Warsaw Business Journal November 2017

WARSAW

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

NOVEMBER/DECEMBER 2017 ~ No. 11/12 (42)

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

For daily news visit us at wbj.pl

CHARLES CARNALL The Managing Director at

Hays Poland talks about the labor shortage and sourcing employees

CASHLESS SOCIETY

WHY ARE GOVERNMENTS DETERMINED TO MAKE ALL MONEY VIRTUAL?

MONETIZING BIG DATA CO-WORKING OFFICES LATEST RETAIL TRENDS

IN REVIEW

News highlights from the previous month from wbj.pl Top export industries............................... 11

November/December

FORECAST 2018

Economy..................................................... 20 Sunday retail............................................. 21 Bitcoin......................................................... 22 Taxes........................................................... 23 Data protection.......................................... 24 Office market............................................. 26

Exclusive

Interview with Charles Carnall.............. 30

COMMENTARY

Interview: Robert BiedroÅ&#x201E;....................... 34 Interview: Chris Wynne............................ 36 Interview: Sung-joo Choi......................... 38

War on Cash

Who benefits from making money virtual? 40

LOKALE IMMOBILIA

Real estate news...................................... 53 New brands................................................ 60 Interview: Golub Gethouse...................... 64 Retail in residential.................................. 66 Interview: Avestus.................................... 70 Luxury rental............................................. 72 Co-working................................................ 76

Tech Insights

Big data marketing 47 Interview: Piotr Prajsnar 48

LIFE + STYLE

Business bars and fine dining................ 85 Interview: Marcin Wachowicz................. 88

EVENTS

EFNI 2017................................................... 90 Fryday Warsaw......................................... 92 Offices in Poland....................................... 93 PRCH Awards............................................ 94 PMR Forum................................................ 95 IT Future Expo........................................... 95 Last word................................................... 96

W B J NOVEMBER/DECEMBER 2017

A NEW ERA IN AUDI STYLING

Sporty elegance, sophistication and true innovation â&#x20AC;&#x201C; the exterior design of the Audi A8 represents a new dawn in styling for the entire brand. Packed with groundbreaking AI technology and a lavish interior offering a spa-like experience, the new Audi A8 is ushering in a new era in automotive design

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BROUGHT TO YOU BY AUDI

New line

Audi is world-renowned for its sophistication, and the exterior design of the new Audi A8 marks the beginning of a new era for the entire brand. It is the first Audi car designed entirely by Marc Lichte, Audi’s chief designer. The front with its broad, upright Singleframe grille, the flowing, muscular body design and the rear with its full-length light strip radiate a powerful presence – in both the standard 5.17-meter (17.0 ft.) version and in the A8 L with its 13 centimeter (5.1 in) longer wheelbase. The progressive character of the new flagship Audi becomes especially clear when viewed in profile – the flat roof dome lends the sedan a sporty touch, while the stretched lines underscore its length.

Like a smartphone

In the A8, Audi conveys its claim to high quality in the digital age with a revolutionary operating concept. At the center of the instrument panel is a 10.1-inch touchscreen display which, when turned off, blends almost invisibly into the high-gloss black surround thanks to its black-panel look. When the system is started, the user interface appears, featuring new, concise graphics. The menu structure is intuitive and flat – just like a modern smartphone. The user can freely arrange the icons according to their importance and control the infotainment system on the large display. A second touchscreen display on the console of the center tunnel is used to operate the climate control and convenience features, or enter text using the handwriting recognition system.

Voice control

The A8 can also engage in intelligent conversation. The driver can activate an array of functions using a new, natural form of voice control. Information on destinations and media is either available on board or is delivered from the cloud at LTE Advance. The driver can freely use spoken commands – the voice recognition system understands sentences such as “Please take me to the Adlon Hotel in Berlin.” The ingenious dialog manager asks questions if necessary, allows for corrections, offers choices and also defers to the speaker when interrupted. A multifunction steering wheel and an optional head-up display complete the operating concept.

Seamless parking

The new Audi will feature an AI system, which includes the Audi AI (remote) parking pilot and the Audi AI remote garage pilot. They make parking extremely convenient by autonomously driving the A8 into parallel or perpendicular parking spaces as well as garages, while the driver monitors the maneuvering. Both systems can be started using the new myAudi smartphone app. The foundation of these high-end systems is the central driver assistance controller, another top innovation from Audi. About the size of a tablet, it continually merges data from the sensors into a differentiated model of the surroundings. In addition to the radar sensors, a front camera and the ultrasonic sensors, Audi is the first car manufacturer to use a laser scanner. Mild-hybrid The new Audi A8 will, for the first time, be equipped with an electrified drivetrain as standard. The engines are equipped for this purpose with mild-hybrid technology: a belt alternator starter (BAS) and a lithium-ion battery with 10 Ah electrical capacity. The new A8 can coast at speeds of between 55 and 160 km/h (34.2 and 99.4 mph) with the engine off. As a result, the vehicle can then travel with zero emissions for up to 40 seconds. As soon as the driver steps on the gas again,the BAS prompts a swift, smooth restart.

Luxury interior

Space is an essential of luxury design. The most prestigious position in the new Audi flagship is at the rear, on the right. The Audi A8 L also comes with the option of a relaxing seat with many adjustable features and a heated massaging footrest. Passengers can also control an array of functions such as ambient lighting, the new HD Matrix reading lights and seat massage, plus make private phone calls, via a separate operating unit.

W B J NOVEMBER/DECEMBER 2017

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

Beata Socha

Managing Editor

bsocha@wbj.pl

Adam Zdrodowski

Managing Editor, Lokale Immobillia

azdrodowski@wbj.pl

Michael Evans Copy Editor

Kevin Demaria Art Director

Contributors

Ewa Boniecka Karolina Papros Sergiusz Prokurat Alex Webber Sales

Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com A. Julita Pryzmont jpryzmont@valkea.com PR & Marketing

Agata Wolny awolny@valkea.com Magdalena Czopur Subscriptions

mczopur@valkea.com Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com Magda Gajewska

Happy New Year! BY MORTEN LINDHOLM

Event Director, Valkea Events

mgajewska@valkea.com Contact: phone: +48 22 257 75 00 fax: +48 22 257 75 99 e-mail: wbj@wbj.pl

NOVEMBER/DECEMBER 2017 W B J

WBJ.pl WarsawBusinessJournal

@wbjpl

All photographs used in this issue are courtesy of partners and companies unless specified otherwise.

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PORTRAIT BY KEVIN DEMARIA

YES, I’M A LITTLE EARLY with the crystal ball, but I’m taking my chances and predicting that the New Year will bring more good tidings featuring shareholder satisfaction, market growth and new opportunities. Certainly, this is something that goes for the Warsaw Business Journal and we look forward to revealing plenty of new features come 2018. In the meantime though, business as usual. Or should that be, business as unusual? Helping us decide, our regular contributors have cast their expert eye on key issues that will dominate the forthcoming agenda: what does a Sunday retail ban really mean for Poland? How will new data protection laws impact you and your business? Does bitcoin pose a threat or an opportunity? Will changes to tax law affect property investment? And what market opportunities should we look out for? Further, this issue we sit down with Charles Carnall of Hays to discuss the recruitment industry and the effect that millennials are having on it. Beyond our cover story, we look at big data marketing, the benefits and challenges facing a cashless economy, changes emerging in the retail sector and how transformations in office and work space habits have both disrupted and brought new opportunities to real estate companies. Of course, I’d like to sign off by wishing a Happy New Year to all of our regular readers and subscribers, not to mention our partners, sponsors and advertisers, whose continued support allows us to bring you all the latest news from Poland’s business front line!

NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

The concept of the central communication hub includes the construction of the largest airport in Poland and including it in the high-speed rail network” said Prime Minister Beata Szydło at the inauguration of the second Meeting between Transport Ministers and Business Forum 16+1. She stressed that transport is an area of cooperation between Poland, Central and Eastern Europe and China that has some of the best prospects for growth, and the Polish government intends to develop it.

COSMETICS MARKET grows 78% over 15 years The Polish cosmetics market was worth PLN 16 billion in 2016, while in 2002 its value stood at PLN 9 billion. Over the past 15 years the market grew by 78 percent nominally and by 32 percent in real terms, which translates into 2 percent growth per year, according to a report prepared by advisory Deloitte. The growth is particularly significant considering that mature markets, such as in France and Italy, recorded a decrease over the same period, of 0.19 percent and 1.09 percent respectively. The Polish cosmetics industry generates PLN 7 billion in added value a year and creates 43,000 jobs. It is the sixth largest cosmetics market in Europe and is growing the most rapidly.

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“In the next few years, the Polish economy should continue to grow, and with it the cosmetics industry. At the same time, society will become more wealthy and that will result in an increased demand for cosmetics,” said Julia Patorska, economist and senior manager at Sustainability Consulting Deloitte. “The structure of the demand will change, with the sales of more expensive products increasing. As a result of the aging demographics, demand for elderly care products will grow as well,” she added. FMCG

18% OF FOOD PRODUCERS eying acquisitions Almost a fifth (18 percent) of agricultural and food producers in Poland are planning acquisitions of their competitors within

the next three years in order to boost their company’s exports, advisory KPMG stated. Most acquisitions are focused on CEE markets. “Almost 8 out of 10 companies with M&A plans in the nearest future claim that the direct motivation for the move is access to local resources,” said Piotr Grauer, director at Deal Advisory team at KPMG. “Acquiring a local production facility is also important for most firms (68 percent) as is the acquisition of a local, known brand (58 percent). Taking over distribution channels on a foreign market is of significance for 53 percent of companies polled,” he added. Food and agricultural exports stood at €24.1 billion in 2016, marking a 9.4 percent increase. Food and produce account for over 13 percent of Polish exports.

SHUTTERSTOCK

FMCG

WBJ

In Review SERVICES

SECURITY MARKET value with 13% growth in 2017 The security services market will reach a value of PLN 10.12 billion in 2017, marking a 13 percent increase y/y. It will then continue to grow at approx. 3 percent annually to a value of PLN 11.4 billion in 2021, according to a Deloitte report. In 2014, the market for security and cash-handling services was worth PLN 8.01 billion, in 2015 – PLN 8.16 billion, in 2016 – PLN 8.96 billion. RETAIL

LPP to spend PLN 200 mln a year on R&D Fashion retailer LPP wants to hire over 1,000 employees and spend nearly PLN 200 million a year on R&D, the company stated. “We want to have 2,000 people working on a variety of R&D projects by the end of 2018,” said LPP’s CEO Marek Piechocki. The company also wants to allocate PLN 1.5 billion by 2020 to expand its sales network in Poland and abroad. In 2016, the company exported PLN 3 billion worth of products, mainly under the Reserved brand. Currently, LPP has 1,710 stores in 20 countries. ADVERTISING

ONLINE AD MARKET grows 7.7% y/y in Q3 Online advertising spending in Poland increased by 7.7 percent y/y in the first six months of 2017, reaching PLN 1.858 billion, according to a study conducted by PwC for industry association IAB Polska. The industries with the highest share in online advertising market were retail (18 percent), automotive (11 percent), telecoms (8 percent), finance (7 percent) and foodstuffs (7 percent). ENERGY

GAZ-SYSTEM to invest PLN 11.5 bln in gas infrastructure by 2022 Natural gas operator Gaz-System will spend a total of PLN 11.5 billion by 2022 on expanding its gas infrastructure, the firm’s CEO Tomasz Stępień said. The investment includes PLN 4.2 billion earmarked for the Baltic Pipe program of connecting the Polish gas network to the Norwegian continental shelf via the Danish gas system. Some PLN 1.7 billion will be spent on the sea portion and PLN 2.5 billion on the land portion of the system by October 2022, Stępień explained. Gaz-System will also spend nearly PLN 5 billion by 2020 on connecting the Świnoujście terminal with cen-

NOVEMBER/DECEMBER 2017 W B J

tral and southern Poland, as well as almost PLN 2 billion on building gas connections with the Czech Republic, Slovakia, Ukraine and Lithuania, scheduled for 2020-2022.

TRENDING STATS

BANKING

PKO’S ZENCARD enters Finnish market ZenCard, part of PKO BP, will launch its transactional marketing service on the Finnish market, in cooperation with Finland’s largest financial institution, OP Financial Group, an association of 180 banks, PKO stated. ZenCard emerged as one of four winners in the OP Smart Commerce competition organized by OP Financial Group in October. Some 100 companies from all over the world took part in the competition. ECONOMY

Highest number of INSOLVENCIES in five years As many as 255 Polish companies became insolvent in Q3 2017 – the highest number in five years. Since January, 673 companies became insolvent, which is a 14 percent increase y/y, said Euler Hermes in its report. The growth rate of insolvent firms will remain at a two-digit level for the remainder of the year. According to Euler Hermes, the reason for the growing rate of insolvencies is the result of increasing production costs, mainly due to higher labor and materials costs. In order to remain profitable, manufacturers have started to increase prices (in August the prices of sold production increased by 4.5 percent according to Eurostat, which was one of the highest readings in Europe), but it is still too early to see the positive impact of rising price on producers. “It also depends on whether growing prices will be accepted by the market,” said Tomasz Starus, risk assessor at Euler Hermes. He added that the current situation is also caused by the fact that manufacturers can no longer increase their production scale without significant investment. AGRICULTURE

POULTRY EXPORTS up 8% y/y in 2017 Poultry exports will increase by 8 percent y/y in 2017, according to estimates by the Institute of Agricultural and Food Economics, a national research institute. “Exports will grow by 8 percent and equal 1.11 million tonnes,” the institute stated. In 2016, poultry exports grew by 20 percent y/y. According to the institute’s analysts, exports could outstrip imports this year by €1.9 billion.

4.6%

Unemployment in September (Eurostat)

4.3%

GDP growth in Q3 (y/y, IPAG)

Export increase in September (y/y, KUKE)

2.1%

Inflation in October (GUS)

53.4%

Public debt as % of GDP in Q2 (Eurostat)

2.1%

budget deficit as % of GDP in 2017 (World Bank)

8.6%

Retail sales growth in September (y/y, GUS)

4.3%

Industrial output increase in September (y/y, GUS)

In Review RETAIL

BIEDRONKA with 8.9% LFL sales growth y/y in Q3 Retailer Biedronka recorded an 8.9 percent increase in Q3 sales y/y in like-for-like stores, while overall sales increased by 12.6 percent y/y to reach €2.8 billion (in PLN the increase amounted to 10.5 percent y/y), owner Jeronimo Martins stated. In Q1-Q3 of 2017, LFL sales rose 9 percent y/y, while the overall sales figure stood at €8.103 billion (a 13.1 percent growth in euro and 10.7 percent in PLN). EBITDA for the first three quarters amounted to €583 million (13.9 percent growth y/y). Between January and September Biedronka launched 46 new stores reaching a total of 2,753 stores. In Q4 the chain will grow by another 70 stores.

order to see a sharp increase in the number of stations we are considering acquisitions,” Jastrzębski said.

terms of new workplaces created, JP Morgan’s SSC center took the lead with 2,500 new jobs.

FUEL MARKET

INVESTMENT

Oil giant PKN Orlen recorded a net profit of PLN 1.6 billion in Q3 2017, an increase of over PLN 1.5 billion recorded in Q3 2016, but below market consensus of PLN 1.96 billion. For the first three quarters of the year, net profits stood at PLN 5.539 billion and were PLN 1.842 billion higher than in the corresponding period of last year. Revenue for the first nine months of the year amounted to PLN 70.63 billion and was PLN 13.979 billion higher than a year earlier.

Expanding Special Economic Zones to cover the entire country could speed up investments, particularly in municipalities that have thus far been neglected, said Deputy PM and Finance Minister Mateusz Morawiecki. The ministry has submitted a relevant draft bill for consultations. “We would like to start implementing these solutions from the beginning of next year,” he stated.

PKN ORLEN with PLN 1.6 bln profit in Q3

FINMIN WANTS to expand SEZ to cover the entire country

TAXES

VAT GAP could fall below 13%, level comparable with Germany, France and the UK

BANKING

ONLINE BANKING on the rise The number of individual clients with access to internet banking stood at 34.6 million at the end of Q2 2017, marking a 9.77 percent growth y/y, according to Polish Bank Association (ZBP). The number of active clients grew by 3.8 percent y/y to reach 15.8 million. In Q2, the number of card transactions increased by 135 million (13.19 percent q/q) to a level of 1.162 billion, while the total value of transactions grew by PLN 18.88 billion (13.1 percent q/q) to PLN 163 billion.

FUEL MARKET

LOTOS SIGNS PLN 3.1 bln deal with PGNiG, plans to expand its gas station network Lotos has signed a deal with PGNiG for up to PLN 3.1 billion. The contract holds until September 30, 2020, with an option to extend it for another two years, Lotos stated. Since 2010 PGNiG has been Lotos’ suppler of natural gas, which the fuel giant uses for oil refinement. Lotos also wants to increase its number of gas stations to 1,000, the company’s CEO Marcin Jastrzębski stated. At the end of Q3 it had 485 stations across the country, mainly outside large cities. “In

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INVESTMENT

€1.77 BLN in FDI projects in October The Polish Investment and Trade Agency (PAIH) completed a total of 51 foreign direct investment projects in October, valued in total at €1.77 billion, which was €700 million more than in October 2016, the PAIH stated. The agency currently has 187 active investment projects in its portfolio, worth a total of €6 billion, a 44 percent growth y/y. If all the current projects are completed, they should create 14,700 jobs. In terms of project numbers, business services remain the leading industry, with 63 investment projects worth €144 million, followed by automotive (39 projects, worth €1.6 billion) and R&D (16 investments valued at €14 million). US companies are currently carrying out 60 FDI projects with PAIH’s assistance, worth €993.4 million in total. German firms are planning on investing €1.04 billion (25 percent more y/y). Chinese investors’ planned CAPEX is similar to that of German firms. The largest investment project completed in 2017 was LG Chem’s electric car battery production plant (€1 billion, 810 jobs). In

The VAT gap could fall below 13 percent in 2018, a level which is observed in countries such as Germany, France and the UK, according to a report prepared by the Center for Social and Economic Research (CASE). In 2017, the gap should drop below 17 percent. Based on VAT collection data in H1 of the year, the VAT gap could decrease to PLN 39 billion in 2017, which is equal to 2 percent of GDP, from PLN 52 billion recorded in 2016 (2.9 percent of GDP), advisory PwC calculated. PwC analysts expect VAT revenues to increase by 19 percent y/y to over PLN 150 billion this year. The gap in tax revenues arises from tax fraud, the grey economy and the inefficiency of tax collection. TAXES

MOVING TO TAX HAVENS should become easier – ECJ’s decision on Polbud The European Court of Justice has decided that member states cannot demand that a company be first liquidated if it wants to move its statutory seat to another country. The decision was in relation to the dispute between Polish construction firm Polbud and the Polish courts. In 2013 Polbud moved its statutory seat to Luxembourg. However, its operational seat and all its business was still conducted in Poland. The ECJ judges stated that demanding liquidation is a restriction on the freedom of economic activity. The ECJ’s decision should make transferring company seats to tax havens easier.

SHUTTERSTOCK

WBJ

Export industries to watch P O L A N D ’ S E X P O R T S are clearly taking off. In 2017, euro-denominated exports should grow by as much as 10.4 percent to reach €195.9 billion, and by 8.4 percent in 2018 (to €212.4 billion) according to insurer KUKE’s forecasts. In the “Exports TOP50” ranking compiled by lender BZ WBK, the industries with the best export prospects are furniture, followed by cereal products and baked goods, and the automotive sector. But alongside those long-term best sellers, there are also a few rising stars. “International expansion is how most companies see their growth. We have a number of export tigers among our clients, representing niche industries. The ambitions of innovation-driven firms for expansion abroad are definitely growing, while companies in traditional manufacturing sectors will remain some of the key players as well,” said Agnieszka Wolska, director of corporate banking at BZ WBK. Here are the hottest export industries to watch in the coming year.

The furniture industry has maintained its top position in the ranking thanks to a strong growth rate of 12 percent y/y recorded last year and the largest trade surplus of PLN 36.93 billion in 2016. Last year, the industry exported a total of PLN 48 billion worth of furniture, as well as mattresses, bed linen, lamps, neon signs etc.

Cereal and baked goods (including cookies) producers held second position in the ranking. The industry’s exports recorded one of the highest growth rates of 17 percent y/y. Last year, baked goods and cereal producers sold PLN 8.74 billion worth of products internationally.

The automotive industry advanced three spots to third position and the prospects for the industry remain promising. Last year, Poland exported PLN 95.45 billion worth of cars and car parts, marking an 18 percent increase y/y.

Chocolate and other cacao products jumped four spots up to fourth place in this year’s ranking. In 2016, the export value of cacao products amounted to PLN 6.5 billion and increased by 5 percent y/y.

The cosmetics and chemicals industry took fifth spot in the ranking, climbing as many as 11 spots over the past year. The industry saw a 16 percent increase in export value last year, reaching PLN 11.8 billion.

The wood industry ranked sixth, with exports valued at PLN 16.77 billion and a growth rate of 10 percent y/y. The export leaders in the industry were companies that produce construction materials, including windows, doors and floor panels.

Books, gadgets, pictures and other printed materials were one of the most interesting debuts in this year’s “Exports TOP50” ranking, jumping straight in at seventh position. With PLN 5.8 billion in export value and a 13 percent growth rate, it is interesting to see what the coming years will bring.

Toys, games and sports accessories producers also recorded impressive export growth of 17 percent y/y, with a total export value of PLN 5.39 billion, coming in as the eighth most promising export industry in the 2017 edition of BZ WBK’s ranking.

Meat and meat products ranked ninth, with PLN 17.76 billion worth of exports and a growth rate of 8 percent y/y. Next to cereal and chocolate, meat is the third-best food category in terms of export prospects.

Machines, electrical appliances and audio-video equipment took tenth spot in the ranking. Despite a modest growth rate of 1 percent, it is one of the most well-established Polish export industries, with international sales of PLN 90.9 billion in 2016.

Other highlights include the fashion and footwear industry, particularly leather products (11th spot). The footwear industry came in 15th, while clothes and accessories ranked 32nd.

Another interesting export sector to look out for is aircraft, spacecraft and related components, which ranked in 16th position.

