WBJ Observer March 2015

SPECIAL EDITIO N

REAL EST A NEWS TE

MARCH 2015

Number 03 (14)

FOR DAILY NEWS VISIT US AT

wbj.pl

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

CIAL

Warsaw 2.0 E

DITION

MIPIM 2015

THE CITY IS GETTING A MAKEOVER > 56

PANDORA’S BOX

CAN POLISH MINES BE PROFITABLE AGAIN? > 26

MAPPING

THE COMMUTE THE POLISH APPLICATION THAT LETS YOU FOLLOW PUBLIC TRANSPORT IN REAL TIME > 36 IMMIGRANT

SONG

POLAND STRUGGLES WITH A DEMOGRAPHIC TRAP AND POLES FLOCKING TO THE WEST > 20

CREATIVE

IDA

FIRST POLISH MOVIE WITH AN OSCAR > 86

DEVELOPMENT INTERVIEW WITH MAŁGORZATA OMILANOWSKA > 30 MARCH 2015

ALSO IN THIS ISSUE:

• C o m m e n t a r y • R a n k i n g • C i t y s c a p e • N ew s • L i fe st y le

lll IN THIS ISSUE Try these:

lll NEWS

4-12 In Review Latest news 13 Dateline 14 Economy

lll COMMENTARY

16 Legal Zoning issues 17 Internet security Protecting yourself 18 Beauty Male grooming 19 HR Outsourcing payroll

20-24

lll FEATURES

POLAND’S DEMOGRAPHY

26-29 Coal Black gold

lll INTERVIEW

30-33 Małgorzata Omilanowska

lll ENTREPRENEURS 36-38 Jakdojade Catching the bus

Made

in Poland 2015

49-77

LOKALE IMMOBILIA

Conference strategic partners:

partners:

41-48

MADE IN POLAND 2015

78-79 Ranking Office developers 80-81 Cityscape Zielona Góra

80 strona | 3

lll LIFESTYLE

82 Events Smart City Forum 84-85 Events Polish Infrastructure 86 Culture Ida 87 Restaurants Healthy eating 88 Nowak On the joy of food

WBJ OBSERVER • MARCH 2015

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Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Editor-in-Chief, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Matthew Czaja Copy Editor mczaja@wbj.pl Journalists Alicja Ciszewska aciszewska@wbj.pl Wojciech Rylukowski wrylukowski@wbj.pl Contributors Ewa Boniecka Alex Hayes Vedika Luthra Brendan Melck Maciej Nowak Sergiusz Prokurat Tomasz Chwinda Art Director tchwinda@wbj.pl Marta Topolewska, Agnieszka Wrzosek Graphic Designers

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MARCH 2015 • WBJ OBSERVER

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WBJ OBSERVER • MARCH 2015

NEWS

lll INREVIEW News highlights from the past month

aweł Pawlikowski’s “Ida” won the Oscar for the Best Foreign Language Film at the 87th Academy Awards ceremony. The film has beaten Russian anti-Putin drama “Leviathan,” among others, and became the first Polish movie to win the award. “We made a film about the need for silence, withdrawal from the world and contemplation, and here we are at the center of noise and attention,” Pawlikowski said during his acceptance speech. He was later played off stage, however, the Polish filmmaker

MARCH 2015 • WBJ OBSERVER

ignored the wrap-up music and continued his speech. He thanked his crew and his late wife. “I would like to dedicate [this Oscar] to my late wife and my parents who are not among the living, who are totally inside this film and they have a lot to do with it,” Pawlikowski continued, ignoring the orchestra and talking over the music. The US online magazine Slate has jokingly commented on the Polish filmmaker’s speech: “Paweł Pawlikowski, a hero of our times, went up against the music that dispensed hundreds of directors, actors, and producers before

him, and won.” Set in the 1960s, “Ida” tells the story of a novice nun, who, along with her aunt, a former prosecutor associated with the Stalinist regime, sets out on a journey to find the resting place of her parents, killed during World War II. The movie won numerous prestigious Polish and European awards. This is the 12th Academy Award won by a Pole. “Ida” was not the only Polish movie that received an Oscar nomination. Both “Joanna” and “Nasza Klątwa” had a chance to be awarded for Documentary Short Subject. (read more on p. 86).

Image: Shutterstock

Ida wins Oscar P

Agata Trzebuchowska played the lead role in “Ida”

NEWS

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WBJ OBSERVER • MARCH 2015

NEWS

Shorts GRUPA ŻYWIEC TO MARKET CIDER

oland’s beer manufacturer Grupa Żywiec will add cider to its portfolio in the springsummer season, according to press reports. The drink will not be produced locally, it will be imported and offered as a foreign brand. The WSE-listed Grupa Żywiec has a number of both domestic and foreign beer brands in its portfolio, including: Żywiec, Warka, Desperados, Heineken, Guinness, Tatra, Królewskie and Leżajsk.

THREE NEW COMPANIES ON WIG20

PGNIG WITH ANOTHER LICENSE IN NORWAY

GNiG Upstream International (PGNiG UI) became the operator of a PL 799 license in the Norwegian Sea. The Norwegian government granted the Polish company 40 percent of the stake. PGNiG UI partners include the following firms: Statoil Petroleum AS (Norway’s biggest oil and gas company), VNG Norge AS oraz Explora Petroleum AS, each of them possesses 20 percent of shares. Currently, PGNiG UI holds an interest in 17 licences on the Norwegian Continental Shelf in the North Sea, the Norwegian Sea and the Barents Sea.

Antananarivo, Madagaskar

PAIiIZ: Polish companies to penetrate African markets Under its GoAfrica Programme, the Polish Information and Foreign Investment Agency (PAIiIZ) will organize business missions to Poland from several African countries such as South Africa, Mozambique and Kongo as well as economic missions from Ethiopia, Tanzania and Angola, the agency informed. Botswana and Morocco will be among new business destinations. “We are preparing a workshop with the World Bank on the procurement system. This is a good channel of starting business with Africa,” said the deputy minister of foreign affairs Katarzyna Kacperczak. PAIiIZ has organized 38 promotional events, including five business missions attended by 3,300 Polish businessmen, seven pathfinding missions and two trade fairs. The Agency also published eight guides on African markets. The GoAfrica programme has been created by the Ministry of the Economy to support Polish companies entering African markets as well as to increase Polish-African trade. In 2012-2014, trade between Poland and Africa increased by 25 percent.

T-Mobile and bitcoins P

oland’s largest mobile phone network operator T-Mobile will let its customers top-up their mobiles by using bitcoins as legal tender. The customers who pay with bitcoins will be granted a 20 percent discount on every top-up for three months. But first, they need to download one of the bitcoin portfolios available on Google Play or App Store. T-Mobile International AG is a holding company for Deutsche Telekom AG’s various mobile communications subsidiaries outside Germany.

MARCH 2015 • WBJ OBSERVER

Image: Shutterstock

wo energy companies, Enea and Energa, as well as satellite TV and phone provider Cyfrowy Polsat will be listed on the WIG20 blue-chip index after the annual revision of indices on March 20, the Warsaw Stock Exchange informed. The three firms to be replaced are mining firm Jastrzębska Spółka Węglowa, oil distributor Lotos and agriculture sector firm Kernel Holding which will be listed on the WIG40 after the revision. The WIG20 is a capitalizationweighted stock market index of the twenty largest companies on the Warsaw Stock Exchange.

WBJ OBSERVER • OCTOBER 2014

NEWS

PARP LAUNCHES LOAN FUND FOR POLISH WOMEN

NUMBERS 19TH

WAS WARSAW’S RANK OUT OF 20 CITIES IN THE GENERATION Y COST OF LIVING INDEX, WHICH RANKS CITIES IN ORDER OF HOW MUCH MONEY YOUNG UNIVERSITY GRADUATES CAN PUT ASIDE.

PLN 956 MILLION

IS HOW MUCH PKN ORLEN PAID TO NEON POLAND FOR OIL RESERVES.

40%

OF POLISH COMPANIES ARE PLANNING TO START INVESTMENT PROJECTS THIS YEAR.

11%

WAS HOW MUCH THE TOTAL VALUE OF CONSUMER LOANS INCREASED YEAR-ON-YEAR IN 2014.

PLN 3,783 WAS THE AVERAGE GROSS MONTHLY SALARY IN POLAND IN 2014, AN INCREASE OF 3.4 PERCENT COMPARED WITH 2013.

The Polish Agency for Enterprise Development (PARP) established a loan fund worth PLN 20 million dedicated to Polish women running or willing to start their own business, the fund will be launched in March. Each loan may be valued within a range of PLN 20,000 to PLN 40,000. The annual interest is 2 percent and the maximum payback period is five years. The project will be implemented in eight voivodeships.

BAUER TO ACQUIRE TVN?

German concern Bauer Media Group will most likely purchase the main holding of Polish television station TVN, according to Gazeta Wyborcza citing three independent sources. The daily indicates that Bauer is the closest to acquiring 51 percent of TVN’s shares worth PLN 2.1 billion. The transaction was to have been concluded by the end of February. Bauer is the owner of Polish radio RMF.FM and the internet portal interia.pl. If the German company buys TVN, it will become one of the largest European media concerns, the daily pointed out.

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NEWS

Pole named National Geographic Adventurer of the Year

Image: Nicola Muihread

lexander Doba, won the Adventurer of the Year Award organized by National Geographic. The Polish kayaker obtained a record 521,000 votes in an online poll. Doba completed the longest open-water kayaking expedition across the Atlantic in history. He had departed from Lisbon in October 2013 and arrived in Florida in April 2014, completing a 7,716-mile route. Doba traveled an average of 30 miles a day and slept no more than six hours a day. “If a 67-year-young can do it, you can do it too,” he said after the journey. The Pole did not start kayaking until he was 34 years old. “It was the vote at National Geographic that showed how many known and unknown friends I have all over the world, who are fascinated with a 67-year-young adventurer in a kayak on the great ocean. It makes me feel very honored,” said Doba on winning the award. The Adventurer of the Year prize has been awarded for more than a decade, to those with remarkable achievements in exploration, adventure sports, conservation, and humanitarianism.

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MARCH 2015 • WBJ OBSERVER

• G e r m a n v e r s i o n : w ww. p o le n a m m o rg e n . p l

PLANNING TO INVEST IN POLISH REAL ESTATE? LOOK NO FURTHER!

NEWS

KR Group is a dynamically expanding Polish accounting and auditing group. Established in 1997 and with over 120 experienced real estate professionals, we provide tax, book-keeping and advisory services to real estate fund managers and investors. With a significant share of the Polish market in this sector, our team understands and provides insight into industry issues that real estate investors need to address. Who are you? Most of our clients are Polish companies with foreign capital involvement and foreign entities doing business in Poland. They include: • Investment funds (open and closed ended) • Banks financing real estate investments • Other entities that invest in commercial real estate (office, retail, warehouse, hotel properties) • Companies whose assets consist of real estate.

Why chose KR Group? Managing the finances of a property investment requires time, attention to detail, and knowledge of ever-changing accounting laws. Over the years we have also learnt that to operate successfully in Poland it is crucial to fully understand Poland’s complex regulatory and compliance reporting requirements. Doing so reduces the risk of transactions, and provides the level of transparency expected by key stakeholders. Our property accounting professionals will manage your books so you do not have to. We ensure compliance with all local and international accounting standards. You can count on us to provide financial accuracy, timeliness and peace of mind.

What we do By combining expert knowledge with best industry practice, and extensive transactional and project experience we are able to bring real value to the investment process. Our key services include: • Book-keeping • Nominee directorship • Financial and manage- • Domiciliation ment reporting • Company secretarial • Tax advisory services • Cash management • VAT representation for • Sale of off the shelf businesses from outside companies the European Union • Payroll services We have been successful by building trustful relationships with clients and becoming a business partner in your investment ventures. We can also cut the overall cost of your business operations in Poland. Our team is well connected with other professionals around the world and able to find solutions at every stage of the reporting process and across several locations. In short, our aim is to ensure that you receive the highest quality services and insightful advice to help you on the road to investing success. Office in Warsaw

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WBJ OBSERVER • MARCH 2015

NEWS

EUROLOT WILL OPERATE ONLY THROUGH MARCH

Poles feel in danger due to Ukrainian crisis - survey

s much as 75 percent of Poles think the Ukrainian conflict may threaten Poland’s security, according to a survey conducted by CBOS. The majority of the respondents (67 percent), find the conflict to be a threat to Europe and 55 percent claim it may disturb the world order. What is more, 56 percent of the surveyed people claimed that Poland should support Ukraine alongside the entire EU. One third of the respondents think Poland should not get involved in the conflict in any possible way. Our country is “especially responsible for supporting our neighbor” was the opinion of only 6 percent of the poll’s participants. The survey sample included 1,003 people.

Raiffeisen to sell its Polish unit

aiffeisen International will sell its Polish and Slovenian operations in order to boost its capital reserves, the lender informed. The Austrian lender is also planning to get rid of its internet banking service Zuno which has been operating in the Czech Republic and Slovakia. According to the press release, the company decided to implement certain

MARCH 2015 • WBJ OBSERVER

measures due to “poor economic performance of some businesses which need significant capital outlays or are not strategically important.” Reuters informed about the possible sale in December last year. The Polish unit of Raiffeisen Polbank is a top-eight player in the banking sector after acquiring Polbank. The bank’s Polish unit made €84 million in profits last year.

The state-owned Eurolot airline is suspending all air connections. From April 1, scheduled flights will no longer be operated, the company informed. “Till March 31, all of the scheduled flights will be operated. None of our passengers will be left without support. We will be contacting every passenger who bought flight tickets scheduled after March 31,” the firm’s spokeswoman Karolina Bursa said. The operator will provide a full-repayment or free re-booking “whenever possible,” for those who bought tickets for trips after the date, Bursa informed. The entire Eurolot fleet will be taken over by PLL LOT. The airline has been operating direct flights from Warsaw to Croatia, Austria, Switzerland, Germany and the Netherlands, among others.

JSW MINERS COME BACK TO WORK, CEO RESIGNS

All the miners of Jastrzębska Spółka Węglowa (JSW) came back to work on February 16, as per the agreement reached between the trade unions and the company’s management board three days prior. Mining had been suspended since the strike was launched on January 28. Resuming work at JSW’s mines was a condition made by the firm’s CEO Jarosław Zagórowski who announced he would tender his resignation at the upcoming management board meeting on February 17. He handed in his resignation on February 16. In line with the deal, JSW is to save up to PLN 400 million, including PLN 100 million saved by mining on Saturdays.

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COMMENTARY / LAW

ANNA WYRZYKOWSKA LAWYER AT WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

Zoning issues - how to choose real estate for investment projects There are numerous important factors to be taken into account when choosing a site for a new development

ne of the key factors for determining whether real estate is suitable for a planned investment is its designation. The designation of land, and the manner and terms of its development, are generally defined in a zoning plan. The zoning plan is an act of local legislation adopted by the council of a municipality. The provisions of a zoning plan constitute binding laws applicable in the area for which it was adopted. The contemplated investment must match the provisions of the adopted zoning plan. Otherwise, it will be necessary to seek an amendment of the plan. This entails a process which is analogous to the process for initial adoption of a plan (i.e. very formal, long and expensive). In practice, even if the municipality is interested in making the amendment, the process may last more than a year. When analyzing a zoning plan, an investor should not just focus on the general designated function of an area (industrial, residential, etc.). The specific provisions of a zoning plan also often introduce significant restrictions e.g. a minimum plot size (which limits the scope for division of plots) or green area indicators (limiting the development area). If a zoning plan is not adopted, the conditions for an investment are determined in a specific zoning decision, which should be attached to the applica-

tion for a building permit. The issue of a zoning decision must observe the ‘good neighborhood’ principle. Generally speaking, a particular project must be consistent with the function or dimensions of developments in the broader neighborhood, and not just those in its immediate vicinity. The application of the ‘good neighborhood’ principle is controversial in practice, and has been the subject of extensive literature and numerous judicial decisions. While selecting a spot for a new investment, an investor must also take into account that some projects of particular importance to the country (e.g. road and rail projects, airports, or nuclear power facilities) are privileged and can be implemented under the provisions of special legislation without observing the applicable zoning plans. Moreover, these projects are not required to respect other contemplated investments, including those for which building permits have already been obtained, regardless of the stage of their implementation. An investor might find that the land they plan to develop is, or becomes, subject to expropriation as a result of a decision issued on the basis of such special legislation. For that reason, it is important to check if the new investment does not collide with a privileged project. u

“A PARTICULAR PROJECT MUST BE CONSISTENT WITH THE FUNCTION OR DIMENSIONS OF DEVELOPMENTS IN THE BROADER NEIGHBORHOOD.

