WBJ Observer September 2016

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SEPTEMBER 2016

Number 09 (31)

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

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BREXIT

Banks are the best MICHAŁ KRUPIŃSKI:

BREXIT.PL HUNDREDS OF THOUSANDS OF POLES MAY BE FORCED TO RETURN. IS THERE A PLACE FOR THEM? >>22

assets

SEPTEMBER 2016

ALSO IN THIS ISSUE:

• C o m m e n t a r y • D e fe n s e • Te c h • N ew s • L i fe st y le • F i n a n ce

LOKALE IMMOBILIA / ON INFORMATION TECHNOLOGY

THE ART of SLOW LIVING APARTAMENTY PRZY ŁAZIENKACH KRÓLEWSKICH ul. Podchorążych 83, Warszawa 46

MAY 2014 • WBJ OBSERVER

T.+48 535 10 10 10

sprzedaż@tacit.com.pl

www.apartamentyparklane.pl

IN THIS ISSUE

26-28

MICHAŁ KRUPIŃSKI 6 30

22-25 47-77 LOKALE IMMOBILIA

BREXIT

NEWS

INTERVIEW

6-16 In Review Latest news 17 Dateline 18 Economy

30-32 Zbigniew Gajewski

78-79 Events NATO Summit 80-81 Events Select USA 2016

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82

COMMENTARY

34-35 Defense NCSS

19 Law Salary Cap 20 Logistics DIY Industry 21 Brexit Welcome to Poland

37-40 Tech Insights

82-83 Gadgets 85 Lifestyle Upcoming events 86-87 Lifestyle Brunch in Warsaw

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FEATURE

LIFESTYLE

41-45 Finance & Investment

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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 Michael Evans Copy Editor Journalists Daria Mamont dmamont@wbj.pl Wojciech Rylukowski wrylukowski@wbj.pl Sławomir Krajewski Graphic Designer Aleksandra Szydło Graphic Designer aszydlo@valkea.com Contributors Jan Duthel Amalia Leitner Vedika Luthra Karolina Papros Sergiusz Prokurat Sales & Marketing Director Tomasz Pawlak tpawlak@wbj.pl

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COMMENTARY / ON INFORMATION TECHNOLOGY

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FEBRUARY 2014

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COMMENTARY / ON INFORMATION TECHNOLOGY

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DEAR READERS JACEK CIESNOWSKI, EDITOR-IN-CHIEF, WARSAW BUSINESS JOURNAL GROUP

The summer holidays have passed and it has been a busy period for us. Along with this issue, we’ve also published the Book of Lists annual. By the time you read this, unless you’re in the audience of the launch gala, all of the top spots in the rankings have already been announced.

This issue has an interview with Michał Krupiński, the CEO of PZU. Some of you remember that last year we talked with his predecessor, Andrzej Klesyk, and it’s the perfect opportunity to compare their strategies, which are surprisingly similar, considering that in the meantime the political landscape has changed and this is a state-owned company.

We also cover Brexit which, besides the United Kingdom obviously, will affect Poland the most. With so many Poles having moved there in the last decade, the Polish diaspora has become the largest in the UK. What will happen to them, how will their

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potential return affect our economy and is there even a place for them here?

In the Lokale Immobilia section we cover the boom in the residential sector. After a record breaking 2015, the first six months of 2016 have been even better. But what will happen to the market after the MdM program ends next year? We also look at the still very niche market of luxury apartments. Why is it so hard to make high-end penthouses attractive to customers? Especially foreign ones as, with one major exception, almost all of the apartments in luxury high-rise buildings are being bought by Poles, which is not enough to make the sector bigger.

September will also be a busy month for us, with two of the biggest business and economic events taking place in Krynica (Economic Forum) and Sopot (EFNI), which we’ll be attending along with our publications. See you there.

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lll INREVIEW NEWS

News highlights of the past months

NATO Summit: US will deploy 1,000 troops to Poland n July 9 in Warsaw, NATO leaders agreed to deploy military forces to the Baltic states and eastern Poland for the first time in order to reassure its eastern partners and deter Russia.

The United States will send 1,000 troops to Poland, the UK will deploy 500 soldiers for a battalion based in Estonia, and Canada and Germany will lead two more in Lithuania and Latvia.

Speaking at the NATO summit in Warsaw, President Barack Obama said the troops would serve “shoulder to shoulder” with Polish forces.

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Elissa Slotkin, the US acting assistant secretary of defense for international security, said the troops would be in place some time next year. “Four battalions – that represents the largest movement of NATO personnel since the end of the Cold War,” she said.

“These battalions will be robust and they will be multinational,” NATO Secretary-General Jens Stoltenberg said. “They make clear that an attack on one ally will be considered an attack on the whole alliance.”

Stoltenberg said the deployment was not aimed at threatening or isolating Russia. “We do not want a new

Cold War, we do not want a new arms race and we do not want confrontation,” he said. “As we strengthen our deterrents and defense we continue to seek constructive dialogue with Russia.”

Images: Shutterstock

O

COMMENTARY / LAW NEWS

WBJ OBSERVER • SEPTEMBER 2016 WBJ OBSERVER • MAY 2016

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NEWS

POLISH ARMY MUST HAVE AT LEAST 150,000 SOLDIERS DEFENSE MINISTER

“P

olish Armed Forces must count at least 150,000 soldiers. This is a minimum,” announced Poland’s Defense Minister Antoni Macierewicz in an interview with Nasz Dziennik in July.

The Minister mentioned that he hopes to reach this number of soldiers during his tenure, not by the end.

Speaking about the European Union having its own army, Macierewicz said: “I do not see such a perspective.”

According to the official, there are no signs that Western European states are ready to make such a far-reaching decision.

OVER PLN 7 BLN PAID OUT UNDER 500+ PROGRAM

President signs new constitutional court law

P

resident of Poland Andrzej Duda signed a new bill on the Constitutional Tribunal into law on July 31, the Chancellery of the President informed.

"The new law on the Constitutional Court resumes the decisions envisaged in the 1997 Constitutional Court law and brings court-related legal provisions into line with the Constitution,” read a statement.

The new bill introduces a series of amendments compared with the previous law passed in December, which was heavily criticized domestically and internationally for breaching

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democratic standards. The passed amendments include doing away with a requirement for the president to agree for a Constitutional Tribunal judge to be removed, if the Tribunal’s disciplinary court has ruled on such a move, and to not allow the president to motion for a given case to be considered by the Tribunal outside of the chronological order in which cases were submitted.

The opposition, however, claims that the new bill breaches the Constitution and doesn't meet recommendations made by the Venice Commission.

he Ministry of Labor, Family and Social Policy informed that parents and legal guardians have submitted a total of 2.7 million applications under the Family 500+ child welfare program and more than PLN 7 billion has been paid out.

In August, the head of the standing committee Henryk Kowalczyk said that the government is currently PLN 5 billion short to finance its flagship child benefit program Family 500+ in 2017.

The Family 500+ scheme is a child benefit program from the Polish government. Under the program, the government hands out PLN 500 per month for every child in a family whose per capita income is lower than PLN 800 per month and for every second and subsequent child, regardless of family income. The sum is aimed at all parents, including single parents, and is not subject to taxes.

Images: Shutterstock

T

NEWS

EVENTS / REDI

PARK AVENUE

WE SERVE OUR TENANT'S NEEDS

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www.parkavenue.com.pl

J U LY / A U G U S T 2 0 1 6 • W B J O B S E R V E R

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NEWS

S&P maintains Poland’s rating at BBB+ with negative outlook outlook is negative.

The agency remains concerned about the independence of the National Bank of Poland (NBP), among other factors, following changes to key institutions after last year’s parliamentary election.

However, it notes Poland’s relatively moderate external financing needs and strong growth potential.

The negative outlook reflects S&P’s view that there is at least a one-in-three likelihood that the agency could lower the ratings within the next 18 months if monetary policy credibility is undermined or if public finances deteriorate beyond current expectations.

Poland’s largest state-controlled lender PKO Bank Polski has notified the financial regulator (KNF) about the launch of a corporate branch in Prague, Czechia.

The branch is to start operations in 2017 and is aimed at supporting Polish companies in their foreign expansion efforts, a statement read.

PKO Bank Polski has been listed on the Warsaw Stock Exchange since 2004.

Images: Shutterstock

On July 1, rating agency Standard and Poor’s affirmed its long- and short-term foreign currency sovereign credit ratings for Poland at BBB+/A-2 and its long- and short-term local currency sovereign credit ratings at A-/A-2. The

PKO BP TO OPEN BRANCH IN CZECHIA

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NEWS NEWS

/ ECONOMY

EC: Poland to lower CO2 emissions by 7% The European Commission has set new targets for member countries regarding the reduction of CO2 emissions from outside industry and expects Poland to cut them by 7 percent by 2030, compared with the level of emissions recorded in 2005.

“In 2014 the EU agreed to a clear commitment: to collectively reduce greenhouse gas emissions by at

least 40 percent by 2030 compared to 1990 levels across all sectors of the economy. Today’s proposals present binding annual greenhouse gas emissions targets for member states from 2021-2030 for the transport, building, agriculture, waste, land-use and forestry sectors as contributors to EU climate action.

The new framework is based on the

principles of fairness, solidarity, cost-effectiveness and environmental integrity,” a statement by the EC read.

The target for each member state varies widely and is as high as 40 percent for Luxembourg and Sweden and as low as 2 percent for Romania and zero percent for Bulgaria.

WBJ Observer presents Many adjectives can be used to describe technologies and work organization methods that can help obtain the highest standards. Enterprises can be innovative, modern, original, optimized, pioneering, or rationallyoriented. However, the term INNOVATIVE seems to be the ultimate notion.

It encompasses the above-mentioned strengths, coupled with the highest standards and a complex offer.

Innovation has always been embedded in the development strategies of German companies. TRUMPF, the leader in laser technologies for sheet metal working, serves as one of the best examples. Some 10 percent of the capital group’s turnover volume is assigned to research – an exceptional figure, even for hi-tech or IT companies. Its executives look ahead, planning for the next five-ten years – which they can afford to do, as TRUMPF is a family company, therefore it is more flexible and benefits from the short-term decision-

making processes, a common quality on the German market.

According to experts, it is crucial to understand that the risk of trying new solutions is much lower than the that connected with avoiding action and investing in innovation. Researchbased solutions help obtain a surge (even tenfold) in the trade volumes of new technology-based companies and their partners.

TRUMPF’s representatives in Poland are delighted to see their partners’ development and their growing understanding that state-of-the-art machinery is among the fastest-return investments.

In order to extend its share in the market, constantly introduce cutting-edge products and cut the manufacturing costs while avoiding environmental burden, TRUMPF’s specialists propose combining all process units into an automated network. Higher levels of automation translate into greater

reliability of manufacturing processes, proper machinery application, and consequently, better economic performance. The knowledge possessed by TRUMPF’s employees worldwide has helped develop over 1,500 sheet-metal-working-automation systems.

The effects of the growing expenditures on innovation are clear on the Polish market. It’s thanks to cuttingedge processes and machines that PESA, Amica or Solaris have grown into regional leaders.

WBJ OBSERVER •

SEPTEMBER 2016

WBJ OBSERVER • SEPTEMBER 2016

BROUGHT TO YOU BY TRUMPF

RESEARCHING THE FUTURE

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NEWS

LOWERING RETIREMENT AGE WILL COST PLN 10 BLN A YEAR

“T

Concluding his five-day visit to Poland, Pope Francis celebrated a mass on July 31 in Brzegi near Kraków attended by around 1.5 million pilgrims from Poland and all over the world, during which he called for the young to get off the couch and do something meaningful.

“Dear young people, we didn't come into the world to vegetate ... we came for another reason: to leave a mark.”

Pope Francis appealed to those who “believe in a new humanity, one that rejects hatred between peoples, one that refuses to see borders as barriers,” not to be discouraged.

He called negativity a “virus infect-

ing and blocking everything” and said young people must not forget about God in a world of unlimited information.

The Pope, who arrived in Poland for World Youth Days, announced that the next location of the Catholic youth gathering will be Panama in 2019.

Image: Shutterstock

he cost of cutting the retirement age will amount to PLN 10 billion a year, said Henr yk Kowalczyk,” head of the Standing Committee of the Council of Ministers.

“In 2016, the cost would stand at PLN 5.6 billion, in the next years, it will rise to around PLN 10 billion,” Kowalczyk said.

On July 19, the Polish government approved the president’s proposal to cut the retirement age starting from October 2017 at the earliest, a move that would unravel the previous administration’s pension reform. The retirement age for women will stand at 60 and for men at 65.

WYD concluded with mass attended by 1.5 mln worshippers

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NEWS

GOV’T TO REFORM OFE PENSION FUNDS Development Minister and Deputy Prime Minister Mateusz Morawiecki announced on July 4 that Poland would like to transfer 75 percent of assets kept in private pension OFE funds to the voluntary capital pillar and the remaining 25 percent to the demographic reserve fund (FRD).

Morawiecki said that initial assumptions to the reform of pension funds stipulate “the transfer of OFE means to individual pension accounts of their users, as well as [allocating them], to new important ventures that will build the power of our economic policy.”

OFE pension funds will be transformed into Polish equity invest-

ment funds and PLN 103 billion, constituting 75 percent of their assets, will be transferred to IKE individual pension accounts.

“Our intention is that assets are still managed by funds but not by open funds, only by investment funds,” Morawiecki said.

“There haven’t been any plans to nationalize OFE, but we have a good plan how to build Polish capital. The plan is to give the money to Poles,” the official reassured.

The overhaul of the OFE funds would be a part of a program aimed at increasing savings that is expected to boost GDP growth by 0.4 percent, the deputy Prime Minister said.

The remaining 25 percent of OFE’s

assets (PLN 35 billion) will be transferred to a demographic reserve fund in order to strengthen the pension system's financial buffer. The means could be used in the future to secure co-financing of pensions of current OFE participants.

On July 2, chairman of the ruling party, Jarosław Kaczyński, said at the PiS congress that the government needs to come up with new proposals about what to do with the money left in OFE, “which today is in fact losing value ... And it could be the basis of new, important ventures which will build the strength of our economic policy but they will also support millions of Polish households."

00-810 Warszawa ul. Srebrna 16

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I N T E R V I E W / I LYA P O N O M A R E V

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I N T E R V I E W / I LYA P O N O M A R E V

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Baltic-palooza

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Image: Shutterstock/ppart

Even though this year's summer in Poland was a cool one, people flocked to the beaches in droves. One of the reasons for this, according to some analysts, was the Family 500+ program which gave many the opportunity to go on holiday with their families for the first time in many years.

Calendar September-October

September 6-9

September 6-8

26th Economic Forum Event: Participants of the 26th Economic Forum will discuss, over three days, major economic, political and social issues. The Forum will be divided into 12 thematic paths, concerning hot topics such as the EU and healthcare reforms. More than 3,000 guests from Europe, Asia, the US and Middle Eastern countries are invited, including many great political and economic figures.

Location: Krynica Zdrój, Poland Web: forum-ekonomiczne.pl

XXIV International Defence Industry Exhibition Event: For the first few days of September, the Kielce International Defence Industry Exhibition (MSPO) becomes the world's defense center. Europe's thirdlargest military exhibition is also ranked among the globe's most important defense industry events.

This years’ event is under honorary patronage of the President of Poland, Andrzej Duda.

Location: Targi Kielce, Kielce Web: targikielce.pl/pl/mspo.htm

September 14-15

IV Smart City Forum Event: The Smart City Forum is a response to the transformation, which is taking place on a global scale, related to the construction and operation of intelligent cities. It affects multiple aspects of life, ranging from transport, energy, construction and finally new ways of communication with residents. The opportunity to meet with decision makers and well-known experts from sectors such as: property and construction, medical, transport, energy, education as well as public services makes the Smart City Forum Poland’s first dedicated smart cities initiative on such a scale and with such substance.

Location: Westin Hotel, Warsaw Web: smartcityforum.pl

September 28-30

European Forum for New Ideas Event: The European Forum for New Ideas is an international discussion meeting of the business environment focusing on the future of Europe and its economy in a broad, global context. It has been organised since 2011 by the Polish Confederation Lewiatan in cooperation with BUSINESSEUROPE, the City of Sopot, as well as Polish and foreign companies and institutions. 2016’s edition will focus in particular on how our work will change under the influence of various factors, such as workplace robotization or work fragmentation, and handling the dawn of stable employment.

Location: Sheraton Hotel, Sopot Web: efni.pl

September 14-16 Baltic Business Forum 2016 Event: Baltic Business Forum is an international economic event taking place annually since 2009. During the BBF, representatives of both business and politics from countries of Western Europe and the CEE region have a perfect opportunity for debate on a wide variety of topics. Every year the Forum hosts present and former Heads of States along with MP’s, Ministers of participating States and representatives of local governments from all over the globe. The main group of participants and speakers consists of enterprises from countries of middle-eastern Europe and Asia, with this year's special guests from Turkey.

Location: Interferie Medical Spa Hotel, Swinoujście Web: balticbusinessforum.eu

October 3

September 29-30

E-commerce Standard Event: The E-commerce Standard, in its 11th edition, is one of the most recognizable conferences focusing on internet sales of goods and services. It will host a variety of speakers, case studies from international companies as well as niche leaders, it also provides places for networking and meeting with e-commerce solution suppliers. The conference will be accompanied by the publication of the annual E-commerce Standard report, which includes data from the Polish e-commerce market.

Location: Radisson Blu Hotel, Warsaw Web: internetstandard.pl

E-commerce Standard Event:Leaders of the energy sector will gather at this unique event, organized by the Executive Club, which was taken under honorary patronage by the Minister of Energy. The debates will focus on the future of the sector and changes to come on the Polish energy market. ATENDE SA, ING Bank Śląski SA, GE, Oracle, PwC Polska, Schneider Electric and Seen Holding are the partners of the debate, and announced speakers are experts in the sector.

Location: Bristol Hotel, Warsaw Web: executive-club.com.pl WBJ OBSERVER •

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NEWS / ECONOMY

FACTS AND FIGURES Data overview for July

Warsaw Stock Exchange as of July 2016 Number of listed companies:

-0.9%

483

was Poland’s CPI inflation

TRADE VOLUMES

8.6%

3.8%

y/y industrial output growth

SHARES

registered unemployment rate

PLN 110.9 billion BONDS

PLN 683 million

4.4%

y/y retail sales growth

FUTURES

4.25 billion Average salary up

In July, average monthly gross salaries in the Polish business sector increased by 4.8 percent on a yearly basis and reached PLN 4,291.

budget deficit at the end of July

Deflation holds

Year-on-year CPI inflation in Poland, July 2015 –July 2016

Keeps falling

Poland’s registered unemployment rate, July 2015 –July 2016 11

-0.5

10.5 10 -1

9.5

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Jul. ’16

May ’16

Jun. ‘1 6

Apr. ‘16

Mar. ‘16

Jan. ’16

Feb. '16

Dec. ‘15

Oct. ‘15

Nov. ’15

Sep. ‘15

Jul. ’15

Jul. ’16

May ’16

Jun. ‘1 6

Apr. ‘16

Mar. ‘16

Jan. ’16

Feb. '16

Dec. ‘15

Oct. ‘15

Nov. ’15

Sep. ‘15

Jul. ’15

SEPTEMBER 2016 •

Aug. ‘15

8.5

-1.5 Aug. ‘15

Data source: Central Statistical Office (GUS), Warsaw Stock Exchange

The Ministry of Development has lowered a GDP growth forecast for 2016 from 3.8 percent to 3.5 percent.

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-0.64%

PLN 25.03 billion

“We are lacking around PLN 5 billion to finance 500+, but we will find it.”

Henryk Kowalczyk, head of the Standing Committee for the Council of Ministers, said in an interview with Polish daily Puls Biznesu.

