Warsaw Business Journal October 2018 Issue #48

WARSAW

BUSINESS JOURNAL S i n c e 1 9 9 4 Po l a n d ’ s l e a d i n g

OCTOBER 2018 ~ No. 10 (48)

business magazine in English

For daily news visit us at wbj.pl

DOROTA POMACHOPĄTKIEWICZ Managing Director of Pandora for CEE reflects about the company’s position and the global jewelry market

TOP REAL ESTATE TRENDS

WARSAW’S CENTRAL OFFICE LOCATIONS PANATTONI EUROPE CEO ON URBAN LOGISTICS VASTINT’S TAKE ON MIXED-USE PROJECTS JEWELRY INDUSTRY | FREELANCERS IN POLAND | VIDEO STREAMING SERVICES | START-UP FINANCING

TH E N EXT GEN ER ATION OF SHOPPI NG, DI NI NG AND LEISURE

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OCTOBER

IN REVIEW

News highlights from the previous month from wbj.pl

OPINION

Salary disclosure.............................................19 Trademark protection.....................................22 Interim management......................................23

FEATURES

VoD/OTT services............................................34 Freelancers in Poland.....................................38

In Focus

Feature: Jewelry market 25 Universal trends and local challenges – Interview: Pandora 30

TECH INSIGHTS

Tech News.........................................................43 Interview: CardPay..........................................46

EVENTS

Book of Lists Gala............................................78 Poland Business Run......................................85 Baltica Equestrian Tour..................................85 28th Economic Forum in Krynica.................86

LAST WORD

A world without work.....................................88

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Lokale Immobilia – Real Estate Real estate news 51 Mixed-use projects 60 Interview: Vastint Poland 64 Warsaw office boom 66 Interview: Ghelamco Poland 70 Interview: Karimpol Group 72 Property management 74 Interview: Panattoni Europe 76

FROM OUR EDITOR

Faster, Better, More and Bigger!

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

Kevin Demaria Art Director

Michael Evans Copy Editor

Contributors

“HOW MUCH MORE CAN THEY BUILD?” my friend visiting from Denmark asked me as I was showing him around Warsaw this summer, some 10 years after his first visit here. He is genuinely impressed by the way Warsaw is changing, becoming a European metropolis in terms of look, buzz and entertainment. Judging from what the experts and the investors we have interviewed for this issue of Warsaw Business Journal have to say, the answer to my friend is – “much more!” Not just in Warsaw but in all major cities in Poland the appetite for investments and new projects is high and the plans go on for another decade. (Read what Ghelamco’s Jeroen Van der Toolen, Roger Andersson of Vastint, Harald Jeschek from Karimpol, and Panattoni’s Robert Dobrzycki have to say about that). The trends are – New Downtown business districts, high-rises, mixed-use projects, urban logistics to facilitate the fast-growing e-commerce market all despite significant construction service costs increases. Read all about it in our comprehensive real estate coverage in Lokale Immobilia on pp. 51-77. In our cover story this issue we take a look at another bright and shiny industry – the jewelry market – one of the fastest growing markets in Poland. We learn about how the small details matter and what the challenges are for one of the world’s top brands – Pandora from Denmark, which has its CEE HQ in Warsaw. Talking success, in general Poland seems to have a positive surplus of investments at the moment – GUS just reported that foreign nationals are spending more than ever in Poland – some PLN 21.1 billion in H1 on goods and services, a 3.9 percent y/y increase – while Poles spent PLN 9.3 billion during their visits abroad. 23 years in a row! Book of Lists – Warsaw Business Journal’s annual collection of data from the key industries was published last month. On September 17 we gathered top business leaders from more than 30 of Poland’s sector leading companies to reward them for continued strong performance and ranking no. 1 in their market. As usual, I wish you a great read – I hope you find something to make your day and business better – and if you have a story to tell then please do not hesitate to contact us – we are always looking for positive stories about and from Poland’s movers and shakers. MORTEN LINDHOLM

Morten has been equipped by Reykjavik District – Warsaw’s unique menswear design shop on ul. Burakowska 15. Check out Reykjavik’s latest collection at reykjavikdistrict.com

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Ewa Boniecka Sergiusz Prokurat Anja Rzhevkina Owen Williams Sales

Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com PR & Marketing

Agata Wolny awolny@valkea.com Book of Lists

Monika Rozner mrozner@valkea.com Magdalena Czopur Subscriptions

mczopur@valkea.com Krzysztof Wiliński Print & Distribution

dystrybucja@valkea.com Magda Gajewska 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

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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL

“The European Commission maintains that the Polish law on the Supreme Court is incompatible with EU law as it undermines the principle of judicial independence, including the irremovability of judges The new law lowers the retirement age of Supreme Court judges from 70 to 65, forcing one-third of the sitting judges to retire, including its current head.

SMALL FORMAT STORE sales up 5% in August Sales in small format stores (up to 300 sqm) grew by 5 percent y/y and by 0.7 percent m/m in August, the Polish Chamber of Commerce PIH said. The number of transactions in the previous month decreased by 2 percent compared to August 2017. The average value of a transaction stood at PLN 13.92 in August and was 7.2 percent more than a year ago. RETAIL

ŻABKA plans to open 700 stores in 2018 Żabka Polska, the owner of the chain of convenience stores, plans to open 700 new stores this year, CEO Tomasz Suchański

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said. Last year Żabka opened 500 stores, he added. Currently, the Żabka chain has 5,215 stores, out of which about 2,500 operate in new Galaxy format. In 2017 Żabka’s revenues amounted to PLN 7.2 billion. RETAIL

LPP to open first store in Slovenia, next in Kazakhstan in October Polish retailer LPP is planning to open its first store in Slovenia, and later, in October, a store in Kazakhstan, vice president Przemysław Lutkiewicz has announced. Next year, entry into the markets of Bosnia and Herzegovina and Finland is planned. In mid-August this year LPP officially opened the first showroom of its flagship Reserved brand in Tel Aviv. Israel is the 21st foreign

market where the Gdańsk company is present. At the end of June this year the group had 1,756 stores, of which 985 are in Poland. In the first half of 2018 Poland accounted for 54 percent of total sales. LPP manages the Reserved, Cropp, House, Mohito and SiNSAY fashion brands. The company has been listed on the Warsaw Stock Exchange since 2001. PHARMA

PHARMACY MARKET UP 8.3% y/y in August – PEX PharmaSequence In August, sales in the pharmacy market in Poland amounted to over PLN 2.77 billion, up by 8.3 percent y/y and 2.6 percent m/m, a report prepared by PEX PharmaSequence stated. An average pharmacy turnover in

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SHUTTERSTOCK

RETAIL

Włocławek

- the perfect place for your business - located in the very center of the country, on the Vistula, the longest river in Poland - city area - 84.32 km2, population - 105,000 people - well-connected: A1 motorway (Włocławek Północ interchange (Brzezie) - 4.3 km distance and Włocławek - Zachód node (Pikutkowo) - 4.7 km distance, national roads no. 91 Gdańsk - Toruń Włocławek - Łódź - state border, national road no. 62 Strzelno - Włocławek - Nowy Dwór Mazowiecki, national road no. 67 Lipno - Włocławek - friendly for development with rich industrial traditions (chemical, energy, food, metal and building materials industries), together with business environ-

ment institutions, such as Kujawskie Credit Guarantors and Włocławek Incubator of Innovation and Entrepreneurship - with advanced vocational education at secondary and higher levels in the following areas: construction, chemical, electrical, automotive and mechanical Włocławek Economic Development Zone - Industrial and Technological Park (Area of the Pomeranian Special Economic Zone): 33.4762 ha of comprehensively equipped land (roads, electricity, gas network, water and sewage network, and teletechnical network), an area with an industrial function - according to the local spatial development plan.

Feel free to contact us! City Hall of Włocławek Investor Service Center ul. Zielony Rynek 11/13 87-800 Włocławek tel .: + 48 54 414 40 44, + 48 54 414 44 77 e-mail: coi@um.wloclawek.pl

WBJ

In Review August was PLN 187,500, a 9.6 percent y/y growth. PEX PharmaSequence estimates that in 2018 the pharmacy market in Poland will grow by 2.4 percent to PLN 33.78 billion. FOOD

Sales of Polish apples in BIEDRONKA chain increases 15.5% y/y in 2017 Sales of Polish apples in the Biedronka network increased by 15.5 percent y/y to 77 million kg in 2017, Jeronimo Martins Polska, the owner of the supermarket chain, has informed. Biedronka is one of the largest recipients of domestically produced apples and pears in Poland. As much as 99 percent of these types of fruit come from 15 suppliers from Mazovia, the Lublin region, the Nowy Sącz region and Małopolska. Biedronka is the largest retail network in Poland. At the end of June this year Biedronka's network included 2,832 branches with a total area of 1.87 million sqm. AUTOMOTIVE

ALTERNATIVE FUEL CAR registrations up by 18.7% y/y in Q2 The number of new passenger cars using alternative fuels registered in Poland was 7,796 units in the second quarter of this year, which means an increase of 18.7 percent y/y, the European Association of Automobile Manufacturers (ACEA) reported. The number of new battery-powered electric cars amounted to 130 (an increase of 120.3 percent y/y), the number of plug-in hybrid cars was 200 (an increase of 28.2 percent y/y). The number of registrations of remaining hybrids in the second quarter is 5,306 (an increase of 40.2 percent y/y), and the number of cars with other alternative fuels was 2,160 (down by 16 percent y/y). Throughout the EU (excluding Malta), the demand for new passenger cars with alternative fuel sources increased in Q2 this year by 44.3 percent y/y to 294,690. M&A

COCA-COLA BUYS Costa Coffee for £3.9 bln Coca-Cola is acquiring British coffee-shop chain Costa Coffee from Whitbread in a £3.9 billion deal. The transaction value amounts to 16.4 times Costa EBITDA for 2018. The deal should be completed in the first half of 2019, Whitbread said in a statement. This combination will ensure new product development, continued growth in the UK and more rapid expansion overseas,

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TRENDING STATS

it added. Whitbread acquired Costa in 1995 for £19 million when it had only 39 shops. BANKING

PEKAO launches first London office WSE-listed Bank Pekao has launched its first office in London to support Polish companies planning foreign expansion, the lender said in a market filing. “Poland is becoming an increasingly attractive market for private equity investors from London, and Polish corporations have international ambitions. We want to be an intermediary of global connections on behalf of our clients and investors,” said member of the board Roksana Ciurysek-Gedir. Bank Pekao hopes that new facility will boost interest toward the Polish market from the private equity funds. It is estimated that in recent years, as many as 30,000 companies were established in the UK. “We are considering setting up a similar type of representative offices in the largest financial centers in the United States and in Europe,” added Paweł Kozyra from the Bank Pekao press office.

64.3%

Car registration increase in August (y/y, ACEA)

Retail sales increase in August (y/y, GUS)

3.4%

Average employment growth in companies in August

FINANCE

(y/y, GUS)

WSE MOVES to FTSE Developed All Cap Index

6.8%

As of Monday, September 24, the Warsaw Stock Exchange left the FTSE Emerging All Cap Index and joined the FTSE Developed All Cap Index. Reclassification as a Developed market has resulted from continuous improvements in Poland's capital markets infrastructure, supported by the country's steady economic progress, global index provider FTSE Russell stated. Poland has been waiting for this decision since 2011 when it was included in the FTSE Russell watch list. So far, Poland is the only country in the Central and Eastern Europe region that has been included in the group of developed economies. Some market participants, however, expect a rather negative effect of the change in indices. On the one hand, Poland will no longer attract investors interested in emerging markets, and on the other hand, its weight in the developed countries group may be too small to draw investors' interest. In the FTSE Emerging All Cap Index Poland's weight as of March 2018 was 1.33 percent, while in the FTSE Developed All Cap Index it is projected to be 0.154 percent.

Wage increase (y/y, GUS)

3.1%

Electricity consumption growth in August (y/y, PSE)

14 TWh Monthly energy consumption (y/y, PSE)

84%

of Europeans are against daylight saving time switch (EC)

FINANCE

Poles are going CASHLESS As much as 19 percent of Poles do not carry any cash with them, while 33 percent

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Invest in Inowrocław

INOWROCŁAW is one of the largest cities of the Kujawsko-Pomorskie province and thus one of the most important economic centres in the region. The city is situated in Central Poland at the intersection of major trade and (road and rail) transportation routes. It lies on the shortest route from the Wielkopolska (Greater Poland) region to Masuria and close to A1 and A2 motorways. The areas of the Inowrocław Economic Area consist of the North Zone (about 25 ha) and the Western Zone (about 2.5 ha - the area is the laureate of the third edition of the competition, "Land for Medal"). We also offer a Salt Investment Area for services related to the activities of health resorts, trade, culture and entertainment. Our assets are developed investment areas at very attractive prices, possibility of exemption from property tax and availability of employees. 88-100 Inowrocław, ul. President Franklin Roosevelt 36, phone (+48 52) 35 55 430 (+48 52) 35 55 230, e-mail: boin@inowroclaw.pl, www.inwestuj.inowroclaw.pl.