MARCH 2015 • WBJ OBSERVER

COMMENTARY / INTERNET SECURITY

MICHAŁ ROSIAK ITN SECURITY EXPERT, ORANGE POLSKA

What we should fear while surfing the web?

he development of modern technologies results in our spending more time surfing the internet. This is not only for pleasure and leisure time, but also due to work responsibilities. An increasing amount of people are unable to imagine completing their daily tasks without access to a computer, a smartphone, and above all the internet. What risks are connected with this? What should we watch out for? What should we refrain from doing, and what precautions should one take? Who attacks and why? Cyber-criminals often remain anonymous and are seldom taken to court for their wrongdoings. In the case of a committed crime, their identity is the least of our problems – the harm rendered is of greater importance. The motives of cyber-criminals are similar to regular criminals – they want to enrich themselves at the cost of the victim by stealing vital data or using one’s computer or internet connection for their own purposes. What exactly poses a risk? The attackers’ activities can be divided into a few groups: First, attempts to steal important information, e.g. passwords, log-ins to important accounts (including e-banking), etc. This can be done through a number of methods, but most often using malicious software, also known as malware, among others trojan horses (files that simulate legitimate programming), or keyloggers (programs that record and transmit keyboard or mouse strokes) and others. This way the criminal can access a victim’s bank account, electronic mail, as well as many other services which can contain vital information – such as data from the company where the victim works. Second, utilization of a victim’s internet connection in order to connect one’s computer to a so called botnet, in other words to a network of subordinate computers, which allow a cyber-criminal to conduct various activities and retain anonimity. Our computer can hence be used to conduct a DDoS (Distributed Denial of Service) attack, in other

words, to flood the bandwidth or the computing resources of our computer. The attacker impersonates the victim’s IP address, and sends many queries as the victim to various servers, which floods the server and the victim’s services with a deluge of responses. As a result, the victim’s web page becomes unreachable via the internet. It is also possible that the DDoS attack focused on a particular service is only a cover for a different, more serious attack, with the aim to e.g. steal important information. Third, destruction of data or disabling user control over important data. In such cases, malware has proven to be very harmful as well, especially viruses (that change file functions and consequently infect further data connected to them), rootkits (interfering with operating system files), or exploits (which take advantage of a flaw or vulnerability in an unprotected program to introduce malware). How to protect oneself? An absolute necessity is an anti-virus package, usually also functioning as a firewall. They allow for regular disk scans as well as the scanning of downloaded files. Thanks to the functionality of a firewall we will be able to block a significant part of suspicious programming, as well as internet traffic that behaves abnormally. Nonetheless, such passive protection can be insufficient since some unwanted programs can pass through without our consent – for example, when we click on a link, malicious code may be downloaded and consequently malware can be installed in the background, all without our consent or knowledge. A similar scenario may occur during the download of a seemingly harmless file, which introduces a number of harmful programs into the system. Considering this, besides a regularly updated operating system and programs (all programs, not just the anti-virus), common sense security precautions are also highly recommended – the checking of suspicious files and not clicking on suspicious links. The entirety of our precautions should be complemented with regular computer scans – although, even then, we cannot be one hundred percent sure that our security is complete. u

WBJ OBSERVER • MARCH 2015

COMMENTARY / BEAUTY

KALINA BEN SIRA THE FOUNDER AND PRESIDENT OF LA PERLA CLINIC

uring my lifelong experience as a manager of beauty salons, I’ve learned that the most important art in business is quick reaction to the changing tendencies of the market as well as the formation of attractive offers. Observing the latest trends and novelties is essential – the selection of technology cannot be haphazard. If we rest on our laurels, the competition will simply leave us behind. One of the most important factors is the highquality of services and standards, thanks to which we are able to build lasting relationships with our clients. Along with technology, the profile of consumers using aesthetic medicine, cosmetic and plastic surgery services is also changing quickly. It is no longer strictly the domain of women – the sight of male customers in an aesthetic medicine clinic doesn’t surprise anyone. The times when shaving cream and a shaver were the only products that men stored in their cosmetic chest are over. The modern man wishes to be fashionable, wellgroomed, active and athletic; thanks to this he feels young and wants to look young as well. Men’s interest in aesthetic procedures is growing year by year. Their knowledge and awareness of care methods is also increasing. Currently, a visit to the aesthetic medicine clinic is just as normal as a visit to the dentist or barber. All the more important, considering that in today’s world attractive appearance is not only important for success in one’s private life, but also one of the main factors determining a man’s professional success. That’s why the beauty industry began a real campaign, for the up until now unnoticed client. Today, no renowned and respected beauty clinic can do without a

MARCH 2015 • WBJ OBSERVER

care offer dedicated exclusively towards men. It should be added here that taking care of oneself is not perceived by men as an unpleasant chore, but is rather a relaxing and pleasant experience. The statistics don’t lie – over 30 percent of our clients are men who visit us often. They use modern technology as often as their female counterparts do. Laser, ultrasound and RF waves are just some of the most popular solutions used by men. Today’s male is active, lives in the fast lane and wants to take advantage of the above-mentioned procedures. They are fast, safe, and give natural effects. Men are increasingly often using non-invasive procedures, with effects similar to the likes of which until now were only possible by going under the scalpel. One of these procedures is Ulthera, which provides spectacular results of face lifting and the slowing down of the aging process. An example of one of our customers who used this procedure in our clinic is Polish actor Bogusław Linda. Men are also frequent guests at our SPA. Therefore, it is quite common for us to create packages devoted especially to the male clientele. Beer baths or care rituals allow men to relax and find peace. Recently, business meetings in special VIP rooms at our SPA have become popular. Summarizing, year after year the aesthetic market is becoming more open to men, who are becoming a stronger group of consumers in this branch. Every professional in the beauty care field should carefully monitor the development of this market and put forth an evermore attractive offer. u

Images: Shutterstock

The beauty industry shows its masculine side

COMMENTARY / HR

DAVID J. JAMES DIRECTOR OF INTERNATIONAL DESKS AT MAZARS IN POLAND

Why you need to place your company’s payroll in the hands of an external specialist provider One of the key functions in a company which can either be outsourced or kept in-house is payroll

ome people consider this an inalienable part of bookkeeping, so it is natural for the bookkeeping department to be entrusted with it, however, there are good reasons why businesses employing non-residents could benefit by taking a tailored solution from an external specialist firm. Unlike other aspects of administration, where errors are found and put right and nobody takes it personally or gets upset about it, payroll is one area where mistakes really undermine morale and can be often taken personally. You don’t need such stress in your workplace. Hence, you need a solution which is as error-free as can get and unless it is carried out by specialists, that probably isn’t going to happen. In addition, payroll is tied to maintenance of HR files for staff and management and looking after compliance with employment, tax and social insurance laws. This is a large task for non-specialist bookkeepers to handle, and mistakes can be very costly, not so much during the time of employment, but whenever claims are made afterwards. Many companies not taking due care with such matters can find that even their time recording is really a time bomb waiting to explode in court or during a visit by the PIP inspectors. You cannot be sure you are covering all the risks unless you outsource this.

When it comes to expatriates or non-residents, especially those dividing their time between Poland and other countries and only partly remunerated here, there are often complex considerations – especially in the cases of diplomatic, certain educational and religious or charity employees. These all require specialist knowledge. There are issues surrounding residence, benefits-in-kind and social insurance. Ensuring that more than one country receives the correct information and tax payments can be a challenge. Needless to say, in highly confidential environments, or in environments where the well-paid foreigner is not keen on all the staff knowing what he or she earns, the best guarantee once again is outsourcing to a professional provider. Holiday, sickness and maternity leave by payroll staff also no longer becomes an issue, and finally and maybe most compellingly – the move to outsourcing can usually save you money. Or you can outsource just for the period of an employee’s maternity leave. With all these things in mind, we at Mazars have perfected a specially tailored service called “Diplomatic Payroll.” We work with several embassies exacting requirements for secrecy and competence in the above areas. However, the service is available on request to international businesses. u

WBJ OBSERVER • MARCH 2015

COVER STORY / DEMOGRAPHY

THE DEMOGRAPHIC

SITUATION

A CHALLENGE, NOT A DISASTER

There is a full-blown alarm in the Polish media about the impending so-called “demographic disaster” which is, we are told, set to hit the country in the coming years, due to a combination of the outflow of population through emigration to other EU countries, longer life expectancy and fewer children being born in Poland. But are all these concerns entirely justified? And should employers and policymakers be worrying?

Image: Shutterstock

B Y B R E N DA N M E LC K

MARCH 2015 • WBJ OBSERVER

Image: Shutterstock

COVER STORY / DEMOGRAPHY

WBJ OBSERVER • MARCH 2015

COVER STORY / DEMOGRAPHY

The challenge of migration Increasingly frequently, commentators in Poland and internationally are speaking of the demographic challenges Poland faces, and migration is usually at the top of this list of factors. The number of Poles migrating has been increasing in the past couple of years, with 2.2 million spending over three months outside the country in 2013 according to GUS, compared with 2.13 million the previous year, and close to the record pre-crisis level in 2007 (2.27 million). A recent Reuters article spoke of Poland’s “creaking” social security system, with young Polish migrant families more likely to have children outside of the country, thereby increasing the challenge of paying for the growing pension requirements of the aging population. It also highlighted the problem of a shortage of labor in Poland, raising the question of the need for a new influx of immigrant workers into Poland.

MARCH 2015 • WBJ OBSERVER

Nuanced thinking needed Izabela Grabowska, professor at the University of Social Sciences and Humanities (SWPS) and senior fellow at the Centre of Migration Research, University of Warsaw, challenges the perceived ideas about migration. “We need to change the discourse on migration, because essentially, when all the political campaigns start before an election, migration is used more or less as a political football,” she said. “It’s easy to use as a kind of eyecatcher for the electorate in Poland and abroad; politicians say ‘I want to bring back young, well-educated people to Poland.’ But we need to look at the pros and cons of migration. Migrants are usually coming back to the places where they started from, meaning they are coming back to the local communities. The question is: do they integrate back to their local labor markets?” Grabowska argues for a more nuanced approach to the question of migration, far removed from the political slanging matches over who is responsible. “What do migrants bring back? They bring back money – of course economic remittances are very important, especially for the eastern part of Poland – but it is not only that,

ALMOST HALF OF RESPONDENTS (48.9 PERCENT) SAID THAT THEY WOULD BE HAPPY TO HAVE FOREIGN NEIGHBORS FROM DIFFERENT CULTURES AND TRADITIONS LIVING PERMANENTLY AND LEGALLY IN POLAND, WHILE 27.8 PERCENT DISAGREED WITH THIS PROPOSITION.

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ver the past 25 years, a combination of factors has led to a marked increase in the aging of Poland’s population. According to a study published by the Central Statistical Office of Poland (GUS) in November 2014, the percentage of the Polish population aged 17 years or below was 29.8 percent in 1989; by 2013, this had fallen to 18.2 percent. At the same time, the percentage of the population in the so-called “post-productive” age group (60 for women and 65 for men) increased from 12.6 percent in 1989 to 18.4 percent in 2013. It’s not as if Poland alone were facing the problem of an aging population – many developed economies are in the same situation. It is the combination of this, plus large-scale emigration – particularly of young people – and a population growth rate slightly below zero which causes concern. In a way, Poland is a victim of its own success: it has a healthier population, in general, than at the time immediately following the transformation from the communist system, with a significantly longer life expectancy, and its people are free to move around between the countries of the most important free trade area on the planet, of which it is a member. So many improvements! But these changes have their implications and consequences for Poland’s economy and society, too.

COVER STORY / DEMOGRAPHY

it’s also about social remittances, the changing mentality, helping local communities open up to the world. People are coming into contact with new behaviors and practices because of migrants coming back. This may make a difference in local communities. However, this is not that visible, and not that obvious.” Many Poles who emigrate do return, and Grabowska believes that they can have a role in changing the shape of the labor market in Poland and instill positive aspects of their work experiences abroad. Thus migration, which is being painted in such negative terms by many, could ultimately still prove to be an essential aspect of Poland’s continued development, at a time when, as she emphasized, a good proportion of employers are still educated according to the communist tradition. Shortage of labor – solutions closer to home Grabowska doesn’t accept that migration is the main cause of the problem of shortages in Poland’s labor market. Reported shortages of construction workers and salespeople, among others, have prompted debate on the need for increasing migration into Poland, particularly from neighboring countries to the east, such as Ukraine and Belarus. In the past year, legislation on the registration of immigrants has been changed to make the process easier. “It’s very easy to say that all the problems in the labor market – shortages, lack of qualified labor force – are caused by migration, but it’s not true,” she countered.

“Migration is only one factor in a whole catalog of factors. Why are we talking about migrants? Let’s talk about women in the labor market. We have one of the lowest participation rates of women in the workforce in the European Union. We still have problems with keeping women in the labor market, and bringing them back to the labor market. But it’s a combination of factors. Emigration is not the only reason why we’re experiencing these problems.” According to OECD figures, 59 percent of Polish women of eligible age participate in the workforce – just 1 percentage point below the OECD average. However, the proportion is significantly higher in Germany, the Netherlands and Scandinavia in particular. Is Poland ready for an immigrant influx? As to whether Polish society is ready for an influx of new immigrants, a recent survey carried out by Poland’s Public Opinion Research Centre within the auspices of a project carried out by the International Organisation for Migration, the University of Warsaw and the Ministry of the Interior, almost half of respondents (48.9 percent) said that they would be happy to have foreign neighbors from different cultures and traditions living permanently and legally in Poland, while 27.8 percent disagreed with this proposition. Grabowska favors a mixed solution in this case, again emphasizing a nuanced approach to these delicate questions.

WBJ OBSERVER • MARCH 2015

COVER STORY / DEMOGRAPHY

ACCORDING TO OECD FIGURES, 59 PERCENT OF POLISH WOMEN OF ELIGIBLE AGE PARTICIPATE IN THE WORKFORCE. “The question is to what extent Polish society is ready for it. There could be challenges in some local communities with structural problems and unemployment, but overall, the Polish economy needs immigrants. There are segments of the labor market – especially in developed countries – where natives do not want to take certain jobs. The best scenario would be for a gradual inflow of immigrants, mixed with returning Polish migrants. In general terms, it’s hard to say how much of a problem an influx of migrants to Poland would cause – it needs to be connected with changes in Polish society brought on by returning migrants, people who have lived in diverse societies, and for whom this is nothing unusual.” It could be worse The danger of there simply not being enough people in Poland to pay taxes and pay into the social security system in the coming years, for all the reasons noted above, is also getting considerable attention. GUS stated in a report last year

that in the foreseeable future, no significant changes could be expected that would ensure an improvement in the country’s demographic situation, pointing to the low levels of marriage and changes in birth trends which will have a negative impact on fertility levels, particularly in view of the sustained high levels of emigration. However, it is not as bad as in the Baltic states, according to Grabowska. “Thankfully, we are not in the situation of the Baltic States – they have a real reason to panic there. The outflow from migration compared with the size of the population in Lithuania is one of the highest. They have real reasons to worry about the social security system and taxes. I don’t think there is a case for panic in Poland at the moment. Migration levels are stable.” A more nuanced and less alarmist perspective on the demographic debate is important when it is being used cheaply to score political points. However, the fact remains that there is a challenge ahead – and a significant one. u

fill the moment

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MARCH 2015 • WBJ OBSERVER

Images: Shutterstock

The first whisky magazine in Poland

WBJ OBSERVER • MARCH 2015

FEATURE / COAL

CRISIS ON THE POLISH BLACK GOLD MARKET

Cloudy forecast The largest miners’ protests in years forced the government to back down from a proposal to dissolve four mines in the Silesia region. Both the trade union members and Prime Minister Kopacz announced the agreement as a grand success. But who really won?

MARCH 2015 • WBJ OBSERVER

Images: Shutterstock

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

FEATURE / COAL

oal currently provides 40 percent of the electrical supply worldwide. It is the second source of primary energy after oil and also the most important source of electrical energy. Poland has large coal deposits and this is why the country, as one of just a few in Europe, bases over 90 percent of its energy security on coal. Utilizing already operational mines and considering planned investments, 19 billion metric tons remains available for extraction. This is roughly a 50-year supply. Another 25 billion tons may be exploited by new investments. And yet paradoxically, Poland, despite being one of the main coal producers in the world and a major exporter, simultaneously imports this resource. Furthermore, the export and import numbers are basically equal – in 2013, we sent 9.6 million tons abroad and imported – mainly from Russia and the Czech Republic – 10.8 million tons. However, coal in Poland is a political subject. For 25 years it has been stirring emotions and is the cause of frequent strikes and protests, such as the one from 2003, when miners wreaked havoc in the capital and got just what they wanted.

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In early 2015, a new round of intensive miner protests took place. Some miners protested underground. Union leaders organised protests, street marches, blocking railways and roads. All this with the support of the inhabitants of Silesia. Upper Silesia has not seen so much turmoil in years. The reason for the unrest was the reform plan for coal mining company Kompania Węglowa, which is basically a financial corpse. This problem could not be ignored any longer – soon KW would have to announce its bankruptcy. The company currently has losses of PLN 200 million a month, with PLN 42 being added to each ton of coal it extracts. During 11 months of the previous year, KW lost PLN 1.14 billion on coal sales, and its liabilities at the end of November 2014 amounted to PLN 4.2 billion.

WBJ OBSERVER • MARCH 2015

Prime Minister Ewa Kopacz placed a condition on the survival of the largest coal company in the European Union, which employs a total of 47,000 workers. She demanded the liquidation of the worst-performing mines – Brzeszcze, Sośnica-Makoszowa in Gliwice and Zabrze, Bobrek-Centrum in Bytom and Pokój in Ruda Śląska. The four facilities together with the Piekary mine generate nearly 80 percent of the company’s losses, and this to an astronomical tune of PLN 800 million a year. Up to 3,100 people were to be out of work in return for severance packages, whose maximum amount in the case of miners would amount to two years’ wages. This was not to the liking of the trade unions. The opinion polls showed that the miners’ strike is backed by 68.5 percent of Poles and that was a significant factor for the government to strike a deal ASAP. The protests finally ended with the signing of an agreement between the government and the unions. Prime Minister Kopacz made a TV appearance, thanked for the compromise and spoke about a repair program for Polish mining. However, the agreement does not solve the problems, because no facility will undergo liquidation, and all workers have guaranteed employment. The majority of the company’s 14 mines will be taken over by a new state-owned company (Spółka Restrukturyzacji Kopalń), while the four mines earmarked for closure are in line to be merged with existing state-controlled energy firms. That move makes it possible to recapitalize mines with public money in accordance with EU laws, however without serious changes and reforms the problem will linger. Mines are spending too much and have outdated

MARCH 2015 • WBJ OBSERVER

“POLISH COAL MINING IS IN A DEEP CRISIS. THE LUCRATIVE CONTRACTS FOR DELIVERING COAL TO WESTERN EUROPE HAVE RUN OUT. technology. The agreement wasn’t the only solution. The other one, privatization, wasn’t seriously considered, even though Selena FM owner Krzysztof Domarecki had publicly expressed interest in taking over some coal mines from Kompania Węglowa. The result of the negotiations is not a surprise. No government in Poland has yet won with the miners’ trade unions. This time was no different. After the miners started protesting underground, their wives came to Warsaw, railways and roads were being blocked in Silesia, which could lead to broader social unrest. The government was quick to surrender. This led to the danger of more protests, which in an election year would be political suicide for the ruling party. The escalating crisis in the state coal mines has been caused by three reasons. The most important of these is the proprietary oversight of the mines by the government, which has lead to many pathological practices, including nepotism, the supremacy of trade unions over market inertia. Most mines only

work five days a week, and due to long arrival times and numerous pauses the effective work time is three to four hours. In the 1980s, when the government was able to provide a monopoly on coal trade, not allowing private mines to appear and creating very high tariffs on imported coal, this industry worked. Now, even though state-owned Polish mines are profitable in some years, especially in those, when coal price is peaking, they still lack adaptation abilities. The agony of state mining was prolonged after the EU accession due to a lack of serious incentives to compete. It’s too comfortable to function as a state-owned coal mine in Poland, meanwhile the EU’s search for cleaner energy and a cut in subsidies is putting pressure on Europe’s coal-mining industries. Currently, the way to solve the problem of Polish mining is the complete privatization of all mines and limiting miner privileges, including the huge budgetary burden of miners’ pensions. The individual cases of privatized mines such as Zakład Górniczy Siltech in Zabrze or Przedsiębiorstwo Górnicze Silesia show us that profitability on the mining market is possible. They extract two to three times more coal per worker. The second reason for the current crisis in Polish coal mining is the “shale revolution” in the US and Canada. Cheap shale gas has caused lower coal and oil consumption in the US economy. And because natural gas cannot be sent without the right infrastructure, American miners have flooded the market with black coal. Add to this production in South Africa, Australia and Russia. Currently, millions of tons of coal worldwide

Images: Shutterstock

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FEATURE / COAL

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FEATURE / COAL

are waiting for buyers, meanwhile workers from the coal-mining industry are clamouring for a complete ban of cheaper imported coal from abroad. This would be a huge loss for the Polish economy, because electricity plants would be forced to produce electrical energy at higher prices than they would thanks to cheaper foreign coal. In consequence, bills for electric energy would rise.

percent percent of carbon dioxide emissions from energy production worldwide; meanwhile, the energy security of Poland is mainly based on coal whose use largely contributes to climate change. The European Union wants to reduce overall greenhouse gas emissions by 20 percent compared to 1990 levels, meaning that fossil fuels would have to be substituted with something else.

