Warsaw Business Journal October 2017

WARSAW

BUSINESS JOURNAL E c o n o my | Te c h

OCTOBER 2017 ~ No. 10 (41)

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

For daily news visit us at wbj.pl

ROGER ANDERSSON The MD of Vastint Poland shares his views on the market for business parks

OMNICHANNEL TECH TRANSFORMING THE RETAIL INDUSTRY

PLN 24.50 (VAT 8% included) ISSN 2543-9529 INDEX-RUCH-332-127

AUTOMOTIVE CAR PART INDUSTRY GOING HIGH-TECH GTC’S GALERIA PÓŁNOCNA THE LARGEST MALL OPENING IN WARSAW SINCE 2007

OCTOBER 9

IN REVIEW

News highlights from the previous month from wbj.pl

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COMMENTARY

Refurbishing historic buildings.............. 14 French investments in Poland............... 16 Taxing company transformation............ 17 Interview: Bartosz Wiśniewski.............. 22

Automotive

More than just nuts and bolts 26 | Interview: Mercedes-Benz 24

Exclusive

Interview with Roger Andersson........... 18

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LOKALE IMMOBILIA

Real estate news...................................... 39 Residential towers................................... 44 Interview: UBM.......................................... 48 Renovated buildings ................................ 50 Interview: Atrium..................................... 54 Investment landscape.............................. 56 Interview: Panattoni................................. 60 Logistics boom.......................................... 62

67

LIFE + STYLE

Top-notch hotels....................................... 67

70

EVENTS

Book of Lists 2017.................................... 70 27th Economic Forum.............................. 78 Dance Championships & Gala................ 80

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Omnichannel Giants get onboard 31 Retail on display 34 Interview: TogetherData 36

POLAND’S ULTIMATE SUCCESS It is a wonderful feeling to achieve such status.

Contact: info@Zlota44.com | +48 22 250 14 44 | Zlota44.com

The icon becomes a home

Z

łota 44 has fascinated the market since its early design. It was Daniel Libeskind himself who was creating it. The world-class architect who designed such iconic buildings as: the World Trade Centre Masterplan in New York, Reflections in Singapore, Berlin’s Jewish Museum and the Crystals in Las Vegas. Though Złota 44 is new to the Warsaw skyline, it is hard to imagine Warsaw without the eagle like silhouette. And now for the first time, Złota 44 is becoming a living residence with apartments illuminating the night sky of the city. The first residents are collecting their keys, moving into their apartments and are now calling Złota 44 home.

Let’s take a look inside Złota 44 to see what this most innovative and luxurious building offers.

What is unique about the building is in fact everything! For example, it boasts the largest recreational floor in Europe, a luxury that doesn’t exist on the Polish market. It consists of a 25m long swimming pool, spa with sauna and steam bath,

a fully equipped gym, spacious conference room, kids club and a 400 sqm terrace with outdoor jacuzzi. There is even a cinema room, which can easily be transformed into a… golf simulator to play on the best courses in the world! Where does it all fit? Well, it is perfectly designed into 1,800 sqm on the 8th floor of the building.

The apartments in Złota 44 are even more luxurious than the recreational floor. Reaching up 52 floors, you will find 287 fully finished apartments with amenities and comforts unmatched in any other residence in Poland.

The apartments come equipped with an ultra-innovative HMS system, which you have to experience first-hand to see the benefits. However, there is one unique feature in the skyscraper to highlight…. every apartment is

Each apartment especially designed by Woods Bagot

This is the highest you can live in European Union

equipped with openable panels giving access to fresh air. It is an important feature so that residents do not have to depend only on air conditioning.

The tower is also built with a triple-glazed façade that has the highest optical and insulating parameters.

The technologically-advanced windows are ultra-safe and reduce the noise of the outside world. But if residents decide that they want to feel the pulse of the city, they only need to open the window panel.

The interior design concept was created by the world-famous London-based architectural studio, Woods Bagot. The design of each apartment is individually crafted to match their unique shape, with no two apartments having the same layout. And they are all finished in perfect style and quality.

Among the Złota 44 mood creators is another famous English brand – Harrods Estates Property Management, who led the team designing

the program of building management services.

So, it is no surprise that that Złota 44 was ranked in first place by REAS Consulting Agency, giving the building the title of “Number 1 investment in Poland” for the last year.

And the most interesting fact… Złota 44 is home to the highest residence in European Union. It is the top penthouse sitting in the peak. Curious who will be living there...?

World-class apartments are waiting for buyers.

1800 m2 of recreational space

Contact: info@Zlota44.com | +48 22 250 14 44 | Zlota44.com W B J OCTOBER 2017

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

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

As little as six months back skepticism was the buzzword...

azdrodowski@wbj.pl

Michael Evans Copy Editor

Kevin Demaria Art Director

Contributors

Ewa Boniecka Karolina Papros Alex Webber Sales

Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com A. Julita Pryzmont jpryzmont@valkea.com PR & Marketing

Agata Wolny awolny@valkea.com

Autumn optimism

BY MORTEN LINDHOLM

Magdalena Czopur Subscriptions

mczopur@valkea.com Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com Magda Gajewska

Enjoy the read, and here’s to a successful Q4.

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Event Director, Valkea Events

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

WBJ.pl WarsawBusinessJournal

@wbjpl

All photographs used in this issue are courtesy of partners and companies unless specified otherwise.

Copyright © 2017 by Valkea Media SA All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher.

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PORTRAIT BY KEVIN DEMARIA

LOOK AROUND and one mood appears to be prevalent in the autumn air – optimism. That represents a considerable u-turn from the last year; in fact, even as little as six months back skepticism was the buzzword with investors either playing a nervous game of wait-and-see or backtracking entirely on their strategies as a result of various political and regulatory upheavals. Now, outward signs suggest that the corporate world has acclimatized to these bumps, and while politicians will doubtlessly continue engaging in big-stake games and gambles, business will continue as normal. If evidence was required, then look no further than at the analytical data: with the year entering its final stage, Moody’s and other ratings institutions have upped Poland’s GDP forecast for 2018 to 3.5 percent – not bad for a country that, according to the pessimists, was teetering on a precipice.

Furthermore, these figures appear to be ably supported by our own findings. Published in conjunction with this issue of WBJ, our annual Book of Lists has revealed record results for many of the top ranked companies we surveyed. Spread over 50 different industries, these success stories weren’t limited to just industry leaders either, with a copious number of mid-sized companies also reporting historic highs.

Naturally, at this stage of the year all eyes swivel onto the real estate segment: with Expo Real in Munich and a number of other events around the corner, our editorial department has busied itself measuring the temperature of the marketplace: this issue we ask what plans Vastint has made for Poland; how the logistics sector has treated Panattoni; and how Atrium Group and GTC are facing up to the latest changes in the retail world.

Of course, as always we’re also delighted to present your usual serving of business news whilst also exploring the latest news from the automotive industry and the IT/Tech sector.

Knowing our clients and their business Following our clients wherever they go

We wish to thank our clients for their continued confidence in our services and we look forward to working closely with them in the future

Metropolitan, Plac Piłsudskiego 1, 00-078 Warsaw, Poland | Benaco, ul. Pilotów 2E, 31-462 Cracow www.kochanski.pl

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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

Any potential reparation attempts would be an attempt to worsen close and good ties that for years have developed between Germany and Poland,” said German Foreign Minister Sigmar Gabriel. The issue of German reparations resurfaced several weeks ago when major Law and Justice (PiS) politicians, including its leader Jarosław Kaczyński, started bringing it up in the media. Later, the PiS Government attempted to downplay the issue with Foreign Minister Witold Waszczykowski saying that discussions on reparations “may not yield the appropriate result.” He added, however, that such discussion should take place if only to “inform the German side about the enormity of the destruction it has caused."

INFRASTRUCTURE

SHUTTERSTOCK

CENTRAL AIRPORT location chosen The planned Central Airport will be built in Baranów in the Mazowieckie voivodship. The town is located 40 kilometers west of Warsaw and has the A2 highway and Warsaw-Żyrardów railway nearby.

According to IAR, the information was confirmed by two credible sources. The Polish government announced the decision to build a new Central Airport between Warsaw and Łódź back in March. The cost of the investment is estimated at PLN 34.9 billion, according to the government’s draft document, and 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 government hopes that the airport would serve as a hub for passengers from the region, similar to Frankfurt and Amsterdam. There are currently three passenger airports located near Warsaw and Łódź, servicing some 16 million passengers per year combined.

Completion of the project is planned for 2021. “After the expansion, the terminal will have the ability to load and unload smalland medium-sized tankers, transshipment LNGs from a ship at a quay to a ship at a transshipment berth, loading LNG bunkering units, and bunkering LNG,” Gaz-System said.

ENERGY

LNG TERMINAL to be expanded

M&A

State-run gas transit infrastructure operator Gaz-System has announced that it will expand the LNG terminal in Świnoujście, and has already started design and preparatory work. Gaz-System plans to build a second quay, including an additional loading and unloading station for ships and a loading station for LNG bunkers, the company said.

According to EY consultancy, there were 107 merger and acquisition deals in Poland in the first six months of the year. In the CEE and South-Eastern Europe region, there were 473 such deals, down by 27.8 percent y/y. In Poland, one of the reasons for the lower transaction volume could be

EY: 107 M&A deals in H1 in Poland

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WBJ

In Review the reduced activity of state-owned companies, which in previous years very often sold smaller subsidiaries to private-owned firms,” Damian Łoziński from EY said. The most active market in the region was the Czech Republic with 113 M&A deals.

While the number of transactions dropped, their value increased by 42.4 percent to $19.9 billion. This increase was primarily caused by the number of larger transactions worth $100 million or more, such as discount retail chain Żabka being bought

by CVC investment fund. In terms of deal value, the Czech Republic was once again the regional leader ($4.5 billion), followed

by Turkey ($3.6 billion) and Poland ($3.2 billion).

M&A / RETAIL

EUROCASH with a PLN 350 mln deal to buy Mila chain WSE-listed FMCG distributor Eurocash has signed a PLN 350 million contract for the takeover of supermarket chain Mila. “The acquisition of Mila, just as the acquisition of the EKO supermarket chain in January 2017, is part of the strategy of building a nationwide supermarket chain based on cooperation with franchise partners as well as running Eurocash’s own stores in order to support chain development in new regions of the country,” the company said in a market filing. At the end of 2016, Mila’s network operated 188 branches. Mila’s sales in 2016 amounted to PLN 1.49 billion and EBITDA stood at PLN 4.8 million.

ECONOMY

LOWER RETIREMENT AGE to cost Poland PLN 54 bln – ZUS head The cost Poland will bear between 20172021 for lowering the retirement age will reach PLN 54 billion, according to Social Security fund (ZUS) president Gertruda Uścińska. “We’ve analyzed how similar changes to the law in the past affected workers, and we’ve calculated that 82 percent of those able to retire earlier will do so,” Uścińska said. Some 415,000 people will meet the new retirement criteria this year.

So far, ZUS has received 120,000 retirement applications. According to ZUS calculations, this year’s cost of lowering the retirement age will amount to PLN 805 million. Back in December last year, Poland lowered the retirement age to 60 for women and 65 for men, from the previous age of 67 for both sexes. The new law comes into force on October 1.

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ECONOMY

RATES HIKE expected as soon as Q1 2018 According to Eugeniusz Gatnar from the Monetary Policy Council (RPP), interest rates should be increased early next year to offset rising inflationary and wage pressures. “If wage pressures rise in line with my expectations and inflation comes near the target then I would expect interest rates to be raised in the first quarter of next year,” he said in an interview with Reuters. He added that he is in favor of a gradual, 25-basispoint tightening. He warned that factors such as lower retirement age, growing wages, and employment, as well as the seasonal increase in food prices will drive up inflation, which could result in “irrational consumption” as lending rates could stay below inflation for some time, he added.

AUTOMOTIVE

URSUS to complete prototype electric car in October Ursus expects work on a prototype electric van to be completed in October this year, vice president Monika Kośko announced on September 12. “We are currently working on a prototype car that will be built in October this year, and we are planning a city-wide delivery van with the ability to customize the loading frame,” said Kośko.

“The company has also started developing a concept for electric motorcycles, but the work is still at a very early stage,” Kośko added. Ursus specializes in the manufacture and sale of machinery and equipment for agriculture. In 2011, Ursus joined forces with another domestic producer of agricultural machinery – Pol-Mot Warfama.

ECONOMY / RETAIL

SUNDAY TRADE BAN to cover only one Sunday per month – media The government wants to impose the Sunday trade ban starting from next year, with two Sundays per month when stores will be allowed to remain open, daily Dziennik Gazeta Prawna reported. In 2019, the ban would be further limited to only one Sunday each month. The bill, which was promised by the ruling Law and Justice (PiS) during its parliamentary campaign, has undergone many changes since the election. At first, it was supposed to cover all Sundays and affect most shops, including even those at gas stations. Since then, the government has gradually eased the restrictions, however, the draft bill has yet to be presented.

TRENDING STATS

8.8%

Industrial production growth in August (y/y, GUS)

7.6%

Retail sales increase in August (y/y, GUS)

4.6%

Employment growth in August (y/y, GUS)

6.6%

Wage increase in August (y/y, GUS)

1.8%

Inflation level in August (GUS)

3.9% Q2 GDP growth (y/y, GUS)

52.5

Poland’s PMI score in August (Markit)

7.0%

Unemployment in August (GUS)

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Commentary EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

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Managing Director at Vastint Roger Andersson discusses the potential of business parks in Polish cities and reveals his plans for further development

With plans to build a €500 million engine production plant, Mercedes-Benz is raising the stakes for Poland’s automotive industry – we talked to Ewa Łabno-Falęcka, head of Marketing at Mercedes-Benz Manufacturing Poland

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Read our experts’ views on the changing regulations for refurbishing historic buildings, French investments in Poland’s automotive industry and the tax on civil-law transactions in cases of transforming a company into a partnership

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In increasingly uncertain times, Poland needs to take its international and energy security seriously – interview with Bartosz Wiśniewski, head of research at the Polish Institute of International Affairs (PISM)

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WBJ COMMENTARY | OPINION

Regulatory changes impacting the renovation of historical buildings

Anna Karol Wyrzykowska Filipiuk Advocate, counsel Head of the Real Estate Practice WKB Wierciński, Kwieciński, Baehr

Lawyer Member of the Real Estate Practice WKB Wierciński, Kwieciński, Baehr

STARTING SEPTEMBER 2017, THE MINISTER OF CULTURE CAN REVOKE OR AMEND FINAL PERMITS FOR CONSTRUCTION ON HISTORICAL BUILDINGS

I

nvesting in the renovation of historical structures and buildings has become very popular in Poland in the last couple of years, transforming parts of Polish cities with new office, residential or retail spaces. As of September 9, 2017, the fervour may decline due to the entry into force of the controversial Amendment to the Act of July 23, 2003 on the Protection and Care of Monuments ( Journal of Laws of 2017, item 1595).

According to new Article 47a, the Minister of Culture and National Heritage (on whose behalf the General Conservator of Monuments acts) has the right to revoke or amend, ex officio, final permits issued by the Voivodship Conservator of Monuments for, among other things, carrying out conservation, restoration and construction works at a monument, dividing monuments, or changing the intended use of a monument or the way of using it.

The Minister is entitled to exercise this right if carrying out the works under a permit would cause “a decline in the monument’s value,” “damage or destruction of the monument” or “improper use of the monument.” These expressions are broad and imprecise, and raise the possibility that almost every investment could fall within the scope of the Minister’s power. Moreover, the Minister is able to suspend the enforceability of a permit even if there is only a probability of the occurrence of these circumstances. However, a decision to suspend a permit will expire after three months, unless the Minister issues a decision to revoke or amend the permit within that time.

The Minister is also entitled to initiate revocation or amendment proceedings within two years of the date on which a permit becomes final. As such, Article 47a introduces a way to challenge final decisions, which is unknown in administrative procedure (and this was acknowledged in the legislator’s statement of reasons with respect to the draft Amendment).