WBJ

In Review of people under 26 claim they only use electronic forms of payment, according to a study conducted by IBRIS. “Cashless payments are not only a symbol of modernity but also an advantage – both in the social and financial aspects. Our goal is to popularize the use of electronic payments and to replace some cash transactions, electronic payment instruments, i.e. payment cards, bank transfers, and mobile payments,” said Director of the Department of Electronic Economy at the Ministry of Enterprise and Technology Dominik Wójcicki. Over the last year, thanks to the cooperation between the Ministry and Krajowa Izba Rozliczeniowa (KIR), Poland’s automated clearing house, more than half of public administration offices have been equipped with payment terminals. “Since the launch of the Non-cash Payments Dissemination Program in public administration units, from April last year to the end of August this year, Poles have completed over 900,000 non-cash transactions with a total value of over PLN 114 million. This is an important step towards building a modern, citizenfriendly administration, which is why we are pleased that the Program has received such positive reception both on the side of offices and Poles,” added Dariusz Marcjasz, vice president of KIR. ENERGY

ORLEN picks suppliers for 150 charging stations PKN Orlen has completed the tender procedure for suppliers of 150 charging stations for electric cars. In the first pilot

stage, by the end of 2019, about 50 chargers will be launched, the company said. PKN Orlen charging points will handle all types of electric vehicles offered on the European market and will be equipped with two connectors for charging vehicles with DC. They will offer CHAdeMO and CCS plugs, as well as Type 2 connectors for charging vehicles with alternating current. EkoEnergetyka and EFACEC were chosen as manufacturers of the chargers for the group. Talks with a third producer are also being finalized as part of the proceedings. ECONOMY

Fitch sees GDP growth in Poland at 4.8% in 2018 Fitch Ratings predicts economic growth in Poland to reach 4.8 percent in 2018, and then it will slow down to 3.6 percent in 2019 and even further to 2.9 percent in 2020. The agency also predicts that investment growth will amount to 5.6 percent this year, 2.8 percent in 2019 and 0.6 percent in 2020. Analysts add that the situation on the labor market and “moderate weakness” of the exchange rate will lead to the acceleration of inflation. As a result, the central bank will raise interest rates in the second half of 2019. Fitch expects that the main interest rate (reference rate) will increase to 2 percent at the end of 2019 and further to 2.5 percent at the end of 2020. ENERGY

Poland aiming to have 10GW of energy from OFFSHORE WIND FARMS by 2030 Poland would like to generate 10GW of

energy from its offshore wind farms by 2030, said the government plenipotentiary for strategic energy infrastructure Piotr Naimski. “In our strategic plans, there is a room for offshore. It means that, by 20252030, there will be up to 10GW wind farms close to our shoreline,” he said. The national grid operator PSE is already working on a potential transmission grid at sea, close to Poland's shores, that could connect all interested parties, Naimski added. Currently, several Polish utilities are in a legal battle with wind farm owners over the termination of framework agreements for the sale of property rights resulting from certificates of origin with producers of electricity from renewable energy sources. ECONOMY

Moody's raises Poland's GDP forecast for 2018-19 Moody's credit rating agency has upgraded the 2018 GDP outlook for Poland to 5.0 percent from 4.3 percent expected earlier. For 2019 the agency raised GDP outlook to 4.2 percent from 4 percent. Moody’s estimated that in 2018 the Polish economy would reach the peak of activity in the current cycle. In the medium and long term, analysts expect a slowdown in growth, in particular due to the tight labor market, demographic trends and potentially lower inflow of EU funds in 2021-27. The agency also lowered the forecast of general government deficit to 1.4 percent of GDP from 1.8 percent (projected in April) for 2018, and to 1.7 percent of GDP from 2.3 percent for 2019.

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OCTOBER 2018 W B J

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Meet us at EXPO REAL stand C2.311

A TRUCK ALONE IS NOT ENOUGH TO DELIVER YOUR GOODS The reality and forecasts for the labor market are not optimistic unfortunately. Many challenges await employers in the face of the increasing shortage of qualified personnel and the growing expectations of employees in specific market and economic reality. These difficulties also affect the transport, forwarding and logistics (TFL) industry, which also suffers from a shortage of professional drivers and warehouse workers, without whom it is impossible to imagine business development and the successive growth of the group of key accounts. What can be done to maintain high employee engagement and to build positive, long-term relationships between the staff and the company? By Anita Koralewska-Ratajczak, HR Director, Raben Group, and Beata Szymczak, Strategic HR Business Partner, Raben Group

aben Group has found the answer to this question and launched many projects and initiatives targeting one of its most important professional groups – the drivers. Their goal is to retain existing drivers and win new drivers as well as building good relations with carriers. The spectrum of activities is very wide, and it covers many areas. Starting from structural solutions for carriers and substantive assistance at the stage opening of a business, through education on road safety and ending with activities directly supporting drivers and their families. Some of the initiatives are common to all Group companies, while some of them are tailor-made, depending on the business model of cooperation with transport companies or directly employed drivers. OBJECTIVE: CAREER Raben Logistics Polska has launched

the “DRIVE your career” project. Its goal is to promote the profession of being a truck driver. Anyone thinking about making a career in this profession will be able find professional and reliable answers as to the development path or as an entrepreneur and a carrier. It is an interdisciplinary project which uses experience and engages regional coordinators for cooperation with carriers as well company experts from the transport and HR departments. It covers a series of activities which aim to retain and build long-lasting relationships with carriers and their drivers. The most important of them are: building awareness and changing stereotypical thinking about the profession, dealing with important topics like staff turnover, engagement and satisfaction surveys, bonus systems, flexible forms of employment and training. All these activities are aimed at supporting activities related to the effective

management of human potential at our key external suppliers. i.e. carriers. This project should help create an inclusive environment that facilitates the exchange of good practices with carriers and lobbying for specific solutions. NO DRIVERS, NO FRUIT For eight years now, Raben Group has conducted the “Transport is Necessary” social campaign. Its goals focus on directing public attention on the importance of the profession of a driver and the role of transport in the modern world. One of the more recognizable actions carried out as part of this campaign were trucks with the following slogans: “No drivers, no shoes,” “No drivers, no cars” and “No drivers, no fruit.” Many people think that being a driver is a “light and stress-free” occupation. In reality, however, it is quite different. It is a profession which requires a certain predisposition, extensive

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skills, high qualifications, self-control and resistance to stress. Raben Group wants to see the profession given more appreciation and respect from the public. These image-related activities are also intended to encourage young people to try their hand in this profession. RESPECT ABOVE ALL One of the companies of the Group, Raben Transport, took part in the “Respect for Professionals” project to show young people what a driver’s job is and to encourage them to cooperate with us in the future. “Respect for Professionals” is not just lip service. Every year, on the occasion of International Driver’s Day, each driver working in Raben Transport attaches a symbolic yellow ribbon to their left mirror. In this symbolic way, the employer wants to emphasize the gratitude for the effort and dedication that drivers put into their everyday work.

WE FOCUS ON HEALTH AND SAFETY When talking about pro-employee initiatives of Raben Group, the issues related to the care for the health and safety of employees must not be disregarded. One of the goals of the responsible business strategy at Raben Group is caring for the health and safety of employees. The company pays special attention to the SHE philosophy (Safety, Health, Environment), which builds a robust safety culture among employees and subcontractors. For years now, Raben has been undertaking many educational, communication and training initiatives promoting health and safety in the workplace and at home. These include: Health Week, Raben Cup football tournament, Safety Month, competition for forklift operators “Dances with Pallets” and SUSA discussions. Much attention is also paid to education about the need to use high visibility clothing by warehouse staff and drivers. With drivers in mind, in July 2018, a special educational platform “Don’t be wild!” devoted to road safety was launched by the company. The Group feels responsible not only for its drivers, but also for other road users, which is why it wants to raise awareness among all of them. The platform offers all interested persons e-training in the form of 10 thematic animations, which show selected principles of safe behavior on the road and maneuvering yards which affect the safety of all road users. It is worth noting that this project was carried out by specialists from Raben Logistics Polska, Raben Transport and Fresh Logistics Polska, in cooperation with drivers, who shared their daily experiences and recounted situations on the road. In addition, as part of the incentiveloyalty program, dedicated recreation zones and outdoor gyms for drivers were developed, which is another example of care for their work comfort. Initiated by Raben Transport, the MOCARZE TRAS [STRONGMEN OF THE ROAD] campaign promotes healthy lifestyle both on and off the road. Drivers could use the advice of a nutritionist, learn how to cook healthy dishes on the road, learn the basics of martial arts or test their skills in the driving simulator. WORK-LIFE BALANCE A driver’s job is not simple, and it

requires many sacrifices. The most difficult of these is separation from loved ones. People often choose this profession for financial reasons. Raben Transport, which employs drivers directly, tries to support both drivers and their families so that it is easier for them to endure the separation they are exposed to. In addition to a safe, serviced fleet and remuneration paid in a timely manner, drivers and their families can count on co-financing for school equipment for children, subsidies for holidays or private medical care. Another benefit for drivers employed in Raben Transport are vouchers for 4-star hotels located throughout Poland, where they can spend the weekend together with a partner or colleagues. All these ventures strongly focus on building relationships and engagement with employees. Thanks to them, Raben Group is building its employer brand and becoming a reliable partner for subcontractors. It is definitely a good long-term investment which will pay off in the future and one which will have an impact on the further development of Raben Group and its employees.

Anita KoralewskaRatajczak HR Director, Raben Group - Experienced, highly energetic and charismatic HR professional with 20 year experience in large and small international companies. In Raben Group responsible for directing the overall Human Resources strategy. Responsibilty covers 12 countries, 10,000 employees.

Beata Szymczak HR Business Partner in Raben Group Experienced expert and innovator in HR. Her main area of responsibility is supporting whole Raben Group organization in projects connected with employer branding, internal communication and recruitment.

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Opinion EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS

(Un)disclosed salary

SHUTTERSTOCK

There is a debate in Poland about whether employers should be mandated to inform prospective candidates about the salary offered in job listings. A proposed amendment to the Labor Code has been submitted to parliament. Will information about salaries be routinely disclosed? While it could make recruitment easier, particularly in the employeeâ&#x20AC;&#x2122;s market we are currently experiencing, employers will need time to adjust

W B J OCTOBER 2018

Opinion HUMAN RESOURCES Janek PLN 150,000

Dorota PLN 120,000

he question about transparency in salaries is increasingly often up for debate all over Europe. In many countries, it is standard practice to include salary information in a job listing. That is the case in the UK, for instance. In Finland, you can submit a query about your coworkers’ salaries to the tax office. In Germany, people employed in large companies also have the right to know about their coworkers’ pay. In Poland, job listings that include pay scales are still rare and information about salaries is seen as confidential. However, change is coming to the job market, which is hardly surprising given that many industries are now a candidate’s market. More and more people browsing job listings expect to find information about pay before they commit to the recruitment process. Our experience shows that a listing without a proposed salary is noticed less often by candidates, which lowers the chances of reaching the target group of professionals, and therefore the chances of hiring a desired employee are also reduced. Recruiters encourage employers to at least share pay scales in their listings,

OCTOBER 2018 W B J

Ania

Piotr PLN 100,

PLN 80,000

but are still meet with doubt and even resistance. A CONTROVERSIAL OBLIGATION The proposed amendment may go a long way to reducing wage discrimination and facilitating recruitment. Communicating salaries directly could make recruitment more efficient and allow candidates to make informed decisions. However, employers are anxious about the obligation and say they would like to have the opportunity to analyze the benefits and risks that come with wage transparency. Some also believe that information about salaries should not be public because it is part of a negotiation between the employer and their prospective hire. They are also concerned about personnel policies and contractual clauses in job agreements and that their costs of new and current employees will increase. In many cases employers’ concerns are unjustified. It is the recruiter’s job to get to know the candidate’s experience and skills, as well as to assess whether their salary expectations correspond to market standards and the client’s budget. If they do not, the next step involves negotia-

tion. As for the mass salary increases for current workers that employers are afraid of, you cannot underestimate the role of cooperation and open communication: all staff should know what level of knowledge and experience they need to achieve in order to receive the salary stated in the job listing. EVERYDAY RECRUITMENT Making salary information public can, above all, speed up and facilitate recruitment, ensuring that companies get enough job applications from people who are satisfied with the conditions on offer. Employers could then interview only the specialists whose salary expectations they can meet. This is particularly important if the main reason a final job offer is rejected is that the pay is too low. If there is no pay information at the beginning of the recruitment process, a lot of applications come from candidates who will not be willing to accept the offer. You can avoid that problem by providing the key pieces of information from the get-go. Some see salary as key, others want to know more about the boss, the hierarchy and the size of their team. The new law may prove to be a time saver. Of course, you need a coherent and transparent pay scale and clear communication within the organization. Employers resist the proposed amendment because they are not ready for full pay transparency. Salary levels remain a sort of a taboo in Polish culture and employees consider information about their pay as confidential, even if it isn’t clearly stated to be so. This may change in the coming years. Regardless of whether or not the proposed bill becomes law, younger generations have different expectations about their careers. They consider transparency to be as important as flexibility. Employers will have no choice but to adapt.