The third reason in terms of importance is the “fight against global warming” in the European Union, where coal is being replaced by natural gas, “green energy” and nuclear. Coal is the greatest pollutant out of all fossil fuels, and is responsible for 43

Polish coal mining is in a deep crisis. The lucrative contracts for delivering coal to Western Europe have run out. In the north and east of Poland, cheaper Russian coal or wood is used for heating. Coal extraction is uneconomic because at times its extraction

costs are above its sale price. Thus Poles are subsidizing an ineffective industry and costly worker benefits awarded back in communist times under very different conditions. The problem also lies in the lack of intention in reforming organizations such as Kompania Węglowa. Other facilities, which need deep overhauls, may also come back to haunt the government. Perhaps the problem of liquidity of Kompania Węglowa will return in a couple of months and once again protesting miners will demand support. The only positive effect is that miners and trade unions already know that they have to start realizing that things will never be the same again. u

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HOW MUCH KOMPANIA WĘGLOWA IS PLN 200 MLN ISCURRENTLY LOSING EACH MONTH

+ WBJ OBSERVER • MARCH 2015

INTERVIEW / MAŁGORZATA OMILANOWSKA

FUNDING CULTURE

MAŁGORZATA OMILANOWSKA, MINISTER OF CULTURE AND NATIONAL HERITAGE, TALKS WITH WBJ OBSERVER ABOUT SECURING THE EQUALITY AND FREEDOM IN ACTIVITY OF ALL CULTURAL SUBJECTS, THE POSITION OF CULTURE IN STRENGTHENING SOCIAL CAPITAL AND ECONOMIC DEVELOPMENT, WAYS OF DISTRIBUTING STATE AND EU FUNDS FOR CULTURE AND THE GROWING PARTICIPATION OF POLISH BUSINESS IN FINANCING CULTURAL EVENTS

I N T E R V I E W B Y E WA B O N I E C K A

ety have equal rights to express their needs and aspirations in the field of culture.

Malgorzata Omilanowska: The prevailing role of the minister of culture is making sure that all subjects in the domain of culture are acting according to the law. They have to obey national laws regarding the functioning of cultural institutions and also laws applying to events connected with freedom of speech and artistic expression. I want to stress that in Poland we have a law forbidding the offense of religious feelings. However, what seems to be most important is to make sure that all subjects and communities acting within the framework of the law have freedom of expression, have their place in culture and can fulfill themselves through culture. Discrimination due to religion, ethnicity or any other reason is not allowed in the cultural policy of the state. All groups in soci-

What financial instruments do you have for conducting cultural policy?

MARCH 2015 • WBJ OBSERVER

When a big controversy erupted associated with the withdrawal of the performance of “Golgota Picnic” from the festival in Poznań due to the protests of some religious groups, you defended the right to present the performance. Yes, I expressed such an opinion, which referred to the right of engaging in any artistic activity within the framework of the law and my statement did not have any ideological context.

The Ministry of Culture has at its disposal a substantial amount of money, which is distributed for various programs and undertakings in the field of culture. Some of that money is distributed through contests organized by the local governments and non-governmental organizations and the competition is quite strong. It is sometimes very difficult to make sure that Poland’s diverse cultural scene is fully represented and that all cultural institutions requesting state support receive public funds. The decisions are taken by established special committees of experts and not due to personal inclinations. They evaluate the institutions’ and artistic

groups’ requests and make a well-informed decision. I am aware that this system of fund distribution, which has been functioning already for long time, is not perfect. Members of the committees, however qualified and respected, also have their own preferences. The Ministry of Culture constantly seeks to improve the system of distribution of state funds. The goal of this process is the securing of objectivity and selection of the best and most interesting projects and avoiding any ideological preference towards any political viewpoint. Some analysts have expressed opinions that culture is marginalized by many Poles and that government authorities do not regard culture funding as a truly important task and obligation. Meanwhile, many artists and cultural activists complain that state funds for culture are too small. How do you assess this? I do not agree with this opinion. The facts show that the condition of Polish culture is strong. Polish theater and films have gained international recognition. There are many interesting art exhibitions, cultural festivals and artistic events and new concert halls and museums are established, like the Museum of the History of Polish Jews or the European Solidarity Centre. Naturally, everybody hopes for more money for culture, but the fact is that every

Image: Ministry of Culture

WBJ Observer: Many events connected with freedom of expression, like lately the attack in France, show that with today’s global communication technology, the issue of freedom of expression is becoming a subject of sharp confrontation between societies with different political, ethical and moral values. While in democratic societies the confrontations between different views regarding freedom of expression are shaped by a framework of laws, they are often influenced by the cultural policy of the state. How do you see this role as the Minister of Culture?

INTERVIEW / MAŁGORZATA OMILANOWSKA

“I AM AWARE THAT THIS SYSTEM OF FUND DISTRIBUTION ... IS NOT PERFECT. MEMBERS OF THE COMMITTEES, HOWEVER QUALIFIED AND RESPECTED, ALSO HAVE THEIR OWN PREFERENCES.

WBJ OBSERVER • MARCH 2015

year the amount of money the state provides for culture is growing. The amount of money at the disposal of the Ministry of Culture has risen from 0.54 percent of the national budget to 0.93 percent, from PLN 2 billion to PLN 3.5 billion. If we add the funds for culture which are at the disposal of local governments, the amount would reach close to 1 percent of the budget. And in the new financial framework of the European Union for 2014-2020, Poland is on top of the list of members receiving funds for regional

MARCH 2015 • WBJ OBSERVER

development, the protection of historical monuments and culture as well. This funding will reach €1.4 billion. Lately, a very interesting report was published by the European Union, presenting the role of culture in the economy. The report states that the culture sector is the third biggest employer in the EU. In 2012, it employed 7 million people and was worth €505 billion. Does this mean that culture is overcommercialized?

I think that every aspect of culture has its place. After the change of the system towards a democracy and a market economy, the prevalent thinking in Poland was that culture should be a source of profit and should be an important element of economic development with the idea: today I invest in culture, tomorrow I reap profits. We have transitioned smoothly to the commercial distribution of films, book selling, organization of pop concerts. Some sectors of culture were possible to commercialize, whereas others were not and are still not

Image: Ministry of Culture

INTERVIEW / MAŁGORZATA OMILANOWSKA

“WE HAVE THE HIGHEST PROPORTION OF ADS AMONG ALL PUBLIC TELEVISIONS IN THE EUROPEAN UNION AND THIS IS HIGHLY ANNOYING FOR MANY USERS. work, for being more innovative. This will have a positive impact on economic development. In cultural processes, I see, above all, the possibility for the development of social competences of employees as well as employers. And a very important aspect of culture is building social ties, building people’s identity and sensitivity, so they can become more conscious participants in local communities and state institutions. Looking at the whole cultural environment, it is obvious how culture upgrades the quality of social and economic life and inspires people to create new jobs. I would point to its crucial role for our country’s overall development.

commercially viable in Poland or in any other European country. If you ask me about the role of culture in the economy, in my view, what is more important is the method by which participation in culture and its consumption create social capital. Building social capital provides an economic impact in the long run, because it is a process that makes the consumer of culture a more creative person, who understands the world around him/her better. Such a person’s social competences make him/her better prepared for

In many European countries, along with state support for cultural institutions, business plays a very important role in financing, so there is a mix of publicprivate financing for culture. In Poland, the leading theaters and museums have steady state support, but in recent years private theaters, local private museums are being established and most of them do not receive money from the central budget. Do you predict that the European model of public-private sponsorship of culture will develop in our country and to what extent is Polish business already participating in financing of cultural institutions and events? I think that a public-private model of culture financing will develop in Poland. There is a growing interest on the part of business in co-financing cultural institutions. The most spectacular examples were Jan Kulczyk’s foundation, which donated PLN 20 million for the Museum of the History of Polish Jews and Wojciech Pawłowski’s financing of the reconstruc-

tion of the Faras Gallery at the National Museum in Warsaw. I have observed that big firms who conduct business in Poland have devoted expenditures for supporting cultural events. Banks are very active here. What is noticeable is that businessmen support not only highly visible cultural institutions and events but also many local cultural initiatives and smaller institutions. We also have many examples of businesspeople getting involved in the recovery of art objects lost by Poland during World War II and after 1945. After conducting successful negotiations, the Ministry of Culture needs to pay for transport and lawyers’ fees. Private businessmen have helped cover extra costs and secured the safe return of artifacts belonging to Poland. There is one important problem, which your ministry was not able to resolve: the fee for public television and public radio. It was announced nearly two years ago by your predecessor that a new bill abolishing the present payment form will be passed. At the same time, a new simple and effective fee will be introduced. How do you want to deal with the situation in the midst of a financial crisis at TVP? It is a problem I have inherited as the minister of culture. The number of Poles paying fees for TVP and Polish Radio is very small. This income covers only 20 percent of the broadcasters’ budgets. So, at present, there are a lot of commercial advertisements. We have the highest proportion of ads among all public televisions in the European Union and this is highly annoying for many users of public TV and public radio. According to the law, these institutions are state-owned companies, so grants from the state budget are forbidden because the European Union specifically excludes such forms of aid. Currently, the Ministry of Culture can support only cultural programs and only on a level that does not exceed the EU recommendations. The preparations for introducing a new bill for fee payments has taken much longer than was predicted two years ago. It is necessary to convince the average Pole and to sway general public opinion towards funding for public TV and public radio. The parliament needs convincing as well. At the Ministry of Culture, various analyses are being made to find ways to solve the problem. u

WBJ OBSERVER • MARCH 2015

INTERVIEW / MAŁGORZATA OMILANOWSKA

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WBJ Observer presents

GAINING A BROADER PERSPECTIVE Trinity, a company providing outsourcing management services in Poland, Romania, Bulgaria, Czech Republic, Slovakia and Hungary, was acquired by Vistra Group in November 2014 and rebranded recently. Tom Ravensdale, the managing director for Central and Eastern Europe at Vistra talked with WBJ Observer about his experience in the market and the changes which joining the group has brought to his business Let’s go back to 2004. How did you come into your own on the Polish market? At that time, I was leaving my previous employer and it was an interesting time in Poland because it was just about to join the EU and since I wanted to stay here for personal reasons, I decided to try something on my own. It was a great challenge, it was terrifying. Entering a market without a fancy business card in your hand is quite scary and humiliating. But there was trust and faith in my track record in Poland. I was known to be a hardworking guy, so luckily I was given a chance. Now, we have four offices in Poland and our core business is outsourcing of corporate secretarial services, accounting and payroll services provided to multinational corporations, property funds and investors, private equity funds, oil and gas exploration companies, along with high-net-worth individuals.

Vistra Group had been operating in over 20 countries and employing around 1,000 people before it acquired Trinity. What does joining the group mean to your business? We got to a stage where we were established in Central Europe, which was our goal, but the next step was to become truly global. Now, as a part of Vistra Group, we can service the whole group. As a result, we see more and more requests for support in jurisdictions where we didn’t exist before like the Netherlands, the US, Luxem-

TOM RAVENSDALE, THE MANAGING DIRECTOR FOR CENTRAL AND EASTERN EUROPE AT VISTRA

bourg, Cyprus, Switzerland and Hong Kong. Also, some of Vistra’s clients are asking how we can help them here. We are enjoying the fact that we are a part of a bigger group and the process of integration is not difficult, because Vistra hasn’t had a presence here. What are your plans regarding integration and market demands? We recognize the changes in the market, so we are investing in new technology, which will be rolled out in the first half of this year. In terms of expansion, as the Vistra Group, we are not going further east on the continent. There are some gaps in the European Union we need to fill, which depends on where our clients are active. Currently, I would like to focus on some of these existing markets within the Vistra Group and in the short or mediumterm, I am not looking at opening any new offices.

BROUGHT TO YOU BY VISTRA

So how would you sum up more than ten years of work in six CEE countries? What do you consider to be your biggest success and failure so far? At the beginning, the greatest challenge for us was to keep up with the demand. We couldn’t find decent staff fast enough and had to open our own Trinity academy and train students how to use our systems. We kept this rolling till the 2008 financial crash. Nevertheless, it had little impact on us. The growth dropped off, but companies still needed services that we provided. There were fewer M&A transactions, but our clients were facing many issues with liquidity, refinancing and negative equity. So we helped them with restructuring. We were opening our business in Sofia at that time, so Bulgaria was the hardest market to enter. Our biggest success is that we have outgrown our well-established regional competitors, by sticking to some solid business principles and values. Failures? I cannot point anything out right now.

ENTREPRENEURS / JAKDOJADE

City slickers

B Y M AT T H E W C Z A J A

AFTER A NIGHT OUT ON THE TOWN IT’S EASY TO CATCH THE NEXT BUS, TRAM OR METRO WITH JAKDOJADE.PL (ENGLISH: HOW TO GET THERE). JUST WAIT FOR YOUR SMARTPHONE TO GEOLOCALIZE YOU AND PRESTO – THE NEAREST CONNECTIONS POP UP. A TRIO OF YOUNG TECHIES FROM POZNAŃ HAS STEADFASTLY LED MILLIONS OF POLES IN THEIR COMMUTES AROUND TOWN AND THEIR APPLICATION HAS BECOME A HOUSEHOLD NAME. NOW THEY’VE STARTED TALKING WITH SCANDINAVIAN MUNICIPALITIES ABOUT THEIR SERVICES

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MARCH 2015 • WBJ OBSERVER

here couldn’t have been a more textbook example of academics-to-business evolution than the Poznań-based company City-Nav. This company grew from a master’s thesis to a recognized brand. Choosing an office location outside the city center, they are based just a city block away from a Poznań transportation authority tram depot. Cities are flocking in droves to sign new deals with the company for the provision of mapped journey planning services via web and smart phone applications. It may not be rocket science, but the tool sure works like a charm. The rookies get guidance The idea was born around 2006 when two Poznań University of Technology students worked on their thesis projects. Artur Szychta and Mikołaj Grajek wanted to develop an application for mobile phones that would help users find public transportation connections on-demand. “They were ahead of their time in 2006, since smartphones were not popular yet,” said City-Nav CEO Bartosz Burek. The university professors did not lose heart though and convinced the young scientists to implement their application as a web platform. Burek insists that the

intervention of the professors helped keep the project alive. Students gathered data by hand at first. Schedules and geographic coordinates of stops had to be collected in the field and entered into a database. Finally, the city of Poznań came around to appreciate the new tool and decided to cooperate with the team. The initial web application was ready in 2008. Poznań University of Technology professors helped their students come into contact with willing investors. This gave Szychta and Grajek some breathing room upon graduating from school. They could devote themselves to the project full-time. Hence, five business angels, as well as Szychta, Grajek, and Burek are the current shareholders in the company. At the beginning, Burek also applied for funding from the European Union and this money further secured development of the start-up. What works Szychta summed up Jakdojade’s utility, “Creating Jakdojade, we tried to program the system to select routes that would have been selected by a commuter that knows the system well. This is the only way we could earn the trust of the users.” It’s simple. You log onto jakdojade.pl,

ENTREPRENEURS / JAKDOJADE

(L-R) BARTOSZ BUREK, MIKOŁAJ GRAJEK AND ARTUR SZYCHTA FOUNDED

Images: Solaris, Jakdojade

THE COMPANY IN POZNAŃ

choose your city and enter the journey beginning point and the destination. A number of options are available, such as the hilarious “grandma mode” which allows more time between connections. The user can also click on the map screen to choose beginning and end journey points, a very neat tool for geographers and tourists. “I had to create demand for Jakdojade in the beginning. It was necessary to crisscross the country in order to convince authorities and users alike that the application was useful,” said Burek. “It is not a simple website, I told them. It promotes the use of public transportation in a given city and this is what I tried to relay to the people in city hall.” Once users gave it a whirl, there was

no going back. The website’s popularity skyrocketed. Today, Jakdojade’s Polish empire spans 20 different cities or multicity transportation systems, including one of Europe’s largest tram networks in the Silesian Agglomeration. Further cities will be added and an inter-city journey planner is in the works. Their business model is rather simple. Most of the revenue comes from advertisements, which seem to be tastefully placed, yet visible enough for partners to find them attractive. A premium membership (PLN 6.99 per year) gives users commercial-free access, unlimited journey planning and additional goodies, such as a widget app that can display vital information night and day. With monthly figures

reaching 2 million unique users of the web application and 1 million users of the smart app, Jadojade can boast a huge audience base. City-Nav’s financial results may not necessarily be a tidal wave, but they sure look promising with an annual growth rate of 20 percent. In 2013, revenue was PLN 890,000 and net profit reached PLN 270,000. Cooperation with public entities The benefits of Jakdojade’s platform wouldn’t be achievable without the company’s ongoing cooperation with city transportation authorities. Once it sees the benefits of cooperation with City-Nav, it chooses to share route planning data and geographic coordinates of stops. Not only that, but ongoing communication

WBJ OBSERVER • MARCH 2015

ENTREPRENEURS / JAKDOJADE

is needed between Jakdojade and the authorities in order to identify emergencies and detours. A recent fire of the Łazienkowski Bridge in Warsaw resulted in massive detours of bus lines and an implementation of an emergency tram line. Jakdojade was on top of its game and its application reflected the change just hours after the dramatic fire surprised Warsaw’s citizens. In some cases, such as the one above, the team has an RSS feed from the city of Warsaw, which still necessitates manual entry of changes into the databank. In other cases, this data entry is automated. The disciplined and functional communication between the cities and a team of 14 employees spread out across the country ensures seamless information flow to the website. Real-time information Increasingly more city bus and tram units are installed with Global Positioning Systems (GPS), hence the position of these vehicles can be monitored in real time. The city of Wrocław already has GPS units installed in its vehicles due to the Intelligent Transportation System project, which yielded mixed results for the city. Nonetheless, for Jakdojade, GPS signals

MARCH 2015 • WBJ OBSERVER

offer an added bonus: real-time travel information. Białystok also has GPS tracking available already, and Bydgoszcz and Poznań should make their real-time data available soon. What is the benefit of real-time data? “In essence, the user does not need to know the schedule. If real-time data is at an arm’s reach, a commuter can automatically see when a vehicle will arrive,” said Burek. The Białystok map on the application even shows the real-time location of a vehicle with a moving arrow icon. On deck City-Nav is working with a Finnish city and will soon unveil their first foreign project. A joint partnership has already been inked with a Scandinavian company, therefore it looks like Northern Europe will be the direction in which City-Nav wants to expand. With IT and GIS solutions looking like the clear winner in the European (and Polish) mission for innovative technology, as well as EU funds for promotion of eco-friendly transport, Jakdojade should catch on in other areas of the continent. Similar projects do exist, for example the city of Munich has a very similar geoportal for public transportation

searches, but Jakdojade seems to be the first of its kind in this part of Europe. The application’s success also points to effective partnership with local governments. Whereas every city with a transportation department could technically develop its own application (e.g. Munich), none can deliver the ease of use and speed that the people at City-Nav have given the Polish commuter. It is a simple advantage of economies of scale – City-Nav can develop systems much more efficiently because its programmers and team can service multiple cities at the same time, all while developing a recognizable service across Poland. “When we created the project, our goal was simple: to create a nationwide Polish standard used by millions of users,” said Szychta. Their mission was accomplished. On the basis of this successful project and business venture, investors and planners alike can draw conclusions. Perhaps the role of private enterprises in public services is not to take over services from city hall, but rather improve them, thus saving taxpayer money and helping increase the standard of living within Polish cities. Jakdojade does just that, and does it very well. u

Images: Jakdojade

THE APPLICATION USES A RECOGNIZABLE INTERFACE. REAL-TIME DATA ALLOWS THE USER TO TRACK APPROACHING BUSES.

