WBJ Observer #5 June 2014

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OF REAL ESTATE N EWS

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june 2014

25

Number 05

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

years of the real estate sector > 52

Polish design Art or business? >28

Legia Will the Polish club make it to the Champions League? > 39

e - commerce

Panattoni’s Pan-European strategy > 62

Behind the mascara Two women found a revolutionary make-up removal glove> 35

Trade duel

How e-commerce is conquering Polish retail june 2014

also in this issue: • C h e m i c a l s • S p o r t s b a r s • m a n a g e m e n t • C o m m e n ta r y • N e w s

An expedition to conquer new territories requires a reliable team. We are experienced merger and acquisition advisors, operating in Poland and around the world.

Financial audit • Tax advisory • Accounting Legal advisory • Due diligence • Mergers & Aquisitions

RSM Poland employs more than 110 professionals in Warsaw and Poznań. RSM has over 33 thousand professionals worldwide.

lll IN THIS ISSUE Try these:

4

lll news

4-8 In Review Latest News 9 Facts and Figures Economy 10 Time Machine 11 Who’s News Appointments 12 Dateline

13

lll commentary 13 Politics EP Elections 14-15 Legal Land Development 16 Stocks OFE 17 Legal E-commerce

28

22-26

e-commerce 47-71

lokale immobilia

lll features

28-30 Design Trains, yachts and furniture 31-33 Chemistry Sector overview

35

lll entrepreneurs

35-37 Phenicoptere Make-up removal glove 39-43 Legia What’s the next step?

44-46 Management Corner CSR 72-73 Cityscape Wrocław 74-75 Ranking Technology parks

76

lll lifestyle

18-21

super-pharm interview

76 Gadgets 77 Events 78 Sports bars 79 Hotels 80 On a final note

43-44

W B J O B SERVER • j u n e 2 0 1 4

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Market intelligence from WBJ Group Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Editor-in-Chief, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Kamila Wajszczuk Editor, Poland A.M. kwajszczuk@wbj.pl John Beauchamp Copy Editor, Managing Editor wbj.pl jbeauchamp@wbj.pl

made in poland

investing in poland

Profile: A guide to Polish exporters and Poland’s fastest growing export industries with macroeconomic and legal analysis. Multi-lingual.

Targeted at: Foreign firms seeking Polish goods

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Profile: Investment calling card for Poland in cooperation with major institutions and consultancies.

Analysis of key opportunities, with legal and tax advice. Multi-lingual.

Profile: Extensive database tracking more than 70 Polish industries/sectors, 3,000+ firms; English, Polish

Targeted at: Foreign investors

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Next edition: September 2014

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news

lll INREVIEW News highlights of the past month

EC signs funds agreement with Poland

P

rime Minister Donald Tusk’s ruling Civic Platform (PO) managed to win the European parliamentary election in late May with a less-than-one-percent margin over the opposition Law and Justice (PiS) party.

With 32.13 percent of the vote, PO only just managed to secure victory, after earlier results from the PKW State Electoral Commission put PiS in front. However, after counting all the ballots, including those polled abroad, Tusk’s party clinched the vote.

Opposition leader Jarosław Kaczyński’s PiS managed to poll 31.78 percent, marking yet another failure to seal victory since the party lost power to PO in the 2007 Polish general election. However, with the result practically a tie, both PO and PiS go into the European Parliament with 19 seats each.

The Democratic Left Alliance (SLD) together with the Labor Union (UP) took 9.44 percent in the ballot, and gained five seats in the EP. Junior coalition partner Polish People’s Party (PSL) claimed just 6.8 percent of the vote, with four candidates from the party joining PO in the European People’s Party in the EP. Meanwhile, in a surprise move the New Right, led by maverick right-wing libertarian Janusz Korwin-Mikke, won the support of 7.15 percent of voters. Ahead of the elections, KorwinMikke said that the European parliament building should be transformed into a brothel.

Other parties did not win enough support to gain seats in the European Parliament.

Solidarna Polska was left with 3.98 percent, Europe Plus with 3.58 percent, Poland Together with 3.16 percent and the National Movement with 1.4 percent.

Turnout at the election was 23.82 percent.

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j une 2 0 1 4 • WBJ OB S E R V E R

No Netflix in Poland yet Contrary to earlier market

reports, video on demand (VoD) service provider Netflix will not enter the Polish market in the near future.

The company is eying European expansion, with plans to launch activity in Germany, France, Austria, Belgium, Luxembourg and Switzerland by the end of this year. It is already present in the Nordics, Ireland, the Netherlands, Sweden, the United Kingdom and Ireland. Netflix also operates in the US, Canada and Central and South America. In January this year Polish media reported that Netflix could come to Poland soon after the company published a job offer for translation into Polish.

Images: Civic Platform/Flickr, Shutterstock

Ruling Civic Platform clinches Euro ballot in Poland

The European Commission accepted a partnership agreement with Poland towards the end of May, the European Commissioner for Regional Policy, Johannes Hahn informed.

The document lays out investment strategies for the European funds due in the 2014-20 budget.

With €80 billion in funds within the cohesion policy framework, “Poland is the EU’s biggest beneficiary and without a doubt, the most examplary when it comes to utilization of the funds,” said Hahn. A similar agreement was signed with Germany, Denmark and Greece.

news

Piechociński: Pendolino contract may be terminated The Pendolino train delivery contract between Poland’s state railway operator PKP and France’s Alstom could be terminated as a result of a major business conflict, Deputy Prime Minister and Economy Minister Janusz Piechociński said mid-May. In his opinion, the supplier has failed to meet the necessary requirements which would see the trains certified to run at the agreed speed negotiated in the contract.

Alstom has said its trains would be certified to reach a speed of 160 km/h, while PKP had asked for 250 km/h. In reaction to the statements, PKP announced that it is not considering terminating its contract with Alstom.

It has however asked the contractor for urgent talks. PKP has twenty new Pendolino trainsets on order worth €400 million.

The first high-speed trains are expected to start operating in mid-December.

PM Tusk: Energy dependence an economic problem for Europe Prime Minister Donald Tusk was in Brussels in late May, where he attended a European Commission conference on European energy security.

Speaking at the conference, which was also attended by the EC head Jose Manuel Barroso and the EU’s Energy Commissioner Genther Oettinger, Tusk said that “energy dependency is an economic and political problem for the EU, which limits its political capabilities.”

According to PM Tusk, the EU’s current gas market is ineffective and needs an overhaul.

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Sweet victory for Ukraine’s chocolate king

Confectionery magnate Petro Poroshenko managed an easy sweep to victory in the presidential elections in Ukraine, claiming 57.31 percent of votes with around 50 percent of votes counted as of press time.

An estimated 80 percent of Ukrainians voted in the ballot despite tensions in eastern parts of the country.

Poroshenko’s main opponent, Yuliya Tymoshenko, managed to poll some 12.39 percent of the ballot, although she made clear that she would accept the result, sparing the country a second round of voting.

All other candidates’ results were below 10 percent.

Meanwhile, in eastern regions of the country, where pro-Russian rebels managed to seize ballot boxes and shut down polling stations, turnout was low. Earlier on polling day, voter turnout in Donetsk amounted to 5.48 percent.

Ahead of the elections, an Italian photoreporter and his Russian translator were killed near the city of Sloviansk in eastern Ukraine.

The two men died from artillery fire, while a French journalist was also injured in the attack.

figure of the month

€ 80 bln

is the amount of cohesion funds poland will receive between 2014-2020 from the eu

j une 2 0 1 4 • WBJ OB S E R V E R

LNG terminal to be ready

by H2 2015?

The LNG terminal in Świnoujście will start commercial operations in late May or early June 2015, Deputy Prime Minister Janusz Piechociński told the Polish Press Agency late May. Test operations will be launched in autumn this year.

“It will not be a situation where politicians come in the autumn, cut the ribbon and announce that the terminal is operational. The process will take several months,” said Piechociński.

The terminal, built by state-controlled SPV Polskie LNG, is expected to have an operating capacity of 5 billion cubic meters of LNG annually, which may be expanded to 7.5 billion cubic meters.

Images: Shutterstock, Polskie LNG

Shorts

>> international

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Years of experience of countless chefs are the foundations of Ferier company. To this day those chefs hone their skills in a dynamic and technologically advanced company.

news

“We ordered a tiger so we can’t accept a cat. We also paid for a tiger, and not for a cat. And our partners, even world players, must understand that.

Deputy PM and Economy Minister Janusz Piechociński about Poland’s Pendolino order. (TVN24)

>> domestic

5.4% was

the year-onyear growth of Poland’s industrial output in April (GUS)

General Wojciech Jaruzelski dies aged 90

G

eneral Wojciech Jaruzelski, the last communist leader of Poland as well as the first post-communist president, died on May 25 at the age of 90. He had been fighting cancer for several years.

The general is best known

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for having introduced martial law, which lasted from 1981 to 1983. The move was seen as a crackdown against the rising Solidarity movement.

He had always explained the deed by stating that at the time, Soviet troops were ready to intervene in the

j une 2 0 1 4 • WBJ OB S E R V E R

country should there have been further unrest.

Jaruzelski, born in June 1923, was deported to Siberia during World War II and came back to Poland as part of a Polish army unit created by the Soviets. After a military career, he joined the top

executive body of the Polish communist party in 1964.

In 1981 he became first secretary of the party, the de facto head of state. In 1989, he was elected the first president of a democratic post-communist Poland, a role he played for only one year.

n e w s / ec o n o m y

facts and figures Data overview

WARSAW STOCK EXCHANGE AS OF APRIL 2014

455 455 455

Data Dataoverview overview

0.3%

WARSAW STOCK EXCHANGE WARSAW STOCK EXCHANGE Number of listed companies AS OFOF APRIL 2014 AS APRIL 2014

was Poland’s CPI inflation in April.

0.3% 0.3% was Poland’s CPI was Poland’s CPI inflation in April. inflation in April. €291.6 million

Trade volumes

Number of of listed companies Number listed companies

was Poland’s foreign trade surplus in the first quarter of 2014. was Poland’s foreign trade was Poland’s foreign trade surplus in the surplus in the first quarter of of 2014. first quarter 2014.

13% 13% 13%

Shares

UNEMPLOYMENT (April)

Shares Shares Bonds

PLN 79.49 billion PLN 79.49 billion PLN 337 million

UNEMPLOYMENT UNEMPLOYMENT (April) (April)

2.5%

Bonds Bonds Futures

PLN 337 million PLN 337 million PLN 3.64 billion

remains the National Bank of Poland’s reference interest rate. remains the National remains the National Bank of of Poland’s Bank Poland’s reference interest rate. reference interest rate.

Futures Futures Growth of main index (WIG), ytd

2.5% 2.5%

PLN 3.64 PLN 3.64billion billion 1.19% Growth of main index (WIG), ytdytd Growth of main index (WIG),

1.19% 1.19%

Highest growth in past two years

PLN 3,976.80 PLN PLN 3,976.80 3,976.80

In the first quarter of 2014, Poland’s economy grew at the fastest annual pace since Q1 2012. A flash estimate released by the Central Statistical Office (GUS) in mid-May saw GDP growth at 3.3 percent year-on-year.

The figure was higher than both the market consensus and estimates issued earlier by Poland’s Economy Ministry.

GUS was due to publish revised GDP growth figures on May 30.

Meanwhile, a number of institutions have raised their projections for Poland’s economic growth. The International Monetary Fund sees 2014 growth at 3.1 percent, the European Bank for Reconstruction and Development at 2.8 percent and the European Commission expects it to be 3.2 percent.

was the average salary in the Polish enterprise sector in April.

was thethe average salary in in was average salary thethe Polish enterprise Polish enterprise sector in in April. sector April.

Close to zero

1.2 Year-on-year CPI inflation in 1.0 April 2013 – April 2014 Poland,

5

* flash estimate

Quarterly 3GDP growth in Poland in year-on-year terms, Q1 2009 – Q1 2014

Apr. ‘14

Jan. '14

Feb. '14 Apr. ‘14

Mar. '14

Dec. ‘13 Mar. '14 '14 Feb.

Apr. '14 ‘14 Mar.

Oct. '13

Nov. '13

Apr. '13

Q4 2013

Q1 2014*

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Q2 2012

Q1 2012

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Q3 2010

Q2 2010

Q1 2010

Q4 2009

Q3 2013 Q1 2014*

Q42014* 2013 Q1

Q3 Q4 2013 2013

Q2 Q3 2013 2013

Q1 Q2 2013 2013

Q4 Q1 2012 2013

Q3 Q4 2012 2012

Q2 Q3 2012 2012

Q1 Q2 2012 2012

Q4 Q1 2011 2012

Q3 Q4 2011 2011

Q2 Q3 2011 2011

Q1 Q2 2011 2011

Q4 Q1 2010 2011

Q3 Q4 2010 2010

Q2 Q3 2010 2010

Q1 Q2 2010 2010

Q2 2009

Q3 2009 Q4 Q1 2009 2010

Q1 2009 Q2 Q3 2009 2009

Q3 Q4 2009 2009

Sep. '13

0.0 0.0 Feb. '14 '14 Jan.

0

Jan. ‘13 '14 Dec.

0.2 0.2

0

0.4 0.4

Jul. '13

1

Aug. '13

1

Q1 2009

2

0

Dec. '13 ‘13 Nov.

0.0

2

1

Jun. '13

0.6 0.6

3

Nov. '13 Oct. '13

0.2

3

* flash estimate * flash estimate

Oct. '13 '13 Sep.

0.8 0.8

4

Apr. '13

0.4

4

May '13

0.6

1.0 1.0

Sep. '13 '13 Aug.

2

Aug. '13 Jul. '13

0.8 1.2 1.2

Jun. '13 '13 May

5

May '13 '13 Apr.

5

Jul. '13 '13 Jun.

Back on the growth track 4

Q1 Q2 2009 2009

Imags: Ministry of Finance, Ministry of Economy

Data source: Warsaw Stock Exchange, Central Statistical Office

€291.6 €291.6million million

Trade Tradevolumes volumes PLN 79.49 billion

“It’s good to be a green island, but it’s even better to be a green hill on the plains.”

Finance Minister Mateusz Szczurek on balanced economic growth in both Poland and the EU.

W B J O B SERVER • j u n e 2 0 1 4

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15 years ago

10 years ago

5 years ago

June 1999 German rail company Deutsche Bahn has become the second international transport company to express an interest in becoming involved in restructuring Polish State Railways (PKP).

Johannes Ludewig, chairman of Deutsche Bahn’s management board, proposed that PKP become a part of Rail Cargo Europe. The other company interested in being PKP’s suitor was US-based Wisconsin Central.

May 2004 One irony of EU enlargement is that instead of opening the way for foreign meat potentates to consolidate the local meat processing market through acquisitions, it seems to be sparking a rush to consolidate in the West.

Giant retailers, such as Auchan, Metro and Tesco, report plans to significantly increase internal exports from Poland. Western European players are reacting by consolidating fast.

June 2009 Press and FMCG distributor Kolporter has announced it will introduce its own e-book reader in the autumn. The device, named eClicto, will be manufactured in Poland along with its software. It will cost about PLN 1,000 which is half the price of a Kindle and just a tad cheaper than the Sony Reader.

June 1999 Cyber-catholics never had it so good. As Pope John Paul II made his way around Poland during his seventh trip to his homeland, internet users were able to follow his every move. “There are over 37 web pages on the internet covering the pope’s visit,” said Adam Schulz, a priest and spokesman for the Polish Episcopate. u

June 2004 “They’re coming,” warns an advertisement recently published in the press. Next to the dire warning is a white-and-red tie, which Samoobrona, or Selfdefense, has chosen as its symbol.

“Sweden is just 250 miles away. Buy a kayak.” The ad captures the mood of millions of Poles, as well as that of many foreign investors. u

June 2009 Poland’s GDP growth in the first quarter of the year was the highest in the EU, according to figures published by Eurostat, which put Q1 growth figure for Poland at 1.9 percent, which was closely followed by Cyprus, whose Q1 GDP growth was assessed at 1.6 percent. The remaining countries all posted negative GDP growth. u

ARABIAN HORSE DAYS POL AND 2014

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j une 2 0 1 4 • WBJ OB S E R V E R

Image: Wikimedia

TIMEMACHINE From our pages . . .

n e w s / app o int m ents

Who’s News Mirosław Taras was appointed the new CEO of state-controlled coal producer Kompania Węglowa. His job won’t be an easy one, as KW – the EU’s biggest coal producer – is bleeding money due to high costs and low coal sales. Just last year it lost PLN 1 billion on coal sales alone. Recently the company had to suspend operations in some of its mines for a week as a cost-cutting measure.

Marek Staszek will become the new CEO of DB Schenker Polska, replacing Christian Schreyer. He will take over the post on July 1. DB Schenker is the second-biggest freight rail operator in Poland with a 20 percent market share. “Marek Staszek will continue the defined directions of development and all undertaken activities with the favor for the whole DB Schenker Rail Group and all employees. In almost 20 years of work in the railway business, he has acquired unique expertise,” said Hans-Georg Werner, Member of the Management Board for Region East of DB Schenker Rail.

The supervisory board of Poland’s second largest telecommunications firm Netia has appointed Adam Sawicki as the company’s CEO. The appointment comes into force as of June 2. Sawicki will replace Mirosław Godlewski, who has been Netia’s chief executive since 2007. The newly-elected CEO headed GTS Central Europe in 2008-2011. He earlier worked in TeliaSonera. In 2012-2013 he was deputy CEO at metals and mining giant KGHM. Nicolas Jedraszak was named new CEO of e-retailer Frisco.pl. “This year we’re planning further investments in marketing and new technologies, which will help us reaching new clients. With fast growth comes many organizational challenges, but our business model is strong enough and the market’s growth perspective is big enough so we’re very optimistic about our future,” Jedraszak said.

Reklama_ Warsawa Business Journal 23 maja 2014 14:45:36

W B J O B SERVER • j u n e 2 0 1 4

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n e w s / dateline

CALENDAR

JUNE ADMINISTRATIVE DIRECTORS SUMMIT

JUNE

5-6

Event: Top managers from the biggest Polish companies will discuss how they manage their offices, from administrative procedures to advice on finding and leasing the perfect office.

Location: Courtyard by Marriott Warsaw Airport Web: ad-summit.com/

WALLSTREET

JUNE

6-8

Event: The Individual Investors Association’s annual meet-up with the biggest investors, stock brokers, WSE management and state officials in attendance.

Location: Hotel Gołębiewski, Karpacz Web: sii.org.pl

IT FUTURE EXPO

POLISH REAL ESTATE FORUM

JUNE

9-10

12

Event: The conference addresses key players on the residential and commercial real estate market.

Location: Sheraton Sopot Hotel Web: konferencje.nowyadres.pl/en/polishreal-estate-forum

J U N E 2 0 1 4 • WBJ OB S E R V E R

JUNE

10-11

Event: More than 100 companies from Poland and Europe will present their innovative technologies in the field of software and hardware solutions.

Location: National Stadium, Warsaw Web: itfuture.pl

c o m m e n t a r y / p o litics

remI adekoya former politics editor of WBJ Observer He also writes for The Guardian

European Parliament elections and Poland’s frustrated youth While the major parties do battle, there is one outsider who is making waves among the electorate

Images: Shutterstock

By

the time you read this column, the European Parliamentary elections will have been over and done with and one of Poland’s two biggest parties will likely be gloating over the results. If the prime minister’s party, Civic Platform (PO), prevailed, then it will doubtless be boasting right now of having won seven major elections in a row, an impressive feat by all accounts.