COMMENTARY / LAW

DR IZABELA SZCZYGIELSKA ADVOCATE, COUNSEL HEAD OF LABOR LAW PRACTICE WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

IS THIS THE END OF THE STATE SECTOR SALARY CAP ACT? companies and joint stock companies in which the State Treasury or local government holds any shares, rather than over 50 percent of the shares, as had been the case up until now. Also, the old provisions allowed managers to be exempt from the rules set out in the State Sector Salary Cap Act subject to meeting the conditions stipulated by the statute, one of which was the directors and officers (D&O) liability insurance.

As opposed to the old act, which provided for the possibility to hire individuals e.g. under employment contracts, the new provisions allow them to be employed only on the basis of civil law contracts. The remuneration of members of governing bodies will be composed of two parts: a fixed part and a variable part. The new act defines the maximum duration of the non-compete obligation, as well the maximum compensation for agreeing to same.

The State Sector Salary Cap Act will not cease to exist, however it will apply to a much smaller group of entities. The new act provides greater flexibility in defining the rules of remuneration in entities subject to its provisions. Even though it sets the cap for the remuneration of members of managing and supervisory bodies, it also allows for the remuneration limits to be adjusted if justified by special circumstances.

The new act was signed by the President on July 26, 2016 and published in the Journal of Laws on August 9, 2016. The new provisions will enter into force 30 days after their publication. u

Image: Shuttesrock

Remuneration rules for individuals managing entities controlled by the State Treasury and local government units are defined by statute and, in line with the legislator’s decision, are not to be governed only by the rules of free economy.

The hitherto applicable provisions of law (the Act of March 3, 2000 on the Remuneration of Persons Managing Certain Legal Entities [Journal of Laws of 2015, item 2099, as amended] commonly referred to as the State Sector Salary Cap Act) provide for a strict definition of the algorithm for the calculation of remuneration of individuals to whom this statute applied. Since their adoption, these provisions had been broadly criticized as the salary limits were determined on the basis of the given entity’s legal status, without taking into account other significant factors, such as its economic results.

Furthermore, some benefits were granted regardless of the employment period, which led to situations in which a manager who worked for a period as short as a few days was eligible to receive a very high severance payment. Also, a significant part of the remuneration was a fixed amount, which limited its incentive function.

The new act – the Act of June 9, 2016 – on the Principles of Determining the Remuneration of Individuals Managing Certain Companies applies to commercial companies with the State Treasury’s shareholding, which will no longer be covered by the provisions of the State Sector Salary Cap Act. The new act regulates the remuneration in limited liability

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COMMENTARY / LOGISTICS

JULIUSZ PAKUŃSKI PROJECT MANAGER DACHSER DIY LOGISTICS IN POLAND

LOGISTICS FOR THE DIY INDUSTRY MUST WORK PERFECTLY

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Another issue in favor of cooperation with a specialized logistics operator is the service of the final stage of the supply – from the moment of delivering the products to the store, to the point where they will be on the shelf. The smoother the process goes, the faster the goods can be sold to the consumer. As a result, the product is delivered to the shelf not in 4.5 days on average but in one day.

Our employees are also involved in the control of the quantity and quality of the supplied goods: their labeling, repacking, handling promotions and refunds. Therefore, cooperation with an experienced operator allows the supplier to save both time and money.u

Images: Shutterstock

Logistics services associated with deliveries to Do-It-Yourself stores are not a simple task. Everything must run like clockwork to get the product on the shelf and make it available to the final customer as soon as possible. The challenge becomes even more complicated when it comes to international deliveries.

More and more Polish companies decide to export their products to various European countries. Large DIY stores, which allow those entities to significantly expand the scale of sales, are an attractive target for many of them. However, to be able to cooperate with big store chains, it is necessary to meet a number of tight requirements, including the perfect planning of logistics processes. Extremely helpful, and sometimes even necessary, may be using the services of a reliable international logistics operator. This allows for a significant improvement of processes – from transport, through to delivery to the ramp, ending in placing the goods on the shelf.

One of the most important criteria of cooperation with DIY networks is the ability of the supplier to quickly execute the contract, which largely depends on the time needed for transport. A large logistics operator, with a dense network of connections and branches can handle deliveries to multiple points scattered around Europe very smoothly, and thanks to the consolidation of shipments from different customers – also in terms of price. For individual companies that plan to carry out the deliveries by themselves, it is a challenge that can often turn out to be simply impassable.

A company that wants to join the group of entities cooperating with European DIY networks should also be aware that it is much easier for the markets to include the next manufacturer to the existing supply system than to organize new deliveries “from scratch.”

It is preferable for the networks to have a few large operators supplying goods to stores as it helps reduce the number of cars on the ramps, which in turn has a positive influence on delivery times and costs. For this reason, retailers give direct recommendations regarding the selected, proven operators they regularly work with. Thus, the possibility of booking specific time windows is available mainly for the operators who have central contracts with the networks or those that deliver large volumes of goods.

COMMENTARY / BREXIT

SYLWESTER BIERNACKI CHAIRMAN OF THE BOARD OF ATM S.A. (ATMAN)

BREXIT: WELCOME TO POLAND Britain’s decision to leave the EU means that a portion of the City will be seeking new locations within the EU. This offers a great opportunity for Poland as a European competency hub. We have a lot to offer to foreign investors – our ever improving infrastructure, highly qualified specialists and a modern technological base.

Although it’s difficult to judge the economic consequences of Brexit today, it is clear that some of the businesses operating in the UK will be relocated to the EU. J.P. Morgan Chase, HSBC, Citigroup or Goldman Sachs are only a few examples of companies which are considering relocating a portion of their business outside of the City. Foreign investment in Central-Eastern Europe is growing. Poland plays a special role in this region.

According to the Ministry of Development, foreign companies had invested €171 billion up to 2014. And the stream of foreign investment is not slowing down. Some 211 new investment projects were implemented in Poland last year (60 percent growth.)

Apart from Russia, no other country has enjoyed such excellent growth. Poland remains the regional leader, ranked by EY as one of the five most attractive investment locations in Europe.

Investors are attracted to Poland by its security, costs (lower than in Western Europe), competences, and the improving infrastructure, including ICT, which is indispensable to modern business.

Although the Polish economy’s digitization index is lower than

in the Czechia, Slovakia or the Baltic States, it is higher than in Greece or Romania, and similar to the French. The contribution of private companies is priceless; thanks to their investments, the digitization index grew by an impressive 74 percent in 20082014, making Poland one of the five countries with the highest digitization dynamics.

Digitization is one of the most important factors that has transformed Poland from a European assembly plant into an equal player in those areas where competences are crucial. It is not a coincidence that state-of-the-art business service centers are among the investment leaders in Poland. We are becoming an outsourcing center, e.g. in the scope of IT. The total revenues from exports in the companies participating in this year’s ITwiz Best 100 ranking exceed PLN 1 billion. Technology is a driving force for Western companies, however they are suffering an increasing shortage of local specialists. Therefore, competency and technology outsourcing is their best solution, providing security and cost-effectiveness. Server colocation is an excellent example – it can be several dozen percent less expensive than maintaining one’s own infrastructure.

Although Brexit offers an opportunity to boost foreign investment, we don’t need to worry about its inflow. Poland has many trump cards, and foreign investors seem to recognize this better than anyone else. u

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COVER STORY / BREXIT

Goodbye and good luck AFTER BEING A MEMBER OF THE EUROPEAN UNION FOR 43 YEARS, THE UNITED KINGDOM HAS DECIDED THAT IT WOULD BE BETTER OFF ON ITS OWN. WBJ OBSERVER INVESTIGATES HOW THE UNPRECEDENTED MOVE BY THE BRITISH WILL IMPACT POLAND Half an hour after the final result of the Brexit referendum came in, I was in a taxi going for an interview with the head of one Polish defense company. Contrary to my previous experiences with more often than not EU-skeptic taxi drivers, this time I could sense concern in the voice of the driver when we touched upon the British matter. He was uncertain about the future of the Polish community and

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was considering the potential return of fellow-countrymen as a threat, fearing that they could take up jobs and drive up unemployment. The feeling of dismay over the decision of the British was common that day, even among critics of the EU, who never miss the opportunity to bash the bloc for (mis)handling matters.

The ritualized critique bears no immediate consequences whatsoever, unlike the

historical decision made by voters on that summer day.

What seemed highly unlikely came true in the early morning of June 24, when Europe woke up to the news that the UK will be leaving the European Union. The referendum itself was called by then Prime Minister David Cameron as a bid to strengthen his position within the divided Conservative party, as well as to challenge the anti-migrant, populist UKIP party led by Nigel Farage. His reasoning might have seemed correct – in 2014, he successfully overcame Scotland’s independence pressure by calling for a referendum on its secession and won the 2015 elections by a landslide vote.

This time, with a fresh deal on curbing benefits for newly arrived EU migrants, it appeared it would be an easy win again.

Image: Shutterstock

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COVER STORY / BREXIT

But the former UK Prime Minister underestimated the negative mood over the inflow of workers from the EU, the disenchantment with the UK and EU elites, and a historical sentiment of standing apart from the continent. In addition, the populist Leave campaign turned out to be much more effective than a sober message conveyed by Remainers about the economic risks associated with exiting the EU. “People in this country have had enough of experts,” said Michael Gove, then Justice Secretary and prominent Leave figure, when asked about the names of economists supporting Brexit.

And he was right. People didn’t trust experts and decided to go on a journey into the unknown.

The very next day after the referendum, the Leave camp backtracked on some of its promises, the most spectacular was the abandoned pledge to give the National Health Service the £350 million “the EU takes every week.” Some of the voters who cast their vote for leave shockingly admitted that they wanted the UK to stay in the EU, but thought their vote had no meaning. Nonetheless, the genie was out of the bottle.

First to feel the consequences When looking at the UK’s divorce from the EU from the Polish perspective, the first question which comes to mind is how it will affect the nearly 800,000 strong minority living and working there. The direct consequence of an anti-migrant discourse present in the mainstream came quickly. For the first time in its nearly 75-year history, the doors of the Polish Social and Cultural Association (POSK) in London were scrawled with xenophobic graffiti. In Cambridgeshire, leaflets which read “Leave the EU. No more Polish vermin” were posted through letterboxes and left on car windows. According to a poll, as much as 12 percent of Poles living in the UK said after the Brexit referendum that they had been a victim of ethnically-motivated attacks, mainly verbal abuse, and 74 percent of them feared negative attitudes toward migrants.

When Poland joined the EU in 2004, the United Kingdom was one of the first countries to open its doors to migrants from Eastern Europe. Since Great Britain has one of the strongest economies in Europe and a widely spoken language,

“Risks from having a large number of migrants in the UK may be overstated if one looks only at the numbers.

Workers’ flexibility in adjusting to instability in their host countries by moving to new markets could make a difference.

Standard and Poor’s the island has become the most popular destination for Poles seeking a better life in the West. In the year of accession, the unemployment rate in Poland stood at a staggering 20 percent, hence the massive outflow of badly paid or unemployed from the ailing economy. Over time, the Polish community in the UK has grown to become the largest in the UK (according to the Office for National Statistics).

Their emigration helped in driving unemployment down, while money transfers added to the Polish GDP. The question therefore looms: how would their potential return affect the economy?

Beneficial return?

Poland is in a different situation than it was 12 years ago. Unemployment is at a 25-year low, the population is aging and the country will soon face labor

shortages. The government is making efforts to turn around the demographic trend by launching expansive social programs, but their effects will be visible within several years at the earliest.

Instead of being a headache, the return of workers might solve some of Poland’s problems. Stanisław Gomułka, a former professor at the London School of Economics and a former adviser to the minister of finance, said that their repatriation might be positive for the economy.

“The return of between 100,000 and 300,000 people who have experience in working in foreign companies and can speak languages would drive entrepreneurship up,” he said. Gomułka added that their arrival would be spread over time, therefore Poland shouldn’t have any problem accommodating them.

Decreasing remittances wouldn’t be a big problem either. The central bank NBP said that in 2015. Their value corresponded to 0.25 percent of GDP and has been steadily falling since Poland’s accession to the EU. This is because emigration from Poland has assumed a longterm character. In the early days, it was often the sole breadwinner who would go to the UK and send money back to their family in Poland. With time, however, his relatives joined him in the new homeland and the volume of transfers diminished. With or without Brexit, the figure would keep falling.

The number of Poles that would be forced to come back is still unknown, but it shouldn’t exceed 300,000. Nonetheless, it’s not yet clear whether EU migrants will have to leave the UK at all. Firstly, a lot of them have been there for more than five years, meaning they are allowed to file for citizenship. Secondly, the British government may propose some kind of arrangement enabling those EU migrants who are already there to stay. Thirdly, the UK negotiations over exit conditions may end up with the UK retaining access to the single market, which encapsulates the freedom of movement of workers.

But even if a part of the Polish community living in Britain is expelled, they may choose to settle in a different EU country rather than coming back to their homeland. Standard&Poor’s reassures that the “risks from having a large number of migrants in the UK may be overstated if one looks only at the numbers. Workers’ flexibility in adjusting to instability in their

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COVER STORY / BREXIT

host countries by moving to new markets could make a difference. For instance, in the wake of the crisis in Ireland in 2008 and the fall-off in construction activity, Polish immigrants moved quickly to other markets, such as Norway.”

Limited economic impact Apart from affecting the Polish community, the greatest economic risks following Brexit come from uncertainty, as the UK will be the first country in history to leave the EU. This scenario has never been tested and the outcome is a mystery. In the coming years, a worsening investors’ sentiment is expected, in addition to perturbations on the financial markets. In Poland, the FX volatility is a headache to those who hold mortgages in Swiss currency. Should the franc’s value grow against the złoty, part of the loans may become unpayable.

Moreover, Brexit will harm Polish exports to the UK in the short-term, but in the long run its effect on trade links with

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5%

UP TO POSSIBLE RECESSION IN POST-BREXIT UK, ACCORDING TO STANISŁAW GOMUŁKA Britain should be limited. Despite the fact that the UK is Poland’s second trading partner after the euro zone, its share of imports and exports is not significant and stands at 2.9 percent and 6.8 percent respectively. The appearance of tariff and non-tariff barriers following UK’s exit will likely have an circumscribed effect as Polish business proved that it is able to find new export routes when conditions change. Following Russia’s sanctions on importing food from Poland, the decline

in exports was temporary and the producers quickly jumped on new markets.

The economies of this part of the region might also be harmed by cuts to EU structural funds. Great Britain has been one of the major contributors to the common budget and Poland is the biggest net receiver in the union. If the UK triggers article 50, that is a formal notification that it wants to leave the EU at the beginning of 2017 as it is expected, negotiations over the final shape of an exit deal would take around two years. The likely date of Brexit is 2019, hence it wouldn’t have much impact on the 2014-2020 EU financial perspective. Things will change, however, with the next budget and much will depend on the type of the deal UK can make. If it is to have a “Norwegian” model, which encompasses free access to the EU market, it would keep contributing to the common budget.

But should Britain have another type of deal, then member countries would have to cover the money the UK doesn’t pay

COVER STORY / BREXIT

300,000

AROUND POLES MAY BE FORCED TO LEAVE THE UK FOLLOWING BREXIT

Image: Shutterstock

in. The German Finance Ministry calculated that its contribution would grow by €3 billion a year and if the burden is to be spread proportionally, Poland would to have to pay in around €300-500 million more annually (in 2016, Poland will contribute €3.1 billion). The other possibility is that the EU will decide to cut the budget value by the amount the UK was expected to contribute. There wouldn’t be a hike in expenses, but the funds obtained will be respectively lower. Either way, the upcoming financial perspective will not be as beneficial as the two previous were, which made Poland the biggest net recipient of EU funds. Irrespective of Brexit, after 2020, the budget available for countries which entered the bloc in 2004 will be significantly lower.

Although the economic consequences of Brexit for Poland seem to be limited, investment bank Morgan Stanley lowered Poland’s GDP growth forecast to 3.1 percent in 2016 and in 2017 amid concerns over economic slowdown in the euro zone following the referendum. A similar forecast was issued by JP Morgan, which also quoted Brexit as a reason. And in fact, the Q2 reading of Poland’s GDP at 3.1 percent shows that the full year growth would be much below the assumed 3.8 percent. According to Gomułka, the lower growth is not that much a result of the Brexit itself, but the ruling party’s way of handling domestic matters, particularly undermining the check and balances and democratic rule of law, thus increasing uncertainty among investors.

New Londons Without doubt, the UK itself will be the worst hit by Brexit. A few weeks on from the referendum, the pound has plunged by 13 percent against the dollar and has not been at levels this low since the mid1980s. Markit’s July PMI report showed that the UK economy is shrinking at its

fastest rate since 2009. For the first time in more than seven years, the Bank of England has cut interest rates and plans to pump an additional £60 billion into the economy to reinvigorate it. But even with these stimuli, the bank forecasts slower earnings growth and 250,000 job losses. Gomułka estimates that recession in post-Brexit UK could reach up to 5 percent, particularly if it goes with “hard Brexit,” that is an exit deal that doesn’t include access to the common market.

Someone else’s misery may turn out to be of benefit to others. Financial professionals and the press have already begun speculating on whether and where the companies from the city of London will move to after the UK leaves the European Union. In a search for a new financial center, US daily The New York Times ranked European cities based on answers from relocation experts at major firms, who described what they were looking for. Warsaw, which came

over these matters,” Deputy PM and Development Minister Morawiecki announced.

Security concerns Should the economic impact of Brexit on Poland and the EU be limited, the same doesn’t apply to international affairs. Britain’s decision to leave may boost nationalistic and populist parties, which are already on the rise across Europe. Further blows to the union would significantly weaken Poland’s security, which is based on being a part of the strong EU and NATO. According to a report by the Center for Eastern Studies (OSW), Brexit strengthens Russia in relation to Europe by making the EU focused on domestic matters and more conducive towards lifting sanctions on Russia. Moscow may also seek to end the Ukrainian conflict on its terms – that is with the West formally accepting the seizure of Crimea and Russia’s control over Donbas. In the long-term perspective, the growing national sentiment in Europe may lead to loosening transatlantic ties and create a tendency to build bilateral relations with Russia, which would make Moscow stronger.

The referendum also showed the weakness of Poland’s ruling PiS foreign policy, which sought a strategic alliance with the UK to offset the German-French

€300-500 MILLION MORE POLAND MAY CONTRIBUTE TO THE EU BUDGET AFTER 2020 TO COVER FOR THE UK in seventh, is among the “new Londons,” according to the newspaper. Despite the fact that it was ranked seventh on a par with Milan and ahead only of Barcelona, there are hopes, expressed by top officials that some big players will actually come to Poland. “Some of the financial operations will spread across continental Europe ... I would like Warsaw to be one of the locations... I have meetings scheduled with financial institutions

domination in the bloc. In conflict with the EU over the rule of law, Poland has lost its only serious partner in the union and now it may find it difficult to advance its strategic interests. All these developments critically threaten the security of Poland, so it should be a wake-up call for the ruling party and the governments of Europe to make every effort to put a stop to growing anti-EU sentiment and avoid the domino effect. u

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INTERVIEW / MICHAŁ KRUPIŃSKI

BANKING ON BANKS I N T E R V I E W B Y JA C E K C I E S N OW S K I

WBJ Observer: When I was doing research for this interview, it felt like I was preparing to talk with the CEO of a bank, not the biggest insurer in the country.

Michał Krupiński: Insurance is still at the core of our business. It takes up to 80 percent of my time. Our results in this field are very good. We’re currently analyzing how we can sell more products to our clients who have group protection insurance, of which we have 6 million. We’re also planning to introduce new investment products, but we have to wait for Deputy PM Morawiecki to announce his plan, which will include a program aimed at increasing Poles’ savings. We think it will be a good opportunity for our investment fund (TFI). Other types of insurance products are also selling very well.

But what interests people the most is not your core segment, but the banking division, which PZU recently entered with a bang and in which it plans to increase its presence with more acquisitions.

