Warsaw Business Journal February/March 2018

WARSAW

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

FEBRUARY/MARCH 2018 ~ No. 02/03 (43)

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

For daily news visit us at wbj.pl

WOMEN IN LEADERSHIP

- women on the board - parity issues - office diversity

KAROLINA KAIM CEO of Tacit Investment

reflects on her career in real estate and shares her vision of the premium residential market

REAL ESTATE

Record investment volume in 2017 Could it get any higher?

ASIAN AND AUSTRALIAN MARKETS ARE NEXT Rafał Zięba

Managing Partner, Head of Real Estate Practice at Kochański, Zięba & Partners

GOVERNMENT RESHUFFLE | EU-POLISH TENSIONS | “DEATH CAMP” CONTROVERSY | IT PAY SCALES

FEBRUARY/MARCH 7

IN REVIEW

News highlights from the previous month from wbj.pl

Women in Leadership

Women in the boardroom 31 | Office diversity 33 Parity issues 34 | Interview: Agnieszka Chołuj 37

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OPINION

Office romance.......................................... 17 Language education................................. 19 Compliance regulations........................... 20 Poland and the EU.................................... 22 Interview with Paweł Musiałek.............. 24 Government shakeup............................... 25 Print is not dead........................................ 27 Interview with Filiberto Amati............... 28

Exclusive

Interview with Karolina Kaim................ 40

55

TECH INSIGHTS Kitchen mech............................................. 55 Tech news.................................................. 56 IT pay scale................................................ 58 Interview with Tomasz Bujok................. 61

63

LOKALE IMMOBILIA

Real estate news...................................... 63 Residential sites....................................... 72 Repurposing office schemes.................. 76 Interview with Katarzyna Kajak............ 80 Warsaw shopping malls ......................... 82 Penthouse market.................................... 86

90 EVENTS

The most important recent business and industry events

Real Estate Investment

Interview: Rafał Zięba 50 | Record deal volume 45

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FROM OUR EDITOR

Correction, disruption, diversification, security, equality

BY MORTEN LINDHOLM

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

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

azdrodowski@wbj.pl

Kevin Demaria Art Director

Michael Evans Copy Editor

Victor Epstein

Editorial Intern Contributors

Ewa Boniecka Karolina Papros Sergiusz Prokurat Alex Webber Sales

Monitor, analyze, adjust, focus, continue, master – I wish you a successful spring.

Enjoy the read.

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PR & Marketing

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mczopur@valkea.com Krzysztof Wiliński Print & Distribution

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PORTRAIT BY KEVIN DEMARIA

THERE ARE MANY BIG WORDS on the 2018 agenda. I admit that after my overtly bullish outlook all the way through 2017, the first several weeks of the year have given me reason to pause. It’s hard not to see some warning signs, be they of a temporary hiccup or of a larger correction looming over world stock markets.

We saw some strong financial results in Q4 2017, but market expectations have been building up to a level that could no longer be realistic. Most companies delivered on their promise, particularly on the Polish market, which is seeing remarkable growth overall. But as much as stock markets give in to overall optimism, they are also prone to succumbing to panic once some of the results deviate from forecasts. And that could be a slippery slope for all involved – just saying.

But onto more optimistic notes. Having been brought up in Scandinavia, ideas such as “democracy,” “freedom of speech” and “equal rights for both genders and all citizens” have always been as certain to me as the proverbial “death and taxes.” Unfortunately, this isn’t true everywhere and for everyone – and that is why I am very proud to include equality as part of WBJ’s mission to put forward great Polish success stories from great Polish leaders, regardless of their gender, race or political views. Take a look at some of the amazing stories we bring you in our Women in Leadership section on pp. 31-43.

In our first issue of 2018, we dive right into the world of real estate as well, with the recordbreaking 2017 transaction volume in mind. We talked to some key players in the market to ask whether there is any cause for concern or if they believe the market growth is sustainable. Are we going to see a new all-time-high apartment price in Poland in 2018? Is there enough land to sustain the current level of development? Will the residential market keep selling as well as it has?

Economic aspects aside, Poland has been making a lot of headlines recently, not all of them as favorable as one would wish. We take a step back to evaluate the recent government shakeup, and the latest controversial legal and environmental policies, as well as how they affect Poland’s place within the EU.

Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com

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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

This bill protects Polish interests, our dignity, the historical truth so that we are not slandered as a state and as a nation” - Andrzej Duda

‘POLISH DEATH CAMPS’ LAW SPARKS CONTROVERSY

SHUTTERSTOCK

By Victor Epstein In early February, President Andrzej Duda signed the highly debated amendment on the use of the term “Polish death camps” into the Polish law. The new bill states that anyone who publicly ascribes blame or joint blame to the Polish nation or state for crimes committed by Nazi Germany or for war crimes or other crimes against humanity may face criminal charges. Also, the phrase “Polish death camps” will now be illegal.

The law, according to its proponents, is aimed at stopping people from incorrectly concluding that Poland had a role in running the camps, and it imposes jail time for using phrases such as “Polish death camps.” But critics say the legislation could hinder debating history, thus harming freedom of expression and opening the way to Holocaust denial. “We are open to dialogue, we want to discuss and investigate the historical truth,” Prime Minister Mateusz Morawiecki stated.

The Israeli parliament decided to debate an amendment to its own “Holocaust denial” law that would penalize the minimizing of the role of Nazi collaborators – a clear reference to the new Polish legislation. Several international organizations have also condemned the law, including Yad Vashem, the United States

Holocaust Memorial Museum and the Simon Wiesenthal Center.

Comments made by PM Morawiecki at a conference in Munich, Germany in mid-February, only added fuel to the flames. He remarked that “Jewish perpetrators” were among other nationalities in an attempt to deflect a question concerning the mentioning of some Poles collaborating with the Gestapo. Israeli Prime Minister Benjamin Natanyahu was particularly indignant, exclaiming that his Polish counterpart’s comments were “outrageous” and “lack[ing] in sensitivity to the tragedy of our people.”

In a public letter written to Morawiecki, two history professors from Jagiellonian University and the University of Aberdeen, who had recently won multiple honorary awards from the Polish Ministry of Foreign Affairs for their books on promoting Polish history, isolated and addressed the major flaws and consequences of the new controversial law regulating historical discourse. The new law intended to fight against the misrepresentation of Poland and Poles during the Holocaust as anti-Semites or, in particular, perpetrators of the concentration camps by previously being referred to as “Polish death camps” in international discourse. While the professors were in full support of the intent, the negative backlash internationally, the aggressiveness of establishing a punishable offense, and the possibility of whitewashing negative and “uncomfortable” Polish history became key reasons for their request that the law be repealed.

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WBJ

In Review POLITICS

Macierewicz, Waszczykowski, Szyszko, others lose their posts in major CABINET SHAKEUP PM Mariusz Morawiecki has dismissed several ministers in a major government reshuffle. Among those who were dismissed were Defense Minister Antoni Macierewicz, Foreign Minister Witold Waszczykowski and Environment Minister Jan Szyszko. This move was seen as an attempt to improve the strained relationship with Brussels.

Also losing their posts were Health Minister Konstanty Radziwiłł and Digitization Minister Anna Streżyńska. New ministers include Jacek Czaputowicz, a professor of international relations, as Minister of Foreign Affairs. Henryk Kowalczyk has been appointed as the new Minister of the Environment, while Łukasz Szumowski became the head of the Ministry of Health.

Mariusz Błaszczak moved from the Ministry of the Interior to the Ministry of Defense, with Joachim Brudziński taking over his previous post.

The Ministry of Economy and Development, led by Morawiecki himself until now, was split three-ways, with Janusz Kwieciński at the helm of the newly set up Investment Ministry. Jadwiga Emilewicz will run the newly-established Ministry of Entrepreneurship in charge of overseeing technology policy. Lastly, former Deputy Finance Minister, Teresa Czerwińska, has been promoted to the head of that ministry.

Read more on page 22-23 and 25.

The Iskander missiles have been deployed to Kaliningrad numerous times before, often as a response to NATO training exercises or deployment of troops to its Eastern flank.

However, according to Lithuanian Defense Minister Raimundas Karoblis, this move is permanent.

4.6%

GDP growth in 2017 (GUS flash estimate)

6.9% INTERNATIONAL

TUSK TO UK – you can still change your mind European Council President Donald Tusk has assured British leaders that there is still time to change their decision to leave the European Union.

“If the UK government sticks to its decision to leave, Brexit will become a reality with all its negative consequences in March next year, unless there is a change of heart among our British friends. If a democracy cannot change its mind, it ceases to be a democracy. We, here on the continent, haven’t had a change of heart; our hearts are still open,” he said in the European Parliament.

His words were backed up by the President of the European Commission Jean-Claude Juncker. “President Tusk ... said that our door remains open. I hope that will be heard clearly in London,” he added.

Companies face more RECRUITMENT issues

Russia permanently deploys Iskander NUCLEAR-CAPABLE MISSILES to Kaliningrad exclave Russia has deployed advanced nuclearcapable Iskander missiles to its Kaliningrad exclave, according to an RIA agency.

The latest model of Iskander 3M14 missile has a range of 2,000 kilometers and can carry both conventional and nuclear warheads.

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5.1% Q4 GDP growth (GUS)

BUSINESS

INTERNATIONAL

TRENDING STATS

According to a report published by HR consultancy Work Service, the number of companies having trouble filling vacancies has increased by 18 percent since last year.

Currently, every other company in Poland is facing such difficulties.

Companies are trying to overcome these issues by raising salaries. “As many as 37.1 percent of entrepreneurs are offering higher salaries during the recruitment process, while 28.1 percent offer longer work hours when trying to fill in for missing produc-

Unemployment rate in January (GUS)

8.2%

Retail sales increase (GUS, y/y)

6.2%

Seasonally adjusted industrial output increase (GUS, y/y)

3.8%

Average employment growth in companies in January (GUS, y/y)

6.3%

January increase in wages (GUS, y/y)

1.9%

Inflation rate in January (GUS)

WBJ

In Review tivity hours. Moreover, the report added that 26.6 percent of companies plan to hire Ukrainian nationals to offset vacancies.

SOCIETY

Polish-Russian team RESCUES FRENCH CLIMBER at 20,000 feet

MINING

BOGDANKA dismisses CEO WSE-listed coal miner Bogdanka has dismissed its CEO Krzysztof Szlaga. The company named its deputy CEO Sławomir Karlikowski as acting CEO as it looks for a new chief. Szlaga had been the company’s head since April 2016. No reason was given for his dismissal.

ECONOMY

Baltic Pipe gets €33 mln EU FINANCING

POLES WORK 41.2 hours per week – Eurostat

The Polish-Denmark Baltic Pipe gas link will get €33 million in funding from the Connecting Europe Facility program, the Ministry of Energy informed.

The gas pipeline project Baltic Pipe will receive financial support for the implementation of tasks in Poland and Denmark.

The pipeline is expected to have a capacity of 10 bcm annually. It will connect Poland with gas deposits from the North Sea. The project will cost between €1.6-2.2 billion and could become operational by 2022.

On average, a full-time European employee works 40.3 hours a week, according to data released by the EU statistical office Eurostat.

People work the longest in the UK (42.3 hours), while Denmark had the shortest working week (37.8 hours). Poland, with 41.2 hours, was fifth.

People employed in the mining industry have the longest working week in Europe– they work 42 hours on average. The shortest working week – 38.1 hours – is in the education sector.

ENERGY

French climber Elisabeth Revol and Pole Tomasz Mackiewicz had climbed to the peak of Nanga Parbat, but their descent became impossible due to bad weather conditions. Revol helped Mackiewicz set up a tent at 7,200 meters (24,000 feet). She texted Mackiewicz’s wife telling her that her companion had succumbed to snow blindness, altitude sickness and frostbite and was in a “terminal state.”

Revol began to climb down on her own.

A Polish-Russian team of mountain climbers consisting of Adam Bielecki and Denis Urubko managed to find the Frenchwoman, who had been stranded on the Himalayan mountain Nanga Parbat together with Mackiewicz. She was found at around 2 am Pakistani time at 6,100 meters (20,000 feet). She had frostbite on her hands and feet and was unable to walk. After bringing her to their camp, the decision was made not to continue with the rescue of Mackiewicz as it would be nearly impossible to get to him due to the deteriorating weather conditions that would have presented an extreme danger to their lives.

BUSINESS LUNCH THE WAY YOU WANT IT

ul. Senatorska 13/15, Warszawa/Stare Miasto www.focaccia.pl, 22 829 69 69

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This is not a coincidence as Budapest has said before that it will block any action to suspend Poland’s voting rights in the EU after the European Commission launched Article 7 procedures against Warsaw. “We don’t want to live in an empire again, we continue to see the European Union as the union of free nations,” Hungarian PM Viktor Orbán said.

“We Hungarians want Europe to remain European,” he added, calling for “Christian culture” to be preserved and strengthened.

ECONOMY INTERNATIONAL

Bloomberg: POLAND IS THE 4TH BIGGEST emerging market

“EU member states should decide on their own who they want to accept,” PM Mateusz Morawiecki said during his visit to Budapest, adding that the EU’s migration policy has failed. “In terms of migration and quotas that were to be imposed on (EU) member countries, we strongly reject such an approach as it infringes on sovereign decisions of member states,” he said.

Morawiecki’s visit to Hungary was his first bilateral visit since taking office last month.

Poland came in 4th in the ranking of the most attractive emerging markets in 2018, according to a report from the Bloomberg agency. Mexico and Turkey took the first two spots as both countries had achieved the highest ratings among 20 developing countries due to their actual effective exchange rates being more competitive than the overall average over the last 10 years, according to the analysis. The Bloomberg report was based on a number of indicators such as growth, profitability, current account balances and asset valuation.

Morawiecki and Orbán to EU: MIGRATION POLICY has failed

ECONOMY

Glapiński: CRYPTOCURRENCIES make no sense for Polish economy NBP head Adam Glapiński stated that “introducing [cryptocurrencies like Bitcoin], makes no sense for the Polish economy, as it will only bring anxiety and provide room for speculation.” He went on to say that Poland would follow other European economies. “If they ban cryptocurrencies, so will Poland,” he said in an interview with Radio RMF FM. The NBP president also added that a digital currency would worsen problems such as tax evasion and possible criminal activity.

He also commented on his uncertainty about the benefits and pitfalls of a stronger or weaker złoty. He was optimistic about the state of Poland’s economy, predicting that it would remain robust throughout 2018 and would likely see some slowdown, but not before next year. Glapiński was concerned, however, about insufficient domestic housing, stressing its importance in keeping young Poles from emigrating. Besides that, most of his concerns were about foreign issues, fearing potential problems arising from the Chinese economy, crisis in

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WBJ

In Review EU CONFLICT OVER BIAŁOWIEŻA LOGGING

According to Yves Bot, the general advocate at the European Court of Justice, Poland broke international law by drastically increasing logging in the primeval forest of Białowieża. “[Poland is] liable for decisions that could result in a deterioration of breeding sites of protected species,” Bot said in a statement, going on to propose that “the court should rule that Poland has failed to fulfill its obligations.”

The European Court of Justice (ECJ) will make a final ruling in the coming months and, though it is not obliged to follow the adviser’s recommendation, it usually does.

Poland earlier said that it had to cut down trees infested by bark beetles to protect the ecosystem and tourists, though it changed its tune after the ECJ ruling and said it will comply.

The mass logging started in 2015, when then Environmental Minister Jan Szyszko claimed that the trees needed to be cut in order to save the forest from a bark beetle infestation. Since logging started, timber harvesting has increased threefold in Białowieża, bringing millions of złoty in profits to the state-owned company managing Polish forests.

the eurozone, or a sudden collapse of the global economy caused by oil prices.

SOCIETY

CEE COUNTRIES with the biggest population drop in the world According to the UN World Population report, Eastern European countries are in the top 10 of the world’s fastest shrinking countries (in terms of demography) in the world. According to the study, Poland’s population is expected to shrink by 15 percent by 2050, which puts Poland in 9th position along with Hungary. The country with the biggest forecasted drop in population is Bulgaria (23 percent), followed by Latvia (22 percent) and Moldova (19 percent). The first country from outside the CEE region is Japan, where the population is also expected to drop by 15 percent.

ECONOMY

BIK: Seniors have nearly PLN 10k in DEBT ON AVERAGE The average debt of a person over 65 is PLN 9,936, according to the Credit Information Bureau (BIK). In value terms, seniors have the most consumption loans (PLN 18.9 billion), followed by mortgages (PLN 6.6 billion), credit cards (PLN 1.1 billion) and debit limits (PLN 0.9 billion).

There are currently 6.4 million people aged 65 and up in Poland, of which 60.7 percent are women. Despite the anticipated decline in the population by 4.5 million by 2050, a systematic increase in the number of people aged 60 and over is expected. According to GUS data in 2050, in Poland the share of older people will exceed 30 percent in rural areas, while in urban areas it will approach 35 percent.

TREE STATS

BUSINESS

180,000

10,000

in Białowieża were cut down in 2017

is the area of the Białowieża National Forest that is protected by UNESCO

trees

60,000 hectares

is the area of the Białowieża forest on the Polish side

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hectares

700

is the number of natural heritage sites within the Białowieża forest

Foreign investors keen on INVESTING IN POLAND – PAIH As much as 92 percent of foreign investors are satisfied with their decision to invest in Poland and would do it again, the Polish Investment and Trade Agency (PAIH) said.

In their report, compiled with HSBC and Grant Thornton, foreign investors expect to increase their revenue this year (70 percent), while 58 percent plan to increase their workforce in Poland. Furthermore, 48 percent of foreign investors plan to increase their CAPEX in Poland.

NEW COLLECTION

WBJ

In Review

Warsaw, January 9, 2018 167.1 µg/m3 PM 2.5: 150.1 µg/m3

PM 10:

EU limits:

PM 10: 50 µg/m3 daily, 20 µg/m3 annually PM 2.5: 25 µg/m3 daily, 10 µg/m3 annually (According to WHO, the daily norms cannot be exceeded on more than 35 days in a year).

What does it all mean?

PM 10 is particulate matter of 10 micrometers or less in diameter. It can increase the number and severity of asthma attacks, cause or aggravate bronchitis and other types of lung inflammation, and reduce the body’s ability to fight off infections.

PM 2.5 is smaller (up to 2.5 micrometers) and able to travel deeply into the respiratory tract, reaching the lungs and even the bloodstream. Exposure to fine particles can cause respiratory and circulatory inflammation and produce asthma-like symptoms.

33

50

out of European cities with the worst air quality are in Poland

PHOTOGRAPH BY KEVIN DEMARIA

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Opinion EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

SHUTTERSTOCK

Workplace romance. Better keep it professional

Even up to 40 percent of employees find romance in the office and 23 percent met the love of their lives at work. But is transferring professional relations into your private life a good idea? >>>

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WBJ

Opinion Office romance can potentially be a minefield if there is a large disproportion in the job titles of the two people involved.

be developing right in front of other people’s lives and they may want to comment on it, not always in a favorable way. “Workplace romance can also hinder productivity,” explains Wicha. “An employer won’t mind a 15-minute lunch break in a nearby restaurant. But when the quarter turns into an hour-long romantic dinner, it could be a problem,” she adds.

AND THE VERY, VERY BAD

“Poles are one of the most hardworking nations in Europe. According to Eurostat, every week they spend on average 40.7 hours in the office. That’s a lot of time to develop relations, though employers would rather these were professional ones,” said Anna Wicha, Country Manager at Adecco Poland.

You could say that a typical Pole spends a third of his or her life, including weekends, at work, and that is if there is no urgent deadline. Professional work creates plenty of opportunities to show how smart, well-read and knowledgeable you are, and, let’s face it – showcase your excellent hair and elegant clothes.

THE GOOD

One of the advantages of transferring professional relations into your private life is the opportunity to build a relationship with people who have similar experiences and interests. That is particularly important in medical and legal professions, which don’t allow for a lot of mingling outside of work. Also, you get involved with someone you know well. Even though people may behave differently at work and in private situations, you could hardly say you’re going on a blind date there.

Office romance can potentially be a minefield if there is a large disproportion in the job titles of the two people involved. Other employees might think you are getting special treatment and resent you for it, or you might feel pressured not to rebuff your superior’s advances, which is the first step towards mobbing and harassment, an offence that carries even a three-year prison sentence.

Should workplace romance be banned outright? Some companies ask their “lovebirds” not to flaunt their feelings in the office, while others forbid it entirely, even going as far as to prepare procedures for when a newly hired person turns out to be in the same company as one of their exes.

Despite all the pitfalls, one out of every four Poles has found love at work. So if you have to do it, do it sensibly. Even though cupid’s arrow could find you at the office coffee maker, make sure it hits your heart and not your head.

…AND THE BAD

On the other hand, the cons of an office romance may well outweigh the pros. Not all relationships are successful, and you need to be aware of that. Would you like to spend eight hours every day with an ex-partner? Because of a failed romance, as much as 7 percent of Poles have had to change their workplace. The employer also loses in this scenario, and not through any fault of his own. Moreover, watercooler gossip is an inseparable element of office life. Your relationship will

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Adam Sanocki Managing Partner, Attention Marketing

WBJ

Opinion EDUCATION

Anita Zajączkowska

Key Account Director at TFLS Szkoła Języków Obcych

Professionals need more specialist language skills

P

oles are one of the best educated nations in terms of foreign language proficiency. The country holds 11th position in the world and 9th in Europe in terms of mastering English as a foreign language. This is according to the 7th edition of EF English Proficiency Index (EPI) study, conducted in 2017, and which measures adult English proficiency around the world.

