghelamco, about the Warsaw Spire project

BRIEFS WARSAW SPIRE WINS AT MIPIM AWARDS 2017

Developer Ghelamco Poland has received the main award in the prestigious MIPIM Awards competition held during the MIPIM international property fair in Cannes, France for its flagship Warsaw Spire office project in the Polish capital. The scheme, which was the only Polish development to have been nominated in this year’s edition of the competition, won in the Best Office & Business Development category, beating investments from London, Rome and Shenzhen.

KRAKÓW OFFICE MARKET PUTTING UP STRONG PERFORMANCE

The office stock in Kraków, the largest regional office market in Poland, has increased by almost 70 percent since 2012, with a record 146,900 sqm having been completed in the city in 2016 alone, according to the latest report by Savills. Office stock in the city will significantly exceed one million sqm this year, with a further 300,000 sqm scheduled for completion in 2018-2019, the study said.

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78th

is Warsaw’s place in the ranking of the most expensive office locations in the worldSource: CBRE

Retail DEKADA shopping center opens for business in Ciechanów Developer Dekada has opened its eleventh Dekada-branded convenience shopping center project, which is located in Ciechanów and is integrated with the city’s bus station. The scheme offers 2,200 sqm of leasable space, with its largest tenants including RTV Euro AGD, Smyk, Martes Sport and Rossmann. Dekada-branded malls have been opened in Brodnica, Grójec, Kraków, Myślenice, Nowy Targ, Olsztyn, Sieradz, Skierniewice, Żyrardów and Malbork. The chain is expected to eventually comprise at least 20 convenience shopping centers across Poland. Dekada malls are now being planned for cities including Nysa, Konin and Mińsk Mazowiecki.

BRIEFS TWO OUTLET CENTERS COMING TO BYDGOSZCZ

The city of Bydgoszcz will soon have its first outlet centers: Outlet Center Bydgoszcz (11,000 sqm) near the IKEA store, and Metropolitan Outlet (17,000 sqm) in the Carrefour Glinki mall, currently under refurbishment. The two centers will expand the city’s retail market by 10 percent. Bydgoszcz currently has 10 shopping malls featuring a total of 272,000 sqm of GLA.

BIAŁYSTOK MALLS FOLLOW EXTENSION TREND

The eastern city of Białystok has seen a number of extensions to its shopping centers, with two still ongoing: the extension of Auchan Hetmańska set to be completed in 2017 and CH Zielone Wzgórze scheduled for completion in 2018, which in total will add 14,500 sqm to the market, according to a recent report by Colliers International. At the end of 2016, another 2,000 sqm was delivered within the Outlet Center Białystok scheme.

Logistics BRIEFS PROLOGIS ANNOUNCES MAJOR SILESIA LEASE DEALS

Industrial space developer Prologis has signed three lease deals for a total of 57,700 sqm at its logistics parks in Silesia. DHL has renewed its agreement for 44,600 sqm at Prologis Park Dąbrowa, while Polonia Logistyka leased an additional 9,300 sqm at Prologis Park Będzin II. For its part, Moto Profil has taken up a further 3,800 sqm at Prologis Park Chorzów. According to Piotr Brycki, the leasing manager at Prologis Poland, the current occupancy level at all the Prologis parks in Silesia is 96 percent.

BYDGOSZCZ/TORUŃ AND SZCZECIN INDUSTRIAL MARKETS BOOMING

Developing warehouse markets: the Bydgoszcz/Toruń area and Szczecin have seen a surge in tenant activity in 2016, according to data compiled by Colliers International.

The level of demand in the Bydgoszcz and Toruń market was nearly twice as high as in 2015 – 131,000 sqm was leased within 44 agreements. Meanwhile, in Szczecin 350,000 sqm was leased last year (three times as much as in 2015), out of which over 290,000 sqm was taken by Amazon and Zalando.

538,300

sqm

the record-breaking volume of logistics space leased in Silesia in 2016 Source: Colliers International

PANATTONI to develop 100,000-sqm distribution center for Castorama Industrial space developer Panattoni Europe is to develop a 100,000-sqm distribution center at Stryków in central Poland for DIY retailer Castorama Polska. Construction on the project will launch later this month, with the first phase of the scheme (50,000 sqm) scheduled to be completed by the end of 2017. This will be the second distribution center developed by Panattoni for this client – the developer earlier completed a 50,000-sqm center for Castorama Polska, which is also located at Stryków. The latest transaction between the two companies was brokered by JLL.

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LOKALE IMMOBILIA | NEWS

Investment Market BRIEFS CEE REMAINS A HIGH-PRIORITY TARGET FOR GLOBAL CAPITAL

The total amount of new capital earmarked for global commercial real estate investment in 2017 stands at approximately $435 billion, which represents a slight decrease upon the volume recorded last year but is still the second-highest figure seen since 2009, according to a recent report by Cushman & Wakefield. While the UK, Germany and France are expected to remain some the most targeted investment markets in Europe this year, the CEE region will also continue to be a high-priority target for global capital, the study said.

Developer Skanska Commercial Development Europe has sold its Maraton office building in downtown Poznań to a real estate fund managed

by Union Investment for €62 million. The building, which was the second office project of Skanska in the city (after Malta House), was completed in December last year and comprises 26,000 sqm of GLA. “The activity of experienced international players in Poznań shows the growing maturity and liquidity of Poland’s regional markets. After the successful acquisition of Skanska’s Dominikański office complex in Wrocław in 2015, Union Investment has again selected one of our top-class office products,” said Adrian Karczewicz, head of divestments CEE at Skanska Commercial Development Europe. Following the acquisition of Maraton, Union Investment currently holds a total of 16 office, retail and hotel assets in Poland that have a combined value of approximately €1.6 billion.

“CEE continues to offer investors good relative value compared to other developed markets across Europe, with average property returns from prime assets in the region set to outperform the wider European average” – Nigel Almond, the head of EMEA Capital Markets Research at Cushman & Wakefield

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€150 million

the amount of new capital that Johannesburg Stock Exchangelisted investor Echo Polska Properties has recently raised to finance acquisitions in the Polish market

Warsaw Stock Exchange-listed developer Echo Investment has signed a preliminary conditional agreement for the sale of the under-construction West Link office project in Wrocław to Griffin Premium RE, a new platform created by commercial property investor Griffin Real Estate. The transaction is expected to be finalized by the end of next year. Additionally, Echo Investment and Griffin Premium RE have signed an agreement by which Griffin will indirectly invest 25 percent of the capital needed to complete the construction of two of Echo’s commercial projects in Warsaw – Beethovena (phase I and II) and Browary Warszawskie (phase J). The investor will be indirectly entitled to a 25 percent stake in the profits generated by the sale of those projects and will also obtain the right of first offer to acquire them.

ASIAN INVESTORS TO REMAIN ACTIVE IN CEE IN 2017

Capital coming from Asia, which last year accounted for 16 percent of the total real estate investment volume in Central and Eastern Europe, will continue to play a major role in the investment market in the region in 2017, with this year’s numbers likely to match or even exceed the 2016 figure, according to a recent report by Colliers International. This is due to the large number of potential sources that capital can hail from in the vast, deep and liquid Asian market, and the fact that Asian investors see CEE as a risky, higher return diversification opportunity compared to Western Europe, the study said.