We have a big surplus of funds earmarked for investment and we want to use it to consolidate the Polish banking sector.

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That’s what your predecessor, Andrzej Klesyk, was saying. He also added that no insurer has ever profited from owning a bank. His plan was to acquire a couple of banks, merge them through synergy and sell them at a later date. Has this plan changed?

THERE’S A LOT OF SYNERGY BETWEEN THE BANKING AND INSURANCE SECTORS AND WE WANT TO TAKE ADVANTAGE OF IT. IF YOU CAN NAME BETTER ASSETS THAN BANKING WE WOULD CONSIDER GETTING INTO THEM No, nothing has changed there. We bought a controlling stake in Alior Bank, which in turn purchased Bank Przemysłowo-Handlowy (BPH). I think that this will be the trend in the

next 4-5 years. The sector will consolidate further and its profitability will increase along with it.

Alior is a very good platform to start from. It’s one of the most innovative banks in the region.

The initial idea was to make Alior an anchor and integrate it with two or three smaller banks. Now, according to media speculation, you plan on acquiring lenders much bigger than Alior (Pekao and Raiffeisen). How will this affect your strategy?

I can’t really comment right now on potential acquisitions, but we approach every possibility individually. With BPH, for example, we decided that it would be much better if Alior were the purchasing body, not PZU. This was the largest transaction of its kind on the market so far, and in the process the bank managed to sell bonds worth PLN 800 million in one day. But future acquisition models might be different.

When you make an investment you always need to have an exit strategy.

Do you have a timetable for selling the banks?

It’s a matter of a few years for sure. We have to show synergy first, produce good results and the sector needs to improve as well.

You don’t have to be Sherlock Holmes to figure out that PZU as a stateowned company is under pressure by the state to repolonize banks.

The question is if it’s a good moment to acquire lenders. We all know that the sector is not in the best shape.

Every company has to manage its own

Image: PZU

WBJ OBSERVER SPOKE WITH MICHAŁ KRUPIŃSKI, CEO OF PZU, POLAND’S BIGGEST INSURER, ABOUT ITS PLANS TO REPOLONIZE FOREIGN BANKS AND THE CURRENT ECONOMIC CLIMATE

INTERVIEW / MICHAŁ KRUPIŃSKI

capital properly. It can’t be under or overcapitalized. If it has more than it needs, the funds should be invested.

There aren’t many acquisition targets in the insurance sector. PZU has investments on the WSE, in the bonds sector, as well as in real estate and should invest in related fields. From an evaluation point of view I think it’s a good moment to invest in banks. It’s a buyer’s market now. When the market is consolidated, banks are more profitable.

demography with lots of catching up to do, we have a f lexible exchange rate and we have stable trade relations with Germany. That’s why many economists, including those in the IMF, and myself, don’t expect the economic situation in Poland to worsen. Moreover, the rise in lending is still the highest in Poland out of all EU countries. If there is a crisis in Poland it will be caused by global downturn, which I actually expect to happen in the future.

What if the market situation in Poland worsens and has a few tough years? Aren’t you afraid that the banks will be the ones that will lose the most in this situation? Just like in the south of Europe.

I spent lots of time working at the World Bank analyzing the banking crisis and I came to the conclusion that this is as much an economic problem as it is a social one. The crisis has been accumulating for some 20 years. We’re still a relatively young

If it’s so good, why do so many foreign banks want to leave Poland?

It’s all caused by the banks’ internal problems. Most of them would love to stay here, but, like UniCredit, which has significant problems in Italy, they have to concentrate on their home turf. During my tenure in the Bank of America I worked on several transactions in the banking sector and they were all caused by the sellers’ internal problems. If they had the capacity, they would stay and strengthen their

position in Poland. But in order to be successful in the sector you have to grow. You’re either up, or out as they say. The consensus is that you need at least 5 percent of the market, if you have less than that, it’s better to leave the sector.

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What percentage of the market share do you plan on having?

I can’t answer that. It all depends on future acquisitions, and what opportunities will be on the market. It’s not like we’re forced to get involved in the sector. It just makes sense for us.

There’s a lot of synergy between the banking and insurance sectors and we want to take advantage of it. If you can name better assets than banking we would consider getting into them. But in the current landscape I don’t see anything better for PZU to invest in.

You’ve talked about having a surplus of investment funds, but you don’t have enough to take over the UniCredit stake in Pekao (40 percent). Someone has to help you with financing.

We can do it in cooperation with the Polish Development Fund.

The Treasury is not the only shareholder of PZU. The company is listed on the Warsaw Stock Exchange and its shares have dropped to their lowest point since it began trading.

It seems that they have a different opinion on entering the banking sector.

I’ll just say that among European insurers we’re one of the best, if not the best performing listed company. The whole industry is in rough shape.

When can we expect some news regarding PZU investments in the sector?

I think within the next few weeks we will announce some decisions regarding one, or even two lenders. But I won’t name any names for obvious reasons. u

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Image: PZU

So if the banking sector has its problems, so do insurers. I have to ask again. Is this a good moment for such large investments?

I do think so. As I’ve mentioned before, there aren’t any better assets for us to invest in. Can you find better banks in Europe than Pekao or BZW BK – banks that have similar profits, or a similar level of innovative products?

These are some of the better assets in the whole of Europe.

INTERVIEW / MICHAŁ KRUPIŃSKI

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INTERVIEW / ZBIGNIEW GAJEWSKI

THE END OF LABOR WBJ OBSERVER TALKED WITH THE DIRECTOR OF THE EUROPEAN FORUM FOR NEW IDEAS ZBIGNIEW GAJEWSKI ABOUT THIS YEAR’S EDITION OF EFNI, WHICH WILL BE HELD UNDER THE TITLE “THE FUTURE OF WORK. REALITIES, DREAMS AND DELUSIONS.” I N T E R V I E W B Y JA C E K C I E S N OW S K I WBJ Observer: This year’s EFNI will focus on the future of the labor market. Why did you choose such a topic, when Europe is facing more pressing challenges such as Brexit, immigration and terrorism?

Zbigniew Gajewski: All of the problems that Europe is currently faced with have already been discussed in previous editions. Maybe the scale of those problems is bigger than before, but we’ve analyzed them in depth.

Europe is lagging behind other continents, and the EU is in crisis and needs fixing. There is a huge discord between EU citizens and EU bureaucracy and I think even EU officials don’t realize how big the gap is.

This is why the topic of labor is so important, as it is one of the foundations of the EU and if we don’t start doing something about it, Europe’s problems will intensify. We won’t be just talking about the labor market, but about the essence of labor as well.

I think it is a problem that will reshape the whole world, not only Europe.

Why is it so important?

Work, in a traditional sense, will cease to exist in the future. This will be

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the first moment in the history of humankind that we won’t have anything to do. Even if we wanted to do something, machines will do our jobs more cheaply and more efficiently. Right now that process has only just begun. It’s not so visible, so we’re not even discussing it. Yet, its effects will have a revolutionary effect on humankind. Work has been a crucial part of our lives, we did it to make our and other’s lives better, it connects us and creates communities, not to mention it provides us with funds to fulfill our needs and dreams. And one day it will be gone.

What kind of timeframe are we talking about here? Years, decades, centuries?

There are different estimates; some studies estimate that in the next ten years, in highly developed countries, half of all jobs will be outsourced to machines. No one will be safe. A US company, Momentum Machines, has developed a fast food bar, fully operated by robots (humans, at least for now, will handle some administrative duties and take out the trash). Customers will order food using terminals, they can even choose if they want their meat rare or medium, robots will prepare it and a

INTERVIEW / ZBIGNIEW GAJEWSKI

different machine will deliver it to your table. The initial investment in opening such a place is paid off in less than a year. McDonald’s, the current leader in the market, employs 1.8 million people in its restaurants all over the world. Will they have so many people on the payroll ten years from now, knowing that they can run the same operations at a fraction of the cost?

You think customers won’t need human interaction in restaurants and other places?

That’s an interesting aspect. Some people definitely need to talk to a waiter or a clerk. But technology can also replace that. What if we develop avatars that act like humans, or probably behave even better than some of us. Watson, a question answering computer system built by IBM, was used

by Georgia Tech as a teaching assistant. For a year it communicated with students and they were all unaware that they’d been communicating with a piece of software.

Image: EFNI

It wouldn’t be the first such revolution in labor. There have been many inventions, including the internet, that have killed some jobs, but in return created many others.

The current situation is different. In 2014, Google had over $16 billion in profit while employing 61,000 people, General Motors in 2015, earned $9.7 billion, with 215,000 people on its payroll. This stat says everything. Apple has built a new server farm worth $1 billion and only 50 people work there. Maybe new kinds of jobs and positions will be created in the future, but so far it’s not looking good.

You’re painting a rather gloomy picture.

These changes won’t affect only us, but they will deepen the problems the EU currently has. In the past, the European bloc encountered numerous problems, but when the crunch time came close, somehow all sides managed to overcome them. But none of the previous problems can compare to the philosophical crisis about what we’ll do with ourselves once we’re stripped of such a significant part of our life as labor.

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INTERVIEW / ZBIGNIEW GAJEWSKI

Is there any way to avoid it? It’s progress, and after all, you can’t stop progress.

That’s true. I think it is not reversible. We’re near the point where the technology we have created, AI, is capable of managing itself. It doesn’t need humans anymore. The question now is what it will do. Some, more pessimistic, theories suggest that it might even destroy us ultimately. It’s hard to imagine that we can manage this process. Can you envisage a G7, or even UN General Assembly, meeting and saying that they demand an end to the robotization process because people are losing their jobs?

The interesting question, which will be discussed at EFNI and I intend to ask Martin Ford about, is what we will do after we no longer have work.

I’m sure that such a moment will occur in the future, as not only simple, repetitive jobs will be handed over to machines. More complicated ones will go the way of the Dodo as well. Even today, we have software that replaces journalists – Quill. Ford claims that we can already read articles written by software in major news publications, but the people running them don’t want to admit it.

Why be so gloomy? The theory that robots will do our work of us and we’ll have all that time to ourselves is rather appealing.

That’s true, most of us don’t love our jobs, and having year-long holidays sounds great. But what happens to demand if only 20 percent of the population is working? The rich won’t buy thousands of cars, phones, computers etc. because they won’t need as many.

On the other hand, those without jobs won’t have money to buy them either.

Let’s say that everyone will have a guaranteed income then. And things will be so cheap, as machines will manufacture them, that they might even be subsidized.

The idea of a guaranteed income is not new, there have already been referendums on passing such laws in some countries. But the history of mankind and different utopias we have thought of, and even tried to implement, have shown us that it doesn’t

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“Work has been a crucial part of our lives, we did to make ours and other’s lives better, it connects us and creates communities, not to mention it provides us with funds to fulfill our needs and dreams.

And one day it will be gone.

ZBIGNIEW GAJEWSKI, director of the European Forum for New Ideas work that way. People are different, they don’t like or want the same things and no regime will change that. It’s not possible for every human in the world to have the same things.

Then what? Do we create criteria, according to which people will earn accordingly? For example, the older you get, the more you receive. But is that fair? This will create conf lict that cannot be resolved.

Others, which I don’t agree with, say that when we’re freed of all the ‘shackles’ of work, we’ll be able to concentrate on our creativity. But even then we need people to consume our creations. So, we would get to the point at which only the richest could afford the best items. If we all have the same things, we won’t be able to consume all of it. So we lose the motivation to create. It’s a vicious circle.

Coming back to the present, and the problems the EU is having, all of the major issues – Brexit, migration, terrorism – also affect the labor market.

Of course, after Brexit the question we all asked ourselves in Poland is what will happen with the Poles who left for the UK in droves. Will they return here, or will they move somewhere else?

Despite the incentives made by the previous and current governments, many are wary of coming back as they know they will earn more somewhere else and have more flexible regulations, so establishing a company for example is way easier in most places than it is here.

This could create tensions elsewhere, because one, if not the main reason why people in the UK voted for Brexit was migration, and with so many people moving to other countries looking for jobs it could have a domino effect.

Of course. It’s obvious now that the inclusion of CEE countries into the EU was something the bloc was not prepared for. Both sides have different agendas. Before, despite all kinds of regulations and policies, all members could sit down and work out a consensus. When you added CEE countries into the mix, coming to an agreement proved very hard because of cultural and economic reasons.

The gap between West and East was simply too big. In the beginning, new members had numerous privileges, not only cohesion funds, but also due to the existing landscape, they could provide services and goods much more cheaply than the old countries. Polish transport companies, thanks to low wages, pushed foreign competitors out of the market for example. But now, after the economic crisis hit the West so hard, they want to level the playing field, that’s why there’s a draft of a resolution forcing everyone to pay the wages of the countries they operate in.

Meaning that if a driver goes through Germany to transport goods he should be paid the same as a German driver for that part of the journey. This will hurt Polish companies, as they would have to pay their workers much more and consequently lose their competitive edge. u

INTERVIEW / ZBIGNIEW GAJEWSKI

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FEATURE / DEFENSE INDUSTRY

A DISCUSSION REGARDING THE FUTURE OF THE POLISH DEFENSE INDUSTRY

WITH THE AIM OF SHIFTING ATTENTION TO THE LACK OF A LONG-TERM STRATEGY FOR POLAND’S DEFENSE INDUSTRY AND THE ISSUES IT IS FACING, THE NATIONAL CENTRE FOR STRATEGIC STUDIES HAS CREATED A PLATFORM FOR DISCUSSION FOR ENTITIES INVOLVED IN THE FORMULATION OF POLAND’S DEFENSE INDUSTRY POLICY. A RESULT OF ANALYSES, DISCUSSIONS AND WORKSHOPS OVER THE LAST SIX MONTHS HAS BEEN THE PUBLICATION OF A REPORT WHICH PRESENTS A LONGTERM VISION OF THE POLISH DEFENSE INDUSTRY. ACCORDING TO EXPERTS, THE MOST PRESSING ISSUES REQUIRING WIDER DEBATE AMONGST POLICY-MAKERS INCLUDE: THE LACK OF A FORMAL, LONG-TERM VISION FOR THE NEEDS OF THE POLISH ARMED FORCES; THE NEED TO DETERMINE THE PRIORITIES OF THE POLISH DEFENSE INDUSTRY IN A LONG-TERM PERSPECTIVE; THE AMOUNT OF SUPPORT FOR POLISH TECHNICAL EXPERTISE; AND THE PROMOTION OF DOMESTIC PRODUCTS ON THE GLOBAL MARKET

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solutions. As part of the project the National Centre for Strategic Studies conducted secondary research, along with meetings and interviews with representatives of research institutes responsible for the programming and implementation of development activities for the armaments industry. This was complemented by the organization of four workshops which acted as a platform for discussion and the

mapping out of solutions for representatives of various entities whose operations determine the success of the Polish defense industry.

“Despite the openness of the Polish economy, the arms industry is quite a closed sector and is characterized not only by its survival on the periphery of the European division of labor or even isolation within the European defense

Image: Shutterstock

The project “Security and Competitiveness – recommendations for the Polish defense industry strategy” was tasked with analyzing a broad spectrum of topics which contribute to the efficient functioning of the Polish defense industry. Among other things, topics include the current selection process, management and choice of support instruments for defense programs, as well as global trends and

FEATURE / DEFENSE INDUSTRY

market, but also by its poor relations with foreign firms – firms which would allow for a greater share of the international division of labor both part of, and outside of, the EU and NATO,” noted Stefan Markowski, expert in the field of economics and defense, and co-author of the NCSS report.

During the research process, strategy papers of the world’s leading defense industry contractors were analyzed and a catalogue outlining technological and organizational trends which inf luence the development of the global defense industry was also prepared. The discussion was joined by representatives of the Ministry of National Defense, the Ministry of Development, the Arms Inspectorate of the Ministry of National Defense, military research institutes, higher education military and technology institutes, the industrial sector, management consulting firms and the media. Importantly, the participation of a comprehensive group of experts, personified by different experiences and areas of expertise, made it possible to carry out a complex debate regarding the Polish defense industry and to work together on solutions which take into consideration different perspectives and interests of particular parties.

“The task set out by our institute was to produce a set of guidelines for the establishment of an appropriate sector strategy, as well as a list of recommendations regarding changes enabling the development of the Pol-

Patronage of the project was assumed by the Armament Inspectorate, whereas the conference was placed under the patronage of the National Security Bureau and the Ministry of National Defense.

The National Centre for Strategic Studies (NCSS) is an independent, non-partisan analytical and research institute which was established to invigorate debate, promote creative and innovative thinking as well as provide expertise on a broad spectrum of national security

ish defense industry. We acknowledge that our report does not fully address the problematic nature of some issues, which is why the set of recommendations is open to amendments and further discussion. Our aim was to envisage the appropriate direction for the Polish defense industry and indicate the changes necessary to bring about the desired results,” said Jacek Kotas, President of the NCSS. The defense industry is one of the few sectors of the economy which remains in Polish hands, and according to expert opinion it has the potential to become a driving force of the Polish economy. However, for this to take place, a change of approach by policy-makers and a different outlook towards the defense industry are both necessary.

“The competitiveness of the Polish defense industry is able to guarantee us security, not only in terms of better quality of products or a greater choice of contractors, but through self-sufficiency of the industry which limits the need for financial support from the country. Moreover, an increase in exports equates to an increase in investments, whereas the emergence of new arms technologies contributes to the overall development of technical expertise in Poland,” said Weronika Myck, director of non-military programs at the NCSS and coordinator of the project.

With regards to the desired scope of changes within the defense sector, experts have pointed towards the

need to gather the expertise and competences of the appropriate entities and assign them to a new institution.

This institution would be responsible for the processes of: acquiring armament/weapon systems; forecasting the directions of arms technology development and the identification of army demands by laying down tactical and technological requirements; and advising and overlooking the industrial, research and development phase of the system (including commissioning, negotiations, signing and carrying out agreements regarding deliveries, and supervising the user, the servicing and the upkeep of the system throughout the whole product lifecycle). The new institution would also support domestic producers with export operations. It would also be responsible for the use of defense industry support instruments, especially offset licenses. Other than that, the report stresses the need to finish the operational consolidation of PGZ, simplify procedures regarding public procurement, and suggests the need for greater f lexibility and transparency of public administration.

The most important recommendations that have emerged from the “Security and Competitiveness – recommendations for the Polish defense industry strategy” project can be divided into three categories: public administration and the organization of firms in the Polish defense industry, support instruments for the development of the Polish defense sector, and boosting exports and research of market niches. ◆

Wit the lan cati issu ish of s cus indu inst

issues. The NCSS focuses particularly on planning and investment options for the Polish Armed Forces and the development of its defense capabilities. The National Centre for Strategic Studies strives to develop a culture of strategic thinking in Poland, its objectives are to be achieved through qualitative and quantitative analyses, academic research, publishing and educational activities. In its research activities the NCSS cooperates with high-ranking national and foreign think tanks.

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INTERVIEW / NICOLA LEIBINGER-KAMMÜLLER

TECHNOLOGY FOR A A BETTER EUROPE WBJ OBSERVER SPOKE WITH NICOLA LEIBINGER-KAMMÜLLER, CEO OF TRUMPF, ONE OF THE WORLD'S LEADING COMPANIES FOR MACHINE TOOLS, LASERS AND ELECTRONICS FOR INDUSTRIAL APPLICATIONS ABOUT THE FIRM’S EXPERIENCE IN POLAND, ITS DEVELOPMENT AND INNOVATIONS I N T E R V I E W B Y W OJ C I E C H R Y LU KOW S K I

How important is the Polish market for Trumpf?