W B J NOVEMBER/DECEMBER 2017

In Review ECONOMY

1.8 MILLION POLES with default debt In October, 1.8 million Poles were in default with 3 million debt payments, valued in total at PLN 25 billion, according to economic information bureau ERIF BIG. The value of default debt increased by PLN 1.4 billion since the beginning of 2017. Men account for the majority of default debt; they have a total of PLN 19 billion of overdue payments. Women accounted for some PLN 5.5 billion of default debt. ECONOMY

ECONOMIC PATRIOTISM increases by 13% in 2017 Nearly half of Poles (46 percent) admitted to making purchase decisions based on whether the product was produced in Poland, which is 13 percentage points more than in last year’s survey, according to pollster CBOS. Economic patriotism is the third most important criterion for those surveyed, following price (81 percent of respondents) and quality (76 percent). The reasons behind economic patriotism are: belief in higher quality of Polish products, followed by wanting to have a positive impact on the Polish economy, Polish entrepreneurs and the labor market.

CONSTRUCTION

CONSTRUCTION FIRMS with increasing debt, uncertain financial future Construction firms had a total of PLN 2.21 billion in default payments in August 2017, which continues to increase, according to a report prepared by the National Debt Registry (KDR). In August 2015, the total debt of the industry stood at PLN 1.02 billion. In August 2016 it was PLN 1.49 billion. The majority of the debt is a few

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years old, mainly arising from unpaid loans and leasing deals. There are 60,950 debtors in the construction industry with a total of 262,901 unpaid invoices. According to Deloitte experts, despite a 2 percent revenue increase y/y in H1 of top ten construction firms, the limited demand for construction services over the past few years has put pressure on offered prices, which often fell below the amounts included in investor’s budgets. “This means that the budget margins are under strong pressure. Additional risk arising from the significant accumulation of construction work scheduled for 20182020 could lead to higher prices of building materials and increased problems in finding qualified workers, … which could affect companies’ future financial results. In effect, despite the seemingly positive signals, construction firms could see their financial standing and their share prices deteriorate,” Deloitte stated.

accelerate to 4.0 percent from 2.7 percent recorded last year, thanks to private consumption fueled by the strong labor market situation and the 500+ subsidy program for families. In 2018, the economy could slow down to 3.6 percent, due to a moderate weakening of the European economy and companies’ difficulties with finding employees,” the World Bank stated.

AGRICULTURE

POLAND’S GRAIN EXPORTS up 19% y/y, non-EU destinations on the rise Between July 2016 and June 2017 Poland exported 6.4 million tonnes of grain, including corn, which is 19 percent more than in the corresponding period of 2015/2016, according to data published by the National Support Center for Agriculture (KOWR). The increase was mainly due to the increase in wheat exports (16 percent more than in the 2015/2016 season), and maize. The exports of the remaining types of grain decreased over the same period. The share of EU countries in Poland’s total grain exports fell from 57 percent to 55 percent. Germany remained the top importer of Polish grain, purchasing a total of 2.5 million tonnes. Outside the EU, Saudi Arabia (1 million tonnes and 16 percent of non-EU exports), Nigeria (327,000 tonnes, 5 percent) and Algeria (320,000 tonnes, 5 percent) were the biggest recipients of Polish grain exports. ECONOMY

GDP TO GROW 4.0% in 2017, could slow down after that The World Bank has increased its GDP forecasts for Poland to 4.0 percent in 2017, 3.6 percent in 2018 and 3.4 percent in 2019. Earlier estimates stood at 3.3 percent this year and 3.2 percent in 2018 and 2019. “In 2017, Poland’s economic growth will

AGRICULTURE

EGG PRICES soar 30% Egg prices have been soaring not only in Poland, but also across EU countries, caused by the reduced population of hens, the Ministry of Agriculture stated. Egg prices have been increasing on EU markets since August, on average by 30 percent compared to July prices. Each week, consumer egg prices grow by another 5 percent. In Poland, industrialquality eggs have recorded the sharpest increase, growing to PLN 6,289 / tonne, which means prices have nearly doubled compared to last year. Polish poultry producers have been limiting their supplies of eggs to supermarkets, while increasing exports due to higher prices of eggs in Europe, said Mariusz Szymaślik, head of industry chamber for poultry producers. Egg producers can get as much as PLN 0.45-0.5 per M-class egg (medium-sized) from foreign clients, while the retail price in Polish supermarkets stands at PLN 0.37-0.39. The rising prices and the increased demand for Polish eggs in Europe is the result of the detection of insecticide Fipronil in Western European chicken farms and bird flu in Italy, one of Europe’s top egg producers.

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WBJ

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nieruchomosci.orange.pl

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In Review IT

COMARCH with a PLN 138 mln deal Comarch Polska, part of the Comarch group, has signed a deal with the State Treasury represented by the Justice Minister to deliver and implement a digital registration system for court cases and their progress. The total value of the project is capped at PLN 137.8 million. Comarch Polska is the leader in the consortium contracted for the project, with MAXTO as the minor consortium partner. The system is to be implemented by August 31, 2018, with 48 months of tech support after the implementation. TELECOMS

ORANGE wants to resume roaming charges Orange Polska is planning to apply to industry watchdog UKE to resume roaming charges for some of its clients, the company stated. “In Q4 we will still feel the negative impact of the roaming charges [abolished earlier this year], however not as much as in Q3. We are hoping to introduce the charges particularly where roaming is commonly used, e.g. near country borders,” said CFO Maciej Nowohoński. The company wants to re-introduce the charges for people who stay abroad for a period longer than four months and who complete more than 50 percent of their connections and transfers via roaming.

Sypniewski added. The Central Logistics Hub will service domestic and international e-commerce. HOTEL MARKET

ORBIS profit soars in Q3 to PLN 106 mln Poland’s largest hotel operator Orbis posted a consolidated net profit of PLN 105.89 million in Q3 2017, up from PLN 80.05 million recorded in Q3 of last year, the company stated. Operational profit stood at PLN 129.09 million in the same period (PLN 104.82 million in Q3 2016), while consolidated revenue reached PLN 421.92 million (PLN 396.37 million in Q3 last year). For the Q1-Q3 period, Orbis recorded PLN 188.14 million in net profit (last year it was PLN 151.42 million), while revenue came in at PLN 1.101 billion, compared to PLN 1.036 billion last year.

AUTOMOTIVE

URSUS to deliver PLN 180 mln worth of electric buses in 2018

POSTAL SERVICES

POCZTA POLSKA to invest PLN 1 bln State-owned postal operator Poczta Polska will invest PLN 1 billion by 2021, the majority of which will be allocated to improving its logistics network, including the construction of a Central Logistics Hub that will be linked to the Central Transport Hub, Infrastructure Minister Andrzej Adamczyk and the head of Poczta Polska Przemysław Sypniewski stated. In 2018-2019, PLN 900 million of the sum will be spent,

QUOTE OF THE MONTH

14 regional airports handled nearly 19 million passengers, 2.4 million more than in the corresponding period of 2016. In terms of growth, Kraków airport remains the leader among regional airports, with 584,000 more passengers in Q1-Q3, followed by Katowice (an increase of 531,000 passengers) and Gdańsk (480,000 passengers more). The Civil Aviation Office (ULC) expects the share in passenger traffic of major regional airports (Kraków, Katowice, Gdańsk, Wrocław, Warsaw Modlin and Poznań) to increase to 59 percent in 2022, from 55 percent in 2017. Warsaw Chopin Airport’s share will fall over the same period from 40 percent to 37 percent. In 2022, Poland’s largest airport will reach 20 million passengers a year, reaching maximum capacity. “This means that we need a central airport in Poland that will take over the traffic,” said Piotr Samson, head of ULC. The share in passenger traffic of small regional airports (Rzeszów, Łódź, Bydgoszcz, Szczecin, Lublin, Zielona Góra, Radom and Olsztyn) is to remain at a low level of 5-5.5 percent in 2017-2022.

AIR TRAVEL

REGIONAL AIRPORTS with 15% more passenger traffic in Q1-Q3 Regional airports have recorded a 15 percent increase in passenger traffic in the first three quarters of the year, according to data published by the regional airports’ association. Between January and September, the

Polish automotive firm Ursus has PLN 180 million in orders for electric buses in 2018, Ursus CEO Karol Zarajczyk told PAP. “The orders we currently have for the production of electric buses have surpassed our expectations. Our company, which was little more than a start-up a year ago, has orders for nearly PLN 180 million for next year, which is equal to some 20 percent of the entire Ursus Group’s revenue,” he said. He also stated that Ursus is talking to its partners about building hydrogen-fuel buses and delivery trucks. “We are currently the only European supplier of 12-meter hybrid buses, … with an electric-hydrogen drive,” he added.

“Comparing the Doing Business ranking to a marathon, we could say that Poland

achieved a somewhat better time than a year ago. However, other countries ran even faster, and that is why Poland’s position has dropped slightly. Despite that, Poland is still among the global leaders in terms of conditions for doing business.

”

Carlos Piñerúa, the World Bank’s Country Manager for Poland and Baltic States, about Poland’s 27th spot in the Doing Business 2018 ranking published by World Bank, which compares the business environment in 190 countries.

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POZIOM 511 Design Hotel & SPA is a modern, four-star facility located in the heart of the KrakówCzęstochowa Jurassic Upland within the Eagle’s Nest Landscape Park. Located on top of the highest hill of the Upland, surrounded by greenery and limestone rocks, 300 meters away from the impressive ruins of Ogrodzieniec Castle, an architectural gem. It attracts not only those who wish to spend their time actively, but also those who search for peace, harmony and new experiences. The Upland is a perfect alternative for those searching for a place to calm down, to clear their minds, be close to nature in all of its beauty and untouched by city noise. The Jurassic Upland, although located in southern Poland is in fact very easily accessible. The distance between Warsaw and Ogrodzieniec can be covered in only two hours, and is accessible both by car and by rail, ensuring a swift and easy journey to POZIOM 511. Business guests can take advantage of our offer of organizing business meetings, conferences, banquets, as well as company events. They can also enjoy the peace and quiet within the Hotel, which is synonymous with the Jurassic Upland. To ensure maximum comfort for our guests, POZIOM 511 takes care of guest transportation to the Hotel and back, offers professional business event organization services, as well as a wide range of attractions which help our guests recharge their batteries in this unique place. The unique wellness zone is the focal point of the POZIOM 511 Design Hotel & Spa: a 20-meter swimming pool, Jacuzzi with water massage and a steam bath and sauna adjacent to natural limestone rock. Our highly qualified staff take care of our Guests. The offer of 511 MEDI SPA is based on leading brands – Ericson Laboratoire and Selvert Thermal. The spa not only offers relaxation and professional care, but also highly effective procedures in aesthetic medicine. Our Guests can also attend tasting dinners prepared by our Chef – Oliwia Bernady, a participant in the Top Chef show. The original dishes are inspired by Oliwia’s travels, newly discovered regional tastes and by the changing seasons. In most cases the dinners are accompanied by wine tastings as well as concerts.

Photograph by M. Mocny

But most of all, Poziom 511 is a place created by history and culture. We promote culture that does not follow the traditional, mainstream current. We don’t shy away from new challenges and ideas, we support young and ambitious artists. We create a welcoming atmosphere without artificial formality. The Hotel is a perfect place for meetings, talks as well as fun; place where people can have a wonderful time, accompanied by friends and close ones.

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WHILE 2017 proved to be a year of welcome surprises for Poland: increasing GDP forecasts, a lower than expected budget deficit and ever-growing export figures, 2018 may not be nearly as generous to Polandâ&#x20AC;&#x2122;s economy. Should we expect the bubble to burst? The burst could come from any number of industries. There are rumblings about another tech bubble. Many economists also point to the ever-increasing government debt as another possible source of slowdown. What awaits Poland in the coming years? What changes do entrepreneurs have to prepare for in 2018? What are the current risks and challenges? Will the Sunday trade ban put a damper on retailersâ&#x20AC;&#x2122; future outlook? What role will bitcoin play in the economy? Even the Wolf of Wall Street, Jordan Belfort, has been warning against the so-called ICOs (Initial Coin Offerings) calling them the biggest scam in history. Are companies ready for changes in data protection laws in the age of ever-bolder cyberattacks? Is commercial real estate as robust an industry as everyone thinks or are new tax laws stirring up trouble? Find out what our experts have to say.

W B J NOVEMBER/DECEMBER 2017

Time to Stuff The Cushion

RAPIDLY INCREASING GDP, GROWING SALARIES AND DECLINING UNEMPLOYMENT ARE THE RESULT OF THE IMPROVED ECONOMIC CLIMATE IN THE EURO ZONE AND WORLDWIDE. UNFORTUNATELY, THIS SITUATION IS VERY LIKELY SHORT-LIVED. CHANCES OF THE GROWTH RATE REMAINING AT 4 PERCENT FOR MORE THAN A COUPLE OF QUARTERS ARE SMALL

conomic data suggest that 2017 is likely to be Europe’s best year over the past decade. The euro zone owes its strong performance to growing employment, an increase in private investment and higher consumption. The EU is also seeing some respite from the looming breakdown of the euro zone and the massive banking crisis that was a real threat back in 2012. The European Central Bank is stimulating the economy with its loose monetary policy that makes debt financing – both public and private – cheap. Most fears about the world economy have dissipated as well: China maintains growth above the 6 percent threshold, the US is also seeing more rapid development.

A TIDE RAISES ALL BOATS

The improved performance of the euro zone is particularly good news for developing countries, as evidenced by the International Monetary Fund’s October forecasts for 2017 GDP growth. Turkey is expected to grow at 5.1 percent instead of the earlier estimate of 2.5 percent, Romania’s forecast increased from 4.2 percent to 5.5 percent, and the Czech Republic’s – from 2.8 percent to 3.5 percent. The IMF increased GDP growth estimates for Poland from 0.5 percent to 3.8 percent, but data suggests it will likely exceed 4 percent. In most of the countries of our region, GDP growth is based predominantly on private consumption, fueled by rising employment and salaries. In the Czech Republic, where unemployment is the lowest in the EU (2.9 percent) and the rate of employment of people aged 20-64 is 78.2 percent, which is one of the highest levels in the Community (for comparison, in Poland it is 71.1 percent), there is little room for labor market improvement.

LOW TIDE BRINGS THEM ASHORE

The tight labor markets means that it is difficult for employers to find more workers, which translates into strong wage growth. In Q2 2017, salaries increased in the Czech Republic by 11.5 percent, according to Eurostat. In the short run, increasing wages fuel economic growth. In the long term, however, a high level of salary increase is very difficult to maintain, particularly if salaries grow faster than productivity. This is the case not only in the Czech Republic. Wages have been climbing

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unnaturally quickly in Romania (18.5 percent), Bulgaria (10.7 percent) and in Poland (8.3 percent) as well. CEE economies have been overheated beyond their potential, as evidenced by IMF forecasts for the next few years. In 2020, GDP growth in Romania will slow down to 3.3 percent from the current 5.5 percent. In the Czech Republic, it will decline from 3.5 percent to 2.3 percent. In fact, the situation is similar in the entire euro zone. In 2017, euro zone countries will grow by 2.1 percent, but in 2020, growth will slow down to 1.6 percent. Outside Europe, Japan’s GDP growth is expected to drop from the current 1.5 percent to 0.2 percent.

BLEAK SCENARIOS

While the IMF sees Poland’s growth slow down from 3.8 percent to 2.8 percent in 2020, other scenarios are far more pessimistic. S&P Global Ratings estimates Poland’s potential growth at 1.5-2 percent (despite the increase to 4.2 percent in 2017), mainly due to the declining and aging population and the fact that nearly half of the current development rate is fueled by EU transfers. S&P’s report also points to the risk of “overstimulating” the economy by over-expansive monetary and fiscal policy. Current accounts are also unlikely to remain as balanced as they are now (this year the C/A deficit is at 0.5 percent of GDP). In 2019, it is expected to increase to 3.8 percent of GDP (of some PLN 83 billion). The agency also sees inflation rising to 3.5 percent in two years’ time. S&P’s forecasts may seem overly pessimistic, but it is undisputable that Poland is not taking advantage of the current boom to curb its deficit and public debt. According to the European Commission, budget deficit will grow to 2.9 percent of GDP in 2018 and it will be the third worst score in the EU, only exceeded by France and Romania. Meanwhile, the EU average is expected to come in at 1.5 percent of GDP, and Germany, the Czech Republic and Sweden are even expected to see a surplus. All signs indicate that the current surge is short lived, both in Poland and in other countries of our region. Development rates exceeding economies’ potential and salary increases of over 10 percent will not last forever. The time for households to prepare for the possible slowdown by limiting consumption and increasing savings is now. And on the national scale, higher savings will not only provide a financial cushion for lean years, but may also help companies finance their future investments from domestic resources rather than foreign capital.

Marcin Lipka Chief Analyst at Cinkciarz.pl

Sunday Trading Ban – What The Legislator Has in Store For Retailers

t the beginning of September 2017, a controversial bill was submitted to the Polish Parliament that aimed to restrict retail and other sales activities by entities providing trading services on Sundays and on holidays. The final wording of the act remains unknown at the date of this Anna publication, and may be subject to further changes Wyrzykowska during the legislative process. Already there is a serious doubt around whether the act should be submitted to the EU Commission within the public aid procedures. Advocate, Also, there is controversy over whether the act – as an counsel amendment to the codes and not just the ordinary bill Head of the – should be adopted in a special procedure for codes Real Estate and not ordinary legislative procedure under the Polish Practice Constitution. Nevertheless, it seems that the partial WKB restriction of trading on Sundays will become effective in Poland from the beginning of next year. Wierciński, Many issues are still open, including the number of Kwieciński, Sundays to which the ban or the restriction will apply. Baehr In accordance with the bill published on the Parliament website, the trading ban will apply to the first, the third and the fifth (if applicable) Sunday of each calendar month. According to our rough estimate, in 2018 the Sunday trading ban will cover 28 Sundays. Therefore its consequences may be important since almost one entire month of trading is on the line. The ban is to apply to most shops in Poland, especially to shopping centers, but also to such businesses as Sylwia online stores and online platforms if sales are performed Czerwikby employees. The bill provides for certain exempDrozdowicz tions such as, for example, trading on the two Sundays preceding Christmas, trading at petrol stations, souvenir Legal counsel shops, and shops run exclusively by their owners. Real Estate Penalties for non-compliance with the Sunday trading Practice ban are to range between PLN 1,000 and PLN 100,000. WKB It remains to be seen what factors will determine the amount of the penalty. There are suggestions, however, Wierciński, that the amount of the penalty will be dependent on facKwieciński, tors such as turnover or recurrence of the breach. Baehr One of the arguments raised by supporters of restricting trading on Sundays is that in many European countries this rule has been successfully implemented and enjoys social acceptance. It must be noted, however, that bans and restrictions have various scopes, and therefore their respective impact on the economy vary from country to country. In most EU countries people are basically free to do shopping without any limits. The most severe restric-

tions apply in Germany and Austria. In most of the German states, Sundays are trading-free, but there are a few Sundays on which shopping is allowed. Partial restrictions apply in Belgium, France, Greece, the Netherlands and Luxembourg. In France, the issue of Sunday trading is permanently negotiated between employers and trade unions. Particular attention should, however, be brought to the fact that a Sunday trading ban does not basically apply in the countries of Central and Eastern Europe. In Hungary, a Sunday trading ban was in force for only one year and was lifted in April 2017. In countries where restrictions and bans have been introduced, regulations usually take two forms: a trading ban (e.g. Germany and Austria) or Labor Law regulations, which means prohibition on labor (e.g. France). The bill that is being discussed in Poland is based on the concept of a trading ban. It has already divided society, different organizations and institutions associating traders and shopping center operators. The latter state that the introduction of restrictions in the form of prohibition on labor (i.e. a guarantee that employees have two Sundays a month free from work) should suffice, and in recent surveys, shopping center employees have supported this view. Such a solution would make it possible to maintain trade every Sunday. Whether or not the proposals will be accepted by the Parliamentary committee that is working on the bill, and later by the Polish Parliament, is yet to be seen. What may already be assumed is that such a substantial limitation on Sunday trading, as indicated by the current wording of the bill, might result in a significant decrease in the revenues not only of the shopping centers and their tenants, who are already raising the issue claiming the extraordinary change in circumstances and asking their landlords to decrease the amount of rent.

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Bitcoin – Threats and Opportunities When Investing in Cryptocurrencies

ryptocurrencies are a comparatively new kind of payment and numerous countries, including Poland, are yet to develop legal standards that regulate using them in a fully legal manner. In Polish law there are no regulations relevant to cryptographic currencies due to the extremely dynamic development of this technology. In spite of that, the law contains a few normative notions that refer to money in the broad meaning of the word, including, among others, digital currency, legal money tender, money tender, or financial instruments. A cryptocurrency cannot, however, be referred to using any of the above-mentioned terms, and Polish legislation has not yet been adjusted to the reality of trade using such currencies. However, it does not prevent interest in cryptocurrencies – which enjoy a comparatively rapid, but, first and foremost, high interest rate – from increasing. It is possible to purchase and sell them in the equivalent of exchange offices and currency markets. Further, there are special payment platforms which make it possible to purchase goods and services from companies, apart from exchanging real money for virtual currencies from companies that have started using such platforms. However, skeptics emphasize the speculative element of this rather unpredictable market. New threats have also resulted from the lack of possibility to control data flow by third parties, e.g. by banks, and the fact that it is difficult to identify the identity of persons participating in the exchange, which is provided by the decentralized data transmission system. It is based on the records of transactions between various addresses, which are Paweł Michalak stored in so-called blockchain (general accounts). However, it is not theft-resistant. Potential theft involves Legal Counsel, co-founder and associate unauthorized copying of the private key to the portfolio at MKZ Partnerzy law office

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of a user and acquiring an address, and then using it for the transfer of bitcoins to a different address. Payments using digital currencies are made without the involvement of banks, intermediaries and, in many cases, are anonymous. In spite of the intensified personal data protection, and the premise that a cryptocurrency is designed, first and foremost, to make it possible to preserve the anonymity of a user, one of the main threats is connected with ensuring the appropriate level of security of the user’s portfolio (the account in which private access key is stored). These keys are also used for conducting transactions. It should also be remembered that transactions using bitcoins cannot be reversed. In spite of being able to detect the address to which a transfer was made, due to the anonymity, what remains a problem is determining the identity of the thief. The possibility to receive and send virtual money anonymously, without the participation of third parties, means that it becomes impossible to enforce the law. Ipso facto, one of the most significant threats to the attractive anonymity of the system is introducing money from illegal sources into circulation. Organized criminal groups take advantage of the currency generated by means, for example, of selling illegal pharmaceutical products or drugs. A cryptocurrency could be considered the perfect tool for financing terrorist activity. In spite of many, and ever more numerous controversies, they are the future, and their development will be accompanied by work on introducing tools that increase control over them and the security of transactions.