PRESS MATERIAL

UNION INVESTMENT acquires Maraton in Poznań for €62 mln

ECHO SELLING WEST LINK IN WROCŁAW TO GRIFFIN

Residential BRIEFS

BOUYGUES TO LAUNCH A HOST OF NEW PROJECTS IN 2017

French residential developer Bouygues Immobilier Polska, the third largest developer in Warsaw in terms of apartments sales, is planning to start selling housing units in a total of 12 new projects in the Polish capital and Wrocław in 2017. The company hopes to reach an apartment sales level of approximately 1,150 this year.

The developer last year secured ten sites in Warsaw and plans further land purchases this year, also in regional cities.

BGK SUSPENDS ACCEPTING MDM APPLICATIONS

State-run lender BGK has suspended accepting applications for the Apartments for the Youth (MdM) scheme for 2018 as the demand has reached 50 percent of the allocated funds.

“The limit for 2018 stands at PLN 762 million, while PLN 381 million has already been reserved,” BGK said. The remaining funds will be available after January 1, 2018 when the applications resume.

DOM DEVELOPMENT TRUMPETS RECORD Q1 APARTMENT SALES

Warsaw Stock Exchange-listed residential developer Dom Development sold 806 apartments in the first quarter of 2017, a 31 percent increase upon the number of units it offloaded in the same period last year, according to preliminary data published by the company. This is the best Q1 sales result in Dom Development’s entire history, and the developer now expects to sell more apartments in 2017 than in 2016. Last year the developer found buyers for 2,735 units.

GHELAMCO launches Foksal 13/15 luxury apartments in Warsaw Developer Ghelamco has officially launched apartment sales in its Foksal 13/15 luxury residential project in downtown Warsaw, which will comprise a total of 55 units in two revitalized historic buildings dating back to the late 19th century. The homes will range in size from 47 sqm to 260 sqm, and are to be made available to their future buyers in mid-2019. Ghelamco first announced the project more than ten years ago, yet as Jeroen van der Toolen, managing director CEE at the company, explained, the pre-construction phase of the investment proved to be particularly time-consuming and the developer had to clear numerous administrative hurdles before it could be granted the final go-ahead. Ghelamco has not revealed the average prices in the scheme claiming that those will be negotiated with the buyers on an individual basis, but according to Adam Skóra, residential market manager at the company, Foksal 13/15 will definitely offer some of the most exclusive and most expensive apartments in the Polish capital. Skóra said that Ghelamco, which in Poland is mostly known for its office projects, wants to strengthen its position in the premium residential property market in the country in the coming years.

“The current situation in the residential market is very favorable for Dom Development and allows the company to be optimistic about the coming quarters” – Dom Development management board president Jarosław Szanajca

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LOKALE IMMOBILIA | OFFICE

DEVELOPERS GO HIGH-TECH

Modern office projects are increasingly equipped with the latest technology that is designed to decrease their environmental footprint and make them more appealing to tenants. We take a look at some of the main office building design trends of today

BY ADAM ZDRODOWSKI

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A

s the competition in the office property market continues to get ever fiercer, investors in new developments keep making their buildings more and more technologically sophisticated in order to appeal to future tenants and potential buyers. The employment of the most technologically advanced solutions is not cheap, but many of these bring property owners tangible financial benefits in the long run. The high-tech systems installed in modern office buildings help improve operational efficiency and can lower expenses.

While developers recognize innovativeness as a key feature of modern office buildings, they weigh the costs and gains involved. “The decision to apply technical novelties in a building should be made with the tenants' needs in mind,” said Harald Jeschek, managing partner at Karimpol Group. He argued that only those solutions that bring value for money are worth focusing on. “Only novelties that are useful for tenants, reliable and cost-effective in the long run can be considered real innovations, rather than nice gadgets,” Jeschek said.

IMAGE OPPOSITE COURTESY OF ECHO INVESTMENT

ENVIRONMENTALLY FRIENDLY

The drive towards sustainability – virtually each new office project is now certified in accordance with one of the globally recognized green building certification schemes – means that developers harness innovative technologies to make their buildings greener and thus lower maintenance fees. The use of shutoff valves in bathroom faucets and rainwater for watering plants are among the solutions that help bring water usage costs down. Improvements made to lighting and heating systems ensure that a similar effect is achieved with regard to electricity.

The latest lighting solutions that allow for an automatic adjustment of the color and type of light in the office, depending on the time of the day and the type of work of the employees, are useful for saving energy and ensuring comfortable and healthy working conditions. Piotr Kozłowski, head of the architectural team in the office department of Echo Investment, said that the developer wants all the lighting installations in its new office buildings to be based on LED technology in the near future.

In Warsaw Spire, which was developed by Ghelamco Poland and received the main award in the prestigious MIPIM Awards competition in March, air from the office floors is used to heat the underground parking lot, said commercial and business development director Jarosław Zagórski. It is expected that solar panels, whose prices have been falling of late, will become a

Opposite page: LED lighting and photovoltaic panels in Q22 building in Warsaw

more popular solution in the coming years. “We want to further develop photovoltaic technology, which we first used while building Q22 in Warsaw,” Kozłowski said.

Marcin Chruśliński, development manager at HB Reavis Poland, revealed that the Varso project, which the company launched in downtown Warsaw earlier this year, will feature smart double-deck lifts provided with an energy saving system. “As the lift brakes, the lift motor acts as a generator and accumulates electricity that can later be used as supplementary power supply for lighting and surveillance systems,” Chruśliński explained. He argued that substantial savings can be ensured in this way.

Joanna Schönthaler CEO, Park Avenue 2010 Sp. z o.o.

Are new trends in office building design creating solutions that meet everyone’s varying needs and expectations?

Dedicated office spaces and workstations – developers will continue to move away from this towards modifying the workplace with an eye on future generations. Millennials, the true children of the digital age, have an intuitive feel for technology and can multitask by nature. As masters of instant communication and social networking like Facebook and Snapchat they are natural collaborators, they prefer to work in teams, seek immediate feedback and want to participate in the decision-making process. They are willing to work hard and accept a lower wage if their work contributes to something more important or meaningful.

For years we have been bringing the office into the home, but now we are bringing elements of the home into the office. What does it mean?

Informal seating areas like a living room, and dedicated rooms to support specific tasks will be increasingly common in corporate office interiors. In our opinion, with the technological advances that allow employees to work remotely – anywhere, anytime – work will be done in a variety of places. Technology will provide access and flexibility in time and space, and the availability of smaller office units in new office buildings will be much wider.

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LOKALE IMMOBILIA | OFFICE BUILDING MANAGEMENT

Modern building management systems (BMS) have been instrumental in making sure that the above-mentioned green building solutions are taken full advantage of. The systems optimize energy consumption by switching to an energysaving mode after working hours. “The most modern office buildings in the world, such as The Edge in Amsterdam, are highly automated,” said Maciej Markowski, partner, head of workplace strategy, Central and Eastern Europe, at Cushman & Wakefield.

BMS solutions allow for heating, ventilation, air conditioning and lighting systems to use less electricity during certain times of the day. This is possible due to the use of solutions including motion detectors. Kalisz pointed out that building management systems are also compatible with concrete core tempering systems, a new solution in the Polish market that is used for heating and cooling office buildings. BMS adjusts the temperature of the core to the current atmospheric conditions outside the building.

FEELING SAFE AND SECURE

However, saving costs is not the only use that such systems can be put to. Piotr Kalisz, senior associate, office agency, at Colliers International, pointed out that modern building management systems also enhance safety and security in office projects. Sensors installed in modern buildings are able to detect irregularities such as an exceedingly high carbon dioxide concentration in a particular room and act accordingly. The system changes ventilation parameters so the concentration can quickly be lowered and proper air quality restored.