WBJ Observer presents

KEEPING TABS You have been present in the market for more than 20 years. What were the pivotal moments in the company’s history? There were a few. In 2002, we redirected our operations to focus on support of international companies doing business in Poland. In 2005, we opened an office in Warsaw with an aim to become more than a local firm. Then in, 2009, we became a member practice of RSM and finally, in 2012, we won several awards and took over Baltic Accountants and Consultants strengthening our office in Warsaw. We are addicted to growth and at the same time focused on quality and trust, a good combination for success in professional services. How has becoming a part of RSM International changed the way you operate? It changed a lot and for the better. Member firms, as we observe, are more and more integrated into RSM cooperation and focused on international business growth. We work closely not only with RSM Europe practices, but also with Asian and US firms. Large RSM practices from the UK, US, China, Singapore and Germany share their knowledge and experience with smaller players such as the ones in Poland. We win multinational clients for tax compliance, statutory audit, transaction support services, risk management and deliver to them what is promised often in 80 to 90 or more countries. This shows the strength of RSM in international engagements for very demanding clients. In the rankings of the largest tax accounting companies compiled by the Polish daily Rzeczpospolita you were ranked 15th in 2014. What is your strategy to break into the top 10?

Which companies are you focusing on and would like to work with most? Large? Middle-sized? Growing or wellestablished? RSM Poland KZWS is a well-established firm that is still growing so we love firms such as ours in that respect. We work with small firms with a small staff and revenues below €500,000 as well as with huge domestic and multinational companies listed in the top 100 of Fortune 500, with revenues in Poland exceeding €500 million. We particularly appreciate working with companies, which – like us – are passionate about their business and cherish long lasting added value based cooperation.

BARTOSZ MIŁASZEWSKI, MANAGING PARTNER AT RSM POLAND KZWS, DISCUSSES THE COMPANY’S HISTORY, STRATEGY AND EXPANSION PLANS

What are your short-term and mid-term targets? Quality and growth. By 2020, we aim to exceed PLN 50 million in turnover from core services. Meanwhile we are observing the market as it changes domestically and internationally, who knows what tomorrow may bring. What is your advice to expats wishing to do business in Poland? Our suggestion is to be open-minded. Poland is full of great opportunities, but also with some unpleasant, lurking surprises. Be happy and confident that you made the right decision to do business in Poland, always listen to good advice but make your own decisions and last but not least – remember – when in Rome, do as the Romans do.

BROUGHT TO YOU BY RSM

That is a very interesting question, as the audit market is not such an easy one these days. Our strategy is to focus on transaction support services and risk management apart from growing the service line of statutory audit. We are seeking takeover targets, to gain synergies, as that is how we see the future of audit in Poland, fewer firms, larger players, with more and more focus on quality.

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Made

in Poland 2015

Conference strategic partners:

partners:

MADE IN POLAND 2015 / EXPORT

Old barriers and new destinations

olish exports have never been stronger. Their value has grown in 2014 by 5.2 percent and that’s despite the Russian embargo on EU products. With quality products and low prices, Polish companies are very competitive on a global scale and are finding new destinations for their products. That’s why, for the fourth straight year, we have published our Made in Poland annual, showcasing selected sectors where Poland is a prominent player or has potential to become such. As usual, the publication is being followed by a conference in which we, along with our guests and partners, tackle selected problems and trends concerning Polish exports. This year, with the crisis in the East, where many of our products are exported, the issue of new export destinations is one of the panel topics. Where else can we

sell our products? Which countries show the most promise as potential export markets? In the second panel, we’ll try to answer questions regarding barriers Polish companies are facing when it comes to exporting their products. What can be done to help them reach new clients and markets? We’ll also evaluate sectors that show the best potential for growth. In this supplement, which precedes the March 26 conference, we present to you the general breakdown of Polish exports in the last few years. Which sectors have been gaining momentum and which destinations are becoming more popular. For an in-depth analysis of specific sectors please check out our Made in Poland 2014/15 annual. Hope to see you all at our March event. available now Made in Poland a guide to Polish

ISSN 2083-0645 PLN 79 (8% VAT INCLUDED)

EXPORTS

2014 / 15 strona | 3

MARCH 2015 • WBJ OBSERVER

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MADE IN POLAND 2015 / EXPORT

Output of goods increasing From vodka to farming equipment. Polish exports have been growing and the trade deficit has been shrinking. Itâ&#x20AC;&#x2122;s only a matter of time till Poland will export more goods than it imports. With the tensions in the East, Polish companies are managing to find new destinations for their products B Y B R E N D A N M E LC K

WBJ OBSERVER â&#x20AC;˘ MARCH 2015

MADE IN POLAND 2015 / EXPORT

xports are in no small part an essential motor of Poland’s economy. From EU accession in 2004 until 2013, total annual exports from Poland increased, according to the most recent confirmed data from the Central Statistical Office of Poland (GUS), by 159.6 percent, with the 2013 figure reaching €154.99 billion. During this time, the country’s foreign trade deficit shrank from €11.66 billion to just €1.98 billion.

The initial data from 2014 shows a significant change from previous years in terms of the most dynamic growth markets for Polish exports, which is certainly attributable to difficulties in Russia and Ukraine. Exports to emerging markets have been growing the fastest in recent years: in 2013, exports to developing markets grew 11.2 percent y/y to €28 billion (compared with growth of just 2.4 percent y/y in 2012), while those to developed markets grew 7.4 percent y/y to €127 million. However, the Ukraine conflict and the subsequent impact on the Russian market meant that last year, exports to developing markets grew more slowly – 6.8 percent y/y – than those to developed markets – 7.7 percent y/y.

Image: Shutterstock

Exports in 2013 grew in value by 8.0 percent year-on-year, which represented an impressive increase in the growth dynamic, following on 4.9 percent y/y growth from 2011 to 2012. Initial data from GUS shows that in 2014 exports from Poland saw a slight downturn in terms of growth dynamic, growing by an estimated 5.2 percent y/y to €163.13 billion. These initial results show a significant impact of the combination of Russia’s embargo on the import of agricultural products from EU countries, and the disruption to trade with Russia and Ukraine caused by the ongoing conflict in eastern Ukraine (the initial GUS data for 2014 shows that exports to Russia – the sixth largest export market for Poland – were down 14.0 percent y/y). However, they also show the underlying strength of Poland’s exports, and the success of Polish exporters in finding alternative markets for their goods in response to these current challenges.

Poland’s Ministry of the Economy commented in its annual report on foreign trade that changes in the structure of Poland’s exports, in terms of their geographic destination, show that Polish exporters are looking for greater geographic diversity, adding also that they are able to react quite flexibly to the situation in the markets of trading partners. This is backed up by the statistics: the share of Polish exports going to European markets (including both EU and non-EU) decreased slightly. In 2013, it was 88 percent, compared with 89 percent in 2009. What’s more telling is that while overall export growth was 8 percent y/y in 2013, exports to European countries grew more slowly, at 7 percent y/y, while exports to Asia were up 10.3 percent y/y, those to Africa were up 30 percent y/y, and those to the Americas, up by 21.6 percent y/y.

MARCH 2015 • WBJ OBSERVER

MADE IN POLAND 2015 / EXPORT

Powering Creation

Powering Creation We are the intermediaries between man and the land, between mind and matter. This is our mission. We build understanding, seek out wise balance. This is our strategy. We create abundance, diversity and safety. This is our offer.

grupaazoty.com WBJ OBSERVER â&#x20AC;˘ MARCH 2015

MADE IN POLAND 2015 / EXPORT

The largest share of Poland’s exports is accounted for by electromechanical products, which in 2013 accounted for 39.3 percent of the country’s exports. Within this group, a particularly high growth dynamic was seen in the sale of ships, boats and floating structures, which grew by 31.3 percent y/y. Overall, exports of this group were up by 8.9 percent y/y in 2013. The fastest growth, however, was seen in the exports of agricultural products – the third-largest product group in Poland’s export mix – which increased by 14.2 percent y/y, to €20.4 billion. As the Ministry of the Economy noted in its report on foreign trade in 2013, this has become a specialist export area for Poland, and it now makes up 13.2 percent of the country’s export total. Within this group, exports of alcoholic drinks grew by 16 percent y/y in 2013, according to data from the Foundation of Assistance Programmes for Agriculture (FAPA), to €319.7 million. According to FAPA data, in the first half of 2014, however, the growth dynamic for alcoholic drinks fell to just 4 percent y/y. Within this, there was an increase in the growth dynamic of

the exports of spirits, from 8.3 percent y/y in 2013 to 11.7 percent y/y in the first half of 2014, while in contrast, growth in beer exports fell from 22.7 percent y/y in 2013 to just 7.4 percent y/y in the first half of 2014. The second-largest product group of exports from Poland is chemicals, which saw an increase of 9 percent in 2013, to €21.9 billion. While plastics and plastic goods is the subgroup within the chemicals group with the highest export sales, which rose 11.5 percent y/y to €7.1 billion, a really strong impression was made by Polish pharmaceutical producers, categorized within the chemicals group, whose export sales went up by 25.7 percent y/y in 2013 to almost €2.4 billion. While Germany is the largest customer of Poland’s chemicals industry, Russia is the second, and the current strains in international relations are likely to have a negative influence on its export results. Cosmetics is a sector which was marked out as a Polish export “hit” by the Treasury Ministry last year, which reported

that the sector’s exports grew 18 percent y/y in 2013 – taking its data from the Polish Union of the Cosmetics Industry – to €2.36 billion. This sector is also affected by the troubles in Ukraine, with GUS estimating that as much as 40 percent of exports of Polish cosmetics go to countries of the former Soviet bloc. Trade news source Portal Spożywczy reported GUS estimates showing that in the first half of 2014 exports of cosmetics increased by just 1.1 percent y/y to around €1 billion, although it suggests that the slowdown in sales to central and eastern Europe started before the trouble in Ukraine. Sales to the EU were up 4.1 percent y/y, while Polish cosmetics producers had increasing success in Asian and Middle Eastern markets. Indeed, the Ministry of the Economy is backing the development of exports in particular sectors to more unfamiliar markets, as a response to the challenging situation in Russia and Ukraine, and in the case of cosmetics, it is supporting an export push for cosmetics in Malaysia. This is one of many such programs intended to support sectors most affected by drops in exports. u

Beauty Abroad I Z A B E L A Ł O P I Ń S K A – B U S I N E SS D E V E LO P M E N T D I R E CTO R , C L A R E N A

MARCH 2015 • WBJ OBSERVER

ciates quality. Without any doubt, hair care products and skin care cosmetics are selling best. We can confidently say that skin care is our industry and safely indicate that face creams, which slow down the aging process, stand out from the competition. Quality at a good price is the motto which promotes the Polish cosmetics industry and this perfectly captures what we offer our customers. BROUGHT TO YOU BY CLARENA

Polish cosmetics potential is constantly growing. The world is looking at our emerging ideas with a growing interest and reaching more confidently for products labeled “Made in Poland” and doing it rightly so, because we do have a well-educated workforce, the historical conditions and related experience and facilities. Today, we can confidently say that Poland is a cosmetics exporter with a global reach. Our business success is best expressed by the numbers – more than half of the cosmetics produced in Poland are exported to foreign markets, reaching more than 130 countries worldwide. Until recently, we were focused on the former Eastern European markets but now the free movement of goods within the EU has significantly changed the situation and we’ve increased exports to Germany, the United Kingdom, the Netherlands and other EU countries. More and more companies focus efforts on attracting contractors in the Middle East. Today, on the list of active markets appreciating the quality of our products we have Kuwait, the UAE; as well as Asian markets, Japan and even China – contrary to public opinion, a country that appre-

WBJ Observer presents

MADE IN POLAND 2015 / EXPORT

Positive Prospects CEO of the wine manufacturer and distributor AMBRA S.A., Robert Ogór, talks about the Polish cider market, the company's growth strategy and the possible directions of foreign expansion.

ow does the cider manufacturing process in Poland differ from the production method in other countries? Robert Ogór, CEO of AMBRA S.A. – In order to secure consumer interest and to ensure the high quality of the product, the Polish legislator has strictly defined what cider is. Under the Polish law, it must contain at least 60 percent of apple juice. Nevertheless, AMBRA is the category forerunner in completely natural cider and relies on a product made strictly from freshly pressed juice. Cydr Lubelski is fermented in pressure vessels, a production process similar to the one used to make sparkling wine, without a carbon dioxide injection, nor concentrate or any other addition of artificial flavors. This way we are able to save the taste of aromatic, Polish apples, which is balanced with refreshing acidity and sweetness. Apple varieties used by AMBRA are different than the ones used in Great Britain or France, they are less acidic and more aromatic. Do you think that the Russian embargo on fruit import, which triggered a social media campaign aimed at encouraging people to eat apples and drink cider, translated into a growing popularity of the drink? Cydr Lubelski was put on the market in June 2013, one year before the Russian ban. Cider expansion in the Polish market is based on a consumer trend, which Cydr Lubelski satisfies: it is simultaneously light, natural, modern, refreshing and local. The fact that the trend was strengthened by the socio-political campaign was a coincidence.

In a KPMG report, cider was ranked 10th in terms of consumption volume, with vodka and beer occupying the top spots. What is the future of the cider market? The report was not a consumer report in the strict sense. According to consumer research, cider is a very well recognized and highly attractive brand for customers, just after two years of presence on the market. Most certainly, cider is a new market, not a fad. As a low-alcohol, refreshing drink, it poses an alternative to beer, but in reality it is targeted at everyone. What is the projected increase in cider sales in Poland in the medium term ? According to our estimates, in the next five years, the cider market has a chance to reach a level of 80 million liters of consumption, which accounts for 2 percent of the beer market. Can we expect new flavors of Cydr Lubelski? Cider in Poland is made mainly from apples, however, it can be innovative. This year we are introducing canned Cydr Lubelski. Every autumn, we offer a limited edition of cider made from young apples from the first harvest in September. We also produce honey apple cider. Nevertheless, our main challenge is to meet the growing demand for natural cider. Do you plan to sell abroad? The most important markets for Polish cider are the markets where the drink is already present and widely consumed. For these customers, natural Cydr Lubelski is a new, quality offer. We are mulling exports to Great Britain and Scandinavia as a first foray into foreign markets.

WBJ OBSERVER • MARCH 2015

BROUGHT TO YOU BY AMBRA S.A.

ROBERT OGÓR, CEO OF WINE MANUFACTURER AND DISTRIBUTOR AMBRA S.A.

Conference 26.03.2015

Zebra Tower, ul. Mokotowska 1, Warsaw

The Made in Poland project, a comprehensive guide to Polish exports will be concluded with a conference where businesspeople, experts and officials will debate the most pressing topics for exporters Panels include: New export destinations. With the Russian embargo on Polish products, domestic producers need to find new markets to sell their products to. Which are the most promising? Africa? Americas? Or the BRICS? The challenges and barriers facing Polish companies. Which sectors have the best export potential? For more information visit wbj.pl To register contact us at rsvp@wbj.pl

March 2015

RENAISSANCE ON THE ESCARPMENT WARSAW IS UNDERGOING SOME MAJOR REFURB ON BOTH RIVER BANKS 56 DROP-SHIPPING AND OUTSOURCING E-COMMERCE IS A GAME CHANGER FOR LOGISTICS OPERATORS 68 HIGHWAYS LEAD TO THE EAST INTERVIEW WITH ROBERT DOBRZYCKI HEAD OF PANATTONI EUROPE 72

30 pages of real estate content

SPECIAL EDITION

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REAL ESTATE NEWS

>LOKALE IMMOBILIA

NEWS

l OFFICE

here are currently some 73 boutique offices in Warsaw, according to a report by BNP Paribas, which “has analyzed existing and planned provision of historical and/or fully or partially refurbished or rebuilt buildings within sections of Warsaw’s city center and the Old Town area, varying in terms of size (max. 15,000 sqm), age and technical specification.” The report reveals that the total leasable area of office boutiques in Warsaw amounts to 310,700 sqm and the number of tenants reached 525. Prime headline rent ranges from €23 to €26 per sqm per month, while the yield for prime assets ranges between 6.0 percent and 6.25 percent. The average vacancy rate stands at 12.4 percent.

The boutique office market has perspective. “Having gained experience in Germany, boutique offices should work in Warsaw, too. Still, the market remains relatively immature,” said Robert Mandżunowski, CEO of developer LHI. Experts, however, agree that boutique offices are assets for a patient investor. “You have to be patient, when trying to lease boutique offices, but it is generally worth it. Sure, costs of refurbishment and fit-out of a boutique office exceed the regular budget, however when considering the achievable rents and loyalty of occupiers, it is a sound investment,” Rafał Krzemień, board member of Polish Real Estate Holding (PHN), was quoted in the report. u

Zielone Arkady - largest shopping Center in Bydgoszcz • GLA: 51,000 sqm • Number of shops: 200 • Parking spaces: 1,200 • Opening date: fall 2015

ECE - European leader in shopping center market. 50 year experience in development, planning, leasing and management of large commercial properties.

Image: IVG Poland

Boutique offices growing in popularity in Warsaw

LOKALE IMMOBILIA / NEWS

Key meeting of representatives of banking and insurance

Spotkanie Liderów 1st - 2nd April 2015 r.

Hotel Westin, Warsaw Banking Forum 9th EDition of the FORUM

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Wwww.bankowosciubezpieczenia.pl BJ OBSERVER • MARCH 2015 51

LOKALE IMMOBILIA / NEWS

AVIA OFFICE BUILDING offers 14,000 sqm of office space

l OFFICE

Avia Office Building delivered

GD&K

Group, a Polish developer active in the Warsaw and Kraków markets, has opened its 14,000-sqm class-A office scheme, dubbed Avia, located in Kraków Technology Park, within the Kraków special economic zone. The sixstorey scheme also features 173 parking places. u l OFFICE

Yareal set to launch Neopark

areal is about to begin construction of Neopark, an office complex offering 24,000 sqm of class-A office space in Warsaw’s Mokotów district. Phase one of the investment is scheduled for completion in Q3 2016. It will feature two five-storey buildings designed by the JEMS Architekci architectural studio. RD Bud has been selected as the scheme’s general contractor. u NEOPARK will be delivered in Q3 2016

l LOGISTICS

Panattoni invests in south-eastern Poland

ndustrial space developer Panattoni is set to launch a new logistics project in Rzeszów comprising two warehouses totaling 39,000 sqm. “As a real estate developer, we are historically present in the region, just to mention the BTS projects for Bosch or Pilkington. However, we still do not have our own location here, that is why we plan to start the investment this spring,” managing director of Panattoni Europe, Robert Dobrzycki said. The Panattoni Park Rzeszów is to be located near the special economic zone and the so-called Aviation Valley. According

MARCH 2015 • WBJ OBSERVER

to Dobrzycki, it will be the first class-A industrial space in the region. In late February, Panattoni commenced work to add approximately 21,000 sqm to one of the production halls for Pilkington Automotive Poland in Chmielów in the Tarnobrzeg Special Economic Zone EURO-PARK WISŁOSAN located in southeastern Poland. The project is to be completed in September 2015. The space will be added to the already existing 35,000 sqm, built by the developer in 2012. u

Images: GD&K Group, HB Revis, Yareal

€440 million

is the investment volume recorded in regional office markets, compared to €156 million in 2013, according to JLL.