Fuss About Real Estate Taxation

A Małgorzata Dankowska Partner, Head of Real Estate Advisory Department TPA Poland

lot has been happening in taxation recently and we are just about to learn about the final shape of the latest tax changes. How are these developments affecting real estate transactions and the ongoing leasing activity? The prevailing type of commercial properties disposal in Central and Eastern European Countries is usually driven by legal and tax factors. In the countries imposing property transfer taxes the most common type of transaction is usually the acquisition of a real estate company (share deal). This is also enhanced by available participation exemption on capital gains derived on the sale of shares. 1. Enterprise deals There is no participation exemption for share deals in Poland, but over the past two years we have witnessed a turn towards enterprise deals and asset deals. When buying through asset deals the buyer places the property within its current structure and recognizes its value for tax purposes based on the acquisition price, close to the market value. In the not that distant past, asset deals were subject to VAT and thus no tax on civil law transactions was imposed, so the buyer’s concern was limited to securing the bridge financing for VAT. These times are practically over. Now, existing commercial property is deemed an enterprise (or its part) rather than a standalone asset, which means that 2 percent CLAT (civil law activities tax) is imposed and formally payable by the buyer. Economically, this burden is very often split between the parties. Given that, from the purchaser’s perspective, enterprise deals are still quite an attractive form of acquisition, as one does not need to be concerned with hidden reserve and related latent capital gains tax. Moreover, the purchaser has an instrument to cut off the responsibility for the tax liabilities of the holding company. An alternative solution is a “good old” share deal.

3. Implementation of ATAD

Another development results from the Anti-Tax Avoidance Directive and its implementation in the Polish tax system. The main restrictions refer to the limitation on tax deductibility of financing costs, as well as for intra-group intangible services. The limit is benchmarked as a certain percentage of tax EBITDA.

4. VAT split payment

Starting from April 1, 2018, a voluntary VAT split payment is to be implemented. In short, the following tax changes are expected to come to force in Poland next year:

• Two different bank accounts for invoice payments (VAT account, general account) • Opt-in voluntary mechanism • Benefits for choosing VAT split payments • Only B2B sector covered and only bank transfers

The split payment mechanism requires the VAT payer to establish two separate bank accounts i) a company bank account and ii) a VAT bank account. Payment for purchased goods or services may be split between these two accounts if the purchaser decides to opt in to the split payment mechanism; the purchaser would thus pay the value added tax into the VAT account with the remainder net sales value paid to the supplier’s company bank account. The supplier would have very limited access to the VAT account and thus, generally, would be unable to dispose of those funds freely. Moreover, the ability to voluntarily opt in to the split payment mechanism means that it can be used selectively and thus not every invoice will have to be subject to it. Incentives for the taxpayers who decide on the VAT split payment mechanism include the following: i) exemptions from sanctions and from joint and several liability as well as ii) an accelerated (within 25 days) input tax surplus refund deadline. While the funds accumulated on the VAT account will 2. Minimal tax on commercial real estate properties always be the property belonging to the VAT taxpayer, In 2018 there is a new tax burden to appear for those prop- such taxpayers will have very limited access to the funds erty holding companies which do not report sufficient collected in their VAT account(s). Generally, VAT taxpaytaxable income. The so-called minimal tax, deductible ers in Poland will only be able to use their VAT account from the CIT amount, will be imposed monthly at a rate to make transfers to other VAT accounts and to make VAT liability payments to the tax office. of 0.035 percent of the initial value of certain properties.

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BEFORE INTRODUCING ORGANIZATIONAL AND TECHNICAL CHANGES, COMPANIES FIRST NEED TO DO A DETAILED AUDIT TO FIND OUT WHICH ELEMENTS OF THEIR SYSTEMS NEED ADJUSTING 24

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GDPR Implementation Requires Time

ue to the horizontal nature of the provisions of the General Data Protection Regulation (GDPR), every enterprise in Poland will have to comply with increased obligations such as providing an individual with a copy of any personal data that is held by the enterprise, the efficient and swift transfer of such data to another entrepreneur, the removal of the individualâ&#x20AC;&#x2122;s data from resources (including backup copies), the implementation and application of the privacy policy at the design stage, and the preparation of data protection impact assessment or risk analysis.

41.3% 133

In order to prepare for the above, enterprises will need to make a number of coordinated changes in their existing procedures and information security measures (both technical and organizational), across of enterprises started preparing for GDPR in the first half of 2017 IT management and IT infrastructure, to assign specific roles within the organization and to modify the provisions of some agreements that have already been concluded. How should we then deal with the national laws will be amended to implement the new regulation task and how long may it take to make such preparations as described above? According to research conducted before July of this year (by IT WIZ magazine), 26.5 percent of Polish enterprises were planning to start preparations in the second half of 2017, 25.3 percent were waiting for the issuance of national industry regulations, for the collection of personal data, setting out the and 41.3 percent have already started preparations. procedures to respect data subjects’ rights and for Therefore, we believe that the percentage of enterselecting processors that provide sufficient guaranprises adapting their organization to GDPR requiretees for the implementation of adequate technical ments has increased dramatically. We have known and organizational measures for proper and secure about the provisions of a draft statute that will amend data processing. Enterprises will also be required to 133 national laws since September 13, 2017. Based maintain records of their processing activities and on our experience, however, we can say that a numdevelop procedures for notifying competent authoriber of enterprises have not yet started the necessary ties of any situation involving personal data breaches preparations. and assessing any personal data processing impact. Before taking the steps to prepare for the GDPR Importantly, enterprises will also need to procure regulation taking effect, enterprises should carry out ongoing IT assistance in adapting their IT systems to a legal and technical audit, which obviously affects GDPR requirements and in designing and implethe duration of the project as a whole. As part of menting any new tools (e.g. privacy dashboards) that the legal audit, the company should do a detailed are intended i.a. to enable data subjects to exercise inventory and verification of current personal data The date their rights. processing systems used by the enterprise. SignifiThe tasks described above require a case-by-case cantly, an analysis of the needs for implementation of when GDPR becomes approach and cannot be replaced by standard soluGDPR changes should be one of the main elements applicable, tions. As organizations vary from one another, the of such an audit. Furthermore, the legal audit should i.e. May entire project implementation may take around six include i.a. an analysis of personal data categories; 25, 2018, months as a minimum. For this reason, the date when legal bases and purposes of data processing, as well no longer GDPR becomes applicable, i.e. May 25, 2018, no as an examination of the places where personal data seems so distant longer seems so distant. is to be processed; analyses made using the abovementioned operations; and an analysis of situations where processing of personal data is entrusted to other entities. The technical audit, in turn, includes an analysis of the technical safeguards used to protect personal data and an examination of the IT systems of the enterprise with regard to compliance with GDPR. As a consequence, it includes an assessment of the readiness of IT systems to service the new rights of data subjects (e.g. the right to receive copies of data), and the adequacy of the measures taken by the enterprise to ensure compliance with the fundamental Paweł Gruszecki Marcin Huczkowski principles of processing, such as: data minimization, Legal Counselor, Legal Counselor, confidentiality and integrity, as well as assessing the Partner, Head Senior Associate adequacy of safeguards applied (e.g. authentication of New Technologies Kochański Zięba methods, encryption, pseudonymization, dedicated & Telecommunications & Partners security solutions). Practice Kochański Following the audit, enterprises will be required to Zięba & Partners make adjustments such as drafting any amendments to contracts, updating standard information clauses

“

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THE YEAR 2017 MARKS ANOTHER PERIOD OF DYNAMIC GROWTH IN POLAND’S OFFICE MARKET. THIS MOMENTUM IS BOUND TO INCREASE AS THERE IS STILL SPACE FOR NEW INVESTMENT – BUT IT HAS TO BE INNOVATIVE, SUSTAINABLE AND – OF COURSE – MIXED-USE. THE MOST SIGNIFICANT REQUIREMENT, HOWEVER, IS THAT OFFICE EMPLOYEES MUST FEEL AS IF THEY WERE AT HOME, OR AT A MEETING WITH FRIENDS

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n the first half of 2017 another record was broken in Poland’s office market: companies leased a total of 723,000 sqm of office space. Despite the high supply, new facilities don’t wait long to find tenants. Competition is always the driver of change as older office buildings are now undergoing major renovations while new facilities are continuously raising the bar.

INTO THE FUTURE THROUGH THE PAST

The trend which is now gaining popularity is to redevelop post-industrial buildings. In large cities, space is limited and it is hard to acquire empty plots of land in prime locations. However, old facilities can still be renovated. Property redevelopment is not only dictated by pragmatic considerations, though. Restoring old buildings and their grandeur is a unique challenge that

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Office Market Offers New Possibilities

can also produce unique effects. A number of such restoration projects can be mentioned here, like the successful commercial developments of Stary Browar in Poznań or Manufaktura in Łódź – already in operation for a number of years. However, new completions are in the pipeline, such as the Monopolis centre in the former Polmos distillery in Łódź. In November, Capital Park will launch its long-awaited ArtN project: the revitalization of the former Norblin Factory in Warsaw’s Wola district. The project will deliver 64,000 sqm of leasable space, including 40,000 sqm of office space and 24,000 sqm of commercial and entertainment space with restaurants and cafés. This combination is aligned with another important trend on the market: that of mixed-use facilities.

590,000 sqm 205,000 sqm 770,000 sqm

gross amount of office space leased in Warsaw in Q1-Q3

amount of new office space completed in Warsaw in Q1-Q3

amount of office space under construction in Warsaw at the end of Q3

GOING GREEN: HOW TO PROTECT THE ENVIRONMENT – AND PROFITS

MIXED-USE: BENEFITS GREATER THAN THE SIMPLE SUM OF PARTS

A few years ago, mixing residential projects with restaurants or offices with public space seemed a little odd, but developers soon noticed that multi-functionality within one building creates synergies which offer benefits for all of the stakeholders in the project. Now there is no turning back to segmentation: the future is all about mixed-use. Office tenants will not be interested in facilities which don’t offer anywhere to have lunch, shop or relax. Capital Park Group’s original concept, Office Plus, is developed in line with the multifunctional trend and gives the Group’s tenants access to a wide spectrum of shops, services and restaurants as well as an opportunity to use concierge services and a carpooling app. Such solutions are already at the disposal of the office employees at Royal Wilanów and the Eurocentrum Office Complex in Warsaw.

OFFICE SPACE AFTER HOURS

Mixed-use is closely linked to the concepts of afterhours use and the trend of creation of public spaces managed by a private investor. Such spaces must be integrated with the surrounding urban environment, convenient to use in different weather conditions and varied in their offer of passive and active entertainment. They also have to be safe and accessible for each potential user. A good example of such a project is London’s mixeduse development, the Battersea Power Station. The re-development has turned a former power station into a facility combining offices and apartments with shops, leisure, gastronomy and culture, thus producing a vibrant space whose heart beats round the clock. In a similar approach, Capital Park’s Royal Wilanów in Warsaw offers its visitors two squares with a multimedia stage and sports and leisure infrastructure. In summer, the space attracts people through summer movie screenings, live concerts (the Music by Night series) and other regular events.

“

Now there is no turning back to segmentation: the future is all about mixed-use

Green buildings are the future of all development projects. LEED or BREEAM green building certificates don’t only lend prestige, but also guarantee good working conditions for office staff and lower maintenance costs for tenants. Capital Park’s buildings are always designed to meet environmental protection criteria. The Eurocentrum Office Complex is LEED-certified at the highest level (“Platinum”), and Royal Wilanów holds a BREEAM certificate (“Very Good”). The certificates translate into water and electricity savings as well as reduced costs of heating and air conditioning in the buildings. Excellent access to natural light and green common areas improve employee well-being, and above-standard ventilation decreases the likelihood of illness related to poor air quality.

WARSAW CITY?

The fact that these trends are already recognized and applied in Poland proves that the local office space market has matured and is now ready to face new challenges. Moreover, Brexit may turn out to be an opportunity – in particular for the Warsaw market. That is because companies which have so far had their HQs in London’s City will require new locations on the continent, and Warsaw’s office buildings offer high quality combined with relatively low prices. In Poland’s capital city, a new business district of Wola is growing dynamically. According to estimates, Wola will offer 1 million sqm of office space within a few years’ time. It is also likely that the district will become a business hub exerting influence throughout Europe.

Kinga Nowakowska Board Member & COO Capital Park

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LEADERSHIP 2017

s the capital of Poland, Warsaw is the most multilingual city in the country. It is usually the gateway for international companies to the biggest CEE market. One of the reasons for Warsaw’s attractiveness is the impressive level of language skills that the inhabitants of Warsaw can offer. The abundance of language schools in the capital works to the advantage of foreign language learners, who can pick and choose who they are going to entrust with the task of satisfying their thirst for linguistic knowledge. However, having such a wide choice has also its downsides. It may be difficult to identify which school is the most trustworthy. Lured by cut-throat prices, large discounts and aggressive marketing campaigns, students can forget to investigate the school’s achievements, accreditations and quality before they register.

Anita Zajączkowska Key Account Director, TFLS

Leader in Warsaw

TFLS – Success made in Warsaw When it was established in Warsaw 25 years ago, foreign language school TFLS (Testing & Foreign Language Services) employed four teachers and offered 15 language courses. Today it boasts over 5,300 students polishing their foreign language skills under the watchful eye of almost 200 highly qualified teachers in 612 language courses. What makes a great language school? 28

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Since the beginning of its existence, TFLS has been recognized multiple times at local and national level as one of the best language centers. Recently, it ranked first among Warsaw language schools in Warsaw Business Journal’s Book of Lists 2017/2018 ranking. In fact, it has been in the top ten for quite some time already. In 2014 the school was named the best language school by Warsaw daily Warszawska Gazeta. One of the secrets of TFLS’ success is its place among a handful of Warsaw language schools accredited by the Ministry of National Education. This accreditation signifies, among other things, that a given educational center meets high teaching standards, provides proper learning conditions, employs wellqualified teachers and conducts honest advertising campaigns. In other words, it validates the school’s trustworthiness.

in co-operation with Warsaw Business Journal The school is also certified by the British Council and the University of Cambridge ESOL Examinations as an official preparation center for Cambridge English examinations such as First (FCE), Advanced (CAE), Proficiency (CPE) or IELTS. Moreover, it is an authorized examination center for TOLES (Test of Legal English Skills) examinations, as well as TOEIC – Test Of English for International Communication (an English language test designed specifically to measure the everyday English skills of people working in an international environment). It is also an approved center for LCCI International Qualifications, which many Western companies operating in Poland require their employees to obtain. Therefore, the school currently offers a plethora of English language courses ranging from general ones through examination preparation to specialized courses for lawyers, doctors or IT specialists. For those who have already mastered the English language, the school offers a number of other languages, including German, French, Spanish, Italian and even Swedish.

ibility and focus on oral communication – key factors in the foreign language learning process. However, it is not only students who evaluate their cooperation with TFLS. Teachers have been doing it too. On GoldenLine, a popular professional social network, the school has been evaluated by 23 employees, who gave it a high score of 4.9 out of 5 stars and complimented the school on the opportunities for professional development, its friendly atmosphere, good earnings and flexible working hours. Therefore, it is enough to say that the key to TFLS success is not only its attractive pricing or the convenient locations of all of its six learning centers in Warsaw’s inner city, but more importantly, the recognition received from (inter) national institutions, its students and employees.

CERTIFICATIONS & ACCREDITATIONS • The National Ministry of Education • British Council and University of Cambridge ESOL Examinations • EPA – ETS Preferred Associate • Global Legal English • Pearson LCCI IQ - London Chamber of Commerce & Industry International Qualifications

Authorized examination and preparation center for the following: FCE – First Certificate in English CAE – Certificate in Advanced English CPE – Certificate of Proficiency in English IELTS – International English Language

Testing System

TOEIC – Test of English for International Communication TOLES – Test of Legal English Skills L CCI IQ – London Chamber of Commerce & IndustryInternational Qualifications

Opinions matter

Despite schools’ ubiquitous marketing campaigns, word-ofmouth has always been considered the most credible form of advertising. Now, combined with social media, recommendations have become a makeit-or-break-it force for any B2C company. TFLS’ Facebook profile, followed by over 20,000 people, is a testament to its reputation. The school has almost 280 reviews, with an average score of 4.8 out of 5 stars. The school has received an even higher score (4.9 out of 5) on warszawa. naszemiasto.pl, where over 100 opinions have been submitted so far. In general, students praise the school for effective teaching methods, teachers’ professionalism, stimulating classes, flex-

1992/ 1993

2000

2005

2017

No. Students:

–

1,200

3,270

5,323

No. Teachers:

112

198

No. Courses

127

342

612

Rank in Book of Lists

–

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WBJ COVER INTERVIEW | LABOR MARKET

Challenges vs. opportunities

WITH HISTORICALLY LOW UNEMPLOYMENT, EMPLOYERS ARE HARD PRESSED TO FIND THE TALENT THEY NEED. NOT ONLY DO THEY HAVE TO SOURCE INNOVATIVE CANDIDATE-SOURCING TECHNIQUES, BUT THEY SHOULD ALSO PAY MORE ATTENTION TO EMPLOYER BRANDING AND INCREASING EMPLOYEE LOYALTY. WHICH INDUSTRIES ARE FACING THE BIGGEST TALENT SHORTAGE? WILL SALARIES CONTINUE TO INCREASE AT THE CURRENT RATE AND WHICH JOBS ARE HEADED FOR FULL AUTOMATION? WBJ SAT DOWN WITH CHARLES CARNALL, MANAGING DIRECTOR AT HAYS POLAND, TO DISCUSS THE REALITIES OF THE POLISH LABOR MARKET

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INTERVIEW BY BEATA SOCHA

WBJ: Poland is seeing record low unemployment these

days, below 7 percent. Do you think Poland will lose its attractiveness in the eyes of foreign investors if unemployment continues to decrease? Charles Carnall: The stream of investors that are interested in Poland hasn’t slowed down. So it hasn’t had any particular effect. What we have observed is that there’s a growing stream of migrants coming into Poland from the Eastern countries like Ukraine and Belarus. What’s also interesting is that Poland is becoming more attractive for people from Western Europe looking to relocate. Also, Poles who moved across to the UK now see Poland as a country with great opportunities for higher paid work and they’re moving back and resettling with their families. Because of higher unemployment levels in Spain and Portugal, people are also coming to explore opportunities here. But unless they have strong English language skills it’s really hard for them to come and find work here. If their English is good enough, they can find jobs in companies that use English on a daily basis, e.g. in new technologies, IT and engineering.

SHUTTERSTOCK

Which industries are facing the biggest problems when recruiting new people? It’s the highly skilled, highly digitized businesses like IT and engineering. What about shared service centers? The industry is growing very quickly and is constantly facing a talent shortage: people with good language skills, analytical skills etc. The modern business service sector is currently the fastest growing area of economy, and the largest provider of employment. In addition to the most common positions in finance and IT, these often also include jobs related to HR, logistics and data management. The SSC/BPO industry is still growing and we start to observe the shortage of talent pool. Candidates with the knowledge of at least two foreign languages receive many job offers, even though they are not actively looking for a new employer. Candi-

dates can choose from many career opportunities and often increase their financial expectations. The business services sector is still a very attractive place of work for graduates. However, employees with some professional experience usually aspire to find new challenging opportunities outside of the industry. As a result, companies in business services sector face recruitment needs all the time. We’ve also got a shared service center in Kraków, which sources candidates internationally. There are about 20 different languages spoken there. What are the realities of companies recruiting in Poland these days? Has the recruitment process become longer because of the talent shortage? The recruitment period is actually getting shorter. It has to. It’s because we recruit mainly among the younger generation, who want to see instant results. When they apply for a job they want it to happen quickly. We’ve had experience with companies where the recruitment process wasn’t efficient. They were losing candidates because of that. As a company, we have a wide pool of candidates and through our internal capability and partnerships with the likes of Google, Hays is investing actively in data science, machine learning and AI, to help us serve our clients better and faster. How many stages are there? Depending on the level of the vacancy, there are usually two stages, and there are up to four in top-level positions. The initial stage is the CV, although young people expect the recruitment process to be digitized as much as possible. Candidates expect recruitment processes to be short, one- or two-stage only with fast decisions, and to receive constant support from recruiters. The efficiency of recruitment processes is even more important in a candidate market. It is not rare that candidates simultaneously take part in multiple recruitment processes. Therefore, if an employer delays the decision about who to employ, when the final decision is made, it often occurs that the

“When a candidate comes to us looking for a job, we need to give them a good service because one day they will be the client looking for employees

best candidate is no longer available. Employers need to accept and adapt to the expectations of candidates as they simply cannot afford to lose the talent they need, especially in the industries where candidate market is observed. The tables have turned. Yes, they have. It’s now the employer who needs to look after its image. People increasingly search for jobs using social media. They look for companies that have good employer branding, which is becoming incredibly important. What is essential for employers is to build a profile to attract especially the candidates representing the younger generation. We understand at Hays, how important it is to have a good brand. When a candidate comes to us looking for a job, we need to give them a good service because one day they will be the client looking for employees. That said, candidates’ online presence is also very important. As a recruiter our role is to remind people to be careful about their profiles in social media. I haven’t seen that in Poland, but back in the UK when I did recruiting I saw job offers pulled because the employer researched the candidate’s Facebook page and found there content that might be considered unprofessional. There’s a lot of talk about automation as the key driving force in the labor market. Will it bring about a sudden revolution or rather a gradual change?

W B J NOVEMBER/DECEMBER 2017

WBJ COVER INTERVIEW | LABOR MARKET

“The recruitment period is actually getting shorter because we recruit mainly among the younger generation, who want to see instant results It’s a gradual change. Jobs that don’t require people engagement, creativity or ideas can be replaced by automation. Within the office environment we’re seeing data processing and document-processing jobs being automated. These algorithms are being improved all the time. Anywhere you can replace a job digitally, it’s probably a wise investment. Twenty years ago in the automotive industry we saw many manual labor jobs replaced with robots. Automation increases efficiency, which leads to new investments, and in turn creates more employment. It also encourages people to focus on their education because it’s only the most repetitive jobs that will be replaced with automation. What about jobs that involve human contact, like cashiers and call center workers? I think they will be replaced to a degree, but not entirely. Cashier desks have been replaced with telebanking to some extent. In shops we have self-service checkouts. However, there is still a need for a person in a supervisory position; someone who can answer clients’ questions and give advice. Poland has a comparatively low labor force participation rate. What kind of impact does the 500+ social benefit program have on women’s labor participation? Do you think the participation rate will increase or decrease in the coming years?