For their part, access cards allow employees and visitors to go by lift to certain floors only.

Admittedly, solutions such as the employment of personalized access cards can also play the role of nice gimmicks for tenants. Upon learning that the CEO has entered the building, for example, the system may tune the temperature and lighting in his or her room to the favored parameters, or even turn on the coffee machine. “Such advanced solutions are still rare but are slowly becoming more popular,” Kalisz said.

EFFICIENT SPACE

According to Marcin Goncikowski, an architect and associate at Kuryłowicz & Associates, market competition has been making developers put more and more emphasis on the flexibility of space arrangements. The same amount of space can now accommodate more employees than it used to. Architectural solutions that help boost flexibility include the modularity of the grid and

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the facade of the building, as well as the use of floor-to-ceiling windows that ensure excellent access to natural light.

Office market experts also point out that office buildings of today are becoming more and more open to their surroundings. Office building lobbies, for example, increasingly house co-working space and cafes, Markowski noted. Goncikowski pointed to the improving quality of the common areas inside office buildings, as well as the space surrounding the buildings. These areas currently typically offer access to Wi-Fi and house various amenities and services targeted at tenants.

SMART PARKING

The development of technology has also affected parking lots in office buildings. The Warsaw HUB project that is now being developed by Ghelamco Poland, for instance, will feature a car recognition system and a charging station for electric cars. It is also increasingly common for modern office buildings to include infrastructure for The most those who prefer to come to the office by bike. modern Warsaw Spire, for one, features a separate ramp office and a parking lot for bicycles, as well as changbuildings ing rooms and showers for cyclists. in the world Changing habits may in the future make the are highly need to find more efficient parking solutions less automated. urgent. Markowski pointed out that the promotion of public transportation has become a trend and many young people today use public transport or Uber, rather than buying their own car.

“Owning a car is no longer the obvious choice,” Markowski argued. According to him, the appearance in the market of autonomous cars could, within the next decade, further decrease the demand for parking space in office buildings.

DOES IT PAY OFF?

By using advanced technology in their new office projects developers are certainly responding to the increasingly fierce competition in the market and the more demanding requirements of their clients, but are such solutions always a must?

According to Zagórski, the innovativeness of office buildings is today, above all, a market requirement. The presence of advanced solutions has become one of the key factors companies consider when choosing a particular building as their corporate headquarters.

And this is all the more important since some of the most innovative companies globally are now leasing office space in Poland, Zagórski noted. Of course, much depends on the particular project. Kozłowski pointed out that each scheme has its individual budget and priorities. Of major significance are the expectations of future occupants – often, a large tenant that is interested in leasing space in a given building requires the

building to feature certain advanced technological solutions, he said.

Since the employment of cutting-edge technologies in new office projects usually involves higher development costs for the developer, their use depends on the estimation of their long-term benefits for the future tenants and the owner of a given scheme.

Experienced developers are capable of anticipating and optimizing costs, Chruśliński claimed. In his opinion, many of the solutions mentioned in the context of modern office developments seem to be addressed to a narrow group of technology enthusiasts.

“HB Reavis remains open-minded about investing in innovations that are not just gimmicks but have an actual impact on the comfort of the people who use our buildings,” Chruśliński said. He noted that the company has initiated WELL certification for several of its buildings. WELL is a quality assessment system based on the latest medical research that focuses on the impact of buildings on the health and well-being of their users. In the future, HB Reavis is going to submit the Varso project for WELL certification as well.

THE ARCHITECTURAL DESIGN of office space is not deter-

Przemo Łukasik, co-owner, medusa group

Łukasz Zagała, co-owner, medusa group

mined directly by fashion. Instead, both economic and market situation play a significant role. An architect can only make a conscious effort to maintain the quality of architecture being developed at a certain level. This is why we are not motivated by fashion. Every time we design office space, we make a conscious effort to be rational in the process of developing timeless, pragmatic but at the same time creatively flexible space, which will retain the capacity to respond to the dynamically changing economic and macroeconomic conditions.

Large developments are usually implemented in stages, which makes them even more vulnerable to the changing market situation. This, in turn, requires that architects come up with relatively universal solutions. Personally, I am an advocate of formal repetitions of geometrical forms. They add strength to the overall message and bring order to the space being developed.

It is hardly an aesthetic gesture only. Quite to the contrary, in fact. Repetitive geometrical patterns developed in successive stages create an opportunity for general contractors to make the construction process increasingly efficient with every new addition. What I mean by that is in-depth understanding of technologies and specific problems that, with every new building, can be corrected and scheduled in a more precise way, making implementation deadlines more realistic. This, in turn, translates into a positive validation of the investor’s budget. The same window frames are used in every case, the same heights apply. This allows for standardization and the use of pre-fabricated products, which, again, helps optimise costs.

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PHOTOGRAPH BY IDA PODSIĘBIERSKA. OPPOSITE COURTESY OF EPSTEIN

LOKALE IMMOBILIA | OFFICE

MARRYING THE OLD WITH THE NEW

WBJ sat down with Czesław Komorowski, head of the architectural department at Epstein, to talk about the ASTORIA Premium Offices building in downtown Warsaw and the latest trends in the design of office projects in Poland

WBJ: The ASTORIA building, which you designed for STRABAG Real Estate, is located in the heart of Warsaw. How does such a location influence the design process, compared to office locations outside the densely developed downtown of the city?

Czesław Komorowski: Well, it’s a completely different exercise because when you design a building in the center of the city, the process depends on many outside factors. You need to analyze the neighbor-

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hood and you actually design the building by drawing conclusions from what is around it. Nothing can be accidental or arbitrary here, the building needs to fit into the existing urban tissue. The ASTORIA project was challenging , as its location was challenging – the site is located on the border of three different architectural worlds.

There is a view of Marszałkowska street and the Palace of Culture and Science on one side, a large modern court building on the second side, and historic tenement houses on third side. We needed to address each of those worlds, hence the variation in the height, form and facade finishes of the building. ASTORIA was meant to be a building with a soul, a building that would represent a marriage of the old and the new, of the historic and the contemporary. It is supposed to give the passer-by the impression that it has always been there.

ASTORIA is one of just a handful of office buildings in Warsaw that boast a LEED Platinum certificate. Which innovative green building solutions were employed in the project?

In the ASTORIA building we employed a number of very advanced solutions that helped us raise the bar

even higher in several categories. For example, we decided to use the Concrete Core Tempering (CCT) system, a truly pioneering solution in the Polish market, which ensures that the cooling and heating inside the building are provided by piping in the slab itself.

The system is commonly used in the German market, while in Poland it is still very rare.

Additionally, ASTORIA has a triple-glazed facade that prevents the heat and cold from outside from getting inside the building. Finally, we installed external louvers that have a similar function. This is a very efficient solution, but an expensive one. It is also a very interesting solution from an architectural point of view as the louvers are visible from the outside and they add complexity to the facade, making it look more interesting. There are very few buildings in Poland that feature external louvers.

Sustainability has become one of the most important issues in the office property market in recent years. What can developers do to make their projects stand out from the crowd and gain a competitive edge?

The certification systems are about calculating points and you can score those points in many different ways.