LOKALE IMMOBILIA / NEWS

l INVESTMENTS

P3 finalizes acquisition of 252,000 sqm of logistics space

Logistics Parks has finalized the purchase of two logistics parks in Poland with a combined space of 252,000 sqm, the representatives of the company informed during a press conference. The company is also considering further transactions. The acquired logistics parks are located in Błonie and near Piotrków Trybunalski. The transaction also included

warehouses with a combined space of 215,000 sqm in Bucharest, Romania. All of the logistics parks were acquired from CA Immobilien Anlagen for an undisclosed amount. “We are investigating the possibilities of further acquisitions in Poland,” Andrzej Wrona, CEO of P3 in Poland, told PAP. Before the deal, P3 already owned two logistics parks in Poland, located in Poznań and Mszczonów. u

KONSTRUKTORSKA BUSINESS CENTER

l OFFICE

PZU leases 18,000 sqm in Konstruktorska

RETAIL

57%

OF E-SHOPPERS WILL SHOP ONLINE MORE OFTEN THAN IN TRADITIONAL STORES IN 2015, ACCORDING TO A SURVEY BY THE RESEARCH INSTITUTE ARC MARKET.

eveloper HB Reavis has leased 18,000 sqm of office space in its Konstruktorska Business Center to Poland’s largest insurer PZU. The insurance firm will take up levels one through three in the seven-storey building. It will move to the new premises in May 2015. Konstruktorska Business Center offers 48,000 sqm of office space and 1,050 parking places in an underground garage. The building’s tenant mix includes Procter & Gamble, Grupa Żywiec, MoneyGram, Otis, Carrier, Comperia.pl, Bilans and IMS Health. u

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LOKALE IMMOBILIA / NEWS

l H O S P I TA L I T Y

Hotel occupancy up, ADR down – HTL Horwath l OFFICE

Asbud secures lease of 10,000 sqm in Karolkowa Business Park

eveloper Asbud has leased nearly 10,000 sqm of office space to the Agricultural Market Agency (ARR) in its recently completed class-A office scheme, Karolkowa Business Park. The project offers 18,800 sqm of GLA, including 2,654 sqm of retail space. It was commissioned for use in January 2015. In September 2014, Asbud became the sole owner of the building, after purchasing a 50 percent stake from CPI. u

l LAND

Warsaw to improve land for investments

The

city of Warsaw is planning to spend around PLN 90 million on improving land in 39 municipalities within the metro-area through 2020 to attract potential investors. Improvement of land includes the installation of utility infrastructure. “We will spend roughly PLN 58 million on improvements in years 2016-2020. Additionally, we will spend PLN 29 million on economic promotion of the land,” the deputy mayor of Warsaw Michał Olszewski said. The city wants to focus on specializations such as: photonics, biotechnology, nanotechnology, ICT, the energy sector and the creative sector. u

2,459

year), makes it more difficult to increase incomes and profits,” he added. Hotel occupancy increased by 1 percentage point to 65.9 percent over the past year, according to STR Global, cited in the report. Central Statistical Office (GUS) data point to a 10.7 percent increase in the number of tourists over the period of January-October 2014 (most recent available data) compared to the corresponding period of 2013. However, the second half of the year saw a lower number of tourists from the former Soviet republics, due to the Ukraine conflict. u

the number of Polish hotels at the end of 2014, altogether offering 120,000 rooms and suites, according to HTL Horwath.

Images: Asbud, Ghelamco, Cushman & Wakefield

KAROLKOWA BUSINESS PARK

hile hotel occupancy figures in Poland increased last year, a growth driven mainly by domestic traffic, average daily rates fell by 1.5 percent to €61, according to a report published by HTL Horwath. “Domestic guests account for approx. 70 percent of hotel rooms sold. On the one hand, investors perceive this as a stable base, but on the other hand, this market segment is very price sensitive,” said Janusz Mitulski, partner at Horwath HTL and vice president of the Chamber of Commerce of the Polish Hotel Industry. “This, together with the rising number of hotels (approx. 100 hotels per

RETAIL

15%

OF RETAILERS’ REVENUE COMES FROM E-COMMERCE, ACCORDING TO CBRE.

MARCH 2015 • WBJ OBSERVER

PLAC VOGLA will feature 5,000 sqm of GLA

l R E TA I L

Ghelamco launches Plac Vogla

helamco is scheduled to launch the construction of its first convenience center, dubbed Plac Vogla, in March. The project is located in Wilanów, one of Warsaw’s fastest growing residential districts without any major retail scheme thus far. Plac Vogla will feature 5,000 sqm within 30 stores. The scheme will be anchored by food chain Alma. Erbud has been selected as the general contractor for the scheme. u

LOKALE IMMOBILIA / NEWS

l RESIDENTIAL

Housing construction numbers down in January

evelopers and other investors completed 11,210 housing units in January 2015. This is 10.8 percent less than in January 2014 and 29.0 percent less than in December, according to preliminary statistics published by the Central Statistical Office (GUS). Construction on 7,240 units was launched in January, 11.8 percent more than a year before and 15.6 percent less than a month earlier. u

RETAIL

JEROZOLIMSKIE BUSINESS PARK was one of eight properties acquired by Ares

l INVESTMENTS

Ares buys office and retail portfolio from IVG

res Real Estate Group has purchased a portfolio of eight office and retail properties, altogether featuring 45,000 sqm of GLA, previously held by IVG Institutional Funds, a real estate investor specializing in boutique offices and the refurbishing of historic buildings. The deal encompasses properties of a total value of over €100 million located in Poland, the UK, Germany, Sweden and the Netherlands. One of the assets acquired by Ares is the Jerozolimskie Business Park in Warsaw,

located at Al. Jerozolimskie 146, approximately three kilometers west of Warsaw’s city center. It comprises four buildings totaling 16,840 sqm. The complex was delivered to the market between 19962001. “The acquisition of the Jerozolimskie Business Park proves a strong interest in the Polish CRE market. ... Jerozolimskie Business Park accounted for a significant portion of the portfolio, thus demonstrating the growing importance of Polish real estate in pan-European strategies,”

€2,010 PER SQM THE AVERAGE ANNUAL REVENUE OF A RETAILER IN A SHOPPING CENTER, ACCORDING TO CBRE. said James Chapman, partner and head of CE Capital Markets at Cushman & Wakefield. “Not only do the properties within the portfolio provide an attractive initial yield, we believe they also present several asset management opportunities, which is consistent with the objectives of our growing value-add business,” said Wilson Lamont, partner at Ares Real Estate Group. Ares has been active in Europe since 1995 and holds a portfolio worth $86 billion. u

FIRST CSR REPORT IN THE FURNITURE INDUSTRY

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Przemysław Różowicz Marketing & CSR Manager WBJ OBSERVER • MARCH 2015

LOKALE IMMOBILIA / WARSAW REVITALIZATION

The once and NOW THAT THE RENOVATION OF PL. MAﾅ、CHOWSKIEGO HAS BEEN SUCCESSFULLY CONCLUDED, THERE ARE BIGGER PLANS AFOOT WITH FURTHER REVITALIZATION PROJECTS IN WARSAW INCLUDING THE RENOVATION OF PL. TRZECH KRZYﾅｻY AND ITS ENVIRONS. HAS WARSAW ENTERED A NEW RENAISSANCE?

MARCH 2015 窶｢ WBJ OBSERVER

LOKALE IMMOBILIA / WARSAW REVITALIZATION

future Warsaw

B Y A L E X H AY E S

Cedet

ecently, the Nowy Świat 2.0 modern office building was topped off. It is being built by general contractor Karmar and investor Centrum Bankowo Finansowe “Nowy Świat” in a narrow strip between an old university building and Centrum Bankowo Finansowe. Nowy Świat 2.0 is a six-storey, glazed building and will offer 4,200 sqm of office space as well as a retail area of 2,000 sqm. Additionally, there will be parking spaces for 160 vehicles. The first tenants should be moving in in the third quarter of this year. Meanwhile, the adjacent CBF building and forecourt are undergoing a full renovation. “We want to give this area back to the city’s inhabitants,” explained Anna Wolańska-Witczak, the president of the board at Centrum Bankowo Finansowe “Nowy Świat.” With this in mind, the forecourt is to be opened up to the public. Because the building is listed on the historic buildings register, every step being taken by the investor first has to be approved by Warsaw’s curator of historic buildings. “In a building listed on the historic register, everything must remain the way it historically was. We want to return the architectural details while not forgetting about modern conveniences,” said Wolańska-Witczak. But it is not just the internal details of the building that have had to be approved. The building’s curator has also demanded that Nowy Świat 2.0 be architecturally consistent with the existing buildings. Despite this, Nowy Świat 2.0 has also obtained LEED ecological certification. The two buildings stand along Warsaw’s so-called Royal Route, a road that stretches across Warsaw’s most picturesque areas from the Royal Park in Wilanów to the Castle Square in Warsaw’s Old Town. This particular project certainly fits the definition of revitalization as given by Łukasz Maciak, the director of Capital Markets at DTZ and a member of the Royal Institute of Chartered Surveyors. He stated that, “Revitalization should be understood as the reinstatement of degraded buildings or urban areas that have lost their original function. Its main purpose is to find a new use for or utilize the potential of the asset or

Nowy Świat 2.0

space in a way which delivers the highest and best value.” Indeed, this project can be regarded as part of a wider scheme to revitalize the Royal Route. In 2008, work on the modernization of ul. Krakowskie Przedmieście, the street that comprises the tract’s northern section, was completed. The street was in large part pedestrianized, only leaving a narrow road for the exclusive use of city buses. The Three Crosses makeover

The revitalization work seems to be slowly moving southward and now encompasses the CBF buildings and the adjacent Pl. Trzech Krzyży, (the Three Crosses Square), where Kulczyk Silverstein Properties is now completing the renovation and extension of its Ethos building. On completion, the development will offer 2,500 sqm of retail space with exclusive boutique stores that open out onto the square and it will also offer over 13,000 sqm of modern class-A office space. The building should eventually be awarded BREEAM ecological certification at the “Excellent” level. The building will have a total of eight silent-operating elevators, six of which will be for the exclusive use of the office tenants, one of the latest building management systems, which will efficiently control and monitor the heating, air conditioning and ventilation in the building.

WBJ OBSERVER • MARCH 2015

LOKALE IMMOBILIA / WARSAW REVITALIZATION

Here’s one we did earlier

This is not the first revitalization project that KSP has been involved in. The company whetted its appetite for such projects with the purchase of the Pl. Małachowskiego office project from Hochtief Development in 2012. However, the building was not actually handed over to KSP until October last year, when the extension and renovation work had been completed. The project comprises the Count Raczyński townhouse together with a newly built wing. The project offers over 13,000 sqm of office space as well as 1,400 sqm of retail. Chmielna 25

MARCH 2015 • WBJ OBSERVER

WHITE COLLARS TAKE OVER UL. CHMIELNA For the last few years, LHI has been involved in the revitalization of ul. Chmielna in Warsaw. As a result of our activities, the only fully-pedestrianized high street has undergone a visible transformation, particularly the stretch between the Domy Towarowe Centrum department stores and the corner of ul. Zgoda and ul. Bracka. Two flagship stores operate in the Nowy Dom Jabłkowskich and Chmielna 25 buildings that we’ve developed: Smyk and mobile phone operator Plus. The office space in the two buildings has been leased to renowned companies, both Polish and international. Ul. Chmielna has been populated with “white collars,” who are eager to spend their money in the surrounding stores, bars and restaurants. Because of this, the owners and tenants of these places have made significant investments in modernization to meet the expectations of the clients. New fashion brands have also appeared. I am convinced that within the space of ten years ul. Chmielna will become a typical high street and join the ranks of other such streets that are well known in other European capitals. As a result, the turnover of local stores, bars and restaurants will continue to grow and the rent levels for office space will be among the highest in Warsaw.

Robert Mandżunowski, CEO of LHI Pl. Małachowskiego

Images: Immobel, MARS Real Estate, LHI, Kulczyk Silverstein Properties

It will even have two reception desks. Recently, the city has spent PLN 3.5 million on repaving the square. An underground parking lot has also been proposed but at present, there are still no concrete details as to when it might be built. The square has long been the place where luxury brands open their flagship stores. It continues to attract new ones.. Omega, part of the Swatch group, opened its first Eastern European boutique store for mechanical watches and other luxury goods on two stories of a tenement house. The store, which opened up on September 24 last year, covers an area of around 200 sqm. But it’s not just stores that are entering the Pl. Trzech Krzyży area. There are new monuments too. In June last year, the Free Word Memorial was unveiled on ul. Mysia underneath the former communist government office for the censorship of the press.

Images: Skanska Property Poland, Wikimedia, Emmerson Evaluation, HB Reavis, Capital Park, Ghelamco, Shutterstock

LOKALE IMMOBILIA / WARSAW REVITALIZATION

WBJ OBSERVER â&#x20AC;˘ MARCH 2015

LOKALE IMMOBILIA / WARSAW REVITALIZATION

OLD JEWISH NEIGHBORHOOD REBORN

Atrium 2 will feature 20,000 sqm of office space

Creating friendly public space leads to a revival of the entire city district, and on the other hand, revitalized public spaces are a very important incentive for our tenants in choosing the location for their head offices. Often, the restaurants of a building as well as the revitalization of public space together present a completely new utility, leading to a change in the culture and historical customs of a given area. A good example would be ul. Próżna. Just a few years ago this was a neglected fragment of the downtown area, mainly visited by those on excursions wishing to get to know and see first-hand the bitter experience of Warsaw’s Jews. Today, life has returned to this part of town, reminding us more of the best times of pre-war Warsaw, which was known as the Pearl of the North. This has been made possible due to a private investor’s adaptation of a 19th century tenement building into Le Palais, a modern office property, which now belongs to IVG, as well as the revitalization, which was undertaken jointly with the district authorities, of ul. Próżna itself. Varsovians happily walk along the pavements from ul. Świętokrzyska to Pl. Grzybowski, they meet in the cafes and restaurants and relax in the square, and also take part in numerous cultural events.

Le Palais

A multitude of projects

But this is not all that is happening and will happen to Warsaw. Over the past few years, many of Warsaw’s historic city center buildings have been modernized, despite their scarcity resulting from the destruction caused by World War II. In 2013, Warimpex finished renovation work on the 4,900 sqm Le Palais

MARCH 2015 • WBJ OBSERVER

Maciej Zajdel, CEO of IVG Poland

office building, a project which was sold to IVG Warschau Fonds that same year. For Maciak, this project was one of the best such projects in Warsaw. “Le Palais, located at ul. Próżna 7-9, has been an undeniable success story, fulfilling all the criteria for a revitalization project. Prime location, a combination of historic structures and new office wings provide both excellent office quality and trendy surroundings. The office building was prepurchased during its construction, which proves that demand for such projects exceeds available supply,” he enthused. Another such project was Lipiński Passage on Al. Jerozolimskie, which was sold to Union Investment in 2010 after renovation work on the building had been begun by Reinhold Polska. The former tenement

house now offers around 3,400 sqm of office space with a retail area of over 2,000 sqm. Strong appetites

What is it that makes such projects so attractive? “The additional risks, such as restitution claims or restrictions imposed by the office of the curator of historic buildings, are mitigated by the exclusive location, correspondingly higher quality fit-out materials, higher rents and occupancy rates, especially when compared to the wider traditional office market,” said Maciak. And indeed this is not the end of the projects that are in the pipeline. Polish developer Capital Park is currently investing in the Art Norblin project. On completion, the project should offer over 39,000 sqm of office space and a retail area

Images: IVG Poland

But as Adam Czyżewski, the director of the National Ethnography Museum in Warsaw explains, the project would not have come about were it not for a large number of organizations: “A number of neighboring institutions were involved in the process of revitalizing Pl. Małachowskiego, including the National Museum of Ethnography in Warsaw, the Zachęta National Gallery of Art, the Holy Trinity Lutheran Church in Warsaw as well as Hochtief Development Poland and Kulczyk Silverstein Properties, which adapted the Count Raczyński townhouse into a high-class office building. A coalition of institutions was created which invited the authorities of Warsaw’s Śródmieście district to cooperate, and it is still working today. Its objective is to return functionality to this part of Warsaw by presenting this modern city square.”

LOKALE IMMOBILIA / WARSAW REVITALIZATION

Ethos

New York comes to Warsaw

At present, Pl. Defilad which lies just next to Warsaw’s Palace of Culture in the very heart of the city, remains com-

MARCH 2015 • WBJ OBSERVER

pletely undeveloped. This is where the city plans to build the new building for the Museum of Modern Art in Warsaw. The planned building will also house the Teatr Rozmaitości theater. The Thomas Phifer and Partners architectural studio of New York won the competition that was held to select the architectural design for the new building. Nearby, on Al. Jerozolimskie, the Cedet building is now undergoing a complete renovation. For many years, it housed the iconic Smyk children’s store, but now it is being redeveloped and extended by Immobel Poland and will eventually offer 15,000 sqm of office space and 7,000 sqm of retail space. Taken together these projects could one day restore part of Warsaw’s former glory and return much of the original architecture of the city back to its people. u

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Art Norblin

Hala Koszyki

"THE ADDITIONAL RISKS, SUCH AS RESTITUTION CLAIMS OR RESTRICTIONS IMPOSED BY THE OFFICE OF THE CURATOR OF HISTORIC BUILDINGS, ARE MITIGATED BY THE EXCLUSIVE LOCATION, CORRESPONDINGLY HIGHER QUALITY FIT-OUT MATERIALS, HIGHER RENTS AND OCCUPANCY RATES, ESPECIALLY WHEN COMPARED TO THE WIDER TRADITIONAL OFFICE MARKET. ŁUKASZ MACIAK, DIRECTOR OF CAPITAL MARKETS AT DTZ

Images: Kulczyk Silverstein Properties, Capital Park, Griffin Group, Warsaw City Hall

of over 22,000 sqm in a former factory on ul. Żelazna. “Capital Park decided to buy the site of the former Norblin factory primarily because of its location, practically in downtown Warsaw, and because of its enormous potential,” explained Kinga Nowakowska, manager of the revitalization project for the former Norblin factory. This is one of the projects that should help extend the city’s central business district further into the outskirts of the Wola district. Another project of note is Hala Koszyki, a former market hall that is being renovated to a design by the JEMS Architekci architectural studio. Eventually, the project is to offer 2,500 sqm of office space as well as a retail and service area of 6,000 sqm. “We would like Hala Koszyki to regain its previous splendor as well as its former importance. Before the war, it was among the most popular places frequented by the residents of Warsaw,” explained Joanna Drygalska, a representative of Griffin Real Estate, the investor behind the project, which is scheduled for delivery in the third quarter of this year.

