Polish Market No. 11 (250) /2016

Innovation

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No. 11 (250) /2016 :: www.polishmarket.com.

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Retail, Office, and SpORtS infRaStRuctuRe

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Rafał

Sonik

President of the ManagMent Board of geMini holding sP. z o. o.

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ONTENTS

4. From The President’s Press Office 5. From The Government Information Centre ECONOMY

OUR GUEST

6. ANDRZEJ ADAMCZYK, Minister of Infrastructure and Construction: THE ECONOMY NEEDS PUBLICPRIVATE PARTNERSHIP, President

7. ALICJA ADAMCZAK, Ph.D., President of the Polish Patent Office: TO PROTECT POLAND’S POTENTIAL

PROPERTY MARKET

8.

PATRYCJA DZIKOWSKA, Associate Director, Consulting and Research, Cushman & Wakefield: INCREASED MARKET COMPETITION CALLS FOR A QUICK RESPONSE

32. Marcin Haber: FINANCING OFFICE PROPERTIES 33. PLGBC GREEN BUILDING SYMPOSIUM DEBATING HEALTH AND THE QUALITY OF LIFE IN GREEN BUILDINGS

34.

ROBERT GERYŁO, PhD, deputy Director for Strategy and Development, Instytut Techniki Budowlanej (ITB): ENERGY EFFICIENCY OF CONSTRUCTION PRODUCTS AND BUILDINGS

36. DARIUSZ PIOTROWSKI, Enterprise & Partner Group Director, Microsoft Sp. z o.o.: IMAGINATION IS THE LIMIT

38. LESZEK JUCHNIEWICZ, PhD, Chairman of the Advisory Board

10. RAFAŁ SONIK, President of the Board, Gemini Holding Sp. z o.o.:

of the EuroPOWER Energy Conference: SUPPORT FOR RENEWABLES SHOULD BE RATIONALIZED

14. RADOSŁAW KNAP, General Director of the Polish Council of Shopping

40. Ewelina Janczylik-Foryś: TTIP, TO SIGN OR NOT TO SIGN? 42. FINANCIAL SECTOR DECISION-MAKERS MEET AGAIN

WE MUST TRY TO TURN BACK THE COURSE OF THE RIVER

Centres (PRCH): INVESTORS WHO INVEST IN POLAND COUNT ON HIGHER RETURNS

16. Ewelina Janczylik-Foryś: CONSTRUCTION IN REVERSE GEAR 18. WOJCIECH SMOLAK, Marketing and Sales Director at BPI Polska: THE AWARENESS OF POLES AS BUYERS IS INCREASING

20. Ewelina Janczylik-Foryś: SMALL, BUT MY OWN? 21. RAJMUND WĘGRZYNEK, Managing Director Tétris Poland: INTERNATIONAL FIRMS ARE FLOCKING TO WARSAW. WE ARE WINNING WITH PRICE AND TRANSPARENCY

22. Ewelina Janczylik-Foryś: POLAND THE CRADLE OF FAIRS 24. EWA WOCH, Vice-President of Targi w Krakowie Sp. z o.o. (Trade Fairs in

Krakow Ltd.): KRAKÓW IS A MODERN CENTRE OF BUSINESS, SCIENCE AND NEW TECHNOLOGIES

26. Marcin Haber: STADIUMS ARE NO LONGER JUST SPORT VENUES 28. ZBIGNIEW KLONOWSKI, President of the Board, TRIAS Group: NEW TREND

IN THE MANAGEMENT OF PUBLIC UTILITIES

CULTURE 44. Cultural Monitor 46. Maciej Proliński: WITH OPERA ON THE VOD PLATFORM 47. Maciej Proliński: GOPLANA’S DRAMA...

48. Maciej Proliński: “100 FOR 100” 49. CINEMA WITHOUT ANDRZEJ WAJDA FOOD INDUSTRY 50. POLAGRA FOOD BUSINESS, KNOWLEDGE, INSPIRATIONS 51. ECONOMIC MONITOR

Cover: RAFAŁ SONIK, President of the Board, Gemini Holding Sp. z o.o.

Photos on issue: www.shutterstock.com

11/2016

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Krystyna Woźniak-Trzosek Editor-in-Chief President of Rynek Polski Publishers Co. Ltd.

THERE ARE CHANCES, BUT NOT GUARANTEES THE OFFICIAL FORECAST ENDORSED BY THE EUROPEAN COMMISSION AND THE IMF SOUNDS GOOD. IN THE NEXT THREE OR FOUR YEARS THE POLISH ECONOMY IS TO GROW AT A STABLE RATE OF 3.5 – 4% A YEAR. UNEMPLOYMENT WILL FALL TO REACH THE LOWEST LEVEL IN A QUARTER CENTURY NEXT YEAR. OVER THE COMING THREE YEARS THE AVERAGE WAGE IS TO INCREASE BY MORE THAN 20% AND THE CONTINUING LOW INFLATION WILL NOT EAT INTO THE PURCHASING POWER. This optimism is not without grounds. During the last 15 years we have avoided a recession, the only such result in Europe.

True, this required considerable assistance of the financial markets, but in Europe, only Germany manages to balance its budget.

In the European context, we are not borrowing excessively and our utilisation of the EU funds is exemplary. The recently verified statistics for the previous year: a 3.9% GDP growth and a 2.6% budget deficit symbolise our macroeconomic wellbeing for all those who are under the spell of the magic of indices.

More thorough analyses confirm this positive picture. In this year’s Global Competition Review 2016-2017 compiled by the World Economic Forum (WEF) which includes 138 countries, Poland takes 36th place, having advanced by five places compared with last year’s ranking. It analyses twelve areas of development of each state. It highlights our strong points such as continuous improvement of the infrastructure, the functioning of markets, health care or education, as well as our weaknesses connected with economic innovation performance, such as low social capital. Regional studies lead to similar conclusions. In the tenth jubilee edition of the 2016 Deloitte Central Europe Top 500 ranking entitled “An Era of Digital Transformation”, regional domination of companies from Poland is indisputable. Apart from the regional leader, PKN, 181 companies, 13 more than last year, come from Poland. The list of the 150 biggest banks in the region is topped by our PKO BP and Bank Pekao, with three others in the top ten and ten more lower down in the ranking. The regional list of the largest insurers includes 50 companies, 16 from Poland, with three taking the podium. They are PZU, Ergo Hestia and Warta.

In recent years the development of the Polish economy has been stimulated by the construction sector, especially the segment building office infrastructure, shopping malls and conference and exhibition centres. In the first of these categories, in 2015 the Warsaw market saw a new record level of space absorption: 280,000 square metres. It is expected that the year 2016 will bring yet another record, toping 300,000 square metres.

The fact that Poland's economic growth is mostly due to the strengthening of businesses, their improving financial standing and professional management is confirmed by our own experiences. However, this cornucopia of positive results should not make us conceited. If we treat the figures quoted above with a degree of brutality, we will see that they are no guarantee of future successes. The economy does not work like this. There are chances – yes. Guarantees – no. Maintaining GDP growth of 3.5-4% per year will not allow us to eliminate the frustrating distance to our Western neighbours within the lifetime of one generation. This would require a quantum leap to 5-6% a year. This is no technocratic fetish. A look at the Top 10 in the WEF Report shows that at least six of these countries have for years functioned with the “social economy” tag. This means that goals can be combined.

A deeper analysis of the challenges facing Poland, presented in this document, shows an astonishing convergence with the diagnosis contained in the Polish Plan for Responsible Development. We can see that our chances are not illusory. As you are reading this edition, the editorial team of "Polish Market" is preparing for the 14th Gala of the Pearls of the Polish Economy during which we are going to announce the Pearls ranking. We already invite you to read an extensive coverage of that event in the December issue of the magazine.

President

"WE ALL WANT A EUROPE OF HOMELANDS, BUT AT THE SAME TIME WE ABSOLUTELY CANNOT IMAGINE OUR HOMELANDS WITHOUT EUROPE." MEETING OF THE PRESIDENTS OF THE V4 GROUP he 14th meeting of the presidents of the Visegrad Group (V4) was held at the former seat of the Lubomirski and Potocki families in Łańcut on October 14-15. The four leaders – Poland’s Andrzej Duda, Slovakia’s Andrej Kiska, the Czech Republic’s Milos Zeman and Hungary’s Janos Ader – took part in two plenary sessions.

"We are meeting here to talk about matters shared by all of us, in particular, to consider how to increase our role and importance in the European Union. At the same time we remember that this year we are celebrating the 25th anniversary of our co-operation in the Visegrad Group. I think that this is a good opportunity for a short summary of our achievements, and for indicating the issues and co-operation areas which require out special attention in the current situation in the European Union," said President Andrzej Duda.

On day one in Łańcut and on day two in Rzeszów, the presidents of the Visegrad Group discussed the policies towards the young generations and the gas market security in Central and Eastern Europe.

"Our talks concerned the identity of our countries and the values and path we should follow. The years of communist rule mean that there is considerable yearning for freedom in our societies. (...) We all want a Europe of homelands, but at the same time we absolutely cannot imagine our homelands without Europe. We want to speak with one voice on the most important issues. 50 years of communism led us to poverty and we are still catching up," said President Andrzej Duda.

"We want to retain our values, but also to create the European Community," he stressed.

President Andrzej Duda also met with Maroš Šefčovič, vice-president of the European Commission responsible for the Energy Union, who was a guest at a plenary session organised in Rzeszów entitled “Security

Photo: A.Hrechorowicz KPRP

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of the Gas Market in Central and Eastern Europe –Regulations, Merger, Diversification of Supplies." It was also attended by, among others, Piotr Naimski, Government’s Commissioner for Strategic Energy Infrastructure, and President of Gaz-System Tomasz Stępień, as well as Tomasz Poręba, MEP. During the meeting the Polish delegation argued that it was necessary to diversify supplies and seek new sources. The president stressed that Poland’s gas terminal in Świnoujście, allowing deliveries of LNG from various suppliers around the world also constitutes such a search for new sources. Also Maroš Šefčovič said that energy sources diversification and maintaining energy independence was a strategic priority for the entire region.

ANDRZEJ DUDA TAKES PART IN THE FUNERAL OF SHIMON PERES

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n September 30, Shimon Peres, former president of Israel and recipient of the Nobel Peace Prize, was laid to rest at a cemetery in Jerusalem. The funeral was attended by numerous world leaders, including US President Barack Obama a Palestinian leader Mahmud Abbas. Poland was represented by President Andrzej Duda. Peres was laid to rest at Jerusalem’s Mount Herzl cemetery, just a few metres away from a former prime minister of Israel Icchak Rabin. Peres, Rabin and the Palestinian leader Yasser Arafat shared the 1994 Nobel Peace Prize for their efforts aimed at fostering the peace process in the Middle East.

The Polish President stressed that Peres had been born on Polish soil. In Jerusalem Andrzej Duda "bade farewell to Szymon Perski, a citizen of the 2nd Republic of Poland", said Wojciech Kolarski, Under-Secretary of State at the Chancellery of the President.

Passengers of the presidential plane going to Israel included former President Aleksander Kwaśniewski and Poland’s head rabbi Michael Schudrich. Both took part in the funeral of Shimon Peres.

"WARSAW STOCK EXCHANGE IS A SYMBOL OF THE SUCCESS OF POLISH TRANSFORMATION"

"

The Warsaw Stock Exchange (WSE) is a symbol of the success of Polish transformation – president Andrzej Duda said on October 6 during an official gala organised to celebrate the 25th anniversary of the Exchange.

"This was a highly symbolic day when the first five listed companies appeared on the floor of the Warsaw Stock Exchange and the first share prices appeared on the screens (...). It was not just the rebirth of the capital market, but also a huge symbol", said Andrzej Duda during an official gala at the National Theatre in Warsaw. He pointed out that the first location of the WSE was in the building of

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the former Central Committee of the Polish United Workers Party.

"History played a joke. A place previously occupied by the very top communist authorities responsible for destroying the free market, for liquidating it in Poland, was where the capital market was reborn."

"Today, the Warsaw Stock Exchange is the fourth-largest exchange in Europe, and undoubtedly the largest in Central and Eastern Europe.

It must be said that the WSE is a symbol of the success of Polish transformation", stressed Andrzej Duda. (PAP)

Prime Minister

SPORT MUST BE A FAIR AND TRANSPARENT RIVALRY

MERCEDES INVESTS IN POLAND

Photo: P.Tracz KPRM

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n October 13, Prime Minister Beata Szydło met with Markus Schaefer from the management board of Mercedes-Benz Cars. The subject of the talks was an investment of the German company in Poland. The company is to build an engine plant in Jawor near Wrocław worth approximately EUR 500 million creating several hundred jobs.

"This is the fulfilment of our obligation to implement the “Plan for Responsible Development” entailing industry rebuilding, re-industrialisation and creation of new major investment projects and new jobs at plants manufacturing high-tech products," Prime Minister Beata Szydło said during a press conference attended

by Markus Schaefer.

Prime Minister Beata Szydło stressed that investments such as the factory of Mercedes in Jawor not only provide jobs and contribute to the development of the region. These are also modern companies offering internship programmes and work practice for students and opportunities for engineers conducting research. The meeting between the Prime Minister and the representative of Mercedes-Benz Cars was also attended by Mateusz Morawiecki, Deputy Prime Minister and Minister of Economic Development. The deputy Prime Minister signed an agreement regarding the construction of the engine plant in Jawor near Wrocław with Daimler AG, the owner of Mercedes-Benz Cars. In early May Daimler AG announced that it intended to invest approximately EUR 500 million in building a new engine factory in Jawor near Wrocław and create several hundred new jobs there. According to the plan, the factory should be completed in 2019, reaching its full production capacity in 2020, producing several hundred thousand engines per year.

These will be technologically advanced four-cylinder petrol and diesel engines used in a whole range of models, from the smallest A class to limousines in the S class.

"

We are proud of Polish Olympic athletes who won so many medals. Their efforts were an example of genuine Olympian spirit," said Prime Minister Beata Szydło on September 26, extending congratulations to Polish medallists of the Rio 2016 Paralympic Games.

“You are breaking barriers which to others appear insurmountable.

Your sporting performance is at a very high level. Olympic results continue to improve, becoming even harder to attain, but you are able to break barriers and achieve even better results," Prime Minister Beata Szydło told Polish paralympians during a ceremony organised at PGE Narodowy Stadium in Warsaw.

The head of government thanked the paralympians for their effort and the good example they set for others.

“We are proud of Polish Olympians who returned with so many medals. This rivalry is a symbol of sporting contest where people enter not only to overcome other competitors, but above all their own weaknesses.

This is the beauty of sport, something to be emulated by everybody else” – stressed Prime Minister Szydło.

BEATA SZYDŁO MAKES CHANGES IN THE GOVERNMENT

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eputy Prime Minister Mateusz Morawiecki as the Economic Development Minister and Finance Minister will head the Cabinet’s Economic Committee – Prime Minister Beata Szydło announced systemic and personnel changes in her government on September 28.

The Prime Minister announced the creation of the Cabinet’s Economic Committee. It will be led by Mateusz Morawiecki, Deputy Prime Minister, Minister of Economic Development. He is the author of the Plan for Responsible Development and will co-ordinate the work of this Committee. Following the structural change Minister Morawiecki has also been appointed Minister of Finance – Prime Minister Beata Szydło said at a press conference held at the Cabinet Office. She said that Deputy Prime Minister Morawiecki is to serve as development minister and finance minister at the same time. The Prime Minister also informed the reporters of the resignation of minister Paweł Szałamacha which was accepted. She added that entrusting the co-ordination of all the ministries dealing with the economy to Deputy Prime Minister Morawiecki ended the consultation stage and launched the stage of implementation of specific solutions.

"In line with the programme of the Law and Justice Party (PIS), we are making structural changes in State administration. These changes also include the government," said Prime Minister Beata Szydło. She added that at the beginning of the term new ministries had been created (energy, maritime economy and inland waters). "The Ministry of the State Treasury has been liquidated. On Tuesday, together with Minister Kowalczyk we will present proposals regarding the new way of managing companies owned by the State Treasury and its assets," said informed the Prime Minister. At the same time she added that her Cabinet wanted to increase the control and audit of State assets. By a decision of the Prime Minister, minister Adam Lipiński has replaced Wojciech Kaczmarczyk as commissioner for equal treatment and civil society.

The September 28 meeting of the government ended with the adoption of the 2017 budget. "It guarantees funds for the Family 500+ programme, the minimum pension of PLN 1,000 and pensions indexation, for drugs for senior citizens over the age of 75 and for other projects ," stressed Prime Minister Beata Szydło.At the meeting the government also discussed Poland’s position regarding CETA.

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Our Guest

THE ECONOMY NEEDS PUBLICPRIVATE PARTNERSHIP ANDRZEJ ADAMCZYK, Minister of Infrastructure and Construction

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he investment property market in Poland continues to develop and Poland attracts increasing numbers of investors, also in the commercial real estate sector.

According to the latest report released by the National Bank of Poland, in the year 2015 the commercial property market saw a historically high level of investment transactions after the record year 2006 (in excess of EUR 4 billion).

Poland is an attractive place for investors due to the good condition of the Polish economy and very low rates of return in foreign market. The real estate sector is tied to other branches of the markets which means that its development has a positive effect upon the entire national economy in Poland.

The dynamically growing Polish economy needs a thriving public-private partnership. This institution is an important instrument in the case of many infrastructural projects.

Public-private partnership is becoming an increasingly popular alternative to traditional forms of implementation of public tasks. Currently, there are in excess of 90 public-private partnership agreements.

The importance attached by the Polish government to public-private partnership is demonstrated by the inclusion of this form of co-operation in all main development strategies and the creation of the legal framework for co-operation between sectors in the area of public procurement contracts. Co-operation in the PPP system can be found in regulations included in the remit of the Minister of Infrastructure and Construction, including the Real Estate Management Act or the Act on Building Works and Services Concession.

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One of the priorities of the government is to carry out housing investment projects so that they are accompanied by a complete social infrastructure and advantageous conditions of pursuing retail activity. On 27 September 2016, the Polish government adopted the National Housing Programme which sets ambitious targets regarding the availability of housing and improvement in the living conditions until the year 2030. The Programme envisages many regulatory and financial initiatives supporting the development of housing, with particular emphasis put on the creation of an institutional sector of flats for rent. The Programme is open to co-operation with entrepreneurs who have their own land properties. At the operational level, arrangements on behalf of the government are made by BGK Nieruchomości S.A. One of the actions provided in the National Housing Programme is using the potential of real estate belonging to the State Treasury. This land will be contributed to the National Housing Fund and used for building blocks of flats.