Some of the ways are relatively easy and less expensive, while others require long-term thinking and are more expensive. Many developers choose to go the easy way, which involves a focus on the management of the building. As an architect, I am more interested in the more expensive solutions, which have more to do with the way a building is designed than the way in which it is managed.

reducing costs – it is also about creating more comfortable work environments. This is important as we all spend much of our lives in the office. The CCT system that we employed in ASTORIA, for example, provides for a much better air quality in the building as the heat and the cold come directly from the slab and do not need to be artificially pumped into the building.

The ASTORIA project was challenging, as its location was challenging – the site is located on the border of three different architectural worlds.

How much further can you go with regard to designing sustainable office buildings?

You can always go a step further – it is the cost involved that will, at least to some extent, continue to be a barrier. Nevertheless, we are now working on high-rise office schemes in Poland that will also feature very advanced green building solutions.

Apart from sustainability, what are some of the latest trends in office building design?

I would say that apart from green building solutions, the greatest thing about modern office buildings of today is the electronic and IT systems that allow for the remote control and management of all the main functions in the building, be it cooling, heating or lighting. When it comes to the latter, for instance, modern building management systems adjust the lighting in the building to the amount of natural light that comes in through the windows. Nowadays, the systems that manage office buildings simply think for you.

Is it the cost of advanced green solutions that makes them so rare in the Polish market?

Of course, such solutions require additional investment and not all developers are willing to shoulder the costs of employing them. However, if you want to be a pioneer, you need to take certain risks, and STRABAG took those risks. You push the boundaries in the market by offering a product that is already popular in other European markets, but still hardly exists in Poland. In this particular case, the developer was ready to invest more as ASTORIA was meant to be a flagship project.

Will the most advanced sustainable solutions of today become the market standard?

I do believe that even the most innovative green building solutions of today will in the future become much more common in the market. As I said, this is about pushing the boundaries and as some developers experiment with ever more efficient solutions, the competition will eventually need to react. It seems that developers are becoming increasingly aware of the fact that long-term thinking pays off and that the initial investment in sustainability does, after some time, bring tangible benefits and thus makes good business sense.

Green building is not only about making buildings more efficient in terms of saving energy and thus

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LOKALE IMMOBILIA | INTERVIEW WBJ sat down with Nicklas Lindberg, the CEO at Warsaw Stock Exchange-listed developer Echo Investment, to talk about the new strategy of the company and its development plans for the coming years INTERVIEW BY ADAM ZDRODOWSKI

‘We want to create destinations’

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We want to be the leading player in the office, retail and residential property markets in Poland

WBJ:

Echo Investment announced a new strategy last year, which envisions stepping up development activity and focusing only on the Polish market. What does this mean in practice when it comes to your development plans for 2017?

Nicklas Lindberg: Well, last year was not about launching new projects, but rather about structuring our business in the right way. A year ago, we had a number of standing assets in our portfolio, which we do not have today. We have sold a major office portfolio to Echo Polska Properties (EPP) and Q22 to Invesco. What we decided in 2016 was to be a pure developer, with Griffin remaining our investment arm. We want to be the leading player in the office, retail and residential property markets in Poland.

This year, we will launch a total of 26 new projects in these three sectors. What is important for us is spreading the development risk across the three main legs of our business. We used to have a hotel leg in the past as well, and may yet decide to look into this market sector again in the future.

You and EPP have acquired two large retail projects in Warsaw – Galeria

Młociny and Towarowa 22 – in recent months. Is there still growth potential in the retail property market in the city?

What makes us special is that we are not going to build yet another regular shopping center in Warsaw, as the city already has a lot of these. We want to create destinations, centers that, besides retail, will also feature considerable leisure components. This is something that can be done relatively easily when you are building a new shopping center as you can shape everything from scratch. When it comes to standing assets, bringing a center into line with the latest retail trends is a bit more difficult.

FromTop: Echo Polska Properties and Echo Investment have recently acquired the Galeria Młociny project in Warsaw.

Echo Investment is currently developing the Galeria Libero shopping center scheme in Katowice

Construction on Galeria Młociny is already underway. What is the status of the other scheme?

Our strategy is to have two ongoing shopping center projects at a time. Galeria Młociny is now in full construction mode and we are currently developing Galeria Libero in Katowice. As for the other Warsaw scheme, it is at the planning stage, with the details being discussed with the City Hall.

Both Galeria Młociny and Towarowa 22

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LOKALE IMMOBILIA | INTERVIEW Left: Browary Warszawskie in Warsaw is one of the flagship projects of the developer at the moment

location and history. The site offers an opportunity to develop a high-rise building.

were acquired in a 70 percent (EPP)-30 percent (Echo Investment) formula. Is this something that you are planning to follow with regard to future acquisitions?

Yes, this formula is something that we would like to follow in the future. In line with our new strategy, we do not want to invest a lot of equity in our new developments – the 30-percent share seems to be just the right level of commitment for us.

EPP, by contrast, is able to commit more capital at an early stage, while relying on us as the developer. This formula works out well for both companies. We do not want to be long-term investors – upon completion, our stakes in the Galeria Młociny and Towarowa 22 projects will be sold, either to EPP or to the market.

Judging by the most recent transactions, EPP and Griffin are the main buyers of your projects...

Indeed, last year we closed a huge deal with EPP and since the beginning of this year we have already announced a major transaction with Griffin. However, in the future EPP and Griffin will definitely not be the only buyers of our projects. We want to sell at least equally as much to the market as within the group. The exact proportions will of course vary from year to year.

Last year was a unique year because of the restructuring process. In the coming years things will be more balanced in this regard.

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The recently launched Browary Warszawskie mixed-use scheme in Warsaw is one of the flagship projects in your current portfolio. Two residential phases are under construction – when will you launch the office phases of the development?

We will launch the first office phase of the project shortly – we are now finalizing the permitting process. Whether the other office phases will be started in 2017 too remains to be seen. Much will depend on permits and the progress with leasing the space in the scheme. However, we are going to be bullish about Browary Warszawskie, we believe that this will be a fantastic destination. We will combine the old with the new – there will be retail space in the historic cellars of the brewery, and residential and office space above ground. We can already see that there is a lot of interest in this scheme in the market – when it comes to the residential phases, I would say we are selling the apartments almost too fast. People are ready to pay more for such a unique product.

After the successful completion, commercialization and sale of Q22 last year, are you planning any new office towers in Warsaw at the moment?

We are now working on the Emilia site in downtown Warsaw, which is part of the Griffin portfolio. This is a very interesting project for the future because of its

What are your plans for the major regional office markets across Poland?

On our radar are regional markets such as Wrocław, Kraków, Katowice, the Tri-City and Poznań. We are focused on second-tier cities and are not interested in entering any third-tier cities. Our strategy here is basically to do more of what we have been doing so far. We believe in the major regional office markets across Poland, which continue to benefit from the growth of the BPO sector. We are seeing new market entrants in the sector, which is also a result of Brexit. By the way, Warsaw has been an important outsourcing destination for some time too.

Will you launch any new regional shopping center projects this year?

At the moment we have enough retail projects in the pipeline; however, we are always ready to pursue new opportunities whenever they emerge. We are able to go to any location with sufficient demand, but good opportunities in this sector are more and more difficult to find.

Echo Investment sold 925 apartments in 2016, which marked an almost 60-percent increase upon the previous year. What is your target for the coming years?

Our long-term target is an annual apartment sales level of around 2,000. We want to be one of the market leaders in this sector in a few years. One of our strengths is our knowledge of all the largest markets in Poland – unlike many of our major competitors, who are only big in Warsaw or in one of the regional cities, we want to be big both in and outside the Polish capital. The residential property market is in very good shape today and we plan to put more units on offer this year than last year. We will focus on the mid-market apartments sector.