LOKALE IMMOBILIA / WARSAW REVITALIZATION

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T +48 22 610 00 85 | www.apa.com.pl WBJ OBSERVER â&#x20AC;˘ MARCH 2015

LOKALE IMMOBILIA / WARSAW REVITALIZATION

CAPITAL PRIORITIES Hanna Gronkiewicz-Waltz talks about how Warsaw is restoring its pre-war beauty street by street Interview by Beata Socha Warsaw’s city center has been under refurbishment for several years now. The revitalization process will also continue in the near future. What has been achieved so far?

Since the beginning of my term of office as the mayor of Warsaw, I have been trying to develop all city districts harmoniously. I’ve been consistently modernizing the inner city area to make the city center a convenient place for walking as well as not only a destination for tourists but also for the residents of other districts. Many central streets have already been revitalized, including Al. Ujazdowskie, ul. Świętokrzyska and ul. Prosta, ul. Emilii Plater, Pl. Powstańców Warszawy, ul. Nowowiejska, Pl. Zbawiciela, the sidewalks along ul. Marszałkowska and Al. Jerozolimskie. Also, smaller streets are being refurbished, like ul. Elektoralna, ul. Nowogrodzka, the northern part of ul. Emilii Plater, ul. Noakowskiego and ul. Mokotowska. What is on the agenda now?

The revitalization of the eastern bank of the Vistula River is very important to us. It’s a large-scale revitalization program, set to be completed by 2022. We’ve earmarked €250 million for that goal. On the one hand, these will be investments in new government-subsidized houses and improving the conditions in the already existing ones, both in technical and visual terms, in order to restore Warsaw’s pre-war beauty. On the other hand, we are changing public spaces in the city, encouraging the development of tourism, culture, sport and economy, as well as fostering multifaceted development of the local community with business’ cooperation. Changes on that riverbank are already happening. The Museum of Warsaw’s Praga district, located on ul. Targowa, the modernized Powszechny Theater and the National Stadium are examples of places that shape this part of the city. The public transport to that part of Warsaw is excellent. Apart from bus and tram

lines, there are the metro stations of the second subway line, connecting Praga with the city center. The metro stations at the National Stadium and at the Wileński Railway Station are important hubs allowing passengers to change conveniently to other means of public transport and to suburban trains. The riverbank itself is also gaining on popularity with Varsovians and with tourists, thanks to a bicycle route and beach areas which bustle with life from spring to fall. How will the second metro line change the city center? Is there no threat that some parts of the center, like ul. Świętokrzyska, will become solely transfer stations?

We expect quite the opposite to occur. It is the second subway line that will bring residents from other districts to the center, to the Royal Route, to cultural monuments, etc. The modernized ul. Świętokrzyska is more convenient for pedestrians, it offers a lot of space for cultural events. We expect similar results in Praga. I believe that the subway will breathe new life into Praga. It will be an excellent way to get to the Copernicus Science Centre, to the Powszechny Theater or to the city zoo. The National Stadium station is a stone’s throw away from the major arena, which features plenty of sports and cultural events. Meanwhile, the Copernicus Science Centre station on the west bank of the river is right in front of the Vistula boulevards. The central section of the second metro line will be the fastest and the most convenient connection between Praga and the city center, but also, after changing trains at the Świętokrzyska station, to the northern and the southern part of Warsaw’s west side. The metro will provide drivers with an attractive alternative, as the section between the Wileński Railway Station and ul. Świętokrzyska will take as little as seven minutes. The City Transport Council is estimating the subway will reduce the number of cars driving between Praga and Wola districts by 25 percent. A similar number of passengers will leave trams and buses for

the subway, making commuting to the center more enjoyable. We expect a similar effect after the central section of the second metro line is expanded (three stations due west and three due north-east). The metro will become the fastest and the most convenient connection between Targówek and Bemowo, and the city center, and upon changing at Świętokrzyska – with the northern and southern parts of Warsaw’s west bank. How is cooperation going with private developers revitalizing Warsaw?

I think that the developers appreciate Warsaw’s potential as an attractive and modern place. We consider the cooperation to be going well. We meet with investors many times each year to facilitate any common initiatives the investors and the city may have, including economic promotion. These initiatives include going to real estate fairs in Cannes and Munich, where we have a joint stand promoting Warsaw at both fairs. This year the city has as many as eight partners, whose investments are of significant importance to Warsaw’s revitalization.

WBJ OBSERVER • MARCH 2015

LOKALE IMMOBILIA / INTERVIEW

What to buy?

With a lot of money to spend and a limited supply of real estate assets for sale, investors are increasingly interested in new markets I N T E R V I E W B Y B E ATA S O C H A WBJ Observer: Last year, investors complained of the scarcity of assets for sale, particularly in the retail segment. Will this year see more schemes hit the market? Tomasz Puch: There will likely be fewer warehouse assets available for sale this year. Regional office markets are worth looking into, as an increasing number of prime assets are being delivered there, which raises the number of investment transactions concluded there. Investor activity will also significantly increase in the retail segment.

MARCH 2015 • WBJ OBSERVER

“IN 2014, THE TOTAL VOLUME OF OFFICE DEALS IN POLAND STOOD AT €1.8 BILLION, OVER €440 MILLION OF WHICH WAS RECORDED IN REGIONAL MARKETS. THAT’S A RECORD HIGH FIGURE IN THE HISTORY OF THE POLISH INVESTMENT MARKET, HIGHER EVEN THAN THE SUM OF VOLUMES RECORDED OVER THE PAST FIVE YEARS. Tomasz Puch,

head of Office and Industrial Investment, JLL Poland

will be the biggest deal ever in regional markets, we expect another very good year for the office segment outside Warsaw. It is possible that last year’s record €440 million could be surpassed this year. We also expect the deal volume in Warsaw to drop. The reason for that is not insufficient interest from investors, but a limited supply of good, large assets for sale. After last year’s spectacular transactions, involving flagship office schemes like Rondo 1 and Metropolitan, as well as deals concluded in previous years, e.g. the sale of Warsaw Financial Center, there aren’t a lot of major assets to purchase right now.

What about retail assets? Quite a few large schemes changed hands between 2011 and 2013. Last year this market segment was largely dormant. Will investors look to smaller cities to find assets to buy? The retail market will also be quite interesting this year. Last year’s lower investment volume (of €570 million) was in no way a sign of waning investor interest. Considering the deals signed last year but finalized in 2015, as well as the ongoing negotiations, you can expect to see far more investment deals this year with a far greater value than in 2014. We also expect to see interesting transactions involving schemes located in cities with populations below 150,000.

Image: JLL

Indeed, regional office markets have had a great year. Will that continue? Warsaw, due to its specifics and size allows for the most spectacular transactions and continues to dominate the Polish office segment. However, investor interest in the largest agglomerations outside the capital has been visibly growing since 2013. In 2014, the total volume of office deals in Poland stood at €1.8 billion, over €440 million of which was recorded in regional markets. That’s a record high figure in the history of the Polish investment market, higher even that the sum of volumes recorded over the past five years. Kraków stood out last year among regional cities, with €260 million in transactions – more than the sum of all office deals over the past seven years in the city. The high activity of investors outside Warsaw is a product of several factors. On one hand, Warsaw is getting more expensive and after several flagship transactions there are fewer products available to buy. On the other hand, regional markets are getting increasingly mature and investors trust them. Their significance on Poland’s investment map has also been increasing with the growing number of attractive investment products, modern office projects with secured long-term leases, as well as with high demand generated mainly by the business services sector. Looking at investor activity and the ongoing talks and considering large transactions that are expected to be closed this year, like the Dominikański sale, which, upon closing,

LOKALE IMMOBILIA / INTERVIEW

Finally, the warehouse segment. After a spectacular year, is there still room for improvement? The volume of warehouse transactions hit a record high €744 million last year. The largest transaction was the purchase of a portfolio of logistics parks by a PZU fund for some €140 million. Portfolio deals in fact dominated the market segment, with an 80 percent share in the total volume. This year, we will see strong investor interest in warehouse assets but we do not expect to see the record broken. Our analysis indicates that the deal volume in this market segment will come in at between €500 million and €600 million this year. We will also see portfolio transactions involving properties from several CEE countries. We could also witness pan-European warehouse portfolios change hands. An example of a transaction involving several Central European countries was the recently finalized acquisition by P3 of three logistics parks in Poland and Romania from CA Immobilien Anlagen AG. The share of Polish buyers in the commercial real estate market increased last year to 10 percent from 6 percent in 2013. Can we expect an increased interest from Polish funds this year as well? What assets are they looking at?

The increase in the share of Polish capital in the total transaction volume was mainly generated by PZU’s investment fund which acquired four logistics parks. Other transactions with Polish capital purchasing Polish commercial real estate include the acquisition by Octava FIZAN of six office properties from the portfolio of real estate fund Arka BZ WBK and the purchase of a part of Skanska’s Kapelanka 42 office scheme by REINO Dywidenda FIZ. These transactions show that Polish investors took advantage of opportunities that came along and bought properties representing various classes and market segments – from well-located warehouse properties, through prime office schemes, but also not shying away from value-add projects. We expect Polish companies to remain active this year but we do not expect their share to increase in the total investment volume. Will the cheaper złoty and the dollar strengthening against the euro encourage investors from the US to invest in Poland? The depreciation of the złoty and the strengthening dollar will not, in our view, generate increased interest from American investors in the Polish market. The deciding factors are still the GDP growth, falling

unemployment, expected level of inflation, strong domestic demand, market transparency. They will continue to attract office and warehouse tenants as well as retail chains, and in turn investors. Poland will continue to be on investors’ radars, as the biggest market in the region, offering a range of interesting investment options, and at the same time a country that is both economically and politically stable, making it the main business hub in this part of the continent. Investor interest will be further fueled by the fact that Western European commercial real estate markets offer more expensive products with lower yields. Many investment funds now face overliquidity, which means they have significant amounts of money to spend. A part of these funds may well be invested in Poland. What are the yields in each asset class these days and do you expect to see compression this year? We expect cap rates in the office segment to remain stable at 6.00-6.25 percent for the best schemes. The leading assets in this category could see some yield compression. Cap rates for the best retail assets are currently at 5.50 percent, while prime warehouse assets could see their yields go down below 7 percent, or even below 6 percent. u

WBJ OBSERVER • MARCH 2015

LOKALE IMMOBILIA / LOGISTICS

E-commerce is changing the logistics landscape

B Y B E ATA S O C H A

The

e-commerce consumer sector in Poland has been expanding at an impressive rate over the past few years. In 2014, it grew by 15 percent, reaching a total volume of PLN 27.3 billion, according to research firm PMR. Apart from the sheer increase in volume, the market is experiencing far-reaching changes, with the digital and the traditional channels becoming increasingly intertwined. It’s long been established that every brick-and-mortar store needs a website and preferably an online store. “Even entities that have thus far not been associated with trade are [launching online sales], including energy suppliers, museums and airlines,” said Artur Wojtaszek, CEO of Cursor, part of OEX Group, an outsourcing company. Going omni-channel Now, the digital revolution is coming full circle. This time it is e-commerce firms that are setting up physical stores. Both giants, the likes of Amazon and Google, as well as fashion retailers, such as Zalando, are trying out brick-and-mortar concepts. Zalando opened up a pop-up store in Warsaw in November 2014 for a trial run of four days, albeit mainly as a marketing feat. Even retailers that have thus far shunned the physical form and built their image on exclusivity and direct sales are finally giving in. Less than a year after opening an online store, Avon decided to launch its first brickand-mortar store in Warsaw’s Złote Tarasy shopping mall in December 2014. “Nowadays, clients aren’t satisfied with only one shopping channel, they expect an omni-channel approach to better understand and experience the brand,” said Oksana Zharkova, head of Avon in Poland, the Baltic States and Finland.

MARCH 2015 • WBJ OBSERVER

The B2C market is only part of the picture, though. There is another growing cake to slice. “It is estimated that the value of the B2B e-commerce market in our country exceeded PLN 140 billion in 2013 and continues to grow,” said Patrycja Gawarecka, marketing and sales director at logistics firm AB SA. Drop-shipping and outsourcing Retailers are not the only ones who are experiencing the digital transformation. The logistics market is going through major changes as well. “E-commerce is increasingly varied – to meet client demand, online stores offer virtually all categories of products these days. The increasing range of products is followed by a growing variety of needs in terms of shipping and additional logistics services,” said Tomasz Szczekowski, head of parcel shipping at DB Schenker Logistics. “There are two key market segments now: courier deliveries (parcels up to 30 kilograms) and groupage shipping (of over 30 kilograms, usually non-palletized),” he explained and added that the company is also recording an increase in the number of shipments to internet stores from large electronics, tools and cosmetics wholesalers. Some say it is only the first step and as the digital channel develops, retailers will outsource more and more processes to logistics firms. “Shipments of large batches of products to our partners are being replaced with ‘drop-shipping’ services, which consist in direct delivery of goods to the endconsumer. We include invoices and our clients’ marketing materials in the parcels,” said Gawarecka. Awaiting same-day deliveries With an increasing part of everyday

Images: Shutterstock

With e-commerce growing at a pace of some 15 percent a year, logistics operators and delivery firms are scrambling to meet the market demands

LOKALE IMMOBILIA /LOGISTICS

1.02 MILLION SQM

OF NEW WAREHOUSE SPACE WAS COMPLETED IN 2014

These days e-commerce is becoming a must for all businesses. An increasing number of producers and retailers is using this form of sale, as shopping on the internet is getting more and more popular. Everything is sold online, from foodstuffs to construction materials. We are currently preparing a very specific and complex service for our clients. It includes both large bulk goods, like washing machines and fridges as well as small items like cosmetics. The latter require the operator to keep a large selection of products in the warehouse. FM Logistic has had such services in its offer for a while now. Currently, we offer them mainly to traditional retailers who additionally carry online sales. Considering how quickly the e-commerce industry is expanding, itâ&#x20AC;&#x2122;s only a matter of time before we offer such services to businesses operating solely in the virtual world.

Andrzej Pawlak, sales director at FM Logistic

WBJ OBSERVER â&#x20AC;˘ MARCH

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E-commerce is a must

shopping being done online, consumers are expecting ever shorter delivery times. Some logistics operators are already testing out their same-day delivery capabilities. For example, AB SA introduced a pilot same-day delivery program within Wrocław in late 2014. “What matters to the end-consumer is not only how fast goods can be delivered but they also want a wide range of delivery options. That’s why we’ve included e.g. deliveries to parcel lockers which are very popular among customers of online stores,” Gawarecka explained. The growing demands of the retail market are fueling the rapidly expanding warehouse real estate market. Logistics base Over 2 million sqm of warehouse space was leased throughout 2014, the highest figure in the history of the Polish ware-

MARCH 2015 • WBJ OBSERVER

“LAST YEAR, THE SHARE OF WAREHOUSE SPACE BUILT SPECULATIVELY STOOD AT 27 PERCENT, WHILE IN 2013 IT ACCOUNTED FOR A MERE 6 PERCENT. house market. Last year saw a 6 percent increase on 2013, despite a lack of spectacular entries (such as Amazon in 2013), real estate consultancy JLL wrote in a report. “Total demand reached 2.06 million sqm, of which 1.4 million sqm was attrib-

utable to new leases and tenants enlarging the leased units,” the report reads. The bulk of the demand for new warehouse space comes from logistics firms as well as the e-commerce sector. New supply delivered in 2014 stood at 1.02 million sqm, the third highest in the history of the Polish industrial market. With 8.54 million sqm of modern commercial A-class warehouse and production stock, Poland is the largest warehouse market among CEE countries. Developers have been optimistic about the outlook for the sector as evidenced by a significant increase in speculative space delivered in 2014 and under construction. “Last year, the share of warehouse space built speculatively stood at 27 percent, while in 2013 it accounted for a mere 6 percent,” said Tomasz Olszewski, JLL’s head of the Industrial CEE department. While the majority of the space being

Images: Shutterstock

LOKALE IMMOBILIA / LOGISTICS

LOKALE IMMOBILIA /LOGISTICS

WBJ OBSERVER • MARCH

LOKALE IMMOBILIA / LOGISTICS

1.4 MILLION SQM

WAS THE NET TAKE-UP LAST YEAR (NEW LEASES AND EXTENSIONS)

delivered is concentrated around major Polish agglomerations: Warsaw, Łódź, Poznań and Wrocław, certain parts of the country, most notably eastern Poland, still lack a substantial logistics base. “For consumers from smaller cities and towns, internet shopping is an attractive alternative to brick-and-mortar stores. Carrying out a delivery outside a major agglomeration is a challenge for logistics operators, because the high quality of service that customers expect requires an extensive network of facilities and transport routes,” said Szczekowski. Whether warehouse developers choose to keep their investments in the safe confines of western Poland or perhaps venture further east remains to be seen. But as supply always follows demand, one can assume that once e-commerce takes a stronger hold across Poland, logistics facilities will eventually pop up even in remote and hitherto untouched areas. u

“NOWADAYS, CLIENTS AREN’T SATISFIED WITH ONLY ONE SHOPPING CHANNEL, THEY EXPECT AN OMNI-CHANNEL APPROACH TO BETTER UNDERSTAND AND EXPERIENCE THE BRAND. 70

MARCH 2015 • WBJ OBSERVER

Betting on Warsaw

Magdalena Szulc, SEGRO’s Business Unit Director Central Europe

With over a million sqm of space delivered to the market, 2014 indeed broke previous records (from 2007) in the warehouse sector. Also, investment activity in the sector was substantial – investors transacted €750 million across Poland, which stands for a 23 percent share of the entire market. The year 2015 is expected to be active as well. Investor activity should remain strong. The most attractive locations continue to be Silesia and the

Warsaw region, the latter has even increased its popularity since the opening of the A2 motorway. The Warsaw region is conveniently located allowing for flexible urban distribution, also distribution to the south and west of the country and to the whole of Europe. The Warsaw suburbs remain the most sought-after industrial location. Nonetheless, facilities located within the borders of the city have noted record popularity. Strong runner-ups of the top two regions are Central Poland and the region of Poznań, where we’ve made a new investment last year. Development is still mainly driven by build-to-suit and prelet schemes, but developers are becoming more and more keen on speculative developments. Constant, stable demand also encouraged SEGRO to implement a speculative project within SEGRO Business Park Warsaw, Ożarów – in November 2014 we started the construction of a new warehouse facility comprising almost 10,000 sqm of space, out of which 8,000 sqm of space is available for potential tenants. One other project we were implementing on a speculative basis was an investment within SEGRO Industrial Park Wrocław.