State-owned land which cannot be used for housing purposes for town planning, technical or economic reasons can be sold by the National Housing Fund in the market.

This way the market of real estate for commercial development will also be stimulated. The principle of sustainable development of cities requires that housing estates are accompanied by commercial and social services increasing comfort and improving their attractiveness as a place • of living.

Property Market

TO PROTECT POLAND’S POTENTIAL Undoubtedly, our economy has already entered the path of innovative global development. We owe this mainly to universities and Polish companies. In the near future the co-operation between industry and science is going to determine the development of Polish innovation and our place in the world.

ALICJA ADAMCZAK, Ph.D., President of the Polish Patent Office

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he fact is reflected in the place occupied by Poland, and above all by Polish entities, among industrial property protection leaders. Currently we are in the 17th position globally in terms of the number of applications and 15th in terms of the number of patents granted by the national patent office. A similar situation exists with regard to utility models – 15th place in terms of the number of applications and 16th in terms of the registration of industrial designs.

This shows our national potential, which Polish companies can turn into money, credit or use to increase their product advantage.

The world is now enmeshed in intellectual property protection systems, although sometimes they differ in smaller or larger detail.

These systems on the one hand provide some much needed order and security of business transactions, conditioning its development, but also lead to some conflicts. The economy is in fact a reflection of society and ourselves: wherever there is law there are its violations, wherever there is privilege, there is someone else who feels aggrieved, and wherever there is even high awareness of protection, it must continue to develop and expand among the next generations. The role of patents and other exclusive rights changes in the global economy, from the initial basic protective functions to today’s – increasingly bolder - attempts to use exclusive rights in the competitive struggle, for example even global patent wars.

What is also worth noting, Poland took third place behind China and Italy in a global study of the dynamics of innovation carried out by the World Intellectual Property

Organization (WIPO), and we continue to climb in various rankings, sometimes moderately and sometimes dynamically. Also, in the last twenty five years Polish industry has travelled a very difficult and long road, which we all know. Probably we need extraordinary and multifaceted solutions for its reconstruction and development. I would like to emphasise that despite the frequent lack of financial capital, much-needed in investments, we have - often hidden or unrecognized - Polish inventive potential, concentrated and dispersed in the hands of individual creators, the scientific community or the economy. We deal with a lot of economic "genotypes" of Polish companies and each of them is a chance for innovative development, which is important in maintaining global growth.

The academic community is a special partner for the economy and entrepreneurship.

Today, universities are not only involved in a process of research and teaching. Today they are also a maker of social ties, a creator of new trends and building human resources for industry, focused on innovation. This should by helped by the idea of concentration of intellectual capital aimed at connecting companies, universities, technology parks, technology transfer centres, business institutions as well as financial support.

One of such places, already recognised for its value, is the Institute of Aviation in Warsaw. This is an excellent research institute conducting development work in partnership with and for the Polish and global industry. This State-owned establishment has received the largest EU grant enabling the creation of Europe’s first Gas Turbines Centre containing the biggest vacuum chamber in the

world. Poland has gained a unique European research and design centre for new technologies for all types of turbines, set up in consultation with large corporations and Polish universities. Professor Witold Wiśniowski, director of the Institute, always emphasises that it is worth to sell not only products, but above all patents, because it offers multiplied added value and allows raising funds for further development.

According to the 2015 data released by the World Intellectual Property Organisation (WIPO), 2,680,000 invention applications were filed (an increase by 4.5% compared with the preceding year) and 7,500,000 trademarks (and increase by 6%) and nearly 1,200,000 industrial designs were registered. Also in the five most active countries, namely in China, the USA, Japan, South Korea and Germany, we see a continuous and significant increase of the number of applications. Poland does well compared with these countries, since last year we saw a very significant increase in the number of patent applications (by 18%) and utility models applications (by 10%). This shows that innovative technical solutions constitute an important part of Poland’s potential. The creation and development of a truly innovative economy requires the constant raising of public awareness about the role of the system of intellectual property protection. Actions in this respect are taken by the Polish Patent Office, which launches education, information and promotion initiatives designed to expand society’s knowledge of the importance of intellectual property protection for the sustainable development of the economy.

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Property Market

INCREASED MARKET COMPETITION CALLS FOR A QUICK RESPONSE PATRYCJA DZIKOWSKA, Associate Director, Consulting and Research, Cushman & Wakefield • Vacancy rates in the largest cities remain flat at around 3% with prime locations benefiting from particularly low vacancies. By contrast, intense competition following high supply volumes in some markets has pushed vacancy rates up in older schemes.

• Prime rents have also remained stable.

Traditionally, the highest rents are in Warsaw’s prime shopping centres, followed by the capital city’s other leading shopping malls and retail schemes in regional cities.

RETAIL STOCK

• •

•

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In H1 2016, total modern retail stock in Poland stood at 13.53 million sq m.

The share of shopping centres and retail parks located in smaller cities below 100,000 inhabitants in Poland’s total retail stock continues to rise.

Having gained an established position on the retail map of the largest Polish cities, outlet centres are expanding in regional cities with 200,000–400,000 inhabitants such as Bydgoszcz and Toruń.

New retail space supply in H1 2016 totalled only 121,000 sq m, half of which was delivered in shopping centres.

There is currently 690,000 sq m of retail space under construction scheduled to be completed by year-end 2017. More than half of this development pipeline will be delivered onto the markets of the largest Polish cities through openings of new large-scale shopping centres.

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At the end of H1 2016 Poland’s total retail stock reached 13.53 million sq m, of which 73% was in 409 shopping centres providing 9.83 million sqm of floorspace. With 2.43 million sq m and an 18% market share, the 255 existing stand-alone retail warehouses were the second largest retail sector. Retail park space (63 schemes) topped 1 million sqm, accounting for 7.5% of the country’s total stock, whilst the 13 operating outlet centres totalled 218,000 sq m, making up the remaining 1.5% of the modern retail stock.

The key trends in the Polish shopping centre market include the continuously growing share of retail schemes in the smallest cities below 100,000 inhabitants in Poland’s total stock.

At the end of H1 2016 shopping centres in such cities accounted for around 17% of the stock, significantly above the 7% ten years earlier or 12% five years ago. A similar trend is seen in the segment of retail parks. The share of retail parks located in cities below 100,000 inhabitants in the total retail stock rose from barely 9% five years ago to 25% at the end of H1 2016. Such locations benefit from the rapid growth of the format of strip malls that enable retail operators to attain smaller city inhabitants. Small shopping centres or retail parks are also being developed in smaller towns below 50,000 inhabitants, including Kwidzyn, Bartoszyce, Myślenice and Nowy Tomyśl.

Given the retail development pipeline, these market trends are expected to continue with a special focus on mini retail parks. It should be borne in mind, however, that small markets have a limited capacity to absorb new supply

Retail stock by format 8% 1% Shopping centre

18%

Stand-alone retail warehouse Retail park 73%

Factory outlet

Source: Cushman & Wakefield, H1 2016

and there is quite a limited number of retailers willing to take a higher risk in less stable small markets. Being aware of the challenges of attaining customers in smaller markets, experienced retail operators tend to develop new store concepts in terms of size, fit-out and retail offering to adapt their business model to new market conditions.

Having gained an established position on the retail map of the largest Polish cities, the outlet centre sector is expanding into regional cities with 200,000–400,000 inhabitants. Outlet centres are already present on the markets of Lublin and Białystok, whilst the development pipeline contains such schemes in Bydgoszcz (Metropolitan Outlet) and Toruń (Outlet Toruń).

H1 2016 SUPPLY

New retail space supply in H1 2016 totalled only 121,000 sq m, of which 56% came on stream in cities below 100,000 inhabitants. The remaining 53,500 sq m was delivered in the major cities and regional cities with 200,000–400,000 inhabitants. No new space was added to the modern retail stock in cities with 100,000–200,000 inhabitants.

Shopping centres accounted for half of the new retail supply in H1 2016. This included the openings of three new retail schemes: Galeria Glogowia in Głogów, the Karuzela shopping centre in Września and Galeria Avangarda in Bartoszyce, all in cities below 100,000 inhabitants. The completions also included the next phases of extensions of existing shopping centres (Atrium Promenada in Warsaw and Auchan

Property Market in Gdańsk) or an addition of retail park components (Leroy Merlin in the retail park near Galeria Sudecka in Jelenia Góra and a retail park forming part of the retail complex Galeria Leszno in Leszno).

A DIY store Leroy Merlin was opened, thus extending the Futura retail park in Wrocław.

44,000 sq m was added to the Polish sector of stand-alone retail warehouses, accounting for 36% of the total retail supply. These included the openings of four stand-alone facilities: two DIY stores (Castorama in Radom and Leroy Merlin in Konin), a big-box furniture warehouse Agata Meble in Częstochowa, and a cash & carry retail warehouse of Selgros in Warsaw.

No new retail space was delivered in the sector of outlet centres in H1 2016.

The first half of 2016 also recorded the first ever closing of a shopping centre, the Sosnowiec Centre in Sosnowiec, which was an old generation retail scheme with a hypermarket as a dominant tenant and a mini service mall. The further operation of the shopping centre proved unsustainable following the withdrawal of the hypermarket operator. Although retail facilities are unlikely to be closed down or fully reinvented on a massive scale, some older secondary schemes failing to respond to modern market challenges may face an uncertain future.

DEVELOPMENT PIPELINE

The retail development pipeline for 2016 and 2017 now stands at approximately 690,000 sq m, 57% of which will be delivered onto the markets of the largest Polish cities, predominantly through openings of large shopping centres, including Posnania in Poznań, Galeria Północna in Warsaw, Wroclavia in Wrocław and Forum Gdańsk in Gdańsk.

Around 40% of the current development pipeline is expected to be completed in cities below 100,000 inhabitants, including Tomaszów Mazowiecki, Mielec, Jarocin and Zakopane, where new shopping centres and retail parks will be added to the market.

The remaining retail space under construction (a bare 3%) will be delivered through extensions of existing retail schemes in regional cities with 200,000–400,000 inhabitants.

Regarding retail pipeline developments, shopping centres will continue to dominate the market with an 89% market share, whilst 8% of space currently in the pipeline will be delivered in the retail park sector.

Further growth is also anticipated in the sector of outlet centres with some schemes already under construction in regional cities with 200,000– 400,000 inhabitants. These include the redevelopment of the Carrefour Glinki regular shopping centre into Metropolitan Outlet in Bydgoszcz and Outlet Toruń in Toruń, which is at an advanced preparation stage and is to constitute the first part of a larger retail complex in the western section of the city.

Overall, extensions and redevelopments have had a significant share in the total retail supply in shopping centres, retail parks and outlet centres over the last few years. Extensions accounted for nearly 30% of the shopping centre supply in 2015 and are expected to make up around 25% and around 15% of the new space coming onto the market in 2016 and in 2017, respectively.

Extensions include both established retail schemes in the largest Polish cities such as Galaxy in Szczecin, Atrium Promenada and Centrum Janki in Warsaw, and small-scale retail facilities in small local markets such as Era Park in Radomsko and Galeria Mrówka in Ciechanów, which already have a strong presence in their respective markets attracting both tenant interest and high footfalls.

Another major trend has been the focus on extending and upgrading the retail offering of in-line stores neighbouring on hypermarkets by operators such as Carrefour (Morena Gdańsk) and Immochan with its Auchan hypermarkets (recently in Gdańsk and Białystok). This trend is particularly important given the changing shopping habits and customers moving away from doing shopping in large food stores that have ceased to be the key magnet attracting customers to shopping centres.

Distribution of the shopping centre stock 5% 7% 11%

7% 13% 11%

12%

17%

17%

16%

12%

76%

2000

68%

2005

13%

60%

54%

2010

below 100,000 inhabitants

100 ,000 - 200,000 inhabitants

200,000 - 400,000 inhabitants

major agglomerations

Source: Cushman & Wakefield

Major retail developments opened in H1 2016 GLA (sq m)

Developer

Galeria Glogovia

2 1 500

Saller Polbau

Galeria Karuzela

12 000

JB Development

Scheme

City

Leszno Park

Leszno

6 500

Blackstone

Galeria Avangarda

Bartoszyce

6 000

City

Source: Cushman & Wakefield

DEVELOPMENT PIPELINE FOR 2016 Half of the current development pipeline (363,000 sq m) is scheduled to be delivered onto the market by the end of 2016.

The largest scheme planned for 2016 is Apsys’s 99,000 sq m Posnania complex, being another shopping and leisure centre in Poznań, the city among leading Polish markets in terms of retail space saturation. Interestingly enough, Posnania will be another shopping centre located in the central area of Poznań having to compete for customers with Stary Browar, Galeria Malta and the recent delivery to the local market - Poznań City Center.

Another retail scheme to open this year is Galeria Metropolia, a new 34,000 sq m shopping centre constructed by local developer PB Górski in a prime location in Gdańsk-Wrzeszcz, near a station of the Fast Municipal Railway (SKM) and in close vicinity to Galeria Bałtycka.

Several small and midsize retail schemes are also scheduled to open in smaller cities by year-end 2016, frequently being the first modern retail facilities in their respective markets, including Galeria Wołomin in Wołomin near Warsaw, Galeria Aviator in Mielec and Galeria Tomaszów in Tomaszów Mazowiecki.

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Property Market

WE MUST TRY TO

TURN BACK THE COURSE OF THE RIVER

RAFAŁ SONIK, President of the Managment Board, Gemini Holding Sp. z o.o., talks to Marcin Haber about the history of the Polish commercial property market, changes in the way society perceives shopping centres, foreign expansion and the moment in which we are at present.

10 polish market

Property Market You have been operating in the commercial property market for nearly 20 years.

How has this specific and difficult market changed over all these years?

The commercial real estate market, like other areas of the free market economy, is subject to the laws of supply and demand. When I started thirty years ago, the demand dramatically outstripped the supply, the number of customers exceeded the number of good premises. Over the years, this situation changed slowly towards aligning supply and demand, which finally happened five or seven years ago. Since then we have been observing a permanent shift of the scales on the supply side. Currently, what the market offers is much bigger than the income and possibilities of customers. A period of very intense competition has begun. This is coupled with a positive development in the form of increased incomes. This state of imbalance, the preponderance of supply over demand, seems permanent. In short, the amount of goods and services offered and retail space are greater than the demand generated by the market. There is never a state of ideal balance in the economy. We see constant fluctuations in the office space market which resemble a sine wave. At one time there are more landlords than tenants, a few years later the situation reverses. And so it continues. This can be compared to the so-called “swine cycle,” or fluctuations in the production and prices of pork. Certainly, here these mechanisms are spread over longer periods than is the case with agricultural production, but they are very similar. Obviously, in some cities the commercial property market is oversaturated.

However, there are still places with reserves.

This does not mean that in cities which already have many shopping centres there is no room for new ones. However, I believe that over the next decade or so we are going to see much more modernisation and reconstruction projects than new facilities. It is necessary to avoid getting under a thin red line, meaning a situation where developers build inferior, less attractive facilities at second-rate locations in a market which is extremely demanding. We must be very cautious, but this is good! This is what we have been learning in recent years – how to be cautious.

PM

How is Gemini Holding doing in the conditions which you have just described? The beginning of the company was spectacular: contracts with international giants.

And how are the things today?

Long time ago Donald Trump, who nobody would have suspected of ever running for President then, said that the best age for engaging in bold projects was between 25 and 35. If you begin early enough, when you reach 25, you PM

have enough experience not to make the same mistakes time and time again. When you are over 35, you begin to think about protecting your position in business, and not about going on the offensive and advancing to higher levels. This definition aptly describes our situation. For 15 years, between 1990 and 2005, we were on the attack. Since then we have stopped being so aggressive in business, becoming a more mature market player. With my silver hair and considerable experience, I was not afraid to invest several hundred million dollars and soon after a similar amount in shopping centre projects. This was due to the fact that most of our experience had come from smaller projects with McDonald’s or BP. Although on those occasions we also risked a lot as the capital investor, but based on the experience gained in those projects, by that stage, we had learned how to minimise these risks.

You mentioned the experiences of the company, but also said that there is still room in the Polish market for new shopping centres. Please tell us about the co-operation with the local authorities as regards negotiations concerning future projects. Has their approach changed?

Above all, today the term “hypermarket” is almost never used when people talk of a shopping centre. Eight or 10 years ago, in all towns where shopping mall projects were not yet commonplace every retail project was a hypermarket. Mayors, heads of the town council or heads of the town planning committee thought that a shopping centre was the same as a hypermarket…

PM

are there to stay. Projects in which big capital is involved and which provide jobs to the local community. We are currently building a facility in the southern city of Tychy which will give jobs to some 1,000 people, and if the Power Centre project is successful, then 2,000 people will work there. Symptoms of “urbanity” are needed in places such as Tychy. For many living in towns with a population of 100,000, a large, convenient, modern shopping mall is a synonym of urban functions. Please note that there are also facilities, such as Millennium Hall in Rzeszów, where the Town Hall has moved some of its citizens support units, generating the greatest traffic. This is happening because it pays for a mall to set aside a few hundred square metres of space on the second or third floor and lease it for free. This move brings in additional customers who, in order to deal with their formalities, such as collecting the identity card or driving license, must walk across a large part of a shopping centre. Fortunately, malls are now perceived as “citygenic” projects. Several new projects are being prepared in Warsaw.

Do you think that there are too many shopping centres in Warsaw?

Of course not. Malls come in various shapes and sizes. There are specialist centres focused on a highly specific customer profile. We, as customers, do not even realise how the sociotechnical methods of identifying and satisfying our needs have advanced. It is still too early to say that Warsaw has too many malls.

I think that there is still room in the market for 3-4, or even 5 more projects.

PM

However, people from outside the sector believe that in Warsaw “there is a mall at every step.” It is interesting to hear a different opinion from an expert.

Above all, we must realise that Poland is full of projects built 10-15 years ago, in particular, by retail operators such as Immochan, which built facilities to order on instructions of their parent companies. Today, the restructuring of retail trade, also including hypermarkets, forces total modernisation of those projects. And since they were erected at very good locations, in city centres, it turns out that it is possible to use these locations even better. This requires rebuilding these facilities.

I expect to see many modernisation projects in our region in the coming years.

PM

…and the word hypermarket has rather negative connotations.