The number, as well as the range of English courses for professional purposes, has been growing for years, too.

Professionals learning English have a number of specialist courses to choose from these days. It’s no longer just Business and Legal English, although these courses are still very popular. If an engineer needs highly specialized language to communicate with partners, clients and colleagues, they can study Technical English, while IT engineers may want to choose English for Information Technology. There are specialist courses for finance and banking, logistics, medical personnel and even media communication.

The number of specialist courses has been growing over the past decade, but most recently the growth has accelerated significantly. In 2010, we ran 69 individual and group ESP (English for Specific Purposes) courses.

Five years later, we had 74 courses. In 2017, the number had grown to 92 courses.

What is also interesting, women are more eager to improve their language skills, as evidenced by the fact that female course participants constitute 73 percent of all adult students in General English and 62 percent in exam preparation courses offered by TFLS. In the specialist courses we offer, women are also the majority, as 67 percent of ESP course participants are female.

Unsurprisingly, women have a higher level of English proficiency. In the EF English Proficiency Index, women received a global score of 53.81, outperforming men by 0.83 of a point. This gender gap is even wider for Poland, where the female EF English Proficiency Index equals 63.24, and the figure for men is more than two points lower (61.05).

Today, a good command of English is a basic requirement in every other job offer. After all, English is the common language of every international business. In addition, over half of the 10 million most visited websites on the internet are in English. In order to tap into these resources, English proficiency is key.

FEMALE PARTICIPATION IN ENGLISH COURSES AT TFLS

62% Exam Preparation

67% Specialist Courses

73% General English

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Opinion LEGAL

Poland’s new compliance regulations

Significant changes in the law regarding compliance are just around the corner. New regulations will influence not only entrepreneurs but also the whole Polish market, without division into individual trades and economic sectors

T

he scope of the Act, in both objective and subjective terms, arouses, primarily, great interest among Polish entrepreneurs but also significant concerns in the context of the practical impact on their situation. The changes that force the introduction of strong and effective anti-corruption mechanisms, together with regulations concerning the legal protection of whistleblowers will be of particular importance to business trading.

The Act on transparency in public life is in line with the global compliance trends: business responsibility for the actions of employees and spreading compliance awareness in organizations.

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The application of internal anti-corruption procedures in Poland has, until now, been widely used in enterprises related to foreign capital, mainly US, German and British companies. Anti-corruption procedures have also been employed by the largest Polish enterprises and capital groups.

The application of internal anti-corruption procedures improving transparency in public life in other countries has been a common practice for years now. The UK Bribery Act 2010, Foreign Corrupt Practices Act (FCPA), Foreign Account Tax compliance Act (FATCA), or the EU’s regulations including AML Directives are the best known foreign regulations regarding compliance in Poland.

SHUTTERSTOCK

WBJ

EXTENT OF THE APPLICATION OF THE ACT – POSSIBLE SANCTIONS In accordance with the Act on transparency in public life, whose entry into force is planned for the upcoming months, entrepreneurs and public finance sector entities will be obliged to implement effective, internal anti-corruption procedures in order to feasibly counteract corruption.

Corruption or quasi-corruption activities may involve both the private and public sector, therefore the regulations will pertain not only to entrepreneurs but also the public sector. Entrepreneurs who do not implement an effective compliance system and anti-corruption procedures in their organization will be, by virtue of the decision of the President of the Office for Competition and Consumer Protection (UOKiK) issued on the request of the head of the Central Anticorruption Bureau (CBA), subject to financial penalty of between PLN 10,000 and PLN 10 million. A supplementary sanction will concern the exclusion of the right to apply for public contracts for a period of five years. The abovementioned sanctions and penalties will be applied for the lack of implementing anti-corruption procedures or if the implemented procedures turned out to be apparent or ineffective and a person related to the entrepreneur would be charged by a prosecutor for corruption offenses. The Decision of the President of UOKiK may be appealed to the Court.

POSSIBLE PREVENTIVE SOLUTIONS To avoid financial penalties and the supplementary sanction of exclusion of the right to apply for public contracts, the Act imposes additional obligations on medium-sized and large enterprises, consisting of implementing or improving effective anti-corruption procedures by means of the development of an entrepreneur’s ethical code, which will be adopted by all employees and co-workers, periodic training for employees concerning criminal liability for corruption offenses, development of internal, clear and understandable procedures of both preventive and restrictive nature. The verification of the application of anti-corruption procedures in an organization will be initiated whenever the prosecutor raises allegations of corruption offenses to a person who acted for and on behalf of the entrepreneur or was executing the provisions of the contract concluded with the entrepreneur.

NEW WHISTLEBLOWER REGIME While the whistleblower regime operates in many legal regulations worldwide, in particular in American and British legislation, in Poland until now the whistleblower regime has not received statutory regulation. Introducing the whistleblower regime and ensuring proper legal protection, including, for example, protection in terms of the employment/cooperation relationship, is definitely a step in the right direction. Nevertheless, the question is whether it is enough. The person informing the law enforcement authorities about detected irregularities, to become a whistleblower, must provide reliable information and be an employee of the entrepreneur to whom the information relates or be related to the entrepreneur by any contract.

Information provided by whistleblowers must relate to corruption crimes, paid protection, bribery, fraud, money laundering, participation in a criminal group, levelling business records or disrupting a tender. Certainly, it is necessary to extend the scope of crimes and offenses, commission of which may be prosecuted by using the information obtained by the law enforcement authorities from the whistleblower.

Thus far, the group of offenses specified in the Act concerns selected types of offenses indicated in the Penal Code, but it should also include other illegal activities like actions to the detriment of employees or the natural environment.

NEW OBLIGATIONS ALSO FOR PUBLIC ADMINISTRATION BODIES Ways of avoiding conflicts of interests by persons performing public functions have been regulated in accordance with the Act on transparency in public life. A person performing a public function, while performing this function, will be obliged to avoid conflicts of interests connected with the performed function. The Act also introduces limitations concerning taking up and running a business by persons performing public functions. Introducing a three-year ban on employment in the company for a person performing public function, who while performing his or her public duties made decisions in relation to the company, also strengthens the anti-corruption regulations. For infringement of the prohibitions, it will be possible to impose a financial penalty on both the entrepreneur who employs a

In Poland until now the whistleblower regime has not received statutory regulation.

person performing a public function and a person performing public duties. The Act also introduces the obligation to create and maintain a register of benefits and a register of contracts, and what is more, the obligation to submit the statement of assets by a much wider group of persons from public administration than before.

NEW ACT, OLD DOUBTS… The introduction and application of effective anti-corruption procedures is one of a desirable good practice, which should be expected from entrepreneurs operating under free market conditions in a democratic state of law. Nevertheless, doubts regarding proposed statutory solutions concern not only statutory regulations, but also significant possibilities of potentially discretionary actions of the state bodies to assess the effectiveness of anti-corruption procedures applied in the organization under the compliance system.

How can organizations manage risk effectively and reduce the possibility of irregularities? It seems that only the effective implementation of a compliance system can help to eliminate the gaps in the functioning of the procedures in an organization and as a consequence significantly reduce risks on the company’s side.

However, complete elimination of perils in the light of proposed legal solutions does not seem possible.

Konrad Orlik Partner, Head of Litigation Practice Kochański, Zięba & Partners

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Opinion POLITICS willing to tolerate even the limiting of judicial independence and the crippling of the court system and other institutions. It wasn’t PiS’ internal policies or the tensions between the president and some former ministers that has made PiS try new tactics.

Unanswered questions

The ruling Law and Justice party (PiS) began the year with a new Prime Minister: Mateusz Morawiecki, formerly the Minister of Finance and Development and the deputy PM. On another front, the European Commission decided to trigger Article 7 of the European Treaty over judicial reforms in order to defend the rule of law in Poland

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T

he personnel changes in the government are deep: the most heavily criticized and controversial ministers, even within the ruling party itself, were asked to step down. Still, PiS has continued with its core policy line.

The united right enjoys strong support in the latest opinion polls. Society seems to be on board with the party’s immigration policy and the economic situation has been very favorable with over 4 percent GDP growth last year and declining unemployment.

The government’s social policy, centered around the 500+ program (a monthly stipend of PLN 500 for the second and each subsequent child in the family, and in case of low-income families, even for the first child), is one of PiS’ strongest winning arguments. Given all that, most Poles are

CONSOLIDATING POWER Despite the die-hard PiS electorate bemoaning the stepping down of the “folksy” Beata Szydło, Mateusz Morawiecki, seen as a worldly technocrat with a background in banking, has been accepted even by the more conservative electorate. The head of the party has hopes that he will rebuild at least some of the bridges between Poland and Brussels, alongside strengthening Poland’s position in the EU. But the changes in the government and the winding down of tensions between President Duda and the Defense Ministry, accompanied by his now full support of PiS leadership’s policies, could have farreaching consequences. There are views that the ruling party wants to appropriate part of the more centrist electorate by eschewing revolutionary rhetoric in favor of a more moderate tone along the lines of conservatism promoted by think tank Klub Jagielloński. The think tank promotes stronger Christian values in the EU and a larger role of national states, at the same time stressing the need for Poland to support EU reforms and respect its founders.

Minister of Entrepreneurship and Technology Jadwiga Emilewicz was in fact a cofounder of the think tank’s journal, Pressje.

The internal restructuring of the PiS cabinet could indeed bear fruit for the party, particularly given the weakening support for opposition parties – Civic Platform and Nowoczesna – as well as the dwindling of the remaining opposition outside of parliament. However, the international affairs, particularly those concerning the EU, will continue to be the government’s Achilles heel. Changing them would require a significant shift in the party’s program, and that seems unlikely when party head Jarosław Kaczyński has reaffirmed that PiS will continue with its policies.

ARTICLE 7 CONTROVERSY Thus far, the PiS government has dismissed off hand the opinions presented by the Venice Commission and the European

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WBJ

BY EWA BONIECKA

Commission which stated that Poland is violating judicial independence with its reforms. The former Foreign Affairs Minister Witold Waszczykowski did not mince his words when commenting on the EU’s stance towards Poland. However, even if more polite, Morawiecki’s government is not backing down from the reforms. Even during the reconstruction, Minister of Justice and Prosecutor General Zbigniew Ziobro continued to dismiss judges in common courts, a fact that has not escaped attention outside Poland.

Meanwhile, on December 20, 2017 the European Commission triggered Article 7 of the European Treaty. The article threatens sanctions against any country that violates EU fundamental values: “liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law.” The EC claims there the rule of law in Poland is under substantial threat. The decision to trigger Article 7 means the Commission has already used all other procedural options and now the ball is in the court of the Member States. The initiative will rest with Bulgaria, which has taken over the presidency of the European Union for the first six months of 2018. It could submit the EU motion for a vote as early as February 27, but it will likely first try to use dialogue, however futile earlier attempts may have been.

This time around the situation could in fact turn out differently, because Morawiecki is ready to talk with the Commission, much more so than his predecessor. The EC stated it was ready to withdraw from Article 7 if Poland was to adhere to EU recommendations within three months (until March 20), but that doesn’t seem likely as long as Kaczyński maintains the course of the “Good Change.” Analysts have been posing questions as to how independent Morawiecki will be as Prime Minister. There are no clear answers, but one thing seems certain: he will not be the deciding voice when it comes to PiS’ party program. And even though he may be far less zealous, he still stands by his party’s policies.

Still, one of his main mandates is to improve Warsaw-Brussels relations and rebuild dialogue with EU Member States. For his first official visit as PM, Morawiecki visited Hungary to talk to Vik-

tor Orbán in an attempt to secure Hungary’s support in the EC vote on sanctions for Poland. Whether his support will save Poland is still an open matter. The biggest players in the EU – Germany and France – have already stated they will support the decision to trigger Article 7 and won’t be appeased by the change in rhetoric unless it is based on substantial action aimed at resuming the rule of law in the country.

But Kaczyński doesn’t seem to be willing to budge on judicial reforms.

At the moment, PiS is preparing for an undisputed victory in local government elections this year.

but the question of the president’s position on the political scene and within PiS has remained open.

PiS’ plan to accommodate the centrist portion of the political stage may prove futile if the party should fail to win Warsaw in the local elections. Opposition parties could still regroup and perhaps even unite forces in the battel for mayoral seats, thus weakening PiS candidates.

Should the Article 7 issue result in sanctions, it could well influence the amount of European funds Poland will be entitled to in the future. The preliminary budget plan will be announced in May. The immigration crisis and Poland’s firm refusal to open its doors to refugees is doing nothing to ease tensions in the EU either.

ECONOMIC STABILITY? The economic situation in the country is very favorable right now, but if the EU’s economic performance deteriorates, it will also affect Poland’s indicators. Poland’s smaller portion of EU funds, already reduced due to Brexit, may increase domestic and international investors’ wariness about locating their money in Poland.

The ruling party has not presented any At the moment, PiS is preparing for an new economic initiatives for the second undisputed victory in local government half of its current term. Its strategy is based elections this year. Regional coordinators, on domestic consumption fueled by the selected from the party’s MPs and Sena500+ social transfer program for families. tors have been meeting on a regular basis The new PM has also ignored an open since March 2017. We are still awaiting letter from economists of various politiPiS’ decisions as to individual candidates cal persuasion to reopen the debate on for city mayors, which should come soon. future euro adoption. PiS is firmly against Winning over local governments is a top it, even though euro adoption was not priority as it is the one thing PiS has yet optional when Poland joined the EU. The to accomplish to secure an unchallenged previous government had claimed it would rule for the remainder of its term (however implement the common currency, but later long that may be). withdrew its plans. The current government is not even interested in maintaining BRIDGING THE GAPS the illusion.

The new government also has a few interThe year started off with major changes nal disputes to smooth over. The removal that have brought respite to both PiS’ of Antoni Macierewicz from his ministedomestic and international concerns. But rial post as Minister of National Defense long-term issues have thus far been left unhas painted a target on President Duda’s answered, namely Poland’s position in the back, as right-wing media such as Gazeta EU amidst budget and immigration talks.

Polska claim it was him who pressured If Article 7 sanctions are imposed, the deKaczyński into making the decision. And bate could proceed without Poland having indeed, the conflict between the president an input. In a country whose citizens are and the Ministry of National Defense has strong supporters of EU membership, this subsided after the government reshuffle, would not be a welcome outcome.

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WBJ

Opinion POLITICS

Republican conservatism – open for dialogue

INTERVIEW BY EWA BONIECKA

ing in the EU, we are right to protest against Macron’s policy. Of course, there are other times when it is unwise.

Why do you think the conservative way of thinking is so strongly rejected by people of liberal views?

Let me go back to the first years of Poland’s transformation. At that time Gazeta Wyborcza and its editor Adam Michnik had great influence and he condemned each form of conservatism as leading to nationalism, even Pawel Musiałek, head of the fascism. He was more supportive of post-communist Warsaw office of Jagiellonian parties’ policies than those of conservative parties. We Club, a conservative think tank should remember that Europe at that time was under the established in 1989 in Kraków influence of liberals. Poland wanted to join it and became that promotes republican conser- obsessed with its ideas, thinking that our state interests were more aligned with European goals, rather than being vatism, talked to WBJ about the based on the sovereignty and freedom of national parliagovernment’s latest policies and ment or government, the value of national tradition. how it has handled the recent disNow a “wind of change” is visible: more and more putes with the EU people in Poland and in other EU member states see that the EU is not the “end of history,” that there is more competition and less solidarity inside. That’s why many Polish people support the “Eurorealism,” represented What does “republican conservatism” mean by the Law and Justice party. They see that the EU today? doesn’t solve all our problems, sometimes it is Brussels’ Pawel Musiałek: We are a group of people who are inspired by dif- bureaucracy that creates problems in the first place. We ferent political doctrines – such as conservatism, republicanism and support assertiveness in our relations with the EU and catholic social teaching. The central value for us is common good. agree that we have to think on our own how to find the We are supporting the subsidiary role of the state, the rule of law, best model of development, but we don’t agree with the institution continuity and “Polish habits.” confrontational rhetoric that PiS sometimes uses, even Our mission is to encourage people into public activity. Hence, if PiS is treated unfairly both abroad and at home. we support patriotism defined as taking care for our state and poI think that the criticism with which PiS looks at the litical community. We strongly believe that the real “game changer” entire policy of the previous governments is also a kind is making Polish people more responsible for their country. Within of revenge for the attacks on right-wing parties and the last 30 years we have changed our economic system and our their leaders that PiS endured for a long time. But the political institutions, but we are still generally a nation of passive emotions that prevail on both sides have led to a kind people who don’t want to engage in public affairs. It is still a huge of Polish-Polish “war.” They have gone too far and are challenge we have to deal with. harmful to state interests.

I want to strongly underline that while we believe the values I mentioned, they are not dogmatic. We aim to approach challenges How can we end the Polish-Polish “war”? with moderation, common sense and pragmatism. That’s why we The Jagiellonian Club presents a symmetric attitude are open for discussion with people who don’t define themselves as towards political parties by means of equal rating of conservative and seek a best possible solution, no matter where it decisions of political parties, but it doesn’t mean that we comes from or whether it fits the conservative tradition. We don’t are always “in the middle.” We look at the interests and see a problem in supporting many reforms which are also supsolutions which could be shared by a coalition of differported by liberals or left-wing political movements. Together with ent parties and political movements. them we are often looking for common solutions in many public For example, we strongly support the idea of issues, despite the fact that on many important ideological issues deglomeration which is now supported by all political we strongly differ from one another. parties in the parliament. Deglomeration means creating additional economical incentives for small and medium I understand that you are not uncritical towards the way Law cities in Poland which have been experiencing structural and Justice (PiS) policy is conducted? development problems. As a result, many residents We share the many similar values, but it doesn’t mean that we always move out to bigger cities, primarily to Warsaw, to look agree with political decisions made by the Law and Justice Party. for job opportunities and to fulfill their life goals there.

Going from a common diagnosis to a common solution is not We’ve convinced decision-makers, including opposition trivial. We support some and disagree with other solutions. For inparties, that the first step towards sustainable developstance, we are critical of the way the PiS government has handled the ment is to create a new institution with agencies outside conflict with the EU regarding our legal reforms, but we agree that Warsaw. It’s evidence that if you put the effort in, a wide sometimes it is necessary to take a hard stance against the EU. For multi-party coalition is possible. That is our contribution example, in the matter of the rights of Polish posted workers workto the process of dismantling the Polish-Polish war.

WBJ:

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BY VICTOR EPSTEIN

CURRENT PRIME MINISTER:

MATEUSZ MORAWIECKI

After having graduated from the University of Wrocław, Central Connecticut State University, Wrocław University of Technology, Wrocław University of Economics, the University of Hamburg and the University of Basel, Morawiecki (49) worked his way up from an intern at Deutsche Bundesbank to CEO of Bank Zachodni. In 1998, he served as Deputy Director in the negotiations department dealing with Poland’s EU accession.

In 2015 he was made Deputy Prime Minister, Minister of Development, and additionally, in 2016, Minister of Finance while serving in the cabinet of the previous Prime Minister, Beata Szydło.

In with the new

The ruling PiS party kicked-off the second half of its term with a major government reshuffle. The Prime Minister was replaced with her former deputy, and three ministry heads also lost their posts. Who has left and who’s in to replace them?

1.

2.

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3.

1. CURRENT MINISTER OF NATIONAL DEFENSE: Mariusz Błaszczak A history alumnus from the University of Warsaw and the National School of Public Administration, Błaszczak (48) was appointed as PiS’ spokesperson in 2009, a function he fulfilled before becoming the head of Law and Justice’s parliamentary caucus in 2010. In 2015, he was appointed minister of the interior under the rule of Szydło. He was moved to the position as head of National Defense Ministry on January 9, 2018.

2. CURRENT MINISTER OF FOREIGN AFFAIRS: Jacek Czaputowicz Czaputowicz (61) graduated from the Warsaw School of Economics, received a PhD in Political Science from the Polish Academy of Sciences

and completed his post-graduate studies at Oxford University.

Czaputowicz is a widely published academic, with over 100 published research papers and scientific monographs on international relations, political sovereignty and European integration.

3. CURRENT MINISTER OF THE ENVIRONMENT: Henryk Kowalczyk Kowalczyk (age 61) graduated from the Department of athematics at the University of Warsaw, class of 1980. From 1990 to 2005 he acted as leader of the Winnica Municipality. From 2006 to 2007 he worked as secretary of state i n the Ministry of Agriculture and in 2015 was made Minister of the Council of Ministers before being reassigned to his current position. >>>

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Opinion POLITICS

FORMER MINISTER OF THE ENVIRONMENT: Jan Szyszko

FORMER PRIME MINISTER:

BEATA SZYDŁO Szydło (54) graduated from the Jagiellonian University in Kraków in 1987 with a degree in ethnography, and she later studied for her PhD in philosophy and history at the same university. She studied cultural management at the Warsaw School of Economics and local government management at Kraków University of Economics. Szydło founded the Libiąż Culture Centre and managed it between 1995 and 1997. In 1998, she became the mayor of Brzeszcz, the youngest mayor in Lesser Poland at 35 years old. After joining the Law and Justice party in 2005, she became vice president of the party five years later. After the party’s electoral victory she was appointed Prime Minister in November 2015, a position she held until December 7, 2017. Szydło’s flagship electoral promise was the 500+ social subsidy program, which was among the first laws that the party introduced. In December 2017, her government won in a vote of no confidence submitted by opposition parties. On the same day, Szydło tendered her resignation as Prime Minister.