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Importantly, if a permit is revoked or amended, it could also open the door to challenging the other decisions issued to the investor in the course of the property development process, including the building permit.

Under the Polish Administrative Procedure Code, administrative proceedings may be recommenced in respect of a decision if it was issued on the basis of another decision that has been revoked or amended.

The changes should only apply to permits issued after the entry into force of the Amendment to the Act on the Protection and Care of Monuments i.e. permits issued on or after September 9, 2017. However, only time will tell whether the Minister will also use the new rights with respect to permits that were issued before that date, but are to become final after it.

“The Minister will be entitled to initiate revocation or amendment proceedings within two years of the date on which a permit becomes final

new office space in katowice

www.ktw.com.pl

|

+48 32 832 00 00

|

al. W. Roździeńskiego 1, 40-202 Katowice

WBJ COMMENTARY | OPINION

Here for the long haul

or Saint-Gobain, whose laminated windshield glass is in every other car in Europe.

Companies with French capital operating on the Polish market are benefiting from the growth possibilities that Poland offers. They also see the country’s THE AUTOMOTIVE INDUSTRY IS ONE OF POLAND’S investment potential, which attracts new French firms TOP EXPORT SECTORS AND ALSO THE SECOND MOST to move their operations to Poland, as evidenced by the POPULAR INDUSTRY FOR FOREIGN INVESTORS. FRENCH recent acquisition made by French Benalu group of 100 FIRMS HAVE BEEN PRESENT IN POLAND SINCE THE percent of shares in a company called Mega, a producer EARLY TRANSFORMATION AND NEW ONES KEEP COMING of steel tippers and trailers.

TO INVEST IN THE COUNTRY’S AUTOMOTIVE POTENTIAL. French companies operating in Poland are increasMEANWHILE, A LABOR SHORTAGE HAS PROMPTED MANY ingly involved in ecology issues. The changing social awareness requires companies to implement solutions OF THEM TO TRAIN THEIR OWN EMPLOYEES reducing CO2 emissions. Manufacturing companies are increasingly switching to electric and hybrid cars, as well as alternative fuel sources, which are becoming he automotive industry in Poland is a diversi- more popular among consumers. Additionally, comfied sector that is developing steadily. Polish panies put great emphasis on education. The French production plants have seen their production Embassy, UNEP-GRID Warsaw, together with French levels grow within the past three years. Apart companies, including automotive firms, is holding an from passenger cars and trucks, they are annual ECO-MIASTO national campaign this year for producing an increasing amount of car parts the fifth time. Its goal is to promote eco-friendly soluand accessories, intended both for export tions in cities and municipalities. Renault Polska has Monika and for the domestic market. The automotive sector been involved in promoting road safety and ecological Constant is the second most important industry in Poland with transportation solutions.

General Director revenue of €31 billion and employing 166,000 people.

The biggest challenge which is limiting the growth of the French-Polish A significant part of that revenue is generated by comof automotive firms is the shortage of qualified low Chamber of and medium-level workers. According to estimates, the Commerce (CCIFP) panies with French capital.

Foreign investors have thus far invested PLN 712 industry needs several thousand people. Companies are billion. It’s noteworthy that these companies reinvest seeking to address the issue by launching automotive the majority of their profits in the country rather than courses at vocational schools and the increasingly popupay them out as dividends. France is the third largest lar training courses organized by employers themselves. foreign investor in Poland (after Germany and the US). Michelin has been running its own Training Center for French capital is present in most Polish industries and years, where it trains employees from Poland, Lithuania, sectors, creating over a quarter of a million jobs directly the Czech Republic and Slovakia. and hundreds of additional jobs at their suppliers and Companies with French capital have been present in partners in all regions of Poland.

Poland since the beginning of the transformation and The car industry is also the second industry where their operations here are long-term. The investments foreign companies like to invest. Poland is an attractive they are making, their involvement in the development destination for the automotive sector due to its location, of the region and of society, as well as strengthening the which fuels growth not only on the internal European cooperation with local partners and suppliers put them market, but also expansion to Eastern Europe and neck and neck with other companies developing the beyond.

Polish economy.

Poland has increasingly improving road, office and telecommunications infrastructure, a well-qualified workforce and support in the form of Special Economic Zones. All of that makes Poland one of the major investment destinations in this part of Europe for French companies.

Automotive concerns with French capital have been present in the Polish market for years. Apart from giants known to every consumer, like the PSA Group’s Citroën, Peugeot and DS; and Renault Polska, French capital is also located in companies producing e.g. chassis for utility vehicles – such as Gruau Polska, and in companies specializing in car parts manufacturing – Faurecia Polska, Hutchinson Polska and Valeo Polska.

We cannot forget about a major car tire producer, Michelin, which has its biggest factory located in Olsztyn,

T

“Companies with French capital have been present in Poland since the beginning of the transformation and their operations here are long-term

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Transformation of companies – Is there an obligation to pay tax on civil law transactions?

Tomasz Wojdal Head Legal Advisor at KRS Kancelaria Legal Office

The issue The transformation of a company into a partnership is a common practice in the business environment. Regulations impose the obligation to tax the contributions made to a partnership at the time of the transformation of a capital company into a partnership. The issue of taxation is most important for companies that have received contributions to both share capital and supplementary capital, as well as those that have generated assets that exceed their share capital. So the question is whether the supplementary capital or collected assets (which were not contributed) are subject to tax on civil law transactions at the time of transformation.

Administrative Court’s interpretation Taxpayers often stress that at the moment of transformation, the assets of the transformed company (partnership) are not increased in comparison to the assets of the transformed company (convertible company).

Hence there is no taxable base and there is nothing to tax. The balance of assets of the company before, and the partnership after the transformation is the same.

However, the administrative courts find otherwise. The courts argue that the difference between the value of the share capital of the company under transformation and the remaining value of the company's assets transferred to the transformed partnership should be taxable. In this view, both the contribution to the supplementary capital of the company and the assets generated during the company᾽s existence are taxed at the time of transformation into a partnership.

Another argument raised against the imposition of the tax is in relation to EU directives. Taxpayers claim that partnerships should be regarded as companies.

Therefore, the exemption for companies in Article 2 (6) (b) ATCLT should be applied. The administrative courts exclude such possibility, arguing that the Polish legislator was entitled to determine the status of companies and partnerships differently. The application of the regulations of the Act applies only to companies and does not affect the transformation of companies into partnerships, which does not violate EU law (eg Voivodship Administrative Court judgment of July 21, 2014. I SA / Wr 1222/14).

Not all transformations are subject to tax In its judgment of May 17, 2017, the Supreme Administrative Court stated that exemption from the tax should be applied during the transformation of a company into a partnership to the part of the share capital which

was previously exempt from tax in accordance with the regulation of the statute. In the background of the verdict was the exchange of share transactions. Before the transformation, the company obtained the shares of the other company. The contribution increased the share capital of the company under the transformation. This transaction was not subject to tax on civil law transaction due to the exemption stipulated under Article 2 (6) (c) ATCLT. The court stressed that in such a situation, part of the share capital – resulting from the increase in share capital – is exempt from tax at the stage of transformation (Article 9 (1) (11) (a) ATCLT).

Bearing in mind the abovementioned judgment, the exemption should also apply to the share capital arising from the merger of companies. Such a merger is subject to exemption from tax under Article 2 (6) (a) ATCLT. Therefore, at the moment of transformation, this part of the share capital should not be subject to tax on civil law transactions.

Summary The above ruling indicates that not all transformations of companies into partnerships are subject to tax on civil law transactions. The exemption includes only the share capital of the company which was not subject to tax at the stage of the increase in that share capital. Other contributions and assets of the company are subject to the tax on civil law transactions at the stage of transformation of the company.

“Not all transformations of companies into partnerships are subject to tax on civil law contracts W B J OCTOBER 2017

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WBJ COMMENTARY | EXCLUSIVE INTERVIEW

Market optimism

WBJ TALKED TO ROGER ANDERSSON, THE MANAGING DIRECTOR AT VASTINT POLAND, ABOUT THE DEVELOPER’S BUSINESS GARDENBRANDED BUSINESS PARK PROJECTS AND FURTHER INVESTMENT PLANS IN THE COUNTRY

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INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

You have recently started construction work on the second phase of your Business Garden Wrocław development.

How do you view the prospects for the office property market in the city in the coming years?

Roger Andersson: The realization of the first phase of Business Garden on ul. Legnicka in Wrocław was completed in November 2016. This part of the investment consists of three office buildings and a restaurant pavilion, surrounded by a big garden.

In total, 37,000 sqm of the planned 117,000 sqm of leasable area has been completed. Currently, there are six office and service buildings with a total leasable area of approximately 79,000 sqm under construction.

Works will end in December 2019.

We have already leased out the first phase and have pre-leased around 20,000 sqm in the two newly started phases. Demand for office space in Wrocław is big at the moment and we are very positive that it will continue in the coming years. The majority of our tenants are companies from the shared services sector, especially IT, and from the banking sector.

What about Poznań, where you are now also expanding your Business Garden scheme?

The first phase of the Business

Garden office complex in Poznań was finalized in 2015. Upon completion, the local real estate market gained 42,000 sqm of office and retail space with excellent access to town infrastructure. Last year we started realization of the additional five buildings with a total leasable area of 46,000 sqm and a detached, multi-story parking lot. Completion is scheduled for the end of 2018.

The first phase is nearly fully leased out and we can now start to concentrate on commercializing the second phase. Poznań is still a very good market due to the many small and medium-sized companies providing a various range of outsourcing services.

Are you considering the development of Business Garden-branded business park projects in any other large regional office markets in Poland, for example in Kraków, the Tri-City or Łódź?

We mainly concentrate on local markets in which we are already present, but of course that does not exclude other markets like the Tri-City, Kraków, Katowice or Łódź. We are interested in purchasing more land in these regional cities, but as the Business Garden concept requires large land plots with closeness to public transport, it is of course limited in terms of opportunity.

“Poznań is still a very good market due to the many small and medium-sized companies providing outsourcing services

As for smaller office schemes, will you enter any new locations in the coming months?

We have already secured two small office projects in Gdynia, on which we are planning to start construction next year. The company is also working on a few similar projects in other locations. In Katowice, for example, we have signed a preliminary agreement for the purchase of a plot of more than 9,000 sqm on ul. Piotra Skargi where the Hotel Silesia has been deserted since 2006. We plan to demolish the existing building and develop a complex of modern office and hotel buildings.

Do you see any major benefits resulting from branding your office projects in Poland? Several other developers have already employed a similar strategy – do you think this is a trend that could become more popular in the country in the near future?

Yes, I strongly believe in our strategy. Business Garden is a brand created to identify projects and differentiate them from the competition. The name serves as a label that is associated with specific features of the buildings, the quality of office space, functional and emotional benefits for tenants and the values that we bring to the project as a long-term developer. A common brand protects against imitation, and more importantly, helps build awareness and customer attachment to our innovative projects.

Although the brand has only just started to take hold in the market, we can already see the “Business Garden” effect. This is reflected in a positive acceptance of each new

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WBJ COMMENTARY | EXCLUSIVE INTERVIEW

“The development of downtown office projects is only a matter of time, since we are looking intensely for appropriate investment sites in and outside the center

the Business Garden Warszawa complex in Warsaw. What is the occupancy level in your flagship Polish business park at the moment?

This is a very successful project and will definitely be appreciated by future users. We have attached project implemented under the brand umbrella. great importance to providing the Our current tenants use the possibility of expansion and most comfortable conditions for reserve additional space; others consider our complexes companies that choose to expand or open their business in the Business in different locations as their additional offices. We cannot always match a timeline of the development process Garden.

The newly built part of the comwith our tenants’ business plans, but in all cases, the plex consists of five office buildings Business Gardens are their first choice. with a total leasing area of 56,000 sqm. It is quite a lot bearing in mind Vastint Poland specializes in the development of phased business park projects. Do you still see dethe fierce competition on the Warmand for space in such schemes in a situation when saw market. However, we should tenants seem to be increasingly interested in central remember that there are also a lot of office locations? tenants and quite high demand for There are numerous proven features that attract a specific modern office space. I am optimiscategory of tenants. For example, our low-rise buildtic, especially since the first lease ings have bigger and more efficient floor plans than city agreements have been signed and center high-rise buildings. We can phase the project the first tenants have moved into the depending on demand. Companies may increase their complex. I think the complex will be space without any obstacles and almost without any close to a quarter leased by the end limits, without having to change their registered office of this year. address. In addition, the green garden and surroundings also offer a very different environment to city center Vastint owns a major plot of land projects. The scale of projects makes it possible to aclocated south of the Business Garcommodate much more services and amenities than in den Warszawa complex and close individual office buildings. The rent levels are also more to Warsaw Chopin Airport. What competitive than in city center buildings. Finally, the are you planning there and when Business Garden projects are well located with easy acwill that investment be launched? cess to public transport.

The plot, with an area exceeding 14 hectares, is located on ul. Ĺťwirki Earlier this year, you completed the second phase of i Wigury near Warsaw Chopin

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Airport. At this moment, it is too early to say but presumably it will be a mixed-use development with office, residential and service space.

We are in the early planning process and it will take two or three years before any investment.

Are you considering any office developments in downtown Warsaw?

Warsaw is one of the most impor-

tant markets that we are interested in. Therefore, we are considering such a scenario. The development of downtown office projects is only a matter of time, since we are looking intensely for appropriate investment sites in and outside the center.

In general, are you optimistic about the office property market in the Polish capital, which has been defined by large new supply volumes and intense leasing activity of late?

Yes, I’m very optimistic regarding the Warsaw market and also the other major regional markets. The demand

for office space doesn’t seem to be on the decline yet.

What are your plans for other real estate market segments?

So far, Vastint Poland has been known for its commercial projects.

Recently, the company has entered the residential segment of the Polish real estate market and for this reason an increase of activity in these local markets is also foreseeable.

Our first residential project, River-

view, is being developed in Gdańsk.

The complex, consisting of seven buildings, offers 282 apartments. The next project in the pipeline, called Portowo, will be constructed on a 15-hectare site located by the Warta river in Poznań. On the project site, which is currently undeveloped post-industrial land, a modern and differentiated residential and retail complex comprising approximately 1,600 apartments will be created.

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WBJ COMMENTARY | INTERNATIONAL RELATIONS

suggest alternative solutions. There are some ever-greens, like “the future of NATO”, or “whither Russia.”

However, we sometimes narrow our focus and look, for example, at the short-term issues like the stability of Libya, or the prospects for a free-trade deal between the EU and Japan. In the coming months, and especially starting in 2018, we will be focused on Poland’s membership of the UN Security Council. It creates certain opportunities and our task will be to come up with ideas on how to take advantage of them.

Second, we analyze issues we are requested to analyze. The Polish Institute of International Affairs plays a supporting role for Polish authorities. We are a very specific type of public consulting agency, in that we work for one client, and one client only, i.e. the Polish state, in a very specific subject area, which is international affairs. Our job is to make sure that the people who are responsible for foreign policy are equipped with the best possible expertise and knowledge, and that this expertise is delivered to them in a timely manner.

WBJ TALKED TO BARTOSZ WIŚNIEWSKI, HEAD OF THE RESEARCH OFFICE AT THE POLISH INSTITUTE OF INTERNATIONAL AFFAIRS (PISM), A PUBLIC CONSULTING AGENCY, ABOUT SECURITY CHALLENGES AHEAD OF POLAND, SHIFTS IN ITS INTERNATIONAL RELATIONS, INCLUDING WITH RUSSIA AND THE US, AS WELL AS OTHER GLOBAL AFFAIRS SHAPING ITS POLICIES, LIKE NORTH KOREA’S NUCLEAR PROLIFERATION

WBJ:

Which global issues do you consider the most pertinent for Poland right now?

Bartosz Wiśniewski: Our analysis, or our activity in general, e.g. in the form of seminars or conferences, is driven by two factors. First, it is our in-house assessment of what is important from the point of view of

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What are some other major trials that Poland has to deal with?