LOKALE IMMOBILIA / INTERVIEW

Big wheels keep on turning Poland’s western markets continue to attract big e-commerce and automotive players, but cheap money and improving infrastructure is opening up also new locations for warehouse developers I N T E R V I E W B Y B E ATA S O C H A WBJ Observer: Last year saw 2 million sqm of warehouse space leased, a record-high for Poland. The result is 6 percent higher than the figure for 2013, when Amazon entered the Polish market taking up 300,000 sqm. Do you expect this year to repeat the success? Robert Dobrzycki: I think so. We can see positive trends in leasing. There are new e-commerce companies coming into Poland, particularly from Germany and other Western European countries. Amazon’s entry into Poland in 2013 was a major transaction and that’s great but the real impact of the deal is that it put Poland on other companies’ radars. Amazon is a benchmark of sorts in the e-commerce business – if it decides on four investments in Central Europe, including three in Poland, others are sure to take notice. Large e-commerce firms are now thinking of moving their distribution centers east of the German border, but close enough to service Western markets. We can already see it happening.

Image: Panattoni Europe

So these players are also likely to settle in western Poland, near Wrocław and Poznań? Indeed. Western Poland makes much more sense for international companies servicing the rest of Europe. The combination of labor costs and the proximity to Western markets make these locations highly attractive.

Robert Dobrzycki,

managing partner of Panattoni Europe

WBJ OBSERVER • MARCH 2015

LOKALE IMMOBILIA / INTERVIEW

The Polish e-commerce business is also growing but the size of this channel is still not as big as in the West. There is 700,000 sqm of new warehouse space currently under construction across Poland. Experts say that as much as 1 million sqm of new stock could be delivered this year. Will there be enough demand? I believe so. I think that demand for warehouse space is quite robust. There are of course temporary turbulences, like the one we can see right now. But we have been recording improvement for a number of consecutive quarters, alongside the improvement on capital markets. The cost of financing has decreased and now we believe that we will see the same trend on the tenant market. The capital for real estate usually precedes tenant demand. But that also means that tenants can access cheaper financing as well and thus develop more quickly. Poland has the lowest levels of warehouse rents in CEE, lower than in the Czech Republic, Hungary, Slovakia and Romania. Why is it so? Rents are low because we have a large land supply. It’s a flat country with a lot of land well suited for real estate development. That makes land prices very reasonable. Plus, Poland is an attractive country for investors, so the cost of capital is lower than in other CEE countries. Consequently, the sizable land and money supply pushes rents down. Do you expect downward pressure on yields in the warehouse segment this year? Currently, yields are above 7 percent. They are higher than in Western Europe and in the US. Given the cheap money and the amount of capital flowing in, these yields will likely see some natural compression. You have recently launched construction of a warehouse outside Rzeszów. Analysts say that the emerging warehouse markets in eastern Poland will see rapid growth in the coming years.

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“NEW NAMES, NEW BRANDS, PARTICULARLY IN THE E-COMMERCE BUSINESS OFTEN NEED SPACE QUICKLY. Do you agree? Yes. This is mainly because of the greatly improved infrastructure, particularly when it comes to Rzeszów. At last, the A4 highway has connected Rzeszów with the rest of the country. Even though the labor market in eastern Poland is far more favorable for labor-intensive, industrial investors than in Wrocław or Poznań for example, the insufficient infrastructure used to push costs up too much. That’s why, until recently, companies were reluctant to locate there. Now, it’s a completely different picture. So you expect mostly industrial investments there? That’s right. It’s not a central region and for that reason it’s not ideal for supraregional logistics. There are locations better suited for that. So we expect either labor-intensive businesses or local, regional distribution companies to settle there.

Last year, as much as 27 percent of the new supply was speculative. That’s a big increase from the 6 percent recorded in 2013. What makes developers so optimistic? True, 27 percent is significant, but in most cases the speculative space was an addition to pre-leased or built-to-suit schemes. I think that this is a sensible level of speculation at the moment, because new tenants keep coming to Poland. New names, new brands, particularly in the ecommerce business. They often need space quickly, within a month or two. Speculative space should continue to emerge in locations where vacancies are significantly below 10 percent. To sum up: which locations are the hottest right now for developers? I would say that the eastern ones are interesting and they have a lot of potential. But they definitely won’t see the largest volumes of new space. Western markets are and will continue to be important, both for the e-commerce and the automotive industries. Businesses located there supply parts and services for a lot of German automotive producers, who have managed to survive the crisis unharmed and are still doing well. u

LOKALE IMMOBILIA / RETAIL

Rooms for expansion The hospitality business in Poland enjoyed a remarkably upbeat 2014. Is this growth likely to take root or is it set to peter out? B Y A L E X H AY E S

Image: Shutterstock, Panattoni Europe

ith a growing economy and over 15 million tourists visiting Poland in 2014, the Polish hotel sector has an evident spring in its step. “We are very excited about Poland. We were initially drawn to Western Europe, but now Eastern Europe, specifically Poland, is becoming increasingly attractive due to its vibrancy and its continued growth. Hilton Worldwide has been here for many years,” says Phil Cordell, the global head for focused services and Hampton brand management, Hilton Worldwide. He’s not the only one to gush at the prospects for the Polish hotel market. “I would say that Poland is one of

the most attractive markets in this region. Development of the Polish hotel industry stimulates our business and we are confident that Best Western can continue penetration of the hotel market in Poland,” says Gheorghe Marian Cristescu, Best Western Country Director for Poland. The Orbis hotel chain also sees the current market in rosy terms: “The hotel market in Poland is growing, it is maturing and getting stronger together with the Polish economy, as the hotel business is closely connected with a country’s GDP. Thanks to the positive business environment, we can see increased demand for hotel services. The prospects for the hotel market in Poland are positive in the short

and medium term as long as there is no political or economic turbulence,” says Ireneusz Węgłowski the vice president of Orbis. Indeed, according to Alex Kloszewski, the managing partner of Hotel Professionals, this connection between a country’s GDP and the success of its hotel industry is steadily becoming even stronger. “Generally the hotel industry is pegged to the GDP of the country, and this will soon be the case in Poland as well. We are adding around 10 percent of new branded rooms each year. This means 1,200 to 1,500 rooms per year. Corporate room demand is a phenomenon, due to BPOs setting up in most cities in Poland recently. Of course,

WBJ OBSERVER • MARCH 2015

L LO OKKA AL LE E I M I MMMO OBBI L I LI A I A / / HHOOT TE EL LS S

we also had 2011, 2012, and 2013, years that were especially positive for the hotel sector due to Poland’s EU presidency, the EURO 2012 championship and the COP 19 Climate Conference in 2013,” he explained. Not quite there yet However, when compared with Western European markets, Poland still has a lot of catching up to do. “You cannot compare Poland’s hotel sector to Germany or certainly not to the UK or the more established Western countries – established in the sense that they’ve been at this business a lot longer than we have. The example is that we have around 60 or 70 rooms per 10,000 inhabitants and in Germany it’s around 250 to 300 rooms,” Kloszewski said. He added that, “Although we’ve grown by about 50 percent in the last six to seven years, catching up with the likes of Germany would take us a few more years.” He also admitted that he doesn’t expect Poland to get to that level any time soon. But despite this, the trend is still positive: “The Polish hotel market is definitely

MARCH 2015 • WBJ OBSERVER

going up. We can see an increase in sales, boosting room occupancy and a growing supply of hotel rooms. ... These positive trends in the industry in the CEE region should be maintained over the nearest two to three years at least,” said Cristescu. But what is it that’s driving the growth? According to the Hotel Professionals Year End Report for Poland 2014, much of it has been due to the rapid expansion of the Business Process Outsourcing sector, which has “grown in medium-sized cities such as Łódź, Kraków, Wrocław, Szczecin, and Poznań. Over 100 new service center projects are being developed in Poland. The BPO sector will add approximately 25,000 new jobs per year for the rest of this decade.” In 2014, Wrocław saw the opening of the Ibis Styles Wrocław Centrum hotel near the city’s main railway station with 133 rooms, while in Kraków, the Hilton

Garden Inn at the John Paul II International Airport opened in November with 155 rooms and conference facilities for up to 350 people. Poznań saw the opening of a Puro hotel with 136 rooms. Other openings included three hotels in Warsaw: the four-star, 367-room DoubleTree by Hilton in Wawer and the three-star, 300-room Hampton by Hilton City Center and the four-star Warsaw Plaza Hotel with 146 rooms. Openings planned for 2015 include three hotels in Kraków: DoubleTree by Hilton (232 rooms) and Hampton by Hilton (161 rooms), which will both share the same building, as well as the Best Western Plus Q with 154 rooms; two hotels in the Tri-City: The Gdynia Courtyard by Marriott – 201 rooms) and the Almond hotel in Gdańsk in May 2015. In Szczecin, the Dana textile factory is being converted into a 102-room hotel.

Inviting new players The biggest news on the hotel market in 2014 was the Orbis takeover of 46 hotels in Poland, Bulgaria, Romania, the Czech Republic and Slovakia from its French strategic partner Accor in a deal worth €142.3 million. “This transaction matches our strategy, as we have been aiming at wider development in the region for some time now. ... The New Master License Agreement gives us a great chance for more dynamic growth with a sustainable outlook for the next two decades. Significant business enlargement will also translate into an increase in value for our shareholders.” Despite this deal, there seems to be little if any consolidation on the Polish market. Indeed, according to Kloszewski, if anything the opposite is occurring because Poland is now becoming an ever more attractive market, which is enticing other chains. “There are actually four new international chains looking into coming to Poland,” he said. The largest transaction for a single hotel was Skanska’s purchase of the Westin Hotel in Warsaw, through the takeover of SPS Investment for €80 million.

Image: Shutterstock

“WESTERN COUNTRIES HAVE BEEN AT THIS BUSINESS A LOT LONGER THAN WE HAVE.

LOKALE IMMOBILIA / RETAIL

Cosmopolitan twarda 2/4: prime location apartments in Warsaw

The beautiful silhouette of the apartment building located in the very heart of the city, at the junction of Emilia Plater and Twarda Streets, makes it appear exclusive and prestigious even if one looks at it from quite a distance. Its modern shape emphasises the charm of the neighbouring historic buildings in Grzybowski Square. The Cosmopolitan residential building was designed by Helmut Jahn architect’s studio. Jahn, one of the world’s most acclaimed architects, designed the European Commission’s headquarters in Brussels and of the Sony Center complex in Berlin, among other things. Here, the architect created a structure of timeless simplicity and top quality, which provides a harmonious counterpoint in Warsaw’s skyline, juxtaposed with the historic surroundings and the more recent high-rise buildings.

Those entering Cosmopolitan find themselves in a lobby that’s elegant, spacious and full of light. The fast lifts need only several seconds to take the owners to their apartments, while those wishing to relax can go to the fourth floor, where there is a leisure zone and a spacious terrace facing all directions. Apartments in Cosmopolitan offer top-quality finishing materials and furnishings. The smart home management system, available in each apartment, makes it easier to control all the devices. For example, with one flick of a switch you can draw the blinds, turn on the lights and put on some music. The view in all directions is breathtaking. The huge window panes, which can be opened, allow one to admire some of the most beautiful landmarks of Poland’s capital: the Saxon Garden, the Old Town, the Palace of Culture and Science, the National Stadium, as well as the picturesque bends of the Vistula River.

Cosmopolitan apartments are simply a must-see. www.cosmopolitan.waw.pl WBJ OBSERVER • MARCH 2015

LOKALE IMMOBILIA / HOTELS

No room for amateurs One of the major trends seems to be the decline of independent operators, many of whom are either being forced to join up with the major brands or are simply going out of business. The main reason for this trend appears to be largely the current dominance of online travel agents (OTAs). “The unbranded hotels have no chance,” said Kloszewski, explaining that “fifty percent of all non-branded hotels in Poland are under water. The proliferation of OTAs will continue squeezing independent hotels out of contention. The branded hotels have the top positions and the top pages on the internet, and they can afford to invest in digital marketing and positioning like none of the independents can.” Best Western seems to agree. When independent hotel operators start to cooperate with the large hotel chains, “they receive new and very useful tools such as

“OPERATING UNDER INTERNATIONAL BRANDS VIA FRANCHISE OR MANAGEMENT AGREEMENTS IS BECOMING MORE AND MORE POPULAR IN POLAND.

MARCH 2015 • WBJ OBSERVER

their own booking system (and sometimes a call center) which represents big added value. This is because using one’s own booking system enables hoteliers to reduce costs, since this solution is definitely cheaper than cooperation with online travel agencies. In addition, the loyalty program is also a very big profit,” says Cristescu. It seems unsurprising that the trend is clearly for the big hotel chains to move away from owning their own hotels and to start depending ever more on franchise arrangements. “We can observe a growing interest of independent hoteliers and investors in cooperation with international hotel networks. Operating under international brands via franchise or management agreements is becoming more and more popular in Poland. This for sure is impacting, in a positive way, the development and professionalization of the industry,” said Węgłowski. Kloszewski agrees: “We’re going to see a lot more of the franchising model over the next ten years,” he said. Health and well-being Yet another trend that can be seen on the market is the growing interest in spa hotels as evidenced by the December 2014 opening of an 85-room Dr. Irena Eris Hotel

Spa in Polanica Zdrój. “The spa hotel market is dominated by small unbranded hotels. However, Dr. Irena Eris hotels are the most recognizable in the Polish market and constitute a benchmark for other spa hotels in Poland,” stated the Hotel Professionals Year End Report for Poland 2014. Many of such hotels resulted from the privatization of a number of sanatoriums in 2013. However, according to Kloszewski, this remains a niche market. “The spa hotel is a complicated niche, but there are good operators and established brands in Poland, that will continue to dominate and expand, i.e. Dr. Irena Eris, Narvil, Bryza and Mera,” he said. Nonetheless, there is some evidence of foreign investment coming onto the health and well-being market with UK-based company MD Nursing teaming up with Angel Poland Group to build a nursing home in Wrocław. Most of the experts appear to agree that the prospects for the Polish hotel industry are rosy, but they don’t look stellar. After all the overall occupancy rate for Polish hotels in 2014 increased by 1 percentage point, to 65.9 percent, according to STR Global. But this coincided with a 1.5 percent drop in the average daily rate to €61. u

LOKALE IMMOBILIA / RETAIL

WBJ OBSERVER • MARCH 2015

OBSERVER TOP 5

OFFICE PROPERTY DEVELOPERS

RANKED BY OFFICE INVESTMENTS COMPLETED IN 2014

Skanska Property Poland

Office investments completed in 2014:

75,900

Projects completed in 2013-2014 (city; sqm): Kapelanka 42 (Kraków; 30,000); Silesia Business Park I (Katowice; 12,000); Green Day (Wrocław; 15,900); Atrium 1 (Warsaw; 18,000); Green Towers (Wrocław; 30,300); Malta House (Poznań; 15,800); Green Horizon (Łódź; 33,400); Nordea House/Green Corner (Warsaw; 28,500) Year founded in Poland: 1997 Top local executive: Katarzyna Zawodna/President

Kapelanka 42

n 2014, Skanska added a total of 75,900 sqm of office space to the Polish market, which made it the most active developer in the country. The projects were completed in four markets: Atrium 1 in Warsaw (18,000 sqm), Kapelanka 42 in Kraków (30,000 sqm), Green Day in Wrocław (15,900 sqm) and Silesia Business Park I in Katowice (12,000 sqm). “We are present in six markets: Warsaw, Łódź, Poznań, Wrocław, Katowice and Kraków. We are now considering launching our first project in the Tri-City. And we want to focus on these seven markets,” said Arkadiusz Rudzki, leasing and asset director at Skanska. “They offer us a guarantee that these buildings will be successfully leased and subsequently sold to investors,” he added. The company managed to sell three of

MARCH 2015 • WBJ OBSERVER

its projects last year: building B of the Kapelanka 42 complex for €29 million to Polish real estate fund managed by REINO Partners, Dominikański in Wrocław to Union Investment and Green Horizon in Łódź to Griffin Real Estate. “Our buildings in the regional markets are purchased by international core funds, as well as by Polish clients. I think we will be able to announce more successful sales pretty soon,” Rudzki stated and added that, “A good building in the center of Wrocław is a far safer investment than a building in Warsaw’s Mokotów district.” The firm is now working on several projects, both in Warsaw and in regional cities. It is currently building Atrium 2 in the capital’s Wola district. It is also preparing to launch the first stage of

Generation Park, an 85,000-sqm project to be erected on a plot near the Rondo Daszyńskiego roundabout. “It was scheduled to be launched last year, but we decided against it given the increased supply. However, seeing that such top-class buildings are succeeding in securing tenants, I think we will launch construction in the second half of this year,” Rudzki explained. “Luckily, we are in a position to wait with the project. We build all our investments with equity, we don’t use any bank financing,” he added. The developer has also recently launched new projects in Poznań (Maraton, 25,000 sqm) and in Kraków (Axis, 20,000 sqm). “We want to start further stages of the Silesia Business Park in Katowice, and a new project in one of the regional cities,” Rudzki informed. u

Images: Skanska Property Poland, HB Reavis

sqm of GLA

Reavis has been operating in Poland since 2008. It has thus far delivered over 95,000 sqm of modern office space to the Warsaw market within two projects: the Konstruktorska Business Center complex commissioned for use in March 2013 and the first phase of the Gdański Business Center completed in July 2014. The developer currently has three projects in the pipeline totaling 147,000 sqm. The Postępu 14 scheme, under construction in Mokotów’s business district, will be delivered in Q2 of this year and will feature 34,500 sqm. The second stage of Gdański Business Center in Warsaw’s Muranów will offer over 50,000 sqm of office space within two buildings. It’s slated for completion in Q1/Q2 2016. The total GLA of the entire GBC complex (phase one and two) is 98,000 sqm. The latest of HB Reavis’ current projects is the West Station complex, being developed in partnership with Polish Railways PKP. The investment involves the construction of a new Warszawa Zachodnia railway station building and two office buildings totaling 67,000 sqm. The new station is scheduled to be completed in Q4 2015,

Capital Park SA

HB Reavis Poland

Office investments completed in 2014:

46,500 sqm of GLA

Projects completed in 2013-2014 (city; sqm): Gdański Business Center I (Warsaw; 46,500); Konstruktorska Business Center (Warsaw; 48,000) Year founded in Poland: 2008 Top local executive: Stanislav Frnka/CEO

Gdański Business Center

while the first office scheme will be delivered in Q1/Q2 2016. The developer has another two projects in the planning stage. “Unlike many other European countries, Poland managed to avoid the aftermath of the global financial crisis and is still seen by investors as a very attractive destination,”

Ergo Hestia

said Stanislav Frnka, CEO of HB Reavis Poland. “Global companies continue to locate their offices there, as well as service centers for the entire region or even for the whole world. Lately, an international ecommerce solutions expert, WebInterpret, leased over 2,000 sqm in GBC. This is great news for us as a developer,” he added. u

Ghelamco Poland

Office investments completed in 2014:

sqm of GLA

42,337

Projects completed in 2013-2014 (city; sqm): Eurocentrum - 1st phase (Warsaw 42,337) Year founded in Poland: 2003 Top local executive: Jan Motz/ President

21,800*

Projects completed in 2013-2014 (city; sqm): Marina 2 (Gdańsk; 10,800); Marina 3 (Gdańsk; 11,000) Year founded in Poland: WND Top local executive: WND

20,000

Projects completed in 20132014 (city; sqm): Warsaw Spire B (Warsaw; 20,000); T-Mobile Office Park (Warsaw 40,000); Łopuszańska Business Park (Warsaw; 16,524) Year founded in Poland: 1991 Top local executive: Jeroen van der Toolen/Managing Director CEE

Data source: Warsaw Business Journal Book of Lists; www.bookoflists.pl This ranking is based on a survey conducted by the Book of Lists team. * Source: JLL

WBJ OBSERVER • MARCH 2015

CITYSCAPE / ZIELONA GÓRA

Did you know?