Precisely, this term did not have a good press. Western hypermarkets were blamed for killing off local trade. This stereotype functioned until fairly recently. Fortunately, today the local authorities have learned to distinguish between these terms. On the other hand – and you have probably noticed this – nobody is building hypermarkets any more. This phenomenon has passed because it turned out that people prefer to shop at a discountstores instead of travelling to a hypermarket. Discountstores came up with a way of offering just as low prices. In the past, hypermarkets used to win because a full trolley of goods cost the equivalent of 3-4 full carrier bags at a grocery store. These times have ended, though. Today, discounts offer prices that are comparable and sometimes even lower than those at hypermarkets, and in addition one does not have to buy almost wholesale quantities. The dialogue with the authorities has also improved because most of them want to see projects that PM

You will be present at MAPIC in Cannes.

What is the purpose of participating in such exhibitions? Maybe you feel that the next stage in the development of your business should be international expansion.

I have already had some experience with foreign markets, including the very PM

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Property Market

WE MUST BE VERY CAUTIOUS, BUT THIS IS GOOD! THIS IS WHAT WE HAVE BEEN LEARNING IN RECENT YEARS – HOW TO BE CAUTIOUS.

interesting Ukrainian market. I investigated the opportunities there ten years ago. We would very much like to build malls in the neighbouring markets. However, it turns out that compared to them Poland is doing really well! It is astonishing, but wherever we go to: Romania, Bulgaria, Lithuania, Latvia or Estonia, our performance is much worse than in our own country. This is why we do not take this risk. I think that few can afford such a costly lesson in humility like building facilities in those countries.

Why is it so difficult?

I do not want to sound hostile, especially with regard to Ukraine, which proved a major disappointment, but please take note of just one issue. For quite some time now, politicians have been promising us that Ukraine will be steadily moving towards the European Union step by step. All those who plan to invest in a market such as Ukraine ask just one question: how far is Ukraine from the EU? Of course, we are talking about the EU funds, but also about investment security. Meanwhile, it turns out that years go by, subsequent governments in Kiev do some work, the Polish government also takes steps to bring Ukraine closer to the EU, but it turns out that this process has now stopped altogether. Today, no responsible person would be able to say that Ukraine would be joining PM

12 polish market

the European Union anytime soon. And this means that investing in that market in our segment carries a huge risk. I am not talking here about risks of a purely market nature, such as the demand, purchasing power, location or commercialisation. We have to consider much greater risks, for example, political ones. They cannot be overlooked. Even the largest Polish State-owned companies have experienced them very painfully.

I understand that for obvious reasons Western Europe is out of the question?

We are not looking towards the West for one obvious reason. We are 35 years old, and as I have already mentioned, at this age defending one’s market position becomes more important than attacking higher levels of the business. It is worth mentioning that, for example, Eastern Germany is a very strange experience for those who have tried to do something in that market. It is also important to remember than our cost of capital is 2% while our Western rivals have to pay 1% a year. It would appear that the difference is small, but after comparing the annual costs of debt servicing, it turns out that these burdens are 3-4 times greater than in the West. They include grace periods, the EURIBOR margin, depreciation and other factors. In many countries there is a rule according to which if you invest in another project, you do not pay income PM

tax. In my annual budget, income tax is still a very significant item, despite the fact that we do not consume this capital, but invest it.

An attempt to compete in the German market would be a very difficult decision to take.

For these reasons we find it hard to compete with Western operators. The reasons are the imperfection of the Polish tax system, which does not promote entrepreneurship as much as it could. If politicians were to take a number of bold decisions, we would have a level playing field and such projects would probably appear.

Talking of international expansion, can you tell us what you think of the current belief of the government that the State should help entrepreneurs in entering foreign markets?

This is a very interesting topic, closely related to your last question. Our challenge is not international expansion. Taking advantage of the domestic market is much more interesting.

The preponderance of commercial properties in Poland, I would say that over 90%, remains in the hands of international capital. I believe that this is where most room for action in our sector can be found. We should try to slowly buy these assets back. I stress the term “buy back” and not nationalise. Re-nationalise or “Polonise” are nice words and politicians find it easier to talk of nationalisation than PM

Property Market

buying back. This is understandable. Our task should be buying back assets which generate the entire revenues. Professionals use the term “earning assets.” These earning assets, which are now almost entirely in foreign hands, are a challenge facing the Polish government. In my opinion, the government should support our sector not in international expansion, but in taking over these earning assets followed by improving their quality. Today, customers visiting shopping centres hand over a large share of their spending to an American, French, English, Italian or Swiss pension fund. Why not a Polish one?

Summarising, you are in favour of taking over foreign capital, but only by market means.

Definitely. And now is the perfect time for this because the price of capital has fallen to a historically lowest level. It has never been cheaper. Poland still has good access to this capital. Using this access, our knowhow and the support of the government in this area, we should try to reverse the course of the river. Today, many people in Poland are concerned that the biggest retailer in our country is Biedronka which belongs to the Portuguese. True, we made a mistake allowing international chains to take over almost 100% of the market. This is felt very strongly by companies such as Alma, but also by all PM

other market players. And my words about your money spent at shopping centres going abroad also apply to discount stores. We are facing a huge challenge in trying to reverse the direction in which this river flows and to slowly buy back assets from these chains, using market methods of course. This means the methods where public aid complies with Community legislation. If we try to do this, after 2-3 generations most of this capital may be in Polish hands. This must be done by market means, because looking at the history of some countries which applied the renationalisation mechanism, this move had huge and adverse market and political consequences.

I oppose expropriating Polish assets which belong to international owners. We must remember that they played a huge role in the development of our economy. They should be offered fair buy-back conditions.

Several years ago, Germany began selling shares in their assets to the Chinese and Arabs who had a huge over-liquidity. However, they did it wisely. The Chinese or Arabs own companies with these earning assets, but German companies allocate profits in companies managing these assets. This leads to a situation where the capital provider is almost incapacitated because he is unable to manage his assets on his own. Thus, this is a method for supplying capital to the market without relinquishing management and revenues

generated by these assets. I think that some sort of an ownership-management structure should develop in Poland, too. The international market offers us unbelievable opportunities. Poland’s economic position in international financial markets is strong enough to be able to borrow money cheaply long-term.

Polish banks can borrow money even at a negative rate of interest. We should take advantage of this. Commercial properties still generate revenues outstripping the costs. Since we can acquire capital for 0% and are able to earn revenues from commercial properties, then why these properties should not be working for Polish pensioners?

But are there companies in Poland which can afford such investments?

I think that there are. For example, PZU has a huge over-liquidity. This is one of the companies capable of providing capital for such a fund and acquire the personnel able to manage these assets. Please observe that most revenues of PZU come from premiums paid by Poles. This would be an excellent marketing move. The largest Polish financial institution generates surpluses which constitute equity in an investment fund supplied by funds from the pan-European market.

Sounds fantastic. We are facing a historic opportunity. It is our duty to take advantage of it.

• PM

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Property Market

INVESTORS WHO INVEST IN POLAND COUNT ON HIGHER RETURNS RADOSŁAW KNAP, General Director of the Polish Council of Shopping Centres (PRCH), talks to Ewelina Janczylik-Foryś.

Let us acquaint our readers with a few facts about the Polish Council of Shopping Centres.

We are an association which has operated on the Polish market for 13 years now. We bring together more than 240 businesses and professionals from the retail sector. Among our members are investors, developers and tenants renting retail space. These are Polish and foreign-owned firms.

PM

At this year’s presentation of your report for 2015, we learned that 482 shopping centres operated in Poland at the end of 2015. This is a big number. Is there room for more shopping centres?

The retail property market has developed for over 20 years in Poland and it is becoming more and more mature.

According to our data, at the end of the first half of 2016 there were 486 shopping centres on the market. In Poland we have 289 sq m of retail space per 1,000 population. It is not a very high ratio. It differs, of course, depending on region or city. We measure it, but it still leaves a large margin for expansion. We can see this in announcements of new projects and projects to modernize existing premises. It is true that there will now be definitely less new centres than just 10 year ago. But the projects which are being put on the market are much better suited to it and meet the needs of consumers better. In coming years, we will see much more expansion and modernization projects for existing premises, which will need to change in keeping with changes to the buying patterns of present and future consumers. These trends will only have a very slight influence on market saturation.

PM

How does Poland compare with Europe and the world?

Poland is in the middle among European countries. Europe’s leader in this respect is Sweden where the ratio is PM

14 polish market

Property Market

over two times higher than in our country. Among larger countries, Britain, Austria and Finland rank just behind Sweden. Looking at the number of shopping centres, and the size of the country and its population, Poland is closer to Spain and Italy. An especially positive thing for us is that interest in our country from investors is still high. In Poland they can still count on higher returns on investment than in Western Europe, with risk being lower than in other countries of Central and Eastern Europe. Another very important thing, indicating that the condition of the market is good, is a low vacancy rate. It is only 3% for Polish shopping centres while the European average is 8% and the US average is 10%. These parameters make us a leader in the region and illustrate very well the real situation on the market.

Do you know how investors examine the market? How do they assess demand for a shopping centre in a given area?

The process of developing a shopping centre takes many years. Each stage is of key importance for the future success of the project, which is worth between a few dozen million and several hundred million euros – from work on the concept of the centre, which determines whether it is a success of failure in the future, to the process of its construction and renting it out. Investors who are taking the decision to enter Poland usually choose as their first location the safe – though, in my view, increasingly difficult market of large cities. From the technical perspective, after taking the decision to start a project, developers check the number of residents and shopping centres in the city, which are very basic data. Then, they look at what kind of shopping centres there are and where they are located. If a city district is being expanded there may be a need for retail premises. Then, the companies do further consumer research, examining the buying preferences of the local population, the purchasing power of prospective clients, client numbers depending on the time needed to reach the centre, the structure of trade in the area and so on.

These seemingly obvious data are very carefully analysed and have huge importance because they enable the investor to decide whether to enter the market and, if so, what to offer and to what sort of clients.

THE ECONOMIC GROWTH WE ARE STILL EXPERIENCING AND WHICH MAKES US STAND OUT FROM OTHER COUNTRIES IN EUROPE CERTAINLY ENCOURAGES INVESTMENT IN POLAND.

PM

At the Economic Forum in Krynica, the Polish Council of Shopping Centres and the Polish Trade and Distribution Organization (POHiD) took part in the debate “Prospects and Barriers to Retail Activity in Poland.” What is it that attracts to Poland foreign investors and international brands?

During the Forum in Krynica we talked about both prospects and barriers to the development of the retail sector in Poland. Although, as a rule, we try to talk only about positive aspects and present the Polish market as attractive for investment, recent developments do not instil optimism.

The economic growth we are still experiencing and which makes us stand out from other countries in Europe certainly encourages investment in Poland. However, the most important factor for investors is obviously the potential to PM

make a profit as are prospective clients. A stable economy and economic policy in terms of regulations is also at play.

Remember that starting a project like the construction of a shopping centre is a very time-consuming and long-term undertaking. The right choice of location, preparing all the necessary documents and permits, and the actual building of the shopping centre is a process spread over several years. This is why stability is so important. We are a country which is still developing. Investors risk more when investing in Poland so they count on higher returns. Definitely, among the risks associated with investing in Poland is now the unfavourable climate surrounding retail activity.

The tax on shopping chains which came into force on September 1, though it is now suspended under a European Commission’s decision, and the planned ban on Sunday retail trading, are a warning sign for potential firms and financial institutions planning to invest in Poland. As the Polish Council of Shopping Centres, we are opposed to the changes and ideas now proposed for the retail sector. Our position is that their introduction will have negative consequences for the whole sector.

Summing up the year 2016, what do you expect? Will the market of shopping centres expand by further projects?

The first half of 2016 was very steady. It saw the opening of only three new centres while another five were modernized or expanded. We expect that the end of the year will be much more interesting. Among the projects to be put on the market will be Hala Koszyki in Warsaw and Posnania, a record shopping centre in terms of size. The year 2017 and the beginning of 2018 also promise to be very interesting. According to our data and developers’ announcements, as many as 15 new centres with a combined space of over 400,000 sq m may be put on the market. The Polish market of shopping centres has not said its last word yet. • PM

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Property Market

CONSTRUCTION IN REVERSE GEAR Ewelina Janczylik-Foryś

D

eloitte has presented a report on the condition of construction companies in Poland for the year 2016. It also set out prospects for the coming years based on midyear financial reports. They are not optimistic.

IN 2015 THE SECTOR SAW A SALES .

INCREASE COMPARED TO 2014

In 2015, revenues of the 15 largest construction companies in Poland included in the ranking went up year-on-year by 8.2% while the corresponding figure for the WSE-listed companies and businesses included in the WIG Budownictwo (WIG Construction) index was 7.3%.

The analyses drawn up on the basis of the financial statements led to the inclusion of 15 construction companies in the ranking of businesses with the biggest revenues in Poland in 2015. The Skanska Group remains the leader with revenues of PLN 5.5 billion, 8.4% more than in 2014. It is worth stressing the fact that the top of the ranking saw no changes compared with 2014. Second came the Budimex Group, controlled by the Spanish Ferrovial company, with revenues of PLN 5.1 billion, representing an increase of 3.7% yearon-year. Third was the Austrian company Strabag, posting revenues of PLN 3.8 billion, meaning an increase of 22% against the previous year.

Interestingly, the line-up of the companies featuring in the ranking has not changed since 2014. There are now new companies in the ranking. The biggest increase was in the case of the Torpol Group, which posted revenues almost 59% higher than in 2014. It is worth noting that the PORR Group saw a rather large increase of revenues (23%), climbing four places in the ranking compared with 2014. However, it must be remembered that this revenues increase was also due to the

16 polish market

incorporation by the PORR Group of Bilfinger Infrastructure.

The total revenues generated by the 15 companies in the ranking exceed PLN 30 billion, representing an increase of nearly PLN 2.3 billion, meaning over 8.2% year-on-year.

President of Skanska S.A. Piotr Janiszewski thus commented on the results: “We must remember that the construction sector strongly relies on the business cycle. The results presented today for 2015 are the effect of the past – our activity in 2013-2014. Today, the contracting parties very often add the “design and build” system, which extends this time even more. This system means that there is a period of at least a year before a contractor can start actual works, even after signing a contract. Consequently, we can expect to see the financial effects of current tendering procedures in 2-3 years time.”

MAJOR SLOW-DOWN IN THE CONSTRUCTION SECTOR IN 2016

In the first half of 2016, revenues of construction companies listed on the WSE rose by PLN 274.3 million, i.e. by 2.8%.

It is with some trepidation that we observe the GUS data for the January-August 2016 period. During this period there was a decline of construction and assembly output of almost 15% compared to the same period in the previous year. It is associated with a shift of key infrastructure projects under the new EU financial plan. “The effects of delays in tendering procedures are reflected in the data released by the GUS. This August saw a decrease of construction and assembly output of 20.5% expressed in constant prices. In the whole JanuaryAugust 2016 period production was also lower than last year by 14.9% in constant prices.

Shifting the key projects may also cause

a slow-down in the sector in 2017, and the first revenues from the current tendering procedures conducted under the new EU financial plan are expected by construction companies in the second half of 2018”, said Patryk Darowski, CFA at Deloitte.

The rather weak condition of the construction industry is also confirmed by the latest data on corporate bankruptcy.

After three consecutive years of decline, the number of bankruptcies in the first half of 2016 increaseed by 8%. This is, however, only five entities more and this fact does not have to determine the entire 2016.

Delays in announcing large infrastructure tenders in 2016 have a negative impact on the current situation in the construction industry. Nevertheless, in the first months of 2016, there was an increase in average wages in construction. An increase in the demand for labour is also expected, due among other things, to the expectations for the implementation of projects financed from EU funds. In the first half of 2016 the downward trend in the number of employees in the construction industry, continuing since 2012, was arrested. According to the data published

by GUS, the average employment in the first half of 2016 increased by 0.2% compared to the same period in the previous year.

WHAT NOW? Representatives of the largest construction companies see a chance in the new EU financial plan, as only then the announcement of tenders and their finalization will not be delayed so much. At the moment, a delay in announcing tenders, especially in the railway infrastructure is 3 years. In addition to direct EU funds for large infrastructure projects in Poland and the lack of barriers to enter the Polish market meant that competition in the tenders has increased, which in

Property Market

TOP15 Polish construction companies by revenue in 2015 (in PLN) 1. Grupa Skanska 5 509 363

2. Grupa Budimex 5 133 994

3. Grupa Strabag 3 835 846

4. Grupa Polimex-Mostostal 2 548 575

5. Grupa PBG 1 798 815

6. Grupa Erbud 1 763 282 The combinated revenues generated by the 15 largest construction companies increased in 2015 to PLN 30.8 billion, which represented a rise of PLN 2.3 billion, or 8.2%,, compared to 2014.

7. Grupa Trakcja 1 329 180

8. Grupa PORR 1 293 120

+8.2 %

PLN 2.3 BILLION

9. Grupa Mostostal Warszawa 1 275 431

10. Grupa Unibep 1 242 860

11. Grupa Elektrobudowa 1 242 830

12. Grupa Torpol 1 238 241

13. Warbud S.A. 1 106 860

14. Grupa Mirbud 760 815

15. Grupa Mostostal Zabrze 759 624

turn leads to lower margins generated by months. He says that one in four buildings general contractors. In this situation, there sold in Poland is a Skanska building. The commercial properties sector is very strong. is a number of pathologies, with companies even offering to carry out projects for It not only develops by itself, but also entails many investments.

48% of the initial price! Fortunately, the amendment to the Act passed in June 2016 This is confirmed by the Ewelina Kałużna, Director for Leasing and Property Portfolio and in force since July 28, 2016 has reduced Management Skanska Property Poland, who the importance of the price criterion in the case of public contracts. According to the said: new legal situation in most tenders the price "Skanska is optimistic about the future. of the contract may account for up to 60% Forecasts show that the activity of tenants of all evaluation criteria. A positive signal in the near future will remain at roku a high w 2015 a notowanych is also the start of a dialogue between na theGPW level. However, they are turning even more authorities and the contractors regarding towards developers who offer primarily the public procurement contracts, which aims to comfort of work space, flexibility and the further develop beneficial market solutions. highest quality of projects. Rents are slowly According to a commonly held belief, becoming less important (often they do not the volume of investment projects may be exceed 10% of the company’s total costs), increased thanks to new shopping centres, particularly in Warsaw, where the tenant’s residential and office properties, widely market has led to their decrease. A tendency known as building construction. President which barely emerged a year or two ago, has now dominated the thinking about designing of Skanska S.A. Piotr Janiszewski confirms that his company has noted a boom in thena budownictwo and erecting kolejowe office buildings. To find a tenant, commercial properties market, saying that: we need to create a place that will attract “Skanska is trying to diversify its portfolio.na lata new talent to the company. People are every 2016-2023 We are present in road and rail infrastructure, company’s main asset, especially considering but also in building construction. We see a that employment costs can reach 70% of the slowdown in central and local infrastructure total costs of a business. Tenants are looking contracts. The building construction sector for buildings which can almost become a HR tool offering considerable added value to their also experiences a fall in output, except for the office and housing market which post business. Ideally, such buildings should offer record results.” Skanska’s president expects freedom in selecting work places because the situation to remain stable in the coming today work is often performed outside.