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There’s this fear of demographic change in Poland. There are fewer working-age people every year because of aging population. In Poland, the percentage of women actively participating in the labor market is still lower than the European average. However, I think that will change over the years. In the EU there’s a program that encourages women to go back to the workplace and it has worked tremendously well, to a point where there are more women working than ever. Research shows that a majority of women are the caregivers in families and this has affected many women returning to work. I think it’s important that men and women share the caregiver duties. It's positive to see that the government is also creating a lot of support for affordable childcare for families. What do you think of the current Polish policy on maternity leave? I think that 12 months is a reasonable amount of time. It’s important that employers help women transition back to work after maternity leave. One of the effective solutions is organizing ‘Keeping in touch’ days. This is put in place so women do not feel out of the loop during leave and the contact with the workplace is still present. This makes the adjustment back to work a lot easier. A lot of employers are also looking into offering part-time jobs and flexible working hours to parents who want to return to work. Reduced working hours are possible. Working from home is another option that is gaining popularity and helps to balance work-related and parental duties. Salary reports reflect the fact that employers are hard pressed to find employees. How quickly are salaries rising? In which industries and at what level are they increasing most rapidly? Salary increase is related to talent shortage. So it is most noticeable among IT specialist, engineers – any business requiring a high level of qualifications. Salaries rose by about 4-5 percent last year, although the

rate is slowing down slightly. I don’t think it’s sustainable to have a 4-5 percent salary increase each year, it becomes unproductive and unprofitable for companies. What we are also seeing among the younger generation is that because of their wide access to job opportunities they are more likely to change jobs for a slightly better salary. Would you say that job loyalty among the younger generation is weaker? It depends on the employer and their employee engagement practices. We focus very much on training and development of our people. If they feel they are being developed, they will want to stay. We provide soft benefits, anything from fresh fruit delivered to the office, a nice working environment, a games console room, or foosball tables to make people feel that they are enjoying their work. Do you think these soft benefits make people more loyal? I think so. They are designed to make people happy. As soon as they stop feeling happy, they have immediate access to plenty of vacancies elsewhere and they will move very quickly. But I think that training and development is key. People want to feel that they are continually learning. High employee turnover is obviously undesirable from the employer’s perspective. What about from the employee’s point of view? Do you think people change jobs too frequently these days? My belief is that the longer you stay with one company, the more you can learn and develop. As mentioned previously, younger people want to work for a well-known brand with good benefits, they also want a good work-life balance and will quickly move jobs if they are unhappy. It’s important that employers offer attractive benefits to source the talent they need and this will help to retain staff. There is also the view that financial pressure to start work is no lon-

ger what it used to be for previous generations, because their parents are wealthier and they continue to support their children well into their twenties. In the meantime, young people have more opportunities to search for the best career path and because of that sometimes start making money later. How is working in Poland different to working in the UK? People in the UK take work a little bit more seriously. Poles are good workers, but they have good worklife balance as well. It is a standard in Poland to employ people on 40-hour-a-week contracts and after work they go home, enjoy their family life and their leisure time. In the UK, and especially in the US, work means everything to people sometimes.

PHOTOGRAPH KEVIN DEMARIA

Do you think there will be pressure to shorten the working week, to say 35 hours like France did? I think Poles are happy the way things are. Shortening the working week to 35 hours hit the French economy quite hard. Investment in France went down for a period of time. What are your forecasts for the labor market in Poland? We’ve seen 20 years of growth, providing employment opportunities, and I don’t see it stopping. According to the Hays Global Skills Index 2017, the Polish economy is expected to grow faster in 2017 than in the previous year, which could increase demand for skilled labor. The challenge will continue to be that candidates will be in short supply. So candidate attraction will remain key, not only nationally, but also internationally. Big investors are still coming to Poland, which will require of employers to source vast numbers of specialized professionals. It’s going to take innovative candidate sourcing techniques to find these people. There is only a finite number of people in the local market, so international sourcing will probably gain even more importance.

W B J NOVEMBER/DECEMBER 2017

WBJ COMMENTARY | LOCAL GOVERNMENT

Local vs. central

ROBERT BIEDROŃ, FORMERLY A PARLAMENTARIAN, LATER MADE A DECISION TO MOVE TO LOCAL GOVERNMENT. HE WAS ELECTED MAYOR OF SŁUPSK, WHERE HE ENJOYS TREMENDOUS SUPPORT FROM THE LOCAL COMMUNITY. HE TALKED TO WBJ ABOUT THE STRENGTHS AND TROUBLES OF LOCAL GOVERNMENT IN POLAND, THE CHALLENGES HE FACES IN SŁUPSK AND ABOUT HIS PLANS FOR THE FUTURE

WBJ:

As the mayor of Słupsk, you are doing a lot for the development of the city – reducing its debt, stimulating its cultural institutions and developing very close relations with its residents, but looking at the general situation of local government, do you think that they have the power to act, which is so badly needed? Robert Biedroń: First of all, we have to remember that the reform of local government was one of the most successful steps taken after 1989 which gave local governments the ability to act independently and the idea was

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that most decisions would move to the lowest level of local administration. That idea must be defended at all times, because unfortunately subsequent governments have restricted the power of local authorities. Today, when I am creating the city’s budget, I see that it depends to a large degree on the decisions made by central government. There are problems of how we can manage subsidies, and funds we receive from the European Union. The tendency of the present ruling party to control local governments is very strong and it is extremely troubling. Many problems

that we could resolve on a local level now depend on the decisions taken in Warsaw. Here’s a simple example: until not too long ago the finances of the Volunteer Fire Department were allocated at a local level. Now they are assigned centrally by the National Fire Brigade. So someone in the central office is now deciding whether the Volunteer Fire Department in Słupsk can buy helmets and other necessary equipment. From 2015, local governments no longer have centers for environmental protection; the new water law excludes us from that system as well. It all goes against the idea of decentralization, and it is harmful to our residents. You have said that you will run for a second term as mayor of Słupsk as an independent candidate. How do you view the moves by the ruling Law and Justice party (PiS) to put only its candidates in local governments while trying to block candidates from other parties from running for mayor, particularly

INTERVIEW BY EWA BONIECKA

those who have already completed two candidacies? PiS has already withdrawn from its project to block the running of candidates who have held office for two terms and I think that was because they were afraid that those long-time mayors, who are highly respected and have a lot of political capital, could in turn move into central politics and become a threat to PiS. But there is no doubt that it is PiS’ intention to make all local governments depend on the ruling party and that candidates elected from PiS would become “political hostages” of that party, unable to act independently in any way. Other candidates would be attacked and presented as villains and the enemy. I will be an independent candidate with my heart on the political left and I am well aware that as long as I publicly criticize PiS for violating the constitution and its other unlawful actions that limit the power of local governments, I will be attacked by PiS during the local elections. Yet it will be the residents of Słupsk that will decide who they want as their mayor. I will present my program for the further development of the city and for the improvement of the quality of life for its residents, regardless of their political preferences. I strongly believe that we have to preserve the decentralization of power. I do not want such a model where the ruling party controls the freedom and the lives of citizens. Słupsk is a very interesting city located 18 km from the sea, with a lot of greenery, parks, the best air quality in Poland and very impressive cultural facilities – three theatres, museums and the biggest collection of Witkacy works in the world. There are also successful businesses like bus producer Scania and shoe manufacturer Gino Rossi, and unemployment has now dropped to 4 percent. So why is the city still suffering from depopulation? It is a large-scale problem across Poland, where all cities are becoming depopulated. It’s the result of the unbalanced development of our country. Globally, there is a differ-

ent kind of development and the deglomeration of central institutions is reviving smaller cities. I would like to see the central Office of Shipping Navigation located in Słupsk, and some other state institutions, which in Europe are often located in smaller and medium-sized cities, such as in Germany and France. There are excellent conditions in the West to work and live in smaller cities and that process also contributes to bringing prestige and employment in those places, attracting visitors and central events. Yet in Poland we still don’t publicize the value of smaller cities, communication to them is often not good, while in Słupsk we are now developing it. Our city has 800 years of history and I am now doing a lot to promote it, renovating neogothic objects, the Pomeranian Docks, the Castle, and exposing modern monuments like the Warsaw Uprising Monument. There have been many prominent figures of many nationalities: Slavs, Prussians, Germans, Poles who have contributed to the development of the city and I want to commemorate them. I believe that historical facts should be exposed and respected and that is what we are doing in Słupsk. How did you deal with the reform of schools and what are your plans for the city? The realization of the task of reforming schools was placed on local governments and I had to spend a lot of money to adapt schools to the new standards. I did not receive any money from the government, which is unfair and was not in line with the minister of education’s declarations. But the children in Słupsk did go to school. Unfortunately, some teachers lost their jobs. What is most important now is to keep an open style of teaching and maintain a high level of education, because from my point of view we should avoid any manipulation in the educational process, which PiS is clearly tempted to do. I want to stress that experts claiming that Polish society is very conservative, especially in smaller communities, is in my view a great simplification. Słupsk is not a conservative city;

I strongly believe that we have to preserve the decentralization of power. I do not want such a model where the ruling party controls the freedom and the lives of citizens

its residents have various preferences, they respect freedom and law, and they value other people and their rights. While respecting traditional values, they are also open, tolerant and pragmatic. When I was an independent member of the parliament from this region I had my office in Słupsk and I visited it every week. I have met a lot of people who talked to me about their various problems, including gender-related issues and I was convinced that I wanted to work here and become a good keeper of the city. And they decided to choose me during the election campaign, respecting my open personality, my private life and my liberal views. I proved that I am an effective mayor and if they decide to choose me again, I will be deeply honored and I will do everything in my power to achieve our goals. I want to further reduce the debt of the city, build its infrastructure, improve city transport, absorb EU funds and take care of the free, democratic and just life of its residents. There’s an American anti-missile base in Redzikowo, situated very close to Słupsk. What impact do you think it will have on the city? We are of course very pleased that the American army will be stationed in our neighborhood, but there are also some restrictions that come with it. We are the only city in Poland which has to consult the US State Department when constructing large buildings for instance. The soldiers on the base are self-sufficient, even the food is delivered to them from the American base in Germany. The base in Redzikowo is a military establishment and is closed to visitors. There is a high fence surrounding it, so Słupsk does not benefit directly from the Redzikowo base. Yet as Słupsk mayor I cooperate with the base’s leaders. The fact that Redzikowo is so close to Słupsk makes people more interested in our security. After all, Poland is a big country and people living in smaller communities, who want decentralized power to act locally, also care about the entire country’s interests and its development.

W B J NOVEMBER/DECEMBER 2017

WBJ COMMENTARY | PAPA JOHN’S

Pizza stories

THERE’S A NEW PLAYER IN THE PIZZA BUSINESS ON THE POLISH MARKET. AND IT’S THE INTERNATIONALLY RECOGNIZED LOUISVILLE-BASED PAPA JOHN’S THAT OVER 33 YEARS SINCE ITS INCEPTION HAS GROWN INTO A 5,000-STRONG RESTAURANT CHAIN PRESENT IN 44 COUNTRIES. WBJ TALKED TO CHRIS WYNNE, CO-OWNER AND GENERAL DIRECTOR OF PJ WESTERN ABOUT THE FIRM’S EXPANSION PLANS 36

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INTERVIEW BY BEATA SOCHA

WBJ:

Why did Papa John’s decide to come to Poland, and why now? Chris Wynne: This is a great time for our expansion into the Polish market, which is still growing. An important factor is also that Poles love pizza – 81 percent of them eat it according to Rynek Gastronomiczny 2017 report. The franchise business in Poland is very popular, particularly among small family businesses. Despite the strong competition on the gastronomy market, the demand for these services will grow dynamically; according to market analysts, more and more Poles prefer to go out or order food deliveries. We are sure that the pizza business in Poland has good potential for growth due to the increasingly busy consumer lifestyle. Home deliveries of pizza are now ordered by approximately 24 percent of Poles and we intend to improve these statistics by showing what “Better Ingredients. Better Pizza” is. Also, we plan to increase clients’ awareness of our online ordering system which makes the pizza delivery process quick and easy. John Schnatter, the founder of Papa John’s, built the company from scratch in the 1980s. What’s the story behind it? Papa John’s is an illustration of the true American dream. The legendary John Schnatter, founder of Papa John’s, made his first pizza in 1984. At the age of 15 he started working at a local pizzeria where he went through all the levels of experience – from washing dishes to baking pizza. He later used his experience in quite unusual circumstances, when it came to saving his father’s business. He sold his beloved car – a Chevrolet Camaro Z28, and with the money he bought used equipment and in the back of the bankrupt bar he began baking pizza using his own recipe. In 1985, he opened Papa John’s first restaurant in Jeffersonville, Indiana. He not only saved his family business but also realized his longstanding dream of creating a pizzeria network where the quality of the products is crucial.

How many restaurants do you expect to launch in the first year? What are your long-term plans for Poland? We plan to actively develop our chain in the territory of Poland for more people to have a chance to taste better pizza. We are going to open at least eight stores next year – first covering the city of Warsaw. Then we would like to move forward into other cities in Poland. During the next two years, we plan to open over 20 stores across the country. The Polish market has great potential, so we don’t want to limit our development plans by announcing the exact number of stores now. What would you say your main competition is here in Poland? Other franchise chains or local pizzerias? Papa John’s is the recognized leader in the pizza category. We now own more than 5,000 stores in 45 countries around the world. There is always competition and it indicates the demand for pizza on the market. Papa John’s invests more than many others in the industry to consistently deliver superior pizza and superior service. We don’t use cheap, hard processed ingredients. Whether it’s our signature sauce, toppings, our original fresh dough or even the box itself, we invest in our ingredients to ensure that we always deliver the finest quality pizza.

There is always competition and it indicates the demand for pizza on the market

The Papa John’s brand is indeed seen as higher quality than other international franchises. Where do you see your brand’s position in the market regarding price and quality? Papa John’s is the recognized leader in the pizza category in terms of quality. According to the 2017 American Customer Satisfaction Index (ACSI), Papa John’s ranked first among QSR-pizza brands in customer satisfaction and product quality. This year’s recognition marks the 16th time out of the last 18 years that the Louisville-based pizza chain has led the pizza industry in overall customer satisfaction. The 16th #1 ACSI ranking is unprecedented in the restaurant category and reinforces Papa John’s category leadership in quality. Additionally, Papa John’s was selected as Pizza Chain Brand of the Year in the 2017 Harris Poll EquiTrend Rankings.

Chris Wynne Co-owner and General Director of PJ Western

W B J NOVEMBER/DECEMBER 2017

WBJ COMMENTARY | SOUTH KOREA

Seoul-Warsaw connections

WBJ TALKED WITH H.E. SUNG-JOO CHOI, AMBASSADOR OF THE REPUBLIC OF KOREA TO POLAND, ABOUT THE PRESENT INTERNATIONAL TENSIONS IN THE REGION CAUSED BY THE COUNTRY’S NEIGHBOR’S NUCLEAR PROGRAM, THE CHANCES OF UNIFYING THE TWO KOREAS, THE ECONOMIC STATUS OF HIS COUNTRY AND BILATERAL RELATIONS BETWEEN KOREA AND POLAND

WBJ: Tensions caused by North Korea’s nuclear program

have been growing over the past months. How has it affected the Republic of Korea and its people? Sung-joo Choi: It is of course a source of concern to our people. We are all Koreans, divided into two countries since Korea was liberated from Japanese colonial rule in 1945. While North Korea is under an oppressive communist regime, we are a democratic republic, where people live in freedom. That freedom has allowed us to achieve rapid economic

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growth. At the moment, there is no dialogue between the two Koreas and the chances of concluding a peace treaty are very slim, even though many Korean people are hoping for that. What’s important for Seoul is that we continue to pursue a peaceful solution to the North Korean nuclear issue and develop our economic potential to prevent any kind of war on the Korean Peninsula. Do you believe, despite the huge differences between the two regimes, that the people of the two

Koreas share the same national identity? Yes. Nevertheless, the two Koreas have been divided for almost 70 years now and most of the generation that had family members in the North has now passed away. If you think about German Unification, Germany still had to go through economic and emotional hardship after the unification even though it had been divided for less than 45 years. The sense of shared national identity might fade as the division continues, eventually making it more difficult to achieve genuine integration of the two Koreas. How do the close military and economic ties with the US influence Korea’s relations with its neighbors? The Alliance with the US is the cornerstone of Korea’s security policy, just like Poland in the context of the NATO Alliance. Moreover, the US is the second largest trading partner and the largest investor in the world from the Korean perspective. Therefore, Korea’s foreign policy aims to build friendly relations with all of its neighbors, based on the robust ROK-US Alliance. The unification of the two Koreas is a challenge that can only be achieved with agreements from all stakeholders, including China, Japan, Russia and the US. In this context, it is important for the Korean government to maintain good relations with all our neighbors. How do you assess the relations between Korea and Poland in general? The bilateral relations between our two countries are developing into a mutually beneficial strategic partnership. The exchanges and cooperation have been growing rapidly in all fields, including the economic, cultural and educational fields since Poland and Korea officially agreed to become strategic partners in 2013. In October 2016, Polish Airline LOT opened up a direct route between the two capital cities of Warsaw and Seoul. The frequency of flights was initially three times a week, but in less than a year it has been increased to five times a

COURTESY OF THE KOREAN CULTURAL CENTER

Korean Festival 2017 in Agrykola Park, Warsaw

INTERVIEW BY EWA BONIECKA

week. I believe this is one of the signs that demonstrate the fast-developing relations between our two countries. What is the volume of our countries’ mutual economic exchange? What are the major exports from the Republic of Korea besides the automotive industry? In 2016, the trade volume between Korea and Poland stood at $34.3 billion (exports: $29.1 billion and imports: $5.4 billion). The FDIs from Korea to Poland have reached a value of $1.8 billion and more than 200 Korean firms are currently operating in Poland. Besides automobiles, Korea exports high-tech goods such as flat panel displays, electrical appliances, automotive parts and mobile phones. Many of these products are used by Korean investors in Poland as intermediate goods to make endproducts, most of which are exported to other EU countries and Russia. What are the major exports from Poland to Korea? What are the possibilities of expanding these? Korea mainly imports ceramics, medical products, car parts, and agricultural products from Poland. In my view, Polish industry has a great deal of potential – not only in the agricultural sector but also in hightech industries such as electromobility and green technology – and can succeed in the Korean market with sufficient governmental support. Recently, the Polish government has been seeking to diversify its trading partners to non-EU countries, especially Asian countries. I think this could be an opportune moment that Polish exporters can exploit.

well, such as food, films, cosmetics (“K-Beauty”), language and Taekwondo. There are currently three King Sejong Institutes (Institutes for teaching Korean language) in Poland, which is the same number as in Germany or France. In order to meet the increasing demand for Korean culture, the Embassy of Korea in Warsaw is organizing diverse events in cooperation with the Korean Cultural Center. For instance, we hold the annual Korea Festival, where Polish people can experience and enjoy all aspects of Korea, including modern and traditional culture. In 2017, more than 15,000 people participated in the 6th Korea Festival, which was held on June 10 in Park Agrykola. What are the prospects for the educational exchange between our two countries? Major Polish and Korean universities have student exchanges and double degree programs and more than 100 Korean students are currently studying in Poland. Furthermore, the Korean Government offers scholarships to Polish students who wish to study in Korea. To facilitate and institutionalize these kinds of exchanges, our two governments are working on cooperation programs in the fields of culture, education, sport and youth.

Korea has a strategic partnership and a Free Trade Agreement with the European Union. How does Poland’s membership in the EU facilitate our economic cooperation? The ROK-EU FTA definitely has a positive impact on our economic cooperation. Since the FTA entered into force in 2011, the trade volume between the EU and Korea has increased by more than 10 percent, In the cultural field, Korean artwhile the global trade volume has ists such as Seung-Jin Cho have increased by only 1 percent. As an EU successfully participated in the Frederyk Chopin Piano Competi- member state, Poland is an attractive destination for Korean investors. tion in Poland. What other fields are developing? Do you think that With its highly skilled labor force and Korean culture and history are well geographical advantage, it is becoming the gateway to the EU market for known in Poland? Korean firms. On November 9 this Korean pop culture is already very year, the Korean Embassy is planning popular among young people in to hold a seminar on Poland-Korea Poland, especially “K-Pop” music. economic cooperation in cooperation The popularity of Korean culture is with Wrocław University of Economspreading to various other fields as

“The two Koreas have been divided for almost 70 years now and most of the generation that had family members in the North has now passed away

ics. At the seminar, the implications of the ROK-EU FTA for PolandKorea economic cooperation will be discussed by experts as one of the major themes. In your opinion, what are the main vehicles of Korea’s impressive economic development? I believe that the national fervor for education and consistent government policy were the key elements in the Miracle on the Han River, which is the term that refers to Korea’s remarkable economic development. Of course, some sacrifices had to be made by certain groups within the country in the course of such fast development. For example, most women had to devote themselves to supporting their families without any compensation or social recognition. These days, the Korean government is focusing on addressing the socioeconomic issues arising from rapid development in order to make the development more sustainable.

H.E. Sung-joo Choi Ambassador of the Republic of Korea to Poland

W B J NOVEMBER/DECEMBER 2017

WAR ON

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CASH

It appears that the future will belong to electronic pulses, rather than clinking coins and rustling banknotes. The convenience and speed of cashless transactions will have its price in the form of increased control and lack of anonymity. The catchy slogan used by officials: “Paperless, cashless Poland” largely stands for complete oversight of an e-citizen living in an e-country and using e-money. Is the era of physical money coming to an end?

F R O M 2 0 1 7,

corporate payments in Poland exceeding PLN 15,000 can be remitted only via a bank account. The limit on cash transactions before 2017 was also 15,000, but EUR and not PLN. Why are state institutions fighting against cash? Officially, the lower limit for cash settlements is a means of fighting tax fraud and money laundering, which contribute to the country’s PLN 50-billion budget hole. The government’s VAT tightening policies will in fact bring in an additional PLN 20 billion in 2017, which is the same as the cost of the 500+ family benefit program. The preliminary draft budget bill estimates 2018 revenues at PLN 355.7 billion, which is PLN 30 billion more than was planned for 2017. According to the Ministry of Finance, the former limit of €15,000 (PLN 65,000) was commonly used to dodge the law, so reducing this amount to PLN 15,000 will play a significant preventive role. What does this mean for the average taxpayer? Will he/she still be able to buy a car in Germany or a secondhand espresso machine in the Netherlands? Will it still be possible to employ a contractor and pay in cash? In many cases it will be much more difficult. Adam Nowacki, a food business entrepreneur, believes that such a limit is far too low. He claims that the purchase of a pallet of oranges or grapes would often produce an invoice exceeding PLN 15,000, and in that industry transactions are undertaken primarily in cash. “After coming back from the fruit wholesale market, I could make a transfer, but that means that the seller would get the money on the next day. I could make such a deal with my traditional suppliers, but I do not buy only from them,” Nowacki added. He also draws attention to the problem of unpaid invoices in Poland. Meanwhile, the law remains untroubled, because entrepreneurs pay taxes on revenue – and revenue is the amount entered on the invoice. If there is an invoice, but a dishonest contractor fails to pay it and there is no income, the tax is still due. Later you can try your luck in the courts to get it back. >>>

BY SERGIUSZ PROKURAT W B J NOVEMBER/DECEMBER 2017

FEATURE / CASHLESS PAYMENTS

amount of money in circulation, while the government is striving to phase cash out. In the meantime the cryptocurrency bitcoin continues to grow in strength, having recently smashed through the $5,000 level. World governments still don’t consider it a threat to traditional legal means of payment. Not yet, at least.