Anna Podolska Branch Manager Hays Poland SHUTTERSTOCK (2)

WBJ

IT companies and state-owned employers who disclose pay information. In the tech industry it is difficult to attract candidates to even consider recruitment without providing salary information beforehand. A systemic solution making it obligatory to publish salary information in job listings raises some questions. Many companies don’t want to disclose pay information because of their competition or because they are afraid that current employees may start comparing their own salaries with newcomers. On the other hand, it would certainly make recruitment more transparent and effective. An increasing number of companies in Poland have decided to disclose pay scales anyway in order to save candidates’ and their own time. I think it will gradually become a standard market practice.

How much would you like to make?

Being asked about salary expectations is almost always the most awkward part of a job interview. But it is equally or even more uncomfortable when a candidate is asked how much they earn in their current job. Should information about salaries be fully public so that the financial aspects of a job offer are no longer an issue?

ne of the questions that candidates find the most difficult to answer during a job interview is about financial expectations. They are afraid that their expectations may be either too high or too low. It’s always a good idea to do some research before the job interview, not only studying salary reports but also asking friends who work in the same industry. A safe option is to provide a pay scale of 15-20 percent. Only 10 percent of Polish companies include information about pay in job listings, while as much as 90 percent of candidates would like to have that information available. Meanwhile, publishing pay scales in job listings is common practice in many European countries (e.g. the UK, Germany and the Netherlands) as well as in the US. In Poland, it is mainly

CURRENT PAY TABOO The question about current pay is also frequently asked at job interviews. There are many different views on how to answer this question, sometimes conflicting ones. Some say it is better to avoid answering the question by going straight for pay expectations, others recommend giving a straightforward answer stating the salary and bonuses and how much the candidates wants to earn depending on the scope of responsibilities in the new job. A candidate is by no means obliged to answer the question about their current pay. During recruitment, candidates choose to talk about their current pay unsolicited. We don’t ask about that. For example, in New York asking about pay history is forbidden. But if the question should arise, we should bear in mind that sometimes employees have contractual clauses preventing them from discussing pay. Besides, pay expectations are always more important for the recruiter than how much the candidate makes in their current job.

Katarzyna Jesionkiewicz Recruitment Consultant PEOPLE

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WBJ

Opinion LEGAL

MESSI scores again

The struggle for trademarks can be almost as intense as that of football players on the pitch, as evidenced by the MESSI case

owadays, sport attracts millions of people willing to admire athletes competing in sports arenas. Nevertheless, struggles before courts and offices for valuable trademark rights in the sports industry are sometimes no less intense. MESSI – A LIVING FOOTBALL LEGEND Lionel Messi’s hard times at the World Cup in Russia followed his attorneys’ long but ultimately victorious battle for the MESSI trademark. In August 2011, FC Barcelona’s (Catalonia) Lionel Messi registered MESSI EUTM 010181154 at the European Union Intellectual Property Office (EUIPO) as a word and figurative trademark for, inter alia, gymnastics and sports clothing, footwear and equipment. In 2011, Jaime Masferrer Coma – the owner of a Spanish bicycle manufacturer, filed a notice of opposition to the registration of Lionel Messi’s trademark. He argued that his registered MASSI trade-

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marks for, inter alia, clothing, footwear, bicycle helmets, protective clothing and gloves are very similar to the MESSI mark and thus may be confusing for consumers. The EUIPO’s 2013 decision was unfavorable to the famous football player, since it allowed the opposition filed by the owner of the already registered marks. The decision was appealed against on Messi’s behalf, but the appeal was also dismissed by the EUIPO’s Board of Appeal. According to the EUIPO, the trademarks at issue are similar, as their dominant elements, i.e. the terms “MASSI” and “MESSI,” are almost identical in visual and phonetic terms, and any conceptual differentiation would be made only by some part of the relevant public. Lionel Messi’s attorneys decided to fight until the end and applied to the General Court of the European Union to annul the decision. They pointed out, inter alia, significant differences between the marks in dispute, primarily in conceptual terms, taking into account the global recognition of Messi’s name. In their opinion,

Messi’s reputation goes beyond the purely sporting aspect that has made him a public figure. His attorneys pointed out that he is known to most press, news, television or radio enthusiasts. In other words, Leo Messi is known not only to active football supporters, but also to a wider audience. The chosen tactic proved to be effective and in its judgment of April 26, 2018 (T-554/14), the General Court of the European Union annulled the EUIPO’s decision. First, the General Court emphasized that the dominant element of Leo Messi’s trademark is indeed similar to the word element of the MASSI mark. However, it found that the EUIPO had erred in its conceptual comparison of the trademarks. The General Court found it wrong to consider that the reputation enjoyed by Messi concerns only the part of the relevant public which is interested in football and sport in general. In fact, the player is a well-known public figure who can be seen on television and who is regularly discussed in the media. The General Court also found that the EUIPO should have examined whether a significant part of the relevant public was likely to associate the term “MESSI” with the name of the famous football player. Lastly, the General Court emphasized that account must be taken of the fact that the goods, which are covered by the marks at issue and for which a likelihood of confusion may exist, are primarily sports equipment and clothing, even if those are not limited to football. However, it seems unlikely that an average consumer of those goods will not associate, in the vast majority of cases, the term “MESSI” with the name of the famous football player. Messi scored again to win the long judicial battle for the trademark. Those admiring the great Argentinian for his talent are still keeping their fingers crossed for the star to shine again, not only before the court, but above all on the football pitch.

Karolina Marciniszyn Patent Attorney, Partner, Head of Intellectual & Industrial Property Law Practice Kochański Zięba & Partners

WBJ

Opinion MANAGEMENT

Are Polish companies ready for interim management?

The idea of interim management has been developing in Poland for a decade. And while the market is growing at a rate of 15 percent each year and the forecasts for the coming years are positive, we are still a long way from Western markets, where these services have been commonplace for years

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nterim management is a temporary cooperation between a company and an interim manager – an experienced specialist with a clear-cut professional profile hired to perform a specific job and reach well defined business goals. Once the job is done, the interim manager leaves the company and their remuneration is contingent on their results. The first country to introduce this management model was Sweden, where interim management services appeared back in 1960s. Over the years, the solution has been adopted by the Benelux countries, France, the UK and Germany. The number of interim managers in the UK is estimated at 20,000, and at 15,000 in Germany. In Poland the number is 10 times lower. Does this mean that the Polish market is not ready yet for interim management? LOW AWARENESS The relatively low popularity of interim management in Poland may be the product of several elements. First, entrepreneurs still don’t know much about the service and how it can benefit them. Unsurprisingly, corporations that use interim management in Poland have already become acquainted with the model in their sister companies in Western Europe. Secondly, decision-makers in organizations are still distrustful of the solution, wary of the high costs or the time it could take to get the interim manager up to speed with ongoing projects. They

also fail to see the difference between an interim manager and a full-time employee who could also be a top-level specialist. In some cases, companies may have poor past experiences with the choice of interim manager. This is usually the case if the management misdiagnoses the problems the company is facing, defines goals and KPIs incorrectly or fails to identify which competencies are missing in the team and selects the wrong person for the interim manager role. To reduce these risks, entrepreneurs need to be educated on how the model works, how to choose the right person for the job and define the areas and types of projects where an interim manager can prove to be effective. Until recently, entrepreneurs saw working with an interim manager as an absolute last resort, when all other methods of increasing efficiency had failed. They also equated interim management with crisis management. This is changing, though. According to the latest report prepared by the Interim Managers Association, companies no longer opt for the solution just in the strategic and management areas, but increasingly often in sales, HR and finance. The most common reason to hire an interim manager is when the company lacks certain competencies, when the organization faces a major change or to complete a very specific project.

level of awareness of the service, there seems to be a long road ahead before the solutions becomes commonplace. It does not mean, however, that Polish companies don’t need it. Economic changes: the growing competition caused by an ever-more global economy, and the increasing complexity of business models forces organizations to look for new ways to develop. Entrepreneurs come across challenges they have never seen before, and they need unique competencies and experience to solve them. Digitization and the growing need for optimizing costs force companies to be more flexible and swifter in introducing changes. That is exactly what interim management offers. You can expect interim managers to become more in demand. Entrepreneurs need to understand the model and the purpose of the service. They need to realize how effective interim managers can be in increasing operational efficiency. But, as with everything else, you won’t know it until you’ve tried it.

Beata Zborowska Partner Mastery of Management

IM TO THE RESCUE If we measure whether the Polish market is ready for interim management by the

W B J OCTOBER 2018

Best gift from Poland handmade silverware

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IN FOCUS

SHUTTERSTOCK

JEWELRY MARKET

BY ANJA RZHEVKINA

GOLD AND DIAMONDS IN DEMAND

Jewelry is one of the fastest growing markets in Poland. Albeit still small, and largely fragmented, it appears to be quite attractive to global producers and designers. Local brands are also making an impact and are poised to take on international markets

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TOP: COURTESY OF FERRARIFIRENZE, BOTTOM JEWELRY DESIGNER ELLA ZUBROWSKA, PORTRAIT BY TATIANA HAJDUK

IN FOCUS JEWELRY MARKET

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“ Necklaces and bracelets with diamonds suitable only for a special occasion are now less popular. More clients prefer jewelry with a single stone “Made in Poland” is not readily associated with jewelry and luxury in general. Not yet, at least. The value of the luxury jewelry and watch market in Poland is about 18 times smaller than in neighboring Germany and 20 times smaller than in France. However, it is developing the fastest of all luxury goods in Poland. By 2021 its value should reach about PLN 976 million, meaning a growth of almost 50 percent compared to 2017, KPMG analysts estimated. With the growth of wealth, more and more Poles are interested in buying expensive jewelry with diamonds and other precious stones. Many clients see this as an investment of timeless value, said Piotr Rączyński, CEO of Apart, Poland’s biggest jewelry producer. In the company’s recent collection “Your Diamond Story by Apart” every diamond has a unique story confirmed by a certificate. Emotional experience

Buying jewelry is not only about characteristics of gold and precious stones, it is an emotional experience. How a piece was created, whether the design is unique – the details matter a lot. Wealthy customers in Poland want to buy both products designed locally, and those from international boutiques, e.g. Milan or Paris, said Radosław Jakociuk, head of W.Kruk, the oldest jewelry maker in Poland, with a history dating back to 1840. In recent years luxury in

Poland has become more discrete, developing into part of everyday life. Necklaces and bracelets with diamonds suitable only for a special occasion are now less popular. More clients prefer jewelry with a single stone, a representative of another leading brand, Yes, told KPMG.

Home-grown success

W.Kruk, Apart and Yes have been market leaders in the Polish jewelry industry for years. In 2016 Yes opened a concept store on one of the most fashionable streets in Warsaw – ul. Mokotowska. In the store visitors can familiarize themselves with a history of the brand, drink a glass of champagne and discover new collections. Last year, Apart celebrated its 40th anniversary at the Wielki Theatre, inviting Polish stars, who wore jewelry from the brand. W.Kruk recently announced its plans to expand internationally through the acquisition of stores in the Czech Republic and Slovakia.

Designed in Paris, made in Poland

As the demand for jewelry grows, new brands are eagerly entering the Polish market. Founded by local designers, they mostly offer semi-fine jewelry affordable to middle-income clients. A designer from Warsaw, Anka Krystyniak, makes jewelry that resembles amulets. She uses Polish symbols, such as mermaids and eagles, Indian motifs and she looks for inspirations in various religions.

A brand from Łódź called Animalkingdom started out in 2011 with just two necklaces and two bracelets and quickly won the hearts of Polish women. Customers are offered the opportunity to create their own jewelry from the pieces in the shape of animals, birds and flowers. Another Polish designer, Ella Zubrowska, creates collections inspired by antiquity and theater. “The collection is set in a fairy-tale world of small luxury sculptures which are entirely handmade in my workshop in Kraków,” the designer says. Zubrowska lives between Kraków and Paris but makes her jewelry in Poland. She said that her first clients were mostly Polish. When the brand was officially launched in Paris in May, more and more international orders came. “Made in Poland is actually very connected to made in the EU. There are many French fashion brands that are producing in Poland, such as Heimstone. Made in Poland is definitely not associated with cheap manufacturing. We have a lot of very good professionals,” Zubrowska said. She added that there are many Polish designers working for big international brands, and some of them may at some point choose to establish their own labels.