She was replaced by Mateusz Morawiecki, formerly deputy PM. On December 11, Szydło was appointed deputy PM and head of the Council of Ministers’ Social Committee.

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Szyszko (73) studied at the Warsaw University of Life Sciences, receiving both a doctorate and post-doctorate degree in forestry by 1983. In 1997, Jan Szyszko became the minister of environmental protection, natural resources and forestry, as well as secretary of state under the ministry of Jerzy Buzek. He joined the Law and Justice party in 2001 and served as minister of the environment from 2005 to 2007. In 2012 he became vice-chairman of the Parliamentary Team on Culture and Tradition of Hunting and the chairman of the Parliamentary Team for Sustainable Development of Europe a year later. Upon his appointment, he greenlit the logging of the Białowieża National Forest, a move which was strongly protested by environmental organizations and the EU.

FORMER MINISTER OF FOREIGN AFFAIRS: Witold Waszczykowski Graduating in 1980 from the University of Łódź with a degree in philosophy and history, Waszczykowski (60) went on to study international relations at the University of Oregon, later receiving a PhD in history and humanities, where he continued to work between 1981 and 1987. In 1992, he was employed at the Ministry of Foreign Affairs, and in 1996 he became the deputy director in the Department of European Institutions and the Security Policy Department. In 2005 he became the Undersecretary of State in the Ministry of Foreign Affairs. In 2008, he was appointed deputy head of the National Security Bureau. He became an MP in 2011, and in 2015 he was re-elected, receiving the minister of foreign affairs post, which he held until January 9, 2018.

FORMER MINISTER OF NATIONAL DEFENSE: Antoni Macierewicz Macierewicz (69) graduated from the University of Warsaw in 1971 with a major in history. He served as minister of internal affairs from 1991 to 1992. In 2006 he was appointed deputy minister of national defense under Jarosław Kaczyński.

He joined the Law and Justice party in 2012, a year later becoming the vice president of the party.

One of his key policies was the investigation into the Smoleńsk plane crash of 2010 which claimed the lives of 96 people, including top politicians.

Macierewicz has demanded on numerous occasions the return of the plane wreckage from Russia, where the crash occurred. He has also claimed the tragic incident to be the product of a conspiracy.

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WBJ

BY MORTEN LINDHOLM

a political statement, and Disney has been making a sizable fortune selling merchandize to its animated media productions.

Why print still matters?

Since you are here and you are reading this column, you might be inclined to agree with me that a printed magazine still has value. It is because of the fast-moving consumer-fueled world we live in, that the experience of a well-rounded overview, trust and relevance are more in demand than they were before

L

ast year’s buzzword was FAKE news, which has brought an entirely new meaning to what reputable and traditional publishing means. The idea that an editorial team has selected, fact-checked and published information meant to enrichen their readers’/target group’s lives is as simple and as basic as it has become forgotten in today’s disruptive world. Being a publisher and a marketing communication strategist, I see the pendulum swinging back, people are once again learning to appreciate the slow-paced moments when you can delve into a magazine, read without constant interruptions of disturbing flashes and sounds, and without worrying about the fact-value of the information you are consuming. I also notice the respect for printed media when I talk to clients and partners. People still prefer to have their interview or company event publicized in a printed magazine rather than “just” another web story. Paper brings prestige and higher levels of trust.

So, what’s in it for publishers?

Find your niche, the times of “one size fits all” is long gone. But there are great business opportunities for publishers with a clear aim and the ability to deliver quality insights and meaningful information to an audience looking for exactly that kind of input.

The business model is developing; publishers cannot just live on subscriptions and an advertising model as they did in the past, publishers seek opportunities in events, product sales and premium content solutions. We can actually see the borders between brands and media disappear, with brands behaving as media companies and vice-versa. After all, the reason Jeff Bezos’ Amazon bought the Washington Post was more than just to make

Brands can build media empires Brands no longer need to depend on buying media space, they can build their own space. With the emergence of the right technologies, the investments necessary to build delivery platforms for quality content, be it text, visual or film, are no longer out of reach. The key issue here is of course building an audience and delivering a message/content that stays relevant and valuable to them, plus, just as media companies have done for hundreds of years, keep a cycle; stay specific on when and how often you publish.

The market being what it is, many media companies still struggle, creating an interesting investment opportunity for brands to acquire their own media platforms.

Rounding off This is an opportunity for your company.

Whether you are in a B2B or a B2C business, engaging your potential audiences through meaningful and outstanding content will add that extra something to your message and will help your audience relate to your company through the experiences you provide them.

This month I’ve read / listened to: HBR idea podcast

Several episodes, but I would recommend episode 596, a special issue featuring a talk with Microsoft CEO Satya Nadella, an extraordinary leader who takes lessons from the founders and has added his own background and history from India to rediscover the company’s soul. Food for thought for many of us business leaders when it comes to focusing on what makes a company great. I could easily recommend most of the episodes from the HBR Ideacast; I find them relevant, inspiring and useful in my daily job as a leader and marketer.

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WBJ

Opinion INNOVATION

Learning how to fail

Innovation requires not only money but also being ready to learn from mistakes and, above all, try again.

Trying to copy solutions that work well elsewhere is not always the best way to go. WBJ sat down with Filiberto Amati of Amati & Associates to talk about innovation and international expansion

WBJ:

Poland has not improved its innovation ranking position in years. Yet it is a frontrunner in many up-and-coming industries, like fintech for instance. What do you think the reason is for the continuously low innovation score?

Filiberto Amati: If we measure innovation in R&D spending, China is the biggest innovator in the world.

Yet they do not produce a lot of patents. Fintech does not require a lot of R&D spending on the other hand. In order to make a country more innovative, you need to invest not only in R&D. Polish companies are not investing enough. But they are not the only player. Foreign investors are a huge driving force for innovation: in pharma and the tech industry.

The government also plays a role. It should ask itself what the important industries and sectors are in the economy. If it’s agriculture, then invest in technology that helps agriculture. If automotive is important, why don’t we have a Polish automotive brand?

Do you think there is still room for a new brand in such an established and competitive business?

With the connected electronic car revolution, the whole market is up for grabs. Cars look the way they look be-

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You need to be able to try, fail and move on having learnt your lesson from the experience

cause they are an evolution of horse carriages. The dominant design of a car depends on the internal combustion engine, which needs to be as far away from the tank as possible, as well as the system to transmit power and to cool the system. If you remove the tank and the combustion engine – like in electric cars – you can completely reinvent the way the car looks. This is the time to do that.

Can Poland really find a niche in the automotive market for its own internationally recognizable brand?

What Poland is missing is a clear brand on the international scene. But in terms of capabilities, it has all it needs.

About 50 percent of German luxury car components are produced in Poland. The same with electrical appliances: Whirlpool, Miele, Siemens are also made in Poland. Poles know how to do things, they need to learn how to market them internationally: they need a brand message, a brand promise. The state obviously cannot do that, but it can enable entrepreneurs to do it. It could create a climate conducive to such innovation.

Which industries are the most inclined to innovation in Poland?

Fintech is a no-brainer. The big fintech marketplaces will

INTERVIEW BY BEATA SOCHA

be Russia, China, Southeast Asia, and the United States.

In Italy, when I go to a bank, they still don’t understand why I don’t want checks. People don’t need banks any more. They want all transactions to be done online. If Alibaba, where the Chinese buy most of their things, also offers a payment service and a credit card service, their banking service is right there.

There’s a lot of talk about fintech in Poland. It is happening already. Warsaw is being touted as the new hub for fintech: the government supports it, companies are here, international investors are here. And there is proximity to Russia. Yes, there are some political difficulties, but it is also a great opportunity: everybody wants to be in the Russian market, but nobody wants to be in Russia.

A two-hour flight from Moscow is actually a great thing for Polish companies.

One sector that surprises me is the food and beverage industry. You come here as a foreigner and you discover the huge range of Polish products that hardly anybody knows about outside of the country. Polish cheeses, Polish vodka, chocolate etc. The Netherlands is a smaller country, with less sunshine and a lot of land reclaimed from the sea, and it is a huge exporter of quality food brands. Why not Poland?

Poland needs better branding, more compelling stories, a more international approach. There is a sense of family in the food industry and Poland could use that to its advantage. There are plenty of brands with family traditions – these are very compelling stories that build brands.

Last year, we witnessed a shortage of milk and butter in Western Europe, as well as soaring egg prices. Poland benefited from that. But it sold butter in bulk, unbranded.

That is the issue right there.

There is a lot that can be done in the eco, organic segment. You don’t necessarily need to appeal to the mass market but accommodating a niche could be a good idea. Poland has at least 12 different seals of approval certifying a product’s Polish origins. Instead of looking at products in white and red, maybe they could go one step further and assess also how green it is. White and red can build patriotism, but you also need to build trust outside of the country.

So you think that the way to be more innovative is through exports and building stronger brands?

Innovation and exports always work together. If you have one, you’ll have the other. The moment you start producing certain things in a country, you develop know-how, technology, assembly lines. And Poles have been great at learning and assimilating new technologies.

In order to become truly innovative, you also need to innovate for innovation’s sake. People leaving universities go to work in fintech, an industry that did not exist when they began their studies. Innovation is always connected with uncertainty. You need to dare, you need to take risks. And one thing that Poles, and Europeans in general, need to learn better is how to fail. You need to be able to try, fail and move on having learnt your lesson from the experience. A company such as Netflix would never have

existed if that motto wasn’t part of their culture. They tried so many other things that didn’t work out before they finally arrived at a concept that is there to stay.

Another thing that requires time and the ability to learn from failure is partnerships. Nike and Apple have been working together on wearables and they’ve become very successful on that front. But before that, Nike had a four-year partnership with Philips that ended in a fiasco.

Nike learnt from that and went to Apple and together they did great things. Philips, on the other hand, shut down the initiative. Now, ten years later, they’re trying to get back in that game.

With the connected electronic car revolution, the whole market is up for grabs

Are Poles more risk averse than other Europeans in your opinion?

No, I wouldn’t say that. There are a lot of microentrepreneurs and small businesses in Poland. They take risks all the time. But the problem they have is that they expect to see results overnight. In France, a new store signs a twoyear lease in a mall and after that period the concept is reevaluated. In Poland, if you don’t start to make a profit within three months, you get replaced with something else. It’s difficult to learn in that environment.

Do you think that the Polish tech industry can flourish without a strong VC market, like the one the Silicon Valley has?

I think there is one market where the VC ecosystem works, and that’s Silicon Valley. Everybody who has tried to repeat the Silicon Valley model has failed: Barcelona, Lyon, Grenoble. Silicon Valley has been an obsession for entrepreneurs everywhere for 60 years. And not even San Diego, which is 500 km away, could replicate it.

You need to find your own model that works for you.

And money is not the problem here: there are a lot of interested investors. Now we can see acceleration and incubation moving outside of the technology sector.

Unilever, Procter & Gamble, L'Oréal and Metro Group are starting their own acceleration programs. Non-tech sectors or non-finance-driven sectors are looking to innovate outside-in rather than inside-out and that creates a great opportunity for entrepreneurs. So, if you have a great business idea for the food industry that you want to try, don’t reach out to a VC in New York who will have no idea what you’re talking about. Instead try to get accelerated by people who know the industry.

Filiberto Amati started his career at Procter & Gamble in Belgium in 1998. In

2005 he joined Auberon Growth Consultants and relocated to Amsterdam. He has worked for Gruppo Campari in Monaco, St. Maarten, Mexico and Brussels. In 2012 he created Amati & Associates, based in Warsaw, with offices in Barcelona and Amsterdam. Filiberto has a Master’s in Commercial Engineering from Federico II in Naples (1998), a MBA degree from IESE in Barcelona (2003) and in 2015 he received a DBA from the Institute of Economics at the Polish Academy of Sciences in Warsaw. He has published two books: “Co-creation: mystery solved!” in 2014 and “Understanding Open Innovation – A Primer” in October 2017.

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SOCIAL MEDIA

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IN FOCUS

WOMEN IN LEADERSHIP

BY BEATA SOCHA

BOARDROOM DANCING

Despite having a head-start upon graduation, the number of women board members is still astoundingly small. Call it glass ceiling or sticky floor, women in Poland are less likely to get promoted beyond managerial level. And even if they do get to the top, their pay hardly ever reflects their position and responsibility. With more and more women’s organizations undertaking grassroots initiatives to close the wage gap and improve parity levels, questions remain whether companies on their own will ever make the change happen and what the role of men in the process should be >>>

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IN FOCUS WOMEN IN LEADERSHIP

W

omen’s workplace equality issues in Polish firms are far from being black and white. On the one hand, they are gaining a stronger foothold in many industries that have thus far been considered predominantly male.

According to the OECD’s “Glass ceiling index,” Poland ranked fourth among OECD countries in terms of women in managerial positions (40.2 percent vs. the OECD average of 37.1 percent). The situation changes quite drastically, however, when we move up in the pecking order. While in Europe as a whole, 22.6 percent of board directors are female, Poland can only boast 15.2 percent of women directors, according to Deloitte’s 2017 study titled “Women in the boardroom. A Global Perspective.” Still, Poland is slightly ahead of the curve in term of female CEOs of listed companies, with 6.3 percent of women in charge of listed companies versus 5 percent for all European countries.

The staggeringly small number of women at the top of the ladder is hard to reconcile with the numbers at entry level positions and at managerial level. “We start out on the career path with the majority of employees being women. At managerial level it is still more or less 50-50, but then when we get to partner, numbers drop to about 20 percent,” said Tomasz Konik, partner at Deloitte Central Europe at a “Male Champions of Change” conference organized by the Success Written in Lipstick Foundation.

Over the past 15 years, female university graduates have constituted a clear majority. So the reason for the overwhelming majority of male directors cannot be lower qualifications. Luckily, the number of women on boards is growing incrementally.

Foreign capital companies send a clear positive signal. However,

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state-controlled companies are on the other side of the spectrum – the number of women on boards there is small and refuses to budge. That is abundantly clear when we visit business and economic events where state-controlled companies set the tone for the event. There are hardly any women to be found among debate panelists.

A GAPING CHASM

The disproportion between men and women is even more obvious when we compare pay checks. The wage gap in Poland is an average PLN 700 monthly pay less for women, the Ministry of Labor stated. Still, Poland has a far smaller disparity (approx. 7 percent) than the EU average, where it stands at 16.7 percent, according to Eurostat. But even if women in Poland are better off at the start of their careers than their European colleagues, the higher they climb, the larger the gap gets. In managerial positions, women earn over a quarter (27.7 percent) less than their male counterparts, which is 4.3 pp above EU average.

“The largest pay gap is in managerial and director positions,” confirmed Kamila Kaliszyk, director at Mastercard. “A woman with 6-8 years of experience makes only 60 percent of the median pay that men with the same experience make,” she said.

WHO SHOULD TAKE CHARGE?

You’d be hard pressed to find anyone who would disagree that gender equality in the workplace is an issue that needs to be addressed. “As much as 60 percent of people with higher education and over half of the available workforce are women. No business can afford to ignore that. That’s why we need to stop talking about parity and start taking concrete steps to allow women to increase their involvement in business,” Deloitte’s Konik stated.

The way it should be addressed, however, is open for debate. One view is that it is up to the employer

ENTRY LEVEL POSITIONS

DIVERSITY

Where are the female leaders?

S T A T I S T I C A L L Y , women in Poland are better educated than men. They can also boast highly developed soft skills. But there is still much work to be done on the equality of women and men in the labor market as there is a significant difference between the amount of men and women leaders. What’s more, employers can benefit from a diverse workforce, as it has been proven time and time again that a diverse workforce attracts and retains the best talent.

Few women hold a board seat in Poland and a significant number of respondents who participated in our Gender Diversity report stated that the highest position held in their company was occupied by a man. This is a trend that also filters down to management positions, with 59 percent of respondents stating that their manager was male. Despite this, there are mostly female-oriented teams in the workplace, which leads to ask the the question: where are the female leaders?

According to our Poland Gender Diversity study, the workplace does not help to promote or develop women and must do more to ensure that women are supported and encouraged throughout their careers.

The lack of support and encouragement in the workplace can negatively affect women’s selfconfidence and makes them less likely to apply for high positions that naturally involve risk-taking.

Adding to this, the lack of representation of women in leadership positions in the workplace can also affect ambition levels and confidence.

It is not surprising then that the results of our survey showed that women are less frequently noticed than their peers, are less willing to take on a challenge and many more tend to diminish their own competencies and merit. What’s more, the vast majority of women face professional difficulties in balancing their work and family responsibilities. Women are lag-

ging behind in the workplace as the labor market remains unchanged in terms of equality of opportunity and promotion of men and women.

Promisingly, however, employers are increasingly eager to look for solutions that support professional development. They know that in the candidate-led marketing we are seeing now in Poland, providing the optimum working and development environment requires special attention. Companies also know that they are responsible for creating a diverse workforce as diversity policies embedded in organizational culture translates into greater business efficiency and fosters organizational growth.

Nevertheless, companies need to do more to tackle the gender imbalance in the workplace and to promote women to senior positions.

It is important that companies and workers start to ask the question: where are the female leaders? Only once this issue is raised, can companies start to work on narrowing the gender divide that is too often seen in leadership positions. However, it is positive that we see companies contribute to building a more gender diverse workforce through their gender diversity policies and initiatives.

Charles Carnall is the Managing Director at Hays Poland

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IN FOCUS WOMEN IN LEADERSHIP

Women in management: is it time we make gender balance a priority?

PA R I T Y

WHEN CANADIAN PM Justin Trudeau was asked why it was important for him to have a gender-equal cabinet, he didn’t hesitate: “Because it’s 2015,” he said. Three years later in Poland, that sentiment still doesn’t seem to have caught on.

As an infrastructure lawyer and partner at a sizeable Polish law firm, I frequently spend time with leaders of major industry players – often as the only female in the board room.

Statistics confirm this is no coincidence. According to a recent report

by TOR Consultants Group, there are roughly six men for every woman on the boards of Poland’s transport, railway and infrastructure companies. Women act as chairperson in only 18 cases.

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Some justify this by describing such sectors as traditionally “reserved for men” (though the work conducted is hardly physical). However, a similar trend exists in other markets, including (sadly) the legal industry. A 2017 analysis revealed that barely 22 percent of the partnerships of Polish law firms are female (the third worst ranking in the CEE region, ahead of only the Czech Republic and Austria).

Astonishingly, this imbalance seems to be generally accepted, including by women themselves.

The reasons for this are manifold and complex. Studies suggest years of the status quo may have affected women’s thinking: they are often less self-confident than male peers; more likely to feel unqualified to apply for a position. They seldom ask for raises or promotions.

Perhaps a more important question than “Why?” is “What can be done about it?” A number of obvious tools can be employed such as codes of good practice (which are not always effective), or legislative intervention introducing diversity quotas. Most importantly, however, a shift in thinking is needed, and not only among the male population; women need to conquer their own mindsets as much as the “traditional” views of society.

In the words of Ewelina Betiuk, Executive Director at TOR Consultants Group , “[…] the issue of career advancement largely depends on the women themselves. They must

show fortitude to overcome excessive pursuit of perfection and a tendency to critically evaluate their own actions and skills, which often prevents them from successfully negotiating. When there are no legislative or systemic solutions, it is also extremely important to understand the power of solidarity among women.”

Striving for gender diversification on management boards ought to be a major goal for businesses too, and not only because of the expectations of corporate social responsibility. As studies conducted in various sectors have shown, gender-balanced management boards simply perform better.

It is an issue that cannot be ignored any longer. After all, 2015 is already a long time ago.

Anna Flaga-Martynek is a legal counsel and the Co-head of the Infrastructure & PPP practice at WKB Wierciński, Kwieciński, Baehr

MANAGEMENT

to enforce policies encouraging women to take on managerial and directorial positions, because, ultimately, it is in their best interest. Mastercard, for instance, has a policy where any vacancy that is to be filled requires at least one female candidate. Of course, the best person for the job is selected based on merit, but a situation where all candidates are men is simply unacceptable. It is somewhat surprising that such instances even occur and that the company needs to look for the “token woman” to be able to carry out the recruitment process.

But as Kaliszyk explains it, “Oftentimes, women don’t look for career opportunities, you need to knock on their door and tell them: ‘Hey, there’s a job opening that you’d be perfect for.’”

There is an ongoing debate about how much the state should get involved in fostering gender equality in the workplace. Some countries have gone as far as implementing a policy of penalties for companies that have too few women on the board. In 2003, Norway introduced quotas for stock exchange listed companies, requiring at least 40 percent of their board members to be women, or having to face financial penalties. That didn’t do much good. “Only after they gave their companies an ultimatum in 2006: either hire more women or be delisted, did the policy have an actual effect,” said Ewa RumińskaZimny, head of International Forum of Women in Science and Business at the Warsaw School of Economics and a university professor. Now, in Norway over 42 percent of board members in listed companies are women. France, Italy and Belgium have followed suit with similar regulations. As have Spain and the Netherlands, they did stop, however, short of implementing penalties.