Stan

21%

przez PKP PLK jest oceniany

We are currently implementing 10 projects in Warsaw and regional cities. In Warsaw we implement two office parks: Generation Park, which will be the largest office complex in Skanska's portfolio in the CEE region, and Spark, which will be the first office building in Poland, and will be given the "building without barriers" certificate at the time of commissioning. When it comes to regional cities, we are going to build a modern office building in the heart of the business district of Gdańsk. This will be our premier office development in the Tri-City, with the first tenants moving in in 2019. In Kraków we have just laid the foundation stone of the largest office project of Skanska outside Warsaw: High5ive. We also implement and plan further projects in other regional markets in Katowice, Poznań, Wrocław and Łódź.

Due to the expected slowdown in the construction market in Poland after the completion of the present EU financial period, construction companies should think about expansion into foreign markets and diversification. The establishment of the Polish Construction Exporters Cluster is to help in building a strong position of Polish companies in foreign markets.

A key challenge for the entire infrastructure sector is to survive the stagnation in large orders. Revenues from new tenders for road and rail projects will be posted by companies in 2018.

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Property Market

THE AWARENESS OF POLES AS BUYERS IS INCREASING WOJCIECH SMOLAK, Marketing and Sales Director at BPI Polska, talks to “Polish Market”.

BPI Polska is a subsidiary of the CFE Group specialising in real estate. CFE operates in the construction sector in Brussels and has been listed on the stock market there for the last 30 years. Is BPI transferring Belgian standards to the Polish market?

The first stage of the Four Oceans project was launched in the city of Gdańsk in 2009.

This means that we entered the market after the end of the construction boom, but at the same time the housing market in Poland had matured, creating opportunities for the implementation of the quality and approach to housing offered by us in other, developed European markets. The unique value of every BPI project is best reflected in our slogan: “Developing Urban Harmony”. Launching every new project we set ourselves one goal that never changes – to build in a way that meets specific expectations of our customers while ensuring that our projects have a positive impact upon the environment and the neighbourhood. We are supporters of master planning.

We go beyond the walls of buildings, making sure that the surrounding areas are developed in a friendly manner and that attractive public spaces and valuable common areas are created in the process.

PM

Your apartments are characterised by good location, high finishing standards and modern architecture. One can say that they are luxurious. Are you also seeking customers who have bigger expectations?

Although BPI does not compromise on quality, I would use the term “thought-out diversity” rather than “luxury” to describe the nature of our projects. Every project includes several types of flats meeting the real needs of individual groups of customers. The Moon Boulevard project in Wrocław includes flats with elevated standards and apartments with the floorage space of between 27 and 128 m2. Our Wola Libre project in Warsaw offers as many as three types of units: Soft Lofts situated on the ground floor, 3.7 m high and with spacious gardens up PM

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to 126 m2, classic Optima flats, including balconies, and apartments with terraces, including roof terraces, located on the upper floors, with a floorage space of up to 170 m2.

More and more flats are put up on the market – both those offered by developers and from the secondary market. Can you say, based on your experiences, which type of flats Poles are looking for?

The awareness of Poles as buyers is increasing. They know exactly what they need and what type of flats they are looking for. Regardless of whether this is going to be an attractive rental investment or a flat to live in, they come to the sales offices with precise and highly specific requirements. In the boom period, approximately until 2008, when flats were relatively cheap, the best selling units were large for their type (for instance, one-bedroom flats with a floorage space of over 50 m2, two-bedroom flats in excess of 70 m2). Later, the growing prices coupled with a declining purchasing power of Poles meant that people searching for units offering maximum functionality within a minimum space mostly chose smaller flats but with the largest possible number of rooms. Today, this trend is beginning to reverse itself. The higher downpayment required from persons taking out mortgages has led to Poles again beginning to look for more spacious flats, assuming that if they are going to pay more for the property, they can demand proportionately more for their money. This increase of expectations can be seen not just in the floorage space of flats, but also in greater requirements concerning the finishing standard of the units and the common areas.

PM

Do Polish preferences match the tendencies observed in Europe?

When it comes to the attractiveness of the Polish real estate market and the flats offered here, the answer is yes, mostly due to the prices which are still lower than in Western Europe.

The interest of foreign investors is gradually PM

leading to a change of the structure of the buyers and a growing number of customers wanting to buy flats strictly for rent. When it comes to the general characteristics of flats, units available in the Polish market are still smaller than those offered in Europe. However, this is also changing gradually. After a period where small and consequently cheaper flats sold much better, today customers are beginning to buy with greater awareness and seek specific functionalities, which increases the floorage of the properties purchased by them. This too brings us closer to Europe.

I have read that BPI Polska “develops and creates innovation and high quality projects”. The real estate sector continues to develop. Innovation is necessary. Can innovation be seen in the architecture of projects, the use of new technological solutions in materials selection, the approach to selling properties?

The innovative approach of BPI Polska is expressed, above all, in the lack of fear of taking risks and breaking the established standards. We were the first in Gdańsk to offer “turn-key” apartments. In our Wola project in Warsaw we implemented a pioneering solution to the problem of residual soil contamination by conducting a transparent land reclamation process. In Wrocław we are participating in the revitalisation of the boulevards running along the River Odra thanks to a planned promenade – a pedestrianised shopping street and a new square. In addition, on the façade of our building we use Italian ceramic panels which change their appearance depending on the light, colour of the sky and the movement of the River Odra flowing nearby. We applied a similar solution in the case of our Four Oceans project in Gdańsk, where the facades are covered with Alucobond panels which change their colour under the influence of sea waves and the resulting light changes. There are more such fascinating little details in our projects.

• PM

Property Market

Wrocław, Poland New Retail Concept Mixed-Use Project

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www.bulwaryksiazece.pl

Property Market

SMALL, BUT MY OWN?

Ewelina Janczylik-Foryś

A

ccording to the latest RE/MAX Europe Housing Report, prices of homes in the European markets continue to increase. Low interest rates in Poland encourage to take out mortgages, but are also conducive to seeking alternative investment opportunities (buying flats for cash). The year 2015 was a record year in terms of sales of apartments in the primary market, due, among others, to the Flats for the Young scheme. Buyers were also encouraged by stable prices of residential properties. According to Agata Stradomska from RE/MAX Polska: "Since the beginning of this year we have been observing an increase of the offer prices, depending on the location and size of the flat. Bigger increases occur in the primary market – usually 6% or so, smaller in the secondary market – mostly around 3%. The demand for flats is still high, and for this reason the development prospects of the real estate market are good as far and the immediate future is concerned."

What are the factors that determine purchasing decisions? Above all, the price! Apart from the amount that must be paid for a given property, customers also take into account other expenses, such as the civil law transactions tax, notarial fees or the required downpayment of 15%. To this we must add the costs of the necessary redecoration or finishing. When this basic price criterion is met, buyers also take note of the location, the layout, floor, and facilities such as lifts and underground car park. Certainly, needs vary, depending on the life situation of the buyers and the number of household members.

Single persons usually seek small one-bedroom flats in a good location. Families with children want a flat with several rooms, with nearby kindergartens, schools, lots of greenery, parks or playing fields.

RE/MAX experts forecast that over the next six months we are going to see a bigger increase of sale prices of residential properties

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compared to rent rises. Alas, for many families a flat of their own remains a pipe dream, a luxury. No wonder then, that the government has just announced the Flat Plus Programme. This is a scheme dedicated to all Polish families. Next to the Family 500+, its aim is to support the pro-family policy. People are reluctant to start a family because they do not have proper conditions for raising children. They have no flat. The government has decided to help those in need. Premier Beata Szydło said: “This programme is the first such comprehensive solution to the housing problems of Poles. The rent in the case of such flats will be PLN 10-20 per one square metre.

This rent will be connected with a possibility to buy the flat. The government wants Poles to have a chance to have an apartment and we have decided to take into account the situation of different groups of Poles, both those with very low incomes, and the middle class which we treat very seriously. Today, many young people cannot afford their own place without getting into debt for decades.”

The pilot programme covers 17 towns and cities all over Poland, where letters of intent have already been signed. They are: Biała Podlaska, Chorzów, Dębica, Gliwice, Katowice, Kobyłka, Nowa Dęba, Pelplin, Radom, Stalowa Wola, Skawina, Starogard Gdański, Trzebinia, Tychy, Poznań, Września and Wałbrzych. BGK Nieruchomości S.A., a subsidiary of Bank Gospodarstwa Krajowego, which manages the entire project, is also conducting talks with the representatives of other local authorities.

The flats built under the Flat Plus Programme will be offered for rent to everybody, families with children as well as single persons. But since the Flat Plus scheme is designed to support families one should expect persons meeting these criteria to be given priority in the allocation of the properties. There is still no decision regarding any income limits. Families must be able to

afford the rent. This is the necessary minimum. There is no upper limit.

Although the flats are to be rented, the government does not exclude the possibility of rental with a “title transfer” option after 30 years. In this case, the rent will be 20% higher.

The Flat Plus Programme is to be based on three pillars: • flats built on land belonging to the State Treasury (National Housing Fund). Land of the State Treasury, including communal land, is to be placed in the National Housing Fund tasked with its management. Nonetheless, the government is open to building on private land as well.

• support for social housing. The government is to increase its support for social housing for rent. Local authorities will be able to apply for subsidies covering 35-55% of the costs of building such flats and for credits granted

by Bank Gospodarstwa Krajowego on preferential terms.

• support of saving for housing purposes (Individual Housing Accounts). Individual housing accounts will enable those interested to save towards buying their own property. The government proposes adding a special bonus to such savings. The minimum period of saving will be 5 years. The money in the accounts can be spent on any housing-related purpose.

We can already see the first effects of the announcements made by the government.

This month, a letter of intent was signed in Łódź between the municipal authorities and BGK Nieruchomości S.A. which provides for co-operation "in the implementation of investment projects including housing construction and social infrastructure and utilities ”. This means that approximately 350 flats for rent will be built on a 3.78 ha plot designated by the city.

•

Property Market

INTERNATIONAL FIRMS ARE FLOCKING TO WARSAW. WE ARE WINNING WITH PRICE AND TRANSPARENCY. RAJMUND WĘGRZYNEK, Managing Director Tétris Poland, talks to “Polish Market”.

Poland is increasingly becoming the country of choice for the headquarters of global corporations. What is driving this trend?

In the global ranking of transparency in the real estate sector* we took 13th place.

A highly educated workforce with experience 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 neighbours in the Central and Eastern Europe. It is attractive to investors and still relatively not so expensive.

PM

What is the current trend in fit-out pricing?

Is office development in Poland 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% of the large players coming into Poland are consulting 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, like Wyborowa Pernod Ricard, Whirlpool or Stanley Black & Decker.

POLISH TOUCH IN MODERN DESIGN. THE BIGGEST JLL OFFICE IN EUROPE MADE BY TÉTRIS.

PM

PM

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.

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-million-dollar 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, this was the case with the new offices for JLL and MMC. At Tétris we drive projects from the initial concept design to a complete turnkey result with the finest finishing touches. * 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.

•

1000-year-old wood embedded in resin, a hall lined with "black gold" or murals with lace a visit to the new office of JLL in Warsaw Spire is a journey through the natural, historical and cultural treasures of Poland. The designer of this unusual arrangement is Danuta Barańska, creative director of Tétris Poland, which specializes in Design & Build model.

Tétris designed and delivered the whole interior of JLL in Warsaw Spire. On each floor there are 15 to 20 rooms of various sizes. These include small rooms to work in silence, creative rooms and rooms for internal meetings.

"It is always important to translate the character of the company, its values, and preferences of employees, into the architectural design of their office- says Danuta Barańska of Tétris.

"We decided to base the concept of the office on three Polish aspects: nature, science and tradition. You can see those influences in meeting rooms. Among those are rooms called Amber, Coal, Forest, Sea, Salt, Beach, Honey or Grain. Each room surprises with unprecedented finishing materials. The Coal Room has walls lined with ore in the form of safe to use sinter slabs. One wall in the Forest Room is made of natural moss. In the Amber Room a transparent onyx imitates the precious stone, and in Salt Room illuminated white quartzite shows the elaborate structure of the crystal.

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Property Market

POLAND THE CRADLE OF FAIRS Ewelina Janczylik-Foryś

E

xhibition and fair centres in Poland are playing an increasingly important role in promoting Poland and the Polish economy in the international arena. Despite a rather difficult situation in the construction market, building construction (shopping centres, office blocks or exhibition spaces) is undergoing a boom. We see how new conference-training facilities appear in large Polish cities. Every one of them boasts an exhibition centre. Among the most important venues of this type are Poznań International Fair, Targi Kielce (Kielce Trade Fairs), MT Polska and Expo XXI in Warsaw, International Congress Centre or Kraków Fair.

Their advantage is a huge space capable of accommodating tens of thousands of people.

Przemysław Trawa, President of the Board of the Polish Chamber of Exhibition Industry, said: ”Polish fairs invite exhibitors and visitors to attractive, modern, fully equipped, professionally managed fair and exhibition venues. Many of them have been expanded and modernised in recent years. Completely new facilities have also been built.”

AT THE BEGINNING…

The term “fair” appears in medieval scrolls. It meant an opportunity to meet other people for the purpose of carrying out a specific transaction – an exchange of goods. I think that this function of a fair has survived until the present times because each time the objective is to sell. Nonetheless, as time went by fairs began to acquire yet another meaning. Between World War One and Two, considered by some the beginning of the fair market in Poland, cities such as Poznań or Lvov (which at that time

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belonged to Poland) gained in importance.

Lvov, called Lwów in Polish, was the venue of the International Eastern Fair, and Poznań focused on the trade with Western Europe. Even then it was clear that fairs are important not just locally, but internationally. Alas, the next period of the history of Europe and Poland was not conducive to the development of this sector in our country. This development began in the early 1990s. In 1993, on the initiative of Poznań International Fair, with enormous support of nearly 150 entrepreneurs representing Polish companies from the exhibition sector, the Polish Corporation of Fairs and Economic Exhibitions Organisers (PKOTiWG) was established. Then, the PKOTiWG, and since 2006 the Polish Chamber of Exhibition Industry (a chamber of commerce, member of the Polish Chamber of Commerce) was one of the first trade associations in the sector. Such a high number of entrepreneurs building a new industry organisation demonstrated the existence of a pressing need to bring all these operators together and to build a strong position of the Polish exhibition market.

The main goals in the initial phase of the organisation’s activity included: creating a Polish brand – gathering and systematising information about the Polish exhibition market, building foundations for the introduction of European standards in the Polish market, also with regard to the publication of reliable statistical data regarding fairs held in Poland. These objectives have been reached. One of the promotional tools was the Fairs in Poland Report published in June 1994. This report described the situation existing in 1993.

It stated that more than 500 events had been

organised in 49 towns. According to the website of the Polish Chamber of Exhibition Industry, these fairs attracted over 33,000 exhibitors, including more than 7,000 from abroad.

WHAT ABOUT TODAY?

This year again, the Polish Chamber of Exhibition Industry in collaboration with the auditor CENTREX – International Exhibition Statistics Union, presented its report entitled Fairs in Poland in 2015. The survey included 200 exhibitions organised in 2015. The total exhibition space hired in 2015 was 764,908 square metres. This meant an increase by 12.1% compared with 2013.

The number of exhibitors reached 28,392 companies, which means a 2% increase on 2012 (27,810 exhibitors). It is worth noting that some 16% of exhibitors at fairs held in Poland in 2015 came from abroad, with 84% being domestic exhibitors. The audit established that the exhibitions organised in Poland in 2015 had attracted 23,718 Polish exhibitors and 4,674 “international” exhibitors. For the first time the authors of the Report made a distinction between domestic, international and multi-national exhibitors. Why? Marzenna Łukaszewicz, director of the Office of the Polish Chamber of Exhibition Industry and Editor-in-Chief of the 2015 Fairs in Poland Report, explains: "In the past, we traditionally divided exhibitors into domestic and foreign ones, and the criterion was the location of the company’s principal place of business given in the entry form. In 2015, based on the international UFI and CENTREX definitions, the Polish Chamber of Exhibition Industry set two new statistical parameters for the Polish exhibition market:

Property Market

Exhibitions in Poland 2008-2015

Data refers to trade fairs and exhibitions audited by CENTREX – International Exhibition Statistics Union.

“multi-national exhibitor” and “international exhibitor,” and leading fair organisers made an attempt to implement them.

An increasing number of foreign exhibitors taking part in exhibitions held in Poland are companies which, despite having their capital and head office abroad, have established subsidiaries in Poland. Those subsidiaries were often presented during exhibitions as Polish businesses. Moreover, international corporations registered in more than one country can be found among exhibitors. Therefore, the definition of a “multi-national exhibitor” makes it possible to identify among domestic exhibitors companies that trade in several countries.

Certainly, the purpose of this distinction is to increase the accuracy of statistical data.

But this division also shows how important exhibitions are in promoting Poland and Polish products. The presence of companies at fairs, especially international ones, attests to their position and sends a signal that these are ready for international expansion. The International Defence Industry Exhibition MSPO in Kielce, where this year’s edition attracted a record number of companies: 614 from 30 countries, with Poland represented by over 325 exhibitors displaying products offered by State-owned and private companies, is an excellent example here. Another example from a completely different sector is POLAGRA FOOD in Poznań. In September 2016, 1,000 exhibitors from 30 countries presented their products to more than 60,000 visitors.