There’s no doubt that Poland is one of the key markets in Eastern Europe for our company. Our customers are mostly (90 percent) small companies,

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At our location in Zielonka we employ 230 staff, including roughly 40 engineers in R&D. And at both locations the majority of employees generally have an academic education and speak foreign languages. Trumpfdeveloped the R&D department because in Warsaw there are many young, talented and highly motivated engineers. We have access to all disciplines, especially to graduates in power electronics.

with around 30-50 employees. In Poland we have nearly 1,800 active machines with around 1,000 customers. For a few years now, we’ve supplied Polish customers not only with simple and standalone machines, but also fully automated systems (large warehouses plus several machines). TPL has also sold numerous laser-welding systems, and in this sector Poland occupies a leading position within the EU. But to me personally, Poland is not only a “market.” It is one of the most important friendly neighbor states of Germany, reminding us to remain with the European idea of integration during these tough times that the EU is currently going through.

Trumpf has launched an R&D department in Poland. Why did you decide to do so?

What piece of advice would you give to the government with regard to boosting the innovativeness of the country?

All in all, the machine volume in Poland can be regarded as very modern and competitive. Here, EU funding has also played a decisive role, one that mustn’t be overlooked, despite all the criticism that Brussels sometimes gets.

Something else is even more crucial, however: We believe that the future of the industry and of the economy as a whole depends on the course set by the government where digitalization is concerned. Europe will only be able to maintain its position in the world market if we can make a powerful contribution to connectivity in production – that is, “Industry 4.0.”

So, the creation of an appropriate framework – as far as network infrastructure, data security, and legal and fiscal parameters in Poland and the EU are concerned – is one of the key requirements. u

Image: TRUMPF

WBJ Observer: You are about to open a new HQ in Warsaw. It seems that the company is growing really fast in Poland.

Nicola Leibinger-Kammüller: That’s true. From 1996 to the end of 2002 we only had one branch in Poznań. Since 2006, we’ve been running our sales and service organization in Warsaw and a development and production site in Zielonka, where we develop and produce driver stages.

Last year, Trumpf Poland (TPL) achieved sales of around €60 million, and Zielonka roughly €25 million. For comparison’s sake, in our first year at TPL (2003) we had sales of €3.5 million. That alone shows the kind of growth we’re expecting in the future.

Over the past few years Trumpf has invested €13 million in its two companies in Poland. Today, we have 75 employees in Warsaw. And next year we’re planning to hire a further 13 employees.

Trumpf Poland is now one of the ten largest Trumpf distributors worldwide. Accordingly, we’ve also decided to invest in building our own new company premises. In September we’ll be opening this new 2,500-sqm building for our sales and service location in Warsaw.

Tech Insights

TECH / LOGISTICS

By Beata Socha

WHERE IS MY PARCEL?

Image: Shutterstock

SAME-DAY DELIVERIES, PARCEL TRACKING, FLEXIBLE DELIVERY OPTIONS – CUSTOMER EXPECTATIONS ARE GROWING AS THE E-COMMERCE INDUSTRY EXPANDS. THE AMOUNT OF DATA AND THE SPEED OF INFORMATION EXCHANGE NECESSARY TO MEET THEIR EXPECTATIONS PLACE STRAINS ON THEIR SOFTWARE PROVIDERS

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TECH / LOGISTICS

J

Shorter delivery time is not the only ust like the taxi business has thing consumers expect these days. been disrupted by Uber and They also want to track their parcel as Airbnb encroaches on the online. “Customers like to think that hotel industry, the logistics their order is being continuously market could be next in line. In fact, processed and not waiting to be Uber is working on two new products processed,” explained Piotr Bielicki, that may well revolutionize the food business consultant, managing diand parcel delivery markets. rector at ScoutSolutions.eu, preiviThe first one is called UberEATS. ously logistics director for Europe at “You can order a meal from your Beiersdorf (NIVEA) during a webinar favorite restaurant that gets dropped on data integration in logistics oroff at your place in a matter of ganized by Appgration. minutes. It uses a new application Another selling point is non-standbecause ordering a meal is obviously ard delivery points. Not many have different from ordering a car on the luxury of waiting all day at home the client’s side. But it uses similar for the delivery of our online orders. back-end infrastructure [to the car Many people prefer e.g. to have their ordering service],” said Anthony Le parcels delivered to their workRoux, general manager for Middle place. But those who are “on the East and Africa at Uber. The second move” most of the workday opt for product is called UberRUSH and the click-and-collect option, where basically means that anyone who they order online and pick up their registers in the system can deliver shopping at the nearest store. That parcels for a fee. works well for retailers who run both “We are testing UberRUSH in a e-commerce and brick-and-mortar number of US markets. It applies the stores but is not an option for the same concept to product delivery. companies focused predominantly Today it’s a bit challenging and on the online aspect of their busiexpensive to deliver your products, ness. Parcel lockers are one soluespecially if you are a small manution, but operators are working on facturer, but once UberRUSH comes making their delivery options even into the mix, it’s so much cheaper than anything else out there and it THE MOBILE REVOLUTION CLEARLY CREATED more flexible.

“This poses an interesting situation, really increases PUSH the access to DEVELOPthe A MUCH-NEEDED FOR THE MENT OF THE AUTOMATION MARKET. where the only actual person you market,” saidHOME le Roux.

SOME OF CUTTING-EDGE SOLUTIONS BEING meet in the online shopping process There areTHE already several similar SHOWCASED RIGHT NOW INCLUDE in the courier. He becomes the face concepts budding in Poland, likeAPPS WHICH ACTIVATE WHEN YOU POINT YOUR SMART PHONE of the company you purchased from, the website jadezabiore.pl (which AT THE THING YOU WANT TO CONTROL. YOU he is to some extent responsible for translates “I’m going, I’ll take”).

DON’T HAVEinto TO SWIPE YOUR SCREEN AND LOOK developing brand loyalty between The critical mass to make LIGHTS FOR THE RIGHT APPnecessary FOR THE WINDOWS, the customer and the retailer. I such functional has yet OR AIRinitiatives CONDITIONING. YOU JUST POINT AT THE WINDOW AND ANbut APP POPSlogistics UP ALLOWING YOU think there is a lot of potential here,” to be achieved major TO OPEN THE POINT AT THE DOORsaid Konrad Kurzydło, IT manoperators areSHUTTERS. likely aware of the AND IT ASKS they IF YOU WANT TO UNLOCK IT. ager at Bluesoft, a software house challenges could pose.

The quicker the better One thing is certain, deliveries are getting faster, because customers expect them to be faster. Yesterday’s express dispatch is today’s standard and same-day deliveries are becoming a reality. The leader in the fashion e-commerce business Zalando has express deliveries which, for an extra fee, shorten the process to a single workday. E-commerce branches of food retailers (Carrefour, Tesco, E.Leclerc) offer 1-2-day delivery times.

delivering solutions for logistics firms.

Embrace the digital As consumers demand more from online retailers, so do online retailers from their logistics partners.

“We are witnessing the fourth industrial revolution, characterized by efficient information and communication systems, groundbreaking innovations and the growing share of various platforms in the process of selling goods and services,” explained Hans-Christian Pfohl from Technische Universität Darmstadt during the Logistics 2016 conference held in June. “Technological innovations are generating rapid changes in the business environment. The way companies conduct their business and cooperate in the supply chain are undergoing radical changes,” he added.

In order to meet the growing demands of the business, logistics firms need to significantly improve their data handling systems. “Today we can collect massive amounts of data, reading sensors that delivery trucks are equipped with, as well as pallets, mobile phones or even fitness bracelets,” said Jos Mariuns, president of the European Logistics Association. “And you don’t need to be an analyst to understand the processed data that we receive even if we don’t consider how it is being created.”

Zero-tolerance for errors Knowing full well that reputation is everything in e-commerce, online retailers are becoming increasingly

Compatibility with electronic data standards in the logistics industry

Edifact/EANCOM Fortrass Other Comarch XML UBL

71% 26% 24% 12% 9%

Source: Logistics and Warehousing Institute (ILiM), 2014

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TECH / LOGISTICS

intolerant of any errors in the delivery process. “We are implementing a number of projects aimed at eliminating any and all inaccuracies,” said Bielicki.

Logistics operators are hard pressed to meet the ever growing expectations of their clients. “While the unit volume of a single transaction is decreasing, the number and frequency of the transactions are growing, as is their speed, including non-standard orders,” he explained.

Many firms still struggle with inefficiencies leading to the corruption of data and thus entire logistics processes. “It is unacceptable when a person entering an invoice into the system calls the warehouse to ask e.g. for the number of pallets. This data must be entered by the warehouse worker,” stated Bielicki.

Entering the same data twice is

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another source of cost-generating errors. “Situations in which the warehouse worker enters the number of pallets into the inventory management system and then later on enters the same data into the accounting program are also unacceptable,” he added. Typing in the name of the product or weighing it at the warehouse are some of the practices that generate the most errors and should be avoided. The data needs to be imported from the supplier in order to maintain consistency.

However, importing and migrating data between a number of proprietary IT systems is always a nuisance that requires substantial software integration and makes switching from one supplier/logistics partner to another difficult.

Even such basic things as addresses can be a source of many problems

Standard solutions The most obvious answer to these problems is creating universal standards. Major logistics firms are making efforts to standardize their data system at least internally, which given the size of the firms and their global reach, is not trivial. “I believe the growing competitiveness and the challenges of the digital world will in time lead to some standardization,” Kurzydło added.

Currently, the most prevalent electronic data standard used in the logistics industry in Poland by GS1 members is Edifact/EANCOM, which is used by 71 percent of all systems, according to a study prepared by the Logistics and Warehousing Institute (ILiM) in 2014. A quarter of systems are also compatible with Fortrass, 18 percent with Comarch XML and 12 percent with GS1 XML. “However, 24 percent of systems also use standards that are compatible with less than 5 percent of existing systems,” explained Tomasz Dębicki, expert at ILiM, as well as at the GS1 European standards development workgroup for the logistics industry. Put simply, a quarter of systems in the industry use some data formats incompatible with the majority of other systems.

It may come as a surprise that despite the global reach of electronic retail, the logistics industry still seems to be lagging behind other industries when it comes to digitization and standardization. “There is a digital revolution happening in finance and in telecoms. The logistics business has yet to embrace it,” Kurzydło stated. The sooner it does the better, especially with the likes of Uber circling around looking to disrupt yet another industry. u

Image: Shutterstock

when migrating data from one system to another. “Sometimes the same street name is typed in a number of different ways, like Jana Pawła II, JPII or J.P. II. Seemingly innocuous changes pose significant problems and require dedicated tools to repair the data,” Kurzydło said. Such tools are also rarely 100 percent accurate.

“95 percent accuracy is considered a success,” he added.

FINANCE & INVESTMENT

FINANCE / CORPORATE SOCIAL RESPONSIBILITY

B Y S E R G I U S Z P R O K U R AT

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Images: Shutterstock

Corporate Social Responsibility – is it a PR-like hoax or science?

FINANCE / CORPORATE SOCIAL RESPONSIBILITY

WHEN ASKED ABOUT THE IMPLEMENTATION OF CSR (CORPORATE SOCIAL RESPONSIBILITY), MANY OWNERS OF POLISH COMPANIES REPLY IN THE AFFIRMATIVE. WHEN ASKED WHAT SOCIAL RESPONSIBILITY STANDS FOR, THEY ANSWER THAT IT IS A WAY OF PERFORMING PHILANTHROPIC-LIKE ACTIVITIES. THE THING IS THAT CSR, ABOVE ALL, IS NOT ABOUT THE WAY COMPANIES SPEND MONEY, BUT HOW THEY EARN IT Milton Freidman, a Nobel Prize winner, once said: “The business of business is business.” Actually, for most companies, the last several decades have been strictly about making a profit. When buying products, customers do not really pay attention to whether employees receive equitable remuneration, or how the production process affects the environment, or whether profits from sales go solely to the company or also to the local community. Nevertheless, for some time we have observed a tendency towards noticing other opportunities of running a business. Social awareness triggers the demand to meet different needs that society considers significant, such as protection of the environment, fighting against discrimination and social exclusion, or creating employee-friendly workplaces where they can feel fulfilled.

of ethical codes of conduct, or ecolabelling of products. Recently, CSR has even been recognized as an area of study. “It is a structured philosophy of operation, accompanied by clear dimensions and a written range of tools intended for

the implementation of objectives. For example, Wayne Visser, who has been doing research on CSR for 20 years, has identified five stages of CSR comprehension: creativity and innovation, scalability and focus on global challenges, reply and response, matching the approach and understanding of local challenges with the global perspective, and a closed cycle, i.e. running a business which at the same time meets market needs and creates them, so that they are contained in a kind of a closed cycle. In the case of some companies, we can talk about a well considered and deliberate CSR strategy, in which all objectives are assigned with indicators that monitor progress. “Analyzing the guidelines of Global Reporting Initiative (GRI), which stand for an international module of reporting responsible business and sustainable development, allows CSR

A voluntary strategy, taking into account social, economic, ethical and ecological aspects of business activity, and the relationship with the surrounding environment, has been defined as Corporate Social Responsibility, which stands for responsibility towards society, understood as the personal contribution of a business owner towards improving the condition of that society. It is a concept according to which companies voluntarily include social and environmental aspects into their commercial activities and in their relations with interested parties, i.e. stakeholders. In practice, it is incorporated into such activities as: social campaigns, corporate volunteering, sponsorship of cultural events, product sales combined with donating part of the revenue to a particular social objective, development

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FINANCE / CORPORATE SOCIAL RESPONSIBILITY

to be treated as a scientific process,” said Katarzyna Bachnik, Assistant Professor at the Warsaw School of Economics.

This point of view does not convince everyone. On hearing “CSR,” many people smile cynically and think that it is pure PR, another marketing trick to attract customers. Bachnik argues, however, that there is an essential difference: “A company should not talk about activities performed in the field of CSR. CSR is not PR. CSR functions within the framework of strategic operations – provided that it is not “an addition” aimed at raising the morale of employees and strengthening the company’s image – and is associated with the implemen-

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tation of specific goals.” In contrast to charity or marketing actions, CSR operations are not of an incidental character but are carried out in the long term. “Although CSR has been created somewhat in opposition to Friedman’s statement, economics is still one of its pillars, so CSR must be profitable. And it will be if the social responsibility strategy is naturally interrelated with the main area of a company’s operations, which facilitates the analysis of existing practices and procedures from a different viewpoint and seeking improvement and modifications. As a result, CSR can be a driving force for innovation,” added Bachnik.

In order to understand CSR, it is extremely important to realize that its

operations should result from a high sense of social responsibility of an entrepreneur and a strong willingness to resolve social problems, which in Poland include: unemployment, poverty, unequal opportunities on the labor market, or limited access to education in rural areas and an insufficient level of environmental protection. In practice the CSR strategy pursues the demand for striving towards sustainable development, where the economy, ecology and social matters are equally important. The research study entitled “CSR Managers in Central Europe”

by Delloite and PBS postulates that the main driver for taking initiatives within the scope of social responsibil-

FINANCE / CORPORATE SOCIAL RESPONSIBILITY

ity and business ethics by companies and business organizations is the willingness to improve the company’s and

“A company should not talk about activities performed in the field of CSR. It is not PR. CSR functions within the framework of strategic operations.

Image: Shutterstock

Katarzyna Bachnik, Assistant Professor at the Warsaw School of Economics

an entrepreneur’s image. Owners of small and medium-sized businesses in Poland, which play the most significant role in the economy, are associated by many citizens with such concepts as: capitalism, private property, profit, and wealth. These connotations are not positive. Therefore, Poles associate CSR directly with PR. Meanwhile, an increasing number of companies in Central Europe have begun implementing strategies that enhance their contribution to sustainable socio-economic development.

The key benefits of CSR activities for enterprises are: increased engagement among employees (65 percent), enhanced reputation (55 percent) and improved relations with local communities (53 percent). One key conclusion of the study is the common awareness of Central European CSR managers that their business has contributed to solving socio-economic problems in individual countries.

From a managers’ perspective, the implementation of CSR is well supported by those tools and methods, which involve cooperation with employees: corporate volunteering (36 percent) and ethical programs for employees (29 percent). Useful instruments of external cooperation in the field of CSR include: dialogue with stakeholders (35 percent), social campaigns (29 percent) and pro-environmental programs (29 percent). These conclusions largely coincide with the results obtained in the research concerning Poland.

There is no denying that CSR functions, most of all, in the realm of corporations – large companies can afford to show that they care. Acting in this way, whether they like it or not, they create their image in relation to a socially desired initiative. Thereby, they derive business profits, as the actions carried out lead to strengthening employee and consumer loyalty, emphasizing product specificity and raising the sales of products or services. But what about small and medium-sized companies? When is it worth considering CSR? Bachnik has no doubt: “First of all, a company must be profitable, to be responsible towards its owners, investors or stakeholders. A profitable business is not incompatible with the idea of CSR, nevertheless it is important to think not only

economically, but also socially and environmentally.” So, isn’t it true that for most small businesses CSR is baloney and marketing hype – an expense they cannot afford? Not necessarily. It seems that everything depends on the level of social awareness. The United States of the nineteenth century was developed upon a Protestant belief, according to which when someone was rich it meant that God had favored them, and consequently such a person was obliged to share their property with others. Therefore, corporate social responsibility places the emphasis on integrity that can be removed from business ethics. Another important aspect is education. If people are educated, they understand that living in a democratic society is not only about privileges, but also about obligations.

Thus, we need to remember that CSR will not pop up with the wave of a magic wand. Rather it should grow out of social awareness.

Another Deloitte research entitled “Christmas Shopping 2015” showed that six out of ten Poles carefully read labels when buying presents. A similar percentage avoids buying gifts manufactured using environmentally harmful processes. In practice, however, almost half of Poles buy what is easily available and inexpensive. This shows that CSR in Poland still has a long way to go. u

The key benefits of CSR activities for enterprises are:

65% 55%

increased engagement among employees

enhanced reputation

53%

improved relations with local communities Source: Deloitte and PBS

WBJ OBSERVER • SEPTEMBER 2016

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LOKALE IMMOBILIA / ON INFORMATION TECHNOLOGY

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MAY 2014 • WBJ OBSERVER

September 2016

30 pages of real estate content

A BUDDING MARKET? DESPITE LIMITED SIZE, THE LUXURY RESIDENTIAL MARKET IS STARTING TO ATTRACT FOREIGN MONEY 56 BPO ON THE PROWL WITH THE LABOR POOL GETTING SMALLER, BPO FIRMS TURN THEIR GAZE TO MILLENNIALS 68 POST-MDM MARKET RESIDENTIAL DEVELOPERS CONTINUE BREAKING ALL RECORDS. BUT CLOUDS ARE GATHERING OVER THE INDUSTRY 64

section partner

LOKALE IMMOBILIA / NEWS

>LOKALE IMMOBILIA

NEWS

I

M

l INVESTMENTS

Poland leads in CEE with real estate investments of over €2 bln

A

ccording to JLL, the volume of real estate investment transactions concluded across Central and Eastern Europe in H1 2016 amounted to approximately €5.1 billion. Poland accounted for €2.07 billion and was followed

by Czechia (€950 million), Hungary (€910 million) and Romania (€340 million).

“The headline deal in H1 2016 in Poland was Redefine’s acquisition of a 75 percent stake in the Echo Investment commercial platform in Poland, including retail schemes (Amber in Kalisz, Galaxy in Szczecin, Galeria Echo in Kielce, Galeria Olimpia in Bełchatów, Outlet Park Szczecin, Pasaż Grunwaldzki in Wrocław, CH Echo in Przemyśl and Bełchatów, Galeria Sudecka in Jelenia Góra and Galeria Veneda in Łomża), and office projects (A4 Business Park in Katowice, Astra Park in Kielce, Malta Office Park in Poznań, Oxygen in Szczecin, Park Rozwoju in Warsaw and West Gate in Wrocław),” JLL informed.

The report also showed that 60 percent of H1 2016 office transactions in Poland were concluded outside of Warsaw.