Unfortunately for Poland, the prevailing policy is still not to admit that a problem with inequality exists. Only about a quarter of Polish firms have implemented diversity policy for top positions. There are changes, but many of them are too slow.

ME? WHY ME?

Regardless of what measures are being implemented, there need to be enough women interested in taking the opportunities to make an actual change. The problem is not only with men promoting men, but more often than not it is women who shy away from career-making opportunities. “Whenever there is possibility of a promotion, I have never seen a guy wonder whether or not he should apply. ‘Sure, I’m in!’ – that’s what men think and how they act when faced with an opportunity. When a woman is faced with a similar choice, she stops to wonder: ‘Am I good enough? Do I have enough experience to do it?’”

Kaliszyk said.

If we fight the fight to be noticed on our own, closing the wage gap would take us decades

The result is that 59 percent of office employees have a man as their immediate superior, according to a Hays report. “Girls are raised to be prepared for a supporting role, not having an actual impact on reality.

Many people, including women, are still bound by that way of thinking,” commented Lucyna Pleśniar, CEO of HR firm PEOPLE, adding that women tend to expect more of themselves than of others, often feel more responsible and even diminish their successes and their role. “They are simply too modest.”

The key to changing that attitude is to teach them otherwise and mentoring programs are the way to do it. Besides, sharing knowledge is one of the things that women seem to do better than men. The multitude of women’s organizations, such as WIREP (Women In Real Estate in

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IN FOCUS WOMEN IN LEADERSHIP

There is no worklife balance at CEO level. You will have to sacrifice something

Poland) and SheXO is proof of that.

“Until now, companies organized mentoring on their own. Now, we are joining forces and we hope to see the number of women leaders in Poland grow. We also hope that managers who take part in our project will inspire other women to do the same,” commented Iwona Georgijew, partner at Deloitte, head and founder of the SheXO club, and a co-creator of the LeadersIN crossmentoring program.

GETTING MEN INVOLVED

But even with all the girl power, the world of business is what it is, and no amount of pep talk is going to turn back the river. After all, it takes two to tango. “Until recently, only women were talking about barriers, solutions and ideas and women were the ones listening. It has been proven, however, that if we fight the fight to be noticed on our own, closing the wage gap would take us decades. That’s why the role of men is so important,” said Olga Kozierowska, co-founder of the Success Written in Lipstick Foundation, which recently created the “Male Champions of Change” club.

Maybe that’s why it is with men that hopes for change rest. But the risk with male mentorship is that the mentee is often trained to mimic the mentor. “The one thing that I find disconcerting about mentoring programs is that usually it’s a man teaching a woman how to act like a man,” said Piotr Dziwok, CEO of Shell Polska.

It is almost a cliché that a woman who wants to make it in business needs to behave like a man. Does it really have to be this way? Grażyna

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Piotrowska-Oliwa, CEO of Virgin Mobile in Poland disagrees: “You do not have to be a bad woman to gain respect and recognition in business. … Be understanding, but first of all think about the company. You do not have to be cruel, just a realist,” she shared during a discussion regarding diversity and business management organized under CaixaBank’s “Diversity Talks” program.

Unsurprisingly, the chief reason given for why fewer women make it to the top is family. Juggling career and family is a trade-off. You can’t do both equally well, one or the other will always take precedence.

For many women, it is the career that fades into the background at some point. Beata Pawłowska, CEO of Oriflame Poland, agrees: “There is no work-life balance at CEO level.

You will have to sacrifice something,” she said. But at the same time, she urged women not to feel guilty for focusing on their careers: “Women do not have to be perfect in every role. If you do what you like, if you fulfill your professional dream and passion, you are not sacrificing anything, you are realizing your potential and your dreams – that which makes you happy,” she concluded.

BOYS’ CLUBS NO MORE

Two professional industries that have historically been dominated by men, but which are now rapidly changing, are finance and real estate. Globally, only 16 percent of managerial positions are occupied by women in the finance industry.

In Poland, the parity is significantly better, with nearly a quarter (24 percent) of female managers, according to a study conducted by consulting firm Oliver Wyman. But many believe that there is still a lot of reluctance to let women into the boardroom where the big bucks are made. “Hiring women in top-level positions is considered risky, also in the financial sector, where men dominate. Any mistakes a female CEO or manager makes are emphasized more than in case of men,” Pleśniar said.

But there are banks that are

BOARD MEMBERS

CAREER

Going out on her own WBJ sat down with Agnieszka Chołuj, the CEO at fit-out company Spaceplan, to talk about her career in real estate and the current trends and challenges in her sector

WBJ: How did you start your career in the property market?

Agnieszka Chołuj: Right after my economics studies I was offered a job at a new fit-out company which I helped create and which is, to this day, one of the leaders in the sector. Initially, I worked at the reception desk, which is a great place to start – the reception is the heart of each office and working there allows you to get to know the inner workings of the company.

Then, I was promoted to the position of office manager, then sales person and finally a board member, which also involved buying a stake in the business.

When the CEO left the company for a year or so, me and one other senior employee de facto managed it. But then the CEO returned and I had to step back.

Having experienced the thrill of managing and decision-making I found the situation difficult and decided to set up a similar business of my own.

What did the building of a new company from scratch look like?

I co-founded Spaceplan with my business partner. We were lucky in the sense that we already had the necessary know-how gained at a company with a very similar profile. We did not need to invest much and knew many key clients – as a result, we secured our first major contracts very quickly. Of course, the scale of the business grew over the years, but Spaceplan has remained a boutique company.

I understand that this has not prevented you from working with large clients…

Absolutely – a medium-sized firm can still do great things, but it cannot do many great things at the same time. The good thing about being a medium-sized firm rather than a corporation is that contacts, both within the company and with the outside world, are more personal – I am not one of those anonymous CEOs sitting behind a glass wall. I am involved in particular projects and often participate in meetings with our clients.

Do you think there is still a shortage of women in managerial positions in real estate?

As far as I know, I am the only woman managing a fit-out company in Poland. Of course, there are many women in lower positions in the sector. In a similar

vein, in the broadly understood real estate market, there are still very few female CEOs of development and investment companies, and many women a bit down the ladder. So the glass ceiling is definitely still there.

Last year Spaceplan celebrated its 10th anniversary – what are some of the company’s biggest achievements so far?

For one thing, we have completed a number of prestigious projects in recent years, including the fitting out of space for Akademia L’Oréal in the Defabryka building and for HBO in the Ethos building, both in Warsaw.

For another thing, we have managed to build very good relationships with many clients, who keep coming back to us.

This is something that we are particularly proud of.

What are some of the major trends and challenges in your industry at the moment?

Certainly, the market is becoming more and more competitive.

On the one hand, many very small and unprofessional fit-out companies have emerged, and for them the only competitive advantage is a lower price. On the other hand, fit-out services are now increasingly offered by developers leasing turn-key space to their tenants and real estate agencies brokering lease transactions.

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IN FOCUS WOMEN IN LEADERSHIP

A PHOTO WORTH A THOUSAND WORDS

PHOTOGRAPH BY KRZYSZTOF PAWELA/FORUM

Women in Poland have come a long way over the past 30 years. During the Round Table talks in 1989, which brought about the fall of the communist rule in Poland, there were a number of women involved in committee works but only two were actually invited to sit at the Round Table, one on each of the opposing sides: the communist government and the Solidarity movement.

GRAŻYNA STANISZEWSKA

She was the only woman to take part in the Round Table talks on the Solidarity side. She was a member of Solidarity’s regional council since 1980. She was interned during the martial law in 1981-

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1982 and again arrested in 1983 for her involvement in underground Solidarity activity. She currently sits on the European Parliament’s Committee on Regional Development.

CEOS

looking to rectify the situation. At US-based State Street Bank office in Poland women make up 53 percent of employees. And why wouldn’t they want to work there if the employer is open to flexible working hours, home office, parttime employment – all the things that make returning to work after having a baby easier. Meanwhile, Alior Bank, founded by Poles in 2008, and listed on the WSE since 2012, has four women out of seven board members.

Mastercard has decided to go further with its initiative to level the playing field for men and women and has introduced eight-week paid paternity leave. “In 2016, Mastercard’s CEO Ajay Banga stated that the wage gap will be eliminated.

That from now on, men and women in the same positions will earn exactly the same money,” Kaliszyk added.

Things could also be turning for the better in another industry that seems to see the prevalence of men over women – that is real estate. It’s hard not to notice that the vast majority of participants at large-scale industry gatherings, such as Expo Real in Munich, are sharply-dressed men.

However, the situation is not as bad as it seems once we take a look inside. An analysis of 36 top real estate companies in Poland has revealed that 22 percent of board seats were occupied by women, and the proportion of female to male CEOs is similar. “It is an interesting phenomenon, however, that the CFO position is frequently occupied by women, while deputy CEOs are almost exclusively male,” remarked Urszula Walenciuk, senior consultant at Hill International, who conducted the analysis. While the numbers seem to be pointing to male dominance, the real estate industry is far more inclusive than e.g. the transport industry, where one would be hard pressed to find more than a couple of women on the boards of leading companies.

NORTHERN BREEZE

Real estate may be in fact one of the

In mentoring programs it’s usually a man teaching a woman how to act like a man.

examples where a foreign influence, particularly that of more progressive, Scandinavian companies, may bring a fresh wind of change sooner than elsewhere. “I have been a Supreme Supervisory Board Member of a Danish stock listed owner of property in Poland – the only Polish women to hold such a position.

What is more, my counterpart, responsible for leading the negotiation team in our divestment process is also a woman,” said Joanna Iwanowska Nielsen of CeMat. Indeed, the prospects for women in real estate, one of the fastestgrowing industries in Poland, seem promising. The number of women in the real estate business is increasing, particularly in managerial positions, stated Krystyna Swojak, the creator of the Top Woman in Real Estate competition and Marketing Director at Real Connect.

“They’ve managed to penetrate the historically male-dominated industry because they offer competencies that correspond to what the market needs: they’re flexible, ambitious, decisive, and also more willing to share knowledge and help each other, which gives them a clear advantage,” she said.

Despite the clear disparities in board and CEO positions in Polish companies, chances are that the gap will continue to close. It seems clear that Polish professional women need to be bolder and more confident, particularly since they are better educated, hard-working and highly productive. Women’s organizations are an excellent way of disseminating some of the best success stories so that they can be repeated, also in other, even more “traditionalist” industries.

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Strength and humility

Being a woman in real estate is not necessarily a disadvantage. What matters more than stereotypes is the resolve and determination to achieve your goals. Karolina Kaim, CEO of Tacit Development, has been involved in premium real estate her whole life. Having created several major real estate enterprises from the ground up, she has more than enough experience in running a company, and she is eager to share it

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INTERVIEW BY BEATA SOCHA

WBJ: You have been a real estate professional for over 20 years. What

were the early stages of your career like?

Karolina Kaim: I have been involved in real estate since childhood. Both my parents were architects. My mother designed buildings, while my father was an interior designer. He designed the interiors of hotel Victoria and Intraco II, among many others. I was always surrounded by designs and blueprints, and even I helped a little, by drawing smoke coming out of chimneys.

It was a natural choice for me to study architecture. Towards the end of my university studies, my parents’ friends wanted to see Warsaw and I was their guide. To return the favor, when I went to study at Oxford for six months, they invited me to Jones Lang Wootton (now JLL). They asked me to be the eyes and ears for the company in Poland.

It was the early nineties and real estate investors were still waiting to see how the budding real estate market would develop in Poland. My job involved showing clients around Warsaw, which I was able to do while studying architecture. At that time there were no real estate experts in Poland.

I remember doing one of my first appraisals. There was nothing I could compare the yields to: there were no transactions to speak of. Companies establishing their first offices in Poland didn’t have many options at their disposal, either.

In short, the only available space was in Warsaw Corporate Center at $50-55 per sqm per month.

In 1994 I graduated and started to develop the Polish office of Jones Lang Wootton. That was when the first office projects were being launched.

You have had experience with other real estate segments, as well.

After having worked for Jones Lang Wootton, I created the Platan Group, which also later spawned a number of other companies. I decided that instead of advising on real estate I’d rather create it.

Platan invested in a variety of assets, from

warehouses, through to hotels and restaurants. Sometimes it is good to focus on one segment and specialize in it, but it is also beneficial to have a fresh take on things.

It helps you to think in an original and creative way. It also teaches you humility.

And now you are in charge of Tacit, whose flagship product is Cosmopolitan, a premium apartment tower. Is it different from your previous projects?

The premium segment has always been close to me. Most of the projects I have been involved in over the course of my career were in fact premium projects. For instance, Platan created the Aries hotel in Zakopane, and the iconic Dom Dochodowy o Trzech Frontach boutique office project in Plac Trzech Krzyży in Warsaw, both of which are premium products. Cosmopolitan is a unique project and nothing like it will be created for a long time. It was a big challenge, both architecturally and financially. There are virtually no premium apartments available in turn-key condition. We furnish all our apartments, so the client can buy an apartment and move in the very next day. It requires tremendous capital expenditure upfront.

Who are your clients?

Mostly individuals who manage significant capital. Buying an apartment in Cosmo is neither the first nor the last investment they’ll make. It’s not like in the popular market segment, where the investment requires a tremendous effort from the entire family, a mortgage loan etc. In the premium segment, 90 percent of purchases are made with the clients’ own capital.

How quickly is the premium segment developing?

At a rate of some 7-8 percent annually, so more quickly than the popular segment. It is also more stable. In Warsaw the cut-off for the premium segment is somewhere between PLN 20,000 and PLN 24,000 per sqm. But for example in Cosmopolitan the average price per sqm in 2017 reached PLN 31,000. The premium market should

“ Barriers exist predominantly in our minds.

Either you want to do something and you look for ways to achieve it, or you don’t and you look for excuses not exceed 0.5 percent of the entire market.

The growth does not mean, however, that we will see other premium residential towers popping up left and right. The strength of the project lies in its location, aside from the design, which ensures that the value of the property will continue to increase.

There are premium products being built, but these are usually smaller investments, offering several to several dozen apartments. Cosmopolitan features 236 apartments, all fully furnished and equipped.

Have any of your clients who purchased apartments in Cosmopolitan already exited their investment?

Last year we had only two transactions on the secondary market. It means that our clients feel safe with the investment they’ve made and expect that the value of their apartments will increase further.

What other projects is Tacit involved in?

We’re developing a 190-room hotel in Wrocław that will operate under the MGallery by Sofitel brand. We are also doing an expansion of Rialto in Warsaw, set to be completed in the second half of 2019. Both hotel projects are premium products. We have recently completed the Akademeia High School in Wilanów – it’s one of the most upscale school buildings there, with very interesting architecture, and it has already received prizes such as Property Design Award 2018 and the Green Building Award.

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IN FOCUS WOMEN IN LEADERSHIP

You have a degree in architecture. Have you ever thought of working as an architect?

Yes, I was convinced architecture would be my future when I was at university. I could hardly imagine doing anything else.

I wanted to follow in my parents’ footsteps. The path I took, however, was very interesting and new. But in truth, I work with architecture all the time. Being able to read blueprints allows me to understand buildings better, it is of great value when you create new projects.

Besides, business is very similar to architecture. Being able to design things on paper is closely reflected in mapping things out in your head. You need to have a vision, know where to start, set deadlines, focus on the needs of your client. Learning how to do business requires a lot of humility as well, you need to realize that what you plan is not always final, you need to be able to pivot and adjust to new conditions, when necessary.

Have you encountered any barriers as a woman in a mostly male business?

Barriers exist predominantly in our minds.

Either you want to do something and you look for ways to achieve it, or you don’t and you look for excuses. In my first year of university, women were a minority; by the time the first year ended, I was the only one in my group.

But it doesn’t really matter if you are in a minority group. When two women sit at a table to talk business, there is no guarantee they will find common ground. But even when you are the only woman at a table, you can turn it to your advantage.

Having worked in a multicultural environment, which cultures do you think are the most progressive?

I always found it easier to work with Americans. They don’t care whether you are a woman or a man. They want to work with professionals and if you can prove yourself to be one, they will respect you regardless of your gender. Some cultures do function differently, of course.

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You are a member of Women in Real Estate Poland (WIREP). Do you think organizations such as WIREP can help other women in their careers?

The association was created as a platform for communication and support between professionals. I decided to join because I wanted to share my experience and expertise with others. I am also a member of the Executive Committee of the Urban Land Institute, which is another great platform for exchanging knowledge and experience.

Sometimes it can be easier to ask another woman for advice. There is, for instance, the Black Swan fund, a group of women who support young start-ups. But to me the fact that an association is only for women or mixed is a secondary matter. For me, what’s important is whether the organization has know-how I could benefit from and how I can contribute to it.

I’ve heard people saying that “If Lehman Brothers were Lehman Sisters, the 2008 crash would never have happened.” Do you think that women are less aggressive and more risk-averse in business?

Our culture has given different roles to women and men. This is described nicely in the book “Sapiens. A Brief History of Humankind” by Yuval Noah Harari and even more so in “Why We Love: The Nature and Chemistry of Romantic Love” by Helen Fisher. The latter explains how our ways of thinking were shaped by the primary roles of men and women. Being in charge of childcare and gathering food and supplies has made women able to focus on several things at a time. Women’s minds are still more capable of handling multiple tasks at once.

This is of course a big simplification: I’ve met men who hedge against all risks as well as women who take on too much risk. I believe men and women are somewhat different in business, neither better nor worse. We are pre-equipped with slightly different ways of thinking. The key to good management is to be aware of that and use people’s potential to the fullest, and to develop team competencies that utilize different ways of thinking.

The main role of a real leader is – in my

“ Sometimes it is good to focus on one segment and specialize in it. But it is also beneficial to have a fresh take on things. It helps you to think in an original and creative way. It also teaches you humility opinion – to create a good environment in which the team will develop their skills and use the maximum of their potential. I give directions to my team, remove obstacles and encourage them to do new things, be better, aim higher, dream bigger.

I have always tried not to be one of the women who complain how hard it is.

Instead I’ve tried to prove it was possible to achieve whatever goals you’ve set for yourself and not let stereotypes dictate your future. There are a lot of very ambitious women who choose to pursue a career, and who are willing to take on additional responsibilities at work. It’s not what all women want though, and I do not think any less of women who choose to focus on other aspects of their lives. But as Poland moves closer to Western Europe, we will definitely have more and more opportunities at our disposal. There are plenty open doors for us, but I think we can open even more of them if only we want to.

In Tacit, the majority of employees happen to be women at the moment. I employ them because they are professionals, excellent at what they do and best fitted for the roles and goals we have.

But should the situation change and new ventures required predominantly a male team, I would not have a problem with building one and managing it. Great teams are not about women or men, just great people in a good business environment.

W B J FEBRUARY/MARCH 2018

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TATA: 1/ Golf Mango, 139,90 zł;

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MARKETING

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19.

14.

3.

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REAL ESTATE INVESTMENT

Another record year coming

BY ADAM ZDRODOWSKI

The highest transaction volume in years was recorded in the commercial property investment market in Poland in 2017.

Experts are saying that this year’s result is likely to be even better

>>>

W B J FEBRUARY/MARCH 2018

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INVESTMENT MARKET

In

spite of a slower first half in which Poland temporarily lost its leading position in Central and Eastern Europe to the Czech Republic, 2017 ultimately proved to be very good for the commercial real estate investment market in the country. The transaction volume achieved in the entire year was one of the highest in history and restored Poland’s role of the regional champion.

Judging by the number of deals now in the pipeline, the prospects for this year are very promising.

REGIONAL LEADER According to JLL data, the combined value of investment transactions closed in the commercial property market in Poland last year stood at €5.03 billion, a figure that is only slightly lower than the record volume of €5.05 billion which was seen in 2006. The country was the regional leader – it accounted for as much as 39 percent of the total 2017 transaction volume recorded in the entire CEE/SEE region, which reached €12.56 billion. The runner-up – the Czech Republic – gained a 27-percent share of the market (see graph).

The retail sector put up the strongest performance with a combined transaction volume estimated at €2.07 billion. The office, warehouse and hotel sectors accounted for transactions valued at €1.58 billion, €940 million and €342 million respectively. Interestingly, in the office sector the volume of transactions closed in regional cities – which reached a record level of €950 million – was higher than the volume of transactions closed in Warsaw, noted Tomasz Trzósło, the managing director of JLL Poland.

As for retail property, investor attention was focused on dominant malls in prime locations, but those are now in short supply. In the largest cities, only one such transaction – Union Investment’s €380-million acquisition of Magnolia Park in Wrocław – took place in 2017. As a result, buyers turned to older centers with extension and re-commercialization potential.

The logistics volume was dominated by one huge portfolio deal – the purchase by China’s CIC of Blackstone’s Logicor platform that included €750 million worth of assets in Poland.

PORTFOLIO DEALS The year 2017 was another year of large portfolio transactions in the retail, office and warehouse sectors, which accounted for almost half of the total investment volume, pointed out Marek Paczuski, deputy head of investment department at Savills. He added that last year also witnessed the further diversification of foreign capital flowing into Poland. This also pertained to Asian capital, which came to the country both in the form of direct investments and through platforms that manage investment capital.