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WBJ PRESENTS

BROUGHT TO YOU BY PARK AVENUE

ADDRESSING A MARKET NICHE There is demand for modern office space from small and medium-sized enterprises in Warsaw and the needs of those tenants should properly be addressed, says Joanna Schönthaler, the CEO at Park Avenue, the developer of the eponymous office project in the center of the city You have just finished building the underground levels of your Park Avenue class-A office project in downtown Warsaw. When is the scheme expected to be topped out and when will it be finished?

Joanna Schönthaler: Park Avenue is a new A-class office building on Wspólna street adjacent to Hampton by Hilton, next to the Marriott Hotel. Construction has just started above ground and every seven working days a new level is ready, hence we expect the full height structure to be completed by the end of August. The new landmark on the Warsaw map – our 5-star office building – will be ready for tenants in the second half of 2018.

What is the current leasing level in the project? Can you reveal the names of any tenants yet?

We have been surprised by the response from the market. Our project is dedicated to those for whom an excellent location matters just as much as good architecture. We know that it will become the most desired address in Warsaw, as the Park Avenue project provides a new level of quality with the highest standards and great efficiency. We have already signed the first few contracts with our tenants and we are negotiating several space plan arrangements with other clients. At this stage we will not reveal any names, but the presence of Green Caffè Nero with its excellent service is already confirmed. We are talking to financial institutions, law firms, embassies and many other potential tenants.

The office property market in the center of the city has been defined by intense development activity and rising vacancy rates of late. Are you not afraid of the growing competition there?

We are not afraid of the competition. Intense development means more demanding clients, and we are prepared for that. Office space is a living and working environment that should focus on people. All of us require good access to light, fresh air and a comfortable work station, regardless of industry, age or work specification. In competing with others our ultimate goal is to deliver what our tenants need and stay one step ahead of the competition. Quality in the most prestigious location – this is our attitude to the Park Avenue project. It starts with an excellent downtown location with means of transportation, elegant, timeless architecture and the latest technical solutions and services dedicated to our partners.

With all this in mind, we cannot go wrong.

The Park Avenue scheme is targeted at smaller occupiers – those looking to lease from approximately 200 sqm to around 1,400 sqm of space.

How much demand is there in this segment of the market?

We are very well aware of demand on the market; hence our offer is tailored accordingly. Warsaw is and will continue to be the place for SMEs establishing their base for operations in Central Europe.

We believe in this sector – it is our niche and we offer offices of 200 sqm and above for medium-sized companies. Large companies have a variety of office buildings to choose from in the CBD, but for SMEs the selection is limited. They are presented with the so-called “leftovers” in office schemes. In Park Avenue, with a total offering of 14,000 sqm of office space, there will be a number of important mediumsized companies – our responsibility is to satisfy all of their needs. We will not let them feel lost among the big clients on the market. There are a lot of companies willing to be seated in prestigious buildings in great locations such as law firms, start-ups, financial institutions and embassies. We also attract them with short leases – three years instead of the five that is the market standard.

WBJ PRESENTS

BROUGHT TO YOU BY TÉTRIS

OPEN BOOK BRINGS SAVINGS TO FIT-OUT

Last year saw a new practice on the fit-out market – Open Book. What turned out to be revolutionary was combining it with working on the Gross Maximum Price. Now, a company interested in arranging a new space no longer needs to worry about the budget, quality and timing

It seems that with Open Book the entire risk (which is inherent in any fit-out project) is carried by the fit-out firm, rather than the client. Does this mean that on average the estimated costs are higher with Open Book than without it?

Open Book is nothing more than a very early consolidation of the customer's imagination with market prices. In the end, it comes out the same or even cheaper. This is thanks to the process of “value engineering” which means negotiating the chosen solutions with suppliers of materials. Take, for example, the recently completed Sage office – the customer saved 4 percent of the agreed budget thanks to Open Book procedures.

What kind of “surprises” occur that could increase the cost of a fit-out project?

I have seen countless well-planned designs that just did not fit the given budgets. I have seen customers disappointed that they were going to have to make cuts because they simply could not afford their dream solutions. It's no surprise. That is why the design and finishing processes cannot be separated. With Tétris projects – using Design & Build – the architect and contractor work hand in hand. They have common goals and full budget awareness from start to finish.

How difficult is it to work with a maximum guaranteed price?

Do unpleasant surprises ever occur, and if they do, who bears the additional costs?

A guaranteed maximum price means that the contractor takes on all responsibility for the costs of interior design. This is a huge challenge. We must carefully consider all of the elements involved in the project and secure the risk. The price structure must be transparent, as must the customer requirements. With the Sage project we agreed to a maximum price 12 months before the start of work.

How is it even possible to guarantee the maximum costs if there are so many unknowns along the way?

Tétris Poland delivers over 100,000 sqm annually, these are offices, hotels, and shops. Under such varied conditions, costs are no longer a mystery. The individual factors, risks and opportunities become apparent to any professional.

And what if the client changes his mind about something, e.g. type of furnishings, technical requirements etc. Does working with Open Book allow for last-minute changes?

The client always has the right to change their mind, and they do.

The role of the contractor is to carry out any changes smoothly without wasting time and causing unnecessary nervousness. In the Open Book process, proposing an alternative finishing element is simple because it just means transferring the cost from one element to another. When all the teams sit down at one table with the client, decisions are taken quickly and thoughtfully, like during works on the new JLL office; we had to arrange a whole new department that had not previously been planned.

How detailed is the Open Book? Does it include everything down to the exact model of doorknobs and faucets?

Exactly. Open Book takes account of every element, down to the smallest detail. We also use “packaging.” It allows us to present the customer with more than one solution for each item.

How many clients have already opted for fit-out with Open Book? Do you think it’s a trend that will catch on in the industry?

We have a dozen or so projects, the largest of which is the new JLL office with an area of 13,700 sqm. And we see a lot of interest.

Customers value the safety and transparency of this model.

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Life + Style

BLUE BLOOD

Royal blue and variations thereof aren't just a summer classic but also the hot trend of the year. Evoking memories of the sea breeze, nobility and evening skies, it's a color that captures both elegance and freshness at right the same time...

(Breitling watch found at Apart)

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Life+Style

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Magdalena Iwańska Fashion editor, stylist, trendsetter.

Creating fashion and lifestyle magazines in Valkea Media.

Engaged in Polish biggest fashion events, co-operating with and styling show-business celebrities.

1. Vistula 2. MIchael Kors 3. Tous 4. Versace Collection 5. Pollini 6. Vistula 7. Dior/Perfect Vision 8. Emanuel Berg 9. Vistula 10. Fabi/Apia

(All products and prices we found at KLIF – DOM MODY in March/April 2017)

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Chmielnik

Old Town Square

Puro Hotel

WELCOME TO THE 'NAN

While always pretty, Poznań has repackaged itself as a city of life and buzz...

PHOTOGRAPHS ED WIGHT

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hough better known as a sensible business town and academic hub, the last few years have seen Poznań emerge as a major tourist destination that's respectful of its past yet connected to the future. The old town is the primary port-of-call, with grid-like cobbled streets shooting from a scenic town square that's one of the finest in Poland. Lined with handsome merchants' houses, the historic core is a gem to behold. Beyond that, a range of new wave museums, artsy installations, bars and restaurants have swept the town, reflecting its transition into a dynamic conurbation that's the embodiment of youth and creativity...