Not only silver and amber

The interest in original jewelry from Polish artists is rising. Social media helps young brands to gain popularity and a customer base. Seeking to stand out, jewelry producers actively exper-

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IN FOCUS JEWELRY MARKET

“ The design of Italian jewelry, the materials used, different goldsmith traditions and higher prices compared to local producers make the penetration of the market slow iment with the form, shape and materials. According to a specialized magazine, Polish Jeweler, for a long time, silver and amber were the most popular materials for jewelry in Poland. But recently, artists have started integrating gold into their collections, and their pieces have already drawn attention at international competitions. At Dubai Design Week, young Polish designers surprised the international audience with physiotherapeutic jewelry. The MIKO+ brand offers gold-plated rings and bracelets with moveable elements. Their special shape massages the hand to relieve tension and pain. The bracelets are designed in a way to keep the wrist in the right position or to relax muscles while working at a computer. Another exotic collection is Messh Perfumed Jewelry: handmade pendants with scented balls inside them. Clients choose a design of a necklace, bracelet or earrings together with a fragrance. The perfume will last for about a month and can then be exchanged.

International brands in Poland

With the growth of overall wealth and demand for jewelry, Poland has become an attractive market for brands from other European countries, especially Italy. In June an event called Italian Jewelry in Warsaw brought together representatives of Bizzotto Gioielli, FerrariFirenze, Federici Gioielli and other local brands interested in partnership with Poland.

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Poland is attractive because its jewelry market is at an expansion and development stage, a representative of FerrariFirenze Giulia Callegari said. However, for an Italian company there are various challenges. “The design of Italian jewelry, the materials used, different goldsmith traditions and higher prices compared to local producers make the penetration of the market slow,” Callegari said. Still, overall FerrariFirenze is optimistic as Polish women appreciate beauty and the handmade concept. Even though an average Polish customer spends much less than an Italian or a French one, it hasn’t become an obstacle for

the success of Austrian crystal jewelry producer Swarovski and Danish Pandora. Both have their mono-brand stores in all major Polish cities. In 2017 Swarovski also chose Gdańsk as the location for its global service center. Luxury jewelry from abroad is present in Poland through multibrand salons, such as Noble Place. The chain, with stores in Warsaw and Gdynia, offers its clients jewelry from Roberto Coin, Chopard and other iconic brands. Italian Pomellato rings with a “nude” stone in various color combinations, Montblanc watches, Boucheron wedding collection are all there for the most demanding clients.

CAN JEWELRY BE AN INVESTMENT?

In 2017 the price of gold rose due to numerous factors, including the weakened dollar. The demand also grew, once again reinforcing the conviction that gold is a good investment, according to Goldenmark, one of the largest distributors of gold and silver in Poland. However, investing in jewelry requires knowledge of certain criteria, e.g. the retail price of an item should be as close as possible to the market price of gold and diamonds. Therefore, buying jewelry in a store can be a pleasant shopping experience rather than an investment, as the client pays for retailer margins, marketing and advertising costs etc. For those who want to diversify their investment portfolio, Robert Śniegocki from Goldenmark suggests buying premium class diamonds (which account for only 2 percent of all extracted diamonds). In Poland sales have nearly doubled in recent years. Colored diamonds have drawn particular interest. “This means that Polish investors want to have something special and unique in their portfolio,” Śniegocki said.

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JEWELRY BY ELLA ZUBROWSKA, PHOTOGRAPH BY OLA WALKOW

IN FOCUS JEWELRY MARKET

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INTERVIEW BY BEATA SOCHA | PHOTOGRAPHS BY MICHAŁ ZARANEK

Universal trends and local challenges

Some brands are welcomed with open arms when they first come into Polish shopping centers, some have to fight their way in. PANDORA’s history in Poland was the latter case. Yet, despite the odds, the company has managed to grow enormously over the past decade and now its network includes approx. 400 points of sale in the CEE region alone. WBJ sat down with Dorota Pomacho-Pątkiewicz, Managing Director of Pandora for the CEE region, to talk about the brand’s early days in the country, global jewelry trends and the challenges that come with overseeing over 20 markets

WBJ: PANDORA is a multinational company. You manage 24 coun-

tries from your Warsaw office, five ownoperated and 19 distributors’ markets. What are the biggest challenges you face in your everyday work? Dorota Pomacho-Pątkiewicz: People are the greatest challenge. We coordinate five own-operated markets which have our own companies, distribution and sales networks as well as 19 other countries in the CEE region. Cultural differences are extremely important to consider when you deal with that many cultures. For instance, Romania is part of CEE but it has a more southern culture, which is different to other markets. Two years ago we organized a winter party, to which we invited all the store managers from our markets. One of the most talked about things at the party was the fact that the place cards featuring people’s names followed the name order of each country, for example, Hungarians had the name order popular in Hungary (first family name, then given name, unlike in other CEE countries). These are small things, but showing appreciation of their culture matters to people. Do tastes in jewelry differ from one market to another?

We are a global company and we want clients all over the world to recognize our stores as soon as they step in. Except for small cultural differences, such as e.g. Chinese New Year, 95 percent of our collections are the same across the world. The list of bestsellers is also very similar in each market, regardless of whether it is the UK, France or the Czech Republic. Of course, there are some local differences, for instance, in the Czech Republic the second most popular charm is one featuring the Charles Bridge, mainly due to tourism. Other than that, we observe similar trends everywhere. Let’s take the Turkish market. I was surprised how much the country follows jewelry fashion trends, despite having a very strong tradition in jewelry making (e.g. women are still gifted gold for their wedding there). A while back, we did a product placement on a very popular TV show in Turkey. For the next two weeks we practically only sold the bracelets that were featured in that show. How do you position your products? We offer affordable luxury. We make stylish, feminine and contemporary jewelry that is worn every day, inspiring women to embrace their individuality and

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IN FOCUS JEWELRY MARKET

express their personal style. Our jewelry combines traditional craftsmanship with modern technology – we have our own modern factories but each single pieces is hand-finished, all stones are set manually. We offer the same production process as luxury jewelry, but at an affordable price. Naturally, PANDORA’s positioning is different in Poland than in other markets, depending on the purchasing power. Product lifecycles are different in Western countries, where jewelry is purchased much more frequently: women there buy jewelry to suit a dress whenever they purchase a new one. In Poland, jewelry is still not an everyday purchase. But the more we earn, the more we can afford and the more eager we are to express ourselves, our moods – also through the jewelry we choose. Are you clients exclusively female? We produce jewelry for women, but men often buy our jewelry as gifts for their loved ones. Of course, some gifts are later exchanged for other items, but we also have online wish lists, where you can create your own set. This is a great help to both men and women. Often, a man comes into the store with a catalogue and the desired pieces circled in it. How is the e-commerce channel developing? E-commerce is growing very rapidly, at a pace of several hundred percent annually. It currently accounts for some 20 percent of our revenue in Poland. Our clients know what they’re buying, as they usually already have several PANDORA pieces in their collection, and online shopping makes their lives much easier. How often do you introduce new products? The frequency is something that distinguishes us on the market. We introduce new collections (so-called drops) 7-10 times a year: for every season, as well as all major holidays: Valentine’s Day, Mother’s Day, Christmas.

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Is it difficult to coordinate so many drops? We are the only jewelry producer of that size with our own production facilities. We have a sizable design and product department, part of which is located in Copenhagen and part in Milan. Our chief designers are Italians. We stay on top of all major trends in fashion. The designs are sent to the production facility, where they are processed and prepared for manufacturing and then we produce the jewelry. It is then distributed through our own Distribution Centers to our stores. This way we maintain full control over the entire production and distribution process. PANDORA is a Danish company. Does the Scandinavian management style have any bearing on how you run the company here? Indeed, we have Scandinavian roots and we take advantage of the corporate culture. When we entered Poland, few people believed the brand would succeed here. It was very hard to get into shopping malls at first. But our people were very passionate about their job, even if some of them lacked retail experience. We had a lot of leeway from the very beginning on how to grow the business. And we’ve managed to create a very big market here. We would never have accomplished that if we had been micromanaged. We are proud of what we’ve created, and we will continue with our development. I believe that we also offer extraordinary benefits to our employees and maintain a warm and very friendly atmosphere within the entire organization. We enjoy informal ways of working in our everyday life. We create a wonderful team, full of passion and energy, capable of coping with any challenges. You say you found it difficult at the beginning to enter shopping centers. How did you manage to get a foothold? We had to sublease our first store from another retailer. When I was renewing one of our first lease agreements after five years,

“ Customer experience is very important: our clients have the same experience in our stores wherever they are located

the center’s managers told me that no one really believed we would last a year. And a foothold wasn’t a huge problem – PANDORA is a well known brand all over the world and Polish customers are very open to new products. Very quickly we have won their hearts. Now we have a lot of loyal customers and new ones are still coming. How quickly has PANDORA grown in Poland over the past 10 years? Very quickly. There were times that each month we would open 4-5 new stores in Poland alone, and several dozen in the entire CEE. The growth has tapered off now. We don’t have that much more room to grow. We already have 50 concept stores in basically all Polish cities with population of 100,000 and above. We are still testing and entering new locations. Altogether we oversee approx. 400 points of sale across the Eastern Europe region. I have no way of visiting all of our 24 markets even once a year. Recently, PANDORA leased 3,190 sqm in Warsaw’s Graffit building in Mokotów. Was it because you have outgrown your current office? Yes, it was. PANDORA has two companies in Poland: our core business office with 80 people and the Shared Service Center with 150 employees, who provide services for the entire EMEA region. Additionally, we employ about 300 people working in our stores. Where we are now, we have access to the airport and when we had a warehouse in Warsaw it was a big advantage. Now, the products are shipped from one of our Distribution Centers in Hamburg

so logistics is not an issue, and we would like to focus and appreciate the needs and comfort of our employees. We want to provide them with better facilities, an easier commute and office that is tailored to our current needs. The new office on ul. Domaniewska is only eight minutes from the subway station on foot wearing high heels. Weâ&#x20AC;&#x2122;ve checked that. Do you have a lot of competition from other brands in Poland? The Polish market is very fragmented. Aside from major brands, there is a lot of craft jewelry. We are definitely a major global brand here. PANDORA is the most widely recognized jewelry brand in the world, and the second largest one. Last year PANDORA took over 13 stores in Poland. What are your plans for the next few years? We are now in the process of moving away from multi-brand stores and non-branded sales. Our stores, both our own and franchise outlets, are all concept stores, where the way we present the product is the same all over the world, including our own furniture. Customer experience is very important: our clients should receive the same shopping experience in our stores wherever they are located. Our five-year strategy focuses on increasing the number of own operated stores. That is why we are taking over franchise stores. Last year, we acquired 13 such stores in Poland, we are in the process of taking over more across the region. Globally we are also acquiring distributors, last year we took over, among others, Spain, Belgium and South Africa. The issue of certificates of origin is raised fairly often in the jewelry market. How do you approach that? Corporate Social Responsibility (CSR) is extremely important to us. We offer resource origin certificates, we are certified by the Responsible Jewellery Council (RJC). In a market which is price sensitive and does not satisfy everyday basic needs,

consumer education plays a vital role. Studies are clear: most of us declare that we are willing to pay more for products produced in a sustainable way, but declarations are one thing and the actual purchasing decision is another. It is changing, but we still have a long way to go as consumers. Furthermore, PANDORA employees recycle, reuse and repurpose 100 percent of waste products from our jewelry manufacturing process. As much as 97 percent of silver and 74 percent of gold grains used to produce our jewelry comes from recycled sources. We also make sure our business ethics as an employer are above any reproach. We produce our jewelry in Thailand, in our own, fully controlled factories, and we have repeatedly received awards and recognition from the Thai government as a company

that continues to create new workplaces and new opportunities each year. We have had a long-term relationship with the country and we are enjoying the benefits of our commitment. Once, we organized recruitment without even placing an ad. We put up a note on the factory door and the news of the recruitment spread solely by word-of-mouth through our employees. We had thousands of people come to the recruitment event that weekend. We employ approximately 13,200 people in our three production facilities in Thailand and we are considered one of the best employers in Thailand. Our workers have their own TV channel, radio station, talent shows, transport to and from the facility, paid lunch etc. Wages are also above average. We are seen as a very desirable employer and we want to continue to be one.