If, on the other hand, its biggest rival Law and Justice (PiS) carried the day, then its leader Jarosław Kaczyński will be able to claim his first election victory in nine years, a long time for a leader to keep losing.

As WBJ Observer went to press, opinion polls had both parties running neck-and-neck.

The party victorious on May 25 will have significant psychological momentum going into the local government elections planned in Poland this year as well as the all-important parliamentary poll scheduled for 2015.

Why does a 72-year-old crank appeal to Poland’s frustrated youth?

Election campaigns for the European Parliament are usually a dull affair. It’s difficult to get people interested in elections to a parliament that seems very far away from their everyday lives, literally and figuratively. But this time around, Polish media were handed a nice present in the form of a 72-year-old crank named Janusz Korwin-Mikke who wants to “destroy the EU

from within.” For a start, Korwin-Mikke says he would like to put the Strasbourg parliament building to better use by transforming it into a whorehouse.

Korwin-Mikke, who heads a party called the New Right, favors Dickensian-era capitalism and brands all the major politicians in Poland as “Bolsheviks.” KorwinMikke is anti-EU, says women are dumb and should not be allowed to vote.

Once he also went one step further, complaining that the Paralympics are an idiotic idea akin to organizing a “chess competition for dunces.” Oh, by the way, he thinks democracy is the “dumbest system on earth because the masses are stupid” and would prefer a return to monarchic rule.

According to various polls, he is very popular with large groups of Poland’s youth and was polling strongly enough to make it into the EP at the time I was writing this column.

Many young Poles are frustrated with the current system. Roughly a quarter of the country’s youth are unemployed and those who do have jobs often earn low wages compared to their peers in Western Europe.

Someone must be responsible for all this and somehow Korwin-Mikke seems to have convinced many of them that Europe’s socialist leanings and democracy are to blame. No matter how the New Right actually performed on May 25, the fact that such views are supported by many young Poles should give mainstream politicians food for thought. u

W B J O B SERVER • j u n e 2 0 1 4

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c o m m e n t a r y / legal

Jakub treszczuk Legal counsel at Nowicki and Ziemczyk Adwokaci i Radcowie Prawni law firm

Is land development in Poland under any control?

Just what really is going on in Poland’s landscape?

14

J U N E 2 0 1 4 • WBJ OB S E R V E R

such, it’s worth considering deeply the empowerment of public authorities in this matter and the reasons for which currently binding legal provisions appear to be ineffective.

Spatial development plan – a greater good, not a lesser evil Local authorities have a great number of measures at their disposal to influence the development of public space, including local spatial development plans as a key instrument which, when properly drawn up, may ensure the harmonious and coherent shaping of any area. However, according to analysis published by Geography and Spatial Organization PAS in January 2014, spatial development plans covered merely 27.9 percent of the whole territory of the country at the end of 2012, whereas in large cities this percentage was understandably at a higher level of 42.5 percent.

So what about the supervision of land management in places not covered by spatial development plans? Well, in theory, separate planning permits should be issued for each property investment. However, administrative bodies do not necessarily take into consideration the arrangement of neighboring properties. As a consequence, individual permits and no general area development plan in respect to ca. 70 percent of the country’s territory undoubtedly lead to even greater chaos in public space.

The situation gets even worse when entire residential estates are built on the basis of such permits. Namely, such estates are developed in agricultural areas deprived of social (e.g. schools, kindergartens or shops) and communication infrastructure.

Images: Kancelaria N. Z. J. Tereszczuk

R

esidential blocks painted in all the colors of the rainbow, billboards and banners covering the last free patches of landscape, as well as fenced, gated and guarded estates emerging in between meadows. These and other phenomena raise the following question in Poland: is anyone in the country in control of the development of public space?

The rapid spread of negative trends in housing and urban development has recently sparked a wide-ranging debate within Polish society concerning the shaping of spatial order and the supervision over land management.

In his feature stories on Polish public space (“Wanna z kolumnadą,” Czarne 2013), Filip Springer tried to get to the roots of these problems. As it turns out, the vast majority of Poles still don’t value the importance of this issue, thus the process of averting the negative implications of today’s negligence may pose challenges in the future. According to the results of a poll conducted by TNS Poland in June 2013, nearly 7 out of 10 Poles believe that public space in their surroundings is well-ordered.

However, after a ten-minute walk through any city or town in Poland, it becomes obvious that such an opinion is simply false. Interestingly, the level of Poles’ satisfaction with their surroundings significantly dropped between 2010 and 2013. Such a decline is most probably the result of actions undertaken by a number of NGOs, which are putting massive efforts in raising social awareness and responsibility for the appearance of public spaces.

Unfortunately, even grassroots activities are not enough to halt the degradation of public space. As

c o m m e n t a r y / legal

Negative implications resulting from the lack of wideranging spatial development plans are pretty obvious, although the question why there are still so few of them in the country gives interesting food for thought.

Anticipating the obvious answer – complex and timeconsuming adoption procedures – is only part of the problem. This is especially apparent as more and more often municipalities happen to intentionally delay the acceptance of spatial development plans. Why? Well, it’s obviously about money. If, according to such a development plan, any road runs through a given plot, the municipality is obliged to pay compensation to the owner of this property. Therefore, many of them realized that the adoption of spatial development plans will shoot their budgets to pieces. In this way, turmoil in public spaces is perceived by authorities as a lesser evil in comparison to the consequences of plan adoption. It seems that Poland will lack consistent spatial development plans until this issue is solved.

Craze for colors In addition, as much as 73 percent of Poles believe that good advertising may serve as an interesting diversification of space (TNS Poland research, June 2013).

Considering the number of billboards, banners, large

format adverts and other types of outdoor promotion, it seems that we have crossed the bounds of “interesting diversification” long ago. The latest attempt to iron out the outdoor advertising mayhem was related to large format adverts covering the entire area of residential buildings. Inhabitants of flats with windows deprived of sunlight on a 24-hour basis initiated efforts to ban such practices, which resulted in changes to the law.

However, even in this case, the adopted regulations turned out to be ineffective as exceptions to these provisions are very often exploited. Namely, despite the ban, regulations stipulate the possibility to cover the elevation of a residential building with an advertisement if it is being refurbished. Upon the introduction of new provisions, a number of fictitious renovations started in many properties allowing for the buildings to still be covered with these “sheets” of advertising.

This last example proves that the current state of Polish public space is not only the outcome of the lack of effective legal regulations. Equally significant is the sense of responsibility for public space and the level of its awareness in Polish society. In a nutshell, the combination of these two factors might fuel a long-term improvement in the field of spatial development and design in the country. u

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c o m m e n t a r y / st o c k s

mateusz adamkiewicz Financial Markets Analyst

A ship without a captain Open pension fund reform wreaks havoc on the WSE

T

he situation on the Polish market is improving.

Economic growth accelerated to the fastest pace in two years. The economy expanded by 3.3 percent, mainly driven by exports, but corporate investments and private consumption are picking up too. These developments are very positive especially in the difficult European environment. Thankfully, we are not observing any noticeable impact from the Ukrainian conflict and Poland has become the famous “green island” once again.

The economy is expanding at a fast pace and the złoty remains stable (with some downward pressure). The housing market is recovering and we are waiting for EU funds which should increase the pace of GDP growth further. It couldn’t be more optimistic. Well, actually it could – the WSE is not catching up at all. Two months ago, I mentioned some reasons for the underperformance of Polish stocks due to the situation in Ukraine and other problems on emerging markets. Those factors were important in the shortterm, but there is something even more important – changes to the pension system.

The Warsaw Stock Exchange has been underperforming since the Polish government showed its proposal to change the pension system last year. Changes were, and are, potentially harmful for companies listed on the WSE. OFE private pension funds have been

generating stable and significant demand for equities, and last year, pension funds might have spent around PLN 700 million on stocks according to our estimates.

It is very possible that in the future private pension funds will be selling their stakes in companies due to lack of capital.

The government gave future pensioners some time to decide whether they want to leave 2.92 percent of their pension contributions in the private sector. It looks like an irrelevant number, but in the scale of whole country we are talking about billions of złoty.

Billions that could flow into the stock exchange and now most likely won’t. If the present pace of claims applications to stay in the private sector remains, less than 10 percent of future pensioners will stay in private pension funds. This would be a catastrophic scenario for Polish stocks, but it is very plausible. In this case, private pension funds will have to sell around PLN 500 million in stocks monthly in order to raise capital for pension payments.

Demand will become supply and the most stable participants of the market will lose their steadily flowing capital. This scenario is being discounted by the market, but its full potential is not fully known so far.

The Warsaw Stock Exchange won’t be the same without private pension funds. Will the ship stay on course without a captain? u

”If the present pace of claims applications to stay in the private sector remains, less than 10 percent of future pensioners will stay in private pension funds.

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c o m m e n t a r y / legal

Agnieszka Wiercińskia-Krużewska

attorney, partner, Wierciński, Kwieciński, Baehr sp.k.

Katarzyna Syska

lawyer, Wierciński, Kwieciński, Baehr sp.k.

Legal issues in e-commerce E-commerce is on the rise, but a number of pitfalls await for the unacquainted

P

Image: Shutterstock

oland is one of the fastest growing e-commerce markets in Europe. This trend has been recognized by foreign online stores which have started offering their services to Polish consumers as well. Even the mighty Amazon has decided to set up its distribution centers in Poland and, if gossip is to be believed, will also launch a Polish-language website in the near future.

For those planning to start an online business in Poland, it is certainly advisable to have the potential business venture analyzed from the legal perspective and have the legal documents, such as the contract terms, drafted. Some of the most common legal issues connected with e-commerce are described below.

E-commerce 101 First, certain general information about the service provider has to be given and made permanently accessible to service recipients, such as the provider’s name and geographic address, as well as the electronic addresses (website, e-mail). Moreover, contract terms of any online service should be made available to potential customers before a contract is concluded. The contents of the terms are also regulated – for instance, the complaints procedure has to be laid down.

Special attention should be paid to making sure that the terms do not contravene any consumer protection regulations. It is a mandatory consumer protection rule that such terms are provided in Polish. Importantly, contract terms should be checked against the list of unfair contractual clauses. This may prove to be a notso-easy task – while the general list is provided in the Polish Civil Code, the (regularly updated) registry of

unfair contractual clauses, kept by the Competition Authority, should also be consulted.

Personal data protection Personal data protection laws are another issue to keep in mind in the context of online business. The vast majority of online services will involve some degree of personal data processing, be it for the purposes of user registration, payment processing, or even delivering goods ordered online. While the consent of the person whose data is collected is not necessary in connection with concluding or performing a contract, it is essential that the person is informed that their data is being collected,as well as by whom and for what purposes it is collected. Such information is usually specified in a privacy policy, but can also be included in the terms of service.

For about a year and a half now, it is also obligatory in Poland to inform users whether cookie files are used by a given website. A simple nugget of information that cookie files are placed on one’s device by the website is not sufficient – it should be explained what type of cookie files are used and for what purposes (e.g. tracking cookies used for tracking users’ online behaviour).

Finally, once the data supplied by a tracking cookie is analyzed and a special offer is put together for a potential customer, based on their probable preferences, an e-mail with such a special offer cannot simply be sent to the person concerned. This is because the sending of so-called commercial communications (newsletters, special offers, ads) by electronic mail to consumers is only permitted once a specific consent to receive such messages has been granted by the consumer. u

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INTER V IE W / b usiness leader

selling health & beauty

All in one i nt e r v i e w B Y B EATA SO C HA

WBJ Observer: Pharmacies and drug stores have been a part of your family business for generations. How did it all begin?

In 1918, Leon Koffler came to Canada from Romania. At 47, he left two pharmacies to his son, who then lost one of them due to bad investment advice.

Now, after cashing out from the Shoppers Drug Mart chain in Canada, the Koffler family operates a fast-growing chain of “3-in-1” drug stores in Poland, Israel and China. In an exclusive interview with WBJ Observer, the grandson and namesake of Leon Koffler, talks about the story behind his family business and the obstacles to global expansion. He discusses what makes the pharmacy business so appealing and what the future holds for the drug store business

Leon Koffler: My grandfather, also named Leon, was a pharmacist who originally came from Romania. He immigrated to Canada in 1918. He passed away very young, at 47. He had only one son, Murray Koffler.

My grandfather left my father two pharmacies in Toronto, of which one was lost to a gambling debt. It’s the classic story, even in those days. A very good friend of his came and said “I’ve got a great deal for you.” And the great deal was that the friend moved to Monte Carlo and my dad lost a pharmacy.

The classic pharmacy in those days in the US and Canada was a combination of a pharmacy and a soda fountain – a counter that served soda and sometimes ice cream. The nickname for the man who stood behind this counter was a “jerk.” It was a very menial job for someone with no education. My dad was a pharmacist by profession so there was no way he was going to be called one. He decided to throw out the counter with food and sodas and instead he decided to adopt a concept that he had seen in the US: self-service grocery stores.

He went down to meet with a company in the United States and after seeing what they were doing, he came back and said: “If they can do it in a grocery, I’m going to do it in the pharmacy business.” And then he created what was called the drug store – a combination of a pharmacy, OTC, toiletries and some other cosmetic items, etc.

Would you say that he was the creator of the drug store concept?

In Canada, he definitely was. He developed the self-service concept which was very unique in Canada.

If we fast-forward to what the company is today, there are 1,300 Shoppers Drug Mart stores in Canada, and it’s not a family company any more. It is a public company. It has just been sold to a leading supermarket chain in Canada, Shoppers Drug Mart, for $12.5 billion.

So what’s the story behind Super-Pharm? Were you the one who created the brand?

Before I seriously got into the business I’d taken a trip like all young people do. I traveled through Eastern Europe. I took a trip from Stockholm to the southernmost part of the Sinai desert called Sharm el-Sheikh. Poland was among my first visits. One of my grandfathers came from Poland.

It was 1973 and I was traveling with a good friend of mine. We spent two weeks traveling through Poland after we first came on a ferry to Gdańsk.

Poland was a much different country in 1973 to what it is today. I visited every country in the Eastern Bloc and Poland stood out in my mind. It was a

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INTER V IE W / b usiness leader

Images: Super-Pharm

very unique experience for me.

I came from a very sheltered democratic country. And Poland was the exact opposite.

Then, I started working with my father in Shoppers Drug Mart Canada. I made a decision with him to leave the company and start up an international division of Shoppers Drug Mart, which actually never panned out. We ended up opening Super-Pharm on our own.

In 1997 we were looking where we could do business in the European area. Because of different European regulations, it was difficult to open up a chain of pharmacies as we were used to, with no barriers to entry. Europe had all kinds of obstacles.

In some countries, you can only open a pharmacy based on distance from other pharmacies. In others, either the owner has to be a pharmacist, or he could only open one pharmacy. Or, like in Paris, it’s done by population. For every 5,000 people you can have one pharmacy.

In the former Eastern bloc there were no such barriers, so we started to study all the countries. I had a sort of favoritism towards Poland. And we dug into Poland very deeply. We said: This is going to be a great country. It was before the European Union accession.

“In the winter, the pharmacy business brings in more money, while in the summer it is toiletries, and in the holiday season perfumery boosts revenue.

So overall it is a smooth line – there might be some storms, but overall the ocean remains calm.

Leon Koffler is the owner and CEO of Super-Pharm

You already had a strong presence in Israel at the time, didn’t you?

Yes, we already had a company in Israel which was pretty well-developed at the time. We had some 60 stores then, whereas we have 200 today. Then we made the strategic decision to come to Poland. We opened our first store in 2001, in Galeria Mokotów.

We know that to develop a drug store you must invest a

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INTER V IE W / b usiness leader

lot of money and it takes about seven years before you start making a profit. It takes a while to build a brand and for the consumer to learn the concept.

The investment cost is high in terms of real estate and it’s also labor-intensive.

Since the concept aims from the beginning to reach high sales, it starts with a high level of employment in order to provide high service at a professional level, which will be justified when the sales arrive. If you want to get to the top, you have to aim high. If you want to build a very productive short-term investment, with low salaries, you can, but eventually you stay at that level. Our partner at the time was looking for a much faster cash flow, while we were in it for the long haul. We wanted to accelerate investment, so we didn’t suit their strategy and we had to part ways.

At the time, in the mid2000s, hi-tech industries were booming and people were getting into much higher-return investments and our partner decided to go down that route.

We had no problem with it.

We were very confident about Poland’s future, and we continued on.

The first year we had positive EBITDA was 2007. In 2008, we made profit for the first time, and since then it has gone up. Now, revenue is $270 million in Poland. It’s the highest revenue per sqm in the world. We have the highest revenue to sqm in all shopping malls in Poland. But it took time. And we know that each country will take time.

Which brings more revenue: the pharmacy or the drug store?

The pharmacy brings people and the other department brings profit. We know that

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“In all the countries we are dealing with – Canada, US, Israel, Poland and China – the direction of the health ministries … is to reduce the cost of medical care to the consumer.

with an aging population and longer life expectancy, people will consume many more drugs. It’s a huge burden on the government budget.

In all the countries we are dealing with – Canada, US, Israel, Poland and China – we find that the direction of the health ministries which represent the government is to reduce the cost of medical care to the consumer. And we are right in the middle of that.

We understand these policies and we look for ways to support the pharmacy. For us the pharmacy is the anchor of the business.

And the only way for it to continue to provide high-quality medicines is for all the participants in the process to minimize their margins: the manufacturer, the wholesaler and the retailer – they all have to earn less. This is the only way. In order to do it, the retailer has to find other areas that will subsidize the medicines and bring profit.

We’d love to make more profit on drugs but we understand this is the direction and under these circumstances we look for our advantage in mixing the concepts together. Besides, our intensive professional service is our competitive advantage. You do not see that many people on the floor anywhere else.

One other advantage the concept offers is smoothing of the business cycle: in the winter, pharmacy business brings in more money, while in the summer it is toiletries, and in the holiday season the perfumery boosts revenue. So overall it is a smooth line – there might be some storms, but overall the ocean remains calm.

How did you fare during the downturn?

Poland had a very unique situation. We didn’t feel the crisis in Poland, we only had a bit of a slowdown in growth. Some problems, caused by mortgages denominated in the Swiss franc, came after the crisis. This created pressure on the Polish community, but it wasn’t part of the crisis.

INTER V IE W / b usiness leader

Leon Koffler Son of a Canadian pharmacist Murray Koffler. Started the Super-Pharm chain in the 1970s. The company has over 250 stores in Israel, Poland and China, as well as investments in other franchises such as Office Depot and Toys“R”Us. Super-Pharm’s approach to business differs from traditional pharmacies in that it offers cosmetics, toiletries, as well as other accessories besides drugs.

home-grown pharmacy chains spread all over the country. So the competitive environment is very strong. We believe in “let the best man win.” For us competition is the name of the game.

“I like to come to our stores unannounced to see how things are going. It has a positive effect on the business.

What is your market share in Poland?

Super-Pharm is now re-entering the Chinese market.

You first ventured there in 2005, then sold your pharmacies and now you’re moving back in. Why? China was blocked to foreign investors until two years ago.