STAY

Once described

by The Guardian as being ‘the most futuristic hotel in the world’, the Blow-Up Hall 5050 dubs itself 'an interactive art piece'.

The Puro is a smart alternative with a cool lobby filled with vibrant pops of color and rooms with marshmallow soft beds and touchscreen tablets

to 'control the environment'.

EAT

Though the old town is honeycombed with eateries, the best deals are found further afield: Cucina 88 serves Mediterranean fare inside informal interiors busy with smart looking types; A Noz Widelec views regional cooking through a sharp, modern

eye; while Bazar 1838 is all about beautiful local compositions inside magically restored 19th century interiors.

DRINK

Chmielnik has a warm, nocturnal mood and a sprawling garden in which to enjoy Poland's latest craft beers. On the square, the upscale Brovaria brewery is

favorite with expats and visitors.

A fun blast-tothe-past is found in Proleteryat, a busy bar filled with paintings and busts of Lenin and Marx.

Museum tells the brutal story behind the first armed resistance the Polish communist party faced.

DON'T MISS...

The mechanical goats that emerge from the The Croissant Museum is one- town hall clock of-a-kind; Brama tower to butt heads at noon: Poznania is an ultra-modern ex- they're a tribute hibition that tells to a pair of runaway animals the tale of the nearby Cathedral that cavorted Island; while the up the tower in 1511!

1956 Uprising

SEE

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Life+Style

Rise of the NeoBistro

Born in France, the neo-bistro phenomenon has been swift in taking Warsaw by storm. Filling the middle ground between regular bistro and top class dining room, it's a movement that makes much of good wine, exquisite cooking and relaxed milieu. While employing many of the flavors and techniques of fine dining, neo-bistros celebrate local produce and seasonal whims while breaking barriers of formality – in short, they've become the talk of the town.

INFO BOX Bez Gwiazdek Wiślana 8, tel. 22 628 0445, bezgwiazdek.com.pl Dyletanci Rozbrat 44A, tel. 692 887 234, fb.com/dyletanci Kieliszki Na Hożej / Kieliszki na Próżnej Hoża 41, tel. 22 404 2109, kieliszkinahozej.pl / Próżna 12, tel.

501 764 674, kieliszkinaproznej.pl Rozbrat 20 Rozbrat 20, tel. 22 416 6226, rozbrat20.com.pl

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DYLETANCI When the skies sparkle and flowers bloom there's few better areas of Warsaw than Powiśle in spring. And in the shape of Dyletanci, the district has a place that specifically suits this mood and fits 'the now'. Set with green banquettes and Tom Dixon lights, it's a natural environment for a smart, global crowd. They're here for a menu devised by Rafał Hreczaniuk, a gifted chef with a fine dining background. “Some say I’m cooking modern Polish,” says Rafał, “but I prefer to call it eclectic – I’ll play with anything that’s fresh and hopefully pull it off.” This he does with considerable elan, building his menu around an exceptional wine offer curated by proprietor and vineyard owner Maciej Sondaj. His own label, Dom Bliskowice, is at the forefront of Poland's wine revolution.

KIELISZKI When the first branch of Kieliszki opened in 2015 it didn't just reinvigorate Próżna and Grzybowski, it sparked off Warsaw's love affair with the neo-bistro.

Such was its success that a second location, this time on the corner of Hoża and Poznańska, followed in 2016.

Though set-up to complement each other, don't think of the two as being twins: there's enough nuances to the menus and design to grant each their own separate identity. If there is a common thread, then that's the general clatter and buzz that have come to define the neo-bistro: you can almost feel the spirit of the 6th arrondissement. Superb wines, all of which are available by the glass, round out the experience.

BEZ GWIAZDEK With the neo-bistro concept built on fine dining foundations, few are better qualified to lead this revolution than chef Robert Trzópek: studded with A-list names, his CV includes experience gained in Noma, El Bulli and Le Manoir aux Quat'Saisons. Seeking to 'reinterpret forgotten Polish cuisine', his tasting menu is a triumph that lets Mother Nature shine. Star billing goes to the market-fresh produce sourced from Pan Ziółko, Poland's premier grocer. Using faultless ingredients as his bedrock, Trzópek then weaves his magic to open up the true tastes of Poland. And in the true spirit of the neo-bistro, prices are moderate when compared to the quality: menus begin from PLN 80.

PHOTOGRAPHS KEVIN DEMARIA

ROZBRAT 20 Joint winner in the Casual Dining category of the Warsaw Insider's Best of Warsaw awards, (an honor shared with Dyletanci), Rozbrat 20 has become the bubbling epicenter of gentrified Powiśle. A chic Lshaped venue, it's a space that multitasks well: superb bread and breakfast options in the morning and belting lunch deals in the afternoon. It's evening, however, that is the best time to visit. Aiding your pursuit of pleasure is an awesome wine selection plus a menu constructed by the upcoming Bartosz Szymczak. His food is a thrilling joyride that blurs the line between fine dining and bistro philosophies. A former Top Chef semi-finalist, his star gleams as bright as Rozbrat's: together, they make quite a pair.

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Life+Style

The Modern Museum

Forget the dank, cobwebbed museums of yesteryear: it's no longer just Warsaw that can offer a 21st century look into the past. More and more cultural institutions outside of the capital's boundaries are merging tech advances with groundbreaking architecture to provide a fully world-class museum experience

MUSEUM OF THE SECOND WORLD WAR The cause célèbre of the moment: opened in March, this Gdańskbased museum has been at the center of a political tug-of-war that has seen the government attempt to wrestle control in a bid to impose a more national-minded narrative. Divided into 18 thematic rooms, the 5,000 sq/m museum has the potential to become one of the most important museums in Europe. muzeum1939.pl

OSKAR SCHINDLER'S FACTORY The seat of Oskar Schindler's wartime factory has been repurposed as a museum that tells not just his own remarkable story, but also that of occupied Kraków. Though opened in 2010, it remains as fresh and innovative as it was when launched. And how's this for a double whammy: part of the wider complex houses the acclaimed MOCAK contemporary art gallery. mhk.pl

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RYNEK UNDERGROUND

This department of the National Museum in Szczecin was named the World Building of the Year at the 2016 World Architecture Festival. Submerged under a sloping concrete plaza, the underground museum covers a 50-year period beginning with the outbreak of WWII and ending with the fall of communism.

“The design,” say the jurors, “addresses the past in an optimistic, poetic and imaginative way.” muzeum.szczecin.pl

Four meters below Kraków's square lies the Rynek Underground. Opened to much fanfare in 2010, the exhibition makes generous use of holograms and hi-tech gizmos to lay bare both the timeline of the square and the progress of the city. Star exhibits include the largest slab of lead on display in the world, 600year old toiletries and the remnants of a 1,000-year old cemetery. podziemiarynku.com

SILESIAN MUSEUM

SOLIDARITY CENTRE

Katowice might not be the most obvious tourist hot spot, but this cracking museum has done its bit in drawing visitors from far and wide. Located on the site of the former Warszawa mine, over 6,000 sq/m have been given over to art displays as well exhibitions linked to the city's industrial past. The richness of the cultural offer is matched only by the breathtaking architecture. muzeumslaskie.pl

Awarded the Council of Europe Museum Prize in 2016, this Gdańsk exhibition presents 1,800 items connected to Poland's struggle against communism. Included in that number are a bullet-pocked jacket belonging to an anti-government protester killed in 1970, and the 21 demands issued by Solidarity during the 1980 strikes. The library and research center are home to over 100,000 archived documents and materials. ecs.gda.pl

PHOTOGRAPHS KEVIN DEMARIA

DIALOGUE CENTRE

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Imaginative Polish Cuisine

Opened in autumn, Inny Wymiar (Another Dimension), like its name suggests, serves dishes otherwise impossible to find on Warsaw’s culinary landscape...