The largest warehouse transactions in Poland included: the NBGI portfolio acquired by Hines REIT, Annopol Business Park sold by ECI to Hines REIT and GLL’s acquisition of the Amazon Fulfillment Center in Poznań. Prime warehouse yields stand at 6.75 percent with further compression forecast, while exceptional, long leased assets are trading well below 6 percent. u l H O S P I TA L I T Y

Nowa Motława topped off

First Moxy hotel to open in Warsaw

The Nowa Motława complex on Gdańsk’s Granary Island (Wyspa Spichrzów) developed by Dekpol has been topped off. The completion of the project is scheduled for January 2017.

“We are very happy that we are involved in the revitalization of the Granary Island, which had been neglected, but its former potential has now been awakened and it has the chance to become one of the most elegant districts of Gdańsk,” claimed Mariusz Tuchlin, the chairman of the board of Dekpol.

The complex will eventually comprise five interconnected eight- and sevenstorey buildings that will include 298 residential units in Apartamenty Nowa Motława and 174 hotel apartments in Aparthotel Number One.u

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Investors of Centrum Praskie Koneser, Liebrecht & wooD Group and BBI Development have signed a franchise agreement with Global Hospitality Licensing to open Poland’s first Moxy Hotel on ul. Ząbkowska in Warsaw in 2017.

The hotel will offer 141 rooms and occupy 5,447 sqm of space in the revitalized five-storey former distillery building of Koneser factory, the company informed.

Moxy Hotels is a Marriott International boutique-hotel concept for the budgetsavvy travelers that debuted in September 2014 with the opening of the Moxy Milan Malpensa Airport. There are currently five Moxy Hotels open and by 2018 the network will have increased to 18. In addition to Warsaw, new Moxy Hotels will open in Germany, Norway, Austria, the UK and the US. Moxy Warsaw Praga will welcome its first guests in 2017. The hotel will offer 141 tech-enabled rooms, high-speed Wi-Fi, underground parking and a bar.u

Image: Shutterstock

l RESIDENTIAL

LOKALE IMMOBILIA / NEWS

WARSAW

INTERNATIONAL

MEDIA

SUMMIT

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LOKALE IMMOBILIA / NEWS

l RESIDENTIAL

Warsaw housing market among the cheapest in Europe For €200,000 one can buy a 163 sqm apartment in Poland (in Warsaw a 114 sqm unit), compared with 11 sqm in central London, according to a new Deloitte Property Index, a comparative report regarding residential markets and housing across Europe.

The index analyzes factors influencing the development of residential markets and compares residential property prices in selected (not only) European countries and cities. This year it

answers the question: “What size dwelling can you buy for €200,000?”

The highest average sizes of new dwellings were recorded in cities from CEE. The winner of this comparison was Debrecen with 201 sqm. Only non-capitals were situated at the end of the ranking list. Large apartments are affordable in Györ (188 sqm), Łódź (183 sqm) and Ostrava (168 sqm).

Less affordable dwellings are located mainly in the capitals of Western and

Central Europe, for example Brussels (69 sqm), Madrid (67 sqm), Berlin (63 sqm), Rome (58 sqm) and Amsterdam (55 sqm). The lowest average size of a new dwelling for €200,000 is in central London (11 sqm), followed by Paris (19 sqm).

Even despite the recent price growth, Hungary, Portugal and Poland are the only countries, besides Russia, with a price mark around the level of €1,000 per sqm. u

l INDUSTRIAL

Panattoni to build 34,000- sqm factory for IFA Industrial real estate developer Panattoni Europe is set to build a manufacturing site for IFA Rotorion of Germany, a manufacturer of vehicle components for such car brands as Mercedes Benz, Ford, Volkswagen, GM, BMW, and Porsche, the company informed.

The project, with an area of 34,000 sqm, will be developed in

Ujazd, in the Special Economic Zone of Katowice. The cornerstone of the new factory was laid on July 21.

The new IFA Rotorion factory is to launch operations as early as January 2017, employing 90 people in the first phase, targeting 400 employees by 2020.u

In Association with

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Distinguishing top Polish businesses abroad, and top foreign investors in Poland 20 October 2016 Hotel Intercontinental, Warsaw

SEPTEMBER 2016 • WBJ OBSERVER

Images: Shutterstock, Prologis

FDI Poland Investor Awards

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l LOGISTICS

Allegro leases around 22,000 sqm in Prologis Park Błonie

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ogistics real estate firm Prologis announced that it has signed a lease agreement with Grupa Allegro, the largest e-commerce platform in Poland, for 21,950 sqm at Prologis Park Błonie. The transaction involves 13,100 sqm of space that has been leased now, and an additional 8,850 sqm that will be leased in 2017.

This represents the third lease agreement signed by Prologis in Central and Eastern Europe with an e-commerce company in the last quarter. BNP Paribas Real Estate Poland facilitated the transaction.

“We are experiencing a logistics boom within e-commerce in Poland, and expect lease agreements with these companies to total up to 700,000 sqm by 2020,” said Zbigniew Smyczyński, leasing manager, Prologis Poland.

Prologis Park Błonie is a state-of-the-art distribution center comprising seven buildings totaling 152,000 sqm. It is located 25 kilometers to the west of Warsaw city center near the E30/DK92 road, which connects Western and Eastern Europe, and the A2 motorway, which connects Warsaw and Berlin. u l C O M PA N I E S

Polish developer GTC debuts on African JSE Real estate developer Globe Trade Centre (GTC) has announced that it debuted on the largest African market of the Johannesburg Stock Exchange (JSE) on August 18, becoming the first Polish listed company on the JSE. The capitalization amounted to €3.4 billion.

"Our listing on the JSE is a step in enabling our strategy to significantly increase our portfolio to over €2 billion within 36 months, through value-enhancing acquisitions, development activities and asset-value improvements," CEO Thomas Kurzmann stated.

GTC is the owner and developer of primarily class A office and retail properties located in Poland and capital cities throughout the CEE and SEE regions.u

E N J O Y

T H E

U N E X P E C T E D

New luxury hotel in prime location in Warsaw

18 boutique rooms • Meeting room • Vibrant wine bar & restaurant OPENING IN SEPTEMBER

hotel@hotelsixtysix.com reklama1/2.indd 1

+48 22 826 61 11

hotelsixtysix.com 22.08.2016 09:57

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l R E TA I L

Retail park pipeline in Poland for 2016/2017 at 280,000 sqm

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ncreased retail park development across Europe is set to deliver 1.3 million sqm of new space to the market by the end of the year, up 50 percent on 2015’s total, according to the European Retail Park Development Report from Cushman & Wakefield.

As it was in 2015, the retail park pipeline for 2016/2017 is dominated

by France, which accounts for 54 percent of the total new space in Western Europe, followed by the UK with 17 percent and Italy with 10 percent.

The top three markets in CEE are

NEWS

Russia, Poland and Czechia – although the pipeline of potential floor space is considerably lower than in Western Europe.

Patrycja Dzikowska, associate director, Consulting & Research of Cushman & Wakefield in Poland, said: “Retail park development has picked up over the last five years in Poland. Although by the end of 2010 only 500,000 sqm of retail park space came onto the market, the provision of new space doubled in the years 2011-2015, with the average annual supply at around 100,000 sqm.

The retail park pipeline for 2016/2017

WBJ Observer presents

/ ECONOMY

is expected to deliver another 280,000 sqm.”

“The growth of the retail park sector is driven largely by growing developer interest in smaller towns. More than half of the 2016/2017 retail space supply will be delivered in smaller cities of fewer than 100,000 inhabitants. Retail park development is also spreading to towns with fewer than 50,000 inhabitants. Benefits of this retail format include lower construction costs and shorter delivery times, favorable rents and lower service charges,” Dzikowska added. u

INTERNATIONAL FIRMS ARE FLOCKING TO WARSAW

What is the current trend in fit-out pricing? Is office development in our country worth it?

Potentially, Warsaw and Budapest offer one of the most attractive pricing structure – at an average level of around €500 per sqm** of usable floor space, depending on the technical possibilities of the building and customer expectations. This is according to the most recent report by JLL, drawn up using

data provided by Tétris. But price is only one factor. The critical factor is taking professional care of the investor. Over 90 percent of the large players coming into Poland consult with their chosen international law and consulting firms, objectively comparing the potential of each location. These kinds of talks preceded all of the major projects at Tétris last year, such as Wyborowa Pernod Ricard or Stanley Black & Decker.

What is the main consideration for foreign companies in choosing a partner to adapt office space?

Number one has to be security – trust in your partner. Our clients are companies with limited, or no experience in office construction, naturally it is not their key business activity. They have to feel confident that we are effectively addressing their needs, that we have the knowhow to predict and resolve problems within the local regulations and restrictions. Our understanding of customer

RAJMUND WĘGRZYNEK, MANAGING DIRECTOR OF TÉTRIS POLAND

requirements corresponds well with the standards of the US or Western Europe.

However, in Poland the market reacts dynamically. Global companies look for stable partners that are able to bear the costs associated with their investment.

Customers expect value for money. No client is willing to cover multi-milliondollar advance payment costs and risk potential problems with delivery of their future office. That works well here with our Design & Build model, with just one company engaged in the preparation and implementation of the project.

BROUGHT TO YOU BY TÉTRIS POLAND

Image: Shutterstock

Poland is increasingly becoming the country of choice for the biggest global companies.

In the global ranking of transparency in the real estate sector* we took 13th place. A highly educated workforce with experience of working in international companies is clearly a well-regarded attribute. At the same time, Poland, as a large country, has far greater resources compared with our neighbors in CEE. It is attractive to investors, and still relatively not so expensive.

* Global Real Estate Transparency Index, JLL report, June 2016. ** The costs of fit-out offices, the area of Central and Eastern Europe, JLL report, July 2016.

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l R E TA I L

Over 300,000 sqm of new retail space in H2 – JLL Polish developers will add about 300,000 sqm of new retail space in H2 2016 after completing more than 115,000 sqm in H1, real estate consultancy JLL said in a report.

By the end of H1, the total supply of retail space in Poland amounted to 13.07 million sqm. In Q2 alone, the market expanded by 91,300 sqm.

Investment transactions in the retail real estate segment amounted to some €893 million in Q2 2016, eight times as much as in Q2 2015, the report showed.u

l C O M PA N I E S

Goodman to build logistics center for Zalando in Poland Zalando, Europe’s biggest pure online fashion retailer, has confirmed it will open a logistics center in Gryfino, northwestern Poland, providing jobs for some 1,000 people.

The retailer has appointed warehouse developer Goodman to design, install, commission and maintain the 130,000-sqm facility in the Kostrzyńsko-Słubickia Special Economic Zone (KSSSE). It is due to commence operations at the end of 2017.

In mid-August, Polish daily Puls Biznesu reported that the investment is worth €200 million and will employ 3,000 people in total.

Zalando’s online shops attract over 135 million visits per month in 15 European markets and serve close to 17.9 million active customers, offering shoes, apparel and accessories from over 1,500 international brands. u

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Listed builder Budimex, as part of a consortium, submitted the best bid of €178.3 million for the construction of a block at a plant in Lithuania, the company informed.

The consortium, in which Budimex holds a 48.46 percent stake, will build a combined cycle block at a waste incineration plant in Vilnus.

The consortium will receive a down payment of 10 percent of the contract’s net value.

Budimex Group is the largest construction holding in Poland. The company is part of the Ferrovial Group, one of the world’s largest companies operating in the infrastructure sector. Budimex has been listed on the Warsaw Stock Exchange since 1995.u

Images: Shutterstock, Zalando, Auto- Partner

l LOGISTICS

Budimex consortium lands €178.3 mln deal abroad

LOKALE IMMOBILIA / NEWS

l OFFICE

l WAREHOUSE

Auto-Partner leases additional 19,000 sqm in 2 MLP warehouses Auto Partner, an importer and distributor of car parts, will increase its warehouse and office space by nearly 19,000 sqm. In MLP Bieruń, the company will lease an additional 11,500 sqm and in the MLP Pruszków II logistics park it will launch a new distribution center with an area of 7,000 sqm, the company informed.

Auto Partner will thus extend its area in MLP Bieruń to over 27,000 sqm. The firm will lease a total of over 35,000 sqm in the MLP Bieruń and MLP Pruszków II logistics parks under the contracts signed. u

Construction of Olivia Star officially launched The foundation stone has been laid at the construction site of Olivia Star, the highest office building in northern Poland, marking the official launch of the construction. The skyscraper will be ready in spring 2017 and will be 180 meters tall.

The office building will be adjacent to the Olivia Business Center complex, which currently offers 73,000 sqm. After the expansion, it will have 120,000 sqm of leasable space.u

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B Y K A R O L I N A PA P R O S

THE LUXURY RESIDENTIAL PROPERTY MARKET IN POLAND IS STILL IN ITS INFANCY IN COMPARISON TO WESTERN EUROPE. CHARACTERIZED BY LOWER PRICES AND A SMALL NUMBER OF GENUINELY HIGH-END PROPERTIES, IT IS LIMITED TO FIVE POLISH AGGLOMERATIONS: WARSAW, WROCŁAW, KRAKÓW, THE TRI-CITY (GDAŃSK, GDYNIA, SOPOT) AND POZNAŃ. HOWEVER, WITH THE STANDARD OF LIVING IMPROVING AND SALARIES INCREASING, THE DEMAND FOR LUXURY DWELLINGS IS ON THE RISE SEPTEMBER 2016 •

WBJ OBSERVER

Images: Eco-Park, Tacit Investment, Angel Poland Group

Limited, but with good prospects

LOKALE IMMOBILIA / LUXURY APARTMENTS

T

he high-end residential property market did not exist in Poland before 1995. The first properties that could be labelled as luxury appeared in Warsaw in the late 1990s as a response to the needs of wealthy Poles coming back from stints in international corporations and looking for properties reflecting their newly acquired social status. The market was also fueled by the influx of ex-pats running the Polish branches of multinational corporations, as well as diplomats, and other international elites – the subpar finishing standard of existing properties fell short of their expectations. The market for high-end residential properties in city centers was budding and that’s when the construction of such residential towers and city landmarks as Złota 44 (Warsaw), Cosmopolitan (Warsaw), Sea Towers (Gdynia) and Sky Tower (Wrocław) commenced.

In July, Złota 44 sold a portfolio of 72 apartments to German firm Catella Wohnen, which corresponds to nearly 25 percent of the total residential space in the building (floors 11 through 19).

It is the first portfolio transaction in the luxury segment. “The purchase of as many as 72 apartments by the Catella fund with the purpose of long-term rentals is an unprecedented transaction on the residential market in Poland,” said Rafał Szczepański, vice president of BBI Development, the co-owner of the tower.

“Catella is another foreign investor, after Amstar, the co-owner of Złota 44, whose

A safe bet

involvement in the Polish market started with this project. It is a testament to the strength and quality of Złota 44, as well as to the promising economic prospects of Warsaw and the entire country,” he added.

Warsaw’s signature skyscraper’s fortunes seem to have changed after years of turbulence. Launched in 2007, the project was halted in 2009 when the financial crisis hit, and re-launched two years later. However, due to the unrealistic pricing policies of the scheme’s original owner, Orco Group, Złota’s sales did not progress and the investor incurred serious debt, eventually being forced to sell the entire project to BBI Development and US-based Amstar at a substantial discount. The new own-

When considering an investment of between PLN 1.5 million and PLN 7 million you are looking for long-term safety.

Many people fixate on the date of purchasing a property and tend not to think beyond it. Meanwhile, a safe investment is also one that will ensure that the value of the property will only increase in time.

Location is naturally the key aspect here.

Just one look at more mature markets is enough to figure out that locations near parks and green squares are always going to be worth more over time.

There are three types of buyers. The vast majority buys it to live in it. Another group of clients buy Cosmopolitan with a view to move in at some point, and rent it out temporarily. A third group, the smallest one, is people who buy an apartment purely as an investment.

Most of our clients buy apartments with cash. Only a fraction of them use bank financing, even a smaller percentage actually needs it. Some of our clients paid 100 percent of the price within seven days of seeing the apartment for the first time. Some take months to think and negotiate, some come back after a year or so. We also have clients who purchase a second or a third apartment.

Karolina Kaim, president of the board of Tacit Investment

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We have very few foreigners buying Polish luxury properties. For example, Russian buyers, who are otherwise quite active in other European capitals, are not looking to Warsaw. Generally, when purchasing a premium or luxury apartment, foreign buyers look for a city that is part of the global economic and educational market. They choose English-speaking countries, or countries where the number of English speakers is high. It has to be an attractive place to do business, but also to live.

In all the markets we are analyzing, like Bucharest, Prague, Moscow or Kiev, the share of the luxury market in total sales volumes is higher than in Poland, where the percentage of luxury apartments in all units sold does not exceed 2 percent.

If we add all premium apartments – the market share is up to 5 percent in major cities. But that’s not a bad thing. It could be that the source of the capital in the luxury segment is more transparent in Poland. In our country luxury apartments are in a large part purchased by highly successful businesspeople and artists. The market is developing organically, which is a good thing. One more thing limiting the size of the luxury market is the fact that wealthy people still fulfill their ambitions by purchasing or building suburban residences.

Kazimierz Kirejczyk, head of residential real estate advisory REAS 58

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Maximum prices (PLN per sqm) for the most upmarket apartments

The Luxury Five

Poznań

However, the primary market of luxury and premium residential real estate is stable and shows considerable potential with a number of new projects underway. OVO Wrocław, a mixed-use project comprising 168 apartments and 28 penthouses has recently been completed.

“The largest and the most expensive penthouse was the first unit sold, shortly after pre-sales were launched. So far, we’ve sold 95 percent of all units in OVO Wrocław,” said Ron Ben Shahar, partner at Angel Poland Group. “Poland is booming, and the appetite for luxury properties has been growing in recent years, including for high-end apartments and penthouses,” he added.

Angel Poland Group has more highend projects in store. “We are about to launch the construction of Angel River.

The apartment building will be located on the Oława river, close to the center of Wrocław. We are also planning another mixed-use project in Kraków. It will include apartments as well as a luxury hotel,” Shahar stated.

Wrocław and Kraków are considered very prospective markets, due to their historic appeal, strong labor markets (Wrocław has the lowest unemployment rate in the country) and proximity to Western Europe. However, it is the capital of the country that offers the widest range of premium homes.

Warsaw

65,000 Wrocław

40,000 Kraków

40,000 Tri-City

30,000

30,000 Source: REAS

The most popular districts for highend apartments are: Śródmieście (the central district), the upper part of Mokotów (Górny Mokotów), areas near the Parliament house and near Łazienki Park, the old part of Żoliborz (Stary Żoliborz) and the older part of Saska Kępa, on the capital’s eastern bank. A few high-end properties have also popped up in Wilanów, Ochota and Natolin (part of the Ursynów district).

The most expensive transactions reach values of PLN 10 million. It comes as no surprise that Warsaw is the city with the highest average prices per sqm (PLN 16,500 per sqm), followed by Wrocław, Kraków and the Tri-City (PLN 12,00013,000 per sqm). Poznań closes the ranking with PLN 9,000 per sqm.

The maximum prices for the most upmarket units reach PLN 65,000 per sqm in Warsaw, PLN 40,000 per sqm in Wrocław and Kraków, and oscillate around PLN 30,000 per sqm in the Tri-City and Poznań. The latter remains the smallest due to the size of the city, type of investments and easy access to the center from the suburbs – naturally, the interest in living in the city center is correlated with longer commute times.

Image: REAS

Limited foreign appeal

ers repositioned the building to better suit the market and relaunched sales in 2015. “The rapid sales of Złota 44 apartments makes us confident about our business target of selling 100 percent of all apartments by mid-2018,” added Szczepański.

Złota 44 is one of rather few residential luxury projects in Warsaw, and in Poland as a whole. The market segment is, one could argue, still in its infancy. It is worth PLN 500 million with 160-180 apartments and 20-25 mansions (or large, upscale single family houses) sold annually, according to data compiled by REAS and KPMG. This is a mere 1 percent of all residential real estate transactions in Polish major cities. “Slightly over 6,000 apartments were constructed [in the segment] in Poland between 2009 and 2014, out of which around 1,000 units are categorized as high-end apartments,” said Kazimierz Kirejczyk, head of REAS.