We were looking at China before, but in the past we couldn’t get a control position and we were looking for a partner. Eventually we were approached by a company that was working in one of the poorest regions of China, a southern province called Guizhou. The company got special approval from the local government of the province to have a control position. And they were looking for foreign know-how. We bought a 51 percent stake in the Chinese business in 2005.

I remember that when we first came to this poor province there were no sidewalks. Today it is amazing, with lots of highrise buildings. We had 30 pharmacies there which we started to convert to our system. We put in cosmetics, but not fragrances.

Fragrances make up a very small part of the business in China, as the Chinese use very little fragrance and very little make-up.

China is a country of skin care. So we put in our skin care products, shampoos, bathing products, etc. and we saw that sales increased fourfold compared to what they were before.

We grew our business there but during that time our vision was to move to Beijing and Shanghai. These are the rich markets. Unfortunately, we were blocked as we only had permission to operate in that province. Our partner wanted to take control of the business so they bought us out in 2010.

But then the law was changed in 2012, so we bought another chain, this time in Beijing. We’ve just obtained our licenses and we hope to start converting the stores in August. We also bought back the Super-Pharm brand which we sold in 2010.

You say that the Chinese don’t buy a lot of make-up or perfume. What about Poles? What do they like?

They like fragrance. They like make-up, skin care, baby products – everything. Polish consumers are very western-oriented.

How competitive is the Polish market?

From a competitive point of view, the Polish market is quite saturated with five-star competition. Then you also have these

It depends on how you look at us. If you look at us as a 3-in-1, we are at the top of the class. We are building a segment that we are the best in. If you look at any of the sectors of our market, if you take either the pharmacy business or the toiletries business separately, then in each of these markets there are competitors ahead of us. Douglas and Sephora have a much larger market share in cosmetics.

Hopefully, as we grow we will overtake the competition in each segment. In the toiletries business, it is impossible due to the sheer scale of the supermarket chains. While in the pharmacy sectors, it’s pure numbers. Today we have 55 drug stores open, while there are a total of 13,000 pharmacies in Poland.

What are your plans for the nearest future?

We’re continually looking for locations in Poland, both in shopping centers and on high streets. High streets are quite difficult because our minimum size is larger than a local Polish pharmacy. So we are looking at other chains to purchase.

It could be, say, a chain of shoe shops, which has 300-600 sqm stores. It’s only a real estate play. We’re not looking to get into another business.

We hope that in the next 3-5 years we will be able to double the size of the company. We plan to have 100 pharmacies in 2017.

Poland is our hub for Europe, China is the hub for the Far East. From China, we will expand to neighboring countries and Poland – it’s big enough for us to grow in, and then we will expand to the countries around it.

Which countries are you looking at?

The clearest goal was Ukraine, at least until recently. We will have to wait until everything stabilizes.

How often do you visit Poland?

As much as I can, which would be at least every month officially, and sometimes I come unofficially, just quietly on my own. I like to come to our stores unannounced to see how things are going. It has a positive effect on the business. We have a great relationship with our management level but it’s obvious that when we’re coming, they prepare. u

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c o v e r s t o r y / e - c o m m erce

The rise of online shopping by mark ordon

Consumers tastes increasingly seem to favor online offers. Will the Polish e-commerce market see even greener pastures?

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c o v e r s t o r y / e - c o m m erce

I

It is a known and accepted fact that Polish consumers quickly managed to embrace the benefits of shopping online. From electronics to kitchen appliances, books to orange juice, every imaginable commodity now seems readily available at the virtual shopping mall only a few clicks away. Yet as you pass through Polish cities and towns, traditional brick-and-mortar shops still seem to attract swarms of visitors. But

what is the real condition of the country’s e-commerce sector when you filter out the superficial impressions?

Still room for more Recently, Poland’s Deputy Economy Minister Dariusz Bogdan presented data during a meeting of the Committee for the National Economy at the Polish Senate which suggests that the Polish e-commerce industry doubled in size over the past six years, generating sales of PLN 21.5 billion

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in 2012. This translates to 3.8 percent of the entire retail market in Poland for that year.

The figures themselves stem from a report prepared by Deloitte, “A wave of digital change: Trends in digital E-nnovation 2013,” which additionally confirms that the e-market share in Poland has been growing.

Deloitte partner Dariusz Kraszewski points out that in 2010, retail sales online made up only 2.5 percent of the entire market, meaning that e-commerce in Poland is growing more dynamically than domestic trade altogether. Meanwhile, a study prepared by Sklepy24.pl also suggests that the e-commerce market could reach a value of over PLN 30 billion in 2014. Yet the question appears, how much further up can it go?

Compared to the largest e-commerce market in Europe – the United Kingdom – Poland still has a long road ahead. While the Polish e-business sector is valued at around £3 billion, its British counterpart is worth £39 billion, according to data prepared by RetailMeNot, owner of Vouchercodes.co.uk. The study, which sampled 8 European countries, places Poland at the bottom of the list in terms of total sales, yet shows the highest

growth dynamic, at 22 percent. Paweł Klimiuk, corporate communication director at Allegro Group, confirms this trend. “The entire digital market is developing very quickly, but e-commerce, especially in Central and Eastern Europe, is where the real growth will be,” he said. As the leading player on the Polish market with the popular Allegro.pl service, Allegro Group is currently concentrating its efforts on that particular region with its wide portfolio of online services, adds an Allegro Group public relations spokesperson.

Out with PCs, in with bottled water?

The same report by Sklepy24.pl also shows that the growth is not evenly spread over the entire e-commerce sector and that signs of consolidation are showing. For example, Piotr Jarosz, publisher of Sklepy24.pl, says the number of internet shops will increase, but by about 7 percent (compared to doubledigit growth in the past). What is more surprising, he adds, is that in many areas the number of shops will drop. E-shops selling PCs are seeing harder times, while

Images: Shutterstock

“the e-commerce market could reach a value of over pln 30 bln in 2014.

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services offering food over the web are growing in popularity.

Indeed, a recent study drawn up by Gemius for e-Commerce Polska does confirm that trend. Around one in four internet users in Poland admit doing their grocery shopping online. In that group there are more women (26 percent) than men (23 percent), mostly possessing a higher education (29 percent) who rate their financial situation as mid-level. The surge here is impressive, said Mateusz Gordon, e-commerce expert for Gemius.

He sees this increasing popularity as an opportunity for Polish e-businesses, as well as a challenge in terms of timely delivery of fresh products. But since online food shoppers in Poland spend an average of PLN 70 per transaction, the effort definitely makes it worthwhile. The most often mentioned e-grocery services by those surveyed are Alma24.pl, Etesco.pl and

E-piotripawel.pl, as well as other spin-offs of existing brick-and-mortar supermarkets.

The end of traditional stores?

The question looms whether the current boom in e-commerce will make the classic brick-and-mortar shop a thing of the past. The study by RetailMeNot shows rather bluntly that sales growth in conventional stores is much lower than in online retail in each of the surveyed countries. In Poland, while online sales grew by 22.6 percent, brick-and-mortar shops noted a mere 3.4 percent, which, by the way, is the highest level seen in the sampling.

So, will the vast glass-and-metal shopping galleries throughout the country become ghost towns? They probably won’t disappear, but they will have to change, at least according to Dominika Jędrak,

head of consulting and market research at Colliers International.

In an interview for Propertynews.pl, Jędrak feels that shopping malls will certainly not disappear from the landscape, but the growing significance of e-commerce will definitely change their mode of operation (see article p. 66). The future of the brick-and-mortar shop is on the borderline of traditional shopping and e-commerce. She explains that “shopping malls will turn into showrooms and recreation centers, where visitors can spend some quality time and virtually test and touch a given product. After a customer makes a choice and pays (with a smartphone for example), the merchandise is then shipped to a specified address.” To survive, conventional stores will have to shift their approach away from the direct sales model to more of a customer advisor approach helping customers make the right choices before they order online.

One of the key players in the Polish e-commerce market, Merlin.pl, is making a rather innovative move from the virtual to the physical, so to speak. Since the online seller was acquired by Poznań-based Czerwona Torebka last year, a number of pick-up points have been opened in cities across Poland where Merlin.pl customers can have their goods shipped free of charge. The idea has proven to be quite popular and the company therefore has plans to open a total of 60 locations by the end of this year. According to a Newseria Biznes conversation with Jakub Radkowski, advisor to Merlin.pl, the new locations will be developed into showrooms of a sort, where customers will not only pick up but also order more merchandise and enjoy a coffee while they are at it.

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No to e-sales?

Yet with all the positive hype surrounding e-commerce in Poland, there are a number of businesses in the country which are shying away from selling their products online. One such example is the Swedish hardware chain, Jula. Although competitors like Leroy Merlin or PSB Mrówka are developing their online presence, the company is simply not interested in pursuing that channel. “We do not intend to extend our services into the web,” says Jula manager Daniel Adamiuk, who explains that doing so would require the expansion of customer service departments to handle orders, shipping, as well as post-sales support. With the company’s policy of keeping prices as low as possible, offsetting the cost of such an investment would be extremely difficult.

Despite the growing potential of food and beverage sales online, discount retailer Biedronka has no plans of pursuing the opportunity. Alfred Kubczak, director of corporate relations at owner Jeronimo Martins Polska, suggests that Polish

“To survive, conventional stores will have to shift their approach away from the direct sales model to more of a customer advisor approach.

customers buy food online because of the lack of time. Given the choice, most people prefer to come to the store and actually touch what they are buying.

In addition, those skeptical to ecommerce often point to the fact that the price advantage of online purchases has diminished over the past few years and differences between conventional stores and e-shops have pretty much leveled off.

Today the only real advantage of e-shops is the convenience factor, they claim.

Nonetheless, the numbers confirming the dynamic growth of the e-commerce market in Poland speak for themselves overwhelmingly. As we, as a society, are becoming increasingly more internetdependent for several daily tasks: e-mails, instant messaging, banking or entertainment just to name a few, with tablets and smartphones easily accessible, it just seems natural that between responding to an e-mail or checking the weather, we will run through our grocery list, order what we need and have it delivered to our doorstep. u

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f e a t u r e / industrial design

making waves

By John Beauchamp

Polish design may be becoming a fast-growing and trendy line of business, but it still has a way to go before it starts making its mark on the global market

A

A decade ago, you would be hard-pressed to find the words “design” and “Poland” in the same sentence. Nowadays, the term “design” exudes more than just a trendy piece of furniture or accessory.

For Katarzyna Rzehak, Director of the Creative Department at Warsaw’s Institute of Industrial Design, it is a far more pragmatic concept.

“We want design to be thought of as bettering the quality of life as a result of well-made, functional, long-lasting and reasonably-priced products: this for us is design, without the fireworks,” she stated.

And while Poland admittedly isn’t yet a design powerhouse such as Italy or Denmark, it bears all the hallmarks of a young market which is on the brink of something big. In recent years, EU funds have spurred on design and innovation to a degree, but it is the global marketplace which has been a big influence on the way Polish designers now have to do business.

It is not about the product per se, it is the whole package – from sketch outlines to production processes – which now has come under scrutiny. As Rzehak underlined, “design is not a form of art, it is a form of business.”

Modernist beginnings But while Polish design is only now becoming a sticking point, it has in fact

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got quite a rich pedigree. Names which spring to mind include Teresa Kruszewska, the creator of the “shell chair” and member of the fabled “ŁAD” Artist Cooperative, as well as Roman Modzelewski, the founder and rector of the Łódź Academy of Fine Art, whose once forgotten chair designs have now been rediscovered and are showcased as a symbol of the “golden age of Polish design,” as Rzehak puts it.

Furthermore, one chair designed by Modzelewski, but not mass-manufactured, has been given a new lease on life thanks to Jakub Sobiepanek, one of the masterminds behind Vzór, a company which aims to highlight Polish design from yesteryear both in Poland and abroad. Modzelewski’s RM 58 chair now sells for up to PLN 3,000.

Exporting design Despite a rich design history, Poland is still playing catch-up when it comes to exports. And the reason for this resounds throughout many industries: years of communism which simply didn’t have the right business model for design to flourish.

“The problem is that Poland doesn’t have any strong brands which we can promote worldwide,” Rzehak laments, although she underlines that Poland has some very good designers, such as Oskar

f e a t u r e / industrial design

Biggest furniture exporters Total value of furniture exports by country (in $ billion, 2011 data) 50 45.2

40

30

20 11.6

3.9

3

2.8

2.6

Sweden

4.9

Czech Republic

7

France

9.1

Canada

13.7

10

Mexico

US

Poland

Italy

Germany

China

0

Source: Centre for Industrial Studies

IKEA in Poland

How the Swedish company transferred its know-how to the local economy

F

roman modzelewski’s RM 58 chair, originally designed in 1958, now sells for up to pln 3,000

Image: Vzór

Zięta, who has made ground on the German market, “but this is a surname, not a brand,” Rzehak underlined. Another name dropped by Rzehak is Tomek Rygalik, whose designs have been picked up by Italian luxury seating and sofa producer Moroso, as well as Aleksandra Gaca, who is making a name for herself in the Netherlands with Architextile, innovative three-dimensional sound-reducing panels.

Road, rail and sea But apart from furniture, Polish design has had some major successes in the world of transport. Pesa, a tram and rolling stock

manufacturer in Bydgoszcz, has made inroads into the CEE market, while Poznań’s Solaris buses cruise the streets of cities in 28 countries.

Apart from urban transport, Poland has also excelled at producing specialized vehicles. Bielsko-Biała-based Wawrzaszek is one of the leading producers of fire trucks in Europe, and have sent fire-fighting trucks and other specialized vehicles for emergency and armed services to over 36 countries across the whole continent.

Wawrzaszek-designed vehicles have even been sold as far as Thailand. But design for Wawrzaszek has only gone so far. In late 2013, it set up a “security cluster”

urniture is one of Poland’s biggest exports. The latest figures put the country fourth in terms of furniture exports worldwide, with figures coming in at an estimated €6.9 billion in 2013.

In terms of design, what is interesting to note is that Swedish giant IKEA started sourcing production in Poland during the 1960s, and now as much as 18 percent of IKEA furniture is made in the country, making it the secondlargest producer for the company.

But the Swedish powerhouse has not just been a boon for the Polish economy in terms of production. It has also helped get Polish businesses off the ground, providing an example in how to combine good-looking design with efficient production.

“IKEA subcontracted a lot of work to many Polish furniture companies for the production of items or furniture elements, and thanks to the high standards and know-how it transferred, more often than not, these companies created their own brands,” Katarzyna Rzehak explains.

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f e a t u r e / industrial design

in Bielsko-Biała which aims to increase the level of innovation in the emergency services.

Another jewel in the Polish design crown can be seen in the marine sector.

Poland is known for its ship-building industry, yet on a smaller scale, luxury yacht producers Delphia show their vessels at shows ranging from France to Canada, Turkey and Russia, and have won awards both at home and abroad.

Bringing business to design However, the problem for the industry is matching the design model with the business model. Katarzyna Rzehak aims to correct this, and hopes that budget funds for innovation will improve the quality of Polish design.

“The industry will get a boost from the new [EU] budget perspective, which includes large sums of money for innovation and design,” Rzehak states. “It has finally been acknowledged that business innovation for the large part incorporates industrial design.”

As is so often the case in Polish innovation, industrial design is still starved for knowledge transfer between fine art academies and business, and as such the gap between finding the right product to fill the niche and the means to do this is often left unbridged.

“Polish designers are aware of the problem, and they know that they have to reach out to businesses, but businesses need to understand that they too should have to reach out to designers,” Rzehak states.

The Institute of Industrial Design is also hoping to play its role in improving Polish design by pressing on innovation and competitiveness to try and push Polish design past the country’s borders.

As part of the government’s Innovative Economy program, the Institute is embarking on a series of workshops entitled “Design – Business – Profit” which will bring together businesses, designers, students as well as members of public administration to try and raise the profile of design. And quite rightly so.

Hopefully in years to come, not only will the “Made in Poland” label be nothing to be ashamed of, but “Designed in Poland,” too, will be making waves in the global marketplace. u

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solaris buses cruise the streets of cities in 28 countries

trainsets manufactured by pesa can be seen both in poland and abroad

delphia yachts are increasingly being snapped up on a number of markets

Images: PESA, Solaris, Delphia Yachts, Shutterstock

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f e a t u r e / che m icals

elements for success b y k a m i l a wa j s z c z u k

Poland’s chemical industry is back on track for growth. It continues to improve its position globally with the help of strong investment and recent consolidation in the sector

T

he chemical industry is a key sector in any economy, providing materials for many others from agriculture to electronics manufacturing. In Poland, it accounts for about 11.4 percent of total industrial production sold, according to data from the Polish Chamber of Chemical Industry (PIPC). With some

70 percent of that production bought by other industries, only a minority is sold on the consumer market.

Though some 11,000 enterprises are involved in chemical manufacturing in Poland, altogether employing about 25,000 workers, it is the biggest industry players, such as Grupa Azoty, Ciech, Synthos and PCC Rokita, that are the most visible. These companies are also the biggest chemi-

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What sells Biggest segments of the chemical sector by export value (2012, € billion)

10.15 2.06 1.89 1.48 1.28

Plastics, synthetic rubber and articles thereof

Essential oils and related goods

Pharmaceutical products

Organic chemicals

Soaps and detergents

Source: PIPC

>>

cal exporters in the country, contributing to one of the highest net export growths sectorwise.

Easy money Luckily for the industry, it cannot complain about insufficient access to capital.

Experts agree that Polish chemical companies continue to spend large sums on investment and that they can count on outside financing. “In my opinion, securing financing for new investment projects is

easy,” Jarosław Myjak, deputy CEO of Poland’s largest bank, PKO BP, said during a debate organized by the Polish Press Agency in April.

Companies may look for financing not only in banks, but also on the stock exchange. “I think that the financial market is prepared for the financing needs of the Polish chemical sector,” Jacek Socha, deputy chairman at PwC, said during the same discussion.

Major projects currently in the pipeline include a petro-

“ The situation of Polish chemical sector exports continues to improve each year.

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chemical unit to be built by Grupa Azoty together with oil firm Grupa Lotos. However, in Socha’s opinion there is need for more innovative projects. “R&D expenditures in Poland as a whole equal only twice as much as these expenses for BASF alone,” he said.

Leaving the crisis behind The dynamic growth of the Polish chemical manufacturing sector was throttled during the year the crisis took hold in

2008. Nevertheless, a rebound started in 2010 and now the industry is back on its feet.

Tomasz Zieliński, head of the PIPC stresses that chemical production sales in Poland grew from PLN 123.45 billion in 2011 to PLN 131.40 billion in 2012 and it has grown immensely since 1995, when it amounted to only PLN 25 billion.

“Favorable factors include M&A activity, especially the consolidation of Grupa Azoty, which created the secondlargest chemical producer in Europe after Norway’s Yara International,” underlined Zieliński.

“A large business always has better options. A group this size can make cheaper purchases, negotiate better conditions both in terms of buying and selling. Goods are sold more quickly, they do not stockpile as sometimes happens with smaller firms,” the PIPC president added.

Export engine Zieliński also stressed that Polish chemicals are appreciated in many countries, saying

Global presence Grupa Azoty

is not only one of Poland’s largest exporters, it also pursues other activities on various world markets. Among them is a phosphorite project in Senegal.