The rare, unknown dishes we refer to don’t hail from distant, mysterious countries, but Poland. At Inny Wymiar we explore our national, natural tastes without relying on molecular pretense, but rather a soft, delicate breath of modernity.

Regard our food as a business card to show foreign guests

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cream. The icing on the cake is a cozy s the old saying goes, ‘the darkest place is under the interior that’s equally suited to a quick, candlestick.’ Until recently, solo lunch, a gathering of friends and that was reflected by modern Warsaw’s family, or a chilled-out evening drink. lack of... contemporary Polish cuisine.

Decked out with crystal chandeliers, Think about it, just where could you find copper counters and wooden furniture, home-made, heartfelt food prepared all who leave comment on the convivial with elegance and style. Inny Wymiar atmosphere of our piece of Poland. has filled that gap, with our team creatInny Wymiar is open to all! Each day ing dishes that are full of homey warmth. we serve two different lunch deals (eiMade using only the finest ingredients, ther a soup, our legendary podpłomyk they’re a showcase of our chef’s outand home-made kompot for zł. 21 or a standing skills. soup, second dish, dessert and homeOn the menu find, among other made kompot for zł. 29) and never have things, coulibiac with borscht; pork a shortage of similar incentives and ofchops with bone fried on lard; and wild fers for after-work visits. And soon we’ll boar goulash and dumplings. Staples be opening up for the best breakfast in of Polish cuisine such as herring and Warsaw that will boast not just the best tartar are served in a variety of surprisprices, but also the best quality! ing forms, and guests can also enjoy the Polish twist on the classic burger - a minced meat patty served between delicious buckwheat buns. And don’t forget our own national take on pizza, the legendary podpłomyk: a crispy yeast flat-cake sprinkled with delicious toppings and baked just prior to serving.

Our kitchen is complemented by a bar serving high caliber drinks befitting of the venue: Absztyfikant, Fircyk, Elegant Inny Wymiar are composed using ingredients such as ul. Świętokrzyska 14, tel. 22 827 3661, seaberries, vodka tea, thyme and lemon restauracjainnywymiar.pl

Technology Invades Gastronomy The Alchemist has smashed down the barriers of technology with a pioneering new concept that has left drinkers in raptures...

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ech is permeating into every aspect of our lives today, so it is no surprise that it is infiltrating the food & drink industry too. From ordering home-delivery meals via an app to doing your weekly grocery shopping online, it’s all being upgraded, fast!

Amazon Go is working on their checkout free, queue-less grocery stores where you can literally grab what you need and go. With this growing trend of empowering consumers, the same technology is being applied to some of the most modern and trendy gastronomy establishments too.

British Executive Chef and entrepreneur Edward Shellard has pioneered a revolutionary technological advance in the beer world, right here in Warsaw. His new chic and trendy gastropub, The Alchemist, alongside authentic gastropub cuisine, features self-service craft beer technology that allows diners to taste, match, pair and engage freely with the real gastropub experience he offers, all without queuing at the bar or waiting for the waiter.

The technology behind the taps at The Alchemist’s “Pour-Your-Own Beer wall” is incredible, simple and facilitates socialising too. Pre-paid cards that can be topped up at any time with more credit trigger the pouring mechanism of each tap when entered into a slot under-

neath. Users are in full control of which drink they pour and, most importantly, the amount they pour: even if it’s just a little taster. Credit is automatically deducted from the Beer Card every 20ml poured into the glass. In addition, the whole wall is interactive. Touch one of the iPads above the eight taps and the customer can read in two languages the details and the flavour profile of the craft beer on tap. This greatly encourages socialising, interactivity, food pairing and adventurous tasting and once you find your favourite tap, you can commit to pouring yourself a full pint. Six of the taps offer a rotating selection of craft beers, one is dedicated to a cider and one to imported Italian DOC Prosecco.

The best thing is that if you don’t use the credit in one night, you can come back and use it later.

It allows customers to explore more, whilst removing the pressure often felt by queueing at the bar. Female users are particularly enjoying the experience, especially The Alchemist’s Prosecco tap, which is in itself a technological first.

The advantages it has for the business are also rather ground-breaking. The software behind the taps, which can all be live-monitored from a mobile app, can record patterns in average spends, provide information regarding the popularity of certain beers, and can even be

set up to order a new barrel of beer from the supplier when the old barrel is running low. The iPad above the tap can be used for advertising purposes or branding and the possibilities are seemingly endless. Further, the Beer Cards can be purchased as gifts and pre-credited and sold on both the corporate & private market as gift vouchers.

The consumer is now in charge, empowered to maximise their experience whilst being fully in control of their financial spend. No more do they have to queue at the bar every time they want a refill. No more leaving your partner alone at the table whilst queueing for a beer! This technology has invaded the gastronomy scene for the greater good, empowering all who venture to it in search of an experience.

The Alchemist Gastropub Plac Piłsudskiego 3, Metropolitan Building, tel. 22 628 00 23, www.thealchemist.pl

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MADE IN POLAND 2017 How much support do exporters need and where it should be directed was one of the main themes of this year’s Made in Poland conference

Poland’s exports have quadrupled over the past 13 years, despite not always favorable geopolitical climate. Polish exporters have proven to be flexible, innovative and resilient in penetrating new markets and increasing their foothold in Europe as well. Contrary to popular belief, Poles don’t export mainly raw materials and produce. The sales of innovative products and services, particularly in the IT business, are growing quickly.

The state’s role is to mitigate uncertainty and risk for the entrepreneurs, particularly for SMEs, whose share in exports is still relatively small. The state has, in fact, made steps to provide exporters with far more support than in the past, uniting all agencies and institutions within the Polish Development Fund. Even the name of the agency that works directly with exporters abroad has been changed to reflect its increased involvement: the Polish Investment and Trade Agency (PAIH). PAIH has taken on a (top left, L-R): Michał Woźniak, Germany major endeavor to launch 70 foreign offices that Trade and Invest; Aleksander Libera, Polish Investment and Trade Agency (PAIH); will support Polish exporters, even in the most Nadia Bouacid, The French-Polish Chamber remote locations, such as Vietnam, Kenya and of Commerce; Paweł P. Mlicki, Netherlands- Mexico. The South American markets could be Polish Chamber of Commerce; Krzysztof the next big endeavor for Polish firms looking Przybył, The Polish Promotional Emblem for new markets: their growing population and Foundation “Teraz Polska” (Poland Now); Karol Jakubaszek, BGK; Pablo Rodas-Marwealth make these markets worth fighting for. tini, Emerging & Frontier; Beata Socha, WBJ “Even if you sell niche products, it is always better to have access to 500 million potential (top middle, L-R): Dionizy Smoleń, PwC Polska; Grzegorz Wolf, Economic Developcustomers rather than 38 million,” said Prof. ment Department of the City of Warsaw; Witold Orłowski, chief economic advisor at PwC Robert Roguski, Kobyłka municipality; Prof.