Zielona Góra and its surroundings can be labeled as Poland’s wine capital. The first wineries were built here in 1314 and at their peak there were some 4,000 vineyards in the region and 2,500 in Zielona Góra itself. Although currently there are no wineries in the city, the region is thriving with a number of small plantations. The wine business is still in its development phase in Poland as the total area of vineyards amounts to some 500 hectares, most of them growing white grapes such as Pinot Gris, Sylvaner or even Chardonnay .

Favorite daughter

ituated among gently rolling hills and thick forests, “Green Mountain,” or Zielona Góra (German: Grünberg) is quite unique for a regional city. It originated in the 13th century as a way station along the east-west trade route between Poznań and Lusatia. Like Wrocław, the city had been under Polish, Bohemian and German influence throughout much of its history. Its population once Protestant then Catholic has left many monuments to its diverse past. In the beginning of the industrial revolution, Zielona Góra had a vibrant textile industry, which was revived in the

MARCH 2015 • WBJ OBSERVER

20th century. Since 1852, an annual Wine Festival has celebrated the local grape harvest and given publicity to the local wine-making tradition, one of the few such crafts in Poland. Since 1999, Zielona Góra is one of two main cities in the Lubuskie Voivodeship, serving as the seat of the Voivodship Council. Located just sixty kilometers from the German border, Zielona Góra is a regional education and industry center, with the IT industry making inroads in the last few years. It is home to the University of Zielona Góra, and a highly successful Speedway motorcycle racing team, Falubaz.

Maryla Rodowicz Maryla Rodowicz is a Polish pop superstar. She has been an active performer for over 50 years. Even though her biggest hits were released in the 1970s and 80s, she is still considered one of the most popular pop stars in the country. In the past, she tried to expand her presence globally releasing albums in Russian, Czech, English and German. She managed to achieve success in Russia, with some 10 million album copies sold. She also tours places with a strong Polish diaspora regularly.

Images: Shutterstock, Wikimedia

Wine country

LONDON 1,077 KM PARIS LONDON 992 KM 1,283 KM BERLIN PARIS 157 KM 1,226 KM BERLIN 354 KM PRAGUE 220 KM

PRAGUE 435 KM

MOSCOW 1,505 KM

ROME 1,143 KM

MOSCOW 1,265 KM

ROME 1,321 KM

MAYOR: JANUSZ KUBICKI AREA CODE: 68 AREA: 278 SQ KM

MAYOR JANUSZ KUBICKI

MAJOR AIRPORT ZIELONA GÓRA/BABIMOST

POPULATION (JAN, 2015) POPULATION (DEC. 2012) 138,000 203,447 HIGHWAYS S3

WORKING-AGE POPULATION (DEC. 2013)POPULATION WORKING-AGE (DEC. 2012)

87,679 132,841 UNEMPLOYMENT RATE

NUMBER OF UNIVERSITIES (VOIVODSHIP)

NUMBER OF STUDENTS (VOIVODSHIP)

59,390

NUMBER OF GRADUATES A YEAR (VOIVODSHIP)

17,282

(JULY 2014) UNEMPLOYMENT RATE (DEC. 2013)

7.2% 9.1% AVERAGE PAY

(DEC. 2013) PAY MEDIAN (2012)

PLN 3,363.53 PLN 3,719.69

MAJOR INDUSTRIES: Tourism IT Recycling

MODERN OFFICE SPACE MODERN 20,000 SQM OFFICE SPACE 45,700 SQM OFFICE VACANCY

RATE 20.0%OFFICE VACANCY RATE 11.8% PRIME HEADLINE RENTS PRIME HEADLINE €5.00-€10.00 RENTS €9.00-€11.00

WBJ OBSERVER • MARCH 2015

EVENTS / SMART CITY

On February 18-19, at the Westin Hotel in Warsaw, the Smart City Forum took place. It is a new initiative dedicated to the development of smart cities in Poland. The conference brought together over 500 participants, including renowned experts, mayors of Polish cities, numerous representatives of voivodship marshalls’ offices, local administration and business

he conference was opened by Tomasz Misiak (President of the Supervisory Board MM Conferences) and Mariusz Gaca (Vice-President of the Board, Orange Poland; Chairman of the Smart City Forum Advisory Board). The guest of honor was the Mayor of Wrocław Rafał Dutkiewicz. The Forum was attended by, among others, Roman Dmowski (Deputy Minister of Administration and Digitization), Marcin Krupa (Mayor of Katowice), Wojciech Szczurek (Mayor of Gdynia), Tadeusz Krzakowski (Mayor of Legnica), Robert Biedroń (Mayor of Słupsk), Michał Olszewski (Deputy Mayor of Warsaw).

The first thematic panel was dedicated to the idea of the smart city and smart society, with speakers including Mark Day (Microsoft), Michał Olszewski (Deputy Mayor of Warsaw) and Braam Burggraaff (Iconics). They described specific examples of

MARCH 2015 • WBJ OBSERVER

The second day started with a panel on payment methods in cities and towns of the future. During the discussion, moderated by Jacek Uryniuk, speakers Jakub Kiwior (Head of Regional Marketing and Business Development in the CEE region, Visa Europe), Karol Stec (Project Director, Polish Organization of Commerce and Distribution) and Paweł Bułgaryn, (Work Coordinator in the Department of Systems and Payment Services, Ministry of Finance) talked about the current situation and future trends. Krzysztof Łukaszuk (Chairman of the Board, AMG. net), Bogusław Prokop (Director, Urban Transport of Białystok) and Andrzej Sobczak (Institute of Computer and Digital Economy, Warsaw School of Economics) talked about sources of data and information management. The Smart City Forum is the first event in the region organized on such a scale. It aims to enable a meeting between key decision-makers at the national level and well-known experts in such industries like IT, telecommunications, infrastructure construction, transport and energy. A wide range of discussed topics allowed the participants to propose new solutions not only for smaller towns, but also gave a chance to establish cooperation between the forum participants and those who have implemented smart city initiatives. We invite you to visit the photo gallery from the event. We also encourage you to participate in the next edition of the Smart City Forum, which will be held on October 28-29, 2015.

Images: MMC

SMART CITY FORUM

solutions implemented in London, Barcelona and Warsaw. The next panel focused on benefits for the residents and entrepreneurs arising from using open technological solutions. After a series of case studies, a panel discussion was held with participation of, among others, Leszek Hołda (Integrated Solutions); Jan Buczkowski (MPECWiK - Środa Wielkopolska) and Krzysztof Głuc (Sądeckie Wodociągi). The first day of the conference ended with a thematic module on legal and organizational aspects of smart cities.

EVENTS / POLISH INFRASTRUCTURE

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WBJ OBSERVER • MARCH 2015

EVENTS / SMART CITY

THE FUTURE OF INFRASTRUCTURE INVESTMENTS IN POLAND THROUGH THE EYES OF EXPERTS

epresentatives of investors, contractors and government once again met to discuss the condition of Polish infrastructure, which in recent years has developed rapidly. In panel discussions with leaders from the road and rail sector, one topic appeared very often - a postulate to strengthen and improve cooperation with the main ordering units. A debate with the president of the General Directorate for National Roads and Motorways, Ewa TomalaBorucka, gave hope that both the formal and handling practices, procedures related to infrastructural investments will change in the direction of what the market expects. Panelists spent a large part of the discussion on investment financing and the use of revenues from EU funds. “If you look at the statistics, we will never be able to catch up with western EU countries in the scope of our infrastructure. Over the next seven years, we should focus on the fact that EU funds are about 25 percent higher and can be used not only to build infrastructure,

MARCH 2015 • WBJ OBSERVER

Images: Executive Club

On February 19, the sixth edition of the “Conference on Polish Infrastructure” took place. The event was organized by the Executive Club with the participation of the leaders of the most important companies in the industry. The culmination of the Conference under the auspices of the Ministry of Infrastructure and Development included the “Polish Infrastructure Diamonds” awards gala

EVENTS / POLISH INFRASTRUCTURE

but also to create an environment for the development of companies operating in Poland; companies that want to reinvest their funds in Poland and to create jobs,” pointed Dariusz Blocher, President of Budimex. In fact, Poland continues to pay the most attention to the expansion of the road network, while the trend in the EU is to increase pressure on investment in railways. Participants discussed the condition of Polish railways and presented many demands on the modernization of the sector. Jacek Neska, member of the board at PKP Cargo, spoke about the difficulties associated with modernization investments, but also the benefits that they bring. “Today, the main problem of Polish railways, for all carriers, is a very high level of unpredictability. We expect that with the ongoing process of track revitalization and their adaptation to the needs of transport, it will be possible to avoid resource constraints and improve our offer to the customers. Fewer resources, less cars to transport the same amount of cargo means lower costs and a more competitive offer. Competitive in relation to road transport.”

This year, the sixth edition of the conference was accompanied by a contest for the best infrastructure entities. A jury made up of a group of authorities from the industry honored the best players in the sector in eight categories with the “Polish Infrastructure Diamonds.” Dariusz Blocher, President of Budimex, was unanimously elected as the winner in the “Top Executive” category. The CSR category winner was Skanska. The “Best Financier” award went to PKO BP. “Efficiency in Management” was received by PKP Cargo. Kolejowe Zakłady Nawierzchniowe Bieżanów were rewarded as “Innovation Leader.” While the “Investment of the Year” prize was awarded for the joint actions of Strabag, Budimex and GDDKiA for their implementation of a section of the A4 motorway from Dębica to Tarnów. “Top Consulting Firm” went to SKS Legal and EY. Transprojekt Gdańsk won in the “Project of the Year” category. The strategic partner of the conference was the Budimex company and the main partners were PKP Cargo and Doka. Honorary Patronage of the conference was held by the Ministry of Infrastructure and Development.

WBJ OBSERVER • MARCH 2015

LIFESTYLE / FILM

IDA And they’ve done it. Poland’s foreign film submission to the Academy Awards, Paweł Pawlikowski’s “Ida,” has won in the Best Foreign Film category. “Ida” was also nominated for Best Cinematography but did not win in this category. Since its release in 2013, the film has already attracted much attention from the West. However, the Oscar win was the first for a Polish language film by Vedika Luthra The black-and-white drama follows the journey of Ida, a young nun about to swear her vows, accompanied by her newly discovered aunt, Wanda, as they venture out to seek answers that lie in Poland’s dark past. Set in the 1960’s, the film replicates the cinematic style of other Polish masterpieces created during that time period, such as Roman Polanski’s “Knife in the Water.” While the story itself takes place nearly two decades after World War II, it is built upon the basis of a country that has suffered deeply. Bleak scenery, a sparse population and post-war communist aesthetics create an uncanny mood.

I was, in fact, attracted mainly to the camerawork. The characters did intrigue me, but their nature was complex to the point where it was frustrating – because relating to them was so difficult. I chose to focus on the technical aspects instead. But as the story progressed, I began to appreciate the multiplicity of layers exhibited in the actors’ personas. The juxtaposition of Ida,

MARCH 2015 • WBJ OBSERVER

“WE MADE A FILM ABOUT THE NEED FOR SILENCE, WITHDRAWAL FROM THE WORLD AND CONTEMPLATION, AND HERE WE ARE AT THIS CENTER OF NOISE AND ATTENTION.

a believer – a symbol of innocence paired with Wanda, an atheist – far from innocent, shows two contrasting viewpoints that were present during that time. With every remark, I found myself hypothesizing and impatiently drawing conclusions. I was disturbed by the long periods of silence, by the action and by the dark-humored dialog. The reality it showed was frightening, yet I couldn’t look away. I am conditioned by the stereotypical action-packed nature of western films that are meant to entertain. “Ida” isn’t a film that is made to escape the banalities of daily life. Rather, it is a film made to illustrate these banalities, in a different time period. It is a film that demands thought, a film that deserves its 2015 Oscar.

Images: Solopan, Shutterstock, Nenette, Tomek Pikula

Each frame – the wide-angles and the closeups, resemble award-winning photographs that convey so much with seemingly such little. Many scenes are quiet – without words. In these parts, the camerawork plays a crucial role, which Łukasz Żal and Ryszard Lenczewski have masterfully crafted. There are shots that seemingly overlook the basic rules of cinematography – but they work. The accolades the film has garnered regarding cinematography didn’t come as a surprise.

L I F E S T LY ILFEE S/ TRYELSET A/ UHROATNE TL SS

By Vedika Luthra

THE RISE OF HEALTHY EATING Ten years ago in Warsaw, it was impossible to find a restaurant with a vegetarian option – in fact, it was difficult to find a decent restaurant at all. That has since changed. What was once a bland, marginalized category of food is on the rise today. And with vegetarianism comes the promotion of other healthy eating lifestyles – the gluten-free diet, the paleo diet and the vegan diet

arsaw is up-to-date on these global food trends that stem from a newfound growth in concerns towards health, food safety, animal treatment and global warming. As the local food scene grows, so does the popularity of healthy eating. A few years ago, the city experienced a burger phenomenon. Chains of burger joints sprung up seemingly overnight – American style burgers, slow-cooked burgers, gourmet burgers and recently, vegan burgers. In the vegan diet, animal products are eliminated; so diehard burger lovers often stereotype vegetarian burgers as anything but decent.

and sugar free. However, it is impossible to tell between mouthfuls of sheer goodness. Their branches are located on ul. Chmielna and in Kabaty. Their baked goods are prepared daily. In the modern day and age, where dietary restrictions are increasing, more bakeries like Nenette are needed. And even if you aren’t limited diet-wise, it is quality. Krowarzywa and Nenette are two of a hundred and counting, as popularity for this type of food grows. Healthy eating is possibly the best trend to enter the Warsaw food scene – here’s hoping it will remain.

However, Krowarzywa has proved this sentiment wrong. For one, their burgers combine a variety of healthy sauces that include “veganized” replicas of traditional condiments such as mayonnaise, mustard and ketchup and the healthy versions taste the same, if not better. Like their condiments, their patties taste far from “bland.” I was shocked to learn that the burger I had nearly inhaled was 100 percent vegan. Ignorant as it may appear, I had never doubted the superiority of the All-American hamburger before. I am not alone in my discovery. Over 30,000 people on Facebook have “liked” Krowarzywa’s page, and the numbers continue to grow. No wonder it is always difficult to find free seats in their restaurant. Like veganism, popularity for the gluten-free diet is also on the rise. This lifestyle eliminates wheat products containing gluten. Unlike veganism, meat and dairy aren’t excluded. Cukiernia Nenette, a bakery that follows this type of baking recipe, displays shelves of freshly baked gluten-free breads and confectionaries. Their carrot cake is both gluten-free

WBJ OBSERVER • MARCH 2015

LIFESTYLE / NOWAK ON THE JOY OF FOOD

MACIEJ NOWAK FOOD CRITIC

hat can be heard in Warsaw gastronomy? One trend seems to be particularly clear: after almost two decades of being sushi crazy, the trend is starting to lose its dynamics step by step. We’ve been one of the strongest sushi centers in Europe for a long time, with over 200 bars and restaurants in peak season specializing in serving Japanese bundles of rice, algae and fish. Visiting those places was a sign of high social status, and more – without unnecessary euphemisms – prosperity and wealth, because prices could bend one to the ground. Once Sakana Sushi at ul. Molièra, then Izumi at Plac Zbawiciela, today – Sushi-Zushi at ul. Żurawia, these favorite spots draw Polish celebs and finding a place to sit may be close to a miracle. But sushi has hit a decline, the trendy audience is more and more interested in cuisine based on local, organic products as well as in the personality of the chef, who makes creative dishes based on those products. There comes a time, when associations regarding Polish cuisine may be due for a change. It’s most often portrayed as unhealthy, fat, heavy and unappetizing as opposed to a healthy and light Mediterranean diet. What if we started to like Polish cuisine? What if we appreciated the taste of our vegetables, fruits, pork and beef? What if we tried to build a new story about the Polish table, as the land of natural flavors and non-industrial agriculture? Land of great cheeses, healthy eggs and exceptional fish, from which young, talented chefs prepare modern cuisine, greatly appreciated by Europeans. Poland, the orchard of Europe – as Pascal Brodnicki says. Doesn’t it stimulate the imagination? It does, it does! Rene Redzepi, chef of the legendary Copenhagen-based Moma restaurant, already announced that Poland would be the next world gastronomy discovery. Anyway, let's wait until spring

JANUARY/FEBRUARY 2015 • WBJ OBSERVER

comes and the next release of a certain red book. It seems like this could be a breakthrough for us. Modern cuisine has been evolving on our continent over the past two centuries. Polish chefs haven’t had much to say during this process. Their voice was dominated by chefs from France, Italy or Hungary. Besides, Poland at that time had other far more important things on its mind than concern for the national cuisine. But today we are in the postmodern era and what is most interesting in gastronomy is no longer a continuation of the old, classic appeal, but rather the creation of new dishes, new combinations, new recipes, that will be picked up by domestic and foreign audiences. Do we lack the creative individualities to deal with this challenge? On the contrary! Wojciech Modest Amaro, followed by Agata Wojda, Adam Chrząstowski, Robert Trzópek, Paul Oszczyk, Joe Seelitso, Jacek Grochowina, Grzegorz Labuda, Daniel Pawełek make a strong and talented team. But recently, there are already younger talents hot on their heels. What’s a distinctive, contemporary young Polish chef like? What are his/her main features? Well, in most cases, the chef has had experience in the UK, Scandinavia, more rarely – in France or Germany. In any case, his education was not limited to the domestic field, which along with the vocational schools has been devastated altogether. For nearly two decades, our educational visionaries, Lord, have mercy, thought that the country will be saved by an army of marketers and sales representatives, high school and private university grads. Only the last wave of emigration has made young people realize that the world is not built on loyalty programs and season sales, that a person with concrete manual skills has a much better professional situation than a blue collar worker. Appreciate them: Sebastian Olma, Marcin Dabrowski, Michał “Magiel” Myszkiewicz and many others are the true rising stars of our gastronomy. Maybe it's about time to talk about Poland as a country of young chefs and healthy products? u

Image: Shutterstock

Is Poland the orchard of Europe?

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2015-02-27 09:47:07