In late August 2013, the group’s subsidiary Zakłady Chemiczne Police announced the acquisition of 55 percent in Senegalese firm African Investment Group for $28.85 million. Thus it obtained rights to exploration and extraction of phosphorite reserves estimated at 56 million metric tons and ilmenite reserves estimated at 1.5 million tons.

It plans to extract 400,000 metric tons of phosphorite in Senegal in 2014. Further acquisitions of Senegalese deposits are also possible.

Another market with potential for Grupa Azoty is India. The holding already sells its technology in the country and has business partners among Indian caprolactam producers.

Late last year, it admitted to mulling over a new investment, a production plant in the subcontinent.

f e a t u r e / che m icals

that “Our products, as well as our technologies, are of desirable quality.” Growth is witnessed in many areas.

Chemicals are Poland’s second biggest export sector, after electronics and mechanical machinery. In 2013, Poland exported €20.2 billion in chemical products.

“The situation of Polish chemical sector exports continues to improve each year,” Zieliński said. “The balance in foreign trade of chemicals is still negative, but it’s getting better. In 2011, the deficit was €8.32 billion and in 2012 it was reduced to €6.68 billion.”

“Petrochemicals and base chemicals have always been a strong segment,” Zieliński stated, adding that “the automotive sector is back on track, so chemicals for the automotive segment are also accelerating.

There are also good perspectives for exports in the plastics segment.”

Ciech up for grabs Ciech

was established in 1945 as a chemical export holding, and until 2005, it was fully state-owned. Now the Treasury holds 38.72 percent in the firm and it may soon sell its shares.

In early March, KI Chemistry, a unit of Kulczyk Investments, announced a tender offer for 66 percent of the chemical holding in a deal that may be worth some PLN 102.6 million.

The State Treasury has already expressed its willingness to sell shares in the tender.

As the deal awaited approval from the Office of Competition and Consumer Protection, KI Chemistry extended the deadline for subscriptions in the tender, originally planned for March 25 – April 25, until May 30.

During its preparation for privatization over the past years, Ciech has evolved from a post-communist giant to a specialized chemical group. It now focuses on manufacturing and selling soda ash, sulfur and organic chemicals. In 2012, it sold its toluene diisocyanate (TDI) production segment to German chemical giant BASF. In early 2013, it agreed to sell phosphorus and chromium compound producer Zakłady Chemiczne Alwernia to Kermas Group.

The buyers Top ten export destinations for the Polish chemical sector (2012, PLN billion) 8,000 7,000 6,000 5,000 4,000 3,000

1,000

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1 2 3 4 5 6 7 n8 e 9 10

Lithuania

The Netherlands

Slovakia

France

Hungary

Ukraine

United Kingdom

Czech Republic

0 Russia

“ Our products, as well as our technologies, are of desirable quality.

Source: PIPC

2,000

Germany

Image: Shutterstock

International perspective With most Polish chemical exports heading to EU countries, especially Germany, the economic situation there is crucial. So the future of the sector’s foreign sales largely depends on the perspectives for recovery in Europe’s core markets.

Another big chunk of Polish chemical production is sold to Russia and Ukraine.

The recent crisis in UkraineRussia relations, which has affected Polish and EU trade with these countries, is one of the challenges that the chemical sector now faces.

This is not the only issue that the sector has to face when it comes to the eastern direction in exports. As Zieliński explained, “one of the main threats is connected with the introduction by the EU of anti-dumping duty for fertilizers from Russia and that country’s actions against it in the World Trade Organization.” Breaching WTO rules, “Russia uses dual pricing in natural gas, which also affects the chemical sector.”

Another key factor is the currently negotiated Transatlantic Trade and Investment Partnership (TTIP) agreement, which aims to establish free trade between the EU and the USA. “Earlier, the biggest issue was the possible inflow of goods produced with the help of US shale gas, which could destabilize the EU market. Now, since the Ukraine-Russia issue emerged, the foundations for TTIP may change,” Zieliński said. v

2014

Germany Russia Czech Republic United Kingdom Ukraine Hungary France Slovakia The Netherlands Lithuania

33

7 388 276 261 155 166 208 1 134 128

e n t r e p r e n e u r s h i p / phenic o ptere

beauty and water

Beauty product makers have come up with scores of solutions for make-up removal. Two Polish women have assumed a revolutionary approach and turned it into a business idea

P

Image: Jan Malinowski

b y k a m i l a wa j s z c z u k

Phenicoptere in Old French stands for flamingo, a bird seen as a symbol of both beauty and water. Ewa Dudzic and Monika Żochowska, the founders of a company by that name and the inventors of make-up remover Glov Hydro Demaquillage, met while studying marketing at university. It was then that they decided they would do business together one day, but they had no specific idea at the time.

So at first they went separate ways. Żochowska headed to Antwerp and became a certified expert on diamonds and diamond jewelry. Dudzic, meanwhile, started a sushi catering business

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“I think that if someone has a good idea, is determined and knows how to place the idea on the market, then the money can always be found somewhere.

in Kraków. Before she left for Antwerp, Żochowska went on another foreign trip, which later proved fundamental for their future business. In Tasmania, she did an internship at the marketing department of a plastic surgery clinic. It was there that she first came across microfibers used for skin cleansing.

Personal motivation “She brought the idea back with her and we started looking for solutions to be able to use the fibers on our own skin to remove make-up,” Dudzic explained.

Their motivation was in line with what many women feel. Żochowska detested make-up removal and Dudzic has sensitive skin, which reacted badly to many cosmetics.

The fibers proved useful and convenient, so they started to do research on the technology necessary to create a professional make-up removal cloth. “When we decided that the prototype was ready, we started showing it to our friends and colleagues,” Dudzic explained. The prototype worked very well.

“That is why we decided to try and commercialize the idea,” Dudzic said.

In order to be able to enter the difficult beauty products market they looked for a financial injection. They tried several options before they obtained PLN 100,000 from AIP Seed Capital and a place in the fund’s Business Link co-working space in Warsaw’s city center.

Getting initial financing was not “extremely difficult,” Dudzic said, though at that moment they were both still working elsewhere. Somebody told them about the AIP program, they applied and got accepted. “I think that if someone has a good idea, is determined and knows how to place the idea on the market, then the money can always be found somewhere,” Dudzic said.

While preparing the first versions of the product, Dudzic and Żochowska co-

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Glov, the product made by Phenicoptere, is sold in Poland and abroad

operated with a fiber producing company in South Korea, which had its own R&D unit. Prototypes of Glov were then tested in the physics and chemistry laboratories of the University of Warsaw and finally in a dermatology lab, which issued a certificate saying that the product was safe even for allergy-prone skin. The whole process, from concept to first sale, took about three years.

Universal use They knew from the beginning that their product had to sell both in Poland and abroad. “Every woman puts on make-up and every woman later has to wash it off,” Dudzic said. Glov is already available in France. Phenicoptere also has

a distributor in Saudi Arabia, which sells their products to Arab markets. Talks are also in progress to extend sales to Sweden, Spain, Japan, Korea, Canada and the USA. “I think that export sales will soon exceed sales in Poland,” Dudzic said.

Customers may buy Glov via the company’s own e-commerce platform, in some other online outlets and in a number of beauty parlors. “We are now slowly negotiating with retail networks. We want to introduce Glov to cosmetics networks to make it as easily accessible as possible,” Dudzic said.

These two ladies’ product is quite unique. At a recent trade fair in Bologna it was the only one of its kind presented.

However, it is not the only one that follows the idea of removing make-up without chemicals. Other similar products have emerged, made out of different types of fibers. Phenicoptere nevertheless claims their fiber is the best for this purpose. To secure their rights they have applied for patent protection.

Simplicity with perspectives To most cosmetics producers they are a threat, as their product could, in the future, sweep traditional make-up removers off the market. Glov is part of a whole new category that the sector will have to deal with. “This is a very good response to trends prevailing in the world right now,” Dudzic said, “such as a turn toward simplicity, toward using as little chemicals as possible, especially on the skin.” These trends are both in favor of the environment and of simplifying our lives,” she claims.

Sales of Glov were just launched in the summer of 2013, so it is still too early to give any figures,” Dudzic explained. In the first few months, the goal was to check how the product would sell and what the return would be. “We knew that women in our surroundings like the product, but there is always doubt about how the

Images: Jan Malinowski, Phenicoptere

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e n t r e p r e n e u r s h i p / phenic o ptere

{

Before we even came back and sat down to reach out to our new contacts, we had a lot of emails asking about potential cooperation.

Phenicoptere is now based at the BusinessLink co-working space for start-ups in Warsaw

market would react. Now we know that our customers are satisfied.” In 2014, the goal is to intensify sales as much as possible and ensure the company’s financial liquidity.

Phenicoptere remains a small company, though it has expanded since the time when a small core team was responsible for R&D, marketing, sales and everything else. Dudzic is responsible for the Polish market and Żochowska takes care of France in that respect. There are also people responsible for various distribution channels. Much of the rest is done by freelancers.

The business is still at an early, intensive-growth phase. “Forecasts for the coming months and years are very good,” Dudzic said, recalling reactions that Glov got at recent trade fairs. “Before we even came back and sat down to reach out to our new contacts, we had a lot of emails asking about potential cooperation,” she said.

There is need for new capital, which is necessary as the company widens its presence. “We are looking for an investor and we may also make use of a bank loan,” Dudzic said. The process should be easier now that the company can use signed contracts as security.

The entrepreneurs are talking to investment funds and business angels.

“Our product is not what investors focus on, unlike the IT sector,” she explained.

“Still, some individual investors are even more inclined to provide money for a sector that may not bring huge returns, but that is more stable, with long-term perspectives.”

Glov has two product versions now, but there are plans to introduce others, all of them based on microtechnology. They will include products for children, sparelated products and products for travel purposes, Dudzic explained. “It is all ready in our heads and some prototypes have been made, but the full process will require capital,” she added.

Managing a quickly-developing startup is what Dudzic wants to continue focusing on. “My goal for the company is to create stable sales, both in Poland and abroad, create new products, develop the company’s portfolio,” she attests. Personally, she would like to continue to enjoy working for the business. “This is work on one hand, but on the other it is pleasure, because this is our company. It is so interconnected with our private lives that it is difficult to keep separate.” u

No chemical solution

G

lov Hydro Demaquillage is different from other make-up removal options in that it does not require any chemicals to make it work. The secret of the product is in the microfibers it is made of. A user has to rinse the glove in water first, then remove her make-up with it. After the process is complete, the glove should be cleaned with soap and water, and then dried. The producer guarantees a three-month usage period. Currently, Glov comes in two versions, Comfort for daily use at home and On-The-Go for convenient use while traveling.

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RepoRt fRom the congRess: www.eecpoland.eu

e n t r e p r e n e u r s / legia

“Legia has the potential to be different from other Polish clubs.

b y jac e k c i e s n ow s k i

Image: Roxana Dawid

Legia’s big dreams Legia is proving to be the best football club in Poland, both in terms of sport and financial results. But its dominance on home turf is not enough for the club’s new owners: now they want to make their mark in Europe

B

Bogusław Leśnodorski is quite a character, even for the unorthodox world of sports executives. He prefers wearing clothes that can be bought in Legia’s fan store to suits and ties. He has a pinball machine and a longboard in his office. If it weren’t for the stack of binders and documents lying on his desk, you would have thought that you’d stepped into a teenager’s bedroom, not an executive bureau.

In the past, Leśnodorski, a law and MBA graduate, was a management board member of various companies from real

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estate to the mining sector. He also has his own law firm. He became Legia’s president in December 2012. “I was always a fan and a regular at the games.

Very often I complained about how things were being done at the club and when it was looking for new management someone said to me ‘you’re always saying how you would handle things differently.

It’s your chance to put your money where your mouth is,’” he explained.

At first he was appointed the club’s president, but after a few months in the seat he started thinking about being Legia’s owner as well. “There have been many multimillionaires, not only in Poland, that have spent huge amounts of money on a sports club, and did not see anything in return, neither money nor championships. I thought the same way at first. But after getting to know the people working here, I decided that Legia has the potential to be different

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from other Polish clubs.” It was no secret that the the previous owners, media giant ITI, were looking for a buyer.

The club was a pet project of Mariusz Walter, the founder and long-time CEO of the company. But he has taken a back seat both in the company – and after Legia failed to win the championship in 2012 – in the club as well. Walter was devastated and fed up that the club his company had spent millions on had only managed to win the championship once during ITI’s decade-long tenure as the club’s owners (the second title was won in 2013, after Leśnodorski became president). It was a really tough time for the franchise. Legia fans quickly turned on the new owners accusing them of destroying the club and its legacy, with chants like “Legia is us, not you,” being sung regularly from the stands, while other “songs” laced with obscenities were even more frequent.

Enter Leśnodorski Going to Legia games became a chore for many. When they weren’t booing the owners, hardcore fans stood quiet, not supporting their team as a sign of the protest. This was Leśnodorski’s moment to shine.

One of his first decisions was making peace with the protesting supporters.

This was actually easy to accomplish.

Both sides were fed up with the situation and the only thing the new president could do was treat them like normal people, not criminals and unwanted customers as they were sometimes being handled.

With an already strong team and a stadium full of rabid supporters, winning the championship six months after Leśnodorski started his job was a formality. This is when he decided that he wanted more than just a chance to run the club. “We knew that the owners

Images: Roxana Dawid, Legia.com

Under Leśnodorski Legia has won 2 league titles.

e n t r e p r e n e u r s / legia

were looking to sell, so I decided, along with [Dariusz] Mioduski, that it’s time to make the move. We both had to convince each other that it was a good decision, we were our biggest supporters.”

Mioduski, also a law graduate and former business partner of Jan Kulczyk, bought an 80-percent stake in the club, while Leśnodorski acquired the remaining 20. In reality, it’s the minor investor who calls most of the shots, having remained the club’s president. But the transition to co-owner was pretty much non-existent as the only difference was he was now spending his own money. “My approach stayed the same. The business model had to be detached from emotions. All your decisions need to be calculated just like in every other business,” he explained.

Balancing the books Leśnodorski made sure he was not spending his funds on a money-losing venture. For the last two years, Legia had a balanced budget. It was not generating losses, but not making a profit either.

“When running a club you can’t expect any profits. Smart managing, in our case, meant that anything you earn you spend.

Sure, you can sell players for millions and put younger ones from our academy in their place, but it won’t lead to much sporting success. Besides, we have many planned investments,” he said. The biggest of them all is a football youth academy, where kids aged seven and over will be able to train, play matches, go to school and even live. Currently, 12 youth teams have to share one field. Such facilities have been in the cards for a few years now and Leśnodorski promises that announcements regarding the academy will be made soon.

The club is not only the best team in Poland currently, but it’s also the wealthiest, according to consultancy Deloitte’s annual report on Polish football clubs.

Legia had PLN 66 million income last year (KGHM Zagłębie Lubin was in second place with PLN 40.1 million income), and while results for 2013 are not available yet, analysts estimate it to be in the range of PLN 80 million. In 2014, Legia has a big chance to be the first Polish club to reach PLN 100 million in income.

More money means better players, as the first team’s wages take up some 60 percent of the annual budget. However, Leśnodorski is wary not to overspend

Financial giants legia is on its way to be the first polish club with PLN 100 mln annual income

T

he club budget heavily depends on its sporting performance. If the club is successful and plays in the European club competition, its TV rights and match day incomes are much higher. In 2012, Legia was quickly knocked out from the international competi-

tion, which was visible in its financial results: match day and TV rights results declined by PLN 2.1 and 8.1 million respectively, compared to 2011, when the club reached 1/16 final of the Europa League. Still, the overall result was PLN 2.5 million better, thanks to a huge PLN 13.1 million

Total Income

16%

25%

increase in commercial income. What’s probably the best indicator of club’s finances is how much it spends on its players. According to consultancy Deloitte, the best income-towages ratio is 60 percent, and Legia in 2012 spent 63 percent of its income on players and coaching staff.

(2012, PLN millions)

59%

66.4 TV Rights

“henning berg’s main job is to put legia on the european map.

Legia Warszawa Founded in 1916, Legia has won 10 league titles and 16 Polish Cup trophies. In the overall league table, which dates back to 1927, the Warsaw side is first, with 76 seasons in the Ekstraklasa and 2,805 points (second is Ruch Chorzów with 73 seasons and 2,514 points). In the international arena, the club’s best showings were in 1970 when the club played in the European Cup (the Champions League predecessor) semifinal and in 1992, when it reached the same stage of the now-defunct Cup Winners Cup. In 1996, Legia managed to advance to the Champions League quarterfinal in its only showing in the competition so far.

Match Days (tickets, gadgets, concessions) Commercial income (sold players, sponsorship deals)

Co M TV

Source: Deloitte

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e n t r e p r e n e u r s / legia

on salaries. “We pay quite nicely here. I don’t think we should be paying players more than we already do.” Player’s contracts are confidential, but according to the sporting daily Przegląd Sportowy, the highest-earning footballer in Legia is Portuguese striker Orlando Sa, who earns some €300,000 a year. There are also a few other players in the club that earn within the €200-300,000 range per season.

Leśnodorski claims that he’s happy with the core squad and plans 2-3 transfers every six months. He mostly looks for young players, both from Poland and abroad, who will first gain experience and after a few seasons become first-squad regulars. After that, they may be sold for a hefty price. He also hopes that established Polish players, who have left the country but have failed to impress abroad or are nearing the end of their professional careers, would be more than happy to return to Poland and play for his team. He is

Image: X-News.pl/T-Mobile Ekstraklasa

Portugueseborn Dossa Junior (white jersey) joined the club in 2013

willing to splash out some cash on a player that could replace a first-team player.

The highest-ever transfer to the club was Croatian midfielder Ivica Vrdoljak, who joined Legia in 2010 for a €1 million fee.

Leśnodorski claims that the club may be able to afford spending that much again on an established player.

Chasing the dream Legia repeated last year’s success by securing its second championship in a row.

But domestic dominance is not the club’s main objective – getting into the exclusive Champions League is. “This is where the real money is,” the Legia president claims.

Polish fans have waited far too long for a Polish team to get into the Champions League group stages. The last time it happened was in the 1996/97 campaign when Widzew Łódź managed to qualify. Since then, all attempts have failed. This season, Legia came close when they were one goal away from defeating Romanian Steaua Bucharest in the final qualifying round.

“With the squad we currently have, we would have beaten the Romanians,” claims Leśnodorski.

Failure to qualify and a lackluster performance in the Europa League was the main reason for firing the previous

coach, Jan Urban, in December. He was let go despite Legia sitting comfortably at the top of the league table. “Urban is a great coach. I wouldn’t be surprised if he works for us in the future, but he was too focused on the first squad. We wanted to improve many other aspects of the club. Our visions were different, so we had to look for a different solution,” said Leśnodorski.

Urban’s replacement was Norwegian Henning Berg, a former defender who played for clubs such as Blackburn Rovers and Manchester United, winner of Premiership titles and the Champions League. But his managerial career has been much less impressive so far. His first trophy is this year’s championship with Legia.

“We’ve spent a long time discussing if he is a good fit for us, if he has the same vision as we do. In the end, we’ve decided that Berg’s philosophy is very similar to ours. Besides, we were a small fish in the pond looking to make a significant step forward. Berg is someone that will help us make it,” the Legia boss explained.