Visitors make or break a given event. According to the report published by the Polish Chamber of Exhibition Industry, exhibitions attracting the most interest include

those focusing on the leisure, hobby and free time sector. The authors of the report see that Poland reflects the global trends. In 2015, the number of visitors was 1,436,083, which was 4.2% (57,874 visitors) more than in 2014, and nearly 15% more than in 2013!

source: Polish Chamber of Exhibition Industry

One can say with full confidence that the exhibition market in Poland is doing well. Undoubtedly, it is a good promotional tool. And because Poland badly needs promotion and a strong brand Poland, it would be foolish not to take advantage of this instrument. •

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Property Market

KRAKÓW IS A MODERN CENTRE OF BUSINESS, SCIENCE AND NEW TECHNOLOGIES EWA WOCH, Vice-President of Targi w Krakowie Sp. z o.o. (Trade Fairs in Krakow Ltd.), talks to “Polish Market.”

The exhibition and conference market seems to offer great prospects. But Poland already has several important venues of this kind. How does one compete on this market?

What do you offer to organizers of potential events to attract them?

Indeed, we can now see increased activity on the exhibition and conference market. Trade fairs are expanding and there are more and more large international congresses and conferences in Poland. There are several reasons behind this. Poland is still a newly discovered destination, which means it is very attractive for participants in these events. Poland is safe and, which is equally important, is very easily accessible. Warsaw and Kraków, the most attractive cities in the event sector, have excellent air and road connections, which makes it easier to organize international events. Hotels in the two cities are also very good – they are modern and their number is expanding. And last but not least, modern exhibition and congress venues have been developed in many Polish cities in recent years. Kraków is especially privileged in this respect because it has several professional facilities for organizing events of various kind. More than two years ago we opened our International Exhibition and Convention Centre Expo Kraków. It is one of the very few wholly private investment projects in this sector in Poland. No public money was contributed to build the centre. It was designed to be able to host a variety of different events: fairs, congresses, conferences, product shows, corporate events, performances, concerts, banquets and so on.

The layout of the halls can be changed very quickly and easily: one can build here scenery and stages, place buffet tables and construct exhibition stands. Our modern solutions and technologies enable, for example, live broadcasts of surgeries taking place at the other end of the world. The convenient location of the centre enables easy access to it from the city centre, motorway and airport. At Expo Kraków, we are able to organize any event, except perhaps an ice ballet performance.

PM

PM

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But you have decided to go somewhat beyond the sector.

You offer the organization of concerts, for instance. You say that your facility is multifunctional. Where did the

idea to conduct such broad activity come from? What does it look like in practice?

Targi w Krakowie Sp. z o.o. (Trade Fairs in Krakow Ltd.) is first of all an organizer of fairs and exhibitions. We have in our programme 18 B2B trade fairs. We are the third biggest organizer of such events in Poland. Another sphere of our activity is the organization of congresses and conferences – both our own events and those for Polish and international associations and organizations. We actually focus on these two main spheres of activity. But since we opened our Expo Kraków centre we have also worked with many agencies and firms which organize their own events.

Among these events are concerts, performances and festivals. We are open to every customer wishing to rent premises from us and carry out their projects there. In such cases, we offer our logistical and technical assistance.

Kraków is thought of as a city of educated people, strongly associated with culture and arts. Does this have any impact on the type of events you organize? Does it look like you have found yourself in a niche?

I think we are influenced here by unfair stereotypes.

Kraków definitely is a city of culture and arts, Poland’s main tourist destination. But Kraków is also a modern centre of business, science and new technologies. This is where the “Polish Silicon Valley” is being developed and where the IT sector is very strong. Besides, remember that more than 8 million people live and work within a radius of 100 kilometres PM

Property Market

from Kraków and the largest Polish industrial plants are located in the area.

It is true that one of our biggest events is the International Book Fair, which attracts every year around 70,000 visitors.

But among our flagship events are also fairs dedicated to industry and modern technologies, like for example the International Trade Fair for Composite Materials Kompozyt Expo and Life Science Congress Eurobiotech.

The design of your halls is very unusual, with not a single pillar used on 9,000 sq m of space. How did you manage to achieve this?

We wanted very much to make our facility truly functional and able to meet any requirement of its potential users. Organizers always and everywhere complain of problems with arranging space if there are structural columns in the hall. In the past, when we rented premises for ourselves, we also complained of this very much. Our first objective when designing Expo Kraków was the absence of pillars as they put constraints on space. The designers had to meet our requirements. Special roof trusses with a span of 42 metres arrived from Austria. Interestingly, they are made of wood, which produces an excellent aesthetic effect in these large halls measuring 116 by 44 metres.

PM

WE ARE OPEN TO EVERY CUSTOMER WISHING TO RENT PREMISES FROM US AND CARRY OUT THEIR PROJECTS THERE.

Do these premises incorporate any solutions invisible to the naked eye but enhancing their attractiveness compared to the competition.

I would like to stress again our effort to make our premises functional. Our customers, and we ourselves as event organizers, appreciate that all the infrastructure runs in ducts under the floor, which means any device can be connected at any place in the facility. The fibre-optic cables enable problem-free communication and Internet access. The floors of sufficient strength allow even very heavy and large vehicles and machines to enter the halls.

But our biggest asset is our excellent team of specialists, who will help you organize any event at Expo Kraków.

• PM

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Property Market

STADIUMS ARE NO LONGER JUST SPORT VENUES Today, sports infrastructure has many more uses than originally expected. Stadiums and arenas host not only sporting events but are turned into conference rooms, exhibition spaces, concert venues, or event places playing host to very important political events. Recent years have definitely changed the perception of this type of facilities. They have gained not only in utility, but also, and perhaps above all, have begun to stimulate economic development.

Marcin Haber

I

n reality, the Polish sports infrastructure market in its present version has existed since 2012, when after the end of the UEFA Euro Football Championship we ended up with four modern stadiums which had to be exploited. The authorities in Warsaw, Wrocław, Poznań and Gdańsk had to learn how to manage these facilities in a market way. In simple terms, the stadiums had to start earning their keep. Three of them have been made available to local soccer clubs - Lech Poznań (the stadium was rebuild for the UEFA Euro 2012), Śląsk Wrocław and Lechia Gdańsk. Due to the fact that the Legia club already had its own stadium, the National Stadium in Warsaw had to find another use. PGE Narodowy – as this is its present name due to the titular sponsor, has demonstrated that a modern stadium is much more than just a place for organising sporting competitions.

In a recent interview published by “Polish Market”, Jakub Opara, President of PL.2012+, the company managing PGE Narodowy, explained what the management of such a facility meant today. This is much more than sport: “PL.2012+ has also decided to open the stadium to the people of Warsaw and those living in other cities. A sightseeing offer has been created (we handle 300,000 visitors per year) and the external areas opened to the

26 polish market

residents. Today, PGE Narodowy is a vibrant, lively place, friendly and open to everybody who is looking for attractive ways of spending free time. As part of our CSR activities, together with various associations, the operator is running a number of free sport workshops: running, roller-skating or long-boarding. The stadium hosts approximately 200 civic events a year. PGE Narodowy has been 'growing' every year. The number of events and visitors has increased along with the revenues. Today, we have reached some 500 events per year attracting nearly 2 million visitors. Our aim is to maintain this level.” Apart from sport and recreation, stadiums are also used as exhibition centres and concert halls. This has created opportunities for many sectors which now co-operate closely with stadium managers.

Last summer, the stadium in Wrocław hosted one of the biggest concerts in Poland’s history. Legends of heavy metal - Anthrax and Iron Maiden-performed on its stage. Organising the event at the Municipal Stadium allowed more than 40,000 spectators to see it.

This year, PGE Narodowy played host to the participants in the NATO Summit in Warsaw.

It was adapted to receiving heads of state, delegates and journalists. For several days its normal functioning was suspended and the venue became the best-guarded place in Warsaw.

It passed this test with flying colours. The stadium and the surrounding areas proved an ideal place for an event of this type. In recent years, the same stadium has been organising the Book Fair with publishers filling the entire facility with their stands. This is one of the largest events of this kind in Poland and every year attracts a huge number of visitors.

These are just some examples showing the extensive use of the new stadiums built for 2012 and the number of sectors which can benefit from the sports infrastructure.

Certainly, there is also the other side of the market. Somebody had to build these stadiums, fit them out, deal with pitch and seats replacement, operate the hospitality venues or the toilets. This is a huge market worth hundreds of millions of zlotys. Apart from the construction works, other tasks have to be repeated and do not end with a single investment. This generates orders for companies from many different sectors and creates economic benefits.

It is time to stop looking at sports facilities as if they were huge loss-making projects costing us millions. The examples mentioned above clearly show that with the right management and vision, stadiums and sport arenas can pay for themselves and be almost • self-sufficient.

EXHIBITION

CENTRE

WWW.EXPOMAZURY.PL

Economy

NEW TREND IN THE MANAGEMENT OF

PUBLIC UTILITIES ZBIGNIEW KLONOWSKI, President of the Board, TRIAS Group

T

he TRIAS Group has operated in the Polish market for over 20 years. Throughout this time we have observed the changing needs of our customers and the business environment. Thanks to the narrow specialization of the companies comprising the TRIAS Group, and a large team of experts, we analyse the market globally and comprehensively consider the needs of the customer.

One of the biggest changes which we are currently seeing in the market is the approach to the management of public buildings. Our experience resulting from a multifaceted co-operation with facilities (we have been running the largest events for years, installing permanent audio-visual systems and handling the maintenance and technical support of well-known Polish facilities), our knowledge of their specifics and our business approach to investments has allowed us to develop a pioneering model of public utility facilities management as a response to the needs of the modern market. Commercial facilities management is a term that appears increasingly frequently when talking of further investment projects in our country. Leaving the management tasks to specialised companies is a trend visible in Western Europe for a number of years. In the USA it is a well-established standard.

In line with global trends in facility management, also in Poland this direction was initiated at entertainment and sports facilities. Thanks to many years of involvement in the activities of the Polish section of the International Association for Sports and Leisure Facilities (IAKS) we were able to observe and analyse similar processes taking place elsewhere in the world, consult with experts from all of Europe (IAKS is an international association founded more than 50 years ago) and participate in international

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bition gress

Economy

The Exhibition The Exhibition

and Congress and Congress

Centre Centre

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Economy workshops on sports infrastructure. Observations, analysis and knowledge of the Polish market and international experience derived from our co-operation with IAKS showed us what to look for when building a strategy for facilities management. Sport halls are not only the arena of rivalry, but multifunctional buildings whose proper functioning should be based on the principles of business real estate management and proper economy. Taking a global look at a facility allows you to create a strategy corresponding to the actual needs of the environment, including the local community. The key to the success of any facility is: organization of events, attention to the class of the facility, high level of service while controlling and optimizing costs. Only a facility that is alive, has a chance for success, for interesting potential tenants, business partners, and for filling the stands, and as a result, a chance to generate revenues from the lease of advertisin and commercial spaces or catering areas.

Actions taken by a facility operator, are the result of the needs and expectations of the business comminity and continuous analysis of the cost and revenue generated by the facility. A sports facility is a business product, whose operation must be adapted to the needs of the environment.

Then it must be effectively promoted and its operations optimised. I am convinced that only a consciously created offer of a facility designed by a team of experts and professionals guarantees the implementation of the assumed plan.

The first such large facility in Poland managed on a commercial basis under a concession agreement is Azoty Arena, a large sports and entertainment hall in the north-western city of Szczecin. The TRIAS Group, acting through its dedicated company Arena Szczecin Operator Sp. z o.o. (ASO), carries out tasks related to the comprehensive management and development of the facility, particularly in terms of tasks that perform a number of civic and sports functions in the region. The foundation of ASO is the "local business power," or people who for years have been involved in the development of Szczecin, with knowledge of the city and the needs and tastes of its inhabitants. Thanks to their competences and the experience of VES (another company in the Group that supports hundreds of events around the country), it was possible to create a business offer of the facility adapted to the expectations of its future users. Preparation in advance of a strategy taking into account the effect of all the factors that support business and those that can threaten it was the pillar of the development of the Szczecin facility in the right and expected direction. For Azoty Arena, those pillars were technical sophistication of the facility, flexibility of the optimisation of the low voltage systems installed, a properly selected and executed tele technical and audio-visual area, the location and the needs and purchasing power of its potential customers, proper support of the stakeholders and their needs, and additional proactive development of added services by the operator.

By signing a three-year concession agreement with the city Arena Szczecin Operator took over the management and responsibility for the costs and revenues, achievement of the development indicators of the facility and its surroundings. At the same time the company performs the tasks set by the facility’s owner, the Szczecin Town Hall. ASO manages the facility on many planes. Parallel to administrative and technical management and optimisation of fixed costs

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THE KEY TO THE SUCCESS OF ANY FACILITY IS: ORGANIZATION OF EVENTS, ATTENTION TO THE CLASS OF THE FACILITY, HIGH LEVEL OF SERVICE WHILE CONTROLLING AND OPTIMIZING COSTS.

connected with the functioning of the facility, the company looks after its development and image in the media.

Thanks to the business approach to management, Azoty Arena is not just a sports facility, but also a business space which the company has commercialised, finding tenants for offices. Moreover, the first fitness club in the Eurofitness chain has been opened there and the arena attracts worldfamous artists and sports people.

As the TRIAS Group, we have initiated in Poland the trend of facility management by private operators and intend to continue it. I think that the local authorities will consciously and consistently move in this direction. The local governments often do not have specialists able to organise events, concerts, sporting events, while large sports facilities being created require this type of experts. These proposals are the result of an audit carried out by the Supreme Audit Office (NIK), which concluded that the lack of an operator means that facilities are not used effectively and stand empty. I am convinced that a private operator who does not have to adhere to official procedures and public procurement regulations can function more flexibly and thus better adapt their actions to the expectations of event organizers.

Sports facilities are just one of the types of public facilities, which can be managed by a private operator. A perfect example of such positive changes is Podkarpackie Region.

Its Marshal's Office has recently commissioned an Exhibition and Convention Centre in Jasionka. This is an impressive building, next to an airport, with more than 7,000 m2 of exhibition space, large conference rooms and an auditorium for nearly 900 seats. Just like in the case of Azoty Arena, the Marshal’s Office of Podkarpackie province also decided to place the management of its flagship investment project in the hands of a private operator – CWK Operator, belonging to the TRIAS Group. CWK Operator has signed a concession agreement for the management of the facility for the next 15 years. We began the management of this exhibition-congress facility with drawing up an image concept presenting the centre as a place stimulating business development in the region, but also as an integration platform for the local, national and European business. During numerous events held every year in Rzeszów the capital city of Podkarpackie province it will be possible to establish important business contacts, learn about the latest sector trends and present attracting offers to potential customers.

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Economy

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Economy

FINANCING OFFICE PROPERTIES Marcin Haber

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he “Office Blocks in Poland” conference was held on October 19 at the Warsaw Hilton. During the event the panellists discussed the financing of commercial properties. The panel discussion was interesting because it provided a number of noteworthy facts, such as a record absorption of office space, division of local markets and changes in the market structure.

WARSAW MARKET IS DIVIDED

The panellists pointed to one very interesting aspect, namely that it is impossible to talk of a single commercial property market in Warsaw. The situation prevailing in the capital city is so specific that one should rather speak of several separate market in individual districts: Mokotów, Wola, Śródmieście.

Recent years saw a clear exodus from Mokotów to Wola, which is gaining in popularity mostly because of a much better developed public transport system. The heart of Warsaw’s new business district is Rondo Daszyńskiego with its own tube station. The most characteristic building in this area is the recently completed Warsaw Spire, built by Ghelamco and financed by, among others, Bank Pekao S.A. A very interesting project recently launched in Wola is Browary Warszawskie, or a “city in a city” built by Echo Investment. The officeresidential-retail complex is to be developed in this historyrich location near Grzybowska Street. It is to be a citygenic organism with its distinctive architecture referring to the style of the orginal brewery complex, using three surviving buildings. There will be a market square with the restored brew-house as its centre-point, squares and the office, residential and entertainment parts. The cellars that were once used to store beer, will be converted into entertainment venues: clubs and restaurants. A place forgotten and standing decrepit over the years is to be returned to the city. This is an example of bringing back life to Wola. It was once teeming with life and was the centre of Warsaw’s industry. Today, location is what really matters. Banks pay particular attention to this matter when deciding on project financing. Beata Latoszek, managing director of the Polish branch of DeutscheHypoteken Bank, said that today “we like best to talk about locations along the second underground line. Mokotów has become a very difficult market. There are discussions on how to change and develop this part of the city.” Marek Koziarek, managing director at the Commercial Properties Financing Department of Bank Pekao S.A. concurred: “Warsaw still remains a very good market. The entire primary market is doing well. Every day I see offers to build further thousands of square metres of space in highly valuable buildings in Warsaw. I have a positive attitude when it comes to the primary market for offices. It is important that the banking sector

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has funds for financing good projects. The market also shows us that the number of tenants is growing. Net absorption is around 280,000 – 300,000 sq m per year. 2016 will be a record year in this regard.”

OTHER MARKETS

The Polish office property market is divided into a number of developed centres: Warsaw, Kraków, Gdańsk, and markets with good prospects, such as Łódź or Lublin. Projects in these cities find favour among financial institutions. “There are some rather desperate voices talking of a collapse of the market in Warsaw. However, life has shown that good locations are selling like hot cakes and the problem does not exist,” said Norbert Kozioł, adviser to the management board of Noble Securities S.A.

THREATS

Krzysztof Czerkas, PhD, president of the board of Upper Finance Restructuring, spoke of the problems existing in the market, “Selection of office projects at banks can be compared to the entrance exam at a Drama School – not everybody will get in, despite the fact that many have such ambitions and feel that they have the calling to be actors. I can see considerable polarisation in this market. The strongest developer groups which have plots in good locations, have been co-operating with large companies for years, have a strong bargaining position. Smaller developers have problems, which begin with financing land purchases. Banks usually do not accept applications from such small and medium-sized developers.” Another very interesting issue mentioned by the panellists was the life cycle of an office block.

According to experts, such buildings can perform their function for up to 20 years. Today, advances in construction are such that older buildings are no longer economical and it is often worth replacing them with new ones. The bank tax has also become a threat to Polish banks. It has considerably increased the competitiveness of Western banks, which do not have to pay it. However, the predictions of a sudden increase of the cost of money have not materialised. “The response of banks was predictable. They have shifted towards consumer loans generating high interest rates. I do not see a large increase in the margins. The bargaining power of the biggest developer groups, which are able to attract the best tenants and make an offer to a number of banks at the same time, is so big that they are able to negotiate very attracting price conditions. Alas, this avenue is not open to everybody. Banks do not agree to this because of the very low cost of deposit money – refinancing,” concluded Krzysztof Czerkas.