Trzósło said that the preferences of investors vary depending on their profile. Some investors continue to be interested only in core assets, which include well-located and fully leased out office buildings as well as shopping malls that achieve excellent footfall and turnover results. Others, by contrast, are looking for properties with value-add potential. Last but not least, there are also opportunistic investors who expect high yields on investments which involve relatively high risk.

The high level of investment activity has translated into compressed yields. According to Savills data, the yields for prime office buildings in downtown Warsaw and leading shopping centers in Warsaw and regional cities now amount to 5-5.25 percent. The yields for the best office buildings in Kraków and Wrocław amount to 6-6.25 percent, while in the other leading regional office markets they stand at 6.5-7 percent. When it comes to warehouse properties, the figure usually ranges between 6.5 and 7.25 percent. >>>

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TA X E S

Małgorzata Dankowska is a tax advisor and partner responsible for the Warsaw tax office and real estate team at TPA Poland

Real estate transaction market responds to tax amendments

BEPS, ATAD, EBITDA, MINIMAL CIT, VAT REFUND, SPLIT PAYMENT — these are terms that have frequently appeared in the context of recent Polish taxation amendments, which affected not only real estate transactions but also their structuring. The market has finally worked out the tools and mechanisms to facilitate the security of tax aspects in real estate transactions.

Without doubt, there has been a visible shift from hitherto prevailing asset deals to other transaction types, such as share deals (acquisition of assets in a company) and enterprise deals (acquisition of an enterprise based on real estate assets). The market also expects the VAT split payment mechanism to be introduced into the Polish system, which will allow VAT risk value on some transactions to be reduced by eliminating a VAT sanction component.

A particular obstacle for investors in Poland is the transitional provisions, which may imply that more than one tax regime could be imposed simultaneously, particularly in the scope of “thin capitalization” restrictions, or the manner of loss utilization. Indeed, we can observe the increase in the scope complexity of DD tax reviews and tax contractual clauses. On the other hand, transaction structuring and the maintenance phase of real estate portfolios have been reduced by structures like debt-push-down, which, starting this year, do not allow investors to use a tax shield on interests. Luckily, this does not impede investors’ acquisition plans and the build-up of real estate supply by developers in Poland.

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INVESTMENT MARKET

SELECTED LARGE INVESTMENT TRANSACTIONS IN POLAND, H2 2017 PROPERTY NAME

CITY

APPROXIMATE PRICE (€ million)

Magnolia Park

Wrocław

380

Blackstone

Union Investment

REICO

VENDOR

PURCHASER

Galeria Słoneczna

Radom

164

White Star Real Estate/ Legend Eastern Europe (Poland) Limited Partnership

A4 Business Park, West Gate, Tryton Business House

Various

162

EPP

Griffin Premium RE

Atremis portfolio zz(TP3, UBCI, UBCII, Grójecka 5, Łódź 1, Arkońska BP)

Various

134

Savills Investment Management

Cromwell/Goldman Sachs

Proximo I

Warsaw

116.6

Hines

REICO

Warsaw Spire Building B

Warsaw

100

Ghelamco

CA Immo

Alfa Białystok

Białystok

92.3

JWK Invest

NEPI Rockcastle

DOT Office

Kraków

Confidential

Buma

Golden Star

Factory Ursus

Warsaw

79.9

IRUS fund

TH Real Estate/Neinver

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2017 CEE/SEE INVESTMENT VOLUME BREAKDOWN BY COUNTRY/REGION Poland 39% Czech Republic 27% Hungary 14% Romania 8% SEE countries 8% Slovakia 4%

SOURCE: JLL

POSITIVE PROSPECTS Will investors remain active in 2018? JLL expects the very good performance of the investment market that was seen in 2017 to continue this year. “In the office sector, the volumes should be similar to or even higher than those recorded in 2017,” Trzósło argued. He explained that a number of large transactions are in the offing and are expected to be closed in 2018. In the retail sector, too, the prospects look very positive, with a major deal having already been completed in the first quarter of this year.

In January, funds managed by Ares Management, Axa Investment Managers – Real Assets and Apollo Rida finalized the sale of a portfolio of 28 retail properties to Griffin Real Estate. The value of the transaction amounts to approximately €1 billion. “We can already be sure that this will be the best first quarter in the history of the Polish market,” Paczuski claimed. He agreed that the retail sector will again account for a sizable chunk of the total investment volume in 2018.

However, starting in Q2, investors in the office and warehouse sectors should also become more active. One can expect a gradual increase in investment activity in Warsaw, including in the Mokotów district that houses one of the largest office hubs in the Polish capital. Investors will continue to be increasingly interested in hotel properties and alternative assets such as rental apartment and student accommodation projects, Paczuski said. Overall, the 2018 commercial real estate investment volume could even be higher than that seen last year.

“Across the traditional sectors of retail, office and industrial, the 2018 pipeline – committed, in due diligence and in advanced marketing – is high, with expectations for the all-time volumes record of €5.05 billion, set in 2006, to be exceeded,” JLL said in a recent report. Of a similar opinion was Paczuski, who argued that the outlook for 2018 is, so far, very optimistic. According to him, one can assume that this is, in all likelihood, going to be another record year.

REAL ESTATE INVESTMENT

BUILT TO LAST

Real estate continues to attract international investors, despite concerns of a correction being underway.

What makes them interested in the Polish market? Which asset classes are they most eager to buy and what can they expect over the next two years? WBJ sat down with Rafał Zięba, Managing Partner, Head of Real Estate Practice in Kochański Zięba & Partners to talk about the prospects for the property market Interview by Beata Socha

WBJ:

Last year saw the highest volume of real property deals since 2006. What is the reason for this success?

Rafał Zięba: Poland as a real estate market is the leading location in the region. You can see that in all real estate segments: retail, warehousing, offices. The years of prosperity, political aspects notwithstanding, mean stable growth.

International funds, whether this be investment, hedge or private equity, have a plethora of money to spend, whilst there is a dearth of good acquisition targets in Western Europe. These funds are therefore turning to markets that are new to them. Poland is now regarded as a key market for investment.

Real estate offers the highest yields among asset classes. As an example, developer Skanska generates their highest revenue from real estate transactions right here in Poland, outside its home market of Sweden.

Thanks to investor interest, our firm has had the opportunity to work with investors from all over the world. In 2016, KZP participated in almost 40 percent of the total transaction value of €4.3 billion in commercial real estate and our strong involvement in real estate continues. The 2016 deal marking the entrance of Redefine, a new South African player on the Polish market, was the largest real estate transaction to date. We were involved in it on the purchaser’s side.

How did that happen? Were you recommended to the investor?

A major London-based law firm we cooperate with recommended us to Redefine. A few years ago we came to the conclusion that the next source of financing of the real estate market will be South African funds. We started to build and develop relations with that in mind. KZP’s partners are some of the largest global players.

As an independent firm, we are not tied to work with our foreign offices but we can choose to working with the best in class law firms, including those that specialize in real estate, with very wide geographical coverage.

This also applies to our Polish clients moving abroad. We are in a position to pair up with international and foreign law firms that specialize in certain sectors and that provide full geographical coverage.

Lawyers are expected to have an increasingly business-like approach in their work. We no longer just facilitate deals, we make

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REAL ESTATE INVESTMENT

them happen. Similar to UK law firms, we are very proactive. We look for opportunities to help our clients grow.

That’s why we’ve moved away from a division into practices (such as labor law, contract law, etc.) towards a sectoral division.

Our attorneys are experts in their industries. The division into practices is now secondary: for instance, the real estate sector also often needs a tax expert. We regularly connect a Polish company with an international counterpart. This could be related to joint venture, investment or financing.

Over the past decade, the majority of capital in real estate came from the UK, Germany and the US. Apart from South Africa, where is the capital coming to Poland from?

It’s not that investment from the UK, Germany and the US is drying up. We are seeing new investors from these markets in Poland.

However, our view is that the Asian and Australian markets are next, both directly and through international funds.

The Chinese market is particularly interesting. Poland is a key location for the Chinese multi-billion geopolitical project, One Belt One Road (OBOR). In the past, China has invested in Western European countries not involved in OBOR. In London alone, Chinese investors acquired two landmark office buildings known as the Cheesegrater and the Walkie Talkie respectively, for €1 billion each. Incidentally, our international law firm friends acted on both transactions.

eople talk about a “ Pcorrection coming, but

we don’t have a bubble like we did ten years ago

The Chinese Government has encouraged Chinese investors to redirect their foreign investment to markets involved in OBOR, and Poland is seen as key to this. Moreover, whilst in the past Chinese investors bought properties based on their notoriety, their size and the way that they looked, or as we call them in the industry “trophy properties,” these days Chinese investors are much more strategic, looking at properties from different asset classes with returns in mind.

Other Asian markets have also shown interest in Poland, especially from Malaysia, South Korea and Singapore. We have worked with funds from all these locations. In 2016 Singapore sovereign wealth fund, Government of Singapore Investment Corporation (GIC), acquired a pan-European warehouse portfolio from TPG Real Estate for €2.4 billion. Gabriel Olearnik, who recently joined us to head our Private Equity practice advised on the Polish and Romanian aspects of this deal.

The warehouse and industrial market has indeed been going from strength to strength over the past years. Do you think the trend will continue?

The warehouse market is no longer diffused, and, at least for now, the warehouse and industrial market is the talk of the Polish real

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FEBRUARY/MARCH 2018 W B J

estate market. The main driver of the market is the growth of the e-commerce sector and the increasing expectations of same-day deliveries. In many instances, if you order a product online before 6 pm, you can now expect it by 10 am the next day. There will be many more e-commerce centers popping up all over the country to facilitate product deliveries, exchanges and returns.

The road infrastructure that has improved tremendously over the past years has opened up new logistic hubs. There are still quite a lot of production facilities located within cities and they will need to relocate to Build-to-Suit projects.

The Polish warehouse market operates on some of the lowest rent levels in Europe, including the CEE regions. Yet, yields remain stable and higher than in other asset classes. Is this situation sustainable?

The reason for this is that land is relatively cheap in Poland, at least as long as the buyer does not reveal all their cards too soon, because if they do, prices can soar. Of course, developers look only at land that has a master plan in place and it is getting more difficult to find suitable prospects.

Are land prices what attracts developers to Poland?

When I started my career in real estate in 1996/97, the largest residential project at that time was developed by an Israeli investor.

I bought 50 hectares of land for the investor in Kraków. We paid $100 per sqm then, with an apartment price at PLN 2,500 per sqm. When the first stage was completed, apartment prices were already at PLN 8,000 per sqm. Israeli investors came into Poland first and they knew what they were doing. In 2004-2007 we saw an influx of Spanish and Portuguese capital into the market, looking to repeat the Israeli success. However, before they could really make their mark on Poland, due to the economic crisis in 2008, the bubble burst.

Do you think it may burst again?

I’m rather optimistic. People talk about a correction coming, but we don’t have a bubble like we did ten years ago. There are limits on financing that prevent one from forming. Investors don’t buy more than their risk assessment allows and we work to minimize that risk. There were a number of projects in the past that didn’t pan out because of legal title issues. It’s common practice to now check land and mortgage registers going back 100 years.

Over the next two years the real estate market will be fueled by a number of factors. One of them is the German mandate to continue working on joint projects with Poland. We can see a number of new business services centers coming to Poland, as well as major manufacturers moving their production plants here, including Mercedes and BMW. The future of the market will also depend on how long the Monetary Policy Council will maintain low interest rates. The Financial Supervision Authority is working on amending the “S” recommendation to lower the LtV ratio below 20 percent. When it was raised a few years ago, the change resulted in an investment hiccup. Altogether, I think we will continue to see the market boom with even more impressive projects being completed.

Given the deluge of money from South African and Asian investors, isn’t the increased demand inflating prices?

There is a lot of interest from investors, yes. But the investment market is not easy. Supply is low and it is difficult to find the right

property. There are no easy transactions these days, which is made more difficult by recent legal and tax changes. As lawyers, we are having to recommend adding a number of extra clauses to contracts because we cannot be sure whether a deal will be interpreted as an enterprise purchase and subject to tax on civil law transactions or as an asset purchase and subject to VAT. Deals are becoming more complicated, which puts a cap on how much investors can actually buy.

The asset class that dominated last year’s volume was retail, with over €2 billion worth of deals.

What type of assets are most in demand?

There are two submarkets in the retail segment: large shopping centers in major cities and small retail projects in smaller cities. We’re seeing a lot of interest in both these segments. And while the number of large dominant malls in major cities is limited, interest in smaller cities continues to grow. Redefine’s acquisition of 18 properties in various locations stimulated other investors to pursue the segment. Investors are also varied. There are REITs – dividend-based funds that look at investments long term and are interested in keeping properties in their respective portfolios.

There are also a number of speculative investors that invest, enhance and improve the property and exit quickly with a good return.

What about the office market? What type of activity is dominant there?

For the past few years we’ve been seeing a lot of development and investment deals in regional office markets. In fact, 60 percent of the total office deal volume was recorded in regional markets last year.

This is the product of companies moving their shared service centers to Poland, including State Street Bank, BP, CH2M and even JP Morgan. The real estate market is responding to this demand. Of course, office schemes need to be in an excellent location to be successful. We’ve learnt from the mistakes made in Warsaw’s Mokotów district. Mokotów is currently seeing an exodus of companies leaving and seeking better locations. In Warsaw, there is a big development pipeline, particularly in the Rondo Daszyńskiego area with most major developers having a stake there.

Do you think Brexit will bring even more business to Poland?

It will. We have a well-educated and cost-efficient workforce here.

We’re a great location for finance, IT and R&D. Aside from companies moving jobs from the UK to Poland, we are seeing another significant trend. Companies emanating from different continents are now using Poland, where previously they would have used the UK, to site their European headquarters or as a stepping stone to enter Europe. We assisted a large Asian pharmaceutical producer that chose Poland as its first European location. Poland is an international business hub and it will continue to attract investors.

Apart from the office, retail and warehouse markets there is interest in alternative asset classes. Do you think the trend will continue?

There’s a growing market for student housing projects. You only have to look at the number of students and the accommodation available. In Poland student housing accommodation accounts for 1,250 beds, which only covers about 0.1 percent of a 1.5 million student population. In the UK the ratio is 23 percent, with 524,000 beds available. In other European countries the ratio is also higher: e.g. 10 percent in Germany and 15 percent in the Netherlands. This year will see the highest number of students in 15 years. There is a lot of room for growth.

What about housing for senior citizens? There’s been a few new projects developed over the past years but we are still nowhere near to what other European countries have to offer their seniors.

This is changing, both with the aging society and its increasing affluence. Senior recreation centers and senior housing are indeed becoming more popular. And they are nothing like what we remember from 10-20 years ago. This is a budding market, but a very promising one. At some point we will start to see economies of scale in this market too.

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55

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

BY VICTOR EPSTEIN

SHUTTERSTOCK

THE FUTURE OF FOOD: MECH IN THE KITCHEN

Warsaw University of Technology students join the movement for automated food service with the latest invention of a club at the university. ”Kebs&Go”, a two-year project that has had great success since its completion, was put on display in the university halls, becoming an instant hit with classmates and which could potentially transfer to popularity in the commercial world. >>> W B J FEBRUARY/MARCH 2018

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TECH

We seem to have arrived in the era of the future that people predicted decades ago: the era of replacing man with machine. The phenomenon starts with food service, as culinary robotics companies such as Miso Robotics in the US move to integrate artificial intelligence, cameras, sensors, real-time coordinative software and quick installation into their machinery to create robotic “kitchen assistants,” such as their burgerflipping robot, endearingly named “Flippy.” Miso recently received $10 million in funding, a clear indication of the direction into which both manufacturers and investors alike are willing to venture in the development of what could become the norm of the future.

Students in Poland have also taken an interest in the subject of foodservice robotics, particularly two scientific clubs at the Warsaw University of Technology consisting of students studying cars and robotics.

Their innovative machine they call “Kebs&Go” was created after two years of work and research. It turned out to be a very popular attraction at

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their school as students gathered in small crowds to spend PLN 10 on a kebab. The machine is essentially a kebab vending machine, stocked with ingredients to be reheated and customized upon request. People can choose from beef, chicken or mixed meat and either spicy, mild or mixed sauce, with or without greens.

TECH NEWS PwC: Polish companies not cyber secure Only 8 percent of Polish companies are cyber secure, according to a report by PwC consultancy. Moreover, last year, as a result of cyberattacks, 44 percent of Polish enterprises suffered financial losses, while 62 percent reported disruptions and downtime.

Nethone with PLN 16 mln financing for cybersecurity behavioral software

DRONES AID STATE-OWNED GIANTS Polish state-owned gas distributor PGNiG wants to use drones to take aerial photos that will be used to map out terrain for natural oil and gas exploration. The high-tech drone was designed by Wrocław-based startup BZB UAS. It was built with Expanded Polyolefin (EPO) foam, reinforced with composite materials and outfitted with 3D-printed modules. “The system we designed allows the aerial pictures to be downloaded in real time to the server. Then they are combined with a three-dimensional map of the terrain,” explained Kacper Budnik from BZB UAS. The gas giant partnered with the startup via the MIT Enterprise Forum Poland acceleration program. PGNiG already uses drones for surveying land for exploration, but the high-tech machine will increase the precision of terrain mapping and cut down on surveying and preparation costs. Another state-owned company – PKP Cargo – has also been employing unmanned aerial vehicles to ensure the security of cargo it transports. In 2015 alone the company managed to save PLN 1.6 million through prevention of coal thefts.

Nethone, a software developer specializing in fraud detection and prevention, received a PLN 16 million grant from the National Center for Research and Development’s European Intelligence Development fund for two major research and development projects: Nethone ATO and Elympics, in total valued at PLN 21.58 million. By combining artificial intelligence with multidimensional behavioral analysis, behavioral biometry and automatic behavioral pattern recognition, Nethone hopes to create software for protection against bank-account takeovers (Nethone ATO) and e-doping/ hacking in mobile multiplayer gaming (Elympics).

POLISH ‘LAB-IN-A-BOX’ TRENDING UP A drug susceptibility testing device developed by Tri-City-based healthtech startup BreakBox Lab has been listed as one to the top 100 health technologies in the “Global Digital Health 100” list. The list is published annually by The Journal of mHealth, which takes into account 10 factors in its selection process, including impact on healthcare, innovativeness, social value and economic viability.

The self-contained mini-lab allows medical personnel to test the susceptibility of bacteria to antibiotics and select the most appropriate drug for an infection, thus cutting the length of convalescence and reducing the risk of creating antibiotic-resistant strands.

“Doctors prescribe antibiotics based on their intuition and experience. If you want to be 100 percent sure that you’re taking the right antibiotic, you need to go to a hospital or a specialist clinic and do a rather expensive test,” explained Jakub Wysocki, business project manager at BreakBox Lab. The startup has managed to cut the cost of a single test from PLN 50 to PLN 8, as well as reducing the test time from several days down to six hours.

Last year, BreakBox Lab was selected from over 3,000 competing startups and accepted for a three-month mentorship in the Startupbootcamp accelerator in Berlin, one of the top tech accelerators.

Report: 25% of companies will invest in work automation As much as 25 percent of companies plan to invest in work automation and replace some of their employees with machines or robots, while 60 percent do not plan to take any such action, according to the latest Work Service survey. As experts point out, in the coming years staff shortages will be covered by foreigners. Over the next year, 7 percent of companies will invest in automation. Another 5 percent plan to do it in a year or two, while 6 percent plan to do it within 2-5 years. Moreover, 8 percent of companies say they will do it in the “distant future.”

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TECH

Cash IT in

The market has never been this good for IT professionals. They have enjoyed special treatment for years now, but current pay trends are staggering. How much longer can this growth continue?

BY BEATA SOCHA

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IT JOB MARKET IT PAY RISE IN MAJOR POLISH CITIES IN 2017 Source: No Fluff Jobs

Mid-level IT jobs Senior-level IT jobs

IN 2017

, pay offered in job ads increased by 6.9 percent in the IT sector, according to data analyzed by No Fluff Jobs, a job portal dedicated specifically to the IT market. You could argue that pay offered in job ads does not necessarily reflect the actual salary an employee gets, but unlike in most listings, pay in IT jobs is actually negotiated upwards rather than the other way round.

Warsaw has long been the pinnacle of pay scales in Poland, including the IT market. But regional cities, particularly Wrocław, Kraków and Gdańsk have caught up to the capital and now offer salaries on a par with Warsaw’s top employers. In Warsaw, IT salaries increased by a modest 6.7 percent last year, compared to 13.4 percent in Wrocław (in senior positions the growth amounted to 16.1 percent), 13.2 percent in Kraków and 12.8 percent in Gdańsk. In fact, in some positions, like Java developers, Kraków has already taken the lead with pay scales of PLN 12,700-PLN 17,700 against Warsaw’s PLN 11,400-PLN 16,200.

B2B OR EMPLOYMENT CONTRACT? There are two main formats software engineers work on: regular employment contracts and as B2B service providers. Naturally, B2B agreements mandate slightly higher pay (an average of PLN 12,000) than regular employment (PLN 10,700). Interestingly, however, people employed on an employment contract but working from home earn more than people coming in to the office every day (an average of PLN 13,900 against PLN 10,500). The disparity could hardly be explained by the cost of overheads, especially since B2B contractors make more money if they work in the office of their business partner rather than at home (PLN 12,100 for office work vs. PLN 11,600 for home office).