Another example of a challenge Poland’s international standing, what facing Poland is avoiding what some experts refer to as the institutional can affect it, how to maximize positive trends and minimize the adverse fragmentation of the European Union. This is not to be mistaken ones, and so on. Of course, not evwith the emergence of a “multierything that we do may be directly speed” Europe, because this is largely applicable “here and now”. Part of already a fact of life – the eurozone what we do needs to be future-orialready creates such a reality. What ented, to be about emerging issues is key is that the EU’s institutional or topics. We often draft scenarios,

SHUTTERSTOCK

Getting serious about security

Let’s start with Poland’s security issues. What are the biggest challenges right now?

Poland’s security environment has deteriorated markedly in light of Russia’s aggression in Ukraine.

Poland’s foreign policy has been about making sure that our alliances are vibrant and strong, and that our partners are aware of our perception and assessment of Russia’s policies.

This is by far the most pressing challenge that Poland is facing, although a lot has already been achieved.

INTERVIEW BY EWA BONIECKA

framework will not be used to create separate, exclusive “clusters” of member states.

What mechanisms are at Poland’s disposal in order to strengthen its ties with the US after the visit of President Trump in Warsaw back in July?

Any high-level visit, and a presidential visit in particular, creates a certain momentum in a relationship, a boost of sorts. Polish-US relations are already multifaceted, rich in content, even though they are characterized by a deep asymmetry, not least because of the differences in both countries’ political, military and economic potential. The importance of Donald Trump’s visit to Poland, quite early into his presidency, is two-fold in this context, which in turn translates into opportunities to advance Poland’s interests vis-à-vis the United States.

First is the actual content of Donald Trump’s statements in Warsaw, both public and during talks with Polish authorities. It appears that a new community of interests is emerging between Poland (and Central Europe in general) and the US, specifically connected with supplies of liquefied natural gas (LNG).

Poland is seeking to diversify sources of supply, the US is keen to export natural gas. If the price is mutually advantageous, it’s reasonable to expect further LNG shipments from the US to Świnoujście.

Second is security cooperation.

Trump praised Poland’s efforts to strengthen its defensive potential.

Undoubtedly, Poland had been meeting its commitments as a NATO member long before Trump moved into the White House. However, what Trump said in Warsaw offers an important lesson about alliance politics: if you want others to think seriously about your security, you need to be serious about it, too. Poland is seeking to solidify its security guarantees, but is not a “free-rider.” Rather, we are already a security “provider,” which is exactly why Warsaw is a valued partner for the US.

How can the Three Seas Initiative and President Trump’s presence at its summit upgrade Poland’s political and economic position?

We need to keep in mind that the Three Seas Initiative is still an upand-coming project. There have only been two meetings in this format, after it was inaugurated in August 2016 in Dubrovnik. Indeed, Croatia was the Initiative’s driving force even before this meeting. The TSI has considerable potential, because the region stretched between the Adriatic, the Baltic and the Black seas is still lagging behind the remainder of the European Union in terms of density and development of energy, transport and digital infrastructure. Numerous analyses point to the significance of investment in infrastructure for boosting competitiveness and economic growth.

To be sure, a lot has been achieved in terms of bridging the east-west divide; the region’s accession to the EU has been instrumental in achieving this goal. The TSI is all about creating greater interconnectivity along the north/south “axis.” What’s important to underline is that this is an initiative within the European Union, and the goal is to strengthen the internal market – a far cry from creating divisions in Europe.

Apart from Brexit and the refugee crisis, what are the EU’s biggest problems right now?

One of the most pressing exogenous challenges facing the EU is how to deal with Russia’s aggression in Ukraine – so far, a formal consensus has established the need to uphold sanctions levied against Russia in reaction to the annexation of Crimea and the subsequent invasion into Ukraine’s Donbas region. Russia is also at the epicenter of one of the key EU debates these days, and that is energy policy and the shape of the EU internal energy market. The Baltic Sea gas pipeline – the Nord Stream 2 – is what is driving it. If implemented as planned and with the requested waivers under EU law, this project will cast a very long shadow not just over the energy security of Central Europe, but over

the notion of European solidarity in general.

If you want others to think seriously about your security, you need to be serious about it, too

What role has Russia been playing in managing global security threats, including in Syria and in North Korea?

Russia has significant potential as an antagonist on a whole range of pressing regional issues. If not for Russian support for the Assad regime, both military and political, the conflict in Syria would have taken a much different course. In the Korean Peninsula, Russia is playing a somewhat subdued role; the spotlight is on China and Beijng’s relations with Pyongyang. And yet, Russia’s position is clearly at odds with efforts to tame North Korea’s aggressive policies. Russia has ruled out the denuclearization of the Peninsula without first making sure that the status quo is solidified, i.e. that Korea remains divided. It is reflected in Russian experts’ proposals to hold a conference of key “stakeholders” to ensure that the balance of power in the region is “safeguarded.” Thus, the Far East is perhaps the premier example of Russian thinking in terms of spheres of influence, while at the same time taming US power and influence.

This genuine incompatibility of US and Russian interests means that a so-called grand bargain between erstwhile Cold War adversaries would be difficult to imagine. At the same time, precisely because Russia does hold some sway over the course of events on the ground, as in Syria, it will remain a partner for the West and the US. This might create uncertainty as to the actual cost of Russian cooperation, especially if tighter cooperation is not accompanied by appropriate consultation with allies.

Bartosz Wiśniewski is head of the research office at the Polish Institute of International Affairs (PISM)

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WBJ COMMENTARY | AUTOMOTIVE

The new four-cylinder OM 654 engine is the first of Mercedes-Benz family of cutting-edge diesel engines

Blazing a trail

EARLIER THIS YEAR, MERCEDES-BENZ ANNOUNCED A WHOPPING €500 MILLION INVESTMENT IN AN ENGINE PRODUCTION PLANT LOCATED IN JAWOR, WESTERN POLAND. HOW IMPORTANT IS THE INVESTMENT FOR THE AUTOMOTIVE INDUSTRY IN POLAND AND WHAT MADE THE GLOBAL CAR GIANT CHOOSE THIS LOCATION? 24

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INTERVIEW BY BEATA SOCHA

WBJ:In June 2017 you launched a major investment in

Poland of €500 million. You’re building an engine factory in Jawor. Why did you choose this location?

Ewa Łabno-Falęcka: The factory in Jawor is part of a global growth strategy for Daimler AG and its Mercedes-Benz brand. The investor chose Central and Eastern Europe, and Poland in particular, as the right location for its first passenger car engine production plant outside of Germany. Until now these have been produced exclusively in Germany (Stuttgart-Untertürkheim, Hamburg, Berlin and Kölleda in Thuringia).

Naturally, we’ve analyzed particular factors such as location, logistics, transportation lines, land attractiveness, proximity to a large city, labor force capacity and many others.

Poland was competing with several CEE economies, and Jawor was one of several dozen locations in seven countries. The involvement and support from the Polish government, as well as from local authorities – the city council, the municipality council and the Wałbrzych Special Economic Zone – were invaluable.

What type of engines will the factory produce? How many per year? Will they be assembled from scratch in Poland?

The plant will produce four-cylinder new generation, diesel and gas engines, very high-tech and compliant with the RDE (Real Driving Emissions) requirements.

How many people will the factory employ? How much automation is used in a cutting-edge engine plant these days?

Initially, it will employ 500 people.

Manufacturing such high-tech products as engines, which form a major part of the drive system, based on the most cutting-edge production methods, is of great value to the Polish economy. The factory will be built and will operate in accordance with Mercedes-Benz standards, which means flexibility and ef-

ficiency, as well as environmentally friendly production methods.

We talk a lot about innovation in Poland. As a premium brand production plant, we are implementing very high standards, both in manufacturing and organization.

The plant will largely rely on expert knowledge. The work of “blue and white collar” workers will be supported by ergonomic workplace organization and intelligent automation. The Jawor plant will introduce not only Industry 4.0 elements, but also innovative work organization, which are both definitely undervalued in our country. I consider them to be a very important positive result of this investment.

How important is Poland for the European automotive industry?

The value of automotive production in Poland exceeds €30 billion, with exports accounting for over €20 billion. The automotive sector is the leader among Poland’s export industries, both to EU markets (85 percent) and outside the union.

The automotive industry is also one of the most innovative sectors and one of very few that is boldly crossing EU borders, blazing a trail for other industries to follow.

How do you see the future of the automotive industry: electric cars, driverless cars – how big a role will they play in your strategy?

Let me focus on electro-mobility.

For Long Distance Driving with constant speed and virtually no stops, conventional propulsion systems and especially the diesel engine show very high energy efficiency. In Inter Urban Mobility, long distance driving at a constant speed is combined with urban traffic, which involves more stops.

Therefore, mild Hybrids with e.g.

Start-Stop function or recuperative breaking are useful to store energy for later use. With a higher share of urban traffic, Plug-In Hybrids using an extra battery as support for the conventional engine are a viable alternative. In Urban Traffic, finally, low speed is combined with

“The automotive industry is one of the most innovative sectors and one of very few that is boldly crossing EU borders

regular stops – virtually no long distance driving occurs. For these purposes, and given the benefits of local emission-free driving, fuel cell or battery electric vehicles could be the right choice. We offer premium products in every segment.

What challenges is the automotive industry facing in the 21st century and how is it impacting your business and that of your competitors?

All the challenges – Connectivity, Autonomous Driving, Shared services and Electromobility – are embraced in the Daimler’s CASE strategy. Mercedes-Benz was the inventor of the automobile in 1886.

Some 130 years later we are the leader in autonomous driving. In 2013, at the IAA in Frankfurt, we presented the first fully intelligent and autonomous car: the S Class 500 Plug-In Hybrid Intelligent Drive. It successfully managed a trip from Mannheim to Pforzheim.

We are continuing to reinvent the automobile.

Ewa Łabno-Falęcka, Ph.D. is the head of Marketing, Corporate Communication and External Affairs at MercedesBenz Manufacturing Poland

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More than just

NUTS AND BOLTS

Poland is a major player on the global automotive parts market, which may seem surprising given that it produces no car brands of its own. More importantly however, car parts produced in the country are often some of the most innovative in the world. Will Poland hold its own in the upcoming electromobility revolution?

BY KAROLINA PAPROS

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E

ven though the title of European leader of the automotive industry has never belonged to Poland, the automotive sector is doing remarkably well and has good prospects for the future.

However, it is not the car manufacturing branch that has experienced the highest increase in exports in 2016 in comparison to the previous year. It was the manufacturing of automotive parts and accessories with an increase of over 13 percent, as reported by AutomotiveSuppliers.pl, an analytical and consulting company specializing in the automotive industry in Poland. In 2016, Poland was the fifth largest European (and tenth worldwide) car part exporter, after Germany, France, the Czech Republic and Italy, accounting for 3.1 percent of the total $361 billion in global vehicle part exports.

Undoubtedly, manufacturing of automotive parts and accessories is the jewel in the crown of the Polish automotive industry and a very important industry for the country’s economy. For instance, vehicle parts account for over 8 percent of Poland’s total exports to its top trade partner – Germany. In fact, Germany is the recipient of 37 percent of the total Polish exports of car parts, followed by the Czech Republic (8.3 percent), Italy (7.5 percent) and the UK (7.1 percent).

Given where Polish car parts are delivered to, it is hardly surprising to find them in most global leading car brands.

For instance, the owners of BMW, Mercedes, Volkswagen, Renault, Volvo, Saab and Audi have airbags and seat belts that are produced in two Polish cities: Oława and Jelcz-Laskowice. The producer is Autoliv Poland, a joint venture of Swedish Autoliv Inc., one of the world’s largest companies specializing in the production of safety systems.

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FEATURE / AUTOMOTIVE Toyota Prius PHV (plug-in hybrid) uses the “Double Bubble” rear window

Recently, Mercedes-Benz launched a new investment, worth €500 million, in an engine production plant located in western Poland. The plant will produce four-cylinder new generation, diesel and gas engines, very high-tech and compliant with the RDE (Real Driving Emissions) requirements. “Manufacturing such high-tech products as engines, which form a major part of the propulsion system, based on the most cuttingedge production methods, is of great value to the Polish economy,” said Ewa Łabno-Falęcka, director at Mercedes-Benz manufacturing Poland.

TOP NOTCH

But it’s not just standard automotive parts manufacturing that Poland excels in. There are also some out-ofthe-box solutions being developed in the country. Ever wondered where the unique “Double Bubble” rear window for the brand new Toyota Prius PHV (plug-in hybrid) was made that makes this car so recognizable? Only one company was able to fulfill the strict and detailed requirements of the Toyota Motor Corporation regarding the shape and the parameters of this rear window. It was Pilkington Automotive Poland, a global leader in innovative high performance glass and glazing solutions with two

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manufacturing operations in southeastern Poland, in Sandomierz and in Chmielów.

Another innovative automotive solution, a state-of-the-art watercooled condenser, has been manufactured in an engine cooling plant of Valeo Poland located in Skawina, near Kraków. It is, in fact, the largest and the oldest Valeo site in Poland.

This innovative condenser uses water instead of air to condensate airconditioning refrigerant vapor. The use of water saves fuel as it is a more efficient coolant than air. Apart from that, its compact design saves space under the hood as the condenser does not need to be located right in front of the radiator, like all air-cooled condensers do. It can be positioned in different spots, which means that there is some additional space to fit other (standard or equally innovative) components. This solution has been applied on a mass scale in the gasoline version of the new BMW 3 Series. Valeo’s water-cooled condenser received the 2016 Automotive News PACE (Premier Automotive Suppliers’ Contribution to Excellence) Award. These accolades are given to innovation leaders among automotive parts manufacturers and are perceived around the world as the industry benchmark for innovation.

MORE THAN JUST FACTORIES

Manufacturing sites in Poland are not the only centers that create innovative solutions. There are numerous R&D centers around Poland that employ hundreds of engineers working every day to ensure that driving a car is safer, more eco-friendly and intuitive.

The largest R&D center with over 1,000 engineers is in Kraków and belongs to Delphi Automotive, a high-tech company creating state-of-the-art safety solutions for the automotive and transportation sectors.

Then there’s a huge engineering center specializing in intuitive motion control, which is located in Tychy and owned by Nexteer Automotive. One of the company’s flagship products is Nexteer’s Electric Power Steering (EPS), which has been installed in over 40 million vehicles such as BMW, Ford, Toyota or VW. Even the Chevrolet Bolt EV, which won the 2017 Motor Trend Car of the Year Award, was equipped with Nexteer’s EPS. Why is it so innovative? This steering system ensures that drivers have control over the vehicle regardless of driving conditions. In other words, it gives them a so-called feel of the road.

Additionally, it saves fuel (up to 6 percent) and reduces the vehicle’s CO2 emissions. Since 2013 drivers can also enjoy Advanced Driver Assist System (ADAS) features such as lane keeping, park assist and road shake reduction.

Nexteer’s ADAS is the first step towards developing automated driving technologies. In fact, Nexteer Automotive, together with over 60 other companies from different industries, has joined an initiative of the University of Michigan to create a research partnership and work together to drive progress towards connected and automated vehicles – the future of mobility. Connected vehicles could exchange data with each other and warn drivers of unexpected dangers. Automated vehicles, on the other hand, would provide in-built technology con-

trolling certain driving functions such as accelerating or braking.

These innovations may massively improve on-road safety.

Granted, producing components puts Poland lower in the supply chain of the automotive industry than countries where cars are actually assembled. However, the high-tech nature and the quality of these components might just be on par in terms of complexity with overall car assembly. It’s just the slightest bit ironic, though, that given how robust the automotive industry in Poland is, the last Polish car rolled of the production line back in 2002.

ELECTRO-THREAT?

There are clouds on the horizon, though. Given how competitive the car parts market is, some of its smaller players may not survive the changes in the industry, which is increasingly focused on electric and hybrid cars. Smaller car part producers are often reliant on one major buyer and therefore more susceptible to global changes in demand and technology standards.

“The trend of growing electromobility will bring major changes in the long term to the supply chain and will plough over the producers of components that are not used in electric cars,” Arkadiusz Taraszkieiwcz, regional head for risk assessment at Atradius, a credit insurance firm, told Puls Biznesu.