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Economy

PLGBC GREEN BUILDING SYMPOSIUM DEBATING HEALTH AND THE QUALITY OF LIFE IN GREEN BUILDINGS On October 5, Warsaw yet again turned into a centre of knowledge about green construction thanks to the 6th edition of the PLGBC Green Building Symposium. The conference has already become a permanent fixture in the calendar of events dedicated to green construction.

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his year’s edition of PLGBC Green Building Symposium attracted experts representing communities connected with construction, architects, designers, developers and trade professionals who discussed health and the quality of life in new and modernised green buildings. Debates included optimising the design process to enable effective modernisation of buildings in the green standard.

The 6th PLGBC Green Building Symposium was opened with a highly inspiring lecture delivered by Michael Pawlyn, a world-famous TED speaker, dealing with biomimetics. During his address Michael talked of inspirations coming from nature aimed at improving the health and productivity of building users. Then, the floor was given to Rudi Scheuermann, leader of Building Envelope at ARUP. Rudi broached a very important issue of reducing the urban heat island effect. The evocative presentations of both experts were met with huge interest of the participants. Two panel discussions, one with representatives of the operators of all multi-criteria certification systems used in Poland, were received equally enthusiastically. The participants also talked about optimising the design process to allow effective completion of building modernisation in compliance with the green standard. Skanska presented the concepts and the approach, drawing attention to the possibilities of adapting buildings to today’s internal environment quality standards, town planning and spatial expectations. Adam Targowski, Sustainability Manager at Skanska Property Poland, addressed another important issue: preserving the cultural heritage. Paweł Warda, Director of the Projects Management Department for Central and Eastern Europe at Jones Lang LaSalle, introduced the participants to the revitalisation of office buildings, and Maciej Kiepal, Area Sales Manager at Armstrong Building Products, presented the case study of the Warsaw offices of Google and PwC. Rafał Schurma, founder and president of the Polish Green Building Council (PLGBC), owner of the visio | architects and consultants architectural practise, talked of a new life of historical buildings using a modernised student dormitory as an example. The Symposium attracted approximately 200 participants,

Michael Pawlyn during a lecture entitled “Nature inspirations designed to improve health and productivity of building users”

including managers, investors, architects, real estate managers, designers, developers and potential tenants of green buildings.

The PLGBC Green Building Awards were also presented during the 6th PLGBC Green Building Symposium. Nestlé House, Ericpol Software Pool Office Building, Mennica Legacy Tower, Ratusz Marszałkowski in Kraków and STEICO flex are the winners of the sixth edition of the prestigious awards in a competition organised by the Polish Green Building Council (PLGBC). The idea behind the competition and the PLGBC Green Building Awards is to promote modern solutions for green construction. The first edition was held in 2010. The jury evaluated green solutions applied in the buildings and products entered in the contest. Their innovativeness was also taken into account, and in the buildings categories the architectural solutions were judged. Nestle House was chosen as the best certified green building.

For investors and designers the PLGBC Green Building Awards are a recognition of their contribution to the development of green construction in Poland.

The honorary patrons of the conference were the Marshal of Mazowieckie Province, Belgian Business Chamber, British Polish Chamber of Commerce, Business France Polska, Scandinavian-Polish Chamber of Commerce, Association of Polish Architects, World Green Build• ing Council.

"The building was given a very high score in the BREEAM certification system. The jury recognised its significant level of innovation. A rarely seen solution in the form of a double façade offering good energy and acoustic parameters has been used, significantly improving internal environment conditions and user comfort. Another distinguishing feature of the building are its spatial and aesthetic characteristics” , stressed Professor Wacław Celadyn, Chairman of the Jury, speaking about Nestle House office building.

"The Best Noncertified Building Award has gone to HORIZONE STUDIO for the Ericpol Software Pool Office Building and its original architectural solutions, blending the building with the surroundings while respecting the context of the locus and individualised, innovative technological solutions meeting high environmental standards set for office buildings” , said Dr Aleksandra Witeczek, PhD, member of the Jury.

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Economy

ENERGY EFFICIENCY OF CONSTRUCTION PRODUCTS AND BUILDINGS ROBERT GERYŁO, PhD, deputy Director for Strategy and Development, Instytut Techniki Budowlanej (ITB)

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he construction and building sector along its value chain includes material and construction products manufacturers, architects and engineering services for design, on site construction and services companies, property developers and facilities managers. An important feature of the construction industry is that it has an around 40% share in the consumption of natural resources.

The construction works and technical systems for heating, cooling, lighting and ventilation must be designed and built in such a way that the amount of required energy in use of buildings shall be low for the occupants and for an economically reasonable working life. Construction works must

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Economy

also be energy-efficient, using as little energy as possible during construction stage and dismantling.

Buildings account for 40 % of total energy consumption in the European Union. The sector is expanding, which increase its energy consumption. Therefore, reduction of energy consumption and the use of energy from renewable sources in the building’s sector constitute important measures needed to reduce the energy dependency and greenhouse gas emissions.

According to building regulations and the national plan for increasing the number of nearly zero-energy buildings by 31 December 2020 in Poland all new buildings will have to meet nearly zero energy performance requirements, set with a view to achieving costoptimal levels.

The cost-optimal level means the energy performance which leads to the lowest cost during the estimated economic life cycle, where the total cost is determined taking into account energy-related investments, maintenance and operating costs, energy costs and savings as well as earnings from energy produced and disposal costs. The estimated economic life cycle refers to the remaining life cycle of a building where energy performance requirements are set for the building as a whole, or to the estimated economic life cycle of a building element where energy performance requirements are set for building elements. Moreover, the cost-optimal level shall lie within the range of performance levels where the cost benefit analysis calculated over the estimated economic life cycle is positive.

The measures to improve further the energy performance of buildings should not affect other requirements concerning buildings such as accessibility, safety, protection against noise and not be a threat to the hygiene or health of users and should take into account requirements for indoor climate environment quality.

Buildings have an impact on long-term energy consumption. Major renovations of existing buildings give an opportunity to take cost-effective measures to enhance their energy performance.

The increased use of energy from renewable sources also have an important role to play in promoting security of energy supply, technological developments and innovations.

In the multi-annual roadmap and longer term strategy of Energy Efficient Buildings

PPP (where ITB represents the largest in Poland, leading research institute dealing with the building technology) horizontal technological aspects were concerned and one of most relevant research challenges was identified as new technical solutions for buildings envelope and its components for new or existing buildings. Thermal insulation materials, and in general energy efficient construction products for the envelope of the buildings are most important contributors to the decrease of energy demand in the building. Improvements of their thermal properties could be reached by adding coatings, nanotechnologies, raw materials, other additives, etc. Furthermore, new or adapted products and techniques are needed to increase energy efficiency of transparent envelope parts.

At the ITB Testing Laboratories we support creating innovative construction technology and techniques. The accreditation scope (PCA Accreditation Certificates: AB 023, AC 020, AC 072, AP 113) encompasses a wide range of testing and certifications procedures specified in the Polish standards and EN, EN-ISO, ISO standards as well as other technical specifications. Our industrial cooperators benefit from our long-standing experience in the construction sector comprising the following scope of tests: mechanical, chemical, physical, fire, acoustic, thermal, biological, electrical, electronic, electromagnetic, radiochemical and radiation, non-destructive and tests in the field of the environmental engineering, etc.

The application fields of research results are: - Research and Innovation projects (novel construction materials and construction products), - development works on prototypes and initial type test (CE marking/technical approvals, certification), - technical recommendations, environment performance declarations, - conformity and quality assessments for construction products market monitoring, - expert investigations of buildings.

The ITB is involved in developing a system of European technical assessment for innovative construction products (European Organization for Technical Assessment EOTA) and is one of the founders of the European EPD ECO Platform, an organization set up to ensure the harmonization of the European system for issuing and mutually recognizing

environmental declarations for construction products, especially innovative ones. The objective of the environmental declarations is providing quantitative information on the environmental impact of construction products at individual stages of their life cycle.

The research activity is focused on key sustainability aspects of construction products, works and buildings e.g. in the scope of thermal and energy performance, technical building systems’ quality and performance, hygienic and environmental performance of products, indoor air quality.

Usually carried out research works are: - material testing in the scope of thermal resistance or thermal conductivity and durability of thermal properties against ageing, moisture absorption, dimensional stability, - thermal transmittance tests of complete components (unique in Poland), - computer simulations based on 2D or 3D modelling in steady state or dynamic conditions for energy efficiency optimization.

The important tested group is energy related construction products which includes: - thermal insulation products, - windows, doors, roof windows, - glass units, - masonry units, - systems of curtain walling, - sandwich panels.

In that group there are many applications of new generation of materials and technical solutions with excellent thermal properties and high strength for load bearing applications. Since there are many barriers that work against energy efficient buildings we work on removing them for new and for existing buildings. Although the energy saving potentials are huge, that is why technology available today can achieve a big improvements in building sector. Polish products are characterized by thermal properties, allowing meeting current energy efficiency requirements in all European countries from our region with a dominant heating season. Moreover, research results confirm that these products have thermal quality corresponding to needs of modern energy efficient buildings such as passive houses and similar standards. Current research projects conducted in cooperation with ITB will lead to further reduce of thermal transmittance at least to level of requirements for zero-energy buildings. Regular laboratory tests confirm also high quality of construction prod• ucts from Poland.

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Economy

DARIUSZ PIOTROWSKI, Enterprise & Partner Group Director, Microsoft Sp. z o.o., talks to Marcin Haber about Microsoft’s involvement in the energy market, cloud solutions and the developing Internet of Things.

IMAGINATION IS THE LIMIT Microsoft at a EuroPOWER conference – this combination seems unusual at first glance. What do you have in common with the power industry? What solutions do you offer to this sector?

Before I speak about the power sector, I think it is important to start with our general idea of how we should operate and with the way we have changed over the past several years. Microsoft is over 40 years old and mainly associated with the Windows and Office systems. However, at present the range of Microsoft’s activity is much broader and is based on two main axes. The first one is support for all businesses and individuals in the digitization process, which now determines all solutions. The second axis, and hence our presence at the EuroPOWER conference, is industry solutions.

The first axis – digitization – is composed of four main pillars: “enhance the capabilities of your employees,” “serve your customer better,” “streamline all in-house processes” and “change your products.” The fourth pillar is often a result of the previous three. We approach energy companies in PM

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the same way. The power industry is now undergoing enormous changes. Today, as a result of new regulations, all the companies have to divide their activity into the spheres of generation, distribution and sales. Apart from being able to prepare more efficient solutions for employees of an energy company through the productivity platform or by enabling remote work, we also offer solutions dedicated for this sector. Among these solutions are settlement systems, billing systems, customer service systems and CRM systems. Can you figure out what all the items in your electricity bill mean?

Certainly not all of them.

We can enable a functionality where you receive an e-mail with a link to a video explaining the bill in two or three minutes in a simple and understandable manner. We explain what individual items in the bill mean and how to optimize costs. Remember that in order to watch such a video you do not even need to have a computer. Today’s telephones have such a function. What is more, they have in-built features PM

Economy like, for example, zooming, voice control and the ability to have your message converted into speech. Even people excluded from the world of computers are able to use the solutions we propose. A very strong cross-selling trend is also emerging. The banking industry combines its services with telecommunications. And energy companies, likewise, are looking for new services for their industry. The sale of electricity is a service which is typical and a bit boring. Meanwhile, it is a very competitive market where one has to fight for customers and take care of them. As a result, Energa has started to attach Microsoft’s software - Office 365 package to its bills. This seems to be an abstract combination. But it has turned out that Energa customers use our solution. For example, they like to store photographs in the cloud, on the OneDrive disc. This may be an incentive for customers to stay with their operator for longer. There may be lots of such solutions – your imagination is the only limit. There are energy companies which offer repairs of washing machines and refrigerators in a package with electricity supplies.

We support the development of the power sector in all segments. What we offer in the generation segment is part of the present trend called Internet of Things. It means collecting data from a large number of sensors and then processing them. I will give you an example from a different sector, but it illustrates this process excellently. Thyssenkrupp, a company manufacturing elevators and known mainly for this activity, has changed its paradigm and now deals with the transport of people. Its 1.5 million elevators across the world are monitored in real time, “learning” on what floor they should stop at a given time. Thanks to the algorithms, the elevators know, for example, that at lunchtime, before 1 p.m., people will be going down to eat something. So the elevators wait on upper floors for the employees. After lunch, at around 2 p.m., they will be waiting downstairs. If there is a separate elevator for the management board and it takes its members to board meetings on the 30th floor every Tuesday it will be waiting for the members at the specific time. This is possible thanks to predictive analytics and the continuous processing of Internet-of-Things data. We can introduce the same to the power sector. One example is transmission line monitoring so as to predict possible failures and service the system proactively rather than repair it when a major outage occurs. Also, smart meters have already been installed in some households. They enable us to collect and process data on electricity consumption by the household. As a result, the operator is able to propose personalized offers to consumers, with lower rates between 10 p.m. and 11 p.m., for instance, because the data show that the household consumes the largest amount of electricity at that time. This is what we offer on the basis of our platform.

From what you say, it appears that today we should lump together all the recently popular notions, like the power sector, smart city, the Internet of Things and cloud solutions. Is this really the case?

You are right. But a feasibility study is quite a different issue. If we draw a chart showing what brings the highest profit and how much effort it requires, the areas with the highest profit and least effort are called low-hanging fruits.

These are the businesses worth going into. I think the trick is to find among the technological capabilities and thousands PM

of ideas from diverse industries those which can bring the highest profit with the least effort and in the shortest possible time. This is what we help companies to achieve. This results from our global experience. We know excellently well what is going on at present in companies in France, Finland and Singapore. We can share this unique knowledge with our partners.

But Microsoft still operates in the IT sector, doesn’t it?

Yes, absolutely. But we say increasingly often that we have turned from a company producing software into a supplier of services and hardware. Today, we provide lots of our services in the cloud environment. We have huge data centres – also in the European Union, which is important from the regulatory perspective – and the data stored there, for example those from the Office 365 service, can be handled by phone or online. Skype, a telecom solution, also operates in the cloud. Companies are moving to the cloud. One should stress that this is always safe. Our responsibility is to ensure the security of the data. When a new virus appears we have protection against it in our cloud before it can reach the company. Another important issue, especially for smaller businesses, is that they pay for the services they actually use.

There is no need any longer to buy 2,000 licences for the Office package. Today, firms can arrange with us that, for example, they buy 1,500 licences, but when the times get harder they will be paying only for 800. Under the previous model, such flexibility was not possible. The model of providing IT services is changing. Time is what counts these days. In strategic sectors, such as the power industry, it is the company that decides what part of the data will go to the cloud and what part will be stored on discs.

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Are Polish firms confident about cloud solutions?

When I talk to people representing every kind of businesses on our market and ask where they have their e-mail I hear they use well-known services, like Gmail, Hotmail, Onet and so on. Then, I ask them if they know where these companies have the servers where they keep their data.

These clients do not even know that for 10 or 15 years they have used the cloud. Constant work is needed to make society aware that the cloud is nothing new. However, if we talk about cloud solutions in important strategic sectors, like banking, the power industry and defence, then of course there are also other aspects involved. In that case, one has to remember about regulators: the Polish Financial Supervision Authority (KNF) and the General Inspector for Personal Data Protection (GIODO). Obviously, there is some mistrust, but this is the case with every relatively new technology.

Progress in this respect is a bit faster in the West, though not everywhere. Germany, for instance, is very conservative about it. This is in contrast to Britain where people understood a long time ago that the cloud is cost-effective. The British Ministry of Defence keeps around 80% of its data in the cloud, except for data critical for the state’s security. In Poland, small and medium-sized businesses are the group most favourably inclined towards cloud solutions. They are more confident about them, realize that these solutions are cost-effective and understand their flexibility. But I think we are about to see this wave move towards large compa• nies.

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Economy

SUPPORT FOR RENEWABLES SHOULD BE RATIONALIZED LESZEK JUCHNIEWICZ, Ph.D., Chairman of the Advisory Board of the EuroPOWER Energy Conference, talks to “Polish Market.”

Observing the Polish energy market – also at EuroPOWER conferences – one can see that it is easily affected by changes, especially political ones. What challenges is the Polish power sector facing now?

Since the 7th conference EuroPOWER has had the same programme format. However, as the Polish economy, its environment and priorities are changing so are ideas for its development.

PM

But are such frequent changes in the power sector a positive phenomenon?

These changes are not as fast as we would like them to be because the Polish power industry is still relatively out-of-date. It is quite hard to put this sector on a development trajectory. As a result, any attempt aimed at achieving the desired state of affairs deserves praise. However, if we take a more careful look we can see that there are some “motifs” which are always present in the sector: energy security, energy mix, customer services and the consumer’s place on the energy market. In this respect, the market remains unchanged, which is a sign of some inertia. This is coupled with new elements which were not present before. One of them is the future capacity market and its conceptualization. Another one is e-mobility, which means creating demand for energy in connection with the developing market for electric cars and intelligent software.

If we take an even closer look we will see that these "motifs" tend to recur. An example is smart grids. We enthused about this idea, which was to revolutionize the Polish power sector, and the biggest interest in this topic was in the years 2012-2013. Then, the hype died down a bit. Now, the issue is returning in a better shape, I hope, that it is one which will be translated into concrete PM

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measures. I hope we will move from slogans and ideas to action.

One of the often repeated slogans is also modernization so as to comply with EU norms. What should it be like at a time when barriers are placed to the development of renewable energy sources? Should we aim to reduce emissions by modernizing existing power units?

The problem is very complex. We meet our obligations resulting from EU commitments related to renewable energy sources on a current basis, but undoubtedly the cost involved is very significant. The support systems used so far have turned those investing in renewable energy sources into not-quite-deserving beneficiaries. There is a problem with refunding investors the high costs of modern technologies and supporting this kind of sources because they would not be able to exist under free-market conditions. But this support has to be “rationalized.” It should not be unlimited, as it has been in some way.

To make things worse, when a need arose – I mean the drought which reached its apogee on August 10, 2015 – wind turbines did not generate enough power, there was a shortage of capacity in the grid and it was necessary to reduce electricity supply to industrial consumers. All this makes us look at renewables in a quite critical way and search for other solutions to make this state aid more reasonable. This is coupled with conventional energy generation based on coal. It is a paradox that highly developed nations, which have already taken advantage of their coalbased power industries, used up their coal in the period when they were developing.