The sky is the limit Legia has a coach, a team and a modern stadium. The only thing left to achieve international success is a bit of luck, at least according to Leśnodorski, who knows that his club will be unseeded in the final qualifying stages for the Champions League, thus facing tougher opponents like Celtic Glasgow, Sparta Praha or, once again, Steaua Bucharest.

But even if Legia fails to qualify there this or next season, there’s always the Europa League, a secondary club competition where the Polish champions can also play. Nevertheless, a strong European presence is a must for a club like the Warsaw side in many ways. By maintaining a regular, strong performance, the team puts itself on the football map as a solid, modern club with strong ambitions, as a result attracting better players to join the squad. It’s also a perfect opportunity to showcase its players and sell them abroad.

After a good showing in the 2011/2012 campaign, when Legia reached the first knockout phase, the club sold several players for nearly €8 million. Leśnodorski assures that the money the club could win in European campaigns is not in the budget before each season, but if the Warsaw side manages to win significant amounts, the club has “multiple ideas on how to spend it.” u

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CSR

is not behavior, it’s DNA! by łukasz cioch

10 years into “Polish CSR,” where do we stand? Is it a necessary ingredient of sound corporate governance or a fancy new name given to a cluster of old things? Is it a passing fad, designed to set up smart defenses against ever more intrusive consumers, regulators and activists, or a genuine shift towards sustainable management models, increasingly keen to address humanity’s collective challenges?

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uch has been done over the last decade to mislead the general public into believing that CSR stands for a combination of PR, environmental protection and corporate charity. With unprecedented access to global communications tools and resulting empowerment of stakeholders, what would once have been a local incident or a case of secluded corporate misconduct, swept under the carpet with relative ease, can now become global debate in a matter of hours. A brand that has taken decades to rise above the competition may turn to ashes in days. This, in essence, is the original chromosome of CSR, which has its roots in the unregulated and often uneasy relationship between core business objectives and the needs of the so-called ‘stakeholders,’ in other words, everyone involved, whether directly or not.

System reboot Over the last 25 years, Poland has gone through a paradigm shift in its social and economic fundamentals, its key institutions, manufacturing companies and businesses. Since 1989, concepts such as company reputation, social dialog and stakeholder interaction have assumed

altogether new meanings, long before the old ones were wiped out from collective memory.

With historical identity and patriotism as the perennial themes of public debate in Poland, the first generation of Poles, born to the digital age, can hardly be blamed for intuitive reluctance to take corporate goodwill for granted, especially when so many were forced by circumstances to look for better prospects abroad since EU accession. For them, especially, associating capitalism with employee (or stakeholder) welfare is hardly a logical impulse.

At the most fundamental level, CSR is about the extent to which we really are capable of dethroning greed as the driving force for growth.

the spotlight of rankings, surveys and associations specialized in attracting big corporate brands to self-sponsored “selfadmiration clubs.”

With crisis and cost awareness looming large in today’s eye-of-the-storm reality, some companies get far more regulatory and social pressure than others. Tobacco and alcohol industries, in particular, are among the most scrutinized sectors, and, until recently, most visibly represented in a variety of CSR fora in Poland. As a result, these industries have become extremely adept at data reporting and paying meticulous attention to organizational culture – a key phrase for those sectors.

Santa Claus keeps coming to town There are over 100 corporate foundations in Poland, a third of which operate in the financial/banking sector, according to Klon/Jawor. More than two-thirds focus their activities on children and teenagers.

For some companies, setting up a foundation has become a competitive tool, for others still, a peer-pressure market requirement, however implicit.

Introducing a separate channel for charitable activities helps companies bring more organizational clarity and

optimize the allocation of available skills and resources. A boost in consumer trust and company image are always welcome by-products.

Enter successor According to “Entrepreneurs in Poland,” a report published in 2013 by the Lewiatan employers’ association, 166 companies are set up every hour in Poland. The report also reveals that in 2010, almost PLN 11 billion was spent on environmental protection, 44 percent by entrepreneurs. Many companies do good work while staying away from

CSR = obvious + unique It should not be surprising that businesses continuously strive to innovate themselves out of the traditional categories they operate in by creating new, out-of-the-box value propositions. This ever more hectic chase is increasingly about survival rather than an incremental change in sales figures.

Today’s dairy product manufacturers operating in Poland, for example, cannot afford to run out of ideas aimed at increasing the “non-core appeal” of their products. They already know that a millionth change in packaging, product tastes and colors, will not be enough to pull the trick, like in the old days.

And so they join forces with charities and dedicate a percentage of every yogurt sold to the chosen cause hoping that empathy is part of their new-found, smart consumer targeting. Likewise, some bottled water manufacturers in Poland choose to drill water wells in Sudan.

Building the future of management The evolving reporting standards for CSR are designed to strengthen the com-

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pany’s stakeholder-conscious image and put a human face on an organism which is instinctively much more at ease with concepts such as market control, maximization of growth and profit.

Confined to embellished reporting, CSR is vulnerable to becoming excessively commercialized and in the process lacking plausability. A typical CSR report is packed with green pastures stretching before readers’ eyes from cover to cover, overflowing with a fine mixture of evocative graphics, colors, design and emotive language.

If the same abstract language that companies use for defensive purposes and governments for drafting bills is used to propagate CSR, little wonder that many corporate efforts in implementing it will eventually resemble a dictator’s likening all efforts to introduce communism in Poland to saddling a cow.

Probably the easiest way to tell whether a company’s CSR report is packed with one-sided semi-truths is to filter it through its employees. If the experience of reading it feels like meeting someone who starts the acquaintance by flooding you with self-fascination, the natural question that follows is: would your first impulse be to like, trust or believe them? Probably not. Would it be judgmental of you? Probably so.

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Back to the future In the 21st century, it is not altogether unreasonable to expect that when people spend at least eight hours a day at work for many years, they would probably feel happier with a long-term

If the same abstract language that companies use for defensive purposes and governments for drafting bills is used to propagate CSR, little wonder that many corporate efforts in implementing it will eventually resemble a dictator’s likening all efforts to introduce communism in Poland to saddling a cow.

commitment more profound than maximizing someone’s profit. As things stand, CSR drifts dangerously close to window-dressing, white-washing, and in worst cases poorly designed and ultimately irrelevant attempts at preempting the role of NGOs, schools and hospitals, which in turn risk developing all the wrong habits and become more prone to ethically questionable compromises.

At the most fundamental level, CSR is about the extent to which we really are capable of dethroning greed as the driving force for growth. If the “trade-off ” is that business empires take a little longer to build and are more “vegetarian” in mindset, perhaps the Bill Gateses and the Warren Buffets of the next generation will be keen to embed the spirit of social entrepreneurship, collaboration and seeing beyond fiscal goals at the very outset of their business activity, rather than launching global foundations before retirement.

To survive, CSR will have to become much more than yet another reporting platform. As it wades through the many organizational cultures and approaches, it will have to evolve towards a clear sense of identity with a bottom-up appeal. For this reason alone, it cannot afford to be seen as irrelevant or removed from business impact criteria. u

June 2014

Poland becoming a support base for pan-european logistic operations > 62

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demand for office space is moving oustside warsaw cbd >56

Convenience centers taking over the retail market >66

25 PAGES OF REAL ESTATE NEWS

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> LOKALE IMMO B ILIA

N EWS

Reaching maturity 25 years of transformation

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Warsaw’s uncertain future Are office developers yielding under pressure?

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Exclusive interview with Joanna Kowalska-Szymczak, investment director at Kulczyk Silverstein Properties 61

DominikaŃski will have 40,000 sqm of office space

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Skanska to invest in office projects in Warsaw and Wrocław

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A matter of convenience With retail polarizing between convenience centers and leisure-oriented malls, what does it mean for the market in the long run?

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Appetites remain strong ��������������������59-60 High Streets: ul. Mokotowska �����������70-71 Interview with Robert Dobrzycki �������62-64 Ghelamco’s Warszawa Gdańska ������������ 50

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kanska announced investments in two office projects in May, in Warsaw and Wrocław. The sum of outlays for both of them will be €95 million.

In Warsaw, the company will build Atrium 2, with investment totaling €58 million. The building, located next to Atrium 1 on Al. Jana Pawła II in downtown Warsaw, will have a GLA of some 20,000 sqm on 15 storeys.

Construction was scheduled to start in May 2014 while completion is planned for the first half of 2016. The

project is pre-certified LEED Platinum.

In Wrocław, Skanska will invest €37 million in developing phase two of its Dominikański office project. The second phase will add 24,000 sqm of office space. The entire Dominikański complex will offer 40,000 sqm of leasable space with two underground levels and seven above ground.

The first stage was launched in Q2 2013 and is scheduled to be delivered in Q2 2015. Phase two is set to be completed in Q3 2015. u

59,600 sqm

was how much office space was delivered to Poland’s six largest regional cities in Q1 2014, according to a report issued by Knight Frank.

Image: Skanska

Interview

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Hampton by Hilton to open new hotel in Wrocław

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he first Hampton by Hilton hotel in Wrocław is due to be opened in 2015.

The scheme, dubbed Hampton by Hilton Wroclaw City Center West, will operate as a franchise between Hilton Worldwide and the owner of the property, West Real Estate.

The hotel will have 100 rooms and will be located in the center of Wrocław.

Hilton Worldwide currently has 18 projects under management or in preparation in Poland. u

warszawa gdaŃska will become a multi-modal transport hub

l Mixed-Use

P

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PHN may demolish Intraco building

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eal estate group Polski Holding Nieruchomości (PHN) is considering the demolition of the Intraco office building in Warsaw and constructing a new one in its place, the company’s management board members said in May. PHN is now preparing to commission a visualization of the Intraco City project, said CFO Włodzimierz Stasiak. The second stage of that project may involve pulling down the existing tower in H1 2016, but economic calculations will be key to deciding whether that will happen. u

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KP SA has decided to take on Belgium-based developer Ghelamco for construction on the site of the Warszawa Gdańska suburban railway station. The estimated total cost for the scheme is some PLN 1.5 billion.

“We are pleased that the negotiations with Ghelamco came to a successful close,” said PKP SA’s Real Estate Director, Jarosław Bator in a press realease, adding that “we are undertaking more and more developer investment projects, and this is a solution which is profitable for both parties.”

Construction work is to commence by the end of the current year or at the beginning of 2015. The whole development will be constructed in stages, with

the actual station first up for reconstruction works.

Three developers were originally shortlisted for the multi-million złoty contract. Earlier, one of the contenders, Marvipol, said that the tender should be annulled and reissued, filing a motion with the Supreme Audit Office. Marvipol also currently owns a long-term lease of a plot directly adjacent to the planned station investment.

The Warszawa Gdańska station, situated just to the north of the Old and New Town districts, is to become a multimodal transport hub which integrates suburban rail links with the city’s bus, tram and metro services. u

talking point

“The positive situation on the industrial real estate market is a reflection of the overall optimistic economic trend in Poland and in the EMEA region. The majority of transactions, concerning both the number of lease agreements as well as the amount of the space leased, were new contracts.”

Patrick Kurowski, head of industrial and logistics at CBRE in Poland, on Q1 2014 sector results.

Images: Panattoni Europe, PHN, SUD Architectes, CBRE, BNP Paribas Real Estate

PKP picks Ghelamco for Warszawa Gdańska project

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Echo launches new office scheme in Kraków

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cho Investment has received a legally binding building permit for its Opolska Business Park office complex which is to be located in the northern part of Kraków, at the intersection of ul. Opolska and Al. 29 Listopada.

The project consists of three twelve-storey

buildings including a ground-level and an underground car park. The entire complex will deliver 57,000 sqm to the Kraków market. The project will be carried out in three stages. The completion of the first building with an area of over 18,000 sqm, is planned for Q4 2015. u

w h o ’ s n ew s Robert Dobrzycki has been appointed managing partner at Panattoni Europe. He will be responsible for managing not only CEE, but also Western European markets, including Germany.

“Our achievements in CEE have been recognized, I am grateful for the trust placed in me, and at the same time looking forward to the new challenges related to the development of the European platform,” Dobrzycki said.

Dobrzycki has been with Panattoni Europe since 2005, when he became responsible for launching the company’s CEE branch in Poland. He previously worked for Menard Doswell & Co., where he was in charge of industrial properties.

Barbara Berta has been appointed technical director at the Property Management Department at BNP Paribas Real Estate. She will be responsible for managing the technical team and overseeing the operations of properties from the company’s portfolio.

The Property Management Department provides complex property management solutions to customers.

Before joining BNP Paribas Real Estate Berta held the position of technical director at DTZ and prior to that, she managed the property portfolio of the L’Oréal Polska Group. She has altogether more than 15 years of experience in the commercial real estate sector.

transactions

46,889 was the number of housing units completed in Poland in January-April 2014, according to the Central Statistical Office.

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“I cannot recall any other market that started from scratch to become a regional leader and one of the most rapidly expanding markets in all of Europe in only two decades.

Reaching maturity

P

In 1989, Poland set off on a path of democracy and economic growth. What did the transformation mean for the real estate market? What was it like 25 years ago and where is it headed now?

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Poland’s modern history is divided into two eras: before and after the country’s transformation to a modern democracy. On June 4, Poland celebrates the 25th anniversary of the first partially free elections that led to a period of growth and increasing prosperity. Few things portray the magnitude of change that followed the transformation better than the commercial real estate market, across all segments.

Looking for equilibrium The office segment has thus far been the most volatile across all commercial real estate classes. In the late 1990s, Poland saw the highest GDP growth in its post-transformation history, of over 7 percent annually.

With growth came a wave of international corporations opening branches in Poland, pushing rent levels in the precious few modern office schemes available at the time through the roof,

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up to $50-60 per sqm per month.

“The first offices that represented any reasonable quality, that is they had a minimum of air conditioning or more sophisticated ventilation systems, started to appear in 1993-1994 and were built by foreign developers,” said Tomasz Trzósło, managing director at JLL. Like in any emerging market, it takes time to find equilibrium. After the spike in demand came a wave of supply, pushing vacancies up to 20 percent or more. The big boom for office space came in mid-2000, culminating in 2007. After a period of uncertainty and belt-tightening, developers seem to be back on track, albeit much more cautious than before the crisis.

Despite its ebbs and flows, the office market has developed quite remarkably over the past 25 years.

Warsaw alone now has 4 million sqm of office stock, 60 percent of all the office space across the country. Kraków, the second largest city, has another 600,000 sqm and Wrocław – 500,000 sqm.

The rate of development remains strong, with 700,000 sqm under construction in Poland’s capital and a total of 350,000 sqm across regional cities.

From the ground up Some 25 years ago, retail was almost entirely state-controlled, not to mention the perpetual shortages of everything, from soap to lollipops.

Retail space as we understand it today was virtually non-existent. In the early 1990s, when restrictions on trade were abolished, retailers and import-

Paul Gheysens founder of Ghelamco, holder of CEEQA Lifetime Achievement Award

I

n 1985 I established Ghelamco as a development and general contracting company in Belgium. We began to import materials for our projects from many countries, including Poland. That’s when I had an opportunity

to visit Warsaw.

I remember that when I first went there, I was astonished by the potential the city had for new real estate investments. So after a few more visits I decided that Poland would be the first CEE country Ghelamco would enter.

The year was 1991 and there were not many developers active in the market. In fact, the market itself barely existed, so I often heard it was too risky to do business in Poland. Well, I took the risk and now, after over 23 years, I must say that it was one of the best decisions I’ve ever made.

What happened in this market is a fascinating story of vision, hard work and engagement. I cannot recall any other market that started from scratch to become a regional leader and one of the most rapidly expanding markets in all of Europe in only two decades.

Of course, the years of shaping the market were not that easy.

Everyone, from developers to consultants, general contractors and tenants made efforts to make it transparent, modern, more developed and ethical. It always makes me proud that Ghelamco had the opportunity to take part in this unique process. u

ers mostly operated from the back of trucks or at bazaar stalls.

Then came the first generation of shopping centers: an anchor supermarket chain plus a few stores. The first international chains in the country were E.Leclerc and Real – they launched their first supermarkets in Poland in 1995. Auchan came in 1996, Carrefour in 1997 and Tesco in 1998.

The second generation of shopping centers increased the space dedicated to the fashion segment and other

services, while the third generation turned shopping malls into the entertainment destinations we know today.

Poles do love their shopping malls, which has taken a toll on high street retail in some of the major cities. In Łódź, Manufaktura practically wiped out ul. Piotrkowska as a retail destination, while in Warsaw ul.

Nowy Świat, once destined to be the shining beacon for other high streets in Poland, has turned into a restaurant and bar hub after the Złote

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Rafał Krzemień managing director at Polski Holding Nieruchomości

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HN has been active in Poland’s real estate market for several decades. In 1975, we built the first high-rise in Warsaw, on ul. Stawki 2.

In 1998, we delivered the Kaskada office scheme on Al. Jana Pawła II. We have seen first-hand how the market changed after 1989.

The economic transformation brought Poland a major shift in investment activity on the real estate market.

Properties ceased to be strictly a commodity and turned into an income-producing asset. The factors shaping the market have also changed drastically over the years.

The transformation process was accelerated once Poland joined the EU in 2004. The country’s EU accession attracted even more foreign capital, which led to a rapid increase in real estate transaction prices.

The fact that Poland fared rather well during the recent crisis, which started in 2008, also helped develop the market. The demand for commercial space in Poland remains strong, which makes companies active in the sector reliable and trustworthy in the eyes of institutional investors.

The market for modern office, retail and logistic space in Poland is big and liquid. It also offers attractive yields compared to other countries, with continually strong growth potential. u

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Tarasy mall opened right smack in the city center, not one kilometer away. But developers and investors are convinced high street retail will boom in Poland again.

“Each year we see about 30 new brands entering the Polish market, most of which decide to debut in Warsaw. Depending on the strategy of the brand, some locate their stores in shopping centers, while others decide to open them exclusively on high streets,” said Beata Kokeli, senior director at CBRE’s retail department.

Currently rent levels in Warsaw are similar on high streets and in prime shopping mall units, which go for up to €100 euro per sqm per month. This could work in favor of the high street as they are generally considered more prestigious.

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“Our office opened when European companies started expanding into Central and Eastern European countries. Most of them first looked to Prague, some to Budapest, with Warsaw third on their target list.

Still, shopping malls remain the dominant retail format in the country.

Out of the 550,000 sqm of retail space currently under construction, 87 percent is being delivered within shopping centers. Currently Poland has 11.6 million sqm of modern retail space. With major cities already mostly saturated, developers are now filling up all the niches in smaller cities and towns, mainly with smaller shopping centers and with retail parks.

“Poland’s retail map is developing increasingly evenly, with locations that were previously less active expanding their offer,” said Anna Wysocka, head of retail agency at JLL. Building a hub The story of the last quarter-century would not be complete without

the warehouse and logistics market, which has probably seen the most spectacular growth over the past 25 years.

Similarly to the retail market, the logistics and warehouse segment also started from scratch. In the early 1990s, there were some concrete warehouses here and there, but nowhere near the standard that tenants needed. The scarcity of space was not the only impediment.