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CHANGING CHANNELS 34

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In the post-globalization world of internet ubiquity, is there still a place for regional TV? With lightning-fast connections and information on everything instantly available, itâ&#x20AC;&#x2122;s just a matter of time before the stream of internet TV providers floods the local players BY OWEN WILLIAMS

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FEATURES

here are many forms of media available to users in today’s world; from the classic book to the latest channel from your favorite YouTuber. Choose any of these media forms, imagine paying for it, but then only being able to enjoy it at a set time for one hour every week. On top of that, it is constantly interrupted by adverts! With a book this would be totally unacceptable. It is only with traditional TV that it is permitted. The only reason it’s tolerated is because it’s always been the paradigm for TV delivery. But things are changing. The introduction of OTT services such as Netflix (launched in Poland in 2016) Amazon Video (rolled out globally 2016) and HBO GO (in Poland since March 2018) have started to make people realize how outdated the old system is. VOD services are now offered by all major TV broadcasters, but is this enough to keep them alive in this fast-changing market?

“ YES, CONVENIENCE IS A

HUGE SELLING POINT; WHO DOESN’T WANT TO BE ABLE TO WATCH EPISODE AFTER EPISODE OF THEIR FAVORITE SHOW UNINTERRUPTED AT ANY TIME?

The convenience of binge watching

The world is smaller than ever. With disappearing borders around the world, global values are becoming more homogenized. People are better connected – technologically and sociologically – than ever before. As such, the media consumed around the world is becoming less distinguishable to the extent of being identical; just look at the talent shows (Mam Talent! Britain’s Got Talent etc.) that have been globally franchised as an example. Taking advantage of this are huge, international TV providers launching their services to a worldwide audience. Done on an OTT or VOD system, these companies appeal to audiences the world over for reasons other than convenience. Yes, convenience is a huge selling point; who doesn’t want to be able to watch episode after episode of their favorite show uninterrupted at any time? But also, greater viewing statistics play a major role. Netflix and its contemporaries gather a lot of data on all of their viewers, from genre inclination through actor preference to viewing time and habits. They can then use this information to tailor suggestions and even production for the market. Such data can show what works best in Poland, leading the provider to commission similar shows specifically for that audience. The system seems to be working, as Netflix produced its first ever Polish language original series “1983” this year, attracting Agnieszka Holland and Kasia Adamik to the production team in the process.

Who’s switching?

Although statistics show that the subscriber base of Netflix et al. is increasing with over a million subscriptions in the first year alone, there may still be hope for local TV producers. Firstly, many viewers who take on HBO etc, do so in addition to their existing network packages, favoring to keep NC+ or Polsat. They do this for the same reason some people don’t want to make the switch; live transmissions, local news, regional programs and sport. This is particularly true for older viewers who are so accustomed to the functioning of TV schedules that any change would be disruptive. This same section of the market favors familiar shows, or things relevant to the local area, over new media from a global perspective. That’s good news if you’re an executive in the local TV station and have a short-term perspective, but what about the other demographics? Netflix’s own statistics show their biggest subscriber base is in the 18-35-year-old section, while the fastest growing is 36-45-year-olds. So, even if traditional broadcasters manage to hold onto the rights of the country’s most popular shows, as the population ages, the future’s looking good for OTT producers.

OTT – Over the top. content that was made for internet users streaming directly without any previous broadcasting.

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Sports exclusives

TV production in the future, with a desire for regional producers only found in news and local productions. It would appear unfeasible for such a small demand to warrant a whole TV network, but there may still be other options for local producers. Firstly, Netflix/Amazon and their competitors may subcontract news production, forming arrangements with local producers and offering their content on the OTT platform. Secondly, news consumption may shift from TV to PC, (something that is already happening, but would be exacerbated by an absence of local TV stations) thus providing more opportunities to independent film-makers to reach a larger audience online. Finally, the extinction of TV as we know it may be the catalyst for the evolution of local radio stations; media providers who are already producing countless online videos to accompany their radio broadcasts and news bulletins. Whichever scenario plays out, savvy local producers should be able to find a platform for their media, so long as there is a demand for it. Things don’t look good for the national TV networks, but the individuals producing on a local level should be Fighting for survival able to keep their programs; they just might need to change It seems inevitable that OTT and VOD will completely dominate channels. Live broadcasts and sport are a feature of classic TV production which could keep viewers paying for their satellite/cable connections. Again though, this could all be set to change; Hulu (the Disney, Fox and Comcast joint venture answer to OTT rivals) is already offering live transmissions to those holding subscriptions to the service! Presently, it’s only available in the US and Japan, but that’s how all the big names in Polish OTT media started out, so the future could see similar services introduced to Europe and Poland. Amazon Video is ahead of the curve in this respect, already including sports programs as part of its worldwide offer. It seems then, that news and local programs may be the last hope for regional TV providers. By its very nature, news is not something which is suitable to an on-demand platform, while the number of regions covered by global media providers make the chances of bespoke programs for each one seem unlikely. Is this enough to keep a local station alive? It seems doubtful.

VOD – Video on demand. A service where a media library is available for viewers to watch as and when they please.

W B J OCTOBER 2018

FEATURES

OCTOBER 2018 W B J

BEING YOUR OWN BOSS Journalist, dentist, lawyer, notary, translator, architect, business coach, photographer, psychologist. Many of these professionals opt against working the traditional nineto-five. Very often they do not even want to work full time. And the economy is in their favor. They can render their services online, with geographical location not being a factor. Poland has become an attractive place for professional freelancers By Sergiusz Prokurat

W B J OCTOBER 2018

FEATURES

ost-transformation Poland saw the first liberal professions appear. Even some occupations of public trust, such as notary, underwent the process of decentralization. Still, back in 2013 Poland was a European record-holder in limiting access to occupations, because the list of regulated professions consisted of as many as 380 positions. Since that time, however, we have seen substantial deregulation of some liberal professions. In 2017, nearly 10 percent of small and medium-sized businesses were run by freelance professionals. “People described as freelancers are a very varied group, as are the reasons why they give up on steady employment,” said Anna Wicha, CEO of Adecco Poland. “It is however a fact that the group is growing at an increasing pace. When Walter Scott used the word ‘freelancer’ for the first time in his novel ‘Ivanhoe’ back in 1820, he surely did not expect the term to describe a third of working people in Europe and the US.” Poland seems to be on the same track. According to Eurostat’s latest available data (2016), 1.05 million Poles had more than one job (out of the total 15.9 million working Poles). Moreover, the percentage of people with higher education working for more than one employer was as high as 16.3 percent. The market is clearly adjusting to the changing working habits. In Warsaw, where there are over 110 locations offering Workspace As a Service, the share of flexible working space take-up in the total volume of space leased shot up from below 0.5 percent in 2017 to 14 percent in Q1 2018, according to real estate consultancy Savills. Freedom above all Freelancers can certainly enjoy a good life in Poland. People wishing to work on their own terms are supported by favorable market conditions now. Building an individual brand and client portfolio has become easier than ever because of the growing demand for specialized, or even hyperspecialized services. According to a 2017 report on liberal professions prepared by Deutsche Bank, freelancers value flexibility of the workplace and working time the most (51.7 percent). The second most commonly indicated advantage of a liberal profession is the opportunity to develop themselves professionally (13.3 percent), followed by running your own business (10.2 percent) and balanc-

OCTOBER 2018 W B J

“As a freelancer, you manage your own time. You can take mornings off, go to the gym in the middle of the day or take a nap after lunch

ing work with personal life (8.2 percent). “The majority of people spend eight hours at work each day, while the day only has 24 hours. Including commuting, we spend nearly a third of our lives in the workplace. Not everyone is happy with that,” commented Wicha. As a freelancer, you manage your own time. You can take mornings off, go to the gym in the middle of the day or take a nap after lunch Not too glamorous Interestingly, according to the Deutsche Bank research, very few professionals see a liberal profession as an opportunity to have above-average earnings (approx. 2 percent) or enjoy social prestige (also a single-digit share). After all, name-dropping is harder if you work for a one-man company. The interesting thing is that the earnings of freelancers are higher than the earnings of full time workers, if calculated by working hours. Overall, however, only 3.3 percent of these people earn more than PLN 15,000 per month. As many as 42.5 percent make a modest PLN 2,000-4,000, while close to 12 percent obtain earnings of PLN 7,000 to PLN 15,000. One problem could be the lack of stability. Over a third (39 percent) of respondents have drawn attention to the problems of steady inflow of new orders, which probably can be a challenge for freelancers who have only just begun building their brand. Their income can be very diverse, and ensuring regular earnings is a problem for 42.6 percent of freelancers. A journalist, architect or business coach can earn multiple wages of a full-time worker but he or she has to work for this success for many years. “Every freelancer will admit that there are months where they see a five-digit salary. But there are also months where all of these digits are zeroes,” Wicha commented and added, “This is a risk that many employees are more and more willing to accept in exchange for freedom to manage their own time.”

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Responsibility vs. opportunity Liberal professions mean responsibility. The biggest challenge for freelance professionals (48.5 percent) is the continuous need to compete with other people offering the same service. A lot of specialists are also afraid of the consequences of making a mistake and 43.4 percent see the legal responsibility for their work as a challenge. A lawyer or a notary may experience problems associated with legal negligence. A journalist risks being sued for libel and the newspaper’s editors will not stand in his or her defense. Translators, copywriters, graphics designers and even architects face the problem of numerous revisions and iterations of the same work. These people find other things far more important, such as opportunities to develop and learn, and relatively simple regulations governing a single-person business. Long-term plans However, freelance professionals must be aware of the dangers concerning their retirement age. This is why they save money themselves. The average Pole shows a significantly lower willingness to save for their pension than a freelancer. In 2017, almost half of freelancers (47 percent) declared they were saving up for retirement, and the percentage was 6 points higher than a year earlier. Only 23 per-

FREELANCERS’ EARNINGS

Over PLN 15,000

PLN 7,00015,000

Below PLN 2,000

PLN 4,000-7,000

PLN 2,000-4,000

Source: Deutsche Bank

cent of Poles in general stated the same, with the percentage 5 points lower than the year before. Moreover, the tendency to make long-term savings increases with age. Pension security is most important for people aged 55-64. Foresightedness is also a trait of professionals with above-average earnings (above PLN 10,000). Here, the percentage of people building their pension capital exceeds 60 percent. The planned Employees Capital Pension Schemes (PPK) is also going to look after freelancers, at least those who are obliged to pay social security contributions. They will be offered the option of longterm savings in the newly established system, on par with regular contract workers. Despite the liberalization of services in Poland, at the same time there is a tendency to organize new professional groups based on the principle of a compulsory self-government. The architect’s profession can be an example here. Meanwhile, other groups, e.g. land surveyors, cartographers, social workers or judge-commissioners took it upon themselves to establish corporate self-governments. Further evolution of professional self-governments comprising the occupations of public trust will depend on whether we find a balance between treating a liberal profession as a company and considering its functions in terms of public duties. It is certain that freelancers are indispensable, and they will continue to be so in the future.

W B J OCTOBER 2018

TECH i n s i g h t s Zortrax to deliver 3D printers to French Faurecia 3D printer manufacturer Zortrax will deliver 3D printers to the French car equipment manufacturer Faurecia, the company said. The first Zortrax devices were shipped to the French concern at the end of 2017. Both companies are looking to develop cooperation in the coming months, according to the statement. Earlier, Zortrax introduced Inkspire â&#x20AC;&#x201C; a new resin printer using UV LCD technology â&#x20AC;&#x201C; to the market. The Polish manufacturer claims that the device works eight times faster and nine times more accurately than the leading DLP and SLA 3D printers.

PRESS MATERIAL

>>>

TECH NEWS W B J OCTOBER 2018

TECH

CD Projekt announces release dates for 2 Witcher games

Fat Dog Games with distribution deal in China Listed on the small-cap, alternative NewConnect market, game developer Fat Dog Games has begun distributing some of its titles on the Chinese market via the Sonkwo platform, the company said in a market filing. Currently, four titles are available. The company is working with major local game distributor Beijing CE-Asia Co. The company games are available on PC as well as consoles such as Playstation 4, Xbox One, and Nintendo Switch.

Orange Polska and Huawei test 5G technology in Gliwice Orange Polska and Huawei have launched a station supporting 5G technology in Gliwice. These are the first tests in Poland carried out outside of a laboratory. They will enable the evaluation of the impact of high buildings and atmospheric conditions on 3.4-3.6 GHz frequencies. Orange Polska said that it is a new stage in preparation for 5G network construction. During the tests in a laboratory, a speed of 1.8 Gb/s was achieved. In urban conditions, at larger distances, the data flew at 1.5 Gb/s through a 100 MHz channel. This is almost twice as fast as Orange Polska’s base station can currently achieve. Orange Polska plans to launch first commercial 5G access points in 2020.