At that time, they emitted large amounts of carbon dioxide without any constraints. Today, there are attempts to constrain this to PM

our detriment. It is impossible to turn overnight a country’s power sector into a modern industry based on low-emission generating units and nuclear sources. These are very costly processes taking many years. As regards discussion about the energy mix, it is still unfinished and work associated with nuclear power generation - although it has already eaten up gigantic sums of money – has actually produced no result. To make things worse, the planned addition of 3,000 MW of nuclear power to the grid is being postponed indefinitely.

You are talking about nuclear power generation. Isn’t it the best way of replacing renewable energy sources, which are not efficient?

Renewable sources may become efficient if we improve the support system. The auction system offers such a chance. It should be noted that it is widely used in the European Union. The EU, which as a rule should see to it that economies are competitive, allows state aid. However, this aid should be subject to quasi-market mechanisms, like tenders and auctions, to ensure that the most efficient organizations win - that the aid goes to those who are efficient rather than those who rely on old technologies of low efficiency. The development of renewable energy sources has been complicated by the law which specifies the distance from wind turbines to homes.

I think, however, it is a reaction to the inefficient way in which wind turbines were built in the past. There was much latitude in investing, with no regard to anyone and anything.

The pendulum has now swung the other way.

These restrictions will constrain the development of wind power generation. But I think that in the long run the two things will bal• ance out.

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Economy

TTIP, TO SIGN OR NOT TO SIGN? Ewelina Janczylik-Foryś

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ollowing numerous protests by Europeans and many debates, the European-Canadian comprehensive economic and trade agreement (CETA) will be signed after last minute negotiations. Despite the readiness of 27 European States, the Government of Wallonia, the French-speaking region of Belgium, had decided to veto the treaty.

However, it was later agreed that finally Wallonia would support CETA. Whether this turbulance related to signing the deal will have any impact upon our economic and political relations only time will tell. We are still facing the unresolved issue of another controversial trade agreement, namely the TTIP.

IT IS TTIP’S TURN!

For some time a heated debate has been continuing in the media regarding the Transatlantic Trade and Investment Partnership (TTIP).

This is one of the most important topics in the economic relations between the European Union and the USA. Negotiations concerning TTIP have continued since 2013. The aim of the agreement is the creation of a free trade area between the European Community and the United States of America. TTIP regulates the three most important issues: - access to the market through a reduction of customs tariffs (customs duties imposed on goods), - regulatory co-operation, meaning the exclusion of barriers to trade other than tariffs (known as non-tariff barriers).

- trade rules covering issues such as trading in raw materials and energy.

Supporters maintain that TTIP is the “economic NATO”. During a meeting at the American Chamber of Commerce, Deputy Prime Minister and Minister of Economic Development Mateusz Morawiecki said: ”We are in favour of signing the TTIP agreement because this would give Poland a development impulse”, adding that “Poland has its own position regarding TTIP, but we support its signing because the flow of goods, extension of the tariff-free area to include the American market or, more widely, also the Canadian market, would provide us with yet another development boost”.

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Importantly, as many as 76% of Polish managers think that the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the USA is not going to affect their companies, the latest "Deloitte CFO Survey 2016 H1" shows. The biggest supporters of TTIP and CFO from Sweden, Belgium, Portugal and Germany and in the case of Poland 16% of the CFOs consider the agreement to be to their advantage. In the aforementioned survey the supporters of TTIP believe that it will facilitate trade, boosting economic growth in Europe and the USA, while its opponents perceive it as a limitation of the freedom of individual countries to pass their own legislation. When it comes to individual sectors of the economy, the biggest supporter of the agreement between the EU and the USA is the manufacturing sector: 35% of businesses in the Community, and 19% in Poland.

We cannot speak of any excessive optimism in the case of Polish enterprises. So far, a lot has been said about this agreement in the Polish chemical and agricultural sectors.

No wonder, considering that the chemical industry is one of the pillars of Poland’s development. It is worth pointing out that some 70% of our factories' output ends up in other sectors, such as the manufacturers of fuels, asphalt, plastics, drugs or mineral fertilisers.

There would be no modern economy without the chemical sector.

I asked the unquestionable leader in the chemical industry for his opinion regarding signing the TTIP agreement. Mariusz Bober, President of the Board of the Azoty Group, speaking exclusively to "Polish Market", said: “The Azoty Group is one of the players in the European fertilisers-chemical industry which may be seriously affected by this deal. We successfully put forward our arguments in this matter at the level of the European Commission and the European Parliament. This agreement may bring many benefits to both continents. However, there are issues which must be discussed in great detail, such as the differences in energy/gas prices which significantly affect the price of fertilisers because they account for approximately 60% of the production costs. Another important issue are the restrictions under the REACH system (European system of registration and certification

of all chemical raw materials and products used in a given enterprise) and here too it appears that the matter has been resolved and TTIP will obligate American companies to comply with the same standards, for the time being with regard to American products that are to be exported to the European market. Then, there are emission reduction targets. We already have the most restrictive climate legislation in the European Union and we are facing further ambitious targets.

Today, many people involved in this process know what the expectations of the Azoty Group are and our arguments can be heard.

What is more, they are understood and considered as something that should be reflected in the final document.”

However, this does not alter the fact that TTIP has not only supporters but also opponents. One of them is Dariusz Krawczyk, currently working in a different sector, but well known as a former president of the chemical company Ciech. Asked about TTIP in the chemical sector, he said: “Everything indicates that TTIP will be implemented. In my opinion, this is a serious mistake. The chemical sector consumes a lot of energy. Energy largely determines the technical cost of manufacturing a given product.

Here appears the question about the cost of the raw material used in power generation. In the USA they have very cheap shale gas, and in Poland we have coal and CO2 limits imposed by the EU. America has no CO2 limits, but has access to cheap shale gas and modern technologies. Signing TTIP would mean that chemical products made in the USA become freely available without any customs barriers in Europe. The EU should consider whether continued self-restrictions, such as the CO2 limits, are suitable in these circumstances. By abolishing customs tariffs we will bring about a situation where chemical companies in our part of Europe face technological death because our technology is based on coal.”

Signing the TTIP agreement is still a matter of the future. However, taking into account the situation with CETA, we cannot be certain that it will be concluded at all. Despite shared interests, the Member States of the European Union increasingly put the benefits or negative consequences for their countries first. •

9-10 listopada 2016 Hotel Radisson Blu, Warszawa

MARIUSZ GOLEC, PREZES ZARZĄDU, WIELTON S.A. „Udział w tym wydarzeniu stwarza możliwość spotkania się w gronie kluczowych dla branży osób oraz rozmowy o przyszłości polskich przedsiębiorstw produkcyjnych czy o nowoczesnych technologiach. Takie fora dyskusyjne pozwalają zrozumieć istotę wszelkich innowacji i ich ważną rolę w rozwoju przedsiębiorstw a tym samym polskiej gospodarki.”

PAWEŁ KACZALSKI, CZŁONEK ZARZĄDU, SOLARIS BUS & COACH „Forum Nowoczesnej Produkcji to duży sukces. Nie pozostaje mi nic innego jak pogratulować zarówno jakości wystąpień pod kątem merytorycznym, jak i szerokości spojrzenia panelistów na poruszane zagadnienia. Jestem bardzo zadowolony, że taka konferencja ma miejsce i życzyłbym sobie żeby było ich jeszcze więcej.”

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Economy

FINANCIAL SECTOR DECISION-MAKERS MEET AGAIN The 12th edition of the Warsaw International Banking Summit – Banking Forum and the 8th edition of the Insurance Forum were held on October 5-6, 2016 at the Sheraton Hotel in Warsaw as part of the Meetings of Leaders of Banking and Insurance organised

by MMC Polska. The conference attracted key representatives of the financial and insurance sector, goverment bodies and most important companies providing services and solutions for these sectors. The event was attended by 621 participants who could participate in 14 panel discussions panels with 98 speakers.

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he main common part of the Meeting of the Leaders of Banking and Insurance began with a discussion concerning Brexit and its impact on the Polish financial sector. The next topic was the “Morawiecki Plan" and Poland’s economic development. The speakers talked about ways of financing development, the future role of Open Pension Funds or the readiness to invest in the Polish economy.

During day one of the 12th Warsaw International Banking Summit the participants talked about the possible

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co-operation between providers of services to the financial services market – traditional entities and the new players - and of the potential and benefits of using block chains.

During the first day of the 8th Insurance Forum conference participants chose the winner in a competition for the best start-up in insurance – Skysnap. The last panel that day discussed cyber-risk in insurance, namely how to define and manage crisis situations and protect against cyber threats.

Day two of the 12th Warsaw International Banking Summit began with a debate on the development of e-comm and m-comm as sectors of modern payment methods. The topics of subsequent discussions oscillated between PSD2 Directive, digital transformation in banks and the application of the resolution approach towards banks facing bankruptcy. Participants in the Insurance Forum talked about digital transformation in insurance, life assurance markets and the future of motor insurance.

The Meeting of the Leaders of Banking and Insurance was attended by, among others: Mariusz Grendowicz (Chairman of the Programme Council of the Banking Forum), Artur Olech (Chairman of the Programme Council of the Insurance Forum), Joao Bras Jorge (President of the Board, Bank Millennium), Sławomir Sikora (President of the Board, Bank Citi Handlowy), Andrzej Kopyrski (Vice-president of the Board, Bank Pekao), Józef Wancer (Chairman of the Supervisory Board, Bank BGŻ BNP Paribas), Paweł Świeboda (Deputy Head, European Political Strategy Centre European Commission), Aleksandra Agatowska (Member of the Board, PZU Życie SA), Andrea Simoncelli (President of the Board, Generali), Michał Gomowski (President of the Board, Benefia Ubezpieczenia) oraz Wojciech Kwaśniak (Deputy Chairman, Polish Financial Supervision Authority).

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Cultural Monitor

NOVEMBER’S CULTURAL MONITOR IS DOMINATED BY EXCELLENT CINEMA AND EQUALLY GREAT FILM MUSIC. EVENTS ARE RECOMMENDED BY MACIEJ PROLIŃSKI. Two notable films have had their release in Poland. They are the seventh movie by Wojciech Smarzowski, who has established a strong presence in our cinema over the past 10 years or so, and the screen debut of Jan P. Matuszyński.

“Wołyń” – dir. Wojciech Smarzowski – Distribution Forum Film This year marks 12 years since the debut of Wojciech Smarzowski on the big screen. During this time, one of the most important Polish directors has managed to make six feature films and gather dozens of major awards. If we were to just “skim over” his work we would find there nothing more than a strange conglomerate of evil and brutality, always trying to mercilessly overcome our most humane traits. But if we look deeper? In terms of content, this cinema is always an unobtrusive path toward light, a journey towards a better life, hope for "a better home," sometimes concluded so poignantly as in the case of "Róża" ("Rose") and now "Wołyń." “Wołyń” – the most anticipated Polish film of the year – is an epic story about the events of World War II in the Eastern Borderlands, where one of the main topics is the love between a young Polish girl (excellent acting debut of Michalina Łabacz!) and a young Ukrainian. Of all the films made by Smarzowski, in my opinion, this story is the most powerful, fullest and most universal. There is no question that the amount of evil presented here is staggering. But the good still trumps it. The “Andrei’s Shine” award (also bearing in mind “The Child of War”, Andrei Tarkovsky’s debut) flows from my cheek to Wojtek. I still cannot overcome the emotion that "only the good does not need to change." Although sometimes this good manifests itself "only on the bridge to the other side of the river," and there even the coach driver has a familiar face. After watching such films we simply stay silent and think. And we want to hug someone close.

"Ostatnia Rodzina" (“The Last Family”) – dir. Jan P. Matuszyński – Distribution Kino Świat.

“The Last Family” is a saga of the famous Beksiński family drawn over thirty years. This family, living in Warsaw, comprised Zdzisław, an outstanding painter and graphic artist, Zofia, his wife, and Tomasz, their son, a well-known music journalist. The characters of Zdzisław and Tomek are played by Andrzej Seweryn and Dawid Ogrodnik. They are accompanied by: Aleksandra Konieczna as Zofia Beksińska and Andrzej Chyra as the art dealer Piotr Dmochowski. During times when people begin their conversations with me by asking pointed questions about my political views and try to verify and classify me rather crudely, there comes “The Last Family” which contains not a scintilla of politics! Instead, it addresses human love, helplessness, weakness, absurdities and loneliness. It is a very good movie where all the characters are given the same degree of importance. Artists and non-artists. And which deals equally with life and death. I never met this family. Moreover, its art (including musical choices of Tomasz) is not something I could call my own. However, the movie is above all that. Instead of “looking at” this family we see our own reflections in it. From now on, I shall closely follow the career of Jan P. Matuszyński (script writer and director of shorts and documentaries, who graduated in Directing from the Kieślowski Faculty of Radio and Television at the Silesian University in Katowice and from the Wajda School)!

“Mikołaj Trzaska. Soundtrack of Wołyń” – Polish Radio – CD Mikołaj Trzaska is among the best and most recognisable Polish jazz musicians in the world. He is a saxophone and clarinet player and a composer. Faithful to the ideas of “Miłość” (“Love”), his band at the turn of the 1980s and 1990s offered “yass,” the Polish jazz style, open and drawing from other genres, as a counterbalance to the petrified jazz community. For years, he has uncompromisingly followed his path, running his own label, still recording and touring extensively. The album “Mikołaj Trzaska. Soundtract of Wołyń” is the fourth musical project of Trzaska created with Smarzowski’s films in mind. This album is unique in many aspects. The composer said: “In the case of “Wołyń” I was looking for a landscape music, something shared by all the nations living in the borderlands at that time. I wanted the themes to sound folksy: with a little bit of Ukrainian, Polish and Jewish sounds put together. I had to find an appropriate, original performer. I immediately thought of the Klezmer Orchestra from Teatr Pogranicza in Sejny. I also used the help of double bass player Jacek Mazurkiewicz, whose improvisation talent is great. The music had to be lyrical, and yet abrasive. I very much wanted to achieve rawness and character, maybe at the expense of perfection. Where beauty and purity appears in the film, my task was to sow chaos with the sound, give the slaughter scenes a dream-like feel.”

Trzaska puts listeners in a contemplative, prayer-like mood with this music. By correctly reading the direction of “all this path” he imbues it with his personal sense of artistic creation. In my opinion, the album, just like the movie, is a masterpiece.

“The Last Family – soundtrack” – Universal Music – 2 CD Music was ever-present in the home of the Beksiński family, both literally and figuratively. It came from speakers, headphones and played in the minds of the main characters. We are reminded of this by the ubiquitous reel-to-reel tape recorders and shelves filled with tapes, priceless LPs and record players. The soundtrack of this movie is much more than a selection of “illustrative” music accompanying the picture.

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CM – November 2016

Cultural Monitor

This is an extension of the personalities of the characters, an insight into their inner self, mood, the way they perceived reality. Director Jan P. Matuszyński, for whom music remained of key importance since the inception of the project, says: “Each piece included in this soundtrack and each featuring in the movie, has its unique history. By this I mean a place in the heart of the Beksiński family and the circumstances which enabled it to become an element of (“The Last Family”). The album sharing Tomek’s musical fascinations which he presented on the radio with those of Zdzisław, less well-known but complementing his painting's, is a collection of pieces which almost never appear on such releases. It is an extension of the film and may be the beginning of an own music search by the listeners”. On disc one: Yazoo, The Moody Blues, Peter Gabriel, Sisters Of Mercy, Roxy Music, Ultravox and others. On disc two: Edvard Grieg, Claude Debussy, Gustav Mahler (fragments of Symphonies No 7, 10, 2), and others.

"KOBIETY BEZ WSTYDU" (“WOMEN WITHOUT SHAME) – SOUNDTRACK” – PIOTR SALABER – SOLITON – CD Piotr Salaber – one of the most interesting Polish composers of theatrical and film music, arranger, conductor and pianist – works all over the world. He is equally at home in theatres in Russia, Hungary, Canada or Taiwan. This summer a new movie directed by Witold Orzechowski, a comedy entitled “Women Without Shame” was released in Poland with his soundtrack. While working on this music Salaber was accompanied by the Polish Radio Orchestra and a band made up of excellent musicians (among others: Mariusz Mielczarek – saxophones, Natalia Walewska – violin, Chris Aiken – drums).

We can also hear a grand piano played by the composer himself. The main feature of the numerous incidental themes and the main theme (the charming “Postcard from Paris”, filled to the brim with the atmosphere of France) is the transparency of the melodic drawing. It is simply impossible to resist the calming effect of this music. Enchanting, romantic and arranged with great charm. Perhaps this album is marginal in the artist's oeuvre, but it is certainly interesting and graceful.

“10 X TWARDOWSKI” – KRZYSZTOF NAPIÓRKOWSKI – UNIVERSAL MUSIC – CD Krzysztof Napiórkowski, vocalist and composer, freely draws from different styles where the common denominator are balanced compositions and poetic texts filled with a distance to the world. His fourth album is inspired by the work of one of the most recognisable Polish poets, Father Jan Twardowski.

“The new record is a monograph of Father Twardowski set to my music. I believe that music reduces the distance between the poet and the reader, and I would like to render this distance as short as possible”, stressed Napiórkowski. These short songs, lasting two or three minutes, contain some mysterious, ethereal beauty which makes us go back to them time and time again. Everything in this 30-minute long album is charming – its modest, ballad music, wise and often perverse words, sublime arrangements.

“10 X Twardowski” is also a great apotheosis of life, but far removed from trite “optimism”. All the mini-songs gathered here, affect our imagination just like the Golden Street in Prague. They are filled with naturalness, melodiousness and reticence which reign from the first note to the last. To summarise: It is no musical minimalism but rather internal maximalism. It is no “milestone” in the history of Polish song, but a small mysterious stone. A must for every true music collector!