“When we started our logistic operations in Poland, we couldn’t find employees with qualifications and had to train them on the job,” said Dorota Raben, CEO of the Port of Gdańsk, at the European Economic Forum in May. “The situation has changed dramatically over a few years, mainly because of the open-

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ness of Poles and their hard work,” she added.

According to Piotr Frąckowiak, head of the rail division of Baltic Container Terminal Gdynia, “If it weren’t for the economic transformation, we might still be nothing more than a peripheral terminal.”

“Today, the sea ports in the Tri-City area are the second largest re-loading hub in the Baltic Sea region. We have become the leading terminal in the group and it’s time for us to teach others,” he added.

Poland’s location, which used to be the country’s greatest weakness in the whirlwinds of the two world wars and the cold war, is now beginning to pay off. Poland has become the perfect outsourcing destination for warehouse and logistic operators.

The country now has 8 million sqm of modern industrial and warehouse space, with nearly 650,000 sqm under development, according to CBRE. It’s also the most promising real estate segment for investors, offering the highest yields (7.25 percent).

“Poland’s warehouse and industrial investment volume is only second to Germany, the biggest economy in Europe,” said Robert Dobrzycki, managing partner at Panattoni Europe (see interview p.

62-64). “The Polish logistics market offers investors a base supporting the development of other markets. This translates into a higher investment volume in the market, also fueled by the country’s attractiveness as an outsourcing destination,” he added.

Law and transparency Many would agree that what has contributed most to the success of Poland’s real estate market was the fact that it’s relatively easy for investors to come in and do business here, something that can’t be said for all former members of the Soviet bloc.

“Comparing it with other countries in the CEE region, such as Hungary, I believe that Poles created very favorable conditions for investment by reducing bureaucracy and legal obstacles. The new construction law, which guarantees the security of businesses and customers was also

Tomasz Trzósło managing director Poland, head of capital markets Poland, JLL

This year JLL is celebrating its 20th anniversary in Poland. What was it like when you opened your office here?

We opened our first office in 1994.

I’ve been here the longest from all my colleagues currently working for JLL, as I joined in 1997. Initially, our office started with a team of 10 employees. When I joined, there were a dozen or so people at JLL. Now we have 200 core employees, plus all the property managers and facility managers working within clients’ properties across the country, bringing the total number of JLL employees in Poland up to around 450.

Our office opened when European companies started expanding into Central and Eastern European countries. Most of them first looked to Prague, some to Budapest, with Warsaw third on their target list. We opened our Prague and Budapest offices in 1992 with our Warsaw office following two years later. These international companies were looking for offices and much needed advisory services. Back then we mostly negotiated lease transactions.

Was there anything to choose from back then?

The offer was limited. Just like Regus works now, back then you could secure a small office in the Marriott hotel, and there was not much more to choose from. This was the natural first step for companies entering Poland – to open a small branch in a room or two, and the Marriott office space was their first choice.

The first real offices were created in tenement houses. The first offices that represented any reasonable quality, that is they had a minimum of air conditioning or more sophisticated ventilation systems, started to appear in 1993-1994 and were built by foreign developers.

One of the first ones was the Warsaw Corporate Center, built by the American investor Golub, and located opposite the Marriott building. The Marriott scheme was built by Austrian Strabag, in cooperation with Marriott itself and LOT Polish Airlines, on a LOT-owned plot. Norway

a very important factor,” said Arie Koren, CEO of OKAM Capital, a residential developer active also in Israel, Cyprus and Hungary.

Rooting out bribery and excessive red tape took some work, but looking at where Poland is now, it seems to have been worth the effort.

House was delivered in 1997 and was built, as its name suggests, by a Norwegian developer. And then others followed.

Interestingly, we now see a significant group of Polish developers active in the market, but back then the market was predominantly comprised of international development companies. The first Polish developer to build a few commercial properties for third-party use was Platan Group, a company set up in the second half of the 1990s. And they got their know how from JLL (or Jones Lang Wootton at that time) by hiring a senior person from JLW – Karolina Kaim – to run their Polish operations.

What happened when the boom came?

So far we’ve only really had one boom, the one between 2004 and 2007. At the beginning of the boom, it might be good to mention that when we moved to our current offices in 2003, the vacancy rate stood at some 17 percent in Warsaw back then.

Although only a few buildings were being delivered then, leasing took a long time, and it was mainly because of the scale of the market. When Metropolitan (38,000 sqm of space) or Saski Crescent were delivered, they added a significant percentage of the entire modern office stock to the market. Today we have over 4 million sqm of office stock in Warsaw, so even a scheme like Warsaw Spire that will add 100,000 sqm is relatively just a drop in the ocean. The current market can absorb such a scheme. Only if there were 10 Warsaw Spires being developed at the same time, would it push the vacancy rate back up to or above what we had 10 years ago.

The above just shows that the Polish office market has changed completely over the past two decades.

Another thing that changed substantially were the rents. In the 1990s, the office market was in its infancy, and as with every emerging market the rental rates were extremely high at the beginning. In the Marriott building, they were at some $50-60 per sqm. And the dollar was much stronger back then. Well, these were great times for those few owners of office properties in Warsaw. u

“Of course, the years of shaping the market were not that easy. Everyone, from developers to consultants, general contractors and tenants made efforts to make it transparent, modern, more developed and ethical,” said Paul Gheysens, founder of Ghelamco. u

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Warsaw’s uncertain future b y b e ata s o c h a

Warsaw’s office stock is set to grow by 600,000 sqm by the end of 2016, half of which will be erected in the very center of the city. Add to that the increasingly pronounced trend of tenants favoring the more flexible and spacious offices outside the capital’s center. Is the 3-4 percent GDP growth forecast for the coming years enough to cushion the effects of increasing oversupply?

Selected office buildings completed in Warsaw (Q1 2014) Office space Developer/Owner (sqm)

Project

Location

Park Rozwoju

Służewiec (Upper Mokotów)

16,000 Echo Investment

Atrium 1

CBD

15,700 Skanska

Gdański Business Center I- building B

Żoliborz

15,000 HB Reavis

Bolero Office Point

Jerozolimskie

11,300 Real Management

The Park Warsaw B2

Jerozolimskie

10,050 AIG/Lincoln Polska

Powiśle Park

CBD

6,800

Grzybowski Square

CBD

4,000 Tacit Development

Foksal City

CBD

2,540 PHN

Mazowiecka Spółka Gazownictwa

Source: Knight Frank

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In

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Q1 2014, some 85,000 sqm of office space was delivered in Warsaw, 16 percent more than in the corresponding period of last year, according to Knight Frank. Throughout 2014, 320,000 sqm should be added to the market, a 7 percent increase compared to 2013, according to projections by JLL. Altogether Warsaw has 611,000 sqm of office stock in the pipeline, which is no trifle given that Warsaw now has 4.2 million sqm of office space.

The most recent major completions include Skanska’s Atrium 1 with 16,200 sqm, Echo Investment’s Park Rozwoju with 16,000 sqm of space, HB Reavis’s Gdański Business Center (15,000 sqm) and The Park Warsaw B2 (10,000 sqm) delivered by AIG/Lincoln.

Crowded CBD Developer activity was at its strongest at the beginning of the year in the capital’s city center, where as much as 31,000 sqm was added to the market in Q1 2014.

Developer activity shows no signs of slowing down, either. Between 2014 and 2016, 350,000 sqm of office space will be delivered in the CBD area, increasing the total office stock in Warsaw’s center by 25 percent, according to CBRE. Most of the new office space will be built in the western part of Warsaw’s CBD. During 2014 and 2015, a number of refurbished office schemes in the CBD are scheduled for completion, including Ethos, Spektrum and Moniuszki Tower, which will altogether add 49,000 sqm of space.

There are also a number of brand new projects in the works, most of them in or close to the city center. HB Reavis is close to completion on its 30,000 sqm building A of the Gdański Business Center complex in southern Żoliborz. Work is progressing on Ghelamco’s Warsaw Spire, which is set to be completed in 2015, adding a whopping 100,000 sqm to the capital’s market. A few weeks ago Austrian developer S+B Gruppe launched

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Will the oversupply have significant repercussions on the market?

The situation isn’t by any means dramatic because there is a real tenant demand in the market. We are seeing positive net absorption, and the supply is growing steadily rather than booming. Theoretically, a lot of space could be delivered in the next few years, considering the land Tomasz Trzósło, bank that developers possess and the building permits managing that have already been issued. But not all of such possible director, stock will be built even in the mid- to long-term, because Poland, JLL the market won’t be able to absorb that much volume, and so third party financing will not be easily available.

I therefore believe that there is no reason to panic, as the market, to a significant extent, will regulate the supply. Banks continue to be reluctant to provide funding on a speculative basis, without some 40-50 percent of pre-leases.

That’s great, and I hope it continues in the longer term. There is a small number of developers that can secure money for a project without having pre-leases and bank financing, and so the supply will naturally reduce. It will, however, be gradually delivered over years, and so the rents will continue to be under pressure.

Also, the market certainly isn’t entirely risk-free. There is a significant number of competing office projects, and some of these may have difficulties finding tenants. And so my piece of advice to developers – it certainly makes a lot of sense to be very cautious. u

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New supply for lease in Warsaw 300,000

250,000

200,000 15

13.5 11.6

12

150,000

9.7

9

7.6

7.2

7.1

6.9

6

100,000 3.0

3

2.8

2.1

>

Italy

Spain

Poland

France

Netherlands

European average

Sweden

Germany

A number of new office schemes will be delivered over the coming years, but will the market be able to absorb all this space? construction on a 6,000-sqm office scheme on ul. Królewska, scheduled to be delivered in mid-2015.

Another major batch of shiny new office space is expected also in 2016.

Echo’s biggest scheme, the Q22 project, is scheduled to be delivered in early 2016.

After the successful sale of Atrium 1, Skanska has also recently launched another office scheme in the center, Atrium 2, which will provide 20,000 sqm of office space in Q2 2016.

Tough times ahead The sheer volume under construction has been cause for concern for quite some time now. Will the market be able to absorb all this space? What will happen to the rent levels as the supply continues to soar? For now there is no reason to panic. As much as 60 percent of the volume completed in the first three months of the year has already been commercialized, according to Knight Frank. JLL estimates that 26 percent of the space scheduled for Q2-Q4 2014 has also already been pre-leased. Something’s gotta give eventually, though.

“The increased new supply is forecast to create upward pressure on the vacancy level and downward pressure on the level of rents with an increasing number of offered incentives lowering the effective rates even by 25 percent below the level of headline rents. This trend should con-

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tinue at least until the end of 2015,” said Konrad Heidinger, market consultant at CBRE’s Research Department.

Currently, prime office rents in Warsaw stand at €25-€26 per sqm per month in the CBD area, while in non-central locations they are at €14-€15 per sqm per month, according to CBRE data. In the entire city center (CBD plus fringe locations) monthly rents come in at €22-€24 per sqm, according to JLL. “Occupiers are fully aware of the increased competition among developers.

In many cases, they can achieve significantly better financial conditions and improve the technical standard of their offices at the same time by relocating to a newly completed building. Furthermore, companies are tending to move out from the central locations and are looking for flexible, customized offices in business parks located in the fringe of the city center or in further, non-central locations,” said Colin Waddell, managing director of CBRE for Poland.

Moving out of the center Tomasz Czuba, head of Office Agency at JLL, also noted that non-central locations, particularly Mokotów, are gaining in popularity. “In Q1 2014 alone, approximately 136,400 sqm was leased, with Mokotów taking a clear lead with a 37 percent share of gross take-up volume,” he said. The second most popular

50,000

0 2008

2009

2010

completed

2011

2012

2013

2014

2015

forecast Source: Knight Frank

location is the city center fringe, with a share of 18 percent of all lease transactions, according to data by Warsaw Research Forum.

Higher take-up in these locations is changing the balance in vacancy rates.

In the CBD area, vacancy now stands at 13.2 percent and is higher than in the city center fringe (9.5 percent) and in noncentral locations (12.7 percent). If more tenants move out of the center, who will rent all this space about to roll off?

Developers and investors will no doubt have more work courting potential tenants. “We’re not afraid. We have to adjust to it. We try to attract tenants with quality and location. The next two or three years years will be tough. With the amount of space that will be delivered this year we can expect rents to go down,” said Stanislav Frnka, CEO of HB Reavis.

Pre-leasing activity in Q1 was “flat when compared to previous quarters, with only an 8 percent share in gross take-up. This may be due to the higher availability of existing vacant office space on the market,” said JLL’s Czuba. Experts’ projections are far from alarmist, though. “We expect some large pre-lets to be closed in the upcoming quarters.

In our opinion, demand in Warsaw will remain sound, thanks to solid economic fundamentals and very positive GDP projections for 2014-2015,” he added. u

Images: Ghelamco, Echo Investment

Online retail share of total market (2014 estimate)

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Appetites remain strong b y b e ata s o c h a

Nearly €1 billion worth of real estate assets were sold in the first quarter in Poland. Prime assets, albeit increasingly scarce, are still in demand, but investors are also looking elsewhere

The

real estate market is past the recovery stage and expansion seems to be in full swing, at least judging by the amount of money coming into Poland. With some €940 million in investment volume, Poland accounted for 69 percent of the total value of real estate sale and purchase transactions concluded in the CEE region in the first quarter, according to data collected by JLL. The whole CEE market generated €1.37 billion in such deals, recording a 19 percent increase year-on-year.

The office segment accounted for 56 percent of the CEE’s total deal volume. Retail transactions accounted for 29 percent, while logistics (9 percent) and hospitality (6 percent) made up the remainder.

Top three

The largest transaction in the first quarter of the year was BlackRock’s sale of the Rondo 1 office scheme, located in Warsaw’s CBD, to Deutsche Asset & Wealth Management for some €300 million.

The biggest deal to close in the retail segment in Q1 was the sale of Poznań City Center by Trigranit, Europa Capital and PKP to the consortium of Resolution Property and ECE Fund. The amount was not disclosed, but market sources estimate it at some €250 million.

The logistics market saw the sale of Panattoni Park Wrocław and Panattoni

}

“The pace at which these top-class centers are delivered to the market may not match the demand.

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Analysts expect this year’s transaction volume to exceed €3 billion

Back on track

According to market experts, in terms of investment volumes 2014 will likely be at least as good as last year, when the transaction volume exceeded €3 billion.

“Looking ahead, we will witness increased momentum relating to cross border portfolio and platform opportunities. This activity of scale supports the view that CEE investment volumes for 2014 are on track to match or even exceed the impressive 2013 levels,” said Troy Javaher, JLL’s head of capital markets, CEE. Investors’ radars are still tuned in to the prime segment. “In the office market, we

may witness more transactions of prime schemes in Warsaw and other major markets. … In the industrial sector, investors’ attention will still be drawn to A-class facilities in major logistics locations secured with long-term lease contracts,” said Agata Sekuła, head of retail investment, Central Europe, JLL. Unlike in the office segment, investors are looking for retail assets all over Poland.

“As for the retail segment, investors will not only look for various products located in Poland’s major regional cities but also further afield in the country’s smaller towns and cities,” Sekuła said.

Casting a wider net

The reason for expanding scope is the scarcity of prime retail assets on the market.

Most of the top offers have already been sold and new ones take time to develop.

“The pace at which these top-class cen-

Poznań City Center was sold for some €250 million, according to market sources

ters are delivered to the market may not match the demand. As a consequence, that will further increase the pressure on yields rendering the purchases more expensive,” said Leszek Sikora, managing director of ECE Projektmanagement Polska.

Accordingly, investors will have to consider other options. With the prime segment nearly dry, they will likely focus on the next-best thing.

“There is a group of properties available that have to be redeveloped, revitalized, commercially restructured and could be profitable if properly managed. I think we will see a number of transactions adopting this rationale in 2014,” said Joanna Kowalska-Szymczak, investment director at Kulczyk Silverstein Properties. u

Leszek Sikora is the managing director of ECE Projektmanagement Polska, which purchased Poznań City Center in March 2014 in a consortium with Resolution Property.

Looking at the bigger picture

T

here was quite a big number of high-volume transactions in recent years, involving some prime-quality shopping centers like Manufaktura in Łódź and Silesia City Centre in Katowice. I believe there will be a few more deals in 2014, but the scale of the deals for Poznań City Centre and the two others I mentioned may be hard to beat.

I do not believe, however, that it makes sense to get excited about the value of individual transactions only. What is really interesting is the fact that there is a growing, more liquid market for prime assets in Poland. It is proof of a certain maturity of the Polish commercial real estate market and a promising outlook for its future. Investors are not afraid to direct significant volumes to individual assets as long as they are top quality schemes.

However, the pace at which these top-class cen-

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ters are delivered to the market may not match the demand. In consequence, that will further increase the pressure on yields rendering purchases more expensive.

Development of new centers is more than ever dependent on how tenants perceive the growth of consumer spending. It is no secret that the level of disposable income of Polish consumers is and will continue to trail the levels seen in Western Europe.

Therefore, top-quality schemes available for sale will continue to be scarce.

The demand is primarily targeting the economically strongest cities of our country and the region.

The safety and sustainable performance of the investment is a key point of interest to the investors.

ECE Fund I is now fully invested and its success increases our appetites for the best retail assets in the strongest Polish cities. l

Images: Plus Communication, ECE Projektmanagement, KSP

Park Błonie I by Standard Life to Hillwood.

All three of the largest transactions were recorded in Poland.

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Opportunities in the middle transactions adopting this rationale in 2014.

Where is the capital coming from now?

German, British and American capital is the most visible. Investors are searching for office projects, some of them are prepared to consider not only newly built assets but also well let buildings which are 10-12 years old. Retail is attracting a lot of attention. After years of stagnation, the industrial sector is also hot.

Will retail prevail once again as it did last year?

In terms of volume, Polish retail investments have the size advantage. All it takes is three large retail deals to make a mark in the annual volume. But in terms of the number of transactions, we will see more office and portfolio transactions this year.

Polish investors are still far from being very active on the domestic market, aren’t they?

No, they’re not. I think a change is coming and the trigger for change is Polish private capital.

Having said that, I admit that the most spectacular transactions are done almost exclusively by foreign funds and the involvement of Polish capital remains marginal. However, it is not the scarcity of Polish money, but legal restrictions which prevent Polish institutional investors from increasing their presence in the real estate market.

Interview with Joanna Kowalska-Szymczak, investment director at Kulczyk Silverstein Properties

Will the transaction volume be higher this year than last year?

Definitely. There might be a shortage of assets available for sale in the two opposite ends of the market, which until recently have been the most sought after by investors: core properties, which are fully-leased and the buyer has little to do other than cut off coupons. Also there is little available to acquire in the opposite

end of the market: the distressed assets segment. We have seen many opportunistic funds looking for properties in Poland but most of them haven’t found much to buy.

However, there is a group of properties available that have to be redeveloped, revitalized, commercially restructured and could be profitable if properly managed. I think we will see a number of

One of the reasons why local institutional funds are so scarce when compared to foreign money is the fact that the first Polish institutional investment in real estate had bad timing. Polish funds decided to invest in real estate relatively late in the property cycle.

As a result, they were hit by the 2008 crisis during their investment periods.