LOKALE IMMOBILIA / LUXURY APARTMENTS

Definition of luxury

It is not only the price that defines which properties can be labelled as luxury. Location is obviously one of the most important aspects. The most upscale projects are located in the city center or the old town area, but parks or waterfronts can be equally alluring. For example, Tacit’s latest project, Park Lane, is located near Łazienki Warszawskie park and features only 12 apartments on seven floors, plus a beauty & spa salon in the ground floor.

Another new investment, Eco-Park’s Finale Apartments, boasts its proximity to the Pole Mokotowskie park in Warsaw’s Mokotów. The project will deliver 24-27 large apartments of between 148 sqm and 478 sqm.

Outstanding architecture is almost equally important to the location itself.

That is why many top-of-the-line schemes are designed by world-famous architects, such as Daniel Libeskind (Złota 44), Helmut Jahn (Cosmopolitan) or renowned Polish architects such as Stefan Kuryłowicz. Luxury projects usually also offer higher-than-standard height of interiors (around three meters).

Turn-key or open space?

Many developers of high-end properties believe that the highest quality apartments can only be sold completely fitted out with top-quality finishing materials (e.g. glass, stone, exotic wood) outside and inside of the building, including works of art.

Tacit’s Park Lane offers several fit-out options to choose from. “Park Lane is another project completed in line with our philosophy that an exclusive and luxury product is a fully completed one. Only then do we present it to the world and potential buyers,” said Karolina Kaim, president of Tacit Investment. “That is why we pay attention to the smallest details, not only in design and fit-out of our investments, but also after all residents have already moved into their apartments. Everything must be in tune with their lifestyle,” Kaim added. Park Lane is Tacit’s second luxury investment scheme, after the Cosmopolitan Twarda 4, residential tower delivered in 2014.

However, fully finished apartments, i.e. in turn-key condition are offered for only 5 percent of apartments, mostly in residen-

tial towers where individual construction works are difficult, if not impossible, to undertake. More commonly, developers offer optional finishing works involving a wide range of materials and styles to choose from.

Almost three-quarters of newly constructed properties are offered in bare shell condition where finishing works must be carried out by the buyers. In some cases buyers may even design the location of partition walls together with the arrangement of interiors in accordance with their preferences. Such is the case with Eco-Park’s Finale Apartments.

“Open space offers the owners unlimited freedom in arranging the unit,” said Artur Chwist, vice-president for marketing and sales of Eco-Park.

Ample parking and 24/7 concierge

Given the location of the top schemes, underground parking is essential. Developers rightly assume that despite living in the city center their clients will likely have more than one vehicle, plus many choose to purchase additional spaces for when their guests come to visit. Finale

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Apartments features 82 parking spaces, which means more than three spots for each apartment.

Round-the-clock security and concierge services have already become standard in the luxury residential sector.

OVO Wrocław has managed to create synergies with the five-star Double Tree

by Hilton hotel, which will operate in the building offering its penthouse residents the same level of services they experience when staying in a top-of-the-line hotel.

Polish crème de la crème

The majority of luxury properties belong to high net worth individuals (HNWI) with liquid assets north of $1 million, according to a survey conducted by KPMG among affluent and rich Poles. Almost exclusively, they own luxury real estate in Poland rather than abroad as prices on the Polish market are more affordable than in Western countries.

Polish HNWI are in their forties or fifties and usually live in major Polish cities. Over 50 percent of them are private business people. The other half is comprised of top managerial staff from international companies, self-employed individuals and professionals such as attorneys.

Increasingly, they buy luxury properties purely as a form of investment. “The average return from renting out a highend apartment in Warsaw stands at 7.5 percent at the moment, which is a very promising prospect for international investors. Meanwhile, London offers 2-5.5 percent, Paris and Berlin – 3-4 percent.

The rapid growth of investments in Warsaw is similar to what was seen in Berlin a few years ago,” said Szczepański.

Not only from developers

The luxury real estate market in Poland is more than just the primary market, though. “It is estimated that the value of the secondary market is 1.5 to 2.5 times the value of the primary market. This means that the potential is enormous, and developers have plenty of room for maneuver, although doing business in this subsegment is much more difficult than in the popular one,” said Kirejczyk.

The secondary market of luxury real estate shows equally great potential, as the most desirable and highly recognized properties are historical residences. They are usually located in the most prestigious parts of the city, like its historical heart. Such residences are unique due to their historic significance and heritage.

However, the availability of historical properties is extremely limited, which makes them highly sought-after luxury goods. u

Home Management Systems are no longer only available in the most upmarket properties.

Developers active in all market segments have started offering HMS (Home Management Systems) in their projects. Is there a difference between HMS solutions offered in luxury apartment buildings from those offered in the popular market segment?

Technically speaking, Smart Home systems installed in luxury apartments, particularly our wireless systems, are in no way different from those we can see in regular apartments and houses. The investor or developer decides how extensive the system should be, and what amenities it should offer. It is the number of automated devices that determines how “intelligent” a home is.

A luxury apartment could allow you to e.g. call the concierge, order housekeeping, activate a fountain, or open curtains with a single swipe of your hand. Such functionalities are not accessible in regular apartments.

What else can a smart home do these days?

In its fullest form, the Smart Home Fibaro system can do almost anything.

Through programming so-called scenarios, the system can wake you up in the morning by playing your favorite music, gradually increasing the volume. It will open the curtains and turn on gentle lighting if necessary. Then it can fill the tub with hot water and switch on the coffee machine. In the meantime it will air the bedroom and turn on your favorite news channel. It will adjust the temperature depending on the time of the day. While you are returning from work, it will start heating your meal. All the while, it will monitor energy consumption and ensure its safety. All that is only a small part of what a Home Management System can do.

Rafał Ciszewski, corporate client and developer market manager at Fibaro 60

SEPTEMBER 2016 •

Images: Fibaro, Tacit Investment

Luxury technology

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5th - 6th October 2016, Sheraton Warsaw Hotel STRATEGIC PARTNERS MEETING OF LEADERS

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Beyond sales WBJ Observer sat down with Karolina Kaim, president of the board of Tacit Investment, the investor behind the Cosmopolitan residential tower, to talk about the luxury residential market in Poland, its size, potential and the difficult decisions an investor has to make when delivering a prestige product I N T E R V I E W B Y B E ATA S O C H A

Karolina Kaim: We don’t like to use the word luxury. We prefer to describe our investment as prestigious, exclusive in a way. There are reports that define what elements a luxury property should have, which starts with a drive in, services for residents, etc. But in my opinion, Cosmopolitan is the first residential tower that is fully completed and at the appropriate standard in Poland. There is the Sky Tower in Wrocław, Sea Tower in Gdynia and Złota 44 in Warsaw, which has yet to be completed. There is of course a number of small tenement houses that offer truly beautiful penthouses. Unfortunately, the neighboring houses still require a lot of work to make the area presentable and nice to live in.

Do you always sell completely furbished apartments?

We do. When purchasing a luxury property, clients also look for safety. Not only in a physical sense, but also in terms of investment. Clients need to know and see what they are buying. There is no overpromise, you get what you see.

We had clients a few weeks ago who asked for chairs to be put in two apartments they were considering. They spent some time in each of them to find out which one they felt better in.

This is the kind of safety you are looking for when considering an investment of between PLN 1.5 million and PLN 7 million. It is also a long-term safety. Many people fixate on the date of purchasing a property and tend not too think beyond it. Meanwhile, a safe investment is also one that will ensure

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that the value of the property will only increase in time. Location is naturally the key aspect here. Just one look at more mature markets is enough to figure out that locations near parks and green squares are always going to be worth more over time.

Do you think that the luxury market is undervalued in Poland?

I wouldn’t say it is undervalued.

We cannot compare Warsaw’s prime apartment prices to those in Tel Aviv, for example. Warsaw may be following a similar path to, say, London, but it is a different market. But well situated and well-executed prime projects will increase in value in their own markets.

The wisest investors say that there are only two ways you can make money: on inflation and on the appreciation of land prices. You could say that a property is an “addition” to this land and that if this piece of land is unique and well situated, it will appreciate.

How big is the luxury market? The average time for a developer to sell a project in the popular segment is more or less five quarters. How long does it take to sell a project of this size and in this class?

For large luxury projects the selling time is counted in years, not in quarters.

In some cases pre-sales are necessary, e.g. when you are undertaking a very large project, like Cosmopolitan, or when the bank that is financing the scheme does not believe in it and wants to see some results before releasing funds. We recently completed a smaller project – Park Lane and we didn’t do any pre-sales. When selling a premium property it is better to present the product once it’s finished – once it looks and smells the way it should, instead of visiting a construction site, putting on a hard hat and hearing about piping issues.

We don’t need to see the “dish” being prepared, we come to see it beautifully served.

How many apartments have already been sold?

Some 60 percent of all our apartments in Cosmopolitan have been sold.

The 42nd floor will be on offer at the end of the year. In Park Lane, which we started offering a couple of months ago, we’ve sold two apartments out of 12.

Do your clients purchase with cash or with mortgages?

Most of our clients buy with cash.

Only a fraction of them use bank financing, even a smaller percentage actually needs it.

Some of our clients paid 100 percent of the price within seven days of seeing the apartment for the first time. Some take months to think and negotiate,

Images: Tacit Investment

WBJ Observer: Cosmopolitan is one of the few finished luxury residential towers in Poland. What does “luxury” mean by Polish standards?

LOKALE IMMOBILIA / INTERVIEW

some come back after a year or so. We also have clients who purchase a second or a third apartment.

How many people buy this type of apartment only as an investment?

There are three types of buyers.

The vast majority buys it to live in it.

Another group of clients buys an apartment with a view to move in at some point, and rent it out temporarily.

A third group, the smallest one, is people who buy an apartment purely as an investment. We’ve even had transactions where the buyer never actually saw the apartment, only the photos.

Do you offer your clients help if they want to rent the apartment out for a time?

We do. We have a specialized service called Cosmopolitan Home Advisor to make sure our clients’ apartments are well taken care of.

What do you think of selling such apartments to funds, who then offer long-term rentals?

Such transactions are not attractive to us. Our clients don’t want to live next to an aparthotel with tenants moving in and out. Once again, you have to think beyond the sale itself and think longterm. When you consider what the share structure will look like after a portfolio purchase, it’s clear that the fund will have the highest ownership share in the building and its interest will take precedence.

You can’t have a prestige product without the caretaker always present to ensure all the tiniest details are in order.

Tacit has its office in the building and we are constantly present on the premises, making sure the quality of the services here meet the standards we promised.

Since the new management took over in December 2014, we have invested another PLN 5 million in the building, even though it had already been completed. They could have said: “Why are you nitpicking, apartments are selling after all?” Instead, they invested in the green areas around the building and on the fourth-floor terrace, they also agreed to rent some of the commercial space on the ground floor at 50 percent market rent to create a consistent environment.

Did the strategy pay off?

Absolutely. There is nothing more conducive to building a community than dining. We don’t have chains, instead we have a blend of culinary concepts. We wanted the residents to be able to have breakfast, lunch, dinner and go out for drinks here, to be able to listen to live music, to have the concierge bring them breakfast upstairs, etc. And it worked out well: we often see clients sitting at the Wine Taste eating dishes from Ceviche Bar across the hall.

I had the pleasure of meeting Helmut Jahn, who designed Cosmopolitan, as well as numerous other towers all over

the world. I was surprised that he could still remember all the street names surrounding the building.

He is an architect with a background as a city planner. He designed the building to have a simple shape, because the shape is a secondary matter. What he paid enormous attention to was how the building would “live” later on. That’s why the patio is open both to the synagogue across the square as well as the church.

The history of the synagogue is that it was rebuilt with the funds donated by the Jews who were sheltered in the church opposite during the war. This is a very emotionally charged place. u

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BY AMALIA LEITNER

Residential developers broke several records in Q2 2016. But with the MdM program about to dry up, developers continuing to expand their offers could be facing a market hiccup, or worse

D

evelopers added another record-high 17,700 apartments to their offer in Q2 2016 in Poland’s top six markets (Warsaw, Kraków, Wrocław, the Tri-City, Poznań and Łódź), according to a report by residential real estate adviser REAS. The total offer reached 58,834 apartments in June 2016.

The total number of apartments sold in the six largest markets over the past 12 months (between July 2015 and June 2016) exceeded 57,700 – also a historic high. “The Q2 results confirmed that the boom in the market is continuing. Despite a slight decrease in the number of applications for the MdM government subsidy program, apartments sales were excellent,” said Katarzyna Kuniewicz, partner at REAS. However, she indicated that once the MdM program comes to an end (in early July the state lender BGK informed that the first half of all the MdM funds earmarked for 2017 had already been allocated), the market could see a decline.

“In early 2017, the second half of the 2017 MdM funds will dry up, so in reality MdM subsidies will stop supporting sales,” she said.

“We will experience a short ‘pile up’ of applications at the end of 2017 and in early 2018 – a hectic race for the last funds remaining in the program. …

That’s when the MdM booster will burn out,” REAS experts summarized in their recent report.

A natural cycle?

What will come after that? Will the heated residential market come to a sudden halt? Experts are cautious about the forecasts. They do admit that “If – as per NBP projections – inflation should rise by mid-2017 from the current -1 percent to +1.5 percent, it will increase the interest charged on loans and paid on deposits. This factor alone could cause a decrease in the scale of investment pur-

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Images: Shutterstock

RUNNING ON FUMES?

LOKALE IMMOBILIA / RESIDENTIAL

chases,” REAS wrote.

Analysts expect the developers’ market to be able to stand their ground even without public support, even if the new Apartment Plus program (which focuses on social housing instead of supporting the developers’ market) makes things worse for them. “In practice, some of their potential buyers could line up for a ‘virtual apartment,’ just like we once signed up a decade in advance to buy a ‘Maluch’ [Fiat 126, a very small car that was popular during the Communist era – ed.].”

The MdM program coming to an end also means that potential buyers will have to pay money upfront in order to buy an apartment. As per Polish Financial Supervision Authority recommendations, banks grant mortgages only to those who are able to provide a 15 percent down-payment, and the loan-tovalue ratio will increase to 20 percent in 2017. Meanwhile, Poles’ savings are among the lowest in the EU. One thing is certain, the boom is coming to an end, while government programs work to increase the cyclical nature of the market rather than mitigate it.

Tri-City getting hotter For now, the market is still doing well, as is reflected by the sales figures, as well as prices, both for new and used apartments. The costs of apartments in Warsaw remain the highest in Poland with average prices in the center exceeding PLN 12,000 per sqm. The process of urban sprawl in the capital intensified during the residential boom of 2005-2007 as many inhabitants moved to Warsaw suburbs, which drove up costs in Warsaw’s outer districts such as Białołęka and Targówek.

Warsaw had by far the highest average transaction prices for apartments in July 2016 (PLN 7,246 per sqm), followed by Kraków (PLN 5,965), Gdańsk (PLN 5,605), Gdynia (PLN 5,605) and Wrocław (PLN 5,432). Poznań (PLN 4,918) and Łódź (PLN 3,332) came in significantly cheaper, according to Metrohouse and Expander.

Prices have remained reasonably stable over the past year with the exception of the Tri-City area, where they have shown a substantial increase. In Gdańsk, they increased by as much as 11.2 percent and in Gdynia – 8.2 per-

cent, which translated into an increase of PLN 200-300 per sqm.

The Tri-City’s developer market has also recorded an increase over the past 12 months, albeit smaller (4 percent), according to REAS data. The number of new apartments on offer has also decreased by as much as 51.8 percent, despite the fact that the overall number of new apartments added to developers’ offer grew by 14.2 percent. “For a long time now demand has outstripped supply there. If the pace of sales remained unchanged, the current offer would be sold out within less than three quarters,” REAS experts wrote in their July report.

Apart from the Tri-City, Wrocław and Kraków recorded an increase of 2.7 percent and by 0.7 percent respectively. Łódź, on the other hand, saw the biggest drop in transaction prices, of 4.5 percent, while Warsaw and Poznań re-

corded slight decreases of 1.5 percent and 1.2 percent respectively, according to Metrohouse and Expander.

Know your client In order to prepare for the coming slowdown, developers are even more concerned with adjusting their offer to what the market needs. A typical buyer on the primary market is young and chooses a two- or three-room apartment of 39-49 sqm. As much as 57 percent of developers’ clients are in their late twenties, 30-35 year-olds constitute about 16 percent. One-third is single, 70 percent is childless and only 20 percent have been married longer than five years.

Regardless of the current situation in the market, analysts agree that there is still a large void to be filled as the market is still short by about 1 million apartments. How developers fare in the post-MdM reality remains to be seen. u

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Not a cloud in the sky Surpassing last year’s sales figures is not a far-fetched idea given how big the demand for apartments is right now.

WBJ Observer asked Oscar Kazanelson, chairman of the Supervisory Board of Robyg SA, whether the good times will continue, even after the government subsidies run out I N T E R V I E W B Y B E ATA S O C H A

L

ast year saw historically high sales in the residential market, and the first half of 2016 seems to have broken all records yet again. Why are the sales figures so high? Is it safe growth or just a bubble?

Sales results in 2015 and in the fi rst half of 2016 signal Poles’ unrelenting demand for apartments – it should be stressed that it is still higher than supply. Often the purchase of an apartment is considered an advantageous investment – perceived as safe and more profitable than bank deposits. Also, the macroeconomic environment is favorable for purchasing housing units – deflation still persists, interest rates are low, unemployment is decreasing and wages are rising. Together, all of this has a positive effect on the primary housing market.

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The MdM government subsidy program (“Apartments for the Young”) is coming to an end. Can homebuyers still make use of the scheme? How long will it be an option?

Customers can still benefit from the government program, which will end in 2018. However, this year’s quota for supporting the purchase of an apartment ran out in March. Although buyers have had the option of booking funds from the budget allocated for 2017, due to the popularity of the program, more than 80 percent of this amount (over PLN 370 million) has already been allocated. In the final year of this scheme buyers will have PLN 761 million at their disposal.

What will happen after the MdM program comes to an end? Will developers have to cut back on their development plans, or is the market ready for the change?

The MdM program has a big impact on the activity of only some developers.

The price per sqm criterion limits the availability of the program to only a certain number of locations in major cities.

Most developers planning new investments take into account the entire market, while the number of units falling within the MdM program requirements is not that big.

Oscar Kazanelson, chairman of the Supervisory Board of Robyg SA

Images: Robyg

Is Robyg ready for what comes after MdM? About 20-25 percent of Robyg Group’s customers make use of MdM and this percentage has remained stable for the past few years. Only some of our apartments in selected locations are available as part of the MdM program – individual units in Stacja Nowy Ursus, Young City in Bemowo and Młody Wilanów.

Robyg is therefore ready for a new situation on the market, as the company has a lot of experience and the long-time ability to adjust its operations to current market conditions. MdM coming to an end may, however, have some impact on developers that offer the cheapest apartments. It is also possible that in the future developers will cooperate in some way with the state as part of the Mieszkanie Plus program. Still, we need more detailed information on the govern-

ment’s project before we can make any projections.

Will you continue to deliver multistage projects as you have until now, or are you planning on launching more one-off smaller investments?

According to Robyg Group's experience, people buying apartments prefer premises located in multi-stage estates, which is why the company will continue its current strategy. Plots purchased for new investments are selected in accordance with both the market situation, as well as meeting the needs of our customers. Still – throughout the years of our development activities – we have come to the conclusion that multi-stage estates give the most opportunities to create the best possible infrastructure and the most satisfying results for residents.

Our goal is to deliver the best solutions to our clients – based on this experience we build multi-family estates with broad infrastructure, providing all aspects of modern real estate such as access roads, shops, service points and parking lots, as well as parks, leisure areas and playgrounds. A good example of such an estate is Robyg’s Park Wola Residence – a place designed with the needs of its residents kept in mind. It is surrounded by nature, but in close proximity one can find convenient routes to the city center, as well as developed city transit.