Technological changes that are the result of the increasingly stringent exhaust emissions regulations will require substantial R&D expenditures on the part of car and car part producers. “This will lead to increasing costs and thus a need to chase margins,” he added.

Clearly, there will be major changes in the automotive industry over the next years and decades. And while the Polish car part industry is vulnerable to them, it has also proven to be capable of not only keeping up with technological advancements but oftentimes being at the very forefront of change. There’s no need to slow down now.

REINFORCING EASTERN FOOTPRINT Renaud Sueur, CEO, Benalu Group

WBJ: Benalu has recently made an acquisition of a Polish car part production company, called MEGA. What type of parts does it produce?

MEGA specialized in designing and building aluminum and steel tippers for trailers, semi-trailers and rigid trucks. Its factory is located in Nysa (450 km from Warsaw, 70 km from Wrocław). The production unit covers a surface area of 66,000 sqm, while the factory in total features 145,000 sqm of space.

Why did you acquire the plant?

MEGA has significant market shares in Poland, Eastern Europe and Scandinavia. Moreover, MEGA’s factory, which is ideally located to serve the Eastern European and Scandinavian markets, benefits from a very strong growth potential.

This acquisition of MEGA therefore represents a great development opportunity for Benalu Group on the fast-developing Eastern European markets. It complements its European industrial footprint. This acquisition is totally in keeping with Benalu’s strategy, which aims at reinforcing its position as a European leader on the market of large tonnage trucks (semi-trailers and large tonnage rigid trucks) for the transport of dry bulk.

What are your plans for the acquired company?

Benalu Group intends to invest over PLN 9 million (€2.1 million) to improve the production lead-time of MEGA and more than double the production capacity of MEGA. We will see the first results of this ambitious CAPEX plan by mid-2018. Benalu Group will also reinforce the sales organization of MEGA to consolidate its market share on key Eastern European markets.

A GROWING RANGE David Guerin, General Director, Peugeot, Citroën, DS Automobiles in Poland

What opportunities for the PSA Group in Poland does the acquisition of the Opel brand in March 2017 open up?

The PSA Group is strengthening its position in Poland. Acquiring the Opel brand is a great opportunity to expand the group’s client portfolio. Opel will complement the strengths of PSA’s product range, which already includes Peugeot, Citroën and DS. Altogether the brands, thanks to their strong position, will secure second position for the PSA Group in sales on the Polish market. We have a similar situation in most other European markets, where the Group, and its brands Peugeot, Citroën, DS, Opel and Vauxhall, is the leader. This November a strategic restructuring plan for Opel will be presented, aimed at improving the brand’s performance in Europe.

How are the Peugeot and Citroën brands performing in Poland?

The Citroën brand has seen 40 percent sales growth this year compared to the corresponding period of 2016, also thanks to the successful debut of the new C3 model. The brand is entering the SUV segment, which is increasingly popular in Poland. The new C3 Aircross will be launched in the Polish market in November.

The sales of B-class Peugeot SUVs has increased significantly mainly due to the revamped 2008 model launched in June this year. The growth we have seen was by 52 percent compared to the same period last year. Peugeot is going forward with its SUV offensive with its 3008 model, which won the Car of the Year 2017 award, as well as with the 5008 model. In the compact car segment, also very important in Poland, we have just launched the new Peugeot 308.

What are your plans for the DS brand?

The DS brand will increase its growth by launching a dedicated sales network soon. The model range of the brand has been expanded with the DS7 Crossback, which will be launched in Poland by the end of the year.

The future of the PSA Group in the Polish market is definitely bright.

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DIGITAL We design a complex brand presence on the internet. We specialize both in creative and technological solutions.

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TECH i n s i g h t s

Written By

BEATA SOCHA

SHUTTERSTOCK

GIANTS JOIN THE OMNICHANNEL RACE

The Polish e-commerce market has been growing at double-digit pace for years and the number of online shoppers is growing steadily. Some of Poland’s top retailers, who have thus far not been able to reap the benefits of the digital channel, are quickly making up for lost time. Fashion retailer LPP and footwear firm CCC have been seeing 100 percent or more growth in their online sales this year. But becoming an omnichannel business is more than just opening an online store >>> W B J OCTOBER 2017

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TECH

T

he number of internet users who shop online has increased to 54 percent, compared to 50 percent in 2016, according to the “E-commerce in Poland 2017” report prepared by Gemius in cooperation with the Chamber of Electronic Commerce (IGE). The biggest incentive for online shopping is the 24-hour availability, according to 82 percent of respondents, while 44 percent see it as comfortable and uncomplicated (41 percent). While last year, 43 percent of respondents considered online shopping as risky, this figure dropped to 38 percent this year.

“The number of online buyers is increasing, as is the value of the whole market, and not only in Poland but also in other countries in our region. The Polish ecommerce market is valued at PLN 36-40 billion and it will increase further,” said Marek Molicki from Gemius.

Online shoppers are also becoming well-versed in the online product offering, and their awareness of e-commerce websites is very high – only 17 percent of respondents were unable to list any online stores. The most popular products bought online are: clothing, accessories, books, records and films. As much as 70 percent of the respondents have purchased these products online.

BETTER LATE THAN NEVER The need to combine online and offline sales has been clear to many retailers for years. “Omnichannel retail is not a new trend, but it took some time before retailers and shopping centers really started to embrace it and implement it as a model,” said Piotr Kreft, Omnichannel Program Leader at The Heart, a Warsaw-based center bringing together tech start-ups and large corporations.

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In fact, some of Poland’s top WSElisted chains, like clothing giant LPP and footwear retailer CCC have only recently started investing in their online channel.

Between January and August of this year, CCC recorded PLN 348 million in online sales, marking a whopping 125.6 percent increase year-on-year. The company is seeing impressive growth in both regular stores and in its digital sales channel, with an overall 35.6 percent increase for the first eight months of the year (and PLN 2.451 billion in sales revenue). Granted, online sales are still a small portion of the company’s business (some 14 percent), but the share of e-commerce in its strategy is clearly growing. Clothing retailer LPP has even more catching up to do, as its online sales constitute a little more than 4 percent (PLN 186 million out of a total of PLN 4.28 billion in the January-August period), but its online sales growth is equally impressive at 111 percent y/y for the first eight months of 2017.

“Many sellers realized that without mobile shops they have no future on the market. Just like offering fast delivery and a customer-friendly return policy is also becoming the norm,” said Molicki.

KNOWLEDGE IS POWER But omnichannel retail is much more than just combining online sales with offline services and support. “It’s not only vast in its scope, but also extensive in terms of the uses and tools that are becoming available. Let’s not forget omnichannel is not only about typical retail: everything involving a customer can and should be omnichannel,” Kreft said.

To bring this vast range within manageable margins, The Heart divided its Omnichannel program into three categories which they consider as the most significant technology drivers in omnichannel ecosystems right now: Customer Intelligence, Future Point of Sale and Marketing & Sales Automation.

Customer Intelligence, which means learning all you can about your client, is essential to target your marketing activities well. There are many examples that show how much more accurate a data-based approach is than relying on intuition alone. “A popular deodorant brand for men decided to target men interested in sports. Our analysis showed that it wasn’t men but women who were

the most frequent buyers of that deodorant. Guys interested in sports have a beer in one hand and the remote in the other, while his wife – in an act of despair – would buy him the deodorant,” said Piotr Prajsnar, CEO of Cloud Technologies, a big data firm.

MORE THAN ONE DEVICE In order to get to know your customer, you need to know where and how they shop. According to research by Google, as much as 85 percent of online shoppers start shopping with one channel and finalize it with another. Multichannel clients make purchases more often, spending three times more than consumers operating in only one of these channels, said Paweł Pierścionek, Chief Technology Officer at Cludo, a SaaS solutions provider for call and contact center management.

“This forces companies to invest in software that identifies the buyer as one and the same person, regardless of the device they are using, and integrates all the information about the client in one system.”

Once you’ve collected all the data about your clients in one system, you can open a dialogue with them. “An increasing number of e-commerce businesses use virtual communication platforms, which allow them to interact with the client at different contact points: in the brick-and-mortar store, via a form on the website, through chat, email, a contact center and even social media,” Pierścionek added.

Cloud-based “as a Service” software seems to be the ideal fit to collate data from many sources and to produce valuable actable insights in the process. UCaaS (Unified Communication as a Service) solutions combine the history of communication with a client, information on which sales channels they use most frequently as well as the client’s interests, preferences and previous purchases.

According to Markets&Markets, cloud solutions integrating communication channels will continue to grow at an average rate of 10 percent a year. The number of retailer-customer communication platforms will continue to grow, “also because of the preferences of Gen-Y and Gen-Z, which are becoming the dominant purchasing power in the market. For them all things tech, mobile and multi-channel are natural and it is their preferences that will decide whether or not a company survives,” Pierścionek said.

OMNICHANNEL

Abyss Glass mirrors in changing rooms can display matching items and accessories

BACK TO BRICK-AND-MORTAR But omnichannel tech is not only about the online and mobile aspects of retail.

A significant number of tech companies are focusing predominantly on the offline channel, beefing it up with some cuttingedge solutions. For example, mirrors that can also display ads and special offers are making their way into shopping malls, bars, clubs and gas stations. They can also be used to offer matching accessories to clients in the store’s changing room. How about face recognition payments to make the shopping experience as seamless and as enjoyable as possible? Some of these ideas are still at the development stage, but just as with beacons in shopping malls,

once they come into play, they will make an entrance. “The quick growth of the IoT sector will surely make the retail space of the future more connected and more digitalized,” said Kreft.

The Gemius research also points out a strong ROPO (research online, purchase offline) effect in terms of durable and electronic products such as home appliances, cars, building materials or telephones and accessories. Pharmaceuticals are also often checked online and purchased in the traditional way (48 percent of buyers declare such behavior for this category).

As Walker Sands reported in the “Future of Retail,” we can already see a regressive trend of more and more shop-

pers wanting to shop in brick-and-mortar locations. “But it doesn’t mean e-commerce or mobile were ever bubbles. They are certainly here to stay and will keep pushing brick-and-mortar locations more often towards being showrooms and funspots. And that’s where technology, like AR or VR could really make an impact,” said Kreft.

One thing is certain: technology creates opportunities. “For retailers, this means researching the start-up scene, experimenting with different solutions, having flexibility and innovation as core organizational and customer-centric values, therefore creating unforgettable retail experiences,” he concluded.

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TECH

RETAIL ON DISPLAY Start-ups will likely play an increasingly important role in transforming retail and bringing all the

sales channels together. Here’s a selection of companies that are part of the Omnichannel program run by The Heart, a European center for corporate-start-up collaboration located in Warsaw. The Heart brings together major industry players like Mastercard, Carrefour or Philips to define the most pressing innovation challenges in retail, attract and select the best late stage start-ups and work with them towards pilot implementations

Synerise

Abyss Glass

Synerise provides a platform that automates marketing campaigns, generates actionable analytics, controls loyalty programs and manages CRM. The platform enables the development and usage of loyalty programs through integration with POS systems. It offers modules for creation of multi-channel campaigns across SMS, push, beacon, wifi and email. CRM features include Audience Segmentation, Database I/O, campaign workflow automation, internal task collaboration tools as well as lead management functionality.

Abyss Glass is a developer and manufacturer of interactive mirrors that can be used as an advertising surface.

The Abyss Glass team noticed that mirrors naturally attract customers’ attention, hence, content which appears right on the mirror's surface is highly noticeable.

The client can change the content with a simple hand gesture, scrolling through the menu, buying and viewing products. The most unique aspect of this product is the fact that you see your reflection and the content at the same time, creating a perception of augmented reality.

About The Heart: Spark Software

Augment

Spark Software developed a special mobile checkout application designed to be used both in traditional and internet shops. It is targeted at regular shoppers, ensuring loyalty through discounts and personalized promotions. Furthermore, it shortens queuing time by allowing clients to scan products with their phone and to pack them directly into a bag or a trolley.

Paris-based Augment is one example of a start-up bringing together the best of both worlds. By connecting on- and offline channels through an augmented reality platform, they are able to create a seamless omnichannel retail experience, already driving engagement and sales for companies like Coca-Cola and L’Oréal.

Lab4motion Lab4motion closes the marketing loop with the ability to match customers’ online and offline behavior. Its technology is based on secure and privacy compliant video image processing technology combined with other sources. It provides comprehensive real-time analytics of business processes allowing access to the customer journey, experience and service at every level.

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Biyowallet Biyo uses the unique vein patterns in your palm to create the most secure and convenient password that you never have to remember. Authentication takes less than a second, and you won’t have to wait for any receipts to sign. Easily keep track of your wallet and previous transactions online or on your mobile app.

Located on the 38th floor of Warsaw Spire, The Heart is the entry point for fast growing tech companies, investors and leading multinational corporations to Central European markets.

The center focuses on thematic programs related to FinTech, Omnichannel, HealthTech and Real Estate. The Omnichannel program has been divided into three areas that will have a major impact on the retail industry in the coming years, such as Customer Intelligence, Marketing & Sales Automation and Future Point of Sale.

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and mobile channels allows the retailer’s system to identify a client who initiated the purchasing process on her smartphone and completed it on her computer or in a brickand-mortar store as one and the same person. This tells the retailer a lot about her path to purchase and thus improves his understanding of his clients’ behavior and expectations.

Omnichannel is a new way of getting to know your client thoroughly and creating a 360-degree purchasing profile, including data from offline shopping, like invoices and questionnaires. This can be applied directly to marketing activities: more personalized offers and loyalty programs, identical for all sales channels. Only full integration of the information about a client’s shopping activity, done in real time, can allow the retailer to understand her needs and increase sales in all channels.

TECH

Know thy client

THE SCENARIO WHERE YOU GET AN AD ON YOUR MOBILE, RESEARCH THE BRAND ONLINE AND THEN BUY THE SHOES AT THE MALL IS BECOMING INCREASINGLY COMMON. OMNICHANNEL IS MORE THAN SOMETHING TO JUST MAKE SHOPPING EASIER AND MORE FUN. COLLECTING AS MUCH INFORMATION ABOUT YOUR CLIENT AS POSSIBLE AND COMBINING DIFFERENT ONLINE AND OFFLINE SOURCES TO DO SO – THAT’S WHERE THE MONEY IS. WBJ TALKED TO PAWEŁ MAZUREK, HEAD OF BUSINESS DEVELOPMENT AT TOGETHERDATA, ABOUT THE FUTURE OF RETAIL Interview by Beata Socha

WBJ:

How can retailers integrate their brick-and-mortar and online stores to make their business model more efficient?

Paweł Mazurek: Omnichannel clients buy more often and spend more compared to those using only one traditional sales channel.

Even though global retailers’ revenues keep growing each year, they still have a lot to do to catch up with their clients’ digital needs.

A full integration of sales channels is necessary to make purchasing easier for the client.

Combining data from the online, offline

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Should we expect any radical changes, any disruptions, or just constant improvement of the customer experience?

More and more sales will go through new channels – mobile being at the forefront, desktop following up – but the integration of mobile and offline sales (such as geo-located sales, mobile sales support etc.) will remain the key direction of the market’s development.

The biggest breakthrough will, in my opinion, come when we deliver full offline-online integration between CRMbrand and brick-and-mortar shops for all economy sectors and all product types, including FMCG producers that have no direct online sales activities due to their product specifics. Today it is extremely hard to trace the full sales-path of a given user, even if they react to online advertising. When they go to the brand’s website and afterwards go offline and buy goods, the connection is lost. We as a whole industry need to focus on generating a link at this very spot.

Is same-day delivery a reality in Poland?

Do Polish customers actually expect same-day deliveries?

In Poland, interest in same-day delivery is growing. Polish companies are clearly following in the footsteps of global giants such as Amazon and Alibaba.com. Some of the first brands in Poland to introduce same-day deliveries were 9design.pl, Unisono, Venezia, Mivo and Shaffashoes.