HR consultancy Hays Poland offers a slightly different analysis of contract work. According to its data, B2B contractors make as much as 20 percent more than their peers employed on employment contracts.

No wonder the model has been gaining in popularity.

A quarter of IT professionals have already undertaken a stint as a B2B contractor. The majority of companies (58 percent) looking for IT talent see B2B contractors as a beneficial alternative to employing IT personnel. “Employing IT specialists on contracts is a clear trend not only in Western Europe, but also in Poland.

Talented programmers, testers and developers are increasingly open to contract work, seeing the benefits of this form that a regular job cannot offer them,” stressed Arkadiusz Wargin, head of IT contracting division at Hays Poland. “Companies also see the benefits, such as flexibility and quick access to competencies that contract work offers,” he added.

People who work on B2B contracts are usually those with very narrow and niche specializations as well as the most popular technologies. They are usually showered with job and contract offers and B2B work allows them to cherry pick the projects they want to get involved in.

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WHY B2B INSTEAD OF EMPLOYMENT? 100%

WHAT IS STABILITY? To people in other industries, contract work usually means less stability. But in case of the IT market, stability is not an issue. If they bid farewell to one employer, it’s usually a matter of days before they are snapped up again. “One of my coworkers decided to quit overnight without any alternative job prospects in mind, and before the day was over, he was already employed elsewhere,” said an employee of a major Polish software company. In fact, loyalty clauses sweetened by upper-five-figure bonuses have become commonplace in the industry to retain key people.

The need to create and maintain a network of coworkers has become a must in the business.

Again, for somewhat different reasons than in other industries. For the majority of working professionals, former coworkers are potential leads for future employment prospects: “If I lose this job, they may be able to offer me something else, maybe even a better job.” IT professionals keep tabs on their former colleagues in case one of them decides to make a move, and then they get to be the ones to bring another talented engineer on board and get a sizable bonus for a recommendation (usually amounting to a monthly salary).

RECRUITER’S NIGHTMARE There are entire websites devoted to recruiters telling horror stories of their experiences when headhunting IT people. “They are rude, they swear and hang up, they call you stupid,” are the most common accounts. Programmers are equally dissatisfied with their recruiters, accusing them of wasting their time due to insufficient preparation and research. “My conversation with recruiters could be compared to: ‘Do you drive a car?’ ‘Yes.’ ‘Over the past three years, how many times would you say you had to operate the gas pedal?’” wrote a Polish software engineer living in London in a forum discussion. Clever recruitment firms know that and train their personnel to understand IT people better and carry out recruitment more efficiently. They have entire divisions specializing in IT recruitment.

The dissonance between what the market needs and what resources are available has created an unprecedented void that only keeps getting bigger. The only question that remains is: How long can this ride continue?

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68% ATTRACTIVE PAY

59% FLEXIBLE WORKING TIME

51% ABILITY TO DECIDE WHEN TO SWITCH TO ANOTHER PROJECT

42% BEING ABLE TO WORK FROM HOME

36% CHANCE TO WORK ON AN INTERESTING PROJECT

21% DIFFICULTY FINDING WORK ON A JOB CONTRACT

14% OPPORTUNITY TO WORK ABROAD

11% CHANCE TO WORK WITH LATEST TECHNOLOGIES

SOURCE: HAYS

TECH

IT JOB MARKET

How many vacancies are filled through headhunting and how many through the regular recruitment process?

It depends on the company profile. IT specialists don’t like headhunting for a number of reasons. They get annoyed when recruiters don’t know the basics of the industry and details about the project in question. Recruiters also often spam candidates with job offers that don’t match the profile of the specialist. IT people know how valuable their time is, so they don’t like to see it being wasted.

No fluff needed

THE IT MARKET HAS NEVER BEEN AS COMPETITIVE WHEN IT COMES TO TALENT HUNTING. HOW IS RECRUITMENT DIFFERENT IN THIS HIGHLY TECHNICAL INDUSTRY, WHERE JOB OFFERS RAIN DOWN ON CANDIDATES EVERY DAY? WBJ ASKED TOMASZ BUJOK, CO-FOUNDER AND CEO OF NO FLUFF JOBS, AN INNOVATIVE JOB AD PORTAL FOR THE IT INDUSTRY INTERVIEW BY BEATA SOCHA

WBJ:

The disproportion between IT and other industries in terms of pay scale is enormous. Is employee shortage the main driving force hiking up salaries in the sector?

Tomasz Bujok: Working in IT requires highly specialized knowledge, which in turn means that studying computer science is also not easy. IT companies charge high fees for their services so that they can provide sufficiently high salaries to their employees.

Furthermore, a lot of software engineers decide to work remotely for international corporations, which – when calculated in PLN – can offer much higher pay, further increasing the upward pressure on salaries in IT. Do you think that software engineers’ salaries will continue to increase at the current rate?

Yes, there is a shortage of some 50,000 programmers in Poland right now. In the EU the shortage is several hundred thousand.

Both the employee deficit and increasing IT fees will maintain the upward pressure.

In which specializations is the shortage most severe?

It is definitely easiest to find Frontend specialists. In the Polish market, there is a deficit in Fullstack and DevOps, as well as Cloud Software. Then there are niche technologies, such as C++, Erlang, Fortran etc. that also see significant talent shortage.

Is the recruitment process in IT substantially different than in other industries?

First and foremost, the IT market is an employee’s market. It is recruiters and employers who have to compete for the best employees, not the other way round. Good IT specialists receive at least a few job offers a month. This makes them very challenging candidates with very high expectations – not only about the job, but also about the recruitment process itself. They expect recruiters to know the industry well enough, including technical terms. In order to attract candidates, HR departments need to ensure the highest level of recruitment, because when deciding which offer to choose, the company image could become the deciding factor.

What do IT specialists look for when reading a job ad??

They are no doubt the most interested in pay opportunities. In an industry which has been an employee’s market for years, specialists can sift through job offers and pay is usually the reason why they decide to apply for a job in the first place.

Secondly, they expect a very precise job description. An engineer wants to see the specifics: what programming languages and technologies the candidate should know to do the job. They also appreciate information about the project, employment form and technologies being used.

Many specialists also look at home office possibilities and the location of the company office. A recruiter who wants to respect the candidates’ time should not only include such info in the ad, but also make sure it is clear and transparent. That is what we offer at No Fluff Jobs – all the information a candidate will look for.

How exactly are job ads on No Fluff Jobs different from regular job portals?

No Fluff Jobs was created with IT specialists in mind and the form we have created suits their needs perfectly. Ads on our portal only contain information relevant to the job in question: pay scale, technological stack and project methodology.

All job offers on our portal have the exact same structure, which makes comparisons very easy.

Some of the information is given in key words, some in graphical form so that reading the ad should not take more than 15-20 seconds. IT people don’t like lengthy, descriptive ads they usually find on other job portals. They expect to get all the relevant job info from the ad itself because they value their time. So do we, and that is why we’ve created a form which allows that.

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25th April 2018, Minska 65, Warsaw

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Latest news in the residential, office, retail, hospitality and logistics sectors

19. DZIELNICA

(Wola, Warsaw) • Year started - 2010 • Number of phases - 6 (3 completed) • Number of apartments - ca. 1,700 (859 completed) • Commercial space - ca. 14,000 sqm

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Land for residential projects

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Office developers' alternative strategies

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Interview with Katarzyna Kajak of Pro Urba

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New Warsaw malls

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Poland's nascent penthouse market

Residential New construction phase of 19. DZIELNICA in Warsaw to get underway Pro Urba will soon launch construction work on the fourth phase of its 19. Dzielnica upscale residential project in Warsaw. The scheme will grow by another 289 apartments and 26 commercial units that are scheduled to be completed in the first quarter of 2020. Located in the Wola district of the Polish capital, in the Rondo Daszyńskiego area that has become one of the city’s hottest office locations in recent years, the 19. Dzielnica investment will comprise a total of approximately 1,700 housing units and around 14,000 sqm of commercial space when fully developed. To date, Pro Urba has completed three phases of the development, which delivered a combined 859 apartments and 66 commercial units in six buildings. The much-awarded project was designed by the renowned JEMS Architekci architectural studio. >>>

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Residential (continued) GOLUB GETHOUSE buys land for Warsaw skyscraper Developer and investor Golub GetHouse has acquired over 5,370 sqm of land located near the intersection of ul. Żelazna and ul. Grzybowska in the Wola district of Warsaw where it plans to build a 140-meter residential skyscraper project comprising approximately 450 rental apartments. Called Liberty Tower, the scheme will also house a hotel. The architectural studio that will design the planned development will be selected in an international competition.

“This is going to be our first investment of this type in Poland, but we have extensive experience in this sector gained in the US – our group has been constructing multifamily rental buildings for over 55 years, and only in the last year has built several such tower buildings in Chicago and in San Francisco,” said Czarek Jarząbek, the founder and CEO at Golub GetHouse.

Golub GetHouse has recently also bought more than 11,500 sqm of land located on ul. Jagiellońska in the Praga Północ district of Warsaw (opposite the Kozminski University campus), on which it plans a dormitory project with approximately 430 beds and numerous amenities for students. The scheme is currently at the design stage and construction is expected to begin in the final quarter of this year.

UNIQUE TOWER in Warsaw's Wola with bank financing A subsidiary of Warsaw Stock Exchange-listed developer Marvipol Development has secured up to PLN 50 million in bank financing from Bank Ochrony Środowiska that it will use to finance and refinance the costs of constructing its Unique Tower residential project in the Polish capital. The loan is to be paid back by the end of July 2021. The Unique Tower scheme is being developed on ul. Grzybowska in the Wola district of Warsaw. The development will consist of three high-rise buildings and comprise a total of approximately 24,000 sqm of usable space. It will include both rental apartments and apartments for sale. Construction work on the investment has already been launched and is scheduled to finish in the first half of 2021.

72,700

Number of new apartments sold in the six largest residential markets in Poland – Warsaw, Kraków, Wrocław, the Tri-City, Poznań and Łódź – last year Source: Reas

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DOM DEVELOPMENT launches new Wrocław project Dom Development Wrocław, part of the Dom Development capital group, has launched apartment sales in its Studio Arte residential project in Wrocław. On offer are 51 housing units in a four-story building, which are scheduled to be completed in the third quarter of next year. The scheme will be located in the Nadodrze area of downtown Wrocław, which is currently being revitalized. Dom Development, which is one of the largest residential developers in Warsaw, wants to strengthen its position in the Wrocław market in the near future. At the moment, the company is also selling apartments in two other housing investments in the city – Księże Nowe and Osiedle Aura.

Work on YIT’S second Polish scheme gets underway Finnish developer YIT has launched construction work on the first phase of the Aroma Park residential project in Warsaw, which is the company’s second housing scheme in the city. The investment is located in the Białołęka district and will involve the revitalization of historic properties sitting on an almost three-hectare site that previously housed a yeast factory dating back to the early 1900s, as well as the construction of a number of new three-story buildings. It will be developed in five phases; the first of them – which will be built by general contractor Unibep – will comprise 78 apartments. YIT entered Poland over two years ago and launched its first residential development in the country – Nordic Mokotów in Warsaw – in May 2016. The project is located in the Mokotów district and will comprise almost 300 housing units.

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Hospitality New MARRIOTT BRAND to enter Warsaw An AC Hotels by Marriottbranded hotel is to be developed in the Ochota district of Warsaw. This will be the first hotel of the midscale designer brand in the city and the second in Poland. The property will be located on Al. Jerozolimskie close to the Warszawa Zachodnia railway station and the Blue City shopping mall and will comprise approximately 260 rooms. It will include conference and restaurant space and will feature a sky bar located on the top floor of the building. Hotel advisory company Hotel Professionals supported Westgate, the investor behind the project, during the planning phase and the process of negotiating the franchise agreement with Marriott International. Its sister company – Hotel Professionals Management Group – will manage the hotel.

Retail Around 351,000 sqm of RETAIL SPACE COMPLETED in H2 2017 – PRRF Approximately 351,000 sqm of retail space was completed in Poland in the second half of last year, which brought the country’s total modern stock to 11.54 million sqm of GLA, according to Polish Retail Research Forum (PRRF) data. The largest completions included the Wroclavia shopping center in Wrocław and the Galeria Północna mall in Warsaw. Some 533,300 sqm of GLA was under construction at the end of 2017 with over 83 percent of the volume scheduled to be completed this year. The largest 2018 completions will include Forum Gdańsk (62,000 sqm), Galeria Libero in Katowice (45,000 sqm) and Gemini Park in Tychy (36,000 sqm). The biggest shopping mall now under construction in Poland – Galeria Młociny in

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Warsaw (75,000 sqm) – is to be delivered next year. At the end of December 2017, the vacancy rate for the 18 largest retail markets in Poland stood at 4.0 percent.

AWBUD to build Tkalnia shopping center in Pabianice Construction company Awbud and investor Tkalnia have signed a letter of intent regarding the construction of the planned Tkalnia shopping center in Pabianice near Łódź. The contract between the parties, which is valued at over PLN 44.4 million, is to be signed by the end of April this year. Awbud will be involved in the design work and will act as the general contractor of the scheme.

Tkalnia will comprise some 14,000 sqm of leasable space and house around 40 stores. It is to be completed by in Q1 2019.

Office work at the beginning of 2019. The project, which will involve the renovation of a number of historic structures sitting on the site and the construction of new buildings, is expected to be completed about one and half years later, said Stanislav Frnka, country CEO at HB Reavis Poland.

Some 1.5 mln sqm of OFFICE SPACE LEASED in Poland in 2017 – JLL A total of approximately 1.5 million sqm of office space was leased in Poland last year, of which more than 674,000 sqm was located in the largest regional cities across the country, according to a recent report by JLL. In Kraków alone, demand reached the level of almost 201,000 sqm, while the figures for Wrocław and the Tri-City stood at 169,500 sqm and 113,200 sqm respectively. Notably, the number of large lease transactions signed in the regional markets has been on the rise. Outside of Warsaw, 13 deals exceeding 10,000 sqm were signed last year, which is six more than in 2016, the JLL study said.

The largest transaction signed in the office property market in Poland in 2017 involved the lease by a confidential tenant of 25,500 sqm at the Nowy Rynek project in Poznań.

AVESTUS about to launch Imagine scheme in TÉTRIS launches space planning platform central Łódź Fit-out company Tétris has launched a new platform which is Developer Avestus Real Estate will launch its planned Imagine office project in Łódź next month. The company has just selected contractors for the scheme – builders Eiffage Polska Budownictwo and Goldbeck will be responsible for the construction of two office buildings and an above-ground, multilevel parking lot (able to accommodate 356 cars) respectively.

The Imagine development will comprise 14,800 sqm of office space and 2,400 sqm of retail and service areas with Colliers International acting as the leasing agent. It is scheduled to be completed in late Q2 or early Q3 2019. Avestus Real Estate plans to obtain a BREEAM Excellent certificate for energy efficiency and environmental performance for the investment.

designed to support companies in selecting locations for their new offices. Called Workspace Insight, the tool calculates the amount of space that a particular tenant will need and suggests the optimal office arrangement. This is done on the basis of hundreds (thousands in the future) of typical space plans found in Poland and across the world. Differences between the needs of companies from various sectors are taken into account.

The platform is particularly useful during the initial phase of a tenant’s cooperation with an architect and a contractor. The knowledge based on the analysis of hundreds of cases of companies with a similar profile speeds up the decision-making process when it comes to the choice of a new office location, noted Tomasz Spalik, the business development director at Tétris.

HB REAVIS acquires site for first Łódź office development Developer HB Reavis, which in Poland has to date been only active in Warsaw, is now preparing to launch its first project in a regional office market in the country. The company has acquired a one-hectare site located in the downtown of Łódź, near the EC1 cultural and education complex and the Łódź Fabryczna railway station, on which it plans to build an office scheme with approximately 30,000 sqm of leasable space.

HB Reavis is now in the process of selecting the design of the planned development through an architectural competition.

The developer wants to apply for a building permit for the investment in the autumn of this year and launch construction

11.7%

average office vacancy rate in Warsaw at the end of 2017 Source: Cushman & Wakefield

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Mixed-use

BUDIMEX appointed Monopolis contractor in Łódź

ECHO INVESTMENT unveils Moje Miejsce project in Warsaw

Developer Virako has selected builder Budimex as the general contractor for the first phase of its planned Monopolis mixeduse project in downtown Łódź. The project will involve the revitalization and redevelopment of a historic post-industrial site that previously housed a vodka distillery. Construction work on this phase of the scheme, which will see the renovation of all the historic properties sitting on the site, is scheduled to launch later this month and finish in mid-2019. In the future, two new buildings will be built within the complex. The entire Monopolis development, which was designed by Grupa5 Architekci in cooperation with a local architectural studio, will comprise 24,000 sqm of office space and 5,400 sqm of service areas.

Warsaw Stock Exchange-listed developer Echo Investment has revealed the architectural details of the Moje Miejsce mixeduse project that it will develop in the Mokotów district of the Polish capital. The scheme will sit on an over three-hectare site located between ul. Sobieskiego and Al. Witosa. It will consist of five residential buildings comprising a total of 244 apartments and two office buildings totaling 34,000 sqm of space.

Construction work on one of the office buildings is already underway, while work on the residential buildings is scheduled to launch in a few weeks. The Moje Miejsce development was designed by the JEMS Architekci architectural studio and is expected to be BREEAM certified.

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Investment market Regulator approves major JOINT-VENTURE scheme in Wrocław

UBM offloads Polish properties for over €160 mln

Poland’s Office of Competition and Consumer Protection (UOKiK) has approved the plans of developers Vantage Development and Rank Progress to establish joint entities that will develop the first part of a large mixed-use project in Wrocław. In December last year, the developers announced their plans to jointly develop 14 hectares of land located on the city’s ul. Wejherowska and ul. Białowieska.

The planned scheme will predominantly house residential space and will also feature accompanying retail and office functions. It is expected to include a total of approximately 2,400 housing and commercial units, and around 14,500 sqm of office space. The investment will be divided into two main parts, which will be further subdivided into phases.

The particular phases will be developed by special-purpose vehicles in which Vantage Development and Rank Progress will have a 55-percent and a 45-percent stake respectively.

The first part of the investment will involve the development of a total of approximately 1,100 apartments and commercial units, and the entire office component.

Austrian developer UBM has recently sold a number of its Polish properties for a total of more than €160 million. Towards the end of last year, the company offloaded the Kotlarska office building in downtown Kraków, which was acquired by Slovak investor IAD Investments for approximately €30 million. Earlier this month, the developer also sold the Pegaz office building in Wrocław to German investor Warburg-HIH for around €54 million.

Another German buyer – Union Investment – has recently acquired two hotels from UBM’s Polish portfolio. The Holiday Inn “Twarda” hotel in Warsaw and the Holiday Inn hotel in Gdańsk were sold for approximately €41 million and around €38 million respectively. The latter transaction is a forward-purchase deal – the Gdańsk hotel is scheduled to be completed in the spring of next year.

URBAN RENEWAL in numbers The Second Life of Buildings Initiative, which brings together experts from various areas of the real estate market and focuses on urban revitalization and renovation projects across Poland, has recently launched what is arguably the country’s first comprehensive report on the matter. The study includes, among other things, figures that illustrate the scale of the ongoing and planned regeneration schemes in Polish cities, both those carried out by municipal authorities and those carried out by private investors.

For example, according to the authors of the report, the total area covered by current revitalization programs in six of Poland’s biggest cities – Gdańsk, Kraków, Łódź, Poznań, Warsaw and Wrocław – amounts to 8,720 hectares. When it comes to the value of those investments, in Łódź alone the renovation of 145 townhouses and a number of streets and squares, as well as the creation of new walkways in the downtown of the city is to cost a total of PLN 980 million.

As for private initiatives, the combined value of 29 major revitalization projects (the most of which are located in Warsaw) that are now being built by developers amounts to PLN 7 billion, the report said. Private investors are currently developing a total of approximately 1.8 million sqm of space within revitalization schemes in Poland with new and renovated historic buildings accounting for 62 percent and 38 percent of the volume respectively. A combined 316,000 sqm in 16 such developments is scheduled to be completed this year.

More information can be found at drugiezyciebudynkow.pl.

NEWBRIDGE acquires three shopping centers across Poland from Aerium Investor Newbridge has acquired the CH Czyżyny shopping center in Kraków, the CH Bielawy shopping center in Toruń and the CH Guliwer shopping center in Łódź from the investment and asset management group Aerium. The malls comprise a total of more than 72,000 sqm of GLA and are now almost fully leased out. They are anchored by retailer Carrefour, from which Aerium bought them in 2006 in a pan-European portfolio deal.

“We are really excited about this acquisition and hope that this will lead to further investment opportunities. Each of the properties have significant upside possibilities,” said Rory Mepham, the CEO of Newbridge.

CROMWELL PROPERTY GROUP sells Warsaw’s WCC building Real estate investment manager Cromwell Property Group has sold the Warsaw Corporate Centre (WCC) office building located in the downtown of the Polish capital. Neither the buyer nor the value of the transaction have been revealed. The WCC was completed in 1997 and comprises over 8,600 sqm of space.

Cromwell Property Group increased the occupancy level at the building from 80 percent to more than 95 percent in the twoyear period since its acquisition with current tenants including Danske Bank and mBank.