Which markets in Poland are seeing the most growth and which still offer the best opportunities?

In Poland, the most popular apartments are located in large cities, due to the constant influx of people to urban centers.

These sites have been developing rapidly over the last 20 years and their growth continues. Noteworthy is the number of apartments bought in the capital, as it is still a growing city and there are forecasts that this trend will continue in the next few years. The other cities with the biggest growth potential are Kraków, Wrocław and Gdańsk – in those cities where people are interested in living and where most newcomers buy apartments.

You can find a job more easily in a major city, and many headquarters of big companies are located there. u

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B Y B E ATA S O C H A

MILLENIALS

As the shortage of skilled employees becomes more acute, employers look for solutions to attract the younger generation, or even replace it

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Images: Shutterstock, Ghelamco

– HOPE FOR BPO

LOKALE IMMOBILIA / BPO

T

he business services sector in Poland employs some 212,000 people, according to the Association of Business Service Leaders. Estimates say the BPO workforce will increase by 20,000 a year, which means that by 2020 employment in the BPO industry will most likely exceed 300,000. “You need to emphasize that 1,000 jobs in BPO generate another 260 workplaces in industries supporting business services,” stressed Paweł Panczyj, managing director at ABSL Polska at the European Economic Congress in Katowice in May. The rapidly expanding BPO sector is creating substantial demand for office space. According to JLL, the business services sector in Poland currently occupies approximately 2 million sqm of modern office space and the number continues to grow.

“According to our estimates, the business services sector in Poland might require some 250,000 sqm of new, modern office space each year. This stems from the industry’s development and the increase in employment that follows,” sad Mateusz Polkowski, associate director, Research and Consulting, JLL. By 2020, an extra 1 million sqm of office space will be needed.

Skill search The main reason why multinational corporations move their business processes to Poland is the shortage of skilled employees in their countries of origin. “It’s people, people and once again people. That’s what foreign investors like. Not because they are cheap. It’s their skills and efficiency,” said Marek Grodziński from Capgemini Polska.

However, the shortage of qualified workers is looming over the industry, even in Poland. “Can we maintain a 1520 percent annual revenue and employment growth in the sector? Certainly, but the employee market is becoming more of a challenge,” admitted Iwona Chojnowska-Haponik from foreign investment agency PAIiIZ. For years now, one of the areas with the biggest disparity between supply and demand has been the IT sector. It doesn’t help that international software giants, like Amazon, have been aggressively pursuing Polish IT specialists offering them positions in their European offices, further contributing to the labor shortage at home.

Primary concern The growing talent shortage is already felt by companies in the business, but the biggest hit has yet to come. “We have fewer and fewer students in Po-

BIGGEST RECENT BPO LEASES Shell Business Operations

27,800

sqm

Dot Office Kraków Samsung

21,000

sqm

Warsaw Spire Warsaw IBM Global Services Delivery Center Polska

20,000

sqm

Wojdyła Business Park Wrocław Capgemini

17,100

sqm

Quattro Business Park Kraków Source: JLL

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Stanislav Frnka, HB Reavis

“Gen Y” offices Are generational changes impacting the demand for office space?

Stanislav Frnka, HB Reavis: Without any doubt the generational transformation we have been observing recently will sooner or later impact the office space demand. The change will be driven mainly by two factors: the aging world population and the change of work habits and culture caused

by Generation Y, which will soon become the largest group in the workforce.

The shrinking number of working-age adults, combined with the growing trend among Gen Y employees towards remote working will erode the demand for desk-space within a traditional office environment.

Increasingly, companies are showcasing their offices as one of the factors that helps them attract talented employees. How is the Gen Y trend influencing the design of office space?

We are seeing a strong trend towards designing more flexible and collaborative workplaces that will meet the expectations and requirements of Generation Y. Having been brought up in the information technology era with easy access to the internet and mobile devices, the representatives of Generation Y don’t want to be tied to a desk and work on their own. Instead, they prefer to stay mobile and work in tandem with others, even when at the office. And of course, they expect the physical space and the office technology to facilitate such a working style. A perfect example of the office concept created in line with Millennials’ needs is Activity Based Working, according to which each workspace should foster a variety of office environments, each designed for different types of tasks. In practice, it means there should be a mix of team desks, quiet concentration areas for individual work, special meeting rooms, as well as fun, leisure and green areas where staff can meet, chat and take a break from the daily routine.

Gen Y employees are not the only ones in the market. How do Gen X and Baby Boomers see the changes? Are they comfortable with things like desk sharing?

That’s true. Most companies employ people of at least two, and sometimes three, different generations. Whereas the office requirements and expectations of Generations Y and X can be reconciled relatively easily, as both of these groups prefer rather flexible and non-hierarchical office spaces, satisfying the more formal and change-resistant Baby Boomers could be quite challenging. Accustomed to traditional conference rooms and cubicles, most Baby Boomers may find it difficult to adapt to modern office solutions like desk sharing or remote working. Therefore, a perfect multigenerational office environment should be a kind of a skillful mix of tradition and modernity, which meets the expectations of people representing different working styles and values so that everyone can find something for themselves.

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land. Only a few years ago, there were 2 million students in Poland, now there are 1.8 million,” said Panczyj.

The most significant shortages are, again, seen in computer sciences. “The market is growing rapidly, making competition for employees ever fiercer.

Meanwhile, the number of computer studies graduates isn’t growing,” said Rafał Bator, partner at Enterprise Investors. “It will affect the entire market in the future,” he added. And it is not only technical skills that are in short supply. “Foreign languages are becoming a challenge as well, surprisingly, even English,” said Panczyj.

Attracting young talent has become one of the biggest challenges in Poland, and employers are aware that the new generation they are trying to lure has different expectations from the previous ones. Pay rises and promotions are not as effective incentives for Gen Y employees as they used to be with older generations.

“Companies are looking more favorably at work-life balance issues and are trying to adjust their work culture to the expectations of the youngest generation [in their workforce]. International tech firms are in the lead in this area,” said Michał Młynarczyk, managing director Hays Poland. “The employee’s market is fueling changes in the market as employees are paying increasing attention to work time and to its organization,” he added.

All over the place The shortages in the labor market have started to shift companies’ focus from the BPO powerhouses that are Wrocław and Kraków (where unemployment stood at 3.5 percent and 4.5 percent respectively in March 2016, according to statistics office GUS) to less obvious locations. Some of the rising stars on the radar are: Kielce, Rzeszów, Białystok, Lublin, Zielona Góra and Bydgoszcz. A recent BPO investment that made headlines was Deloitte leasing 2,500 sqm of office space for its business service center in the Skyres project in Rzeszów. “We are talking about as many as 50 potential locations. One of the latest new BPO projects was located in Sandomierz,” said Panczyj.

Each of these locations has a lot to offer potential investors, although some

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are still largely underdeveloped. “We are increasingly involved in projects in nonobvious locations,” concurred Krzysztof Misiak, partner at Cushman & Wakefield.

The business services sector has become the major office tenant in cities outside of Warsaw. In 2015, business services companies leased 380,000 sqm of office space outside Warsaw, which accounted for 55 percent of the entire office demand, according to JLL. In Q1 2016, the share of business services centers in overall occupied office space totaled around 67 percent in Kraków, 52 percent in Łódź, 51 percent in Wrocław, 37 percent in Rzeszów and 35 percent in Katowice, according to JLL. In comparison, business services centers account for only 9 percent of occupied office space in Warsaw.

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Warsaw, although behind regional cities in attracting BPOs, is still the goto location for advanced process outsourcing, like R&D. “Investors locate their centers where they can find good employees. These could be talented students as well as people with many years of experience. The latter group is attracting companies investing in advanced services. For them the no. 1 location is currently Warsaw,” said Jacek Levernes, president of ABSL. Office transformation With the growing competition for the best specialists, the workplace has become a very important factor in the recruitment processes. According to joint research by JLL and Skanska conducted among employees from the busi-

Why need people at all?

Even the best possible working conditions may not be enough given the growing labor shortages. Some employers are considering implementing more automation into their business models.

“We constantly arrive at a dilemma of where to find people to complete the orders we get. Instead of going in circles, why not think of using robots instead?” said Grodziński, and added that Capgemini is already working on automating BPO processes. “We have plans to create a virtual service center with special robots and software automation systems,” he said.

But even with growing automation, the business services industry will need more employees and will go a long way to win over the best talent. Offering cool offices and adjusting work culture may be just the beginning of a larger transformation. u

Image: Deloitte

ness services sector, up to 65 percent of the specialists questioned say that a modern, spacious office that encourages productive work can tip the scales in favor of one prospective employer over another.

“The specific nature of our business clearly determines the expectations we have in relation to office space. In a large part we hire members of Generation Y, people who see their workplace as more than just an office. We expect developers to understand our industry and meet their needs,” said Levernes.

Developers are eager to accommodate the changing needs of the industry, which has resulted in the growing popularity of the new approach in designing offices, called workplace solutions. “A greater number of meeting rooms, space for project work, creative work, working in silence, or space for integration – these solutions are becoming increasingly popular in offices. They can trigger the growth of space leased by business services centers for which conveniently designed, attractively arranged and comfortable offices have become of crucial importance during recruitment processes and help them retain the best specialists. The office has become a vital tool for HR management,” explained Karol Patynowski, associate director, Tenant Representation, JLL.

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LOKALE IMMOBILIA / BPO

9th EDITION

WE ARE BUILDING THE FUTURE OF THE DIGITAL WORLD

13th of October 2016 The Westin Warsaw Hotel

kontakt@mmcpolska.pl

+48 22 379 29 70

www.en.polskainfrastruktura.pl WBJ OBSERVER •

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Catering to SMEs

WBJ Observer talked to Yuval Ben-Ari, head of Park Projects Group, about the company’s latest endeavor and its new office project – Park Avenue I N T E R V I E W B Y B E ATA S O C H A It’s even better to launch construction now, when construction costs are relatively low.

Even if the next two years are tough, we know that in five or ten years’ time the project will be very successful.

Warsaw is and will continue to be the place where international companies look when establishing a base for their operations in Central and Eastern Europe.

Are you not concerned about the high vacancy rate in Warsaw?

The vacancy rate has increased

mainly in the Central Business District where the majority of vacant space is offered in older offices which find it difficult to compete with recently delivered offices.

We are also confident about the location of the project. It is on Wspólna Street, in the “center of the center,” between the Marriott and the Hampton

by Hilton, close to the main railway station.

How long did the preparation take before launching the project?

Seven years. It always takes a long

Images: Park Avenue

WBJ Observer: The supply of new office buildings in Warsaw has never been so high. From January to June 2016, 16 major office schemes have been completed. Is there still a place for newcomers?

Yuval Ben-Ari: We are very well aware of the situation in the market.

When you look at the market right now, it might seem that it is not the best time for an office investment. On the other hand, if you think long-term and consider city centers in top European cities, you’ll see it’s a very sound investment.

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time to get all the permits in the city center, but we’ve managed to find a solution that satisfied all the interested parties.

How far along is the construction?

Warbud, the general contractor for the project, entered the site in July and is excavating the underground levels.

The scheme is scheduled for completion in mid-2018.

Shouldn’t you have an anchor tenant by now?

We already have a tenant for 1,800 sqm. But we are not looking for an anchor tenant. We decided to operate in a niche, where we offer offices of 150-400 sqm to small and medium-sized companies. They are our primary target. We believe there is no completion in this niche in the Warsaw market.

We believe in SMEs. They are the businesses that have built Poland as it is today. Major companies have plenty of nice buildings to choose from, but we feel that SMEs are being overlooked.

When a small or medium-sized company looks for an office, they are usually offered “leftovers” in major office schemes. Then the company gets “lost” somewhere between big tenants.

Our building will comprise 14,000 sqm and will not have one major tenant, but a number of equally important smaller ones. We will not put corporate logos on the facade of the building. It will be more like a boutique than a typical office scheme.

What about financing? Are you using the market standard level of financial leverage?

Our level of leveraging is lower than the market standard. We have been present on the Polish market for 15 years and thanks to our stable financial position, we can afford to commercialize the building more slowly. Our lender, Pekao SA, also believes in our strategy as it granted us financing without requiring an anchor tenant.

How are you attracting your tenants?

When we talk to companies interested in leasing space in Park Avenue, we sit down with them and an architect and he designs their office, with no obligation to use the design later on.

We also put a lot of emphasis on the quality of the building. The project was designed by JSK Architekci, a renowned

architectural studio. Our GC is Warbud – we could have gone with others, but decided to have the best building for our scheme. We also have a very detailed catalog of finishing materials, down to faucets and door knobs, so that the tenants are assured of the quality we will deliver. We offer openable windows in every room, VRV air-conditioning, minimized common space and seven fast elevators with a maximum waiting time of 28 seconds. The building will have power terminals for electric cars in the underground car park, as well as spacious terraces.

Catering mainly to SMEs we are also

much more open to negotiate specific lease terms. For instance, we will also offer shorter leases – three years instead of the five years which is the market standard.

What type of industries do you think the building will appeal to?

As mentioned before, international firms looking to set up a base of operations in Warsaw, as well as start-ups, and firms from the financial and real estate sector, such as mortgage real estate funds. We hope to have a mixture of businesses – small, medium-sized and offices of international corporations – that will all feel important and valued. u

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One goal, different solutions?

WBJ Observer sat down with Kazimierz Kirejczyk, head of residential real estate advisory REAS, to discuss current and past government initiatives and how they are shaping the residential real estate landscape in Poland WBJ Observer : Who is the new government subsidy program, called Apartment Plus (M+), going to help?

Kazimierz Kirejczyk: The most important aspect of the program is its scale and how quickly it will be implemented. People looking to participate in the program will be able to submit their applications as early as 2017. Then the ranking method will place them in an order starting from those most in need. Unlike earlier programs, this one will most probably take into account both the income and the wealth of the applicants.

The intention is to provide help to large families who cannot afford either to buy an apartment (directly from a developer or on the secondary market) or to rent one at freemarket prices.

What is the scale of this problem?

Only the top 30 percent of all Polish households can afford to purchase from a developer, up to 35 percent if we consider low interest rates and subsidy programs like MdM. In the remaining group only a few people can afford to pay free market rents. Some of them, however, are capable of making regular payments lower than the free market rents. There is also a group of households, accounting for about 20 percent of the total society, who need someone else to pay for the maintenance of their apartment on a monthly basis, in full or in part. The ones with the lowest income can hardly afford to pay for utilities. That is also the group the Apartment Plus program is targeting.

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There have been government programs for the residential market that have been highly publicized but have thus far produced few tangible results. For instance, the Apartments for Rent fund, which so far has provided a mere 423 apartments in four locations, with a further 2,000 in the pipeline. What are the chances that M+ will take off?

It largely depends on what the priorities of the program will be. The scheme is supervised by the Ministry of Infrastructure and Development, with the Finance Ministry overseeing the state lender BGK. With multiple institutions involved in the program, naturally there could be some inefficiency.

It still isn’t clear which approach will prevail: whether the program will use market mechanisms and institutions, which would allow it to produce results sooner, or if it will opt for creating large bureaucratic structures, which always delays implementation. We must bear in mind that the program will support not only apartments with a purchase option, but also social housing. This part of the program can in fact be implemented faster using available projects with building permits or at an advanceddesign stage.

What about the part of the program that introduces individual savings accounts for people looking to buy the apartments they rent? This measure is vaguely reminiscent of the building society accounts that were popular before the transformation into a market economy

after 1989. There are still stories of people who saved up for years only to see their savings depreciate so much they could barely afford a couch. Do you think these experiences might impinge upon Poles’ trust in such instruments?

The period when savings lost their value was a time of high inflation. For the younger generation it is a distant past. The new system is supposed to minimize the involvement of public institutions and make use of the private banking sector with a simple subsidy mechanism. It can be highly beneficial for banks – it’s another product they can offer. It could increase their current revenue as well as offer valuable information about their future borrowers and their ability to make regular payments, thus lowering the banks’ risk when granting loans. Besides, by helping people accrue long-term savings, the system will improve the banks’ ratios of longterm deposits to long-term receivables.

What about the geographical reach of the program: Do you think it will include both large cities and small towns?

The pillar of the program involving social and communal housing, as well as building societies, will likely be more popular in smaller towns. Some communal projects will also likely be developed in larger cities.

The other pillar – of building apartments for rent with the buyout option still needs to be clarified. You could assume that such projects could be developed in cities where the state has land in good locations, suitable for this type of inexpensive project. In cities where the state does not have suitable land, it will have to look in either satellite cities, or will have to purchase land.

Is that economically feasible?

It depends on the way feasibility is evaluated. The authors of the program tried to minimize cash subsidies. One must bear in mind that the program will be endowed

Image: REAS

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LOKALE IMMOBILIA / INTERVIEW

with really huge land assets across the entire country, including some of the most attractive plots in city centers, which it can dispose of to acquire land that will meet the project criteria. Finally, the success of the program will be measured by the achievement of its social goals and not the financial results.

Both the current government subsidy program “Apartments for the Young” (MdM) and its predecessor “Family on its Own” (RnS) met with a lot of interest. However, there has been a certain amount of criticism, like for instance that MdM mainly supported developers in major cities and did not cover many smaller towns. Is there any merit to these claims?

The MdM program supported three groups: first and foremost – banks. One of the primary purposes of the scheme was to make it possible for banks to implement the “S” recommendation [the gradual lowering of the maximum Loan-to-Value ratio for mortgage loans from 100 percent to 80 percent over a period of four years. – ed.].

If it wasn’t for MdM, we could be looking at a significant slowdown in banks’ credit activity.

The second group of entities that the program supported was in fact developers.

But that was the case until the program opened up to the secondary market. That also allowed buyers in small towns to take advantage of the subsidies.

Still, it is true that the majority of MdM loans in major regional cities, like Warsaw, Poznań and Gdańsk, are still granted for properties purchased on the primary market. However, there are cities such as Łódź where the number of new applications for apartments on the secondary market is currently four times bigger than for units purchased from developers. It is because prices in the secondary market are significantly lower.

Finally, the third group the MdM program was aimed at were households that needed the additional boost to meet the down-payment requirement introduced by the “S” recommendation. It definitely encouraged many buyers to look for a new apartment instead of a used one, or to accelerate their purchase decision.

There has also been some criticism that the majority of the projects built in the

Karzimierz Kirejczyk, head of residential real estate advisory REAS

MdM scheme were on the outskirts of cities due to arbitrarily low price ceilings implemented by the government, thus promoting urban sprawl.

At first the program covered, in case of most large cities, only peripheral districts of cities, but price ceilings were later readjusted, which prompted developers to expand their offer to more central locations.

Currently, in Warsaw for example, you can purchase MdM apartments in practically all districts outside the city center.

In recent years, investing in apartments for rent has become one of the most popular options for individual Poles, given the low interest rates and the number of apartments that are being delivered each year. Do you think that the Apartments for Rent fund, as well as M+ could have sufficient impact on the rental market to make such investments less profitable?

The assessment of the risk would be quite different if we assumed that the number of new apartments delivered and offered on the rental market was in the tens of thousands range. In Warsaw, for example, there are some 20,000 apartments sold in a year, 4,000-5,000 of which are later rented out.

The key question about the M+ program is whether it will double the scale of the supply of new rental units on an annual basis, or if it will increase it 20-fold. If the former is true, it shouldn’t have too much impact on the market. The number of apartments bought in the last few years by individuals for the purpose of renting them out has a

far bigger impact.

But the real impact M+ could have on the rental market is restoring balance in the relationship between the landlord and the tenant. Today, the biggest risk involved in investing in an apartment for rent comes from tenant protection practices. The risk of renting to a non-paying tenant who is also impossible to evict is quite high, which is probably why rents are still high. What the market needs is to make the relationship between the tenant and the landlord more transparent and balanced, so that the risk of not receiving rent payments is limited.