It’s what customers expect and what allows

OMNICHANNEL

WHEN A CLIENT GOES TO THE BRAND’S WEBSITE AND AFTERWARDS GOES OFFLINE AND BUY GOODS, THE CONNECTION IS LOST the brands to stand out from their competition. More and more delivery companies have same-day deliveries in their offer, including one of the top players – Inpost.

The growing need and interest in same-day delivery services is evidenced by the fact that Empik.com is planning on implementing it soon.

What technologies are considered cutting edge in omnichannel retail?

Connecting offline and online data – multiple FMCG brands do not have e-commerce related business and as such have limited possibilities to merge their CRM systems with online data. The new approach from CRM enrichment companies is to deliver, while working together with the customer’s CRM-teams, a bridge to connect the offline and online worlds of their customers. With the usage of mobile devices, even the brickand-mortar segment can be included in a brand’s CRM. Such case studies are already being developed in France (e.g. by L’Oreal or Carrefour). This technology, when fully implemented, will make it possible to merge branding budgets directly with the sales results of offline stores and feed data to CRMs. This will enable omnichannel to really live up to its name – of not being only old-fashioned multi-channel sales.

Which technologies do shopping centers use to support their retailers? Is there room for innovation there?

There is always room for innovation. The technologies that shopping malls use most frequently are different cost-saving solutions, like modern BMS systems, which allow mall owners to estimate costs more precisely, e.g. of energy consumption. Beacons are also increasingly popular: a signal received by an app on a client’s phone will make it easier to navigate through the mall and shorten their time to reach the desired store. Beacons also allow retailers to understand the behavior and the preferences of a client better and send them more personalized marketing offers.

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Section Partners

39

Latest news in the retail, office and logistics sectors

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New residential towers in Warsaw

48

Interview with Rudolf Grossmayer and Jakub Mirosławski of UBM

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Renovation and revitalization projects

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• Number of tenants 220 • Total area ca. 192,200 sqm • Leasable area 64,600 sqm • Duration of construction 24 months • Total investment value €184 mln

Interview with Scott Dwyer of Atrium Group

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Retail

H1 commercial property investment volumes

GTC opens PLN 800-mln shopping center in Warsaw The Galeria Północna shopping center, which Warsaw Stock Exchange-listed developer Globe Trade Centre (GTC) has just completed in the Białołęka district of the Polish capital, opened for business on September 14.

The mall comprises over 64,000 sqm of leasable space and houses more than 200 stores and points of service. It is the first new retail project of this scale to have been developed in Warsaw since February 2007 when the Złote Tarasy shopping center located in the downtown of the city welcomed its first visitors.

GTC initiated the process of developing Galeria Północna seven years ago with the investment having cost the company approximately PLN 800 million. “It is currently the biggest asset in our portfolio,” said GTC CEO Thomas Kurzmann. The Galeria Północna mall was designed by the APA Wojciechowski and Tzur Architects studios and built by general contractor Unibep. It is expected to obtain a LEED Gold certificate for energy efficiency and environmental performance. Cushman & Wakefield and JLL are acting as the leasing agents of the shopping center, whose anchor tenants include a Carrefour hypermarket. (continued)

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Interview with Robert Dobrzycki of Panattoni Europe

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Take-up in the logistics property market

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LOKALE IMMOBILIA | NEWS

Retail (continued)

SHOP AND RELAX Agnieszka Nowak, the director of the newly opened Galeria Północna shopping center in Warsaw, speaks on the occupancy rate and tenant mix in the mall What is the occupancy rate at Galeria Północna as it opens for business?

Galeria Północna is currently over 90 percent leased out and we expect this occupancy rate to soon increase to 95 percent. This is a very good result at this stage of the investment; however, we will of course aim to achieve full occupancy at the mall in the coming months.

Is any important element of the tenant mix still missing?

No, all the major types of tenants are already represented in Galeria Północna. Now we want to further expand our offering when it comes to segments such as fashion.

Have you secured any tenants who have not been present in Poland until now?

Hamleys, a British chain offering toys, has just opened its first store in Poland in Galeria Północna. Also, Newbie, which offers baby clothes, has chosen our shopping center for its first Polish location. Besides, Galeria Północna is the first mall in Poland to have attracted all three brands of Russia’s Melon Fashion Group – Zarina, Love Republic and befree.

Does the tenant mix reflect the current trend towards making shopping centers meeting places as much as shopping destinations?

By all means. Galeria Północna features a roof garden with a children’s playground, a skate park and an outdoor gym.

Inside the mall, visitors will find an eleven-screen Cinema City cinema and a Calypso fitness club. As for the food and beverage sector, we have not only a large food court, but also individual restaurants located in other places across the shopping center, in between stores, so that the visitor has the impression of walking along a regular high street.

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DEKADA to launch Nysa project later this year Developer Dekada will start working on its eponymous convenience shopping center project in Nysa in south-western Poland before the end of this year. Construction work on the planned scheme will take approximately one and a half years with completion having been scheduled for mid-2019, said management board president Aleksander Walczak. The twofloor development, which was designed by the JSK Architekci studio, will comprise a total of around 20,000 sqm of leasable space and house more than 90 tenants. The investment is being commercialized by BOIG Property Consulting. There are currently 11 operating Dekada-branded convenience shopping centers across Poland with the developer planning new projects in locations including Konin and Mińsk Mazowiecki.

EPP finishes Outlet Park Szczecin extension Investor Echo Polska Properties (EPP) has finished the latest phase of the Outlet Park Szczecin extension in Szczecin in north-western Poland, which has delivered an additional 3,800 sqm of retail space. The new area has already been fully leased out to tenants including Guess, Solar, Bagatelle, Pierre Cardin and Home & Cook. “I am convinced that due to the expanded offering, Outlet Park Szczecin will strengthen its leading position among operating outlet centers in Poland,” said Monika Gogacz, the director of the Szczecin center. The only outlet center in its region, Outlet Park Szczecin houses a total of 120 stores after the latest extension.

LOKALE IMMOBILIA | NEWS

Office of Białystok in eastern Poland, on which a large phased, mixeduse investment including office, retail and hotel space could be developed. The site is attractive due to its close proximity to the main railway station in the city, said Christoph Salzer, a regional director at Warimpex. The company sees a growing development potential in Białystok as the road and railway connections with the city keep improving.

The developer is currently working on two office projects in Poland – Ogrodowa Office in Łódź and Mogilska Office in Kraków. The Łódź scheme is scheduled for completion in the first quarter of next year with Warimpex having signed preliminary lease agreements for 8,000 sqm of the combined 26,000 sqm of space available in the development. In Kraków, the developer has signed a letter of intent regarding the lease of approximately 60 percent of the 12,000 sqm of space offered in Mogilska Office. The project is expected to be completed in Q4 2018.

VARSO TOWER in Warsaw with WELL pre-certification WARIMPEX with new development plans in Kraków, Białystok Warsaw Stock Exchange-listed Austrian developer and investor Warimpex is planning a new office project in Kraków, which will be located near the existing Chopin hotel and comprise approximately 20,000 sqm of leasable space. Called Chopin Office, the scheme is expected to be completed in 2019. The company has also revealed it owns a plot of land in the center

Developer HB Reavis has got its Varso skyscraper project in downtown Warsaw WELL Core & Shell-pre-certified. The company’s flagship scheme in Poland is the first building in Europe to have secured such pre-certification. The WELL Building Standard is a new certification system that focuses on the health and well-being of buildings’ users and which is now gaining in popularity among developers of prime office projects. HB Reavis also wants to WELL-certify its other future schemes in Poland, while Skanska Property Poland earlier this year announced its plans to secure such certification for its Spark office development in the Polish capital. The 230-meter Varso project is scheduled to be completed in 2020.

Logistics PANATTONI developing 50,700-sqm BTS project for OBI Industrial space developer Panattoni Europe has launched construction work on an almost 50,700-sqm built-to-suit project located in the Nowosolna commune near Łódź, close to the A1 motorway, which will serve as the central warehouse of DIY retailer OBI in Poland. The scheme will be developed in two phases with the first of them – comprising 20,000 sqm of space – scheduled for completion in November this year. The second phase of the development is expected to be ready in December 2018 at the latest. Panattoni has to date developed a total of approximately 345,000 sqm of logistics and industrial space in the Łódź area.

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1,786,000

sqm

the record take-up in Poland's logistics market in H1 2017 Source: Cushman & Wakefield

WBJ PRESENTS

BROUGHT TO YOU BY KRS LEGAL OFFICE IN ŁÓDŻ

LEGAL ASSISTANCE FOR CONSTRUCTION INVESTMENTS Patrycja Kaźmierczak, attorney-at-law and owner of the KRS Legal Office in Łódź, specializes in construction law. She has many years of experience in assisting construction companies. Her successes include legal coordination of the construction of several housing estates across Poland, and shopping malls and retail space commercialization, including in the Middle East.

At what stage of the investment process is an attorney or legal representative needed?

Patrycja Kaźmierczak: An attorney is required as early as at the planning stage of the investment process. The attorney should perform an audit of the property before purchasing it. This includes checking the legal status as well as building conditions so that the investment may prove profitable. They should pay attention to possible dangers in the acquisition of a specific property. In addition, in consultation with the designer, they should determine the density of development in the area, which is important from the point of view of the investor’s interests. Then, they should prepare all documentation necessary for the acquisition of real estate, as well as an agreement to purchase the property.

What does an investor need to pay attention to when choosing an attorney to carry out an investment?

First of all, experience and knowledge of construction law. They should choose a representative who understands the responsibilities of the inspector on behalf of the investor, someone who can see the difference between the site manager and investment supervision inspector. They should choose a representative who will indicate the need to examine the construction project by a competent team of inspectors, in respect of both technical and economic issues. An attorney must also have extensive experience in the preparation of contracts for design and construction contracts so as to protect the investor against the claims of any subcontractors. They must know the difference between substitute works and additional works. I also believe that it is necessary for an attorney to know the technical basis for performing construction work, for example, those related to the proper temperature during the floor casting or base of insulation fixing. An attorney should also pay attention to the specific form of economic activity that the investor is performing.

partner. The design of the limited partnership allows the separation of the assets of a private investor from the investment. All responsibility related to the investment process rests on the company and the investor's risk is limited to the contributions made by them to the company. At the same time, a limited partnership is transparent for income tax. This means that the taxation of income occurs only at the level of partners (according to their share of the profits). A limited partnership is, therefore, as beneficial tax-wise as a sole proprietorship.

Can an attorney influence the reduction of the length of time for investment processing?

First of all, an attorney watches over the times of the building permit decision. If necessary, they file a complaint concerning a public authority’s failure to act. The main reason is the sluggishness of administrative bodies which misinterpret article 35, paragraph 6, section 1 of the construction law, assuming that the decision on building permits must be issued within 65 days. Authorities ignore the primary basis of the Code of Administrative Procedure, according to which the issue should be settled without due delay. Only in cases requiring investigation could those issues be handled within one month. The period of 65 days is a final deadline, not the deadline for a decision. Misinterpretation of the regulation is the reason for the tardiness of architectural and building administration bodies.

Why did you become interested in construction law?

I spent most of my free time in college with friends from the construction business, I learned about their nomenclature and I had already mastered construction terminology well before the exam for legal training. That is why I opened the office in Łódź, which primarily specializes in construction law, but not only. Me and my team are deeply involved in our clients’ affairs. I am present at meetings What form of economic activity is the most beneficial for the with civil engineers or contractors and I do not feel like a stranger investor? during those meetings. My office monitors every stage of the client’s I always put the legal security of my clients in first place, so I encour- investment. It is not the client who informs us that there has been a age them to act as a limited partnership in which the investor acts as problem; it is us who warns the client that such a problem may arise, the limited partner and the limited liability company as the general and then we indicate how it should be addressed.

LOKALE IMMOBILIA | RESIDENTIAL

LOFTY IDEAS

A number of developers are now planning high-rise residential projects in central locations in Warsaw.

Will the planned towers be popular with apartment buyers and investors?

BY ADAM ZDRODOWSKI

Roma Tower project in downtown Warsaw. The rendering shows the building with the originally planned office function

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W

arsaw has seen developers announce and launch many new office skyscraper projects in recent years, but now the skyline of the city seems likely to also be transformed through the addition of a number of high-rise residential schemes in the near future. A host of new residential towers that are planned in the Polish capital are a response to emerging trends including an increased interest in rental apartments and the heightened activity of international institutional investors.

TOWERING AMBITIONS

Asbud Group recently revealed that it has acquired almost 18,000 sqm of land near ul.

Towarowa in the Wola district of Warsaw where it plans to build a major residential project comprising approximately 900 apartments. The scheme is to include two 30-floor skyscrapers.

The site in question is located in the quickly developing Rondo Daszyńskiego area of the Polish capital. According to the company, the location – one of the fastest-growing office hubs in the city – is now also attractive for developers of retail and residential space.

Also, Marvipol earlier this year bought land in Warsaw’s Wola district, on which it will develop a residential complex consisting of three high-rise buildings. The tallest of the buildings, which will be located near ul. Grzybowska, will feature 28 storeys. “We will launch sales of the apartments in the coming days. Construction work will start before the end of this year,” said Mariusz Poławski, the managing director for development and management and board member at the company.

Marvipol expects that the planned project will attract the attention of investors. “We are convinced that a considerable portion of the units will be bought in package sales,” Poławski said.

For the time being, the developer is not revealing the apartment prices in the scheme. For its part, Golub GetHouse, which wants to make a strong presence in the rental apartment market in Poland in the coming years, is now in the process of acquiring plots of land for two high-rise residential projects in Warsaw’s Wola.

Czarek Jarząbek, the CEO at the company,

Rafał Szczepański Vice president of the management board, BBI Development

LUXURY RESIDENTIAL TOWERS ARE NOT FOR EVERYONE

A

luxurious tower with top-notch apartments is a unique project.

It is not for everybody, or an assignment that could be realized by any developer. On the Polish market there are many construction projects that only pretend to be apartment towers. They are said to be unique not only in Warsaw but in Poland. And they probably are each one of a kind, but none of these projects can equal Złota 44 as far as quality, location and facilities are concerned.

How to recognize true luxury? At Złota 44 the whole eighth floor has been transformed into a 25-meter swimming pool, spa, sauna, steam room, jacuzzi, fully equipped gym and a movie theater with golf simulator. There is also a kids’ club.

What is more, it is a project of the worldfamous architect Daniel Libeskind. Our residential tower has many functional interior solutions and an extraordinary view. It is number one in Poland, but it is also at the forefront of luxury residential property in Europe. It is the only project that meets all of the requirements of an ideal investment.

Can such projects pay off? For sure, one needs more time to sell luxurious apartments, but they are profitable. Our apartments are being bought by institutional investors and businesspeople, for whom Złota 44 is a second home.

Today, it is hard to imagine the Warsaw skyline without “Libeskind’s Eagle.” The skyscraper has become a benchmark for every other construction project, although it is difficult to imagine when someone will be able to create a worthy competitor for our tower.

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LOKALE IMMOBILIA | RESIDENTIAL

revealed that the schemes are currently at the planning stage. Golub GetHouse has already signed preliminary agreements for the purchase of the sites and hopes to close the deals later this year. Jarząbek said that the company wants to build apartments in the largest office hubs in Warsaw. Thousands of people will work in the new office projects now under construction in Wola – some of them will certainly be interested in renting an apartment in the location.

Meanwhile, at the intersection of ul. Nowogrodzka and ul. Emilii Plater in the center of Warsaw, BBI Development is planning a 170-meter project called Roma Tower, which was originally supposed to comprise office space but is now expected to be a mixed-use investment and include residential space. A new zoning plan, which is now being worked on and will cover the location in question, needs to be put in place before the planned scheme can be launched. The developer hopes this will happen within the next few months.

Last but not least, Atlas Estates is currently

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Some developers reckon that building apartments targeted at those already working in Wola is a safer option than adding to the quickly growing office stock

working on obtaining a building permit for its planned Atlas Estates Tower project on Wola’s ul.