SO WHO BENEFITS?

Nearly every tenth company in Poland operates without using a computer. Meanwhile, the Minister of Digitization, Anna Streżyńska, claimed quite recently that nearly 9,000 Polish towns and villages still have no access to the internet. Of course, lowering the limit for cash payments may result in using payment terminals on a wider scale. But it will not happen overnight. Salespeople say outright that limiting cash in turnover is only to the banks’ advantage. This is because transfers cost money and if you want to make one, you need to keep the cash in the bank, increasing the bank’s cash reserves. Also, banks charge a 0.5 percent fee of the cash deposit value.

OTHERS ARE DOING IT

Poland is by no means the only country to try converting to a cashless society. In recent years, many other EU countries also introduced lower limits on cash transactions, which resulted in reducing the shadow economy by 1-2 percentage points of GDP. Regulations lowering the maximum limits for cash payments have been introduced in France (€3,000), Portugal (€1,000), Hungary (€5,000), Spain (€2,500), Bulgaria (€5,000) and Greece (€1,000). Sweden is one of the leaders on the way to a cashless society. According to the Royal Institute of Technology in Stockholm, 80 percent of transactions in Sweden are carried out electronically. By 2030 the country

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intends to completely abandon using traditional money. Meanwhile, the website of the Ministry of Development contains a document on “increasing cashless turnover,” which states that the share of cash transactions across Poland should fall from 21.5 percent to 15 percent within five years. Somewhat ironically, Poland is also about to introduce a PLN 500 banknote. Although the new banknotes are to appear in circulation by the end of 2017, politicians are still trying to convince the National Bank of Poland (NBP) to give up on this idea. The clash between the government and the NBP is not incidental as they have somewhat divergent objectives. The NBP cares about the

There is another reason why governments are fighting against cash – and that’s because a vast number of countries are facing a serious debt problem. Withdrawing cash from circulation removes a major obstacle to negative rate deposits. “We need to become a cashless society pretty quickly, as it is the only way to enter an area of negative interest rates,” said one of the bankers present at the Davos Forum. Right now, if rates on deposits fall below zero, people will simply withdraw their money and keep it under their mattresses. Once they are no longer able to, they will have to either invest their savings in more profitable (often riskier) instruments, or watch their capital slowly shrink. Meanwhile governments would be able to go into debt at zero cost. In a world of negative interest rates, public debt would be systematically reduced. Either way, the wheel keeps turning.

SHUTTERSTOCK

NO CASH – NO DEBT

What do Poles think about cash?

Cashless payments are the method of choice mainly for men (60 percent) and for people aged 35-44 (62 percent). Groups that prefer cash are people aged 18-24 (37 percent) and residents of rural areas (34 percent) according to a recent study conducted for eService. “Most Poles chose cashless payments, while cash is preferred only for payments below PLN 10,” said Joanna Seklecka, head of the electronic payment services center at eService. Here are some interesting cash-related stats.

56%

of Poles prefer to pay without using cash

17%

of Poles don’t have a bank account

of Poles claim they would be able to live without cash

40%

of Poles do not carry cash around

31%

of card payments are contactless

of those who have bank accounts never use electronic banking

24%

64.4%

PLN 18,500,000,000 is the cost that using cash generates in the Polish economy, roughly 1 percent of GDP

38,000,000

is how many payment cards Poles have

30,000,000

is the number of payment cards that allow for contactless payment

SOURCE: ESERVICE, NBP

5,000,000 Poles pay with their smartphone

PLN 4,500,000,000

A FINE-TOOTH COMB

The Finance Ministry has been rolling out a number of policies that are aimed at curbing financial fraud and closing the VAT gap. Another such measure is the Standard Audit File (in Polish abbreviated to JPK), introduced for large companies in 2017 and for micro-companies in 2018. It is an electronic file containing all economic operations performed by a company in a specific period of time. It is sent each month to the Tax Office, allowing tax authorities to conduct an easy and cost-efficient analysis of accounts, bank statements, inventories, VAT purchases and sales records, VAT invoices, revenue and expense ledger and revenue records. The Polish government is in the process of building an algorithm which will detect any potential fraud.

is the annual total value of internet transfers

W B J NOVEMBER/DECEMBER 2017

WBJ FEATURE | RETAIL

A walk through Gdańsk airport

STEP THROUGH THE SECURITY CHECK AND YOU’LL BE SWEPT OFF YOUR FEET BY AELIA DUTY FREE’S METICULOUSLY DESIGNED OFFER OF REGIONAL SPECIALTIES AND TOP WORLD BRANDS

he first walk-through multistore in Poland opened in November 2017 at the Lech Wałęsa Airport in Gdańsk. Aelia Duty Free, located right behind the security check area, encompasses 1,200 sqm. Its design follows “The Art of Gift” concept, with gift ideas prominently displayed throughout the store. To better personalize their presents, clients can choose from a variety of elegant gift boxes suitable for different types of gifts: cosmetics, confectionery, wines and Champagnes. The store has been designed to convey Gdańsk’s unique atmosphere, with many architectural motifs, beautifully adorned furniture and fixtures matching the region’s feel and color palette featured throughout the store. Screens displayed both inside and outside the store show the seaside’s breathtaking scenery at its best.

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SENSE OF PLACE

In the Sense of Place area, located just outside security checks, the store offers Polish specialties: a wide selection of regional tastes, including cold cuts, breads, fish (and caviar) as well as cheeses, plus traditional Polish pierogi. Leading Polish chocolate and confectionery brands and a big selection of spirits are complemented by thousands of amber jewelry items at the S&A boutique. Clients shopping for regional craftwork can find hand painted porcelain cups and gifts. The beauty area showcases leading Polish cosmetics and perfume brands, including Phenomee, Clochee, ZEW, dr Irena Eris, Bohoboco and Inglot. Naturally, the offer also includes top international brands such as Chanel, Dior and Armani. The Only At The Airport section features sets of miniatures designed especially for travelers. Aelia Duty Free encompasses a TOUS boutique with a wide selection of accessories, while Swatch and C. Klein complement the multistore’s watches and jewelry offer. The multistore also offers electronics, toys and gadgets that make travelling easier and more enjoyable. To make shopping at Aelia Duty Free even more convenient, clients can use the Click&Collect service, which allows them to purchase items online and collect them at a special checkout without having to wait in line.

EXHIBITION

EXHIBITION & CONFERENCE

2017

W B J NOVEMBER/DECEMBER 2017

November 23rd-24th 2017 The Westin Warsaw Hotel

BLOCKCHAIN DIGITAL WORLD aI & MACHINE LEARNING FinTech & InsurTech Congress FinTech & InsurTech Digital Congress

.com

TECH i n s i g h t s

Written By

BEATA SOCHA

SHUTTERSTOCK

HOW TO MILK THE BIG DATA COW?

Every marketer wishes they knew more about their clients. Data analytics in marketing is no longer just an added value or competitive advantage. It is becoming a do-or-die thing for all B2C companies in all of their marketing efforts. What are the current trends in monetizing big data? >>> W B J NOVEMBER/DECEMBER 2017

TECH

nline advertising spending has been growing for years. In Poland it increased by 7.7 percent y/y in the first six months of 2017, reaching PLN 1.858 billion, according to a study conducted by PwC for industry association IAB Polska. “You can clearly see that online advertising spending has been growing the quickest in video, social media and classifieds. Ads sold in the Programmatic model are also recording strong growth,” Włodzimierz Schmidt, CEO of IAB Polska told PAP. The industries with the highest share in online advertising market were retail (18 percent), automotive (11 percent), telecoms (8 percent), finance (7 percent) and foodstuffs (7 percent). “The list of industries with the highest online ad budgets doesn’t change much. There are no huge moves. It’s more about constant trends, and changes are caused by the seasonal nature of marketing and sales activity,” Schmidt added. What is changing, however, is how the effectiveness of online ads will be assessed. Recently, IAB Polska introduced a new viewability standard for internet ads, where “an ad is considered as viewed if at least 50 percent of its pixels are displayed for at least one second for a graphic ad and for two seconds for video ads,” Schmidt explained.

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I KNOW WHAT YOU’RE DOING Given how competitive the online ad market is becoming, it comes as no surprise that 81 percent of companies already declare that they employ user data in their marketing activities, according to a recent report titled “Data-driven marketing benchmarks for success” prepared by Ascend2 and Zoominfo. Big data marketing ranges from profiling clients in online advertising, through direct marketing and sales calls, to the use of social media in marketing. All of these activities are aimed at driving up revenue, and all of them need to be used wisely. There is no doubt that companies already have tons of data at their disposal. The abundance of information is one thing, but learning how to put all the pieces of the puzzle together is what really matters. “The key to success is not only an analysis of relevant data sets, but above all, an appropriate combination of its own data with external data,” said Szymon Szmigiel, Head of Commercial Sales at TogetherData. Collating data from multiple sources allows companies to implement new marketing strategies, analyze customers’ behavior and find out what their interests, preferences and purchase intentions are. “We’ve noticed that companies are beginning to invest in their own Data Management Platforms (DMP). These platforms allow them to integrate data from multiple sources – websites, media activities, CRM, sales systems. A lot of the data from these sources can also be used in advertising,” Szmigiel said. According to IAB Europe’s “The economic value of data-driven marketing” report, 86 percent of behavioral data is already used in programmatic advertising. Call centers are another example of where behavioral data analytics can become a huge help. Who isn’t annoyed by cold calls that catch you in the middle of a meeting or when you’re trying to write an important and compelling email. But there are ways to know if your potential client has the time to take your call. You can check when they are idle or looking at funny memes websites. That’s when you call them. This simple trick managed to get the response rate up by 8 percentage points for the call center in question. If your call center agent makes, say, 200 calls a day, it could generate 16 more “leads” every day.

Scouring the web

100 MILLISECONDS IS NOT A LOT OF TIME, YET THAT IS HOW LONG AN AUCTION FOR AN ADVERTISING SPOT TAKES. WITH BIG DATA ANALYTICS, ADVERTISERS NO LONGER HAVE TO CHOOSE RANDOMLY WHICH SPOTS TO BID FOR. AND AS MANY EXAMPLES SHOW, INTUITION CAN BE FLAWED: IF YOU WANT TO SELL MEN'S DEODORANT, DON’T ADVERTISE TO A SPORTS FAN BUT TO HIS WIFE. WBJ SAT DOWN WITH PIOTR PRAJSNAR, CEO OF CLOUD TECHNOLOGIES, TO TALK ABOUT THE REAL LIFE APPLICATIONS AND THE SURPRISING EFFECTS OF BIG DATA IN ADVERTISING Interview by Beata Socha

WBJ: Your company claims to analyze over nine

billion internet accounts on a regular basis. How can this huge amount of data be monetized? Piotr Prajsnar: We got into Big Data after years of experience in data mining and internet advertising, an industry that absorbs new technologies like a sponge. AdTech (Advertising Tech) has been around for over 10 years and in 2010 AdTech firms went through a revolution, by means of so-called Programmatic Buying, an automated auctioning system for internet advertising. The way internet advertising now works is as follows: an internet user opens a website and at that moment the browser contacts an auction system, where an auction between different advertisers takes place. The winner of the auction is the one who is willing to pay

B I G DATA

any way. If you’ve already purchased a car, it’s too late; the bank already knows that the client could afford it. It would have been better to know about his purchasing plans sooner. If they had known, they might have offered him leasing options etc. Banks don’t want to call people up and offer their products randomly. Similarly, you can help call Apart from advertising, what centers get through to potential clients. If a call center else are you using Big Data calls you randomly, they will analytics for? most likely irritate you. But About 30 percent of our we managed to use internet business comes from data consulting. According to Gart- data to check when a client ner, by 2020 approximately 80 is viewing popular pastime percent of business processes websites. Because when they are browsing them, it means will be automated. We are integrating with companies’ they have nothing better to CRM systems and help com- do. That’s when you should panies improve their cross-sell call them. and up-sell, as well as lower the client exit rate. Did that have measurable effects? What kind of companies use Absolutely. The percentage of Big Data in their business? people who took the call inFor instance banks, which can creased by 8 percentage points use Big Data to segment their on average. clients better. Banks know what we buy; however, usually Still, many entrepreneurs and managers wonder whethGoogle is planning to incor- too late to benefit from it in How much do you know er the insights they get from about the users you analyze? porate an inbuilt adblocker big data are in any way better First of all, we analyze devices, into its next version of than intuition and experinot people. Actual users are all Chrome. How will that affect ence. Why should they pay anonymous. We analyze inter- the advertising market? extra for it? In the long term adblockers net traffic on more than nine Intuition is good, but we use could eradicate free content billion devices. We collect data mining to reach levels on the internet. Poland is the the data and then we analyze that cannot be accessed by leader in adblock activity. it. We create profiles, e.g. of intuition, to discover entirely Nearly 50 percent of website people who visit automotive new things. For instance, an views is generated by people websites. Before Big Data airline’s media planner, in one using adblockers. In Poland analytics, advertisers had to early advertising campaign target their clients by advertis- advertising spend per user is aided by Big Data, wanted nearly PLN 150 a year. If ading on themed portals, so a to increase ticket sales to vertising becomes ineffective car retailer would advertise Italy and they decided to because all ads are blocked, on a car portal. But knowing target the airline’s advertising users will have to pay for the which car brands the user campaign at businesspeople likes makes the ads way more content themselves. and people who are interested The advertising market saw effective. And we can provide the most for the banner at that that information. Still, we are not an intelmoment and on that website. The entire auction takes about ligence agency and we do not record the data: we 100 milliseconds. usually “forget” it after 30 So how do advertisers decide days. Internet information is very transitory, anyway. The which websites and at what times they want to advertise? lifetime of cookie files, which That is where we come in. We we analyze, is about a week. After a month only a tenth of analyze over nine billion internet accounts and we gather them “survive.” data that makes advertising Is data from social media much more effective. We are more useful than scanning a ratings agency for clients internet activity? of sorts. We can tell advertisI wouldn’t say it’s more useers which user is looking for ful. Our data covers a much a laptop and how much a given user is willing to spend. higher percentage of internet users. There are few places we A banner displayed for that person is worth much more to don’t have access to. Social a laptop retailer than to, say, a media, like Facebook and shoe store. Advertisers would LinkedIn, protect their data. They may provide more rather spend more on adver“calorific” data, but they only tising but in a more efficient way, reaching people who are cover a portion of the market. For instance, there are some actually planning to spend 25 million internet users in money on products that the advertiser offers. By providing Poland. Meanwhile, there are over 10 million Facebook information about internet users, we bring order to the in- accounts in Poland, and only ternet advertising ecosystem, some of them are active. You which also makes advertising have no intel on the rest of the market. far less annoying.

the news of Google’s plans to have a built-in adblocker in its browser as a clear sign of monopolizing the market. What Facebook and Google are doing is strengthening their already monopolistic positions. The Interactive Advertising Bureau (IAB) is monitoring the situation and legal questions have already been raised.

50% of website views in Poland is generated by people using adblockers

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TECH in travelling. That’s what his intuition told him was the right way. However, it turned out that the people who were the No. 1 client group at that specific time period were people interested in interior design. Perhaps it was because Tuscany was a source of inspiration for them, perhaps the destination correlated with their wealth. We don’t know why the campaign worked and we don’t need to know. The media planner was good but the machine was better. There’s another example: a popular men’s deodorant brand decided to target men interested in sports. Our analysis showed that it wasn’t men but women who most frequently bought that deodorant. The guy interested in sports has a beer in one hand and the remote in the other, while his wife – in an act of despair – would buy him the deodorant. The Big Data market is growing at a much faster pace than the entire IT industry. Is this growth supported by actual increases in productivity of companies using the technology? We are indeed growing much faster than the average for the market. That’s because the saturation of Big Data solutions in the market is still very low – it’s still a very fresh market. Even if we can improve efficiency by a few percentage points, it brings a lot of extra profit and savings. In internet advertising, using Big Data can increase a campaign’s effectiveness two or three-fold. Are Polish companies open to Big Data? It depends. Innovation is not always embraced easily and

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many firms still consider it risky. The Polish economy has many growth drivers. In more developed economies being more competitive is much more important. Our economy still has a way to go before it reaches that stage. It’s like with Maslow’s hierarchy of needs: Big Data is right there at the top, and we are still somewhere in the middle. Highly advanced technological solutions come later. Is that why the majority of your revenue comes from abroad? Yes, some 80 percent of our revenue comes from markets outside Poland. Our clients are media houses, advertising agencies and affiliation networks. In our data-consulting segment we work with large B2C businesses: telecoms, banks, insurers and multimedia companies.

Piotr Prajsnar, CEO of Cloud Technologies

LIKES, CLICKS AND AMBASSADORS Social media undoubtedly is a cornucopia of information for marketers. Take Facebook for instance, where every minute users post 510,000 comments, update their statuses 293,000 times, and upload 136,000 photos (source: The Social Skinny). It comes as no surprise that Facebook users alone generate some 100 TB of data each day. Twitter users send 6,000 tweets every minute (data for 2016), which is still less than a half of the traffic recorded in the service’s peak month of August 2014. According to different studies, 42-50 percent of marketers already considered social media critical or very important to their business. This means that social media is definitely crowded – you can bet that most of your competitors are already there. Marketers are therefore being taught not to overload their social media with content but to use them wisely. For instance, Facebook sees the most traffic mid-week between 1 and 3 pm, according to Bit.ly blog, but posts published later in the day, at around 7 pm, usually garner more clicks. It’s a trade-off between reaching a wider audience and getting through to fewer people but keeping them more engaged. This information alone can be useful for marketers but making your posts stand out from the crowd of other content is becoming a real challenge. And companies do want to get their money’s worth. Imagine you are about to publish a post about your latest winter collection. Based on your previous track record you know that posts published around 6 pm have been the most successful at getting clicks. You also know that the most successful posts were those that contained between four and six short sentences. There, you have a very general recipe. But if you want to tailor your social media marketing even more, you can go one step further and use predictive analytics to foresee how successful your social media communication will be before it is even posted. “You can predict which words make your posts more visible, for instance. We also check for sentence length and time when the post is published,” said Łukasz

B I G DATA

WHAT’S A ZETTABYTE? We’ve gotten used to talking

about terabytes. To those who still live in the 2000s: terabytes came after gigabytes. When we run out of disc space on our computers, we go out and buy an external USB drive, which currently offer a capacity of some 1-4 TB (terabytes) of data. Then we started talking about petabytes and some felt a bit confused. Bad news: We’re already past the petabyte stage. Ninety percent of the data in the world today has been created over the course of the last two years alone. Our current daily output of data is roughly 2.5 quintillion bytes = 2.5 exabytes a day = 2,500 petabytes = 2,500,000 terabytes. That’s about the same as a million external USB drives. A day!

STAT SOURCE: WIKIPEDIA, IMAGES SHUTTERSTOCK

Estimates of the diameter of the Milky Way Galaxy are between 0.9 and 1.7 zettametres (Zm).

Trębicki, head of Social Media Analytics at Valkea, which recently launched its new online analytics tool called Viewell. Big data algorithms can also help you identify trendsetters among your target group: people who are followed the most by your target client base and whose likes generate the most traffic. “You could approach such individuals and make them ambassadors of your brand, for instance,” said Trębicki. Whether you sell shoes, cars or financial services, if you know your client’s daily routine, his or her favorite pastimes and favorite websites, you can definitely reach them more effectively and increase your visibility. The pressure to increase efficiency of your marketing efforts, be it online ads, sales calls or social media activity, will almost definitely continue to grow in the future.

zetta

1,000,000,000,000,000,000,000

1021

exa

1,000,000,000,000,000,000

1018

peta

1,000,000,000,000,000

1015

tera

1,000,000,000,000

1012

giga

1,000,000,000

109

mega

1,000,000

106

kilo

1,000

103

The volume of seawater in the Earth’s oceans is approximately 1.369 zettaliters (Zl).

The mass of Earth’s entire atmosphere is approximately 5 zettagrams (Zg).

HOW MUCH DATA IS BIG DATA? One of the most commonly used definitions of big data encompasses anything that is calculated in petabytes. According to McKinsey, big data refers to datasets that exceed the capacity of standard data storage, analysis and management. In addition to that, IBM also emphasizes that big data requires that the data come from diverse sources and be generated in real-time (or close to real-time).

W B J NOVEMBER/DECEMBER 2017

EVENTS

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Interview with Mariusz Frąckiewicz and Marta Wybrańska of Avestus Real Estate

Co-working space in office buildings

Mixed-use GHELAMCO with €221-mln loan for huge Warsaw project Developer Ghelamco Poland has secured €221 million in bank financing for its ongoing mixed-use project in the Polish capital – The Warsaw HUB, which is the biggest scheme in the company’s history. The loan has been granted by a consortium of five banks: Bank Zachodni WBK, Pekao, PKO Bank Polski, Raiffeisen Bank Polska and Bank BGŻ BNP Paribas. Located in the quickly developing Rondo Daszyńskiego area of the Wola district of Warsaw and scheduled to be completed in early 2020, the 113,000-sqm project will comprise offices, a conference center, three- and four-star hotels, and retail and service areas. The complex will consist of three connected buildings – an 86-meter hotel building and two 130-meter office towers. Ghelamco Poland will soon be able to announce the first lease agreements in the scheme, said commercial and business development director Jarosław Zagórski.

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Mixed-use (continued)

CEDET scheme in Warsaw topped out Investor Immobel Poland and general contractor Korporacja Budowlana Doraco have held a topping-out ceremony at the construction site of the CEDET mixed-use project in downtown Warsaw. The scheme involves the modernization and extension of a former department store building and will comprise a total of approximately 22,000 sqm of class A+ office and retail space. It is expected to be completed towards the end of Q1 or at the beginning of Q2 2018. The development has been BREEAM pre-certified at the “Excellent” level. and ul. Świętokrzyska, just next to the entrance to the Świętokrzyska stop of the city’s two subway lines with which it will be connected, is scheduled to be completed in the second quarter of next year. Korporacja Budowlana Doraco is acting as the general contractor. Centrum Marszałkowska will comprise a total of 16,500 sqm of space, including 3,400 sqm of retail area. The office space in the investment has already been over 40 percent leased out, said Michał Skotnicki, the management board president at BBI Development.