It comes as no surprise, then, that local institutions are now very cautious about trusting the real estate sector again. Although the cautious approach of Polish institutions helped the Polish economy stave off the crisis, it is now preventing Polish institutional capital from benefiting from the real estate market growth. u

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Robert Dobrzycki, managing partner of Panattoni Europe

A support base for pan-European operations WBJ Observer: Amazon is currently building three logistics centers in Poland. Do you think Poland will see more such investments in the future? Is Poland an attractive destination for warehouse and logistics outsourcing?

Robert Dobrzycki: Poland’s central location, as well as its political and economic stability, are making the country increasingly attractive to Western European investors. The country managed to stave off the economic crisis and is currently gaining on importance as a warehouse and logistics destination.

Poland’s warehouse and industrial investment volume is only second to Germany, the biggest economy in Europe.

The Polish logistics market offers investors a base which supports the development of other markets. This translates into a higher investment volume in the market, also fueled by the country’s attractiveness as an outsourcing destination. Major international companies are increasingly looking for costefficiency in Central Europe as a near-shoring alternative to Asian countries.

The majority of recent projects are all located along Poland’s western border. What is it that draws so many companies there?

Poland has invested a lot in expanding its infrastructure alongside the western border, including building the S3 expressway which connects the port in Szczecin with Central Europe, particularly with the Czech Republic. Investors are increasingly interested in the western part of the country. Market reports indicate the volume of goods arriving in Polish ports is growing and thus these ports are expanding.

As a warehouse developer, we can see increasing interest from companies in locations alongside the S3 expressway. We have completed a dedicated production hall for RECARO Aircraft Seating in Świebodzin, a 30,500-sqm facility for Lear Corporation in the Legnica Special Economic Zone, as well as two units for Faurecia, one in the Legnica SEZ and one in Gorzów Wielkopolski, within the Kostrzyn-Słubice SEZ. Within the Wałbrzych SEZ Invest-Park, there is also the 33,000-sqm BTS we built for Polaris – an American producer of quads in Opole.

i nt e r v i e w b y b e ata s o c h a

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In eastern Poland, demand is for industrial assets (production facilities).

These are only BTS units, often dedicated to local companies in need of refurbishing or expanding their current space. For example, Zelmer decided to optimize its production processes and replace its production facilities located in several buildings with a single modern production and warehouse complex situated in Rzeszów.

Panattoni also recently built Pilkington’s second factory. The first one is located in Sandomierz. The city’s master plan would not allow for another one there, so we built it in neighboring Tarnobrzeg.

All this development shows the potential of the region, mostly because of the presence of highly-qualified labor. The growth of the logistics and

Images: Panattoni

What about eastern Poland? Is there any demand for warehouse space there?

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Amazon construction site near Poznań

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warehouse segment in eastern Poland is stymied, however, by insufficiently developed infrastructure (highways, roads and airports) and the significant distance from Western Europe.

We’ve seen some speculative space being constructed over the past few months, but the bulk of new space comes in built-to-suit schemes. What asset classes are currently in demand?

The growing e-commerce sector is driving demand for assets dedicated to this market segment, across all asset classes.

In Amazon’s case, these are usually XXL facilities like the three units currently under construction in Poznań and Wrocław, each comprising 100,000 sqm.

However, international and local transport companies, carriers and major logistics concerns create demand for small and big units alike.

Companies like DSV Road, for which Panattoni constructed several facilities, and DHL have very specific requirements for their space usually featuring crossdocking platforms. Meanwhile, logistics operators usually lease space to service a particular contract with a client.

Apart from units dedicated to e-commerce, there are a number of BTS being built for production purposes, for companies moving manufacturing to Poland from Western Europe.

We have also expanded our offer with value-added acquisitions where Panattoni Europe purchases industrial properties, refurbishes or expands them raising their value, and then re-commercializes them or sells them to investment funds.

For instance, we’ve redeveloped a facility for Lear Corporation in Legnica. We’ve also acquired K-Flex’s production plant comprising 8,000 sqm with plans to add another 8,000 sqm of warehouse space as well as refurbish the building’s facade and the routes leading to the building.

You are now responsible for the company’s operations not only in CEE, but in western markets as well. Where do you see opportunities for growth?

What is Poland’s role in Panattoni’s global strategy?

Up until now, our Western European division has performed well and the Eastern Europe division performed above av-

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“The growing ecommerce sector is driving demand for assets dedicated to this market segment, across all asset classes. erage. The new goal for us is to push all operations of the company to perform above average.

The role of Poland’s warehouse market is currently increasing as even the most demanding investors are starting to see the country as their second choice, following Europe’s key market, Germany. They’re starting to see that Poland has overcome the crisis and that it’s become a transparent market that offers a useful base from which to provide support to other markets, such as neighboring Germany.

What we’ve witnessed for some time now is that in an effort to improve cost efficiency investors have begun looking beyond Poland to its neighboring countries. The recent Russian-Ukraine tension has slowed this process and we have already seen a number of companies looking to move their operations further to the East to provide even higher cost-efficiency.

As the new managing partner of Panattoni Europe, how do you see the company’s further development?

We’ll be increasing our focus on Germany, as it continues to be seen as Europe’s core warehouse market. Both due to the size of the market as well as to the fact that it’s an industrialized country whose exports are global. Germany’s warehouse market provides great opportunities.

Another advantage of Germany is the location, which makes the country a gateway to Europe for global industrial players and a key distribution point. Until now, leasing space at logistics parks wasn’t that popular. Companies preferred to have ownership of the properties. This is changing. There are many key global players here from the automotive industry, but also smaller specialized companies and we want to be here as well. u

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b y b e ata s o c h a

While convenience centers are becoming the go-to destination for everyday shopping, large malls are trying to attract consumers with leisure and food experiences. In this polarizing market, is there room for other schemes which are neither dominant enough for leisure centers, nor close enough for everyday shopping?

A matter of convenience

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It might be that people are getting lazy, or it could be that they are increasingly overworked and perpetually late. No matter what the cause, Poles are increasingly taking to convenience centers, which are easily accessible on their way home from work or located close to where they live.

Developers, investors and retailers are also increasingly interested in smaller projects, looking to fill the niche. “According to JLL data, 26 percent of supply currently under construction will be within schemes

below 20,000 sqm of GLA,” said Agnieszka Tarajko, senior research analyst at JLL. A number of smaller schemes are under development in small and medium-sized cities, even those with populations under 100,000, such as Ełk (population 60,000), where the 16,000-sqm Brama Mazur retail scheme is scheduled to be delivered in August 2014, and Kutno (population 46,000), where Elbfonds Development has just delivered its Marcredo Center, which offers 16,000 sqm of GLA.

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Wherever there are people “The significance and popularity of convenience centers has been increasing for a few years now. We see demand for such schemes in smaller cities and suburban areas as well as in major markets, for example in densely populated residential districts,” Tarajko added.

Wherever new residential clusters are created, developers salivate at the prospect of investing in retail schemes. In Warsaw alone, Ghelamco is moving forward with three convenience centers: one

in Wilanów (a southern Warsaw district), one in Łomianki (north of Warsaw) and one in Piaseczno (a satellite city south of Warsaw).

Meanwhile, RE Project Development is preparing to launch construction on a 12,500-sqm convenience project, Ferio Wawer, located in Warsaw’s eastern district and GTC is also looking to launch a 25,000-sqm scheme in another southern satellite city – KonstancinJeziorna.

Other regional markets also seem able to accommodate a few more

retail schemes. RED Real Estate is currently building the two-storey, 10,000-sqm Galeria Dębiec in Poznań, set to be completed in September 2014. Capital Park recently launched another of its Vis a Vis street malls in Łódź that will provide 5,500 sqm of retail space.

Fun, games and... food Even though not immediate competitors to convenience centers, large shopping malls have been forced to shift their focus towards entertainment and becoming more

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>

of a weekend destination where people socialize, go to the movies and, naturally, eat. No wonder, then, that shopping malls are constantly expanding and revamping their food courts, adding more green areas and iPad bars for the tech-savvy crowd, like Unibail Rodamco is doing now in Warsaw’s biggest mall – Arkadia, as well as in its Warszawa Wileńska center.

“This is a part of our strategy of re-tenanting, re-marketing our centers,” Arnaud Burlin, managing director of Unibail Rodamco, said.

“We welcome more than 20 million customers a year in Arkadia. … We want to continue to bring the best shopping experience to each of our guests,” Burlin added.

Indeed, it’s all about experience. “You could say the market is becoming somewhat polarized.

Naturally, we spend far more time in big shopping malls, so much so that going shopping becomes going out. We don’t just shop any more, we go to restaurants, use the malls’ entertainment and recreation offer. You can easily spend several hours in a mall,” said Tarajko. “You don’t go to malls to run everyday errands. Convenience centers are far more suitable for that,” she added.

Peaceful coexistence?

Most experts say that convenience centers and shopping malls are like apples and oranges and thus do not compete with each other.

They have different target groups, different functions and can peacefully coexist next to one another, one catering to people’s everyday needs, the other providing entertainment and a wide selection of fashion brands, including premium ones.

This all sounds very reasonable, until we consider grocery shopping, which both convenience centers and large malls have in their offer. It appears that lower prices are no longer the deciding factor and convenience takes precedence in that matter, particularly when we consider the growing share of e-commerce in the food retail segment. As a result, shopping malls are cutting back on supermarket

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“You could say the market is becoming somewhat polarized.

Naturally, we spend far more time in big shopping malls, so much so that going shopping becomes going out. We don’t just shop any more, we go to restaurants, use the malls’ entertainment and recreation offer.

You can easily spend several hours in a mall. You don’t go to malls to run everyday errands. Convenience centers are far more suitable for that.

Agnieszka Tarajko, senior research analyst at JLL

space and instead opening up more fashion, shoes and home and interior accessories stores.

Zombie centers?

With retail being increasingly polarized into dominant, leisureoriented destination centers and small, food and services-focused convenience centers, the ones that are under threat are the ones in the middle. “They are under competition from dominant centers, and they are not close enough to be convenience centers,” explained Thierry Lelou, head of funds management, Valad Europe.

“It’s inevitable that we’ll see obsolescence in the next 5-10 years,”

said James Brown, head of EMEA Research & Consulting at JLL. With convenience at one end and leisure at the other, “it will be up to those centers to reposition or to accept the consequences of the new world of retail,” he added.

Yet not everyone agrees that this asset class is facing oblivion. “There are very few zombie centers, it’s pretty rare to see something completely dead,” said Michael Rodda, head of EMEA Cross Border Retail Investment at Cushman & Wakefield.

There is still hope for the nondominant centers stuck in the retail limbo, however. “A center which is less interesting in terms of customer flow could actually become a center

l o k a l e i m m o b i l i a / retail

Easy shopping Interview with Jeroen van der Toolen, Ghelamco’s managing director for the CEE region The convenience segment is increasingly popular, also among tenants. This begs the question: What type of fashion brands choose to locate in convenience centers?

If a brand already has its store in a shopping mall, is there room for another one in a convenience center located just a few kilometers away? Isn’t it too costly for the retailer?

That obviously depends on the tenants and their development strategies. When deciding on a location for new facilities in different types of objects, companies take into account such factors as size of the city or the center’s localization within it. Tenants who choose to operate in convenience centers, which by definition are supposed to be located near its clients, usually provide products for all family members, e.g. footwear and clothing retailers; both local, national and multinational.

They are usually medium price-range brands. The premium ones in most cases reside in large shopping malls and centers dedicated to wealthy customers. Convenience centers complement bigger centers and are an excellent alternative for tenants, which for diverse reasons do not wish to start their business in a large mall.

Some convenience centers, which are currently under construction or being planned, are built quite close to large shopping malls, for example: Your Pasaż Tukanów in Piaseczno will be less than 2 km away from Immochan’s Auchan. Aren’t you afraid of the competition?

Images: Unibail Rodamco, Ghelamco

Ghelamco’s retail centers aim to answer different needs than typical shopping malls. They will provide local communities with a wide range of retail and services facilities and an accessible place for everyday shopping. We hope to create places which will play a central role in the lives of local communities.

for ‘click-and-collect’ for example.

Online sales could drive footfall into those centers that we consider dying, which may end up as destination for warehousing and storage,” Rodda explained.

But even without such radical shifts, the first and second generation centers have to adjust to the changing market conditions.

“A solution worth considering is decreasing supermarket space and making room for other services, for instance a fitness club, children’s play rooms, etc. These decisions depend on the project’s position and place on the retail map as well as on how active its competition is,” JLL’s Tarajko explained. u

At the same time, unlike large shopping centers, our projects will seamlessly fit into the city fabric without disturbing local architecture. Therefore, local retail centers and large shopping malls are not necessarily a competition for each other.

Moreover, it needs to be stated that over the last few years, we have observed a change in Polish consumers’ habits. Poles are less and less willing to spend their time in shopping malls. They prefer to do their everyday shopping close to or on their way home and that is the niche for projects like ours – offering all the products of primary need in conveniently located and nicely designed centers.

Some market experts say that the retail landscape is becoming increasingly polarized, with large leisure destinations on the one hand and small nearby convenience centers and retail parks on the other, and that in a few years there might be no room for those “centers in the middle” – neither dominant, nor close enough to compete. Would you agree?

Centers providing integrated facilities, including high-quality grocery, fashion and accessories stores and a well-developed restaurant and entertainment sector, will always attract visitors. However, medium-scale centers which fail to stand out in the market might struggle to draw the attention of customers. They need to find their place in the market and properly position themselves – for example by aiming to meet the demands of more affluent clients.

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l o k a l e i m m o b i l i a / high streets

The High Streets: ul. Mokotowska pa r t f i v e o f a s e r i e s

D

espite its drawbacks, such as narrow sidewalks, one-way traffic and a sea of parked cars on both sides of the street, ul. Mokotowska is attracting an increasing amount of attention from the capital’s fashionistas. It’s where both established and rising Polish designers locate their ateliers. It’s a place where you can buy some truly original and unique clothes off the rack, as well as Jimmy Choo high heels.

There is a lot to be done on ul.

Mokotowska, including freshening up the buildings’ facades and courtyards. The sidewalk also remembers better days. But maybe that’s what attracts the artsy crowd there and creates a nurturing environment for upcoming design icons of the Polish fashion industry. u

Fashion and design hub A narrow one-way street, ul.

Mokotowska is a relatively new retail destination, but it’s gaining importance and has a lot of potential for growth. It has its own character, being the destination for stylish boutiques with a unique upmarket offer, creating a fashion and design hub in Warsaw.

According to JLL research conducted in 2013, fashion stores make up its largest tenant group, often multi-brand with clothes, shoes and accessories from well-known Polish and world-class designers.

The second largest group is gastronomy.

The street is home to many boutiques, including: Bagatt,

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Blind Concept Store, Bohoboco, Loft37, Lilou, LeChic, Hos & Me, Unisono, Wolford & Roeckl. Multi-brand stores, such as Laura Boutique, Snobissimo, Chiara and Paryżanka carry a variety of clothes and accessories brands, including Givenchy, Michael Kors, Marc Jacobs, Giuseppe Zanotti, Moschino and Jimmy Choo.

The list of fashion designers with ateliers on ul. Mokotowska includes Maciej Zień, Tomasz Ossoliński, Robert Kupisz and Ania Kuczyńska. A well-known lingerie brand, Agent Provocateur, opened its boutique there towards the end of 2013.

All these brands and bou-

tiques, together with home and interior accessories stores and beauty parlors create an interesting mix and contribute to ul. Mokotowska’s unique image. Together with ul. Mysia, ul Bracka and Pl. Trzech Krzyży, these streets are becoming an inner-city high-end retail destination. u

Recently: Atelier Mokotowska 63 was opened in November 2013. The four-storey tenement houses premium and luxury brands, including Tommy Hilfiger and Oscar Jacobson.

Retail segment: National designers, unique retail (craftsmen), art galleries, small boutiques with home decor accessories, beauty parlors, etc.

Top tenants:

Anna Wysocka, Head of Retail Agency Poland, JLL

Burberry Lilou Agent Provocateur A. Kuczyńska M. Zień

l o k a l e i m m o b i l i a / high streets Plac Trzech Krzyży

Other Burberry

Tods Adler

Services

Wearso. Organic Make Up Forever

Health beauty Witold Ziółkowski is the owner of Snobissimo, a&store on ul. Mokotowska 28 with luxury brands like Jimmy Food Choo and Sergio Rossi

Together

Lilou

T. Ossoliński

Blind Concept Store Hos & Me

o ad tic Pe

Be My Lilou Atelier Mokotowska 63

a iar Ch

Moko 61 Just Paul Ania Kuczyńska Lniany Zaułek Unisono Agent Provocateur Terra Spa M. Zień LeSpa Candy Crystal Furs See Mee Boutique Mimbla Bukieteria Roma Marc Cain Escada

Mokotowska

K WB BZ

ic Ch Le

sen ffei Rai

How has the street changed since then?

When we opened our store, we had an ice cream parlor next door with a perpetual line in front of it and a greengrocer’s with cucumbers and salted herring bought straight from the barrel. There was a cheap milk bar opposite our store which is now one of the most well-known restaurants in Warsaw, called Dyspensa.

The greengrocer’s and the ice cream parlor turned into stores with Fashion luxury home and interior accessories. The unit at the corner opposite 13% used to be a sports accessories store but it’s currently vacant, while the Food one next to it now houses 7% fashion store 303 Avenue. There also used to be a furriers workshop, which now houses Flaming and Co.

Health & beauty

Co.

Home & interior

Wolford & Roeckl Flaming & Co. Wear Hefra Other Snobissimo Casa mia 303 Avenue

Home & interior

Mokotowska

Shabu Shabu Bartek Janusz Raiffeisen Polbank

40%

It’s changed quite a bit then. How would you describe it today?

Services It’s the number 1 route connecting two major squares: Pl. Trzech Krzyży and Pl. Zbawiciela.

11% It’s also the primary destination for hipsters.

g& min Fla

Salad Story Maison Creative Flaming & Co. Kids Petit Appetit Słodki Słony Flaming & Co. Champagne Bar Bukieciarnia Kerastase Takie Buty Art Manus Fashion Shop Dyspensa Designer Secret

Fashion

When did you open the store?

In 1991.

Lion’s Bank Mokobelle Loft 37 Lullaby La Sal Gallery Przegryź Karpiński Jewellery Eugene Klein Lewanowicz Diran Anouchikian R. Kupisz Alewino.pl K.Stróżyna Paryżanka Mood Boutique JoCoCo Rodart Bagatt Rossmann Nordea Bank

11%

k Ban

Images: Snobissimo, Lilou, JLL

The best location in Poland

Catimini

Aromatherapy Gifts

Green Coffee Nero Fine Wine & Spirits Bang & Olufsen Lounge

Home & interior

Italian Design

Valentino

Nail & Beauty Bar Services Fumo Me Amore Health & beauty Veteran Store Mimino Vacation express.pl Food

18% luxury brands. Do you think You import your goods from foreign Other they are interested in opening their own stores in Warsaw?

Many of the brands we import are Italian and they are now dealing with some problems in their domestic market. Besides, luxury brands have other destinations on their radar, like Asia and the US. Still, Fashion Poland is high on their target list but when they decide40% to come here, Food jump18% they will surely need a local “guide” to help them through all the Health & beauty 11% hoops.

Services 11% Home & interior Other 13%

7%

Fashion

Beauty from the inside out Retail shops by category

Fashion

13%

Food

Source: CBRE, 2014

7% 40%

11%

Health & beauty Services

11%

Home & interior

18%

Other

Fashion 40% Food 18% Health & beauty Services 11%

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11%

71

cityscape / wrocław

Did you know?