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US patent office initially rejects Google's application on ANS coding The patent office in the US has initially rejected an application submitted by Google, concerning a solution by Jarosław Duda, an employee and lecturer of the Jagiellonian University (UJ). A year ago, the scholar, together with UJ, demanded the withdrawal of a Google application. Google Polska spokesman Adam Malczak, when asked about Google’s intentions regarding the initial decision of the office, replied: “We are familiarizing ourselves with this decision.” He also stressed that Google had already declared it would like the possible patent to be available on “open rules.” Duda concluded it would mean that coding would be free in Google programs, but not in the competing software in case of the so-called “open rules” mentioned by Google. The IT environment, including EFF (Electronic Frontier Foundation) and FSE (Free Software Foundation), criticized Google's patent application of ANS coding. ANS coding allows data compression in computers and other electronic devices. Currently, it is used among others in Apple, Facebook, Google, and Linux products. “Virtually all computer and phone users in the world use this Polish method now,” Duda declared.

Pekao and Microsoft become strategic partners

Polish producer of quantum software enters Canada and US

Bank Pekao and Microsoft have signed a strategic partnership agreement at the 28th Economic Forum in Krynica. They will work together on new digital products addressed mainly to small and medium companies. According to the President of Pekao, Michał Krupiński, the agreement with Microsoft is important for the bank from the point of view of its clients – it concerns activities and joint initiatives for small and medium-sized companies. “We are slowly becoming the leading bank when it comes to small and medium-sized companies,” he said. He said that several specific projects have already been identified, stating that it is too early to talk about them in detail. He added that the cooperation will result in a better offer and new products addressed to retail clients and SMEs.

Bohr Technology, a Polish start-up that creates algorithms and software for quantum computers, has entered the US market. It has also started cooperation with the main players of the Canadian market, said the Polish Investment and Trade Agency (PAIH). The company, which was established in 2017, took part in an acceleration program at the famous Creative Destruction Lab incubator in Toronto. With the support of a local PAIH office, the company is looking to expand its portfolio of customers in North America and Canada. According to Thomson Innovation, the quantum computing industry is growing by an average of 24 percent annually. Quantum technology can be used, among other things, in the development of artificial intelligence, medicine, energy, finance and logistics.

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WSE-listed game developer CD Projekt has announced that it will release two titles based in the popular Witcher universe: “Thronebreaker: The Witcher Tales” and “Gwent: The Witcher card game” on October 23 for PC. Both games are also scheduled to launch for the Xbox One and PlayStation 4 consoles on December 4, the company added in a market filing. Upon the news, the company’s stock went up by 5 percent.

TECH

KNOCKING ON EVERY DOOR

GETTING FUNDING AS A FLEDGLING TECH START-UP IS ALWAYS A BIG DEAL. WHO SHOULDN’T YOU GO TO AND WHY IS IT THAT 99 OUT OF 100 VCS SAYS “NO”? WBJ ASKED DARIA DEMCHENKO, BUSINESS DEVELOPMENT MANAGER AT CARDPAY, ABOUT THE FINANCING LANDSCAPE IN CEE AND WHETHER CEE START-UPS SHOULD COUNT ON GOVERNMENTS AND ACCELERATORS INTERVIEW BY BEATA SOCHA

OCTOBER 2018 W B J

S T A R T- U P F I N A N C I N G

ALL START-UPS FROM UKRAINE ULTIMATELY TARGET WBJ: What are the most common problems start-ups from markets such as EUROPEAN AND AMERICAN MARKETS FIRST, BEFORE Ukraine face when looking for financing? Daria Demchenko: Basically, start-ups will normally go and knock on all doors. That’s a crucial mistake because they will waste their own time and that of investors. They need to do their homework. If you develop tech in agritech, for instance, go to investors who provide financing in agritech and focus only on those who finance startups at the exact stage of the development of your company. So if an investor provides Series A financing, don’t chase them for seed money. Don’t make them mad, because you may want to approach them again later. That’s the first thing. Another common mistake is that companies will look for funding too soon. They have an idea, but they are nowhere near ready to present it to potential investors. Every investor expects you to first invest your own time and money to reach a certain point that shows that your business model is valid and your product will work. That’s a common challenge with ICOs because people are investing in advance without a gauge of future performance. That is why the venture model is clearer and more reliable for all involved.

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What is the accelerator landscape like in Ukraine? Accelerators in Ukraine are a little underdeveloped. It could be because all start-ups from Ukraine ultimately target European and American markets first, before building homegrown finance. There are some legal challenges, as it is hard to negotiate cross-border deals with investors and VCs. The average Ukrainian start-up wouldn’t establish their processes in the country. They start with a minimal team – such as vital R&D and C-level exec – on the ground, then expand to the international scene at the earliest opportunity. That’s why they don’t really need accelerators in Ukraine specifically, as they can look overseas. What about government-funded accelerator programs? On the one hand, it’s a great gesture that there is trust and support for start-ups at governmental level. But in general, by increasing government investment in

BUILDING HOMEGROWN FINANCE start-ups, they have been fueling a start-up bubble – which can be a stumbling block for those start-ups looking to take the next step in their business growth. Currently there’s a gap for those who have successfully completed an accelerator program and are trying to access their next level of support and funding. From a government perspective there’s scope to build support and bridge the gap, as those companies that have completed accelerator programs are showing promise and business viability. Are investors in Poland and in other CEE countries more comfortable with early investments rather than series A or B funding? Yes, this is a simple entry investment strategy because you start from developing a large small-ticket portfolio, rather than making one bigger deal. This is a simple way of mitigating risk. That’s also why investors join Business Angel groups, which can offer expertise from various fields of technology. You are able to share your knowledge with your co-investors and gain

a better understanding of the projects you invest in, further minimizing your risk. Does it make sense to try to copy the Silicon Valley model in Poland and CEE? I think that Silicon Valley’s best days are behind it and these days it is winding down. It is still the most popular base for most tech start-ups, but it is not growing as quickly as it used to in the past. People are already moving to Seattle, Berlin, London and other places to look for lower costs. Employee turnover is a major problem in Silicon Valley. Recent research has found that the average time an employee stays with Facebook is two and a half years, and with Google – one year. Even with all the employee benefits, they still have a hard time retaining their employees. It’s now a new time for start-ups to create a growth culture that they want, and that’s also why it is a great time for Poland. It has a lot of bright technological minds, and plenty of opportunity to kickstart a start-up. The region is certainly one to watch, not only within Europe but as a global start-up business hub.

DARIA DEMCHENKO

As an experienced Unicorn hunter, start-up investor relations manager, banking advisor and start-up business accounts specialist at CardPay, as well as a journalist and analyst. There is little that Daria hasn’t witnessed when it comes to the digital start-up world. Daria is also an organizer of local ecosystem events (Startup Wise Guys roadshow Kiev, Pitch to Cross-Border Angels, Angel Investor Day Lviv and Connect Ukraine festival) as well as a mentor at AngelHack and Aspen Institute Ideas Festival.

W B J OCTOBER 2018

WHERE OPPORTUNITIES ABOUND

Kraków – a city of change that is not afraid to face the challenges of the future, an open, ambitious metropolis – created jointly by its residents, the academic and scientific sector, business and local government

he city has long been recognized for its historic and royal heritage, its attachment to tradition and the wide range of historic monuments. This image is, however, far too narrow when thinking about contemporary Kraków. The capital of the Małopolska region is now more than just a symbol and an educational center, it is also a modern and green transport hub, offering a wide range of social facilities and a business-friendly atmosphere. Kraków is a metropolis with a high quality of life, a city of committed residents, a space for creative development, a place where investment in new technologies is evident in virtually every aspect of its functioning. This is due to the extraordinary scientific background of its 22 universities with more than 160,000 students, adding 57,000 graduates to the Kraków job market each year. They are highly qualified young people, many of whom already have experience gained during the course of their studies through internships and apprenticeships completed in in-

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ternational, multicultural companies. Young people are well aware of the opportunities the capital of the Małopolska Region offers and are eager to train and build their professional careers in Kraków – a city full of possibilities. The booming research and development sector, business processes centers and, finally, the Kraków start-up scene are just some of the elements the city has to offer its residents and the people who choose to settle here. Thanks to the development of mechanisms facilitating effective partnership in the science and business sectors and the use of a knowledge-based economy, Kraków can compete both with cities in Europe and across the world. Approximately 70,000 people work in the modern business services sector, the majority of whom are graduates of Kraków universities. The Mayor of the City of Kraków, Jacek Majchrowski, stresses: “We are proud of being the leader of continental Europe in this sector, but at the same time we are constantly trying to diversify the city’s economic profile and to increase the complexity of the processes implemented here.” The Mayor also emphasizes that the contemporary world determines and shapes the directions which modern metropolises should follow. Kraków is the beneficiary of a positive snowball effect – global brands such as Motorola, IBM, Shell, ABB and Cisco attract other companies interested in investing in the future. Success stories of Kraków-based companies such as Codewise, Brainly or Estimote prove that a sound idea supported by a well-tailored solution and passion can conquer world markets. There will continue to be more success stories on the Kraków tech scene, as there are approximately 300 start-ups in Kraków, and the whole sector employs thousands of people. They will create future solutions that will be used all over the world and gain widespread international recognition. Kraków is constantly facing new challenges. However, as a city with enormous potential, it achieves its goals in an effective, flexible and consistent manner. That is why it is so successful in the areas of creating innovation, implementation of modern technologies and advanced services for residents. At the same time, it is a kind of trendsetter for other centers, sharing its experiences through events organized locally and abroad. More than 100 festivals and countless events – including many of international significance – take place in Kraków every year. These events are mostly proprietary ventures, enjoying great popularity, often promoting young, independent creators, intelligent urban development and knowledge transfer, encouraging both residents and visitors to participate in an active manner. The city, wanting to reach even further afield, actively participates in fairs and foreign delegations. This is, of course, associated with specific expenses. Therefore, in order to maintain a healthy state of the city budget, considering the fact that it is taxpayers’ money, Kraków tries to finance as many of such activites as possible with EU funds. Thanks to such well-thought-out activities, Kraków is set to present its opportunities at the upcoming edition of EXPO REAL in Munich. It is worth noting that the costs of renting exhibition space, the implementation of the Infokiosk and the delegations of the city representatives all being part of the “Growing Internationally – Kraków's Economy on the Rise” project are all funded from the Małopolska Regional Operational Programme. As the Mayor of the City of Kraków, Jacek Majchrowski, points out that, “the use of EU funds is not only one of the benefits of being part of the European Union, but above all, it’s about learning to set one’s own capabilities and establishing an appropriate plan for the ongoing project.” You are therefore warmly invited to our stand – No. A2.120 – at Expo Real 2018. It will certainly be a great opportunity to discuss the development potential of Kraków, a city where tradition and modernity intertwine like in no other place.

Kraków

KRAKÓW

CITY OF

POTENTIAL

Visit

stand A2.120 at EXPO REAL 2018

Latest news in the office, logistics, retail and residential sectors

Mixed-use projects

Interview with Roger Andersson of Vastint Poland

Office market in central Warsaw

Interview with Jeroen van der Toolen of Ghelamco Poland

Interview with Harald Jeschek of the Karimpol Group

Office PHN gets the go-ahead for Warsaw office tower State majority-owned, Warsaw Stock Exchange-listed commercial real estate investor Polski Holding Nieruchomości (PHN) has revealed that it has recently obtained a building permit for a high-rise office project that it plans to develop in the downtown of the Polish capital. Called PHN Tower, the scheme will be located on ul. Świętokrzyska near the Rondo ONZ subway stop and will comprise 46,500 sqm of leasable space. PHN is currently in the process of selecting a general contractor for the development with construction work scheduled to start next year. A lower building that will be part of the PHN Tower investment is expected to be completed in 2021, while the 155-meter skyscraper should be ready in late 2023 or early 2024. >>>

Property management trends

Interview with Robert Dobrzycki of Panattoni Europe

W B J OCTOBER 2018

LOKALE IMMOBILIA | NEWS

Office (continued) BRIEFS WROCŁAW WITH 1 MILLION SQM OF OFFICE SPACE – REPORT

More than 100,000 sqm of new office space was completed in Wrocław in the first half of this year, which brought the total existing modern office stock in the city to over one million sqm, according to a recent report by JLL. As much as 240,000 sqm of new office area is now under construction in the city. The biggest ongoing office project in Wrocław is the second phase of Vastint Poland’s Business Garden complex, which will deliver 70,000 sqm of leasable space.

ADGAR REOPENS WARSAW OFFICE BUILDING

Investor Adgar Poland has reopened for business its Adgar Bit (previously Adgar Business Centre II) office building in Warsaw, which has been thoroughly modernized. The company now offers three leasing concepts at the property: Brain Embassy (co-working space), Beyourself (a model combining co-working with traditional lease) and traditional lease. Located on ul. Konstruktorska in the Mokotów district of the Polish capital, the six-story Adgar Bit building comprises 8,500 sqm of leasable space. The property features a LEED certificate for energy efficiency and environmental performance.