CAPITAL PARK to launch ArtN investment in Warsaw CENTRUM MARSZAŁKOWSKA in Warsaw reaches maximum height Investors BBI Development and Warszawska Spółdzielnia Spożywców Społem Śródmieście have held a topping-out ceremony at the construction site of their Centrum Marszałkowska office and retail project in downtown Warsaw. The scheme, which is located at the intersection of ul. Marszałkowska

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Developer and investor Capital Park has revealed that construction work on its flagship Warsaw project – ArtN in the Wola district – will get underway in November. The company hopes to soon select the general contractor and secure financing for the mixed-use scheme. The ArtN development will involve the revitalization of a major post-industrial site located on Warsaw’s ul. Żelazna where a total of some 65,000 sqm of office and retail space will be built. The retail area in the project has already been 40 percent leased out. The ArtN scheme, whose book value amounts to PLN 285 million, is scheduled to be completed in the first half of 2019.

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Investment market TRIUVA acquires Green Day in Wrocław for €48.5 mln Real estate investment manager TRIUVA has acquired the Green Day office building in downtown Wrocław from a Luxembourg fund advised by GLL Real Estate Partners and Investec Bank for approximately €48.5 million. Completed in 2014 by developer Skanska Property Poland, the building comprises 16,000 sqm of space and is LEED-certified at the “Gold” level. It is currently fully leased out with Credit Suisse as the anchor tenant. “We strongly believe in Poland in general and in Wrocław as one of the main economic centers of the country. Many international companies from throughout Europe are choosing Wrocław as a location for complex outsourcing services requiring a high level of know-how. Therefore, highquality office space in the city is currently in short supply. We are convinced that central locations in Wrocław with excellent transport connections and high quality facilities will, over the long term, maintain their pre-eminent position in the market and generate attractive returns,” said Jörg Laue, director of investment management at TRIUVA.

GHELAMCO sells part of Warsaw Spire complex for €100 mln Developer Ghelamco has sold building “B” in its flagship Warsaw Spire office complex in the Polish capital to Austrian real estate company CA Immo for approximately €100 million. The building comprises 21,600 sqm of GLA and is anchored by Frontex, the European Union’s border and coast guard agency. Completed in 2015, the building is part of a complex that is located in the quickly developing Rondo Daszyńskiego area of the Wola district of Warsaw and offers a total of around 100,000 sqm of office space in three buildings.

61% share of regional cities in the total commercial property investment volume in Poland in H1 2017 Source: Colliers International, Deloitte Legal

Logistics PROLOGIS completes second Stryków BTS project for Arvato

PANATTONI signs first tenant for Kielce logistics park

Developer Prologis has finished construction work on an 18,100-sqm built-to-suit project for outsourcing company Arvato Polska. The project is located within the Prologis Park Stryków logistics park in central Poland. It is the second BTS scheme to have been completed by Prologis for the client in this location. Located within one kilometer of the A1/A2 motorway junction, Prologis Park Stryków currently totals 40,400 sqm of space. It is expected to comprise 78,800 sqm when fully developed.

Textile recycling company VIVE Group has leased 26,200 sqm of space at the Panattoni Park Kielce logistics park, which developer Panattoni Europe plans to build near Kielce in south-eastern Poland. Axi Immo advised the tenant during the lease negotiations. Construction work on the building for VIVE Group is expected to launch at the turn of the year and finish in August 2018. When fully developed, Panattoni Park Kielce will consist of two buildings and comprise a total of more than 43,000 sqm of space.

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Office TÉTRIS fits out new CCC offices in Warsaw The new Warsaw office of footwear retailer CCC has recently opened in the Metropolitan building in the downtown of the city. Fit-out company Tétris designed and delivered the 2,000-sqm premises with In Design studio architects having been responsible for the creative concept. The project took about three months to complete and was done in the Design & Build model.

Another ENTERPRISE PARK building ready LC CORP unveils Wola Retro in Warsaw Developer LC Corp has revealed the details of its planned Wola Retro office project in the Polish capital. Located on ul. Skierniewicka in the Wola district of the city, the scheme will involve the refurbishment of an existing, pre-war building featuring four floors and the development of two new buildings featuring nine and fourteen floors. In total, the investment will comprise 24,500 sqm of class-A leasable space. Construction company. The scheme is scheduled to be completed in Q3 2019.

November 23rd-24th 2017 The Westin Warsaw Hotel

Developer Avestus Real Estate has finished construction work on building “E” in the Enterprise Park office complex in Kraków. The building offers more than 15,500 sqm of leasable space and is almost fully commercialized with Aon being the anchor tenant. Until now, Enterprise Park consisted of four buildings comprising a total of almost 36,000 sqm of space. Avestus Real Estate is also finishing work on building “F” of the complex that will deliver 10,900 sqm and which is scheduled to be completed later this year. Both building “E” and building “F” are expected to obtain BREEAM certificates for energy efficiency and environmental performance. The entire Enterprise Park complex is jointly owned by Avestus Real Estate and Tristan Capital Partners.

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Retail DEKADA Skierniewice mall to be extended The municipal authorities of Skierniewice in central Poland earlier this year adopted a new zoning plan which allows for the extension of the Dekada convenience shopping center in the city. Developer Dekada plans to develop an additional 8,250 sqm of retail area and a two-floor underground parking lot with spaces for approximately 280 vehicles in the location. “We are planning to launch construction work in the second half of 2018 and to finish it at the beginning of 2020,” said Aleksander Walczak, the management board president at Dekada. Opened in 2011, the Dekada shopping center today comprises 3,400 sqm of GLA. The mall is being commercialized by BOIG Property Consulting. There are currently 11 Dekada-branded shopping centers across Poland with Dekada working on new schemes in locations including Nysa, Konin and Mińsk Mazowiecki.

SERENADA mall in Kraków opens The Serenada shopping center, which developer Mayland Real Estate has completed in Kraków, opened for business on October 27. The mall comprises 42,000 sqm of space and houses 160 stores and points of service with 70 percent of its tenants representing the fashion sector. The value of the project is estimated at €140 million. Mayland Real Estate has been present in Poland since 1995 and has to date developed several other retail schemes across the country, including Karolinka in Opole, Pogoria in Dąbrowa Górnicza, Jantar in Słupsk and Riviera in Gdynia. The company is currently preparing a number of new developments, among them the extension of the CH Ster shopping center in Szczecin.

135,000 sqm

the amount of retail space completed in Poland in Q3 Source: Colliers International

Residential Residential market booming, demand for luxury units on the rise – REAS The residential sector in Poland continued to put up a very strong performance in the third quarter of this year with a total of approximately 17,500 new apartments having been sold in the six largest markets in the country – Warsaw, Kraków, Wrocław, the Tri-City, Poznań and Łódź – in the period according to the latest report by Reas. Roughly the same level of demand was recorded in Q2. During the last four quarters, a combined almost 72,000 new housing units were offloaded by developers in the six markets in question, which marks a 23.3 percent increase y/y. Interestingly, the market has been defined by an even balance between supply and demand – in both Q2 and Q3 2017, developers active in the six cities and agglomerations analyzed by Reas put around 17,500 new apartments up for sale. The average price of the new apartments offered in Q3

increased by six percent q/q, the Reas study said. This is largely because of the growing demand for and supply of apartments in the “upper middle” and “high-end” segments of the market, which are typically priced more than PLN 17,000 per sqm. According to Reas, a total of over 470 such apartments were sold in Warsaw, Kraków, Wrocław, the Tri-city and Poznań in the first three quarters of 2017, which is more than in the entire year 2016. The combined value of the transactions amounted to PLN 222 million. Those buying high-end apartments in Warsaw had to pay an average of PLN 31,000 per sqm. Every third luxury apartment sold in downtown Warsaw in Q1-Q3 was in the Złota 44 skyscraper. “For the second year running, this investment by BBI Development and Amstar is the sales leader in luxury apartments,” said Paweł Sztejter, a partner at Reas. Mennica Residence in Warsaw’s Wola district was the bestselling project in the “upper middle” segment.

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LOKALE IMMOBILIA | RETAIL

A host of foreign retail brands have opened their stores in Poland this year. Real estate experts argue that the country remains an attractive location for international retailers and could yet accommodate a broader range of tenants BY ADAM ZDRODOWSKI

he retail property market in Poland may be growing increasingly saturated, but due to its considerable size and the growing purchasing power of Poles it continues to be a magnet for expanding foreign brands. This year’s openings of several new large-scale shopping centers in the country were accompanied by the Polish debuts of a number of international retailers. For their part, some of the dominant malls completed in Poland in previous years welcomed market entrants too.

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DEBUTS GALORE

According to Colliers International data, over 25 foreign retail brands have debuted in Poland since the beginning of this year. A similar annual number of new market entries has been recorded in the country in the last few years. “The difficult economic situation in some of the countries of Western and Northern Europe, as well as in Ukraine, provides the motivation to look for new markets,” explained Małgorzata Kobziakowska, associate director in the retail agency of Colliers International. With its growing economy, low inflation, record-low unemployment rate and rising salaries, Poland is an attractive and safe choice for expanding retailers. Additionally, the recent opening of new malls in Warsaw and Wrocław offered brands prime debut opportunities. Warsaw’s Galeria Północna, which opened for business in September, houses stores of British retailer Hamleys (toys) and Russia’s Zarina and Love Republic (fashion). Another brand from the same Russian owner (Melon Fashion Group) –

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MANY BRAND-NEW STORES

befree –debuted in Poznań’s Posnania. Wrocław’s Wroclavia mall, opened for business last month, has attracted brands such as Ukraine’s Goldi and Spain’s Sfera, both representing the fashion sector. The shopping center also houses Spanish home textiles retailer La Mallorquina. A number of foreign fashion brands have entered older prime shopping centers across Poland. These include America’s Victoria’s Secret and Romania’s Nissa (Arkadia in Warsaw), Denmark’s Freya (Stary Browar in Poznań) and Italy’s Elisabetta Franchi (Klif in Warsaw). Also, Papa John’s, one of the largest pizza delivery restaurant chains in the US, is to enter Poland later this year. The company is looking at the largest cities across the country, with the first locations scheduled to open for business in Warsaw in December. Chris Wynne, co-owner and CEO of PJ Western, Papa John’s International’s representative in Europe, said that the chain is not a food-court concept and is mostly looking for commercial units sized over 100 sqm and

located close to roads with ample vehicle and pedestrian traffic. When it comes to food court debuts, American chain Blue Frog has opened its first Polish restaurant in Wroclavia. For its part, Sweden’s Max Premium Burgers has recently debuted in the Galeria Dominikańska mall, also in Wrocław. Experts argue that new market entries in the food and beverage sector testify to the growing significance of food courts in shopping centers. A debuting Apart from being shopping destinations, malls brand will certainly gen- are increasingly becoming meeting places. erate interest Olga Garlej, leasing manager in the retail agenand attract cy of Savills, said that while until recently tenants buyers from the food and beverage sector accounted for approximately five percent of the total GLA in a shopping center, today the recommended level is around 20 percent. According to Garlej, another group of potential entrants who may debut in the Polish market in the near future are retailers that have until now only offered their products online and which are now looking for opportunities offered by multi-channel sales. >>>

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ENTRY BARRIERS

Admittedly, apart from market entries, there have also been market exits. Last year, brands including Gap and American Eagle Outfitters left Poland. This year, they have been joined by such retailers as Top Shop, Marks & Spencer and Springfield. There are many reasons for exiting a market. However, when it comes to both Marks & Spencer and Springfield, the move was evidently part of a broader strategy as each brand also pulled out of several other countries besides Poland. Certainly, far more foreign retail brands have debuted in Poland than exited the country in recent months. Nevertheless, real estate experts are saying that there is the need in the Polish market for a wider range of retail tenants. Poland still features a poorer retail offer than Western European countries with a number of brands which are very popular there being absent from the Polish market, said Edyta Potera, national director, retail agency, at JLL. Several entry barriers may be responsible for this.

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The recent opening of new malls in Warsaw and WrocĹ&#x201A;aw offered brands prime debut opportunities

Garlej argued that most fashion brands are used to having stores in high streets and this is where they would prefer to debut in the Polish market. However, this is often not possible due to the limited availability and relatively low popularity of high-street retail space in Poland. The retail property market in the country is dominated by large-scale shopping centers. Meanwhile, rent costs in malls are much higher than in commercial units in high-street locations. Kobziakowska pointed out that retailers from the food and beverage sector are currently the main occupiers of retail space on Polandâ&#x20AC;&#x2122;s high streets. High-street locations in the country need a coherent growth strategy to be able to attract foreign fashion brands, she said. In the opinion of Garlej, the rapid growth of online sales, which can allow brands to make a presence in new markets at a relatively low cost, is another barrier preventing international retailers from opening brick-and-mortar stores in Poland.

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FRESHNESS FACTOR

Meanwhile, from a developer’s point of view, securing a debuting foreign retailer for a shopping center is an important element of the commercialization process. “A debuting brand will certainly generate interest and attract buyers,” Garlej said. Garlej noted that developers planning to open a new shopping center in one of the main regional cities have to take a high retail space saturation level into account. Winning clients who will regularly return to the mall is a major challenge. Szymon Mińczuk, regional leasing director, shopping center department, at Echo Investment, said that the large number of newcomers testifies to the growth of the retail property market in Poland and the potential that the market offers. It also reflects the current drive towards diversifying the offer of newly built malls. “Paradoxically, this is often the result of the needs and suggestions of those tenants who have already been present in Poland for many years,” Mińczuk added.

This is because all the parties participating in a commercialization process are interested in creating an attractive shopping center and the freshness that newcomers bring to a mall allows one to hope that this overriding goal will be achieved. Mińczuk said that Echo Investment’s new retail projects – Libero in Katowice, and Galeria Młociny and Towarowa 22 in Warsaw – have the potential to attract foreign brands. The company is working on securing such deals and should be able to reveal names soon. According to Grzegorz Latała, leasing director and management board member at Mayland Real Estate, the investor behind the newly opened Serenada shopping center in Kraków, debuting foreign brands usually choose modern dominant malls in the largest agglomerations. He said that at this moment Serenada is not a large project. However, after a planned extension it will become the biggest shopping and entertainment center in southern Poland and will then need to house brands debuting in the Polish market.

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RENTAL OPPORTUNITIES

WBJ sat down with Cezary Jarząbek, the CEO of developer Golub GetHouse, to talk about the company’s plans to make a strong presence in the student accommodation and rental apartment sectors in Poland INTERVIEW BY ADAM ZDRODOWSKI

WBJ: Golub GetHouse earlier this year announced the acquisition of a site for a dormitory

project in Kraków. What is the reason for your entering this segment of the market? Cezary Jarząbek: For a long time now, we have been planning to enter what can be called the “commercial” residential market in Poland. This basically means rental property, including both student accommodation projects and regular rental apartment schemes. Building rental property, renting it out and eventually selling it to longterm investors is what we have mostly been focused on in the US in recent years. We think that now is the right moment to use our American experience in the Polish market. Why is it the right moment to enter the market? As for student accommodation, Poland has a relatively large student population, comprising some 1.5 million students. The number of foreign students in the country has been on the rise. These people increasingly have the financial resources needed to rent good-quality apartments, but have difficulty in finding the right product. The existing stock of modern dormitories is very low and the rental apartment market is very dispersed, with private owners often reluctant to rent apartments to students. This is a market niche that needs to be filled.

Will you cooperate with universities while developing dormitory projects? We do not plan to establish joint ventures with universities – universities admittedly own very attractive sites, but joint developments with them would be more difficult and more time-consuming. However, we will cooperate with universities when it comes to marketing and advertis-

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Several other developers have recently entered the sector. How deep is this market? The competition in the sector will grow, but I think that the market has a lot of growth potential. It suffices to compare these numbers: in the UK there are approximately 500,000 modern dormitory beds, while in Poland the figure stands at around 1,000.

ing strategies. It is worth pointing out that with student accommodation in Poland being in short supply, the development of dormitories is also in universities’ interest, as the projects will enable them to attract more students, including those from abroad. How many schemes of this kind do you want to develop in Poland? We would like to eventually have 3,000-4,000 beds in our Polish portfolio. We are looking at projects offering at least 400 beds – the schemes need to be relatively large to be profitable as there are certain management costs that need to be covered irrespective of the project size. At which point do you want to exit the investments? I think that we will sell the projects within approximately a year or a year and a half following completion, once the assets have become stable in terms of their rental revenues. Student accommodation projects have become a very popular asset class among investors in Western Europe and the US in recent years, and there are already investors in Poland who are looking for this kind of product. Some of them are specialized funds, while others already own other types of assets in the country and are currently looking to diversify their portfolios. When will you launch the Kraków project? The Kraków project will involve the partial demolition and redevelopment of an existing building. The demolition work has already started, and we plan to launch construction work on the site at the beginning of next year. What about your plans in other large Polish cities? We are in the process of acquiring a site for a dormitory project in Warsaw which will be located close to a private university outside of the downtown of the city and whose exact location we cannot reveal yet. In the future, we also want to build a dormitory project in a central location in Warsaw. We are now also looking at investment opportunities in all the other large academic centers across Poland, for example in Wrocław, Poznań, Gdańsk, Lublin and Łódź. Does the rental apartment sector have a future in Poland? Yes, by all means. We have decided to enter this sector because we see how much Poles’ attitude toward renting has changed in recent years. Poles are used to the home ownership model, but the younger generation is increasingly focused on convenient living in a good location, rather than on whether their apartment is owned or rented. Young Poles are now also less willing to make longterm commitments with regard to borrowing from banks than they were a few years ago. The interest in renting rather than owning an apartment is a growing trend. In Warsaw, there are approximately 100,000 rental apartments, but the vast majority of them are in the hands of individual investors. The institutionalized rental apartment market, in which we want to grow,

The existing stock of modern dormitories is very low and the rental apartment market is very dispersed, with private owners often reluctant to rent apartments to students

is almost non-existent in Poland. Meanwhile, this market has many advantages over the existing dispersed rental apartment market – we want to build apartment buildings that offer a whole range of amenities and are professionally managed. Where do you want to build your rental apartment projects? We are interested in the largest office locations in Warsaw – the projects will mainly be targeted at those who work in those locations and need to commute from other districts. We are currently working on one project located in the Służewiec area of the Mokotów district and on two projects located in the Wola district. We have already signed preliminary agreements for the purchase of sites for those projects and hope to finalize the deals in the coming weeks. The buildings are at the design stage. How large will the projects be? We are interested in projects comprising between 350 and 500 apartments. In Służewiec, we are planning a complex of four buildings featuring six to seven floors. In Wola, we are thinking of building two residential skyscrapers; however, I cannot reveal their height yet. Do you have other such projects in the pipeline? We are looking for more sites in Warsaw which could house rental apartment schemes. We are now also analyzing the situation in some of the largest regional cities, mainly in Kraków and Wrocław, which are the biggest office markets outside Warsaw.

Cezary Jarząbek CEO of Golub GetHouse

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CHOOSING GROUND-FLOOR STRATEGIES

Retail and service areas located on ground floors have long been a fixture of modern residential projects. How much of such space is actually completed every year and is it successfully commercialized? BY ADAM ZDRODOWSKI

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U Newly completed, waiting to be occupied commercial space in Dom Development's Żoliborz Artystyczny estate in Warsaw

nlike shopping centers and retail parks, this niche segment of the retail property market is not the subject of detailed reports from real estate experts and defies easy analysis. Indeed, there is no official data that shows its size and the number of transactions in which it is involved. Meanwhile, commercial units have become a ubiquitous and an inherent element of new schemes built by residential developers who maintain that the supply of and demand for this kind of product remain at a stable level or have even been going up of late.

REGIONAL VARIATION

The annual supply of new commercial space that is included in residential developments is hard to assess as analysts tend to focus on retail projects comprising at least several thousand sqm of GLA, and retail areas in residential buildings are usually smaller. For their part, residential developers – who typically disclose the number of apartments in their new projects – often fail to mention the amount of the accompanying commercial areas in the schemes, noted Szymon Łukasik, head of the retail department at Cresa Poland. According to Michał Bukowski, an expert at Home Broker, in most cases – provided that the potential is there – residential developers tend to build as much commercial space as they can. This is because such space is cheaper to develop than apartments and is sold at a higher price. However, this mostly pertains to projects in central locations and those located close to major roads. When it comes to projects in outlying locations, most developers try to minimize the amount of commercial space, claimed Tomasz Kołodziejczyk from redNet Property Group.

STABLE SUPPLY

As a result, while the majority of residential investments these days feature some amount of commercial space, the number and size of the units vary a lot depending on the location. Very often a project comprises several hundred sqm of such space. However, there are also mediumsized schemes in the market that offer much more of it. A project that developer Unidevelopment built in Warsaw’s Targówek district houses, apart from 127 apartments, more than 4,000 sqm of commercial area. Warsaw Stock Exchange-listed Dom Development, one of the largest residential developers in Poland, has completed an average of approximately 50 commercial units annually over the last three years. Over the same period, the company sold an average of 63 units a year. Radosław Bieliński, the spokesperson for Dom Development, said that commercial units are

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LOKALE IMMOBILIA | RETAIL

Pro Urba has seen sales of commercial units in its 19. Dzielnica project in Warsaw grow

planned in most of the buildings built by the company. However, he pointed out that whether they are actually included in a particular scheme depends on the zoning in the given location. Mateusz Juroszek, vice president of the management board of Atal, another listed residential market giant, said that in his company the annual amount of completed commercial space varies a lot depending on the kind of projects that obtain occupancy permits in a given year. For example, in Warsaw Atal delivered six commercial units totaling 611 sqm last year. Meanwhile, since the beginning of this year, the company has already completed 39 such units in the city, with the combined area amounting to 2,382 sqm. Also, the annual sales of commercial units vary depending on Atal’s offer in a particular

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period – across Poland, this means from over ten to tens of units. Since the beginning of 2017, the developer has sold a total of 33 such units in Warsaw, Wrocław, Kraków, Łódź and Katowice. According to Juroszek, demand remains at a very high and stable level, especially when it comes to projects in prime locations. “We have not noticed any major fluctuations in demand and supply in recent years,” Juroszek said.