1670 The first ever medical pub-

T

he City of Wrocław has one of the most turbulent histories of most regional centers. Over the centuries, it has changed its allegiance numerous times, at some point in history being ruled by Prussians, Austrians, Germans, Czechs, the French and even Hungarians. Wrocław lies on 12 islands linked by as many as 117 bridges According to legend, the city was founded in the 10th century by Czech prince Vratislav, explaining the origin of the name Wrocław. Historically, the city’s legacy starts in 985, when the first Polish king Mieszko I founded his first borough on Ostrów Tumski island, which has since then become a part of the city. The town was made a bishopric in 1000, which is also taken as the official date of the city’s birth.

In 1241, Wrocław was burned by its authorities to force the occupying Mongols to withdraw from the town.

After this, it became repopulated partly

by German settlers who in the following centuries became the prominent group within the city, gaining more influence there with the Habsburg dynasty took control of the town in the early 16th century.

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The city, controlled by the Nazis, suffered huge losses during World War II. It was one of the last German cities which surrendered to the Allies, with the capitulation pact signed on May 6, 1945, four days after the fall of Berlin.

After the end of WWII, the city returned to Poland, along with other lands to the west, collectively known as the Recovered Territories. Poles from the Eastern territories – such as Lviv and Vilnius – which Poland lost after World War II, became the first inhabitants to settle there.

Currently, it’s the capital of the Lower Silesia voivodship. It has a vibrant business environment with such companies as Siemens, Bosch, Nokia Solutions and Networks, Volvo, HP, IBM, Google, Opera Software, QAD, Bombardier Transportation, DeLaval, Whirlpool Corporation all having branches there.

It’s also a place of many sporting events, holding the Euro 2012 games and gearing up to host the World Games in 2017. The city has also been selected as a European Capital of Culture 2016 and will host the European Film Awards the same year. u

Favorite son

Mirosław Hermaszewski The first and only Pole in outer space. Born in the Volhynia region (currently in Ukraine) in a turbulent period of history. Most of his family was killed during the ethnic murders organized by the Ukrainian nationalist group UPA during World War II. In 1945, his family was re-settled to the Wrocław region where Hermaszewski grew up and started flying gliders. He joined the army and became a pilot and in 1976 he was chosen from several hundreds of Polish pilots to be the first Pole in space. In June 1978, he flew on board the Soviet Soyuz 30 spacecraft along with Belarusian Pyotr Klimuk and spent eight days in orbit.

Images: Shutterstock, Wikimedia/Maciej Kulczyński

Troubled past, bright future

lication was published in Wrocław.

Miscellanea Curiosa Medico-Physica.

Its first edition contained 160 articles written by 36 authors in the fields of anatomy, botany, zoology, physics, chemistry and others. In total three editions were published, with each issue spanning a decade-worth of publications.

••• Wrocław could be considered a very unsafe place to live. Over the course of its existence, cholera, smallpox and the bubonic plague ravaged the city, as well as a number of deadly fires, floods and even an earthquake. The last major disaster struck Wrocław in 1997 when a major flood engulfed most of the city. Throughout the entire country, 56 people drowned and a high level of water caused PLN 12 billion in damages.

London 1,192 km Paris 1,078 km Berlin 295 km

Moscow 1,452 km

Prague 216 km

Rome 1,085 km

Mayor: rafał dutkiewicz area code: 71 Area: 293 sq km Nearest airport wrocław nicolaus copernicus airport

Population (dec. 2012) 631,188

Distance to the city center 10 km

highways A4, A8

working-age Population (dec. 2012)

406,400

unemployment rate (DEC. 2013)

5.8%

median pay (2012)

PLN 3,923 Modern office space 540,000 sqm office vacancy rate 12%

number of universities

number of students

number of graduates a year

24

135,366

35,000

Percentage of city covered by zoning plans: 61.1% major inDUSTRIES: automotive, white goods, BPO Recent major investors BNY Mellon Credit Suisse Dolby IBM Nokia Siemens Networks Parker Hannifin Qatar Airways Sumika Ceramics Viessmann

prime headline rents €13 - 15,5

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observer ranking

OBSERVER TOP 10 Technology parks

Ranked by roofed space

1

Regional Industry Park in Świdnik Roofed space (sqm):

100,000

Total area (ha): 53 Total number of business entities: 36 Total employment: WND Main specialization: Production/Wholesale trade Laboratories: NA Al. Lotników Polskich 1, 21-045 Świdnik +81 722-6022/+81 722-6652 biuro@park.swidnik.pl park.swidnik.pl

2

Gdańsk Science and Technology Park Roofed space (sqm):

26,384

Total area (ha): 4 Total number of business entities: 82 Total employment: 2,850 Main specialization: IT/Medical production and services Laboratories: NA ul. Trzy Lipy 3, 80-172 Gdańsk +58 739-6117/+58 739-6118 i.grajek@strefa.gda.pl gpnt.pl

3

Nickel Technology Park Poznań Roofed space (sqm):

24,000

ul. Krzemowa 1, 62-002 Złotniki +61 658-6499/+61 658-5498 biuro@ntpp.pl ntpp.pl

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Images: SOOIPP

Total area (ha): 33 Total number of business entities: 42 Total employment: 690 Main specialization: IT/ Production and material services Laboratories: WND

observer ranking

6

8

Roofed space (sqm):

Roofed space (sqm):

Total area (ha): 18.71 Total number of business entities: 159 Total employment: 1,560 Main specialization: IT/Research and development Laboratories: Chemistry and biotechnology, mechanical prototyping, cryogenics, material and biomedical engineering, optics, photonics, metrology, electronics, mechatronics, spintronics, non-destructive testing technologpark.pl

Total area (ha): 17.2 Total number of business entities: WND Total employment: WND Main specialization:WND Laboratories: NA parktechnologiczny.olsztyn.eu

Wrocław Technology Park

4

Life Science Park Roofed space (sqm):

20,000

Total area (ha): 1.8 Total number of business entities: 18 Total employment: 61 Main specialization: Medical and pharmaceutical production/Research Laboratories: Nuclear Magnetic Resonance, Raman spectroscopy, high performance liquid chromatography, liquid chromatography-mass spectrometry jci.pl

12,686

7

Poznań Science and Technology Park Adam Mickiewicz University Foundation

11,725

Pomerania Science and Technology Park Roofed space (sqm):

13,000

Total area (ha): 6.1 Total number of business entities: 136 Total employment: 837 Main specialization: IT/Biotechnology/ Creative industry Laboratories: Microbiology, chemical analysis, in vitro cultivation, molecular biology ppnt.pl

11,332

9

Bydgoszcz Industry and Technology Park Roofed space (sqm):

Roofed space (sqm):

5

Olsztyn Science and Technology Park

Total area (ha): 5.4 Total number of business entities: 67 Total employment: 506 Main specialization: IT/Research and

development

Laboratories: Atomic absorption spec-

trometry, ultraviolet visible spectroscopy, infrared, gas chromatography, ionium, gel, labeling of physicochemical properties and surfaces, thermographics, calorimetry (including reactive), labeling of main and trace elements using F-AAS and HG-AAS methodology ppnt.poznan.pl

11,015

Total area (ha): WND Total number of business entities: 57 Total employment: WND Main specialization: Production/IT Laboratories: NA bppt.pl

10

Poznań Technology and Industry Park Roofed space (sqm):

9,379

Total area (ha): 1.3 Total number of business entities: 49 Total employment: 181 Main specialization: IT/mixed Laboratories: NA pptp.pl

Research for the list was conducted in April. WND: would not disclose.

Data source: Polish Business Innovation Center; sooip.org.pl; Warsaw Business Journal Book of Lists; www.bookoflists.pl

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Gadgets We live in an age of gadgets: some are useful, but most are just a waste of time and money. We sift through the latest tech available to pick those that we believe will help you live your life more comfortably and confidently.

Chefjet

>>

Technology to make your life easier

3D printing is developing rapidly. In the beginning you could only print simple plastic items. Nowadays you can print guns, prosthetic limbs and even entire houses. Chefjet is perfect for people who have a sweet tooth and have a little bit of extra money, as the monochrome model will put you back $5,000 while the full color machine will run you twice that amount. It can print candy from a variety of materials, including sugar, chocolate, vanilla and even watermelon. With the printer you can make elaborate cakes and unique, one-of-a-kind candies. The device should be available in H2 2014. .

Price: $5,000-$10,000

3dsystems.com

It’s the Lego of the 21st century. The MOSS system lets you build your own fully programmable robot from 1x1 or 2x1 bricks. Every element has its own function: they can be a power source, a motor, or a sensor. Besides that, you can add other elements such as rotors, wheels, speakers and much, much more. The potential is endless, as developers promise to release new modules in the future. With its Bluetooth functionality, you can control your creations through your phone or tablet.

>>

The BioLite Campstove Even when camping you can’t escape high-tech gadgets. The BioLite Campstove with a portable grill is a perfect solution for city slickers who somehow end up spending a night in the woods.

The heat from the fire generates electricity via a thermoelectric generator to power a fan creating airflow for improved combustion.

Surplus electricity is sent to a USB port for plugging in devices, so you can use them even in the middle of nowhere.

Price:$129.95

biolitestove.com

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modrobotics.com/moss

>>

Price: Single modules start at $24.95

Images: Biolite, Modrobotics, 3dsystems, PTWP SA

MOSS Robot Construction System

e v e n t s / ecc

European Economic Congress in Katowice

O

ver 6,000 guests visited the 2014 edition of the European Economic Congress in Katowice.

It’s one of the two biggest economic events in Poland, besides the Economic Forum in Krynica.

Just like in previous years, the Congress was attended by top politicians from Poland, the CEE region and the EU, as well as CEOs, experts and academics. Everyone that has an impact on the economy, business and social life participated in nearly 100 sessions held there.

For three days in May, Katowice became the European economic capital.

This year’s event was accompanied by the 2nd annual Africa-Central Europe Economic Cooperation Forum and the Pakistan-Central Europe Economic Cooperation Forum.

The forum was dominated by topics concerning energy, the EU-US trade agreement, the new EU financial perspective and global expansion of Polish companies. u

The congress was accompanied by the Pakistan - CEE Economic Cooperation Forum

Jan Kulczyk was one of the Congress’s special guests

In the evening, guests could relax to the hits by Boney M.

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l i f e s t y l e / restaurants

Where it comes to sports bars, Warsaw offers surprisingly slim pickings – a point aggravated by the demise of a couple high profile expat-owned haunts. So with the World Cup looming, the countdown is on to find a venue worthy of the biggest competition in sport

Warsaw Tortilla Factory

Legends

Champions

While the British Bulldog looks like the most authentic British pub in town, it’s actually Legends that steals that title – and with considerable ease. Overseen by Graham, an Everton nut with an embassy history, Legends proved a huge success for Euro 2012, and is expected to continue its form: wall-to-wall football with English commentary, traditional food and drinks, plentiful happy hour promotions and a lively ambiance that sees expats and natives mingle with ease.

Warsaw’s best known sports venue has a heavy décor that brings to mind a transAtlantic sports bar from the 1990s: here it’s all glinting trophies, clacking pool tables, whirring darts machines and a cacophony of commentaries from the 40+ TVs. Hell, there’s even a boxing ring planted in the middle. Some call the prices exaggerated, yet there’s no doubting the food is usually on-point, the service pro and the space suited for unwieldy groups of large and loud lads. Reservations, however, remain essential for big games.

ul. Emilii Plater 25

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Lolek

WTF has long been established as the No. 1 choice when it comes to sport. In part that’s thanks to a selection of screens both large and small, not to mention what is reputed to be the biggest satellite dish in town.

There’s credit, also, for a sprawling floor plan and extended terrace. Yet the factor that really elevates it above the competition is the atmosphere. Whether it’s Bristol City on a Tuesday night, or international rugby on the weekend, the tension, banter and horseplay is unrivaled. Expect it to go through the roof come the World Cup.

You might consider this something as a surprise entry. Known for its boisterous spirit, park-centered location and basic, almost beer hall design, it’s a place where strangers squish together on shaky benches while sausages grill over an open fire. They don’t do much to promote themselves as a sports bar – and indeed they’re not – but it’s become the de facto favorite for Scandinavians and Dutch to descend en masse (usually in barmy national attire) and cheer on their side during international fixtures.

ul. Wilcza 46

ul. Rokitnicka 20 (Pole Mokotowskie)

j une 2 0 1 4 • WBJ OB S E R V E R

Al. Jerozolimskie 65/79 (Marriott Hotel)

Outsiders

Outsiders in every sense of the word, you can expect plenty of other venues to make use of the (fingers crossed) rising temperatures and utilize a few outdoor screens to cover the action. While they’ve remained non-committal thus far, Temat Rzeka – the beach bar under Most Poniatowskiego – is widely anticipated to show the matches.

As too are Cuda Na Kiju (Nowy Świat 6/12), whose huge courtyard and ample selection of craft beer seems a natural combination.

Traditionally the -1 outdoor level of Złote Tarasy also hosts a big screen for tournaments, though you’re advised to check in advance to avoid disappointment. u

Images: Shutterstock, Warsaw Tortilla Factory, Legends, Champions,IBB Grand Hotel Lublinianka

Warsaw’s top sports bars

l i f e s t y l e / h o tels

Hotel Spotlight: IBB Grand Hotel Lublinianka

A

strange animal is Lublin. You’d think with its rising economic importance and increased tourist traffic that it would bristle with good hotels, but this is not the case. Sure, for sightseers the rickety old Waksman contains character in abundance, while weekending couples will appreciate the appeal of the boutique Vanilla. The corporate traveler, however, gets a far shorter shrift. This does not mean, though, that all hope is lost.

If hotels are to be judged by their cover then the Grand is just that. Slotted on the city’s principal high street, its wedding cake facade is a feast of Belle Epoque elegance: all magnificent white colors and splendid minute details. Opened in 1900, it doesn’t take a giant leap of creativity to picture whiskered fat cats in top hats and tails arriving to hold court in this venerable grande dame.

The Parisian pomp is not exclusive to the exterior. On entry, guests are met by palm fronds and marble.

A piano sits enticingly in the lobby, while in the distance bow-tied bar staff stand polishing glasses. Only the distant tap of Macs and the garish tracksuits of some burly Russians suggest I have not traveled in time.

Check-in is a pleasure, conducted with a receptionist who’s playful and coquettish. It all contributes to a sense of intimacy, a sense of being somewhere special. Lovingly restored at the start of the millennium, the hotel is a departure from the bland cut-and-paste lodgings of Poland’s higher profile cities.

The sense of nostalgia extends to the rooms, where décor effortlessly mixes classical elements with pristine modern fittings. This time around, conscious of my expense limitations, I have chosen an economy room.

But it is economy in name and price alone (PLN 170 per night). Sure, the design is a little more stringent on flourishes and flounces than standard and superior rooms, but you wouldn’t really tell unless you otherwise knew.

The wifi is fast and free, the mini-bar is generous, and there’s enough floor space for a decent size workspace and an armchair for luck. It helps, too, that the naturally high ceilings create a sense of depth.

Further investigations reveal Lublin’s best conference facilities, a Shirin spa, not to mention a collection of daring erotic art peppered about the bar. Though for me, nothing defines this hotel more than its shaded courtyard terrace: with work wrapped up for the day, it’s a place to wallow under the stars with a glass of local beer. u

IBB Grand Hotel Lublinianka

Number of rooms: 72 Number of suites and apartments: 1 Distance from the airport: 15 km Distance from the train station: 1.7 km ul. Krakowskie Przedmieście 56, Lublin

www.lublinianka.com

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l i f e s t y l e / o n a final n o te

alex webber editor of the Warsaw Insider

Where did spring go?

With temperatures on the rise, has summer finally set in?

Y

ou do meet strange people out here. Strange people with even stranger stories. There’s me sitting in the pub the other week when the conversation turned to chance meetings with the rich and famous. In the hours that followed, I heard unverified stories of all size and shape, though mostly to the tall end of the spectrum: really, never had I imagined that so many of my mates were close friends with Alan Sugar or had attended Tony Blair’s wedding (in one case, both).

Yet among the fantasies and the fibs one tale stood out. A friend of mine was back in London for Christmas, down at the pub with the lads and watching Sunday football. International darts god, Eric Bristow, was there, so my pal got talking to him and lured him over for a few afternoon drinks. With the day’s matches finished, Bristow bade farewell and went over to the darts board and proceeded to practice. After a while, one of the guys my mate was with looked up at a poster hanging in the pub and announced, “blimey, might be worth sticking around tonight, Eric Bristow is playing here later.” He hadn’t noticed that for the previous four hours he’d been drinking alongside him. “I thought it was the new landlord,” he explained a trifle lamely.

Apocryphal it might be, but I like to think there’s a deeper meaning to this yarn: that you don’t know what you’ve got till it’s gone. In Poland’s case, that means spring. Blink, and you’ve missed it, and with it the opportunity to enjoy the only user-friendly weather this country ever gets. It reminds me of just how lucky we are back in Britain, with the weather a steady fifteen degrees throughout much of the year.

Not that Brits know their luck. The occasional dip to zero is greeted with hysteria: post goes undelivered and the army gets called out. It’s like Armageddon and the death of Diana all rolled into one. At the other end of the scale, the briefest glimpse of sunshine sees mass migration to the coast as people head to the murky waters to escape the searing twenty degree heat.

This is not an exaggeration. Only the other day, I was clicking through the online version of my local

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paper back home – in the old days, the headline would have been something such as “Milkman Rescues Goose.” Now though, it’s seeking to boost sales with lurid tabloid content: a big ask, because barring the annual inner city riot, mine is a sleepy town where a rescued goose really is news. But sensationalism is the order of the day, and so it was I found the website declaring: “Bristol Braced for Heat Wave.” Accompanying it, a picture of office workers cavorting under a hosepipe. Only with further investigation did I note the temperature was forecast to top out at 20 degrees Celsius.

Of course, in Poland we know the real meaning of summer. Summer is when the asphalt starts to steam.

When the tram to work becomes a suffocating steel coffin filled with challenging aromas. It is a time of sleep deprivation. When bed sheets cling to the carcass and the still air burns like a matchstick. Next year, you promise, you’ll get the air-con installed. There’s no hope of that this year, for all the units have sold out.

I paint an unforgiving picture of the Polish summer, but there are considerable upsides. Hemlines rise in tandem with the mercury, transforming the streets into a spontaneous catwalk of audacious fashion. In the evenings, there is an energy and excitement that reminds you of the buzz found on the last day of school: all of a sudden, everything seems possible. Over the last few years, Poland has enjoyed an increased stature amongst its continental peers. But it is in summer, with the nights filled with reckless laughter, that the nation feels truly extricated from that glum, dark anchor of its recent past. Enjoy it. u

Summer is when the asphalt starts to steam. When the tram to work becomes a suffocating steel coffin filled with challenging aromas. It is a time of sleep deprivation.

WBJ.PL TO ADVERTISE: TOMASZ PAWLAK, TPAWLAK@WBJ.PL, PH. +48 501 791 461 SUBSCRIPTION: AGNIESZKA MICHALIK, AMICHALIK@WBJ.PL, PH. +48 797 634 123