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HB REAVIS with building permit for new Warsaw scheme Developer HB Reavis has secured a building permit for its planned Forest office project in Warsaw. Designed by the HRA Architekci architectural studio, the scheme will be located on ul. Burakowska in the Wola district of the city, close to the Arkadia shopping mall, and will consist of a 120-meter tower and accompanying lower buildings featuring from six to eight floors. In total, the planned development will comprise approximately 78,000 sqm of leasable space.

Approx.

2.5 million

sqm

the amount of office space across Poland that is occupied by business services centers Source: JLL

LOKALE IMMOBILIA | NEWS

Retail BRIEFS PRCH WITH NEW MANAGEMENT BOARD PRESIDENT

Aleksandra Zentile-Miller has been appointed as the new management board president of the Polish Council of Shopping Centers (Polska Rada Centrów Handlowych – PRCH). She has replaced Patrick Delcol, who held the position from 2008 but has now decided to step down due to his taking up a new post within the European structures of BNP Paribas Real Estate. One of the founders of PRCH, Zentile-Miller has been on its management board since the organization’s establishment 15 years ago. She studied architecture at the Gdańsk University of Technology and the University of Westminster in London, and she heads the Warsaw office of the international architectural studio Chapman Taylor.

New OUTLET CENTER in northern Poland Investor DNB Assets Holdco will develop an outlet center project in Rumia in the Tri-City area. Called Pomerania Outlet, the scheme will be built on the site of the existing Galeria Rumia shopping center, which will be remodeled. The planned development will comprise a total of more than 16,700 sqm of retail space on three floors and house 80 units with The Blue Ocean Investment Group (BOIG) acting as the leasing agent. The Pomerania Outlet project is scheduled to open for business next year.

APSYS MANAGING BONARKA MALL IN KRAKÓW

Over 172,000

sqm

the amount of new shopping center space completed in the biggest agglomerations in Poland – Warsaw, Wrocław, Kraków, the Tri-City, Poznań, Szczecin, Łódź and the Silesia conurbation – in H1 2018 Source: Colliers International

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Investor NEPI Rockcastle has appointed Apsys as the manager of its Bonarka shopping center in Kraków. The mall, which is located in the Podgórze district of the city and opened for business in 2009, offers 92,000 sqm of usable space. It houses 270 stores and over 30 restaurants. The current owner bought the property in 2016. Apsys Polska currently manages a total of 1,100,000 sqm of GLA in 25 shopping centers located in 17 of the biggest cities in Poland.

LOKALE IMMOBILIA | NEWS

Investment market Logistics

Hines sells PROXIMO II office building in Warsaw

PANATTONI launches new logistics park project in Silesia

Developer Hines, acting on behalf of the Hines Russia & Poland Fund, has sold the Proximo II office building in Warsaw to the CSNF investment fund, which is managed by REICO. Located in the Rondo Daszyńskiego area of the Wola district of the Polish capital, Proximo II offers over 20,600 sqm of office space on ten floors. The building was completed in January this year and is currently fully leased out. The first building in the complex – Proximo I – was also acquired by REICO, with the transaction having taken place in August 2017.

Developer Panattoni Europe has launched construction work on its Panattoni Park Bielsko-Biała III logistics park project in Silesia, which will comprise more than 68,000 sqm of leasable space. The scheme will be developed in two phases, the first of which – offering almost 27,000 sqm – is scheduled to be completed in the spring of next year. Panattoni Europe has already leased a total of over 11,000 sqm in the development to logistics operator Seifert Logistics Group (7,500 sqm) and an interior design company whose identity has not been revealed yet (3,600 sqm).

BRIEFS

NEW INVESTMENT ADVISORY ENTERS POLISH MARKET

Jason Sharman and Michał Grabara, until recently managing partner and head of investment at BSC Real Estate Advisors respectively, have announced the establishment of a new real estate advisory business. Burlington Real Estate is Poland’s first investment only advisory practice and covers all commercial asset classes. It offers such services as providing investment acquisition and disposal advice, sourcing of debt, financial modeling, due diligence and asset management. “We are extremely busy already with over €240 million under offer and many more deals in the pipeline,” Sharman revealed.

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INVESTMENT ACTIVITY UP 100% Y/Y IN H1

The total volume of investment transactions in the commercial property market in Europe reached more than €97 billion in the first half of this year, which marks a 5% decrease y/y, according to Savills data. The H1 investment volumes in the UK and Germany went down by 9% and 7% respectively, while the volume in France went up by 27%. Several European countries recorded even bigger increases – they include Poland where the H1 volume increased by 100%. Over €3.24 billion was transacted in Poland’s commercial property investment market in the first half of 2018 with the combined 2018 volume likely to exceed €6 billion.

7R STARTS TCZEW SCHEME

Developer 7R has launched construction work on the first two buildings of its 7R Park Tczew logistics park project in northern Poland. In this phase of the scheme, which is scheduled to be completed in the first quarter of next year, the company will deliver 46,700 sqm with one of the buildings – comprising over 26,000 sqm – having already been fully commercialized. 7R Park Tczew will be located 40 kilometers from the center of Gdańsk and is expected to obtain a BREEAM certificate for energy efficiency and environmental performance.

INTERMARCHÉ STAYS AT MYSŁOWICE WAREHOUSE

French supermarket chain Intermarché has renegotiated its agreement for the lease of 28,000 sqm of warehouse space at Distribution Park Portfolio in Mysłowice in Silesia. Colliers International represented the tenant in the transaction. Distribution Park Portfolio, which is owned by the Hines Poland Sustainable Income Fund and asset- and property-managed by Hines Polska, consists of five sites located in five cities across Poland and offers a total of more than 126,000 sqm of warehouse space. Intermarché is currently the exclusive tenant of the Mysłowice warehouse.

LOKALE IMMOBILIA | NEWS

Residential

YAREAL starts sales in luxury Warsaw scheme Developer Yareal has launched apartment sales in its Rezydencja Łazienki Park upmarket residential project in downtown Warsaw, which will be located close to the biggest park in the Polish capital. The boutique scheme was designed by the HRA Architekci architectural studio and will comprise 64 units. It is expected to obtain a BREEAM certificate for energy efficiency and environmental performance at the “Very Good” level. Construction work on the development is scheduled to start at the end of this year or at the beginning of 2019.

BRIEFS GOLUB SELECTS ARCHITECTS OF RENTAL APARTMENT PROJECT

The Grupa 5 Architekci architectural studio will design a rental apartment project, which developer and investor Golub GetHouse is planning in the Mokotów district of Warsaw. The planned scheme will be located on ul. Postępu in the Służewiec business area – one of the biggest office hubs in the city – and will comprise approximately 370 housing units earmarked for long-term rentals. Golub

OCTOBER 2018 W B J

GetHouse expects to be able to launch construction work on the development in the third quarter of next year.

ATAL LAUNCHES MODERN TOWER DEVELOPMENT IN GDYNIA

Warsaw Stock Exchangelisted developer Atal has launched sales in its Modern Tower project in Gdynia on the Baltic coast, which will comprise 142 apartments and 135 apartment hotel units. The 16-story scheme

was designed by the HRA Architekci architectural studio and is scheduled to be completed in the final quarter of 2021. Modern Tower is the fourth development of Atal in the Tri-City with the company now planning new investments in the agglomeration, said management board president Zbigniew Juroszek.

ZEITGEIST TO OPEN DORMITORY IN WARSAW

Prague-based developer and asset manager Zeitgeist Asset

Management has acquired, on behalf of a German fund, a ten-floor office building located near the bank of the Vistula river in central Warsaw, which it wants to transform into a student dormitory. The company sees significant potential in the student accommodation sector in the Polish capital. The building currently comprises over 4,200 sqm of GLA. After remodeling, it will offer 149 rental units. The dormitory will be operated by Zeitgeist Asset Management’s subsidiary Zeitraum.

WBJ PRESENTS

BROUGHT TO YOU BY TÉTRIS

LIQUIDITY IN THE INTERIOR FIT-OUT INDUSTRY

Completing an office project on time and on budget is a challenging process. Managing the interests of investors, designers and contractors in the construction process can be a complex balancing act.

An investment in a new office is first and foremost a financial challenge which, for a significant period of time, is handled by the contractor, as it is the contractor who has to pay for the majority of materials and subcontractors in advance. Therefore, before choosing a partner, an investor should enquire about the status of the counterparty's financial liquidity, the principles of granting guarantees and the transparency of costs. Using the example of the Sage office fit-out project, we will point out the most sensitive issues in this process. Sage is a large, international IT company that has chosen the Eurocentrum building in Warsaw as its Polish headquarters. In 2017, Tétris designed and built the first part of this space with an area of 2,600 sqm, and recently finished arranging two more floors with an area of 1,500 sqm. The company works with Polish and international teams, so commissioning a fully equipped office on time was a priority. The problem of pre-financing From the moment of signing the contract, time is of the essence for the investor. Each day of delay is a potential additional cost. “A loss of income related to delayed commencement of operations or liquidated damages payable to the lessee due to a delay in handing over the leased area (if the client is the owner of the building) may also be a cost,” explains Anna Wąsiewska, attorney-at-law from the law firm Wawer Wąsiewska. Adwokaci. Spółka partnerska. The contractor’s remuneration is paid out in specific installments as the project implementation progresses. In practice, this means that the contractor must order most of the materials in the first days of project implementation due to long delivery times. Manufacturers require up to 40–50 percent of the price to be paid in advance, which implies that the contractor must pre-finance a large part of the project long before the first invoice is issued to the investor. “The fact that we are able to pay PLN 5-6 million within a month is a huge plus for the client. Otherwise, the project would have to wait two or three months until the funds were collected,” says Paweł Brodzik, Managing Director of Tétris. “Working for large companies, we have to bear in mind corporate invoicing rules. Sixty- or ninety-day payment periods are standard,” he adds. This means that when you have two or three months to implement a project, you need to finance the costs of subcontractors immediately and then wait for the invoice to be paid by the client. In corporations, such long payment periods are normal practice.

LOKALE IMMOBILIA | MIXED-USE

RESTORING URBAN FABRIC

A number of large mixed-use projects that will revitalize long-neglected historic and post-industrial sites are now under construction or in the pipeline across Poland. Such schemes are complicated and time-consuming, but their benefits outweigh the costs BY ADAM ZDRODOWSKI

nvestors Liebrecht & wooD and BBI Development have officially opened a publicly accessible 4,000-sqm square that lies at the center of their Centrum Praskie Koneser mixed-use project in the Praga Północ district of Warsaw. The ongoing scheme, which will result in the revitalization of five hectares of post-industrial land that previously housed a vodka distillery is now nearing completion, with new event, office, retail, restaurant and residential areas scheduled to be delivered by the end of this year.

Google’s Campus Warsaw, several office and residential buildings, an event center and the Polish

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Vodka Museum have already been open for some time. Marriott International’s 141-room Moxy Warsaw Praga hotel will welcome its first guests in late 2018 or early 2019. In total, the multi-phase development will comprise 88,000 sqm of space, including 25,500 sqm of office space and 21,800 sqm of retail and service areas. The residential part of the investment, which BBI Development is developing on its own, will feature around 350 units. Centrum Praskie Koneser is just one of a number of big mixed-use projects of this kind now under construction or in the pipeline in Poland. Also in Warsaw, Capital Park is working on its ArtN scheme that

Vastint's planned mixed-use projects in Wrocław (left) and Gdynia (right)

will regenerate a major post-industrial site located in the Wola district. A combined more than 64,000 sqm of usable space – including 40,000 sqm of office space and 24,000 sqm of retail, entertainment and cultural areas – will be built there. The location previously housed a metalwork factory dating back to the 19th century. For their part, Tristan Capital Partners and White Star Real Estate are developing their Elektrownia Powiśle investment in the downtown of the city, which will entail the renovation of a former power plant site and will include office, retail, residential and hotel space. In Łódź, Virako is building its Monopolis on the site of a former vodka distillery with the project expected to include office, retail, cultural and recreational areas. Vastint is planning major mixed-use schemes in cities including Wrocław and Gdynia (see interview on page 64).