CONCERTS THE YEAR 2016 SEES THE 20TH ANNIVERSARY OF THE TANSMAN FESTIVAL. Its first edition was held under the patronage of UNESCO, and on the 30th anniversary of the death of the festival’s patron - Aleksander Tansman. The main theme of this year’s Tansman is Polish Music – Discoveries and Novelties: unique and spectacular reconstructions of Polish musical masterpieces from the 20th century ans their world premiers. The aim of the jubilee edition is to enrich the national cultural heritage and to uncover the unknown pages of its 20th century history through propagating innovative achievements, presentation of unknown and forgotten works: showing their rank in the context of Polish and global culture, in a dialogue between the best artists, with the participation of historians and musicologists engaged in discovering, reconstructing and releasing Polish masterpieces of the 20th century music. The prologue of the Festival takes place on October 16 in Warsaw and brings, among others, the world premiere of the last symphonic work by Henryk Mikołaj Górecki – “Two Tristan Postludia and a Choral” op. 82 for symphonic orchestra, never performed before. Sinfonia Varsovia will be conducted by Jerzy Maksymiuk. The programme of the Festival, which takes place in Łódź until December 2, includes a concert of the legendary Kronos Quartet (playing music by Henryk Mikołaj Górecki; the spectacular collaboration between Kronos and Górecki lasted for a quarter of a century and was recognised the world over), a meeting with Andrzej Wendland, the author of the latest book about the work of Górecki (“Górecki 4th Symphony Tansman Episodes. Phenomenon, Element, Mystery”) and Violetta Rotter-Kozera, the director of a film about the composer (“Please find”), a world premier of the “Concertina for a flute and orchestra” by Paweł Klecki (before the war he belonged to the elite of Europe’s avant-garde composers) and a world premiere of the opera “La Toison d'Or” by Aleksander Tansman (Directed by Maria Sartova).

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WITH OPERA ON THE VOD PLATFORM Photo: Angela Sterling

Culture

Before the start of the 2016/2017 artistic season at the Teatr Wielki – Polish National Opera in Warsaw the institution encourages its audience to visit its VOD platform, where one can view in full its important new productions, including "The Tempest," choreographed by Krzysztof Pastor, and "The Haunted Manor," directed

by David Pountney. The season will be inaugurated on October 21, 2016 with the premiere of the opera "Goplana" by Władyslaw Żeleński, with the libretto based on the romanticist tragedy "Balladyna" by Juliusz Słowacki. It will be the first ever staging of this work at Teatr Wielki! The director is Janusz Wiśniewski) Maciej Proliński

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eatr Wielki – Polish National Opera has launched its own VOD (videoon-demand) platform, where one can watch selected performances for free, in November 2015. In Poland, only the Fryderyk Chopin National Institute has so far used VOD to broadcast classical music. This was done on a grand scale on the occasion of the coverage of all the auditions during the 17th Chopin Competition. Moreover, the opera broadcasts on vod.teatrwielki.pl will be free over the next five years! The National Opera is a member of The Opera Platform collaborating with Arte television. It is an association which brings together 15 European opera houses, including the La Monnaie Opera in Brussels, London's Royal Opera House – Covent Garden, the Vienna Staatsoper and the Bayerische Staatsoper in Munich.

“However, neither London nor Vienna and Amsterdam have what we have now, which is picture broadcasting in the 4K technology, four times better than HD”, says Waldemar Dąbrowski, managing director of the National Opera. On the fifth floor of Poland's national stage a TV streaming studio, a command centre complex, and impressively extensive

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installations for picture broadcast have been built. It is Poland's first modern opera studio complex, which consists of a director's picture control room working in the 4K quality, a multi-channel audio control room operating in the 5.1 standard, a recording chamber and equipment facilities. The video studio equipment also allows establishing a link to an outside satellite broadcasting unit. This facilitates the preparation of direct broadcasting of any artistic event, as well as cinema broadcasting, just like the broadcasts from the Metropolitan Opera in New York.

"The Tempest," choreographed by Krzysztof Pastor in April 2016 opened the Shakespeare Festival of the Polish National Ballet in Warsaw, held on the 400th anniversary of the death of the great English playwright. It is the fruit of co-operation between the Polish National Ballet and the Dutch National Ballet in Amsterdam. The fruit is extremely tasty, one may add. Critics in Poland agree how poetic and beautiful this ballet is. Starting from the original choreographic ideas to the beautifully composed music, and the painful and endearingly conveyed message of the work...

The great hero of the evening is also the Orchestra of the Teatr Wielki – Polish National

Opera conducted by Matthew Rowe. Last, but not least, huge congratulations must go to the entire ensemble of the Polish National Ballet and the outstanding soloists led by Yuka Ebihara and Vladimir Yaroshenko.

"The Haunted Manor" by Stanisław Moniuszko, directed by David Pountney – representing top class opera – inaugurated the 2015/2016 season at the Warsaw Opera. The crown jewel of Polish opera, an elaborate musical comedy structured with dramatic flair and a side-splitting funny plot, based on double "bachelor vows," has been arousing emotions for years. The story, written a year after the unsuccessful January Uprising (1863-1864) is also a great poetic synthesis of old-Polish culture, its traditions, rituals, costumes and dances. However, Pountney clearly breaks with the conventional setting of “The Haunted Manor” (and does this cynically, in the style of Gombrowicz) and moves the action to the 1920s1930s... The Orchestra and Choir of the Teatr Wielki – Polish National Opera was conducted by the new music stage director Andriy Yurkevich. The cast included Edyta Piasecka, Tadeusz Szlenkier, Rafał Siwek and Adam Kruszewski.

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Culture

GOPLANA’S DRAMA...

The new season at the Polish National Opera in Warsaw starts on October 21 with "Goplana" by Władysław Żeleński – a rarely staged Polish opera with the libretto based on "Balladyna", a famous romantic drama by Juliusz Słowacki.

Maciej Proliński

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his opera in three acts by Władysław Żeleński with the libretto by Ludomił German shows affinity with the works of the father of Polish opera – Stanisław Moniuszko. Żeleński wove Polish motifs into the music: the polonaise, kujawiak, mazurka and oberek. This is a story of unhappy love and deceit designed to take away from Balladyna her beloved Grabiec by replacing him with prince Kirkor. Alas, the intrigue leads to a feud between Balladyna and her sister Alina, and consequently to a great tragedy... Żeleński and Ludomił German, who based the libretto on the text of Słowacki’s "Balladyna", made this almost Shakespearean drama more like a fairy tale. The protagonist is a goddess of the lake, a fantasy character with a lyrical coloratura voice. However, the tale retains its cruelty: there are three corpses and evil reigns...

The forthcoming premiere will be the first production of this work from 1896 on the stage of the Polish National Opera. It was performed in 2000, but only in a concert version. There is also no recording of that event.

Waldemar Dąbrowski, director of the National Opera stresses that the inclusion in the

repertoire of yet another work by a Polish composer forms part of a bigger plan. 'Goplana' is an important element of the artistic plan which we are designing with the year 2018 in mind. In two years’ time we will be celebrating the 100th anniversary of Poland regaining its independence. We want to mark that occasion by creating on our stage a unique festival of masterpieces from the national treasury, presenting, apart from Stanisław Moniuszko’s 'The Haunted Manor' and Władysław Żeleński’s 'Goplana', also “King Roger” by Karol Szymanowski, 'Manru' by Ignacy Jan Paderewski and 'Eros and Psyche' by Ludomir Różycki”, said Waldemar Dąbrowski.

“Regardless of its Polish traits, 'Goplana' is an interesting work both in terms of music and drama. It offers melodic solos and vocality, excellent group scenes, transparent and striking instrumentation, consistent, and yet highly discreet use of leitmotifs as a unifying factor and, last, but not least, exceptional theatricality of its score. Żeleński used it in a masterly way to present the contrast between two, or rather three worlds: the fantasy world of Goplana and her spirits, Kirkor’s knights, and simple country folk – Grabiec, Alina and the Widow.

Żeleński’s music also conveys brilliantly Balladyna’s introvert and ambitious character and the drama playing out in her soul'', wrote Józef Kański, a well-known Polish musicologist and critic in “The Opera Guide” (1997).

The Warsaw production is directed by Janusz Wiśniewski, one of the most outstanding Polish theatre directors, a graduate of the Faculty of Polish Studies at the University of Warsaw (1974) and of the Faculty of Drama Directing of the State Drama School (1978).

He has recently directed “Quo Vadis” at Teatr Polski in Warsaw, voted the best production of the 2012/13 season by the weekly “Przegląd", and the opera “Ubu Rex” by Krzysztof Penderecki at the Baltic Opera in Gdańsk. Soloists include: Małgorzata Walewska, Wioletta Chodowicz and Arnold Rutkowski! The music director and conductor will be Grzegorz Nowak – one of the principal conductors of the Royal Philharmonic Orchestra in London. Choreography is by Bartosz Zyśk – a dancer at the Polish National Ballet. The opera will be broadcast live on Vod.teatrwielki.pl and Theoperaplatform.eu, giving a large international audience an opportunity to listen to a Polish romantic • opera!

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Culture

“100 FOR 100” Paintings and drawings by Jan Matejko, Józef Chełmoński, Jacek Malczewski, Jerzy Nowosielski and other artists, as well as valuable sculptures, china and manuscripts from the collection of the John Paul II Catholic University of Lublin (KUL) are on show at the Royal Castle in Warsaw. The exhibition entitled “100 for 100. One Hundred Greatest Pieces od Art from the Collection of the John Paul II Catholic University of Lublin on Its Centenary" will be held between October 13 and December 30, 2016 and is a prologue to the celebrations of the 100th anniversary of the University in the year 2018.

Maciej Proliński

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he John Paul II Catholic University of Lublin is the oldest Catholic university in Central and Eastern Europe. It was established in 1918 on the initiative of Father. Idzi Radziszewski. According to the Statutes of the University, its basic mission is to “conduct academic research in the spirit of harmony between research and faith, to educate and bring up Catholic intelligentsia and to cocreate Christian culture”. Today, KUL is among the fastest-growing universities in Poland. Its scholars conduct research on a wide range of topics in general and specialist disciplines whose profile is determined by the humanistic traditions of KUL and openness to modern man.

The diversity and richness of the collection, both in terms of artistic genres and chronology, is explained by its stormy history. The collection began in 1932 with a donation made by Father Jan Władziński (18611935), who gifted KUL with “a collection of historical mementos and style exhibits from different parts of the country”. In December 1939, these objects were seized by Germans and lost forever. However, the pre-war museum traditions were not forgotten following the University’s rebirth after the war.

Thanks to the generosity of Church institutions and private individuals over the last 60 years the collection has grown to more than 1,700 exhibits.

The most valuable of them will be presented at Warsaw’s “100 for 100” exhibition. They include paintings and drawings by outstanding Polish artists, such as Jan Matejko, Józef Chełmoński, Leon Wyczółkowski, Jacek Malczewski, Włodzimierz Tetmajer, Józef Pankiewicz and Jerzy Nowosielski. There will also be valuable works of foreign painters, such as “Ecce Homo”, work of a Netherlandish imitator of Juan de Flandes dating to approximately 1574, and “The Monkey Soldiers”,

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a 17th-century copy of the painting by David Teniers the Younger.

Another interesting fragment of the exhibition are late-Gothic sacral sculptures. They include the figure of St Catharine of Alexandria, known as the Golden Catherine from a Wrocław townhouse forming part of the St Catherine’s Monastery, produced by the studio of Jacob Beinhart or the Grand Holy Family altar cabinet from the church in Kliczków made in approximately 1520.

Other exhibits include china from the leading European manufactures, as well as manuscripts, incunabula and documents from the Special Collection of the University Library. Of particular interest is the Gracian’s Decree, an illustrated manuscript constituting a collection of canon laws, written down by Gracian, a Bologna monk, in 1150.

The Lublin copy, one of just six in Poland, was made in Toulouse in approximately 1300 and is decorated with 63 colourful miniatures in the French Gothic style.

The exhibition is accompanied by an extensive educational programme, including lectures and a “Day of Attractions” - October 16, 2016. The honorary patrons of the exhibition are: Deputy Prime Minister, Minister of Culture and National Heritage Professor Piotr Gliński, Archbishop of Warsaw, Kazimierz Cardinal Nycz and Lublin Archbishop, Stanisław Budzik.

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1) Virgin Mary Orant, Jerzy Nowosielski (1923-2011), 1957, tempera on board. From the collection of the KUL Museum, photographer I. Marciszuk, KUL. 2)Pope and King – Enforcers of Mediaeval Law, miniature on the first sheet of Gracian’s Decree, approximately 1300, Toulouse. Special Collection of the Library of the KUL, photographer A. Adamczuk.

Culture

ANDRZEJ WAJDA

Andrzej Wajda, a great Polish film director, died on October 9, 2016 at the age of 90. He owed his popularity to works giving rise to the “Polish school of film-making”, such as “Kanał” (1957) and “Ashes and Diamonds" (1958). For more than half a century his movies accompanied the most important debates in the country, taught national pride and criticism towards Polish sins, idiosyncrasies and complexes. And now, when the Master is no longer with us, the films should continue to do so...

Andrzej Wajda on the set of “Afterimage”, Photo: Anna Włoch / Akson Studio.

CINEMA WITHOUT

Maciej Proliński

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he work of Wajda is an example of the close relation between cinema and visual arts, cinema and literature. Wajda was a true master of the form. Single frames from his films, filled with emotions, colours and meanings, remain in the memory of viewers just like paintings. Wajda spent three years as a student at the Academy of Fine Arts in Kraków. However, he quickly parted with this Academy and left Kraków for the Łódź Film School. Literature had always been an inspiration, the starting point, allowing him to address matters of importance to him, Poles and a specific point in time in his inimitable style.

Screen adaptations of literary works occupy a special place in his artistic output. This was the case since his debut, A “Generation”, made in 1955 on the basis of a novel by Bohdan Czeszko. This debut presaged the huge success of the “Polish school of film-making”, focused on coming to terms with the war period and the times of Nazi occupation. “Kanał” and “Ashes and Diamonds” are prime examples of his films belonging to this current. It is also necessary to mention Wajda’s adaptations of the classics. In 1965, Wajda adapted to the

screen Stefan Żeromski’s epic novel “The Ashes”, a gripping tale of Poland and Poles at the turn of the 18th and 19th century.

In 1972, the director surprised everybody by “The Wedding” based on the eponymous work by Stanisław Wyspiański. He retained the original text. Nearly ten years earlier Wajda had staged this national classic at Teatr Stary in Kraków. In 1974, he released another masterpiece, “The Promised Land” based on the novel by Władysław Reymont, painting a huge panorama of Łódź during the era of “predatory” capitalism of the late 19th century.

His adaptations of the classics included works by Jarosław Iwaszkiewicz and Tadeusz Konwicki. (“The Birch Wood”, “The Maids of Wilko” – based on the prose of Iwaszkiewicz, “A Chronicle of Amorous Accidents” by Konwicki). In both films, in keeping with the spirit of the literary archetype, he concentrated on showing the passage of time, melancholy, sensual intensity, unrequited feelings and loneliness, rather than the irony of History.

Other important screen adaptations in Wajda’s portfolio include the epic poem “Pan Tadeusz”

by Adam Mickiewicz and “Sweet Rush” based on the prose of Jarosław Iwaszkiewicz.

On March 26, 2000 Andrzej Wajda received an Oscar for lifetime achievement. During the presentation ceremony the director addressed the audience in Polish, because, “he always thinks in Polish”… This was a significant statement. For more than half a century his movies accompanied the most important debates in the country, taught national pride and criticism towards Polish sins, idiosyncrasies and complexes. Maybe the “Polishness” of these films, apart from the great talent of the Master (painter-filmmaker), was the reason why his movies have been understood and respected the world over.

“Afterimage”, the last film by Andrzej Wajda, completed in 2016, has been nominated for an Oscar in the “best non-English language film” category. This decision was taken by the Oscar Committee comprising representatives of the Polish film-making community and the Polish Film Institute. The film tells a story of the charismatic Polish painter Władysław Strzemiński, who decided not to follow the principles of socialist realism and remain faithful to his artistic vision. Until the end...

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Food Industry

POLAGRA FOOD

BUSINESS, KNOWLEDGE, INSPIRATIONS

This is how one could summarise the largest event dedicated to the food industry which took place on September 26-29, 2016.

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his year’s exhibition was held in three pavilions.

The event attracted more than 350 exhibitors who presented several hundred novelties, both well-known products in new flavour variants and completely new solutions in the area of meat, fruit and vegetable products, sweets, beverages, alcoholic drinks, fats, ready meals and organic food. As many as 27 products were awarded the Gold Medal of Poznań International Fair, confirming that manufacturers focus on the quality of their products.

Italy was represented particularly strongly among foreign markets. Several manufacturers brought with them Italian delicacies: cheeses, sausages, hams, pickled vegetables, ice cream, not only to present them to Polish buyers, but above all, to negotiate space for them on the shelves in Polish stores with special food and supermarkets. Exhibitors also came from China, Hungary, Turkey, Spain, Germany, Belgium, Belarus, India, Lithuania, South Korea, Holland, Austria, Egypt, and Ukraine.

The dairy sector clearly dominated among the Polish producers attending this year’s edition of Polagra Food. Faced with milk overproduction, both in Poland and in other

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countries, it is necessary not only to stimulate the demand by launching new products meeting consumer expectations, but also to seek new markets. This was the intention of the Polish makers of milk products participating in Polagra Food. Their expectations, and those of other exhibitors regarding the number of visitors were met. The exhibition was visited by many foreign delegations from countries including: Albania, Australia, Belgium, Belarus, Brazil, Canada, China, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, India, Ireland, Israel, Italy, Jordan, Latvia, the Netherlands, the Philippines, Portugal, the Republic of South Africa, Slovenia, Spain, Switzerland, Sweden, Thailand, the United Arab Emirates and the United Kingdom. Conversations in many languages could be heard at the stands, but also during pre-arranged B2B meetings. Such meetings took place during the International Co-operation Exchange organised by the Polish Agency for Enterprise Development (PARP) and a session of meetings prepared by the Belgian Meat Office. The Inspiration Area of the Agricultural Market Agency offered information on new trade opportunities, especially in the markets of Asia and Africa.

The annual Tastes of the Regions fair, which began on 24 September, acted as the prelude for Polagra. This year’s edition of the event broke every record in the books. It attracted over 200 exhibitors from all over Poland, occupying two exhibition pavilions. The products brought by them to Poznań tempted and suprised the visitors with their aromas and tastes. The huge potential of the traditional and regional food is also attested by the unprecedented number of entries in the Tastes of the Regions Medal competition. This year, the competition Chapter judged 90 products, with medals awarded to as many as twenty of them.

Polagra Fair has yet again demonstrated that in the era of digitisation present in business, direct meetings with partners are irreplaceable when it comes to building stable relationships, and in particular, establishing new contacts.

This is the key venue for initiating co-operation, especially international, and offers a pretext for holding sector meetings, seeking new solutions and business development inspirations. The next edition of Polagra is scheduled for Oc• tober 2-5, 2017.

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