POSITIVE PROSPECTS

While a certain amount of space often remains vacant for some time after a project’s completion, generally speaking developers do not seem to have any serious difficulty in commercializing retail and service units in their schemes. Łukasik admitted that some of the units are built only be-

cause the space is not fit for apartments and that they may thus not be carefully planned. However, “residential developers do not have to be retail space experts,” he argued. In his opinion, they see commercial units as a potential additional source of profit. Bieliński, who maintained that demand has been on the rise, claimed that “commercial units are seen by investors as an alternative to the still very popular investments in housing units.” Whether the space is successfully commercialized depends on several factors. Bieliński pointed to the volume of pedestrian traffic and the availability of parking spaces as some of the most important. Indeed, the number of inhabitants in a given location is crucial. Kołodziejczyk cited the example of the relatively new and fast-developing Miasteczko Wilanów residential area in the Wilanów district of Warsaw. Over the first few years of the neighborhood’s existence, the leasing of commercial space there proceeded rather slowly. The situation changed drastically when the number of inhabitants grew and the first office buildings were built in the location – the interest in leasing and buying commercial space in the area soared. Katarzyna Kajak, the sales and marketing director at developer Pro Urba, said that sales of commercial units in the company’s 19. Dzielnica upmarket residential project in Warsaw have been growing along with the completion of the subsequent phases of the scheme. That growth has also been spurred by the development of the entire neighborhood. The 19. Dzielnica investment is located in the quickly developing Rondo Daszyńskiego area of the city, close to a new subway stop and numerous new office buildings. Kajak argued that investors are interested in buying commercial space in such a location as they can count on a steady supply of customers. Also, the demand for new services, which has been generated by new residents of the estate, has been on the rise. “In 19. Dzielnica we observe various business models. On the one hand, there is a big group of individuals who set up their own businesses here. On the other hand, we deal with investors who later rent commercial spaces to individual entrepreneurs or to chain stores,” she said. Certainly, apartment buyers pay a lot of attention to the availability of goods and services needed in everyday life. The lack of stores and points of service in a neighborhood can put a potential client off buying residential property there. In the opinion of Ewa Przeździecka, the sales and marketing director at Unidevelopment, the growing significance of the convenience sector in the retail market allows one to be optimistic about future demand for commercial units in new residential schemes.

In most cases – provided that the potential is there – residential developers tend to build as much commercial space as they can

BUILT-TO-SUIT SPACE

Commercial space is most often bought by investors directly from developers and then leased out to retailers, often during the construction process. “Because of a smaller financial commitment, in most cases leasing a unit is more attractive,” Kołodziejczyk said. Typical tenants include grocery stores and other businesses offering consumer goods and basic services. There is a trend toward opening restaurants, ice cream parlors and cafes in new residential buildings as people tend to eat out more and more often. However, this is not the only popular model. Bukowski said that sometimes developers choose to commercialize units themselves to then be able to sell them with a signed lease deal and get a better price. Apart from offloading commercial space in its housing schemes, Dom Development earlier this year also started to lease it. A unit that already has a tenant is more attractive to those investors who are looking for a complete investment product, Bieliński explained. Another trend is the delivery by developers of built-to-suit commercial space. According to Kołodziejczyk, this is a very common practice when it comes to larger units that house stores or specialized (for example medical) services. Bieliński said that Dom Development cooperates with tenants on the delivery of built-to-suit commercial units. These are mostly retail chains which have expansion strategies and can thus make decisions relatively early regarding the choice of new locations. In contrast, Atal does not offer this kind of service. Each buyer tailors and arranges the space according to their own needs, Juroszek said. Przeździecka admitted that the development of built-to-suit commercial space is the optimal solution for a residential developer. However, she argued that in practice this rarely happens. At Unidevelopment most transactions are signed after the start of construction. The company most often tailors units to buyers’ needs while they are under construction or even after they have been completed.

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NEW SITE ACQUISITIONS ON THE CARDS

WBJ met with Mariusz Frąckiewicz, director Poland, and Marta Wybrańska, leasing director, at developer Avestus Real Estate, to talk about the company’s planned office projects in Warsaw and some of the largest regional cities INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

Avestus Real Estate and Eiffage Polska Budownictwo are now planning a joint mixed-use project in the Służewiec business area of Warsaw. How much space will the scheme comprise and when will it be launched? Mariusz Frąckiewicz: The Cube project will comprise over 21,000 sqm of office space and will combine office and hotel functions. The hotel will be operated under a well-known brand, whose name we will reveal soon. Construction work will launch within weeks of getting the building permit – which we are currently in the process of obtaining. We also need to wait for the negotiations with the hotel brand to be finalized as the development of the office and hotel sections should be synchronized, and both types of area should be completed at roughly the same time. Does Służewiec, which has lost some tenants of late, remain an attractive office location?

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Marta Wybrańska: We do believe in the location – otherwise we would not have decided to invest there. Of course, we are well aware of the challenges that Służewiec is facing and of the fact that the market there is relatively saturated, but we think the area still offers room for new developments. The Cube project will be developed south of ul. Marynarska, in a part of Służewiec where traffic jams are less of a problem than in the neighborhoods located north of the road. M.F.: I think that we are now witnessing a segmentation process in the tenants’ market in Warsaw. The new office projects that are being developed in the increasingly popular Wola district have admittedly attracted some of the tenants who were previously leasing space in Służewiec, but those are tenants who are able to pay slightly higher rents. While banks will probably move, other, more price-sensitive tenants such as call centers will likely stay in Służewiec.

It is also worth pointing out that Służewiec will see the development of several major infrastructure projects in the coming years, which are expected to drastically improve traffic flow in the area. By the time Cube is delivered, some of these projects will already have been completed. Earlier this year, you announced an office project in Łódź that will be called Imagine and which will be located in a part of the city where several other developers have been active in recent years. Are you planning to start construction in 2017? M.F.: Indeed, the project will be located at the intersection of Al. Piłsudskiego and Al. Śmigłego-Rydza, an area that has emerged as one of the two largest office hubs in Łódź. We are in the process of obtaining a building permit for the scheme and plan to launch construction work later this year. We want to develop both buildings – a total of 16,800 sqm of leasable space – in one phase. Additionally, we will build an aboveground parking lot with spaces for over 340 vehicles as part of the investment. Why aren’t you going to build an underground parking lot – something that most office projects feature? M.F.: Firstly, because of the lower costs. Secondly, such a solution will allow us to launch construction work on the office buildings and the parking lot at the same time, and thus complete the office space in a year and a half, rather than in more than two years. This makes a big difference in the Łódź market where the acceptable (from a tenant’s point of view) period between the signing of the lease agreement and the completion of the space is shorter than in Warsaw. Have you already signed any lease agreements in Imagine? M.W.: When it comes to both Cube in Warsaw and Imagine in Łódź, we are now in advanced talks with a number of potential tenants, but have not signed any lease agreements yet. This is because a lease agreement means a commitment and we do not want to let our tenants down. We never sign lease agreements until we know exactly when we will be able to launch construction work on a given project. We have to be sure that we will be able to deliver the leased space on time. How do you view the prospects for the Łódź office market in the near future? M.F.: Łódź is a much smaller market than Warsaw and a relatively young one, but it has very good growth prospects. The office property market in the city currently features a very low vacancy rate of approximately six percent. The rate will likely not grow much in the near future as despite an increased developer interest in the market, the take-up of new office space is expected to remain at a stable annual level of around 60,000-80,000 sqm in the coming years. After several years of a slowdown, Łódź is now seeing another wave of investment, with office developers

appreciating the central location and excellent transport infrastructure of the city, as well as the availability of a qualified labor force in the market. What are your plans in Kraków, where your flagship Polish office project is located? M.W.: We are now finalizing the Enteprise Park project, which comprises 62,000 sqm of space and is almost fully leased out. We want to buy more land in the city – we expect to make an acquisition there before the end of this year.

We are thinking very seriously of entering the Polish rental apartment sector

Do you plan to enter any other office markets in Poland in the near future? M.F.: We are finalizing the acquisition of an office site in a central location in Wrocław. This is a very attractive market at the moment and a completely new market for us. We are planning a project there that will comprise approximately 20,000 sqm – this is the typical size of our projects in regional cities. Admittedly, we always look for opportunities to build several phases in a given location, as many of our tenants are expanding companies from the BPO/SSC sector. We are now also analyzing development opportunities in the Tri-City. Do you see any office development potential in medium-sized cities across Poland? M.F.: Lublin, which has several good universities and thus offers easy access to human resources, is now attracting more and more attention of office space developers. I think that this and other Polish cities of a similar size have an office future, but it will yet take a few years before the office markets there start seeing considerable growth. When that happens, we will probably be one of the pioneers in those cities. However, at this moment, we do not have any concrete development plans there. Are you planning any projects in other real estate sectors in Poland? At the moment, we only have office projects in our Polish portfolio, but this could change soon. We are thinking very seriously about entering the Polish rental apartment sector, which is now growing fast. We will make a decision regarding this in the coming months.

Mariusz Frąckiewicz Director Poland at developer Avestus Real Estate

Marta Wybrańska Leasing director at developer Avestus Real Estate

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LOKALE IMMOBILIA | RESIDENTIAL

NO44 LUXURY LONG-TERM RENTAL APARTMENTS NOW AVAILABLE IN WARSAW

nvestor Catella Real Estate has recently launched its luxury rental service in the iconic Złota 44 residential skyscraper in downtown Warsaw. On offer are a total of 72 No44-branded apartments located on nine full floors of the tower, sized from 57 sqm to 218 sqm and available in three different furnishing styles. The introduction of the brand is a response to the growing demand for safe and transparent long-term agreements, which until recently have hardly been available in the rental residential property market in Poland. The service is mainly targeted at clients such as managers, expats, diplomats and start-up owners who travel a lot and live abroad for long periods of time. Designed by the Zurich-based Upscale Interiors studio, the No44 apartments are designed to meet the expectations of the most demanding tenants. The three exclusive furnishing styles – Contemporary Glam, Comfortable Modern and Midcentury Modern – may feature their own characteristic elements, but they are all defined by sophisticated design and elegance. A limited collection of paintings of wellknown Polish artists can be found inside the apartments. Importantly, there is also the option to rent an unfurnished apartment and arrange it according to one’s own preferences. The rentals offered in Złota 44 include access to concierge services, as well as to a dedicated floor of the building that houses sports and recreation facilities including a 25-meter swimming pool, a gym, a sauna, a spa and a small movie theater. The floor also accommodates several conference rooms. The costs of renting the No44-branded apartments are highly competitive when compared with room prices found in luxury hotels in downtown Warsaw. Monthly rents start from approximately PLN 8,000 with the first agreements having already been signed and several more to be finalized soon.

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LOKALE IMMOBILIA | RESIDENTIAL

The No44-branded, fully furnished apartments are now available for long-term rental

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LOKALE IMMOBILIA | OFFICE

DESK FOR HIRE

Even if you can do most of your work from a home office or a café, you still need a place to hold meetings, meet clients, often also a quiet place where you can take a business call or do creative work. Nowadays, the number of options to choose from is greater than ever. The office-sharing trend is clearly evolving to fill more and more niches BY BEATA SOCHA

erviced and co-working office space is becoming increasingly popular in Poland with the demand for flexible office solutions in the country being driven by both start-ups and large corporations, according to a recent report by Savills. Warsaw currently features a total of nearly 84,000 sqm of flexible office space in 95 locations, 44,000 sqm of which are serviced offices and 40,000 sqm are co-working spaces. Meanwhile Kraków and Poznań offer almost 15,000 sqm in 25 locations and over 8,200 sqm in 18 locations respectively, the study said. Key flexible office providers (offering a total of at least 3,000 sqm in at least two locations) include Brain Embassy, Business Link, CitySpace, Dago, InOffice, Office Hub, OmniOffice and Regus. Their

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share in the total office space take-up increased from 0.4 percent in 2010 to 1.9 percent in 2016. “It remains to be seen how much space the Polish market will be able to absorb. Following the recent debuts of many providers of such office space, other providers will be considering potential locations with a degree of caution. The market, however, is heading in this direction and it looks like the current co-working boom is far from being over, particularly in regional markets,” commented Jarosław Pilch, head of office tenant representation at Savills. “Poland has big potential and is an attractive destination for high-tech businesses. Besides, large international providers such as WeWork, The Office Group and i2 Office have not entered the Polish market yet,” he added.

NOT JUST FOR START-UPS

The distinction between serviced offices and co-working space can get somewhat fuzzy at times, but there are differences in what each of these offer, and who they target. Serviced offices have been present in the Polish market much longer, going back as far as mid-1990s, when the first international companies started to look into establishing their foothold in the Polish market and were in need of modern office space, which was hard to come by back then. However, the look and the array of services they now offer have evolved significantly from the gray-walled corridors with rows of identical unremarkable doors on either side with a common reception area. Now, serviced offices are colorful, meticulously designed and even artsy. They no longer just offer individual rooms, either. They offer fully equipped offices, conference rooms and social areas, often also a shared open space. They have more of a business feel in their design, although fun common social areas are also popular. They target SMEs, scale-ups or latestage start-ups, as well as freelancing professionals (e.g. lawyers), who need proper exposure and all the amenities an office can provide. They are most suitable for companies in their growing stage, but are also frequently used by large corporations waiting for their permanent space to be delivered. “Perhaps it is contrary to the popular stereotype that these offices are made for start-ups, but it is because of this business model that flexible office space has a chance of becoming a permanent fixture on the office property market,” said Pilch. Generally speaking, serviced offices are a much more flexible option than regular leased offices, even if they are somewhat more costly. “The cost of leasing such offices can be two or three times higher than that of a standard three-five year lease. However, tenants have much more flexibility, both in terms of minimum space and lease time,” said Piotr Capiga, senior negotiator at Cushman & Wakefield. To provide even more flexibility, serviced office operators often also provide virtual offices, which basically consist of a prestigious company address and a telephone and mail service.

EXPOSURE AND FLEXIBILITY

WBJ talked to Sebastian Rączkowski, managing director of CitySpace, one of the fastest-growing serviced office providers in Poland

WBJ:

How many locations do you have now and how many are you planning on opening? Sebastian Rączkowski: We are present in four cities, totaling seven locations: three in Warsaw, two in Kraków and one each in Katowice and Wrocław. We plan to open at least two more in 2018 – Kraków and Wrocław and perhaps a third one. We are looking closely at Łódź and Gdańsk. Also, in 2019 we will open two more locations in Warsaw as well.

modating whole companies waiting for their target space to be delivered.

How much space does each of your offices cover? Our standard floor space is roughly about 1,500 sqm. That is usually a full floor or a full floor module, depending on the design. We have traditional serviced offices in our first two locations: Rondo 1 and Plac Unii in Warsaw. All new projects are hybrids with 70 percent open space. Our latest project in Katowice is open space only.

How is CitySpace different from its ever-increasing competition? We try to be close to our tenants needs’ so we can facilitate them instantly. In our serviced open space project we used to be alone in the market and we have only recently begun to notice competition as more developers have become interested in working closely with serviced office operators. With our traditional locations we proudly offer our clients the highest quality of furniture, acoustic comfort between offices, top standard conference rooms and lack of our logo (which is something I haven’t seen anywhere else). Also, we now develop digitalization for our tenants, so not only will they be able to have instant access to their bills but also book extra services within a dedicated onestop-shop app on a 24/7 basis.

Who is your target group? For traditional modules our target is small companies or teams which need both exposure and flexibility. We pioneered the all-in concept with a large lounge and break-out areas. In open spaces we count on BPO/ SSC sector companies that require instant space for larger teams – 50 people or so. Also, we are located in high office supply areas under construction in regional cities where tenants look for swing spaces accom

CitySpace, part of Echo Investment, is present in seven locations in four cities: three in Warsaw, two in Kraków and one each in Katowice and Wrocław. In Warsaw the firm offers its serviced offices in Rondo 1, Plac Unii and in Park Rozwoju in Mokotów. It offers fully equipped offices with a range of services at tenants’ disposal. CitySpace also started experimenting with open space offices. It targets not only small firms, but also major business service operators in fast-growing office markets.

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LOKALE IMMOBILIA | OFFICE

CO-WORK IT OUT

Co-working offices are a much younger concept, first appearing in the Polish market in the 2010s, but it’s a trend spreading like wildfire, mainly due to the growing population of freelancers and start-ups, who choose co-working offices as an alternative to home office or lounging at cafés. BY BEATA SOCHA

he rise of co-working space is a worldwide phenomenon. There are currently some 11,000 different co-working spaces across the world, and the number should increase by another 2,500 by the end of 2017. “The co-working space trend is growing fast, particularly in large European cities. In Poland, there are still decidedly fewer options, but we are very optimistic: the number of people interested in this solution is increasing,” explained Adam Lis, general manager at Brain Embassy.

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In Poland, there are about 180 co-working options, and a lot more keep popping up. Almost every other recently completed office scheme offers a co-working floor. The options are aplenty, with new operators coming in and the existing ones expanding to new cities. “There are several reasons why people choose co-working. First, it’s an economical option, and secondly it offers added value of industry contacts and sharing inspiration,” Lis added. Co-working spaces are predominantly aimed at tech startups and freelancers, looking for a fun-looking space and – above all else – networking possibilities. That’s why co-working space operators frequently organize seminars and events aimed at connecting people with the expertise and services they need to grow their business. Besides, the more people you get to know in your work environment, the easier it will be to find a suitable candidate for an open position, without having to launch formal and costly recruitment. And as the war for talent has never been fiercer in Poland than it is today, having leads on potential talented employees is of tremendous value. Some co-working operators combine office space with various business accelerators and funding opportunities for their promising residents. Here is our selection of some of the more interesting co-working options in Poland, both with a well-established presence in the market as well as some relative newcomers.

BRAIN EMBASSY

This multiple award-winning co-working space was created in June 2016, initially offering 1,700 sqm in Adgar Park West, in Warsaw’s western business district. In August 2017, the location was expanded by another 1,300 sqm, altogether offering a total of 3,000 sqm. Brain Embassy offers quiet workrooms, well-equipped conference rooms and a workshop area, as well as informal solutions, like meditation rooms, stationary bikes, phone booths and even cable cars. The central open space is furnished with comfy couches, wooden benches, pillows and even trees. “We can see that people who rent a traditional office start moving to the common area after a while and spend most of their time here,” said Adam Lis, general manager at Brain Embassy. The company likes to use “co-creating” to describe its space. “According to an opinion poll we carried out among the members of our community, the space has a positive influence on their business meetings (90 percent of those polled said so) as well as on building relations. Over 50 percent of respondents said that thanks to the community and the initiatives we organize for our members, they have built new business contacts and relations,” Lis added. After a year of operating in Adgar Park West, Brain Embassy is planning on launching a new office in Adgar Plaza in Mokotów.

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LOKALE IMMOBILIA | OFFICE EXPLORER HQ

Founded by three Norwegians in 2014, first in Warsaw (Central Tower), then also in Białystok city center and Oslo. They called their concept: Office-as-a-Service, a nod to the IT industry, which is where the majority of their tenants are active. The key aspect of the Explorer space is that every company that resides there is useful to the entire hub community. Of course, hub members can offer services not only to one another but also internationally. This way of doing business works like a magnet for Polish start-ups, which aren’t only looking for modern office space, but also potential international business partners with whom they will share a “positive chemistry” and whom they can trust. However, the Explorer founders’ vision goes beyond creating a network of Scandinavian co-working spaces. The Norwegian team is seeking out opportunities to invest in promising Polish start-ups too. “We have the ambition to make Explorer HQ the first Polish-Norwegian investment bridge, joining Scandinavian know-how and business culture with the Polish tech talent and ingenuity,” said Nikolai Fasting, one of the Explorer’s founders. Explorer HQ currently occupies the 20th floor in the Central Tower in Warsaw (opposite the Central Railway Station). The second office is located in the strict city center in Białystok, where Explorer offers over 400 sqm of modern co-working space. The third one is in Oslo. The central location is also an important part of the Explorer’s strategy. Polish offices currently house 25 companies, but there’s always room for more.

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CAMPUS WARSAW

Launched in November 2015, the co-working tech incubator offers not only cool interiors, but more importantly, connections to major tech companies in the word. As a Google initiative in one of six locations in the world: London, Madrid, Tel Aviv, Seoul and Sao Paulo, its goal is to identify the most promising tech start-ups and help them grow. Seeing as the demand well exceeded the offered space, in August 2017, Campus Warsaw changed its location, but still within Centrum Praskie Koneser. Currently, it occupies 2,500 sqm of space on three floors, featuring co-working space, quiet work areas, meeting rooms and an event space for 200 people. Apart from 140 traditional desks, its residents can work in less formal areas, on couches, armchairs and at café tables able to seat up to 180 people at once. “Places such as Campus Warsaw contribute to the development of the Polish innovative economy and to promoting novel tech solutions internationally,” said Jonathan Steer, executive director at CBRE.

PHOTOGRAPH TOP: ANNA LIMINOWICZ

MINDSPACE

Mindspace, a provider of co-working space, opened its first location in Poland in October this year. The company occupies a total of over 3,000 sqm of space on three floors in the Hala Koszyki building in downtown Warsaw, which is owned by listed real estate investor Griffin Premium RE. The location will accommodate approximately 450 people including teams from innovative enterprises, small and medium-sized businesses and technology start-ups, as well as entrepreneurs and freelancers. “Warsaw is an energetic market where the forces of business and innovation are driving the city forward at an amazing pace. This creates a need for co-working spaces for startups, small businesses and forward-looking enterprises,” said Mindspace founder and CEO Dan Zakai. Founded in 2014, Mindspace is currently present in Berlin, Hamburg, Munich and Tel Aviv. Its clients include Samsung, Barclays Bank, Euronews and M&C Saatchi.

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LOKALE IMMOBILIA | OFFICE

BOBO COWORKING

BOBO Coworking is a new co-working operator on the Polish market, providing flexible rental rates (services) in a creative space for start-ups, small and medium-sized businesses, IT developers, young entrepreneurs and freelancers. The first location, with an area of approx. 1,700 sqm, will open by the end of 2017 in myhive Crown Point, a 10,250-sqm office building located close to the Rondo Daszyńskiego roundabout in the Wola district of Warsaw. Over the next three years, BOBO Coworking plans to open an additional five locations in the major cities of Poland. JLL advisory firm acted as broker for this transaction. “We made a strategic decision to introduce our newest office concept to Poland. It is mainly dedicated to representatives of the creative industry as well as start-ups and freelancers. We were looking for an attractive business location in the center of Warsaw that is well connected to other parts of the city. So Wola was a natural choice for us,” said Daniel Bahman, business development manager at BOBO. “We are glad that tenants from myhive Crown Point will include a player that provides flexible space for smaller, innovative companies. Co-working spaces are now being more frequently developed in high- class office buildings situated close to where large international companies are located,” commented Rafał Pisklewicz, team leader at the Leasing Office of Immofinanz.