Witold Orłowski, PwC and Vistula University in Poland and rector of Vistula University.

The Made in Poland conference, held on March (top right, L-R): Prof. Witold Orłowski; 30, 2017 at Villa Foksal, was attended by over 100 Izabela Godlewska and Kacper Zieliński, business leaders, and heads of bilateral chambers Undress-code; Aleksandra Wadowska, of commerce and government institutions who PARP discussed the situation of Polish exporters.

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BEST PLACES IN WARSAW & GDANSK WE COOK WITH SMOKE MOMU is a restaurant in which cuisine plays the leading role. Most of the dishes served by our Head Chef – Sebastian Ruta, come from our oven, the only one in Poland. Thanks to this, our menu includes original positions which bring us back to the old Polish cuisine, natural and simple. Meats, vegetables, and cheeses are the main ingredients in our kitchen, and are given a unique character thanks to the smoke. All of the products which we base on, come from local and friendly suppliers.

Smoked tartare, duck on a bed of cherry mousse, or a chocolate soufflé, constitute the dishes for which we are most praised by our Guests.

Additionally, our unique bar offers cocktails based on the highest quality alcohols – smoked whiskey or bourbon, which allow to get fully submerged in MOMU’s ambiance.

Apart from caring for the highest standard of the served dishes, we also focus on people thanks to which we are here. Thanks to working with

WWW.MOMU.PL FACEBOOK.COM/MOMU

THE BEST BALKAN CUISINE If you’re not familiar with us, then know that we are present on the gastronomical map of Warsaw for 13 years now. In the so called meantime, we’ve changed our location from Mokotów to the center of Warsaw. What we are inspired by are the colorful, varied, and still undiscovered Balkans. Delicious cuisine, a kitchen open up to late hours, live music each day of the week, and everyday animations constitute the reasons for which we are most valued by our guests. If however we did already meet, then you’ve surely tasted our lamb chops prepared by Olaf Michalczyk - our head chef, who says smiling “I can bet on my lamb chops against any other chops in this city”. It’s also hard for you not to know Mrs. Kasia’s apple pie, or Mrs. Ania’s cheesecake which both just blow your mind. Regional rakia, Croatian and Slovenian wines, and beer straight from Bosnia are things you are surely also familiar with. If so, then we are positive that we will meet again soon.

WWW.BANJALUKA.PL FACEBOOK.COM/BANJALUKA.WWA

A PLACE FULL OF GOOD FOOD, URBAN LIFE AND FREEDOM

AïOLI is one of the best known chains of modern urban canteens, inspired by the rhythm of the city.

Industrial interiors, within which one can find fresh and simple southern cuisine, which the aioli sauce is a symbol of. The open kitchen serves dishes characteristic for AïOLI, in accordance with the Southern European profile of the cuisine, meaning breakfasts, snacks, salads, sandwiches, pastas, burgers, and pizzas. Many products and ingredients are delivered from Italy, Spain, or France.

AïOLI is a space which stands out with its lifestyle, various cultural events, public initiatives, and unique lifestyle projects. Each evening a DJ performs here, thanks to which AïOLI is teaming with life, just like the most popular canteens of European cities. We are here with you since 2012 and we don’t intend to stop creating following AïOLIs for you, in which you will be able to spend time with friends and people close to you.

FB: FACEBOOK.COM/AIOLICANTINESWIETOKRZYSKA

FB: FACEBOOK.COM/AIOLICANTINEPLACKONSTYTUCJI

AÏOLI INSPIRED BY GDAŃSK IS A MODERN URBAN RESTAURANT INSPIRED BY THE RHYTHM OF GDAŃSK. INDUSTRIAL DECOR LIKE GDAŃSK SHIPYARD’S HALLS TRANSFORMED INTO A SPOT OPEN FOR ALL #AIOLIFRIENDS, WHERE YOU CAN ENJOY FRESH AND SIMPLE SOUTHERN CUISINE. The open kitchen serves Southern cui- sine dishes characteristic of AïOLI, that is starters, salads, sandwiches, pasta, burgers and pizzas. Many products and ingredients are delivered straight from Italy, Spain or France. Delicious food is com- plemented by a broad selection of alcoholic beverages served in the bar. The venue is teeming with life like the most popular European spots thanks to DJs performing there every single evening. AïOLI is a unique and stylish venue, open for artists creating broadly defined art, boasting plenty of cultural events and social initiatives aimed at bringing together different generations, as well as full of original lifestyle projects. AïOLI doesn’t forget about its little guests, holding a spe- cial programme of weekend educational anima- tions #aiolidzieciszkoli (#aiolieducateschildren).

It’s a perfect spot for a breakfast, lunch or evening out with friends. The first AïOLI opened in Warsaw, at Świętokrzyska 18, in November 2012. We won’t stop here and we’ll open more AïOLI restaurants, where you can hang out with your friends and family.

FB: FACEBOOK.COM/AIOLIXGDANSK

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5TH EDITION OF THE SMART CITY FORUM

The fifth edition of the Smart City Forum, a platform for dialogue and business cooperation with central and local administration that allows for a wide debate and effective exchange of opinions and experiences, took place on March 8-9 at the Westin Warsaw Hotel in Warsaw. The event was an opportunity to meet with national decisionmakers, public administration representatives and wellknown experts. The topics discussed during the Forum included the direction in which Polish “smart cities� are heading and the changes that have been implemented since the previous edition of the event. The participants focused on many specific, smart city concept-related issues, such as electromobility and gasmobility, intelligent urban lighting management & mobility, urban services, city infrastructure management, municipal economy, integrated territorial investments, city infrastructure financing and energy efficiency.

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17TH EDITION OF THE TELECOMMUNICATION AND MEDIA WORLD SYMPOSIUM More than 550 participants attended the 17th edition of the Telecommunication and Media World Symposium, which took place on March 28-29 at the Sheraton Hotel in Warsaw. This year’s edition of the Symposium was full of important and current topics pertaining to the media market, telecommunication, e-commerce, new technologies and gaming. Business and central government representatives brought participants closer to issues connected with the Polish TV market, analyzing possible scenarios for its further development. The discussion also focused on the prospects for the evolution of the advertising market in Poland, as well as on the international expansion of Polish telecoms. The subject of regulating the telecommunications and media world also came to prominence during this year’s Symposium, bringing into the spotlight the latest reforms of the European Union in this area. Looking ahead, experts discussed the technologies of the future – AI, VR, AR, and 5G networks.

THE JUBILEE EDITION OF THE BROADBAND NETWORK CONFERENCE The jubilee edition of the Broadband Network Conference, which has become a unique platform for the exchange of ideas and opinions on the construction of access infrastructure and the development of broadband networks in Poland, took place on March 29 at the Sheraton Hotel in Warsaw. The event, which was attended by 260 participants, brought together key business and government representatives. Among the main topics of the conference were the challenges of the digital economy, the effects of the 2007-2013 outlook projects, cooperation models such as network sharing and service collaboration, and the concept of NGA. Also discussed during the event were the challenges and problems relating to POPC, as well as its impact on the shape of the market and the cooperation between infrastructure operators and service providers.

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BEST OF WARSAW ANNUAL EDITION

The Insider’s Best of Warsaw awards have become one of the leading food and drink events in Poland, which is why for the first time ever we’ve published a separate bumper issue detailing the cream of the crop.

Available all year round for zł. 20, look for it in selected media outlets, or contact us direct at: insider@warsawinsider.pl