“The sale of the Warsaw Corporate Centre with significantly improved occupation marks a smart turn-around of a welllocated city center office asset over a two-year period. We are currently experiencing strong demand from international investors looking to deploy value-add capital in the CEE region, with a particular focus on Polish and Czech real estate,” commented Karol Pilniewicz, head of CEE at Cromwell Property Group.

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Logistics Record supply and demand volumes in WAREHOUSE MARKET – Colliers Poland’s warehouse property market put up a record performance in 2017 with both supply and demand levels having reached new highs in the period, according to the latest report

by Colliers International. Developers completed over 2.3 million sqm of new space last year, while tenants signed lease agreements for a total of nearly 4.6 million sqm, the study said.

Most new space was delivered in the Warsaw area (460,000 sqm) and Silesia (408,000 sqm). The Warsaw area was also the leader in terms of demand with tenants having leased over one million sqm there in 2017. A similar amount of space was taken up in central Poland (which includes the Łódź area), while the volume in Silesia amounted to almost 940,000 sqm.

Over 1.3 million sqm of industrial space is now under construction across the country, of which the most is being developed in Silesia (398,000 sqm), central Poland (240,000 sqm) and the Warsaw area (227,000 sqm). Colliers International experts predict that smaller warehouse markets, including Białystok and Kielce, will see further development this year.

PROLOGIS to step up development activity in Poland in 2018 Industrial space developer Prologis plans to launch three new projects in Poland later this year. They will include one scheme in a new location for the company – Prologis Park Łódź – that will comprise some 93,000 sqm of space. Construction work on the development is expected to launch in the second quarter of this year.

Also in Q2 2018, Prologis wants to start building Prologis Park Poznań III. Two buildings, offering a combined 60,000 sqm, will be built in the first phase of the investment. The developer is also preparing to start expanding Prologis Park Janki south of Warsaw – the company has recently acquired 24 hectares of land in the location.

In 2017, Prologis leased a record 940,800 sqm of space in Poland. At the end of last year, the developer’s portfolio in the country had an occupancy level of 96.2 percent. The company completed five buildings – comprising a total of 93,000 sqm – in the Polish market in the period in question. It launched construction work on one built-to-suit project totaling 8,260 sqm.

MARVIPOL to start another warehouse investment Marvipol Development and Panattoni Development Europe have reached an agreement regarding the development of another joint warehouse project. The scheme will be located in the Warsaw agglomeration and will be the two companies’ seventh joint investment. Panattoni Development Europe is one of the leaders in the industrial property market in Poland.

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Marvipol Development, which is arguably best known for its residential projects (the company is now working on housing schemes comprising a total of almost 68,000 sqm of usable space), has been strengthening its presence in the warehouse sector in recent years. The developer is currently involved in five ongoing warehouse projects totaling 235,000 sqm of GLA. In 2018, the company wants to launch construction work on warehouse schemes comprising a combined almost 115,000 sqm of GLA.

PANATTONI launches new logistics project in eastern Poland Industrial space developer Panattoni Europe has launched construction work on its Panattoni Park Białystok logistics project in Białystok, which is the company’s first scheme in Podlaskie voivodship. The development is part of Panattoni Europe’s strategy of entering emerging warehouse markets across Poland with the developer having previously launched logistics investments in Lublin, Kielce and Zielona Góra.

Panattoni Park Białystok will consist of three buildings and comprise a total of approximately 40,600 sqm of space that has already been 50 percent leased out. It will include a production facility of over 10,000 sqm for car glass manufacturer Pilkington IGP. The logistics park is scheduled to be completed towards the end of the third quarter of this year.

In other news, Panattoni Europe has revealed it will build a 73,300-sqm warehouse project within its Łódź-based Central European Logistics Hub complex, which will be occupied by retailer Media Expert. Construction work on the scheme, which will be BREEAM-certified, is scheduled to launch in the second quarter of this year.

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LOKALE IMMOBILIA | RESIDENTIAL

THE FIGHT FOR LAND

Record demand for new apartments has resulted in fierce competition between developers vying to secure attractive sites for future projects.

Those are now becoming more and more difficult to find

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UPWARD PRESSURE

BY ADAM ZDRODOWSKI

T

he residential property market in Poland has continued to put up a very strong performance in recent months with many of the country’s largest developers having achieved record apartment sales results in 2017. The supply of new projects has remained at a high level, too. Homebuilders have been trying to replenish their portfolios of plots to be able to maintain high development activity, but this has become increasingly challenging. With the pool of available sites shrinking, the prices of land for housing schemes have been going up.

The fact that many of the biggest cities are not sufficiently zoned has been making the situation even worse. “The pace of passing new zoning plans is not satisfactory,” complained Jacek Putaj, a board member at Pro-Urba Invest. In his opinion, the prices of plots are likely to grow due to new regulations restricting investment based on planning decisions in areas that are not covered by zoning plans. “Acquiring new plots, especially in city centers, is becoming more difficult,” Putaj argued.

The total value of transactions closed in the development land market in Poland in 2017 amounted to a record of more than PLN 5 billion, according to a recent report by Colliers International. Most of the demand seen in the period came from the residential sector. This resulted from Poland’s continuing housing boom. Reas data show that a record 72,700 new apartments were sold in the six largest residential markets in the country – Warsaw, Kraków, Wrocław, the Tri-City, Poznań and Łódź – last year, an increase of over 17 percent y/y.

“Residential developers accounted for more than 70 percent of all the transactions closed in the first three quarters of 2017,” revealed Emil Domeracki, an associate director, investment services/land, at Colliers International. He added that when it comes to plots of land for residential projects, the market is now defined by a lack of balance between the big demand and the constantly dwindling supply, which has put upward pressure on transaction costs.

The prices of residential sites have been rising.

“In Warsaw, we can even speak of over 10-percent increases y/y with regard to the most attractive properties,” said Joanna Kieszczyńska, a senior consultant, land advisory services CEE, at JLL. The Tri-City, Wrocław and Kraków are following the trend, which is the result of the limited supply of plots and the high level of investor interest. The situation in the land market

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LOKALE IMMOBILIA | RESIDENTIAL Aerial shot of Warsaw as seen from the Wawer district on the east bank of the Vistula river

has not yet had a major impact on apartment prices, but that could change in the near future.

In the opinion of Domeracki, some of the best sites which allow the buyer to launch construction work on a new residential investment relatively soon are now often even 20 percent or 30 percent more expensive than in 2016. Barbara Bugaj, an analyst at Cenatorium, said that due to the continued price hikes, and despite the huge demand, the number of transactions involving the sale of plots of land for multi-family housing projects has been decreasing.

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HOLDING GROUND There is appetite for buying land – but not at any price.”

Jarosław Szanajca, president of the management board at Warsaw Stock Exchange-listed Dom Development, admitted that securing sites in attractive locations is now often riskier than before.

Apart from the fierce competition, legal issues make transactions more difficult. The shortage of prime plots has turned developers’ attention to sites which they did not even consider buying a few years ago, for reasons including a complicated legal status or a high price, Szanajca said.

However, he stressed that Dom Development itself is in a comfortable situation as it already owns an attractive and diversified portfolio of plots, which was additionally enhanced due to the company’s acquisition last year of Tri-Citybased developer Euro Styl. Dom Development is therefore under no pressure to buy. In 2017, the company earmarked approximately PLN 400 million for land acquisitions. In previous years, it spent almost PLN 300 million annually for that purpose.

Zbigniew Wojciech Okoński, management board president at Robyg, too claimed that the company does not need to urgently acquire more land as it already has one of the biggest site portfolios among Warsaw Stock Exchangelisted developers. Robyg now owns plots on which a total of almost 14,000 apartments can be built. The company is active in the Warsaw and Gdańsk markets and is planning further geographical expansion. The developer has already secured a site in Wrocław, Okoński revealed.

In 2016, Robyg spent a record of more than PLN 260 million on the acquisition of new plots in Warsaw and Gdańsk. Last year, because of the significant land price increases, the figure was approximately PLN 100 million lower. Many large residential developers have accumulated enough sites in previous years to be unconcerned about the prospects for their businesses in the near future, but could the current situation in the development land market pose a serious problem for smaller companies?

PRICE CONSCIOUSNESS

Bugaj pointed out that developers currently have to cope with both growing land prices and rising construction costs. A combination of these two factors could lead to a decrease in homebuilders’ interest in acquiring more sites, she claimed. In her opinion, smaller developers who have not previously secured a sufficient amount of land will be hit the hardest. This could lead to the further consolidation of the market with a number of M&A transactions having already taken place in the sector last year.

Will the hunt for land continue this year?

Colliers International experts predict that while the transactions volume could slightly decrease in 2018, investors will remain active and will also be ready to buy plots for large, multi-phase schemes that can be built within six to eight years. The decreasing availability of residential sites in prime locations is expected to lead developers to buy plots of land for large projects in outlying neighborhoods. Also, they will continue to be interested in the revitalization of neglected post-industrial areas.

AVERAGE PRICES OF RESIDENTIAL SITES IN SELECTED LARGE POLISH CITIES CITY FROM (PLN/SQM) Warsaw 1,700 Poznań 600 Wrocław 680

TO (PLN/SQM) 2,100 780 700

Source: Cenatorium

SELECTED 2017 TRANSACTIONS INVOLVING THE ACQUISITION OF LAND FOR RESIDENTIAL PROJECTS CITY PLOT SIZE (SQM) PRICE (PLN) Warsaw 53,200 150,000,000 Warsaw 34,000 70,000,000 Wrocław 97,500 45,000,000 Gdańsk 46,000 45,000,000 Katowice/Cieszyn 33,000 17,000,000 Source: Colliers International, JLL

Maximilian Mendel, partner in charge of transaction advisory at Reas, believes that demand for development land will stay at a high level, but the fact that it is now increasingly difficult to find reasonably priced plots will be a major challenge. “Prices are likely to continue to increase for certain types of land plots, especially those in prime locations and those suitable for small to medium-sized residential projects,” Mendel said. Meanwhile, many developers are hesitant about buying land at the current prices.

The market fundamentals are still good, and most developers want to expand their business activities. However, some of them are worried that buyers will not be able to accept higher apartment prices, which the increases in land prices and construction costs will cause. “There is appetite for buying land – but not at any price. For now, many developers can still launch projects on land they bought in the past. But for entirely new developments, the big question is to what extent the market will accept higher apartment prices,” Mendel said.

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WEIGHING UP THE ALTERNATIVES

Faced with the intense competition in Warsaw’s office property market, some developers have chosen to redesign their projects and go for a different building function. Mixed-use schemes are now also gaining in popularity in the city

BY ADAM ZDRODOWSKI

V

ibrant development activity has defined the office property market in the Polish capital for a few years now.

Despite recurring fears about the market being overheated, the large supply of new space has to date been offset by record-high demand levels. Nevertheless, some of the developers active in the city seem to have already come to the conclusion that in certain locations the development of pure office projects has become too risky and they are considering other investment options.

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NEW SOLUTIONS

According to Cushman & Wakefield data, nearly 770,000 sqm of office space was under construction in the Polish capital at the end of 2017.

The average vacancy rate in the city has recently dropped to 11.7 percent, but it amounted to around 15 percent in previous years. If the most popular office buildings manage to maintain almost full occupancy, older and less attractively located properties, as well as new investments with inflated rents, will have difficulty finding tenants, Cushman & Wakefield said in a market analysis published last November.

With the significant supply of new office space continuing to be a major challenge, some landlords are starting to consider the implementation of new solutions, said Piotr Capiga, an associate, office agency, at Cushman & Wakefield.

The excellent performance of Warsaw’s housing market has already led several office developers, including Echo Investment and ECI in the city’s Służewiec area, to redesign their planned projects and to replace the office function with a residential one.

LARGEST 2017 OFFICE PROJECT COMPLETIONS IN WARSAW BUILDING

AREA (SQM)

DEVELOPER

Business Garden II

54,800

Vastint

West Station II

35,000

HB Reavis

D48

23,400

Penta Investments

Bobrowiecka 8

22,500

Spectra Investment

Generation Park X

21,000

Skanska

Wronia 31

15,100

Ghelamco

Source: Cushman & Wakefield, PORF

The planned Roma Tower project will likely include a major residential component

Paweł Słupski from the PR department of Echo Investment explained that the company’s vision for the planned office scheme on ul.

Taśmowa in Służewiec had evolved over time. A few years ago, the developer decided to build a mixed-use project there. Then, after the success of its Nowy Mokotów development – one of the first residential investments in the officesdominated Służewiec – and the launch of construction on a large amount of office space elsewhere in Warsaw, the company went for apartments only.

Also, the planned Roma Tower high-rise scheme in downtown Warsaw, which investors BBI Development and the Archdiocese of Warsaw originally envisioned as an office skyscraper, is now expected to be a mixed-use investment with a dominant residential component. In some cases, developers have decided to combine the office and residential functions.

Examples of such developments in Warsaw include EC Powiśle (White Star Real Estate), Browary Warszawskie (Echo Investment) and Centrum Praskie Koneser (BBI Development).

DIVERSIFYING RISK

Perhaps the change of function will be a chance for older office buildings, which have the most difficulty keeping tenants

Capiga pointed out that such a combination ensures an attractive revenue structure – the sales of apartments are a quick revenue source whereas the lease of office space provides long-term revenues – and risk diversification.

Importantly, the solution is favored by municipal officials as it contributes to the sustainable development of the city. Aware of the problems created by the office monoculture in the Służewiec area, the authorities often insist that large projects include non-office functions.

The boom in the hospitality market, too, has been providing office space developers and owners with new opportunities. Several recently completed office projects have already been turned into apartment hotel schemes. A Marriott hotel will be built on a plot in Służewiec where Polski Holding Nieruchomości was previously planning an office project. A hotel operator will likely take up much of the space in the Nowa Emilia scheme that Globalworth Real Estate is planning in central Warsaw.

In the opinion of Daniel Czarnecki, a portfolio manager, office agency, landlord representation, at Savills, developers who have a larger number of projects in the pipeline are currently open to the alternative options of developing them.

And such options have indeed been emerging.

“In central locations in particular, but not only there, we have been noticing the activity of hotel

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LOKALE IMMOBILIA | OFFICE operators who are now talking to developers and owners of office buildings,” Czarnecki said.

Large-scale developments in the Polish capital that will combine office and hotel functions include Varso (HB Reavis), The Warsaw HUB (Ghelamco Poland) and Centrum Praskie Koneser (BBI Development and Liebrecht & wooD).

For office space developers, hotel operators are attractive partners as they usually pre-lease sizable areas for long periods of time. Besides, easy access to hotel space tends to boost the attractiveness of a given office project in the eyes of its potential tenants.

CYCLICAL TREND

According to Jarosław Zagórski, the commercial and development director at Ghelamco Poland, one cannot speak of a wider trend yet.

The record supply of office space is the result of very strong tenant demand with a large portion of new projects located in the Wola district. The Rondo Daszyńskiego area has been more popular with tenants than the CBD and the Służewiec area in the Mokotów district. “Some developers who previously planned office projects in less competitive locations have decided to change their investment plans,” he said.

Ghelamco Poland is not considering a change of function in any of its ongoing or planned office schemes. Krzysztof Wilczek, a regional director at Skanska Property Poland, noted that the decisions of some developers to redesign their office projects are nothing new. “We can see the cyclic nature of the changes of projects’ functions, depending on the market situation,” he argued.

This mostly pertains to plots that are not naturally suited to pure office projects and may involve an increased investment risk.

Wilczek pointed out that before the crisis of 2008 a large number of pipeline schemes with a planned office function were redesigned and turned into residential developments, a trend that was reversed during the crisis years. Now, with the residential market booming and the office market becoming increasingly competitive, developers are again more and more often considering the development of housing projects in locations where such schemes were previously not planned.

Wilczek said that when acquiring a new plot Skanska is always focused on one business model and tends to keep to it throughout the investment process. The company prefers to put off the start of a project and wait for a more favorable time, than to change its function. Not all owners of existing office properties can afford to wait. “Perhaps the change of function will be a chance for older office buildings, which have the most difficulty keeping tenants,” Capiga said.

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We have been noticing the activity of hotel operators who are now talking to developers and owners of office buildings

PLEASING TENANTS

Mikołaj Sznajder, a senior associate director in the office agency of CBRE, argued that the demand for office space is not waning and the emergence of mixed-use projects can be attributed to the requests for complementary functions that have been voiced by tenants. From the tenant’s perspective, access to additional amenities is of major significance as the office is an employer-branding tool which helps to win talent in the competitive labor market, Sznajder noted.

Of a similar opinion was Zagórski, who argued that the office property market in Poland, while continuing its strong growth, remains very competitive, and a good location and highquality office space are no longer enough. He maintained that the multi-function nature of The Warsaw HUB is, above all, meant to ensure that the project meets the growing expectations of tenants. Does all of this mean that mixed-use developments will become even more popular with developers in the near future?

The fact that developers have been considering new options does not presage a move away from large-scale office projects. Czarnecki noted that not every office site can house a hotel or residential scheme. In some office locations a different function will simply not take on.

Besides, mixed-use investments tend to be challenging in terms of design as one needs to combine functions that have their own specific requirements. In some cases, redesigning an office project and adding other functions to it may be too costly and not make business sense.

But even those developments in which the office function does remain predominant are increasingly attracting non-office tenants. New groups of such occupiers include large fitness concepts, some of which are looking for areas sized as much as 5,000 sqm. The Ghelamco Poland-developed Warsaw Spire scheme, which offers some 100,000 sqm of office space, houses a publicly accessible gym and several restaurants. “This is the direction in which we want to go when it comes to big, centrally located office projects,” Zagórski said.

Some of the latest Warsaw skyscraper schemes, including HB Reavis's Varso, will house much more than just office space

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LOKALE IMMOBILIA | RESIDENTIAL WBJ:

Apart from being one of the most important office locations in Warsaw, the Wola district is now also among the fastest-growing residential areas in the city. What are the reasons for the housing boom there?

Katarzyna Kajak: Above all, Wola has a great central location, which guarantees excellent transport links with the key points in the city. It’s located on the second subway line, around one kilometer from the Central Railway Station, with convenient access to Chopin Airport. In addition, Wola is one of the few districts with well-developed rail transport (WKD and SKM local trains as well as trams). It is worth mentioning that the construction of the Main Railway Station (near ul. Towarowa) will soon commence. According to JLL, during the renovation of the cross-city line in 2018-2020, it will serve as an auxiliary station servicing some regional and long-distance trains.

What’s more, Wola differs from other central districts by its availability of free plots for residential development, but it already has strong infrastructure with good service and commercial facilities. There are also many educational institutions (such as schools and kindergartens), which attract young families that already have or are planning to have children. What is important is that each new residential estate comes with additional commercial areas, which further enrich the area.

WOLA’S COMMERCIALRESIDENTIAL SYMBIOSIS

WBJ talked to Katarzyna Kajak, the sales and marketing director at developer Pro Urba, about the potential of Warsaw’s Wola and the company’s 19. Dzielnica residential project in the district

INTERVIEW BY ADAM ZDRODOWSKI

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How many of the people who buy your apartments work in the new office buildings in Wola?

As a developer we don’t have access to exact data as we only have information about buyers, not residents. According to our research, the proximity of the workplace within the City Centre West zone (Zachodnie Centrum Biznesowe) is a significant factor when making the decision to buy or to rent an apartment in this location. What’s interesting is that there are even residents who – due to their family situation – look for jobs in this area as this makes it possible for them to take care of their families and save significant time on commuting. So, as we can see, it works both ways.

The large supply of office space has also created significant demand for new retail space in Wola. Is this demand addressed in 19. Dzielnica (the 19th District) when it comes to the number of commercial units offered in the complex?

According to JLL data, within the next five years, due to the new investments, the number of inhabitants in the City Centre West zone will increase to 31,000 and the number of employees will grow to 115,000. Taking into account the potential of this area, commercial space has become very desirable. For our clients, the location in the City Centre West zone, close to the new office buildings, was a key factor determining the purchase of premises in the 19. Dzielnica project. For this reason, we offer commercial premises in each stage of the estate. Apart from the wide range of premises, we have designed a product that fulfils the needs of our clients. So, for example, in the latest stage there are premises with small areas starting from 39

sqm; some of them come with their own garden and are suited for gastronomy. There is the possibility to combine multiple commercial premises. It’s worth mentioning that high-ceilinged premises offer the possibility of installing an entresol.

Several developers have recently announced rental apartment projects in Wola. Will they be serious competitors for developers offering apartments for sale?

In our opinion, such a trend is simply based on a different business model and addresses a different type of customer.

Warsaw is such a large market that these two formulas can function in parallel. A significant number of people buy apartments for rent as they are interested in investing their capital. On the other hand, there are a lot of young people who, after years of renting an apartment, decide to buy their own apartment because they finally decide to get their own place and secure their future.

It’s worth mentioning that there are several companies operating in 19. Dzielnica that offer short and long-term rental in our estate. It fits perfectly with the needs of our clients, who cooperate with them as it is the easiest and the most trustworthy way to rent out an apartment. This model has been very successful so far.

Will you be interested in offering rental apartments within the 19. Dzielnica project or in any other new residential schemes in Warsaw?

We don’t have such plans as our core business is the sale of apartments. So far, we have completed three stages. In each of them, apartments have sold out, which confirms that the demand for premium quality flats in this location is high.