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SOCIAL MEDIA

We know that a social media presence is a must nowadays. We utilize various platforms to bring the best results, which translate into brand awareness and sales results. We know what kind of content engages customers. We know how to speak their language and initiate discussions. We stay up to date with trends. We react instantly. We offer a valuable opportunity to communicate with customers in real time. See more at www.sm.valkea.com

PHOTOGRAPH KEVIN DEMARIA

Life + Style

The Art of the Deal

Though signed and sealed around the conference table, an increasing amount of business is being done in the dining rooms and bars of the Polish capital. But there is no single catch-all solution: different moods call for different places...

NO EXPENSE(S) SPARED N31 n31restaurant.pl Largely credited for the post-communist modernization of Polish food culture, chef Robert Sowaâ&#x20AC;&#x2122;s tenure at the top has made him a household name and a national treasure. Moving with the times, his menu is full of understandable dishes that come with skillful, arty twists. Though you will find the occasional dating couple encroaching past the entrance, it remains very much a bastion of business: for private moments, book the VIP room.

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Life+Style

DOWN IN ONE

AFTER WORK

DOM WODKI domwodki.pl Vodka isn’t just a quick way to get drunk. Learn about the nuances of this spirit in Dom Wodki, a slick, thought-out project built around a choice of 250 artisan vodkas – find them incorporated into inspirational drinks mixed by dapper-looking experts. Smart-casual in style, it’s an ideal way to introduce foreign visitors to local habits and tastes; that this is done in a swanky background is an added boon to all.

THE ALCHEMIST thealchemist.pl Heavily influenced by Britain’s culture of a “pint after work,” The Alchemist has emerged as a place where the suited and booted can gather to talk work over a glass of something tasty without looking out of place. And it’s all the better when that glass of something tasty comes from a self-service “craft beer wall.” Complimenting the cosmopolitan atmosphere is “upmarket gastro-pub food” as cooked by Ed Shellard.

CORPO CASUAL

WINE FOR THE TIME

STIXX BAR & GRILL stixx.pl Immense in size and ambition, Stixx’s interior is best described as urbane-industrial. A place of smooth lines and sophisticated finishes, it’s been a winning addition to an area that’s fast evolving into the CBD of the future. Despite its international diversity the menu is executed with competence, while the sheer scope of its offer sees it organically transform each evening into a nightspot of note. All-rounders don’t get much rounder!

DEKANT dekant.com.pl With wine bars popping up like toast it’s hard to keep track of which are the best. Dekant, however, is a place that remains branded into the conscience. Emblematic of the area’s shift from hipster epicenter to upmarket playground, the wine list here is prodigious: over 400 labels from the most prestigious on the planet, right the way down to tiny, little vineyards you never knew existed. Smart and chic, it’s more than just reliable.

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Brought you by Podwale Bar and Books

PODWALE BAR AND BOOKS barandbooks.pl, WÄ&#x2026;ski Dunaj 20

When negotiations have extended long into the evening, Podwale Bar and Books is the late night bar you want to retreat to: redolent of a Mayfair club transported to colonial climes, the dignified, wood-paneled interior is all leather-bound tomes, dimmed lighting and touches of whimsy such as portraits of chimps. Whiskey, cigars and faultless cocktails await in this discerning Old Town retreat, with the comprehensive choice complemented by burlesque shows and assorted live music.

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Life+Style WBJ:

The capital has led the country in its “food revolution.” What’s needed to maintain success in such a competitive and fluctuating environment? Marcin Wachowicz:Tricky question. The Polish market is quite dynamic at this moment meaning you can’t afford to take your foot off the pedal. It’s important to constantly be looking at new trends whilst also listening to your audience – I learn something new each day. By treating your competitors as an evolving benchmark then you allow yourself to continually improve your level of work, the overall quality, and how your team works on a daily basis. It’s also important to invest in your team, to help them improve their skills and qualifications and broaden their horizons – this will always help them achieve more. What’s the most important lesson you’ve learned along the way? I’m learning all the time – each and every day brings with it a new surprise. Because this industry is about the guests, then the team has to be right. I’m a member of that team, and I love working as part of it, helping inspire young people and teaching them how to feel fulfilled by their role even when the pressure is on. It’s becoming quite common to see people abandon the rat race in pursuit of their dream of owning a restaurant. What’s your advice to those considering doing just that? Each person has a unique, different story so it’s tough to advise, but I’d just make them aware that passion alone isn’t usually enough in this highly complex business.

From the top table

Hailed as one of Poland’s top restaurateurs, Marcin Wachowicz has created a string of successful projects that are defined by their sense of energy and buzz. This issue he joins the WBJ to talks about the trials and tribulations of this cut-throat industry

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How do you keep customers coming through the door. How do you create that “buzz” that all successful restaurants have? Getting guests through the door is the most important part of our business – you have to ensure they’re not bored of your venues; it’s important they feel they’re getting something back from you rather than giving all the time. Regular promotions can help that as well as helping change the image and impression guests may have of your concept. We work constantly on communicating our message to them. How would you describe your management style? There is method to the everyday madness of this industry – each day I’ll try to motivate

and provide a structure and platform for others to enable others to work more freely. You need to react quickly and, most of all, listen to the ideas of your coworkers. Of course, mistakes will always be made, but these need to be treated as lessons to be learned from rather than failures. Trends change fast in this country, and that’s especially true of culinary trends – how do you adjust to these? Trends power change, and change frequently means higher standards and, hopefully, higher quality. Like many other European cities, Warsaw is a place where culture, people and the general environment are intertwined so you need to be vigilant to keep up with the changes: you need to be aware of what others are doing and then fill the gaps. Warsaw has seen the emergence of a “celebrity chef” culture – in particular, restaurants have been keen to recruit anyone who has appeared on TV for three minutes. What’s your opinion of this new chef culture and how does it influence the success of a restaurant? It’s one thing being a celebrity, it’s another thing being in the gastronomic trade. Often, owners think that a celebrity chef will raise the standards or bring something innovative to the table but that’s not always the case. Further, the internal organization of a restaurant is composed of many elements so that person needs to be able to fit into that. In my opinion, they have to be ready to engage and cooperate with others – it’s hard being a star when you’re serving 1,000 guests a day. That’s not to say it’s always a negative thing: there have been many successes and we’ve seen some great ideas and inspiration as a result that have added real color to the culinary world. What challenges do you face? The challenges are daily – they’re about maintaining quality and standards, about keeping the team together, co-creating and mastering concepts. The basic challenge restaurants face is raising the standard of management. It’s a difficult industry, sure it is, but the fundamental challenge lies in being professional. The Polish restaurant industry is growing fast – can it sustain this growth and how do you foresee the market in the future? The industry isn’t getting narrower in its scope and dynamic, on the contrary it’s expanding and becoming more elastic. We are also seeing increased interest in the restaurant market from abroad which shows the market is still wide open to new solutions. I see the industry developing in many new directions, though we will obviously see smaller, weaker and less experienced businesses disappear. But we can’t give up on these, as many great things have evolved from these smaller projects and there should always be room for local projects.

Aioli Long communal tables thrive with life throughout the day in Aioli, a jaunty space with a varied international menu and diverse crowd. aioli-cantine.com

Banja Luka A Balkan stalwart occupying an atmospheric, rustic-themed spot. Grilled meats feature prominently on the menu, and arrive served by staff in cheery, peasant garb. banjaluka.pl

MOMU The biggest talking point is a wooden smoker imported specially from the US. The meaty menu has been adjusted to play to this strength and is popular with a young, trendy crowd. momu.pl

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EVENTS

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

EUROPEAN FORUM FOR NEW IDEAS 2017

Due to the economic crisis, distrust in elites and migration, a wave of populism and nationalism has swept across Europe and beyond. This is proof that the economic and social models are not functioning smoothly. “It is our responsibility to defend European values and the progress we have made over the recent decades,” said Henryka Bochniarz, President of the Polish Confederation Lewiatan, during the Opening Gala at the European Forum for New Ideas (EFNI). Over 1,000 leading representatives of business, politics, science and culture from Poland and abroad met in Sopot for the seventh time to discuss the future of Europe. The main theme of this year’s Forum was: “The World Anew. Globalism, Bilateralism, Economic Patriotism? Challenges for Societies and Business.” Markus Beyrer, Director General of BusinessEurope, stressed that the last year has been successful in terms of moving several issues in the EU forward and in the right direction. We are more optimistic. There is clear progress, due to reforms both at national level and in Europe. The economic situation is improving. Europe remains a place where millions of people 90

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wish to live, but of course, not all problems have been overcome. For instance, the slow progress of the Brexit negotiations is a source of concern for business people. Norman Davies, professor at the University of London, was a special guest at the Opening Gala. He received this year’s EFNI award for promoting European values. Former Heads of State and Government have agreed that the European Union is now at one of the most difficult moments in its history. The biggest challenges are security, demography, multiculturalism and the transformation from the industrial to the digital era. Dacian Cioloş, former Prime Minister of Romania, and former President of Poland Aleksander Kwaśniewski said that the European Union needs a new form of management that would be more relevant to current and future challenges. This is not only due to changes in the external environment of the Union but also to the consequences of recent enlargements. The decision-making process and the way the EU institutions work must be adapted to the new conditions. “I think the reform of EU institutions is necessary

EVENTS

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

but not sufficient. Let us note that the solutions agreed in Brussels are often not implemented in the Member States. We will not reform the Union if we do not deal with this problem. We cannot be in the EU constantly criticizing it,” Cioloş said. Yves Leterme, former Prime Minister of Belgium, pointed out that politics is not isolated from society. Pan-European parties are unlikely to become the panacea for the greater involvement of Europeans in the decision-making process. “The main problems we are facing – security, integration of refugees, climate policy – cannot be solved in one country. This requires cooperation at European level. Europe is based on unity but respects diversity. But we will not create one European nation, the United States of Europe,” he added. An important topic of discussion was the issue of migration. “We have a demographic problem, our societies are aging. That's why we need immigrants,” Kwaśniewski said. According to Atifete Jahjaga, former President of Kosovo, there is no alternative to European integration. Although it is difficult to predict how the EU will look in 20-30 years, South

Eastern Europe needs a strong EU. “We expect more involvement in our problems. The Balkan states, which have been aspiring to membership for years, have favorable demographic indicators, which can offset shortages in other parts of Europe. If the EU was more committed to completing the enlargement process towards the south-east countries of the continent, this would have a positive impact on its socialeconomic profile, without increasing the risks of a lack of cultural integration,” she argued. The seventh edition of EFNI also featured numerous panel discussions which focused on a number of industries, from food, through automotive, aviation and space industries, to IT and telecommunications. Several roundtable and late-night discussions were held, touching upon such topics like the role of women in politics, the risk of corruption and fraud in business, economic patriotism vs. globalization and the role of authorities and leaders in today’s world. The seventh edition of the European Forum for New Ideas was held at the Sheraton hotel in Sopot on September 27-29, 2017.

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EVENTS

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

FRYDAY WARSAW On Wednesday September 27, Fryday Warsaw held its first event in a new format. Fryday is an international organization that creates events for business professionals in a social environment, combining a short presentation with a business mixer for people sharing common interests. It was accompanied by a wine tasting and a presentation of the Tesla car. The topic of the meeting was BLOCKCHAIN technology, one of the most talked about subjects today. Many people associate blockchain only with cryptocurrency speculation, but it is much more than that. It could be used in numerous spheres, including finance, banking, insurance, investments, and even as a tool against terrorist hacking. The keynote speaker of Fryday was Robert Lipiński, an experienced business consultant and B2B sales expert, with more than 15 years of experience gained while working with leading IT products and services suppliers, such as HP, Asseco Poland, Software AG and Alcatel/NextiraOne. Currently, Robert is Business Development Executive in Coinfirm, a company responsible for sales strategy and the acquisition of new business. Coinfirm is a Polish company with British roots, specializing in blockchain technology and cryptocurrency. Coinfirm has created its own product, TRUEDATUM, which helps to protect transactions in different spheres of business. Recently, Coinfirm signed a contract with PKO BP. The evening was held in the fashionable interior of the recently opened INDIGO Hotel, Warsaw Nowy Świat. This hotel is an individually styled boutique hotel that combines authentic local experience, modern design and intimate service, associated with the peace of mind and consistency of staying in one of the world’s largest hotel groups.

www.iworldservice.pl Mac, iPad, iPhone, Apple Watch, apple Watch Nike+, iPod, Apple TV, Beats, Beddit. • Authorized display exchange in 1 h (iphone 6s and above) • Professional Tools, Original parts, Certified technicians • Facebook site: www.facebook.com/iWorldSerwis/ • Accesories: Apple, UAG, 3MK, Artwizz, Tylt, JBL, Propel • Door to door service: www.iworldservice.pl • iWorldService is a brand of global service provider SBE • Global Care, working in Poland over 17 years • Comfortable customer zone with free Wi-Fi and charges

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serwis@iworldservice.pl Tel.: 22 716 08 88

Online registration: https://support.apple.com/pl-pl

EVENTS

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

OFFICES IN POLAND The tenth edition of the “Offices in Poland” conference, organized by Nowy Adres, was held on October 23 and 24 at the Warsaw Hilton hotel. Nearly 300 key players in the Polish office real estate market took part in the event. For two days, office developers, banks and investment fund executives, advisors, analysts, architects and industry journalists discussed the current condition of the Polish office market and the possible scenarios for its future. And they appear to be promising: in regional cities new office supply is being scooped up by BPO/SSC companies, while in Warsaw, despite the looming shadow of slight oversupply, leasing activity is superb, which is what encourages developers to launch new investments. Many analysts expect the positive trend to continue, as Poland is expected to be the destination for many companies leaving the UK after Brexit. The conference was inaugurated with a keynote speech from Kazimierz Marcinkiewicz, Poland’s Prime Minister in 2005-2006, economist and business advisor. Marcinkiewicz presented an optimistic forecast for the Polish economy, which will continue on its stable growth path in the coming years, provided nothing unexpected occurs in the global economy to disrupt that. The panel on the planned commercial property tax, which could lower the attractiveness of Polish office projects as investment assets, attracted many participants, as did the discussion on the challenges of design & build of office towers, which are permanently changing the landscape of Polish cities. One of the signature features of conferences organized by Nowy Adres is the MatchMaker system, an IT tool allowing all conference attendees to set up business meetings before the event even starts. The solution facilitates making valuable business contacts and allows participants to take full advantage of the two-day conference. This year was no different; nearly 200 business meetings were scheduled via MatchMaker at this year’s “Offices in Poland” conference.

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EVENTS

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

PRCH RETAIL AWARDS GALA This year’s final Gala of the PRCH Retail Awards, held on October 12 in the Auditorium of the Faculty of Physics of Warsaw University of Technology, was attended by 380 representatives of the retail industry. This year’s edition of the contest saw a record-breaking number of 108 applications. The Jury granted the highest award in the “New shopping center” category to the Posnania shopping center, and Hala Koszyki in Warsaw was also awarded a distinction. Galeria Sfera in Bielsko-Biała was distinguished in the best shopping center category, while Galeria Morena in Gdańsk and Aleja Bielany in Wrocław were lauded as shopping centers that best dealt with extension and modernization. In the retailer category, the chain of stores of Play proved unrivalled; it was also the winner of the service quality category. Księgarnia Autorska and Sephora were next in the ranking. Verona and Folkstar, new retailers debuting in the market, were distinguished as well. “One of the best recommendations of the shopping center and retail market is the fact that these projects do not shy away from being evaluated by industry experts, and compete in contests such as PRCH Retail Awards. The aim of the contest is to indicate the best practices in the area of managing and marketing of shopping centers and retail chains. We admit that the contest application process is very demanding and complex. For example, every application of a shopping center undergoes a preliminary evaluation, and is then

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visited by the independent jury, consisting of experienced industry specialists. Therefore, we were very happy to see the record-breaking number of 108 applications submitted, which was 28 applications more than in the previous year,” said Radosław Knap, director general of the Polish Council of Shopping Centres. The laureates were also selected in the categories related to the marketing of shopping centers and retailers. The Jury assessing marketing projects selected the most important event in the shopping center industry – “The 10th Birthday of Manufaktura” in Łódź. Among other awarded marketing campaigns there were those of Deichmann footwear “Deichmann x Margaret” and of Plac Unii in Warsaw: “Miejsce Korzyści.” The PRCH Retail Awards contest is aimed at retailers, developers, managers, investors and professionals involved in retail marketing. The PRCH Retail Awards contest and Gala is hosted by the Polish Council of Shopping Centres (PRCH); while Dekra Certification, which specializes, among other things, in the professional evaluation of the customer service quality, is the research partner of the contest. Since 2003, PRCH has associated businesses and people involved in the shopping center segment of the real estate industry: managers, investors, developers, retailers, lawyers, architects, PR and marketing agencies, as well as other companies operating in support of this sector. Currently, PRCH associates over 240 companies.

EVENTS

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

PMR FORUM Some 140 executives from leading construction firms converged on the Airport Okecie Hotel in Warsaw on October 12 to take part in the second edition of PMR’s annual Construction in Poland Forum. They came to share experiences, exchange views on current trends in the sector, and outline their plans for the immediate future. Interesting discussions abounded both during the panel sessions and on the margins, and one thing emerged very clearly from the remarks of the panelists and from our poll of Forum attendees: a lot has changed in the construction sector over the past 12 months. The poll confirmed what our research has been telling us – that conditions in the sector are much better now than they were last year. Fully 76 percent of Forum attendees expect their companies to report an increase in construction or real estate revenue in 2017 as compared with 2016, with just 3 percent predicting a decline. And a very similar pattern of responses was found when participants were asked about their projected revenue in 2018. This does not mean that the sector is devoid of problems, however. Even as they welcomed the noticeable acceleration in railway tenders, the continued buoyancy of the residential construction segment, or the strong performance of the commercial segment, Forum participants also expressed concern that the spike in activity observed in so many parts of the market has come at a time when construction firms are grappling with labor shortages and rising material and transport prices, and wondered what the consequences might be for their companies and for the market as a whole. Lively debates also developed about efficiency, innovation and education in the construction sector, or about project financing and profitability.

IT FUTURE EXPO On September 19 and 20, a record of over 2,700 Polish and international IT professionals and managers came to the PGE National Stadium in Warsaw for the IT Future EXPO. During the first day of the fair, the IT Future Awards event was held. IT Leaders in 16 categories were awarded statuettes for their leadership and achievements in 2017 in areas such as IT security, Data Center Leader and Business Intelligence trends, among others. For the first time, this year a category for the best IT solution for internet users was added to the list. The exhibitors at the fair are companies and professionals in knowledge management solutions, security, mobile, big data, Data Centers, or BPM. Participants could meet talent hunters and experiment with modern technologies, 3D printers, virtual reality, drones, and many other attractions. The event’s special guest this year was Łukasz Jakóbiak, one of the most popular YouTubers in Poland. IT Future EXPO is the largest B2B meeting in the IT industry.

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We’re all winners. On serial entrepreneurs and the cult of Silicon Valley Łukasz Kapuśniak Chief Technology Officer at Cloud Technologies L A Z I L Y, I look at my phone. I’ve got two new matches on Tinder, the UberEats driver is on his way, ten people like me, five love me and 100 just respect me. I haven’t left my home since Friday, but it’s all really happening. I glance at the screen: the constant green bars and the purple of the completed Key Performance Indicators is reassuring. It wasn’t nearly as great just a few years ago. We live in interesting times, where the boldest dreams and plans are surpassed by limitless possibilities. Today everyone is a serial entrepreneur; everyone is fixing the world while sitting in a comfy chair, in an office shared with other visionaries. The graffiti painted on the wall says that an idea is only 10 percent of success. It also says that a good business idea is one you can explain in thirty seconds or less, putting even Eminem’s furious freestyle to shame. Also, you should have at least ten of those ideas lined up just in case. The abundance of financing is seeping through from magical funds controlled by generous rubber-stamping clerks or mythical unicorn-hunting angels. An absolute Garden of Eden! No one says they own a company anymore, because a company should, by definition, make money. A start-up, on the other hand, doesn’t necessarily have to. Hundreds of agile scrum meetings perpetuate the cult of the product, service, tech, platform or solution that will one day rain down fame and fortune on its followers. It has to. After all, everything has been done by the book, every box has been checked, the hired mentors and coaches ordered, plus a lavish, fun office, the first round of funding, extensive recruitment, full engagement, scrum-

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masters, Instagram account, the second round of funding, accelerator, employees across the globe. That’s how things are done down in Silicon Valley. Why wouldn’t it work here? When I look at our little backyard, a picture of “Cargo Cults” of the late 19th/early 20th century seems eerily similar. Cargo Cults are how anthropologists described the practices of Pacific Ocean islanders who would build landing strips for planes, berths for ships and warehouses, believing they would bring them bounty in steel birds flying in from across the ocean, just like they did in white-people settlements. If it worked for them, why wouldn’t it work for us? Young start-up founders, just like the natives a century ago, are toiling away to recreate the success stories of their Western counterparts. They follow the same rituals. They pay an arm and a leg for top-of-the-line, fancy office equipment – just because that’s how it’s done across the ocean. Elon Musk’s cosmic tweets, Mark Zuckerberg’s visionary expansion plans and Steve Jobs’ biographies, all read cover to cover, fire up their imaginations and fuel their appetites for milliondollar transactions. The new cult, like any religion, has its devoted evangelists, ordained by coaching schools. They are spiritual guides explaining the teachings of progressive philosophy gurus, telling gullible wannabes how to live and run their businesses. And you pay dearly for those teachings. But where else do you look for motivation? Without the self-realization workshops the world would obviously come to a standstill and all those brilliant entrepreneurs who are supposed to change it would probably grow moustaches and start driving taxicabs. All you sales wizards, marketing ninjas, self-proclaimed growth hackers and evangelists – how many of you have actually found your own path? How many of you managed without a hammock and a foosball table in your office? The sky is not the limit; you are your own limit. The more rituals you manage to copy and recreate, the harder it will be for you to survive the harsh market realities and reach your ultimate goals.

Illustration by HUGMUN.STUDIO

LAST WORD

VII Kongres Podatków i Rachunkowości KPMG Nowości w przepisach – jak przygotować się do zmian? Warszawa, 9 stycznia 2018 r. Zapraszamy do udziału w Kongresie kadrę zarządzającą, a w szczególności dyrektorów finansowych i głównych księgowych. Więcej informacji, w tym warunki uczestnictwa oraz formularz rejestracyjny są dostępne na stronie:

kpmg.com/pl/kongresKPMG