Grzybowska, which will be located next to the existing Platinum Towers and Hilton Warsaw Hotel & Convention Centre buildings. The skyscraper will stand around 165 meters tall and feature 47 aboveground floors, said Marcin Liberski, the marketing and sales director at the company.

The scheme was announced a few years ago with some in the market speculating that Atlas Estates will eventually sell it.

INVESTOR INTEREST

Is there demand for apartments in residential skyscrapers in Warsaw at the moment? The downtown of the Polish capital has seen the development of two luxury residential towers – Cosmopolitan Twarda 2/4 and Złota 44 – in recent years. Neither tower has to date been fully commercialized. However, Maximilian Mendel, partner in charge of transaction advisory at REAS, argued that it is not unusual for apartment

sales in luxury schemes of this kind to take even several years.

Why are so many developers planning highrise residential projects now? Mendel said that some of the schemes were actually originally announced several years ago, if under a different name and ownership, but have never, for a number of reasons, been launched since then.

He explained that there are around 20 sites in central locations in Warsaw, where local planning allows for the development of skyscrapers with a residential function (or alternatively office – to be chosen by the developer).

Some of the previous owners of the plots were hit hard by the global financial crisis of 2007-2008 and left Poland with the sites having already found new buyers. In other cases, developers have changed their plans replacing the office function with a residential one. This is a tempting alternative in Wola where so many new office projects are now under construction.

Some developers reckon that building apartments targeted at those already working in the location is a safer option than adding to the quickly growing office stock.

The rising interest of foreign institutional investors in rental property in Poland may be another reason for developers’ willingness to launch high-rise residential projects. Catella Real Estate has recently finalized its acquisition of 72 apartments in the Złota 44 building. Mendel said that while the investment funds currently eying the Polish market are not targeting entire skyscraper projects, they may potentially be interested in acquiring packages of apartments in such schemes and are now certainly looking at the planned towers.

Nevertheless, the supply in this sector of the residential market will rather remain limited. In the opinion of Mendel, three to four new residential skyscraper projects will most probably be developed in Warsaw in the near future. According to Marcin Krasoń, a real estate market analyst at Home Broker, one should not expect a new wave of investments of this kind. In his opinion, the most likely scenario is that one residential skyscraper will be completed in Warsaw every few years.

Asked whether new high-rise residential projects are now being planned in any of the other large cities across Poland, Krasoń argued that demand for such schemes outside of Warsaw is even more limited than in the Polish capital. Admittedly, the Sea Towers and Sky Tower developments, which are some of the tallest residential buildings in Poland, were completed in Gdynia and Wrocław respectively a few years ago. However, those projects are “the exception that proves the rule,” Krasoń claimed.

Xavier Jongen Member of the management board, Catella Real Estate

THE RENTAL APARTMENT MARKET IN POLAND HAS A FUTURE

P

ersonally, I consider Poland not only to be a promising market in terms of rental apartments but above all a fascinating proposition due to the present economic ecosystem and its favorable conditions. No wonder developers are taking an interest in developing this sector. There is a lot of demand for product to rent. Take a look at how many apartments are presently rented out not by institutions but individual investors – and this number is growing day by day. Furthermore, Poland needs a new level of quality delivered by institutions: transparent conditions, rental safety without risk of early and unexpected termination. Naturally, Poland will follow the European path in order to meet clients’ and the market’s demands. I am absolutely positive that the planned residential towers in Warsaw will be warmly welcomed. When it comes to Catella, we have created our own brand – No44 – offering super premium apartments at Złota 44. Besides those, we can provide this desired quality in two other buildings in Poland which we purchased with a joint venture partner.

One is located on ul. Pereca in Warsaw and the other is near the University of Economics in Kraków. Of course, we are still interested in Warsaw and Kraków.

I do believe that one day we will enter two or three other cities in due course if the buildings fit our strategy. What we are looking for are individual buildings with clearly determined functions. So far, we have invested around €80 million in the Polish market, but we are ready to double this amount.

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LOKALE IMMOBILIA | OFFICES

POLECZKI PARK RE-BRANDED, SET TO GROW

WBJ met with Rudolf Grossmayer, board member of subsidiary companies, and Jakub Mirosławski, head of sales and marketing, at UBM, to talk about the developer’s further investment plans regarding the Poleczki Park office complex in Warsaw INTERVIEW BY ADAM ZDRODOWSKI

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WBJ:

Your flagship office project in Poland earlier this year went through a major re-branding process that involved, among other things, changing its logo and name. What was the rationale for the change?

Rudolf Grossmayer: The business park has been in operation for about eight years now. We have completed six buildings so far and achieved a very good overall occupancy level of about 92 percent. Still, we wanted to give our product a new push as we are well aware of the fact that the market is very competitive at the moment. We have come up with a new logo and a new simpler name for the entire complex. Each of the buildings in the complex has been named after a European capital and has been given its own unique identity.

Does the change of name from Poleczki Business Park to Poleczki Park suggest that more non-office functions will be added in the location in the coming years?

R.G.: No, not really. Poleczki Park has always combined office functions with some non-office functions – the complex includes storage and retail space, and offers a number of amenities that are typical for large office parks. However, the office function is dominant in the location – it currently accounts for approximately 85 percent of the total volume of leasable space – and we are also going to retain this proportion in the future phases of Poleczki Park.

renewed their original lease agreements, which were usually signed for a period of five to seven years. This shows that the tenants in Poleczki Park generally want to stay here; so far, we have only lost one tenant.

Importantly, many of our tenants have already renewed their original lease agreements, which were usually signed for a period of five to seven years - R.G.

Recent reports from real estate services firms suggest there is now growing tenant interest in central office locations in Warsaw. Have you observed this trend and could it possibly be a problem for projects located outside the center of the city?

Jakub Mirosławski: There is now definitely a lot of leasing activity in the center of Warsaw, including in the Wola district, but I would not compare central office locations with the location of Poleczki Park in the Ursynów district, which offers a different kind of office product, a business park with extensive green areas and, crucially, with much lower rents. Let us remember that monthly office rents in downtown Warsaw amount to €19-€22 per sqm, whereas those in Poleczki Park amount to €13-€14 per sqm.

The Służewiec area of the Mokotów district, which houses Warsaw’s largest office hub and is located relatively close to Poleczki Park, also features low office rents. Still, it has lost many tenants in recent months…

J.M.: I would even say that the rents in Służewiec are a bit lower than in our location. However, our huge advantage is the access to major roads and Warsaw Chopin Airport. We do not have the traffic jams that Służewiec is known for.

R.G.: Importantly, many of our tenants have already

Our huge advantage is the access to major roads and Warsaw Chopin Airport - J.M.

Have any of the tenants decided to expand within Poleczki Park?

J.M.: The possibility to expand within the same location is a unique feature and a huge advantage of business parks, and we have seen our tenants expand here many times.

Indeed, some of them have moved from one building of the park to another to take up more space.

What is the total development potential of the park?

R.G.: In total, we have room for up to 14 buildings that will comprise a combined 130,000 sqm of leasable space. To date, we have completed 84,000 sqm of GLA so the park is more than 60 percent finished.

Where and when will the next phase of the project be launched?

J.M.: In the next phase of the project we will develop the site that currently houses a temporary parking lot. Then we will continue to develop the remaining plots on demand.

We want to develop built-to-suit buildings, which will be anchored by at least one large tenant. We plan to launch the next phase of the scheme next year. Then, everything will depend on demand. We will soon obtain permits for all the future buildings, which means that we will be able to start developing them at any given time and complete them within two years.

Meanwhile, you have recently finished arranging a major green area located in the very center of the complex, on land which was originally expected to house one of the planned office buildings…

R.G.: Yes, the new green area was developed at the expense of office space. We wanted to make the business park even more attractive to our tenants by giving them the opportunity to stay and work outside. Again, the extensive, rather than intensive type of development here is something that differentiates the business park from the office projects in downtown Warsaw and offers possibilities which cannot be found in the center. The completion of the new public area has already allowed us to organize a number of popular outdoor events for our tenants.

Admittedly, in accordance with the zoning plan, the development of the green area will allow us to build more office space elsewhere – the buildings planned in the future phases of the complex will feature one floor more than the buildings which have already been completed.

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LOKALE IMMOBILIA | OFFICE/RETAIL

A SECOND LEASE ON LIFE

Office and retail space developers in Poland are increasingly focused on renovation and revitalization projects. This is a sign that the commercial property market in the country is maturing

BY ADAM ZDRODOWSKI

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arsaw and the largest regional cities across Poland may now be teeming with shiny new office and retail projects, but developers and investors in the country have also been increasingly preoccupied with the refurbishment of the existing building stock in recent years. The various aspects of the trend, which is expected to continue to grow in the near future, were thoroughly discussed during the “Giving Buildings a New Life� conference that was held at the Bristol Hotel in Warsaw in early September.

EC Powiśle scheme in downtown Warsaw

The growing popularity of revitalization projects is the result of several factors. On the one hand, investors are now looking for interesting schemes and, compared with a few years ago, less often go for the easy and obvious options, said Radosław Kubaś, a partner at Deloitte. On the other hand, the downtowns of large Polish cities currently seem to be gaining in significance again after years of neglect and underinvestment related to an increased focus on the suburbs. “Young people are coming back to city centers,” Kubaś said.

Developers are responding to the trend and looking for opportunities to build commercial space in central locations. With large undeveloped sites in such locations in short supply, they are increasingly turning their eyes to existing buildings with refurbishment potential. In the opinion of Anna Górska-Kwiatkowska, a manager at Cushman & Wakefield, the revitalization trend is a natural consequence of the maturing of the Polish property market, with a similar phenomenon having previously been observed in Western Europe.

Tenants too have been looking for new alternatives to “standard” office buildings with the trend well visible among innovative companies from various industries, including the IT sector, noted Bartek Włodarski, partner, head of office department, corporate solutions at Cresa Poland. Google occupies office space in Centrum Praskie Koneser. For its part, co-working space operator Mindspace has chosen the newly renovated Hala Koszyki office and retail complex in downtown Warsaw for its first location in Poland.

AGING BUILDINGS

MATURING MARKET

In the Polish capital alone, a number of large investments that will involve the transformation of historic post-industrial sites and combine the development of new buildings with the renovation of existing, hitherto defunct structures are under construction or in the pipeline. They include Art N and Browary Warszawskie in the Wola district, Centrum Praskie Koneser in Praga Północ and EC Powiśle in the city center. Łódź has its huge Nowe Centrum Łodzi project, while in Gdańsk a former shipyard area should be redeveloped in the coming years.

The revitalization of large historic areas aside, there are now more and more relatively new buildings, which undergo extensive renovation as owners take measures to keep their aging assets attractive amid growing competition.

How much investment potential is there in this segment of the market? Paweł Warda, a director at JLL, pointed out that office buildings in Warsaw that are more than 15 years old account for approximately 30 percent of the total modern office stock in the city.

On the other hand, Bolesław Kołodziejczyk, head of research and advisory at Cresa Poland, noted that the average age of one sqm of office space in Warsaw is ten years. By comparison, the average age of office buildings in the US is 50 years. “Seen in this context, our market is still relatively young. Large demand continues to keep occupancy rates in older buildings at a high level, which is also the result of the segmentation of the tenants’ market,” Kołodziejczyk said.

Meanwhile, there is also no shortage of existing, aging buildings that have to date housed

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LOKALE IMMOBILIA | OFFICE/RETAIL Bohema project in Warsaw's Praga Północ district

functions other than modern office or retail and which can relatively easily be adapted to new uses. Telecom Orange Polska, for one, has been offloading buildings from its huge portfolio. “We have more than 300 buildings across Poland that can be renovated,” said the company’s vice president Piotr Muszyński. Orange has sold many of its buildings in recent years, in which new owners have already arranged modern office and retail areas.

Experts stressed that there is no single formula when it comes to selecting the right strategy for dealing with existing and aging property.

The available options range from modernization to demolition and new construction to change of function. In each particular case, the financial feasibility of all the options needs to be analyzed.

The urban planning, market and technical aspects, as well as the investor’s own preferences regarding the allocation of capital, need to be taken into consideration, Kołodziejczyk said.

COOPERATION NEEDED

Many difficulties present themselves to developers taking on revitalization and renovation

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With large undeveloped sites in central locations in short supply, developers are increasingly turning their eyes to existing buildings with refurbishment potential

projects. Good revitalization schemes are mixeduse, sustainable developments that are built with respect for the history of the given location, Górska-Kwiatkowska said. It is therefore crucial that the right choice of functions is made, argued Mariusz Kozłowski, the management board president at Liebrecht & wooD Poland. He also pointed to the importance of a proper cooperation with local authorities while renovating heritage assets.

Indeed, many of the conference participants complained about the length of the process of obtaining administrative permits for projects that involve the refurbishment of listed property. It often takes many years before such schemes finally come under construction. Kinga Nowakowska, a management board member at Capital Park, the investor behind the planned Art N project, revealed that construction work on the scheme should finally launch in the coming months, after about nine years of preparations.

The element of uncertainty, which is often intrinsic to investment in historic buildings, is a major challenge. “The investor often does not know what he will be able to do with the purchased property,” claimed Łukasz Dołęga, the development director at Immobel Poland. It is imperative that the private and the public side show more mutual understanding. The interests of developers and heritage preservation services may often diverge but many of the neglected heritage assets can only be saved if a reasonable compromise is reached.

Municipal authorities should guard their own interests, but they should not hinder development, argued Szymon Wojciechowski, an architect and the management board president at the APA Wojciechowski architectural studio. Others emphasized the role that city hall officials play when it comes to assisting real estate investors. According to Krzysztof Giemza, a proxy at Echo Investment, officials and developers should cooperate more closely on the creation of zoning plans.

KEEPING VALUE

Maciej Zajdel, the CEO at Kulczyk Silverstein Properties, pointed to the difficulty in assessing the costs of refurbishment projects. The development of such schemes is usually more time-consuming and 20-30 percent more expensive than the construction of new buildings. He admitted that his company’s Ethos investment in downtown Warsaw, which was completed earlier this year, eventually proved to be much more costly than had originally been expected.

Dołęga pointed out that while obtaining financing for the refurbishment of an existing building is usually not a problem, technological and other risks mean that the investor has to keep extra financial reserves on hand in case unbudgeted expenditure needs to be met. Nevertheless, according to Zajdel, the result is worth the effort. In the long-term perspective, refurbishment projects often prove to be very successful since well renovated buildings do not age and they retain or even increase in value, he argued.

WBJ was one of the media partners of the conference.

Tomasz Spalik Business development director, Tétris Poland

SEVEN SECONDS TO MAKE A GOOD IMPRESSION

R

ecent office investment opportunities in Warsaw may raise concerns about the fate of slightly older buildings, some of which are already struggling in the competition for tenants. The prospect of vacant office space is motivation to find creative ways to increase the attractiveness of real estate. The key to winning in this situation is to propose changes above and beyond customers’ expectations.

In the high-end office building segment, a prerequisite is, and always will be, a good location. Then there is also competition in terms of other factors such as the attractiveness of the lobby – the space which is a showcase for visitors. It is not without good reason that we say the first seven seconds is the key factor when meeting new people. According to Tétris observations, the importance and attractiveness of shared areas in a building – structured networking zones, fitness and wellness clubs, canteens and kitchens, meeting and presentation rooms – are crucial.

Sometimes it is more profitable to "replace" the entire interior of the building to propose solutions that are ahead of today's standards. This is what happened in the Renaissance tenement at Plac Zbawiciela, recently revitalized by Tétris. The owner of the property, the GLL fund, has spared no effort to ensure that the area, both in design, quality and technology, looks to the future and thus attracts the best tenants.

Apart from the premium group, there are also a large number of buildings where competing for originality and design is difficult. We can observe a change in positioning such properties towards offering good quality interiors for employees. And that is also a great long-term strategy. Where design plays a lesser role, you can allocate resources to improve work comfort, renovate your installation or better align the layout to the needs of present and future tenants. A great example of this type of renovation is the building on ul. Kasprzaka, which is occupied by Orange and has recently been renovated by Tétris, where for a relatively small cost they have managed to significantly improve the comfort and appearance of the office in an interesting way.