Wola differs from other central districts by its availability of free plots for residential development, but it already has strong infrastructure with goodservice and commercial facilities

When fully developed, 19. Dzielnica will be one of the biggest new estates in this part of Warsaw. How much public space has been planned in the complex?

The 19. Dzielnica residential estate was designed as a conceptual coherent whole. The target public area reaches almost 36,000 sqm of squares and pedestrian routes with a creative entertainment course for kids which stretches through the entire estate. Everything has been designed with attention to detail. Recently, we opened a recreational square equipped with sport facilities for adults and children.

How many apartments have been completed so far within the project? Will you be launching a new phase of the scheme this year?

This year we completed the construction of the third stage with 242 new flats. In total, 859 apartments and 66 commercial premises have been built so far. This year we are starting the construction of a new, fourth stage of 19.

Dzielnica. In the new building, flats of various sizes are available: from small studios – ideal starter homes, or for rent (with the possibility to separate a bedroom part) – to large apartments, also two-story units, with terraces on the upper floors. On the ground floor of the building, similarly to the previous three stages, commercial premises (26 new units) will be provided.

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LOKALE IMMOBILIA | RETAIL

Galeria Północna

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MULTI-TRACK GROWTH AHEAD Warsaw’s first-in-a-decade new large-scale shopping center – Galeria Północna – opened for business in Q3 2017. Does the Polish capital still offer room for major retail developments?

BY ADAM ZDRODOWSKI

A

fter a few years of a slowdown, the retail property market in Warsaw has been seeing increased development activity in recent months with a new major shopping center project having been completed in the city in September and several big schemes now in the pipeline. Experts are saying that the Polish capital remains a very attractive retail destination and will still be able to absorb a few new large malls. Nevertheless, most of the developments expected to be completed in the market in the coming years will be mid-sized investments.

GROWING STOCK

According to CBRE data, the existing retail stock in the Warsaw agglomeration stood at 1.57 million sqm (spread across 47 developments) at the end of Q3 2017. A further 166,000 sqm of retail area was under construction. On September 14, GTC opened its 64,000-sqm Galeria Północna shopping center located in the northern part of the Polish capital. The investment is the first retail project of this scale to have been built in Warsaw since 2007 when the Złote Tarasy mall welcomed its first visitors.

The same developer is also planning a 61,000sqm shopping center in the Wilanów district.

However, it is not yet certain when the project could be launched as the company is still in the process of obtaining the necessary administrative permits. For their part, Echo Polska Properties (EPP) and Echo Investment are now working

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LOKALE IMMOBILIA | RETAIL Cedet

on their 71,000-sqm Galeria Młociny scheme in the Bielany district. The companies also want to build a huge mixed-use development, including a 110,000-sqm mall, in the Wola district.

“This is going to be a brand new city center with all the urban functions – with residential units, offices, entertainment, restaurants, a theater, a culture center, a green area and a broad retail offering,” said Hadley Dean, the CEO at EPP. “Despite new shopping malls being opened, the Warsaw market remains a very attractive one,” argued Dean. He noted that the Polish capital features the biggest purchasing power per capita in Poland, which is almost 86 percent higher than the country’s average.

“On the other hand, when it comes to retail space saturation, Warsaw is ranked as the sixth city in Poland. And last but not least, Warsaw – as the country’s capital and its richest city – attracts the most major high-end tenants,” Dean pointed out. “This is why, while EPP invests in regional cities with one dominant shopping center, we are not giving up on Warsaw,” he added. GTC’s management board president Thomas Kurz-

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Warsaw is ready for new retail schemes.

However, their formula has to address the needs and growing expectations of buyers

mann, too, pointed to the enormous potential of the retail property market in the city.

“We are proud of the fact that Galeria Północna attracted almost two million visitors within the first two months of its opening,” Kurzmann said. Also testament to the continued attractiveness of Warsaw’s retail real estate sector is the entry decisions of foreign retailers.

“Of the approximately 30 new brands that enter Poland every year, the vast majority are choosing Warsaw as the place of their debut,” said Magdalena Sadal, the head of retail research and advisory at Cresa Poland.

MODERNIZATION DRIVE

Does this mean that one can expect many more large-scale shopping center projects in Warsaw in the coming years? Not really, experts say and note that while a considerable number of new schemes are in the pipeline, most of them will represent other retail formats. “Młociny, Wola and Wilanów are all defined by intensive residential and office space development so they remain attractive locations for new retail

Centrum Praskie Koneser

SELECTED ONGOING RETAIL PROJECTS IN THE WARSAW AGGLOMERATION PROJECT

projects,” argued Magdalena Frątczak, a senior director, head of the retail agency, at CBRE. “Warsaw is ready for new retail schemes.

However, their formula has to address the needs and growing expectations of buyers,” Frątczak claimed. In her opinion, apart from the three previously mentioned large-scale projects, future retail investments in the city will be smaller.

Indeed, most of the major retail projects that are scheduled to be completed in the Warsaw market within the next two years (see table) will either involve the extension of existing malls or the development of retail space as part of large mixed-use complexes.

Atrium European Real Estate is in the process of extending three of its flagship shopping centers – Atrium Promenada, Atrium Reduta and Atrium Targówek – which are located in the Praga Południe, Ochota and Targówek districts respectively. Just outside Warsaw, Cromwell Property Group is now adding more space to the Centrum Janki mall. In the Polish capital itself, a Tesco store in the Ursynów district is expected to be redeveloped in the near future, as is the Fort

GLA (SQM)

PLANNED OPENING

DEVELOPER

Cedet

7,000

Q2 2018

Immobel Poland

Nowa Stacja Pruszków

27,000

Q4 2018

ECC Real Estate

Centrum Praskie Koneser

21,000

Q4 2018

BBI Development/ Liebrecht & wooD

EC Powiśle

10,000

Q4 2018

White Star

Centrum Janki (extension)

10,000

Q2 2019

Cromwell Property Group

Galeria Młociny

71,000

Q2 2019

EPP/Echo Investment

Atrium Targówek (extension)

9,000

Q4 2019

Atrium European Real Estate

1.5

MILLION SQM

the amount of existing modern retail space in Warsaw at the end of Q3 2017

Wola shopping center in the Wola district.

Mixed-use projects that besides office (or office and residential) space will also comprise sizable retail components include Centrum Praskie Koneser in the Praga Północ district (BBI Development and Liebrecht & wooD) and ArtN in the Wola district (Capital Park). In the very center of Warsaw, BBI Development is now finishing construction work on the Centrum Marszałkowska scheme. For its part, Immobel Poland will soon complete its Cedet investment.

Because of the ongoing changes in the retail market – including the ever fiercer competition between shopping centers and the growing expectations of buyers when it comes to the socalled shopping experience – many of the existing malls need to adapt to the current trends.

As for retail space offered as part of centrally located mixed-use developments, it will not only provide convenient shopping opportunities for the local inhabitants and employees, but will also – due to its high quality – attract buyers from other districts, Sadal explained.

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UP-AND-COMING MARKET Warsaw is still an emerging penthouse market, but it already offers some of the highest apartments in Europe. Luxury residential real estate in the city is moderately valued as global standards go, with upward pressure on prices forecast for the coming years

BY ADAM ZDRODOWSKI, MORTEN LINDHOLM

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US-POLISH JOINT VENTURE

Established in 1987 and headquartered in Denver, Colorado, Amstar is an American investment fund that acquires, develops and manages office, residential, retail, industrial and hotel real estate in the US and selected other countries. To date it has invested a total of around ₏4.9 billion in property around the world and bought or built more than 8,400 apartments. Amstar claims to be a unique investment fund in that it offers its clients direct access to decision-makers, has its own funds for new investments and takes decisions very quickly. BBI Development is a Warsawfocused developer that is now working on several large-scale projects in the city, including Centrum Praskie Koneser and Centrum Marszałkowska

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ne of the biggest single-asset transactions to have closed in Poland’s housing market in recent months took place at the Złota 44 tower in Warsaw earlier this year.

An anonymous buyer acquired an apartment of over 240 sqm located on one of the top floors of the skyscraper. Its exact price and location within the building have not been disclosed, but the value of the investment is estimated at almost PLN 11 million.

The price per sqm is believed to have amounted to approximately PLN 46,000.

In 2017, average apartment prices in Złota 44 – a luxury project designed by star architect Daniel Libeskind and completed by US investor Amstar (for whom it marked the entry into the Polish market) and WSE-listed developer BBI Develop-

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400 MILLION DOLLARS

the value of the most expensive penthouse in the world

ment – stood at PLN 30,000. The scheme’s owners have now put up for sale an almost 600-sqm, three-level penthouse accommodated on floors 52,53 and 54 of the tower. According to the investors, this is the highest apartment in the European Union – it includes a bedroom at 190 meters.

The total value of the penthouse has not been revealed; however, judging by the size and location of the apartment, its price will, in all likelihood, be more than twice as high as the price of the recently sold 240-sqm unit. Such prices may seem prohibitive for the average home buyer in Poland, but BBI Development and Amstar are not worried about the commercialization of the Złota 44 investment. They claim that sales are proceeding according to schedule.

“We have better results than the competition.

Demand for luxury apartments is not dwindling,” argued Michał Skotnicki, the management board

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LOKALE IMMOBILIA | RESIDENTIAL

GROWTH PROSPECTS

president at BBI Development. He added that this is also because of the numerous amenities that the building offers. Złota 44 – whose inhabitants include Robert Lewandowski, Poland’s best soccer player – houses a recreational floor that accommodates such amenities as a 25-meter swimming pool, a gym, a screening room with a golf simulator, a spa and a 400-sqm terrace with a Jacuzzi.

Christopher Zeuner, head of Europe at Amstar, pointed out that the number of affluent Poles has been growing and thus there are more and more potential buyers of luxury residential real estate in the country. KPMG data shows that in 2017 the number of well-earning Poles reached 1.1 million. “Wealthy Poles prefer to invest their capital in the real estate market – 76 percent of them, according to KPMG, have a second flat or house,” Zeuner said.

The prices in Warsaw could potentially match the current prices in Berlin and Amsterdam within the next three to five years

The recent record deal at Złota 44 says something about Poland’s residential market. Paweł Sztejter, vice president of the management board at Reas, said that until recently transactions valued at several or even more than ten million PLN only involved the sale of well located houses. Today, due to the growing buyer interest in upmarket apartments, such deals are also closed by developers building in the centers of large cities. This often pertains to high-rise projects, Sztejter said.

He added that while Poles were initially skeptical about residential towers, they are increasingly convinced that the luxury apartments in them are not only a good investment, but also an attractive place to live. Yet such apartments are, by definition, characterized by their limited availability and those which are located on the top floors are truly unique, on the city or even national scale, said Jolanta Matuszewska, a senior property advisor at Poland Sotheby’s International Realty.

Penthouses tend to be much more expensive than other apartments located within the same building. As for the supply, in the primary market there are usually just a few such units on offer across Poland at any given time and most of them are sold relatively quickly, she added.

Around ten are usually on sale in the secondary market. Of course, the Polish penthouse market is still nascent and the prices of such products in Warsaw cannot compare with the prices found in such cities as London, New York or Moscow.

According to Sotheby’s International Realty data, the most expensive penthouse in the world is in Monaco and is valued at $400 million.

“Standard” global prices of such apartments are lower – on New York’s Fifth Avenue they can be bought for approximately $30-40 million. In Poland, by contrast, the prices usually range between PLN 10-20 million. However, Matuszewska warned against focusing solely on the price – when it comes to such unique properties, comparing them by looking at any single parameter is unfair, she claimed.

On the other hand, experts predict that the prices of luxury apartments in Warsaw will continue to rise in the near future. According to a recent report by EY, the Polish capital is a city with a relatively low premium for luxury and can thus expect rapid price growth. The prices of luxury residential real estate in Warsaw could potentially match the current prices in Berlin and Amsterdam within the next three to five years, and the current prices in Paris and London within the next ten to eleven years, the report said.

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EVENTS

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

BEST OF WARSAW FOOD AND DRINK AWARDS The city’s top restaurateurs and chefs converged on the Sofitel on February 15 for the latest installment of the Insider’s prestigious Best of Warsaw food and drinks awards. Key winners on the night included Nolita, who, for the third year running, scooped the top prize in the fine dining category, Vietnamka (Casual Dining), and Plato (Neo Bistro). The big winner, however, were Bez Gwiazdek who came away with awards in the categories for Best Modern Polish and Best Chef (Robert Trzópek).

Other gongs were handed out to Martin Gimenez Castro of Salto (Inspiration), Robert Sowa of N31 (Lifetime Achievement), Sebastian Wełpa (Outstanding Achievement) and Malka Kafka of Tel Aviv (Restaurateur of the Year). Of the newbies, Hala Gwardii were recognized for Best Food Concept, Winsky as the Best Drinks Concept and Arkadiusz Wilamowski as the Best Newcomer on account of his outstanding debut as head chef at Chłodna 15.

Price: zł. 20 ANNUAL EDITION 2018

BEST OF WARSAW ISSUE ON SALE MARCH 15 BLAZING STAR

The chef that’s become the talk of the town

REVEALED INSIDE

Warsaw’s top chefs, restaurants, bars, clubs and buzzes as chosen by the Insider and its jury!

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PLUS:

Plus: restaurant design, trends to watch, the neon revival and much, much more!

EVENTS

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

REVOLUTIONARY CHANGES FOR ENTREPRENEURS IN 2018 On January 9, 2018, the 8th KPMG Tax and Accounting Congress took place in Warsaw. This year’s edition brought together over 1,100 representatives of management staff, including financial directors, chief accountants, heads of financial reporting and controlling from companies from all sectors of the economy. Participants listened to 11 lectures from KPMG experts on important changes in the areas of taxation, accounting and law, which will have a significant impact on entrepreneurs in 2018.

During the event, upcoming changes to the legal acts concerning PIT, VAT, CIT and transfer prices were introduced. Technological trends in taxes, a new relief for R&D and other business challenges awaiting entrepreneurs in 2018 were also presented. KPMG experts discussed new IFRS 15 and IFRS 16 standards as well as topics related to transaction control increasing tax efficiency.

Speakers also raised the issue of Cybersecurity CFOs and discussed a new approach to personal data protection (RODO).

As in previous years, a survey on the Polish tax system was conducted among the participants of the Congress. Its aim is to get to know the assessment of the Polish tax system from the point of view of top-level staff employed in enterprises from various industries throughout Poland. The results will be the basis for the preparation of a report entitled: "The Polish tax system according to the participants of the 8th KPMG Tax and Accounting Congress," which will be released soon.

The KPMG Tax and Accounting Congress is the largest project of this kind in Poland, organized by the auditing and consulting company KPMG since 2011.

Detailed information about the event, including the agenda and presentation of speaker profiles, is available at kpmg.com/pl/kongresKPMG.

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

VICTORIA’S SECRET AND UNIBAIL-RODAMCO BIG WINNERS AT THE CEE RETAIL AWARDS Lingerie company Victoria’s Secret and investor/developer Unibail-Rodamco came out on top at the Central Eastern Europe Retail Awards.

After a significant boost to the retail real estate industry, the 10th annual EuropaProperty CEE Retail Awards welcomed a record number of attendees to its gala, held at the five-star Intercontinental Hotel Warsaw. It brought together some 450 top real estate professionals from the major retail market sectors in the CEE region.

Unibail-Rodamco won the “Developer of the Year” award along with three development prizes for their projects in Poland and the Czech Republic.Two big prizes also went to Victoria’s Secret, which collected wins for “Fashion Retailer Over 1,000 sqm” and “Newcomer 03.27-28 Blockchain Tech_KF1035 reklama drukowana_174x75mm DRUK.pdf 1 of the Year.”

Other winners included shoe retailer Kazar for “Overall Retailer of the Year,” CBRE Global Investors for “Investor and Asset Management Firm of the Year,” TPA Horwath for “Tax and Financial Adviser of the Year,” and MK Illumination for “Professional Service Provider of the Year.”

Other major accolades were won by IKEA’s Franowo Centrum in Poznań in the “Best Convenience Store” category and Arkadia for “Best F&B Concept” for its Grand Kitchen. Mayland’s Serenada in Kraków won “Retail Project of the Year” in the medium category, while the Wroclavia shopping mall in Wrocław won in the large category.

Mayland’s Maciej Kielbicki claimed the “Professional of the Year” award, and the highly contested “Shopping Center Director of the Year” went to Carrefour's Ewa Karska.

2018-02-06 15:13:23 For the full list of winners go to www.retailawards.eu

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

THREE MICHELIN STARS AT THE FRENCH-POLISH CHAMBER OF COMMERCE GALA Philippe Mille of the two-Michelin-starred Le Parc Restaurant at the Les Crayères Castle in Champagne; Wojciech Modest Amaro, Chef of the atelier Amaro – the first restaurant in Poland to receive a Michelin star; and Maciej Majewski from the Warsaw restaurant La Brasserie Moderne prepared a special dinner at the French-Polish Chamber of Commerce (CCIFP) Gala. The menu was a combination of Polish and French culinary traditions.

On February 9, the annual CCIFP Gala took place at the Sofitel Warsaw Victoria hotel, the main theme being French Champagne. This year's celebration was not only an excellent opportunity to establish valuable contacts, but also provided unforgettable taste sensations. More than 500 guests participated in the event, including, among others, the CEOs of the largest French capital companies, as well as representatives from the world of culture, politics and the media. This year, chefs Philippe Mille, Wojciech Modest Amaro and Maciej Majewski, who between them boast three Michelin stars the highest accolade in the world of gastronomy were asked to prepare the dinner at the Gala. The dishes were accompanied by Champagne, specially selected for the occasion to complement the qualities of the first-class cuisine.

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The blessings of a flexible working day I WOKE UP WITH A MILD HEADACHE and my lenses hot glued to my cornea. “At least I brushed my teeth before I keeled over,” I thought. Making out the time on the clock in the dark was easier than I’d thought (because of the remnants of the lenses). 4:30 am. Great. Now, I need to shower, change into jammies and either try to sleep for a couple more hours or get back to work.

People, I learnt, work at very different times of the day.

Unless you have a typical desk job, with a nine-to-fiveish framework, you will ultimately revert to your “inner clock.” By that I mean you will work when your brain and your family situation allow you to be the most productive.

I work with people who wake up at 6 am, and work from 7 am till 3 pm. After that they start to lose focus. I have a close coworker like that. When he’s “sundowning,” I’m stretching to begin my most creative work. I work primarily at night with a nap during the day and a longer nap sometime after sunset.

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Recently, I met a person who regularly works 16 hours a day. He sleeps between 7.30 pm and 1 am. Then he wakes up, gets down to serious, creative work for six hours, and after that he “runs on autopilot” throughout the day – he takes meetings, answers emails – things that don’t require too much actual input on his part. Naturally, he can only do that for a few months at a time before his energy starts to wane and he’s in a dire need of a longer holiday.

A surprising number of people work weird hours. We’re happy, on the one hand, that we don’t have to sit in the office for the entire day: you can run errands, take the kids to doctor’s appointments, get the whole swimming pool to yourself at the gym, go to the DMV or the post office when the lines are the shortest. But are we really as productive as we like to think we are?

For one, meetings, even with other time-challenged people will be an issue.

Unfortunately, I do have meetings with the “daywalkers” as well. When I have to get up before 11 am, no amount of coffee can make me coherent. And if your meetings require you to be at the top of your game, you’ll only have about a three-hour window to do them. On the plus side, you can Skype with Singapore at 3 am as if you were sitting with them at a table sipping your morning coffee.

Deadlines will always screw with your working cycle. It is ten times harder to “burn the midnight oil” when you’re burning it at 2 pm after a 14-hour workday. It’s like working night shifts, which switch around so much that you find yourself constantly forgetting what day of the week it is.

You have to remember to set the alarm clock right: Four hours is ok, but five hours is bad, because it interrupts your natural sleep cycle.

It’s harder to get up after two hours’ sleep than an hour and a half. You’ll find yourself constantly making those calculations to avoid being woken up mid-cycle.

Then there is family life – If you work like we do, and if your spouse is “normal,” you’ll find it hard for your days to intersect. Social gatherings will become something you have to will yourself to do. Long-distance journeys will become hazardous and you’ll find yourself even more addicted to caffeine.

Flexible working hours are great. But some people, me included, take them to the extreme.

No matter how many times you tell yourself that you like it better this way, the ugly truth is that you’re just torturing yourself and you’re not nearly as efficient and productive as you’d like to think. - Beata Socha

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LAST WORD

Warsaw

The Largest Metropolis in CEE – New Areas for Development The Mayor of Warsaw is pleased to invite you to Warsaw events at MIPIM 2018: Warsaw Session Panel “The Largest Metropolis in CEE – New Areas for Development” on March 14th 2.30 p.m., Ruby Room, Palais des Festivals The Premiere of the film “The Future of Warsaw” by Poland Today, on March 14th 2.30 p.m., Ruby Room, Palais des Festivals Presentation of the report “Winning in Warsaw – Prospects for Business Service Centers”

by Elias van Herwaarden, Deloitte and a Networking Cocktail on March 14th 4.30 p.m., at Warsaw stand R8.D1, Palais des Festivals

Visit us at MIPIM 2018!

Our Partners at MIPIM 2018

www.e-warsaw.pl | www.mapa.um.warszawa.pl