Do you expect the attractiveness of investing in apartments for rent to increase then?

An individual invests his or her capital with two benefits in mind. The first one is the current cash flow and return on investment, which is also related to the risk of the investment, as well as alternative investments the capital could be allocated to. The second type of benefit is the conviction that the property will appreciate in value over the long term. The conviction comes from, an otherwise sound, assumption that apartments in good locations in large cities are relatively inexpensive. In 20-30 years their value should increase and bring additional profit to the investors.

There is another real estate segment that is growing in Poland – aparthotels.

Developers promise ROI of 7-8 percent, which is significantly more than the 4-5 percent that the rental market can offer.

Why would anyone choose to invest in an apartment, given the more lucrative alternative?

When investing in any residential property, investors are looking long-term. If they choose to invest in aparthotels, they want someone to manage their asset in the long run, ensuring a steady flow of guests and a sufficient standard of service. The risk involved in this type of investment is that after the initial two or three years, when the developer guarantees high returns, the standard of the service could decline and thus the profitability of the investment will follow. The aparthotel operator could also go out of business, which renders any kind of guarantee pointless. The risk in this asset class is thus inherently higher. u

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WARSAW NATO SUMMIT 2016

LEADERS OF THE TRANSATLANTIC BLOC GATHERED IN WARSAW TO SEAL AGREEMENTS STRENGTHENING NATO’S EASTERN FLANK

n July 8 and 9, the citizens of Warsaw had to abandon their usual commuting routines as a number of streets in the city center were closed, several bus and tram detours were put in place and the metro system was significantly disrupted. Those who hoped to swap public transport for bikes would have been disappointed as the city closed bike stations in most central locations. Litter bins and benches were also removed for the duration of the event. For those few days, Poland imposed extraordinary means to provide

RQ-4 Global Hawk drone exhibited in front of the National Stadium, the main venue of the event, and next to the place where the Polish Institute of International Affairs held its expert debates.

On the pitch of the stadium, a large tent was erected, where leaders gathered to debate and formally sign agreements.

Rumor has it that the organizers also built a replica of the Oval office so that Barack Obama could feel at home, but the information has not been confirmed. On the upper floors of the stadium, around 2,000 journalists from the largest global outlets, as well as those working in less recognized media,

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security for more than 50 world leaders, including US President Barack Obama, German Chancellor Angela Merkel, French President Francois Hollande and EU President Donald Tusk who came to Poland for the NATO summit.

Preparations for the historic event had been ongoing since the decision was announced in Newport in 2014 that Warsaw would be the next host of the highest-level meeting.

Journalists, analysts, experts and other guests from all over the world, who came to Warsaw, could enjoy the view of a smooth silhouette of a mockup

Images: Flickr/NATO

EVENTS / WARSAW NATO SUMMIT 2016

EVENTS / WARSAW NATO SUMMIT 2016

informed the world about the event as it unfolded.

This year’s summit was groundbreaking for Poland and the Baltics, as for the first time NATO leaders agreed to deploy military forces in order to reassure its eastern partners and deter Russia.

According to the agreement, the United States will send 1,000 troops to Poland, the UK will deploy 500 soldiers to a battalion based in Estonia, and Canada and Germany will lead two more in

Lithuania and Latvia. Speaking at a press conference, President Barack Obama said the troops would serve “shoulder to shoulder” with Polish forces. The long-awaited decision was received with satisfaction in Poland.

However, it wasn’t all good news for Poland from the US President. Barack Obama also expressed concerns over developments in relation to the Constitutional Tribunal, saying the

government must do more to maintain democratic values. Obama’s statement came as a surprise to President Andrzej Duda who made no reference to his comments and didn’t take any questions at the final press conference that concluded the event.

All in all, the NATO summit was widely regarded as a success for Poland.

The next one will be held in Brussels in 2017.

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EVENTS / SELECT USA 2016

A BLUEPRINT FOR FOREIGN INVESTMENT B Y K E N G LO B E R M A N

T

he US is home to more foreign investment than any country on our planet, valued at $2.9 trillion in 2014. So what’s this country doing right? How might other countries take notice? Following my participation in the 3rd Annual Select USA Investment Summit this past June in Washington DC, let me offer three broad observations that may shed some light on the matter.

Observation #1: Unwavering commitment. With its $500 million budget and 2,000+ dedicated employees covering 75 global markets, the United States government invests considerably to support international trade. Created in 2011, Select USA acts as an intermediary, helping foreign

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companies take advantage of the United States business-friendly environment. As Executive Director Vinai Thummalapally pointed out, “Select USA provides a type of concierge service, pointing foreign investors in the right direction and helping them answer basic questions such as, ‘How do I get a visa? Where do I go?’”

At the Investment Summit, did President Obama delegate his keynote address to a lower government official? Absolutely not.

He showed up personally, along with other high profile state officials such as Secretary John Kerry, Virginia Governor Terry McAuliffe, Georgia Governor Nathan Deal and Secretary of Labor Thomas Perez. In his keynote speech, Secretary Kerry reinforced the foreign investment priority by noting, “Developing economic and commercial ties

is paramount to our diplomatic relationships. All US foreign service officers are to act as economic ambassadors.” Bottom line: the United States is “all in” with respect to driving foreign investment and protecting its leading global position.

Observation #2: Brand power. Was the Investment Summit a two-day infomercial? Perhaps. If there’s one country that understands the power of advertising, it’s the

Images: Select USA

PRESIDENT BARACK OBAMA STOOD FACING 2,500 REPRESENTATIVES OF FOREIGN BUSINESSES AND US ECONOMIC DEVELOPMENT ORGANIZATIONS AND BLUNTLY STATED: “THE US IS OPEN FOR BUSINESS. IF YOU CHOOSE A PLACE TO EXPAND YOUR PORTFOLIO, TO PLACE YOUR BETS, TO OPEN UP A PLANT, TO START BUILDING THE NEXT GREAT NEW BUSINESS OR SERVICE, YOU WOULD SELECT THE US – BECAUSE NOWHERE IN THE WORLD AND NEVER IN HISTORY HAS THERE BEEN A BETTER PLACE TO GROW YOUR BUSINESS.”

EVENTS / SELECT USA 2016

United States. The Summit’s audience was exposed to: repeated messaging (driving effective communication); case studies outlined by recognizable CEO’s (demonstrating reliability); and speeches delivered by major heads of state (emphasizing credibility).

If you study why companies invest in the United States, the reasons go beyond strong fundamentals. One can’t underestimate the power of country branding, and this particular country seems to understand this well.

Observation #3: Healthy competition.

American culture encourages a unique balance of competition and cooperation, and it was on full display at the Investment Summit’s exhibition hall. Local reps from all 50 states were on hand to “pitch” their respective localities as the best investment destination, touting statistics and other value drivers meant to attract foreign delegates. But while states competed for business, never did it appear toxic or uncooperative. The exhibition hall felt like one big party, and the subtle competitive element simply encouraged everyone to put his or her best foot forward. Georgia touted its international airport transportation hub. Ohio – its natural resources. Florida – its tax friendly business environment. New York – its brand name. But in the end, no matter who wins, the US still wins.

What can be taken away from these observations? Countries competing for foreign investment on the global stage may reflect on these simple questions: Are we committed enough? Do we understand how our country is perceived abroad? Are our local officials putting their best foot forward?

Poland is one country that’s perhaps starting to take notice. Among its Eastern

European neighbors, it was one of the few actively present at the Summit.

Midsized Polish companies like Budmat and Korona Candles were on hand, along with senior members of US & Polish Embassy trade and investment divisions.

Furthermore, the Polish government recently announced a new initiative called the “Polish National Foundation” with a budget of about PLN 100 million (about $25 million) and a mandate to promote the Polish brand on the global stage.

Thummalapally pointed out how Select USA could be valuable for small to midsize companies (SME’s) and micro-sized startups from abroad. “SME’s across the globe are finding our online tools very useful. For example, our interactive cluster-mapping tool allows companies to input their specific needs and characteristics to help visually pinpoint the most attractive locations across all 50 states. Another tool, known as our ‘state incentives database,’ helps companies identify resources, contacts and opportunities at the local level.” The

US is much bigger than just Silicon Valley and New York. Select USA helps small businesses from abroad wrap their hands around this reality.

The Select USA Investment Summit was a microcosm of the United States approach to promotion, branding and cooperation between government and private industry – a formula that’s proven successful. The 4th Annual Select USA Investment Summit will be held on June 18-20, 2017 in Washington DC. To learn more about Select USA, head over to www.selectusa.gov. ******* Ken Globerman is an investment professional operating in New York, NY and Warsaw, Poland. Through his background in private equity finance and media advertising, he writes, teaches and works with investment funds, corporate accelerators and small to midsize companies on investment strategy, investor communications and strategic financing issues. u

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GADGETS TECHNOLOGY TO MAKE YOUR LIFE EASIER

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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 available tech to pick those that we believe will help you live your life more comfortably and confidently.

Price: €7,900

Price: PLN 6,799

Hasselblad X1D

hasselblad.com

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Hasselblad has just released its first (and the first) mirrorless camera with a medium-format sensor, which at less than half the weight of conventional medium-formats, is a game changer. The X1D, made in Sweden, looks like a typical DSLR (digital single lens reflex camera), except the 50MP CMOS image sensor is significantly larger than anything else on the market. With ISO ranging from 100 to 25,600, an LCD touch screen, a weight of 725g and shutter speed from 1/2000 to a full hour, the X1D might just be the best in its league. It’s also the only player.

The Delonghi PrimaDonna Elite is another smart device for your smart home. This one makes coffee. It can be controlled either with the color touch display, or the Coffee Link mobile application. Thanks to this, coffee may be prepared from any place in the home. It offers a wide range of recipes, including four black coffees and seven milk drinks. All of them may be personalized according to the user’s taste. You can change such factors as aroma level, milk quantity, and temperature.

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WBJ OBSERVER

Images: Hasselblad, Delonghi, Nintendo, Patsbcb, August

Delonghi PrimaDonna Elite

Nintendo NES Classic Edition

If you loved the Nintendo Entertainment System as a kid, you’ll be delighted to hear there is a remake in the pipeline. Available from November 11, the NES Classic Edition system is a miniaturized version of the groundbreaking NES, originally released in 1985. The box comes with the NES, a single controller and 30 pre-installed games including all of the classics like Super Mario, Legend of Zelda, Donkey Kong and Metroid. Welcome to the 8-bit wonderland.

Price: $60

nintendo.com

>>

August Smart Lock

Price: $199

august.com

>> Pat’s backcountry beverages

You start with filling the bottle with water and a beer (or soda) flavor. Then you pump water from one chamber into another, starting the carbonation process.

Shake the whole thing for a minute – et voila: your cold pint, available wherever you are. There’s also an all-natural cola or Sprite-like option, which is nice enough. The process is based on dissolution of the beer’s concentrate in water, which means legally it isn’t actually beer, and is therefore referenced as a “brew.”

Is the price worth the result? The answer might be at the end of the trail.

Price: $50

patsbcb.com

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This little device premises one thing – it unlocks the door with your smartphone. This smart-lock pairs with your phone over Bluetooth and lets you control the entrance to your house with it, remotely. Grant guest access keys to your dog-walker or cleaning lady at a specific time, or just let in a friend while you try to get through the afternoon traffic. And the best thing?

The Auto-Unlock function, which opens the door automatically as you walk up to the house, making a mechanical sound just like those gates on the Millennium Falcon.

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LIFESTYLE / LATIN RESTAURANTS

Images: Shutterstock, Flatbush Zombies, Teatr Wielki, WFF, Warszawska Jesien

LIFESTYLE / LATIN RESTAURANTS

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LIFESTYLE / EVENTS

UPCOMING EVENTS IN WARSAW No day is ordinary when you live in one of Europe’s most culturally rich capitals. Whether it’s art, film, music or opera you seek, this city is your oyster

WARSAW AUTUMN

(INTERNATIONAL FESTIVAL OF CONTEMPORARY MUSIC)

This month, the largest international festival of contemporary music will be upon us. Founded during the communist period in Warsaw, the event was a form of expression – a way to showcase new musical creations both locally and from the West. Although it was thwarted twice during the communist period for obvious reasons, it has become a national tradition and continues to thrive till this day. The aim of the festival is to present new music from Poland and around the world, the event lasts a total of eight days. A must-attend musical spectacle for both locals and not-solocals.

September 16-24 For more information: www.warszawska-jesien.art.pl

FLATBUSH ZOMBIES

Brooklyn born hip-hop group, Flatbush Zombies will be performing at Palladium this month. The trio’s recently released debut album, 3001, A Laced Odyssey, can be described as a psychedelic blend of beats, rap and rhythm. 3001 reached Number 1 on Billboard’s Independent Album chart, an indicator that the concert is not to be missed – that is, if hip-hop is your thing.

Images: Shutterstock, Flatbush Zombies, Teatr Wielki, WFF, Warszawska Jesien

September 29 Palladium Złota 9

THE PASSENGER

People vowed never to forget the atrocities that occurred during the Second World War. Memories live on in the form of literature and art, sometimes a combination of the two. The Passenger was originally a novel by Zofia Pomysz, set during the time of the holocaust. Then, in the 1960s, PolishJewish composer Mieczysław Weinberg transformed the novel into a musical masterpiece. It wasn’t staged until 2006, after the composer’s death. Director David Poutney has brought the piece to Warsaw amongst other locations, and you can experience this compelling story at Teatr Wielki.

September 18 and 19 For more information: teatrwielki.pl/en

WARSAW FILM FESTIVAL

Although the annual Warsaw film festival doesn’t take place until October, there’s no harm in grabbing your tickets in advance.

All films screened at this event are acclaimed by international (and local) audiences. The organization’s aim is to “show a film before it wins an Oscar.” Because Poland is renown for its rich cinematic creations, there is no doubt that the films being presented are of high acclaim. Among a range of countries, this year’s program includes films from Germany, India, Mexico and New Zealand. Even if you aren’t attending the festival, take a look at the program – it’s worth a glance through if only to widen your own home movie repertoire.

October 7-16, 2016 For more information: wff.pl

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LIFESTYLE / LATIN RESTAURANTS

SUNDAY BRUNCH IN WARSAW HERE’S HOW YOU MAKE YOUR SUNDAY MORE ENJOYABLE Nothing says Sunday better than brunch, and thankfully Warsaw offers up quite a variety of brunch options on Sundays. Here are some of the popular options, namely some of our favorites.

BLUE CACTUS

Brunch and buffets pair perfectly together.

Especially when the buffet consists of all-you-can-eat Mexican style food. On Sundays, Blue Cactus serves up a hearty array of Tex-Mex cuisine: Nachos, tacos – you name it. If you’re looking for a family friendly destination, this restaurant offers a special price menu for children under 12, with occasional entertainment.

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SOFRA

My latest find in Warsaw is Tel-Aviv DeliCafe, a restaurant that will probably fit all of your diet constraints (vegan, gluten-free, sugar-free). At Tel-Aviv Food and Wine, there is plenty of opportunity to taste all sorts of Mediterranean-inspired dishes such as falafel, but you’ll also be able to experience vegan fine-dining at its best. Their sumptuous everyday breakfast menu means grabbing brunch even when it isn’t Sunday.

While Sofra can mainly be classified as a Turkish restaurant, their brunch buffet offers far more than just succulent lamb. You can chose from an array of traditional breads, meat, fruits, Mediterranean style vegetables and even pancakes. There’s also the option of ordering quite a variety of eggs à la carte. With one of their decadent desserts (which may include crème brulée and baklava depending on what is being served) and a cup of Turkish-style tea, there isn’t much else you need.

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Images: Shutterstock, Blue Cactus, Sofra, Tel-Aviv Food and Wine, Downtown, Shipudei Berek, Charlotte

TEL-AVIV FOOD AND WINE

LIFESTYLE / SUNDAY BRUNCH IN WARSAW

DOWNTOWN

My first encounter with Brunch in Poland took place at Downtown in the Intercontinental where I was staying when I had just moved to Warsaw. I have to say, I fell in love with the concept. Downtown is located at the Intercontinental Hotel, so it is a little on the higher end price-wise but definitely worth visiting at least once, especially on an empty stomach. At Downtown, the service is, as always, exceptional. Even after you’ve inhaled multiple plates at their Sunday brunch buffet, you’ll go back for more, so make sure to wear pants a size larger, the vast spread is difficult to resist.

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SHIPUDEI BEREK

Located on Ulica Jasna, in the heart of Warsaw, Shipudei Berek has done its part to win the hearts of locals. The owners (who also happen to run Der Elefant and Jeff’s, among other successful chains) clearly know how to manage a good restaurant. The service is exactly what you’d hope for, the food is more than affordable and the ambiance draws in masses of nearby passers. At Shipudei Berek you can find authentic Israeli cuisine and you’ll be able to grab a hearty breakfast or brunch that consists of breakfast pizza, fresh omelets, salad, cheese and an array of Mediterranean delights. Yes please!

CHARLOTTE

Whether it’s midday on Sunday or not, Charlotte is consistent when it comes to amassing the crowds at Plac Zbawciela. Their French-style menu is ideal for breakfast or brunch. Flaky croissants served with homemade chocolate spreads, fluffy omelets and my favorite, croque monsieur is just a selection of what you’ll find on the list of items to choose from. A must for brunch anytime of the week. aleja Wyzwolenia 18

Jasna 24

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WBJ Observer presents

A GOOD MANAGER NEVER STOPS ON THE ROAD TO MASTERY

BROUGHT TO YOU BY: HARVARD BUSINESS REVIEW

Knowing your path is as important as knowing your destination. Continuous development is the key companion to success in business. Even the best managers should constantly verify and build their skills. This is the road to mastery. It requires effort, work and sacrifice, but also – which is rarely mentioned – the right choices. What are those choices?

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We live in a time of virtually unlimited opportunities offered by the internet, freedom of travel and an unrestrained exchange of opinions. So, how do you choose what’s best for you? First of all, managers need to know which skills they should focus on developing.

This is necessary in these extremely competitive, merciless times, in which time is becoming a rare commodity. The transition from a “good” to an “excellent” manager, as mentioned above, is illustrated by a learning curve. It demonstrates the abrupt stages of acquiring new knowledge or skills.

Beginning to learn from scratch we can easily notice a rapid increase in knowledge, especially through exercise. However, once we reach a “peak”, i.e. the level of a good specialist, there comes a stage where it is more and more difficult to develop and our absorption of knowledge comes to a halt. Why? Most managers prefer to learn new things, which is when their knowledge grows considerably and rapidly, and the results are evident here and now. In this way they neglect their strengths, which seem to be sufficiently mastered, but they are the ones that deserve special attention and reinforcement.

For many managers, the stage of stagnation is the last stage of development. But there will be more stages of growth and more peaks to climb for those who are the most determined and strive for mastery.

What sets apart the best is that they never stop developing their strengths and skills when they reach the stage of stagnation.

Once we find out what to focus on and what the path to mastery should look like, there is one more thing that we should choose – educational tools to help us climb to the top.

At the ICAN Institute we prefer an individualized approach that facilitates a diagnosis of strengths and weaknesses and designing a learning path. Our development programs for managers provide them with practical hands-on knowledge in specific areas on which they should focus. We promote a unique formula that helps “good” managers become “excellent mangers and leaders.” Continuous development and learning the skills that complement and highlight our strengths are the keys to mastery, something I wish you to achieve, remembering the words of Ralph Waldo Emerson, who once said: “The only person you are destined to become is the person you decide to be.”

SEPTEMBER 2016 •

WBJ OBSERVER

ANDRZEJ JACASZEK, PUBLISHER AT HARVARD BUSINESS REVIEW POLSKA

LOKALE IMMOBILIA / ON INFORMATION TECHNOLOGY

Reach high

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LOKALE IMMOBILIA / ON INFORMATION TECHNOLOGY

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