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LOKALE IMMOBILIA | RETAIL

RETAIL SPOTLIGHT

Atrium Group COO Scott Dwyer talks to WBJ about the firm’s blossoming transformation in Poland INTERVIEW BY ALEX WEBBER

WBJ: Atrium has been very enthusiastic about renovating and expanding its existing centers in major

cities. What’s the reasoning behind this strategy?

Scott Dwyer: The strategy has always been to focus on key cities with good demographics. In the case of Warsaw, each of our assets has a different story. Atrium has followed the trend of adapting to modern standards and new lifestyles, and therefore the ‘revamps’ of our centers include improved and enlarged food courts that have seen physical upgrades as well as improvements to the tenant mix and overall consumer offering. The introduction of a cinema and fitness center have been important while fast wifi, comfort zones and lounges have become requisites of modern times. Reduta, for instance, has been around for 20 years. During that time it’s seen the surrounding residential area build up. People have aged while others have moved into the area. We’ve had to adjust our offer accordingly, which has meant more food options, more leisure facilities, including a new cinema and fitness club.

We’ve also had to rethink our fashion offer to appeal to both younger and older markets.

In Promenada, that’s all happening on a bigger scale.

When completed it’ll have climbing walls, chillout areas and two large outdoor public areas that can be used for events. With the gym open from seven and the cinema and restaurants open till late, the aim is to maximize the

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number of people who visit through the day. Then there’s Targówek. When that opened 20 years back it was basically in a field. Now it’s surrounded by medium density residential. We’ve had to expand there because of the requirements of retailers and the neighborhood.

With centers looking to diversify their offer, has shopping almost taken a back seat in terms of importance?

Many consumers still want to be seen shopping, though the market is re-positioning itself – for example, we’re seeing more big fashion stores opening in the same centers.

You’d think that it was counter-intuitive and that the competitive nature of fashion retail would lead to cannibalization, but that hasn’t been the case. Instead, the possibility to comparison-shop has led to a gravity effect that has attracted more shoppers.

How important have “millennials” become to the shopping center of tomorrow?

They’re a different animal with different habits and different ways of shopping. They want choice, they want to be seen having a good time and they want easy access in and out of a center. Typically, they’ll spend more on consumption than they will on their home, so much so that the shopping center has evolved to become an extension of their lives: it’s their gym, it’s their room, it’s their kitchen –

shopping centers have become places in which they want to see and be seen. This new generation is bigger than the baby boomers and they’ve got a larger disposable income.

The millennial market is a huge opportunity.

How are you looking to tap into it?

We realized the opportunities from early on – we took a team of 15 people to see what’s happening around Europe and then retro-fitted some of these ideas into our own centers. Now, we’ve also established our own innovation team that’s composed of millennials. Things we’re looking at include how to use technology to influence dwell time and how to use it to get us closer to the customer.

It shows that the business is maturing. Retailers come and go, that’s natural. If you look at the top 10 retailers in the US right now, they’re not going to be the same ones that were in the top 10 a decade back. Retail is becoming more and more borderless, and you only have to travel around Europe to notice how Polish brands have expanded outwards – there’s even a Reserved store now in London.

A lot has been made about the proposed ban on Sunday trading. In your opinion, how does this stand to affect What we shopping centers?

We’ve heard different suggestions as to how this could don’t play out, ranging from an outright ban to limited Sunday want to do opening hours or select Sunday closures – it looks like Would you agree that shopping centers are increasingly much conciliation needs to happen. If you look at what is just obsessed with technology? happened in Hungary (Ed note: where a similar ban innovate came into place before being repealed a year later), it was If something can make our centers more efficient, increase for the infrastructure that was impacted the most, for instance, the dwell time or improve our connectivity with a retailer then we’ll consider it. We want to learn to understand our sake of it extra pressure we saw on parking. Whatever happens, we’ll centers better and help our tenants – what we don’t want adjust our business. I think providing you’re positioned to do is just innovate for the sake of it. in a good urban area that doesn’t rely heavily on Sunday traffic then you’ll be fine. Those that will be affected more The market has seen some high profile entries in recent will be outlet centers and retail schemes on the peripheryears, though these have been offset by some huge exits ies: these “destination” centers that are heavily reliant on – for instance, Mothercare and Marks & Spencer. Does weekend shoppers will suffer more than a good retail this suggest that the situation in Poland is still volatile? option in a prime location.

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LOKALE IMMOBILIA | INVESTMENT

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IS POLAND’S STAR LOSING ITS SHINE? Czech property deals have made headlines much more frequently this year than Poland’s.

The largest CEE market has clearly been sidelined by its southern neighbor, which is now struggling to meet demand from investors

BY KAROLINA PAPROS

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LOKALE IMMOBILIA | INVESTMENT

Investment volume (H1 2017, € million) 1. Czech Republic

2,200

2. Poland

1,500

3. Hungary

824

4. Romania

399

5. Bulgaria

390

Source: Colliers International

P

oland has always dominated CEE markets in terms of investment volumes. In H1 of this year, however, the Czech Republic overtook Poland by as much as €700 million (€2.2 billion for the Czech market vs. €1.5 billion in Poland).

In fact, several CEE countries recorded impressive year-on-year increases. In the latest half-year data and outlook report from Colliers, the year-on-year growth experienced in Czech (114 percent), Romanian (155 percent) and Bulgarian (213 percent) real estate investment volumes were the drivers of the momentum in the January-June 2017 period. Meanwhile, Poland recorded a y/y drop of 26 percent. Is the Polish market losing its appeal?

The previous year brought record-breaking levels of real estate investment in Poland. Attractive yields, energetic economic growth, a welleducated workforce, relatively low wages and the speed with which new properties are developed attracted investors like a magnet. It was a clear sign that Poland had finally recovered after the financial crisis of a decade ago. Among some of the biggest office deals recorded in 2016 was the sale of Q22 by Echo Investment to Invesco (€273 million), Gdański Business Center A&B by HB Reavis to Savills Investment Management (€186 million), and Konstruktorska Business Center by HB Reavis to Golden Star Group (€120 million).

The latest report from Cushman & Wakefield

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The performance of the Czech real estate market shows no sign of slowing down in 2017

emphasizes that the Warsaw office market has recently been undergoing major changes as it reaches the next stage of its maturity. These changes are driven by increasingly demanding expectations of tenants, improving infrastructure, a growing population as well as social and political factors. However, it does not change the fact that the current office vacancy rate in Warsaw has reached 14 percent, whereas in Prague it is currently at a mere 7.5 percent. Despite the high vacancy rate, developers remain extremely active in Warsaw: 720,000 sqm of office space was under construction at the end of June 2017.

Meanwhile, Prague only has 178,800 sqm scheduled to be completed this year – almost four times less.

Despite its size, Poland has never been the only country in CEE that domestic and foreign investors have been observing very closely. The whole CEE region has been on investors’ radar.

JLL predicts that in 2017 the demand for office space in the region will be driven even further by companies’ relocations and expansions. Additionally, the interest might be even stronger now, with the UK’s exit from the European Union. Sean Doyle, head of Polish capital markets at property adviser CBRE, has noticed that, for instance, banks are increasingly interested in office space in CEE. He commented in The Financial Times that “the big banks had long been planning this – but over a period of five to ten years. Brexit has given them the impetus to do it more quickly.”

Growth rates

(H1 2017 vs. H1 2016) 1. Bulgaria

+213%

2. Romania

+155%

3. Czech Republic

+114%

4. Hungary

-14%

5. Poland -26% Source: Colliers International

CZECHS IN THE LEAD

However, the fact that the Czech Republic has dethroned Poland as the leader of real estate investment in H1 2017 must have a reason.

Admittedly, the Czech Republic did finish 2016 with a solid result, but it was not as impressive as Poland’s. So how come it took the lion’s share (60 percent) of the overall real estate investment across CEE in H1 2017?

Among possible factors that might have contributed to this are events on the Polish political scene. The threat of a ban on Sunday trade and the eagerness of Polish tax authorities to challenge rulings on the recoverability of VAT, set at a rate of 23 percent on commercial real estate sales have impacted business deals and contributed to a smaller scale of investment.

“The uncertainty about the recoverability of VAT was the factor that most concerned investors at the end of 2016,” Doyle told The Financial Times. Consequently, the amount of investment decreased in Poland and at the same time skyrocketed in Romania, Bulgaria and the Czech Republic.

The Czech Republic has been increasing its attractiveness for domestic and foreign investors over the past few years. And it is not only Prague that is of interest. Blanka Vackova, Head of Research JLL for the Czech Republic, highlights that at the end of 2016 the D8 highway to Dresden was completed. “It will drive the interest in the Ústí nad Labem region. Both the

Ústí nad Labem and Karlovarský regions will attract investors in 2017 because they are located close to the border with Germany, offering better infrastructure and available labor force,” Vackova added.

Currently, the level of demand in the Czech Republic is so overwhelming that many locations, especially the capital, are struggling to supply enough prime real estate for investors.

Due to the very low vacancy rate, even many SMEs, whose space requirements are not excessively high, are having a hard time finding office space in Prague. Limited availability may cause a slight increase in average headline rents, but at the same time it may have the biggest impact on the real estate investment results in H2 2017.

“The performance of the Czech real estate market shows no sign of slowing down in 2017.

We believe leasing and investment volumes will continue to rise in line with the continued strong macroeconomic performance of the country.

This is the place to be in 2017,” commented Richard Curran, managing director of CBRE. Perhaps, once political speculations no longer affect real estate investments, Poland may have a chance to regain its leading position on the CEE property market. With Warsaw featuring four times more office space in the pipeline than Prague, the shortage of available real estate for sale will not be an issue and the Polish star may once again shine as brightly as it did last year.

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LOKALE IMMOBILIA | LOGISTICS

LOGISTICS BOOM CONTINUES

WBJ talked to Robert Dobrzycki, managing partner Europe at developer Panattoni Europe, about the continued excellent performance of the logistics property market in Poland and the company’s investment plans for the coming months INTERVIEW BY ADAM ZDRODOWSKI 60

OCTOBER 2017 W B J

WBJ:

The total net take-up in the logistics real estate market in Poland reached 1.3 million sqm in the first half of this year, which is the third best result in Europe according to JLL data. Will this recordbreaking leasing activity continue in the coming months?

Robert Dobrzycki: From our perspective nothing will change in the next few months; the demand for warehouse space is at a record-high level and there is a positive capital sentiment. Until these two factors are present and work together, the warehouse industry will register rocket-high levels of performance.

Which sectors currently generate the most demand for logistics space?

E-commerce and automotive. The industrial market is flourishing with regards to the type of demand as well.

On the one hand, we are signing a lot of big-box deals with companies coming from different industries, for example a 100,000-sqm deal with Castorama, an 80,000sqm deal with B/S/H (Bosch Group), a 50,000-sqm deal with OBI and a 40,000-sqm deal with H&M, but we are also working on a handful of manufacturing projects.

With tenants being so active at the moment, are speculative schemes back in the market?

The situation regarding speculative schemes hasn’t changed for a couple of years now. They are present on the market; however, they are now less risky than before.

There are exceptions, but usually such projects are commenced after a pre-lease deal has been signed. Most of the multi-tenant parks are majority-leased during the construction process.

Logistics assets in Poland have become very popular with investors in recent years with the transaction volume recorded in the sector in 2016 having been the highest in the history of the Polish market. Is this investor interest equally visible this year?

The investor interest is definitely visible. Previously, only German, French and Dutch capital was present in Poland and now we also observe British, Asian, South African and American investors looking for investment opportunities here.

Panattoni Europe has recently announced several large-scale built-to-suit projects across Poland. Is this a segment of the market that will continue to grow in the country in the coming years?

Yes definitely, this is backed by the increase in e-commerce, the development of road infrastructure and the centralization of companies’ operations under one roof.

You have been increasingly focused on secondary logistics locations in Poland in recent years, entering markets such as Lublin and Rzeszów. Has this investment strategy proved successful so far?

Absolutely, due to two factors: human capital is present

The demand for warehouse space is at a recordhigh level and there is a positive capital sentiment

there and slowly the road infrastructure is developing as well. We have realized multi-tenant projects in Bydgoszcz, Szczecin and Lublin – all of them are fully leased out.

We are currently building in Zielona Góra and soon will be operational in Kielce, Toruń and Białystok. This is a totally new warehouse segment which is finding its own demand and we are happy to be a pioneer in it.

You have launched several logistics projects in cooperation with developer Marvipol. Is the development of schemes in joint ventures with other companies part of your strategy for the near future?

Yes, of course, we have a flexible approach to cooperating with different business partners. If there is value in such partnerships with others, then we will definitely consider them.

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WAREHOUSE MARKET AT HISTORIC HIGH According to H1 results, Poland took third spot in Europe in terms of net take-up. Developers are also more active than ever. The market is going from strength to strength. How much potential is still there?

BY BEATA SOCHA

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A

fter years of strong growth, Poland beat yet another record in industrial space leasing activity. “We have just witnessed the best half-year in the history of Poland’s industrial market. Companies signed lease agreements for a recordbreaking 1.72 million sqm. New deals and expansions accounted for 1.3 million sqm. This meant that Poland was number three in Europe for net take-up after Germany and the Netherlands,” said Tomasz Olszewski, head of Industrial CEE, JLL. Coming third in Europe in tenant demand is not a small feat, when we consider that the only two countries that beat Poland’s H1 results are Germany (whose warehouse stock is six times bigger than Poland’s) and the Netherlands, one of the most mature warehouse markets in Europe, with a total stock that is twice as big as Poland’s. “Such a high level of activity among tenants provides a great opportunity for another record – 3 million sqm in terms of total demand by the end of 2017,” Olszewski claimed.

The bulk of demand came from logistics and retail – riding on the back of the ever-growing e-commerce industry, as well as the light manufacturing industry. “What is interesting is the fact that retailers accounted for the largest share of net market demand,” commented Olszewski.

Built-to-suit transactions clearly dominated the demand side of the market in H1 2017. The largest deals included Amazon in Sosnowiec (135,000 sqm), Castorama in Stryków (102,000 sqm) and BSH in Łódź (79,000 sqm), all of them being developed by Panattoni.

Geographically, the five major markets in Poland were responsible for the majority of leasing activity, of which the largest volumes were observed in Central Poland (24 percent of the total volume) and in Warsaw (22 percent), according to a report prepared by Savills. Outside of the major markets, significantly high demand was recorded near the German border, where over 105,700 sqm was leased (6 percent of demand).

ANOTHER MILLION COMING

The remarkable demand is met by an equally impressive development activity. Almost 800,000 sqm of warehouse and industrial space was completed in the country in the first half of this year, which marks a 17-percent increase y/y, according to Savills data, and was the second-best result in Europe in the first six months of the year. The total new supply in 2017 is likely to exceed the 2016 level of 1.2 million sqm, the Savills report said.

“The business outlook for the warehouse market is very positive. The Polish market is far from being saturated and has potential for further growth. The falling unemployment rate may boost development of new warehouse locations due to better availability of workforce there. There is no

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LOKALE IMMOBILIA | LOGISTICS sign of any slowdown indicators. On the contrary, 2017 may be even better than 2016,” commented Wojciech Zoń, Head of Industrial Agency, Savills.

The largest projects were: an extension of P3 Błonie (47,500 sqm) in Warsaw Zone II owned by GIC, BTS for Kaufland (45,700 sqm) in Bydgoszcz

by Panattoni and an extension of Prologis Park Piotrków II (42,200 sqm) in Central Poland.

More than 1.6 million sqm of warehouse and industrial space was under construction in Poland at the end of H1 2017, twice as much as at the end of H1 2016. The largest ongoing developments include two BTS projects that Panattoni Europe is developing for Amazon in Szczecin and Sosnowiec (comprising 161,000 sqm and 135,000 sqm of space respectively) and a BTS scheme that Goodman is developing for Zalando in Szczecin (130,000 sqm).

The highest amount of space under construction can be found in the Warsaw Suburbs, the Upper Silesia region, Szczecin and Central Poland, according to JLL. “Furthermore, it is worth mentioning that the emerging markets continue to grow gradually, with a total of 115,000 sqm currently being built in the Kujawy, Lublin, Opole and Lubuskie regions,” said Jan Jakub Zombirt, associate director, Strategic Consulting, JLL. A quarter of the space under construction is being built on a speculative basis, JLL stated.

Developers are typically keen to start unsecured investments only in the regions with high levels of demand, such as Warsaw and Upper Silesia.

Poland’s total industrial stock is currently at 11.9 million sqm, making the country the eighth largest warehouse space market in Europe. “While we cannot compete with industrial giants such as Germany – which has the highest European volume, totaling 60 million sqm – Poland is still characterized by impressive growth,” Zombirt concluded.

Despite dynamic growth of the market, the vacancy rate remains low at 5.9 percent, just above the three-year average of 5.5 percent. In the next few months a significant increase in the vacancy rate is not forecast, as 75 percent of the space under construction has already been committed to, according to Savills.

PORTFOLIO DEALS BREWING

Despite impressive growth, the market has seen little investment activity in the first half of the year.

Currently, the volume of industrial investment transactions is approximately €32 million. “However, taking into account deals currently under negotiation, we can expect a busy end to 2017 and an annual result of over €1.1 billion. The volumes are mainly generated by pan-European portfolio transactions,” said Tomasz Puch, head of Office and Industrial Investment, JLL.

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BIGGEST LEASE DEALS IN POLAND IN H1 2017 TENANT

PARK

SPACE (sqm)

Amazon

Panattoni BTS Sosnowiec

135,000

Castorama

Panattoni Park Stryków

102,000

BSH

Panattoni BTS Łódź

79,000

H&M

Panattoni BTS Bolesławiec

60,000

Kuehne & Nagel

P3 Piotrków

55,800

OBI

Panattoni BTS Łódź

50,700

Source: JLL, www.warehousefinder.pl, 2017

Tomasz Lubowiecki President of the Management Board of 7R

NO SIGNS OF SLOWING DOWN

A

s available data has shown, the Polish market may break even more records this year. In the first six months of the year, companies’ leasing activity was the highest in history, with some 1.8 million sqm leased. It’s 30 percent more than in the corresponding period of last year, which was also a very good one for the market.

For 7R it has also been the most intense year in the company’s history. We have 200,000 sqm of completed warehouse and office space in our portfolio, and another 100,000 sqm under construction. Since the beginning of 2017 we’ve delivered and fully commercialized almost 100,000 sqm of space.

Three new facilities have been erected within our flagship investment – the Logistics Park Kraków Kotów-Brzegi. We’ve also delivered another warehouse within the Logistics Park Gdańsk-Kowale, totaling 34,000 sqm, which is our new joint venture with Hillwood. We’ve also carried out a BTS scheme for Velvet Care in Klucze featuring 20,6000 sqm.

Seeing the strong interest in our current and planned investments, e.g. in Silesia, we do not expect the market to slow down any time soon. Poland remains one of the most attractive markets in Central and Eastern Europe, fueled by the high quality offered by domestic developers, relatively low rents and labor costs, the availability of qualified workers and everimproving infrastructure.

WBJ PRESENTS

BROUGHT TO YOU BY HILL INTERNATIONAL

developers should, from the very beginning of the development, have a preparation process, a very professional team – either inhouse, or from a company like Hill International.

Firstly, regarding the design, the developer should employ a designer that has experience in that particular kind of development. Some developers opt to carry out a design competition, and sometimes they engage Hill to carry out the tender process for a designer.

Assuming there is a Design and Building Permit, who chooses the GC? Firstly, a building design with a building permit is not a basis on which to choose a GC. If the project is time sensitive (which is very often the case), the tender design is prepared by the design team. It is also important to have a bill of quantities prepared for each design discipline. This is the minimum requirement for carrying out a tender for a GC.

DEVELOPER’S CHOICE

In modern construction there are typically two ways of managing a development: with a General Contractor, or in ‘packages’ without a General Contractor. WBJ talked with Robert Karczewski, Director of Business Development Europe at Hill International, about the various pros and cons of each method.

What is the real difference between using a General Contractor and Construction Management?

There are differences in various areas, such as risk, guarantees, procurement, performance, or the attitude of financial institutions. The general opinion of developers is that having a General Contractor (GC) is safer and the risk is minimized because the fee is written in the contract between the developer and the GC, and there is a time schedule of construction milestones, which also indicates a permit for use. The developer also receives a guarantee from the GC for the entire construction in its scope of work.

That is why financial institutions that fund developments prefer construction with a GC. That seems logical. Is it really that simple?

In theory yes, but as usual in practice it is very different. Our 25 years of experience in Poland has shown that to be on the safe side

If that is the minimum, then what would the ideal circumstances be?

The ideal situation for all parties is when the designer develops a working design in which each process is specified in detail.

This allows the developer’s team, for example Hill, to calculate the budget in detail and this cost estimate can be compared with offers from any potential GC that is taking part in the tender. On the other hand, it is also a better situation for any potential GC, because they can calculate the fee for the offer in a very precise way and they do not need to assume high-risk margins for not having a precise design.

If the lending financial institution agrees not to use a GC then what are the benefits to the developer of carrying out the development using Construction Management?

In Construction Management each package of work is tendered.

Therefore, the developer has direct influence over the choice of the package contractor and a direct contract with each of them.

The developer also has direct control over the fee and the time schedule. Therefore it is cheaper and, more importantly, it is easier to implement any changes requested by the tenant (which were not known at the design stage or during the tender for a GC).

Which construction method would you recommend to a developer – with a GC or Construction Management?

Hill International provides complex services using both methods, because we have vast experience in each of them. We can discuss with the developers the details of these methods and then they can choose which is more convenient for them for that particular project. There are developers on the market that use Construction Management only, because their financing allows for it and they have no problem with guarantees from package contractors.

Some developers always use a GC. Both methods can be successful if the design is worked out in detail at the tender stage and a professional team provides project management, cost management and technical supervision services during construction.

SOCIAL MEDIA

We know that a social media presence is a must nowadays. We utilize various platforms to bring the best results, which translate into brand awareness and sales results.

We know what kind of content engages customers. We know how to speak their language and initiate discussions. We stay up to date with trends. We react instantly. We offer a valuable opportunity to communicate with customers in real time.

See more at www.sm.valkea.com

Life + Style

Hotel Metamorphosis

More and more corporate travelers are turning their backs on the established five-star giants and their suffocating sense of comfortable conformity. Instead, in the ascendancy are a new breed of hotel that offer innovative concepts that are fresh and bold. The following represent our pick of the bunch W B J OCTOBER 2017

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Life+Style

Alex Webber Journalist

Based in the Polish capital since 2000, for the past six years Alex has served as the editor-in-chief of the Warsaw Insider lifestyle magazine. He regularly contributes to both domestic and international titles specializing in subjects ranging from business and real estate to culture and travel.

WARSAW INDIGO (pictured on previous page) Warsaw, indigowarsaw.com The lobby alone stops guests in their tracks: suspended from a glass-covered atrium, find a chandelier that dances and dazzles in a riot of color. Housed inside an elegant townhouse, the Indigo pulses to a design that juxtaposes a contemporary design ethos against the historic airs and graces of this ornate city center residence. Before bed, make time to catch a drink in the stunning Bourbon Lobby Bar.

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AUTOR ROOMS Warsaw, autorrooms.pl An increasing number of younger business travelers are eschewing the humdrum traditional chains and instead seeking out something with that unique taste of home. Autor Rooms is one such place: set around a hip communal living space with retro styling and its own vinyl record library, find four rooms touting custom-made furnishings and art and design pieces from both upcoming and established Polish designers.

WROCŁAW GRAPE Wrocław, grapehotel.pl An odd inclusion you might think, but the justification is thus: though on the face of it the 13 wine-themed rooms seem more suited to eloping couples, there’s something about the Grape that makes it feel like a blueprint for all other boutique residences.

Found in a gabled villa with pointy towers, it’s a place that bleeds with elegance, identity and that cloistered feeling of undisturbed seclusion.

DOUBLETREE BY HILTON Wrocław, doubletree3.hilton.com Swan white in color, the amorphous exterior of the OVO complex became one of the big talking points in Polish architectural circles when it opened last year. Leasing a considerable amount of space inside is DoubleTree, Hilton’s acclaimed four-star brand.

Adhering to the principle that “less is more,” the understated design combines form and function to create a sophisticated space that feels expertly devised. Nice welcome cookies, as well!

GDAŃSK PURO Gdańsk, purohotel.pl/gdansk Technophobes: hide! With much emphasis placed on tech (room functions are controlled by an iPad), there are some who think the Puro is too smart for its own good. All, however, agree that the design team (London-based DeSallesFlint) are onto something: pride of place goes to a lobby / lounge / living area that subtly explores the industrial history of this so-called Granary Island.

CRAFT BEER CENTRAL HOTEL Gdańsk, centralhotelgdansk.pl If you thought craft beer was the realm of wax-whiskered hipsters and woolly jumpered dorks, think again. The summer launch of the CBCH marks a crossover point between millennial cool and traditional luxury. Beyond a quite astonishing brewery, points are earned for a design that’s chic but never loud and always mindful of the heritage of this turreted, red brick beauty.

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EVENTS

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

THE BOOK OF LISTS GALA 2017

The annual Book of Lists Gala was attended by over 150 guests. WBJ Group handed out two Spotlight Awards, to law firm Kochański Zięba & Partners as the Leading Legal Advisor (Mergers & Acquisitions) and to Hill International for Innovative Solutions in the Construction Industry. The Lifetime Achievement accolades went to Kuehne + Nagel and to Ghelamco Poland.

Book of Lists also distinguished companies in 50 industries with certificates for the top spot in their field.

Piotr Kochański – Managing Partner, Kochański Zięba & Partners

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Ghelamco Poland – represented by Anna Pelczarska

(l-r) Tomasz Spalik – Business Development Director, Tétris Poland; Beata Tadla – Gala Host

Ewa Buczyńska – Vice President, Lidex

Anita Zajączkowska – Key Account Director, TFLS

Jolanta Sawicka – Regional Director, Raben Polska

Adecco Poland – represented by Łukasz Silski

Michał Ciemiński – B2B Director, Orange Group

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EVENTS

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

(l-r) Morten Lindholm – Publisher, Warsaw Business Journal Group; Julita Pryzmont – Business Development Manager, Warsaw Business Journal Group, Krzysztof Jakubowski – Vice President, Interkadra; Marcin Smoroń – President & CEO, Interkadra

Emilia Dębowska – Marketing Manager, Panattoni Europe

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Robyg S.A. – represented

by Agnieszka Petelicka

Michał Szynkiewicz – Branch Manager, Idea Getin Leasing

Ingo Goldhammer – Managing Director and President, Kuehne + Nagel Poland

EVENTS

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

Anna Czyż – Executive Manager, Hays Poland

Łukasz Flisiuk – Sales Manager, Masterlease Group

Renata Kabas-Komorniczak – Partner, Rödl & Partner

Jacek Żurawski – Managing Director, Hill International

(l-r) Izabela Mendelowska – Brand & Communications Manager CEE, Sodexo Polska, Yann Gontard – CEE Region Chairman, Sodexo; Beata Tadla – Gala Host; Marta Diop – Sales Director, Sodexo Polska

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WBJ Group would like to thank our partners

Specialized Translations

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EVENTS

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

27TH ECONOMIC FORUM IN KRYNICA Hosting a record number of participants and accredited journalists, with more than 200 thematic panels and special events, the 27th Krynica Economic Forum, held on September 5-7, was attended by nearly 4,000 guests from Europe, Asia and the US. The forum guests included: heads of state; top members of governments and parliaments; CEOs of the largest companies; local government officials; and experts and scientists; and was covered by over 650 journalists. The theme of this year’s Krynica Economic Forum was: “Project: Europe. What is the recipe for future decades?”

European integration must be maintained for the sake of building Europe’s strong position and ensuring the competitiveness of its economy when compared to other powerful countries in the world. However, the integration process cannot be

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divided into various stages because the founding fathers of the European Community perceive the EU as a Union of equal countries – this is the conclusion arrived at by the Presidents of Poland, Macedonia and Georgia, who were the speakers at the inaugural plenary session of the Forum.

“We, the Poles, are the citizens of a state that for many years aspired to join the European Union. Our attempts were successful and the vast majority of Poles consider our membership in the EU as a great value,” stated the President of Poland, Andrzej Duda, during the inaugural session. “A genuine failure of the European Union will be its division into an EU of multiple speeds, which may lead to it falling apart,” he claimed.

During the 27th Krynica Economic Forum, many important economic and social declarations

were made. Prime Minister Beata Szydło declared that in the nearest future her government may suggest appointing a council of advisors to the government that would consist of entrepreneurs. Deputy Prime Minister and Minister of Development and Finance, Mateusz Morawiecki, announced his ministry’s plans regarding special economic zones. “We want to make the whole of Poland an investment zone,” stressed the Deputy Prime Minister. The President of the Polish Investment and Trade Agency (PAIH), Tomasz Pisula, said that by the end of the year the Agency intends to open 20 trade offices abroad. The Minister of Energy, Krzysztof Tchórzewski, announced that if a decision regarding the construction of a nuclear plant was made this year, the first block would become fully operational in around 2029 or 2030 and the cost of the whole power plant would be about PLN 75 billion. “In 2022, Poland’s gas supplies will come from other sources than they do currently,” said the government’s plenipotentiary for strategic energy infrastructure, Piotr Naimski. The minister added that in 2022, thanks to the LNG terminal and the Baltic Pipe gas pipeline, Poland will be able to import 16-18 billion cubic meters of gas a year, which will cover all of the country’s demands.

“We can then completely resign from (Continued)

SEMINAR

Retailing & FMCG: Reshaping Strategies in a Connected World 25th October, 2017 InterContinental Warszawa, Poland

More information and registration: http://go.euromonitor.com/polish-seminar

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EVENTS

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

Russian gas. Our present agreement on gas supplies with Russia expires in 2022,” said Piotr Woźniak, the President of PGNiG. The Minister of Family, Labor and Social Policy, Elżbieta Rafalska, informed during the forum that the unemployment rate in Poland amounts to 7.1 percent and is at its lowest level since March 1991. According to Radosław Domagalski-Łabędzki, President of KGHM Polska Miedź SA, the state has to provide instruments, financing and developmental programs if foreign expansion is to be successful. On the other hand, Filip Grzegorczyk, President of Tauron Polska Energia SA, confirmed that “small and medium-sized enterprises are the future and that they are worth investing in as some of them will become genuine champions.” During the 27th Economic Forum in Krynica an agreement was signed, based on which the European Investment Bank will grant Poland credits amounting to almost €1 billion for strategic energy and scientific-research investment.

The first day of the 27th Krynica Economic Forum was capped off by the Festive Award Gala. Prime Minister Beata Szydło was chosen as “Person of the Year,” and the Program Council of the Economic Forum presented the award for the “Company of the Year” to Alior Bank SA. A special award of the 27th Economic Forum in Krynica went to the President of Georgia, Giorgi Margvelashvili, whilst the New Culture of New Europe award went to Svetlana Alexievich, an outstanding Belarusian writer and journalist.

WARSAW INTERNATIONAL DANCE CHAMPIONSHIPS & GALA BALL 2017

Dansinn by Malitowski galas are events where the best dancers from all over the world come together with Hong Kong’s business elite. This year, the international network of dance schools began operating in Poland, and for the first time in Warsaw it has organized a ball for local rumba and waltz enthusiasts.

The event – Warsaw International Dance Championships & Gala Ball 2017 – was held on September 16 at the Hilton Warsaw Hotel and Convention Centre. During the day, couples from all over the world took part in a dance competition. In the evening guests had the incredible opportunity to admire dance legends, including Michał Malitowski and Joanna Leunis – multiple world champions and the faces of the Dansinn brand. Honorary patrons included, among others, the Polish-Chinese Chamber of Commerce.

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