URBAN PLANNING TREND

Several factors are at play when it comes to the growing popularity of large-scale mixed-use projects that result in the revitalization of entire historic or/and post-industrial neighborhoods of Polish cities. On the one hand, there is the general shortage of vacant plots in city centers. Jan Szulborski from the consulting and research department of Cushman & Wakefield noted that the boom which we have been Such projects are extremely seeing in all commercial property market sectors demanding in recent years has led to a depletion of the pool of for all parties attractive sites. “As the market competition intensifies, the supply involved of land gets more and more limited and the expectations of tenants change, developers are increasingly turning towards areas that used to be an important element of the urban fabric but have now lost their original function,” he said. On the other hand, mix-

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LOKALE IMMOBILIA | MIXED-USE

Developers are increasingly turning towards areas that used to be an important element of the urban fabric but have now lost their original function ing building functions is a major feature of modern urban planning. There is currently a move away from designing neighborhoods dominated by one particular function, Szulborski added. He said that the changes currently taking place in Warsaw’s Służewiec area are a case in point. Once an industrial neighborhood, Służewiec has become the biggest office hub in Poland, but is now also seeing the development of many new residential and hotel schemes. Developers see the potential for synergy that comes with combining several various functions within one project. However, Szulborski claimed that coming up with the right mix of functions is also one of the main challenges for investors launching mixeduse developments. Of a similar opinion was Bolesław Kołodziejczyk, head of research and advisory at Cresa Poland, who

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pointed out that the expectations of the end users of the particular functions are often divergent. For instance, apartment owners will expect silence in the afternoons, while the owners of stores and restaurants will want to maximize footfall to make their businesses successful. Reconciling such expectations is difficult but doable through proper architectural solutions.

WORTH THE EFFORT

In general, mixed-use developments require from developers much more know-how and experience than single-use investments. Also, they involve significant capital expenditure, which is a major barrier to entry, Kołodziejczyk noted. Crucially, the renovation of historic properties that are often part of such projects is technically challenging and requires close cooperation with the heritage conservation officer. Obtaining

Centrum Praskie Koneser (left) and ArtN (right) in Warsaw

all the necessary administrative permits tends to be a lengthy process. “Such projects are extremely demanding for all parties involved. Every building and every interior element must be completed with the utmost care,” admitted Magdalena Bartkiewicz-Podoba, general manager at Liebrecht & wooD Poland. Kinga Nowakowska, operational director and management board member at Capital Park, revealed that it took the company almost ten years to prepare ArtN. It also took 12 tomes of technical documentation to meticulously describe the entire planned renovation process. Nevertheless, Nowakowska stressed that the time spent on preparing the investment was not wasted and the work put into it during its initial phase is currently bearing fruit as the unique nature of the development is attracting business partners, including ten-

ants. “It is in the DNA of our company to create places with a history, a soul and a certain social capital that a project brings with itself. That capital is the value which makes an investment timeless and attractive for people of different ages and with different needs,” she said. Experts, too, stress that the final effect is usually worth the effort. Mixed-use projects are appreciated by tenants from almost all segments of the real estate market, including the office sector, in which the needs of the employee are playing a more and more important role. Retailers want to be close to buyers and residents enjoy easy access to stores. From the perspective of hotel chains, proximity to a rich restaurant and retail offering is a bonus that comes at no additional cost. “Such projects have a future,” Kołodziejczyk maintained.

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LOKALE IMMOBILIA | MIXED-USE

FINDING THE RIGHT MIX

WBJ sat down with Roger Andersson, Managing Director at developer Vastint Poland, to talk about the company’s planned large-scale mixed-use projects in Poznań, Warsaw and the Tri-City INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

Vastint Poland earlier this year acquired a major postindustrial site in the downtown of Poznań which previously housed a meat processing plant. What do you plan to build on that plot? Roger Andersson: We will build a mixed-use project including residential, office, hotel and retail space. In total, the site – approximately 5.5 hectares of land located very close to the Old Town of Poznań – will be able to accommodate up to around 100,000 sqm of space. The residential function will be dominant in the scheme – it will account for about 50 percent of the total space. When it comes to offices,

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the figure will stand at some 20 percent. This particular mix of the various functions results from, among other things, the nature of the site, which currently houses a number of historic buildings. In accordance with the requirements of the heritage preservation officer, some of those buildings will need to be preserved. We will demolish the least valuable structures and build a number of new buildings on the site. How advanced is the project at the moment? The project is now at the design stage and it will take from a year and a half to two years before construction work can start.

We are waiting for a new zoning plan for the area in question to come into force, and such procedures tend to be time consuming. However, generally speaking, the municipal authorities are very cooperative and share our vision for the site. The place is very well known in Poznań and many people in the city are looking forward to it being revitalized. Your portfolio also includes a plot of land for a huge mixed-use scheme in Warsaw… The Warsaw site, which is located close to Warsaw Chopin Airport, is much bigger than the Poznań site – it totals approximately 14 hectares and can accommodate

Meanwhile, you have been working on the Gdynia Waterfront mixed-use development in the Tri-City for a few years now. When will you launch construction work on the next phase of that investment? The Gdynia Waterfront project will be developed in three phases. The first of them – consisting of one hotel building and one office building – was completed in 2015. The second phase, which will deliver residential (dominant function, approximately 75 percent of the total area) and office space will be launched in the first quarter of next year. The third phase – comprising hotel and conference space as the dominant function, but also including office, retail, entertainment and cultural areas – will be started a year later.

up to around 200,000 sqm of space. We will build apartments and offices there. What is the schedule here? Again, we will be able to launch construction in about two years. We expect the scheme to feature some 60,000-70,000 sqm of office space that will be built in two or three phases and be completed within four to five years. When it comes to the residential space, it could take even seven to ten years to build. The good thing about mixed-use projects is that you can work on a bigger number of phases at the same time – the residential and office functions can be developed in parallel.

Projects of this scale allow you to create whole new areas, shape parts of cities anew

From your perspective as a developer, what is the most attractive aspect of large-scale mixed-use projects that are, by nature, much more challenging than smaller, single-function schemes? There are several reasons why we like doing big projects of this kind. For one thing, because we are talking about very big sites and very complex schemes, there are few developers in Poland who want to start such investments, which means that it is easier for us to buy land. When it comes to the Poznań site, for instance, there was only one other company interested in acquiring the plot. Meanwhile, the sites housing projects of this kind are usually in prime locations in city centers and location is everything in the real estate market. Creating neighborhoods that feature buildings with various functions is increasingly seen as an example of proper urban planning, whereas areas with an office monoculture do not get a good press these days… Exactly, this is another reason

why we find mixed-use projects attractive. As a professional developer, we obviously need to think about the returns on our investments, but this does not mean that we are only focused on the financial aspects of our projects. We want to contribute to the development of cities and to help municipal authorities revitalize entire neighborhoods that have been neglected for many years. Projects of this scale allow you to do exactly this – to create whole new areas, shape parts of cities anew. What is the main challenge that you face while developing schemes of this kind? When it comes to such sites as the one in Poznań, which houses buildings that need to be preserved, the main challenge is to come up with the right function or functions for the existing historic properties. While it is relatively easy to refurbish such buildings – it is a purely technical issue – deciding on what exactly they will accommodate proves to be very difficult. We need to make sure that the historic buildings will be integrated with the new buildings in the complex and that the concepts devised for them will work. Is coming up with the right mix of functions a challenge? Absolutely. Each project requires a thorough analysis of the location and its development potential. Each of the projects that we have discussed will feature a different mix of functions that will be the most suitable for the particular location. Is it difficult to secure financing for such big schemes? We actually rarely take out bank loans as we mostly finance our projects with our own equity. However, this comfort obviously does not mean that we do not need to be careful – we try not to overdo things and not to abuse the trust of our owners.

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LOKALE IMMOBILIA | OFFICE

TOO HOT, OR NOT?

Despite previous apprehensions about a potential overheating of the office property market in central Warsaw, the possible emergence of a supply gap is now actually being reported BY ADAM ZDRODOWSKI 66

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he office property market in downtown Warsaw continues to be in full swing, with very high supply and demand volumes being recorded in the Central Business District and the City Center area surrounding it (including the fastgrowing Rondo Daszyńskiego neighborhood). A number of very big office projects are now under construction in central locations in the Polish capital, with several more expected to be launched in the coming years. In spite of the sizable supply, tenants with large office requirements are finding it difficult to secure space.

Daszyńskiego, which can house high-rise buildings. Exactly when those projects will be launched is not yet known. Regional director Krzysztof Wilczek said that the company does not bow to the pressure to build more space because of the activeness of its competition and continues to analyze the market situation very carefully. He stressed that Skanska is in a convenient situation as it does not need to depend on external partners for financing and construction services – both are available within the group. “Due to this, we are able to react to opportunities appearing in the lease market more quickly,” he said. This IMPRESSIVE PIPELINE ability currently seems to be of In total, 765,000 sqm of new office crucial importance as more and space is set to be completed in the more companies are interested in Central Business District and the leasing space in central locations, City Center West zone (covering and large vacant areas in recently the part of the Wola district that completed or nearly ready buildlies closest to the CBD) by 2021, ings are hard to come by. according to Savills. The biggest CHANGING PREFERongoing developments include ENCES Varso (HB Reavis, over 100,000 sqm), The Warsaw Hub (Ghelamco In the opinion of Jacek Wachowicz, CEO at Immobel Poland, we Poland, almost 80,000 sqm) and are now witnessing a marked Mennica Legacy Tower (Golub change in tenants’ preferences GetHouse and Mennica Polska, with regard to choosing locaapproximately 60,000 sqm). tions, with convenient access to Ghelamco Poland is preparing to launch an office skyscraper public transportation having the project called Spinnaker at Rondo most influence on their choices. “By all indications, the trend is Daszyńskiego (see interview on going to continue,” Wachowicz page 68), while Skanska continues to develop its Generation Park said. His company is currently developing the Central Point scheme (a total of around 84,000 high-rise project at the intersecsqm of GLA in three phases) tion of ul. Marszałkowska and ul. there. The latter developer has very ambitious plans for the near Świętokrzyska, which will comfuture when it comes to the office prise 18,000 sqm of office space and should be ready in 2020. property market in central WarWilczek, too, maintained that saw. Skanska has recently begun new, well-located buildings are demolishing an existing low-rise now filling up with tenants withbuilding located at Rondo ONZ out any difficulty. Despite repeated which it is expected to replace forecasts of an imminent marwith a taller structure. ket crash, the strong demand The company also wants to for office space has continued. build a taller tower on the site of Indeed, according to JLL data, a the Ilmet office skyscraper in the total of more than 200,000 sqm same location. Last but not least, was leased in the broadly underSkanska’s portfolio includes the stood city center of Warsaw in the former Impexmetal site located first half of this year. This accounts between Rondo ONZ and Rondo

Mokotów 8%

Other 11%

CBD 24%

City Center 57%

Construction activity in Warsaw’s office zones, H1 2018

Source: JLL

Żwirki i Wigury corridor 8%

Puławska corridor 3%

Jerozolimskie corridor 13%

Other 6%

City Center 27% CBD 21% Mokotów 22%

Demand distribution across Warsaw’s office zones, H1 2018

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Part of the space scheduled for completion in 2019-2021 – some 82,000 sqm – has already been pre-leased

for nearly 50 percent of the total amount of office space leased in the Polish capital in that period. The planned projects will certainly not hit the market until 2020 as the process of obtaining administrative permits and the process of construction take more than two years, noted Daniel Czarnecki, head of landlord representation, office agency, at Savills. “In 2018 and at the beginning of 2019, no new schemes will be completed in this part of Warsaw,” Czarnecki said. Meanwhile, his company has had many enquiries from potential tenants interested in leasing office space in new developments in this period. This situation has been leading the vacancy rate in central Warsaw to go down – at the end of H1 2018, it stood at 7.9 percent

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(which is the lowest level since 2012) and was much lower than the average vacancy rate for the entire city (11.1 percent), according to JLL data. In practice, this means that tenants looking for large office areas, sized more than 3,000 sqm, have little to choose from. Czarnecki revealed that in central locations the same office area is now often the subject of several negotiation processes – first come, first served.

QUICK ABSORPTION

The volume of new office space expected to be built in the CBD and Warsaw City West areas over the next three years may be impressive, but it will be delivered gradually, with 139,000 sqm, 391,000 sqm and 217,000 sqm set to be completed in 2019, 2020

and 2021 respectively. Considering the fact that part of the space scheduled for completion in 20192021 – some 82,000 sqm – has already been pre-leased, developers should not have any reason to worry about deciding to start new projects, Czarnecki argued. Also, Mateusz Polkowski, head of research and consultancy at JLL, pointed out that Warsaw is one of the most absorptive markets in Europe, so the volume of new space should not affect the balance between supply and demand. At the end of 2017, occupancy of modern office space across the Polish capital was up by 360,000 sqm on the previous year. This was the second best – after Paris with its 440,000-sqm y/y difference – absorption result among all European cities.

E X P E RT O P I N I O N

A new city center in the making

F O R M A N Y Y E A R S we could hear talk in the Warsaw real estate commercial market about new office investments being under construction, despite the fact that so much office space remained uncommercialized. Until quite recently, hundreds of thousands of sqm of office space were said to be unoccupied in Warsaw alone. Today we can safely say that the situation looks completely different. What should be kept in mind is that Poland is located

at the center of Europe, while Warsaw â&#x20AC;&#x201C; thanks to its dynamic development â&#x20AC;&#x201C; is now recognized as one of the main European capital cities. Warsaw is the perfect alternative for global corporations to locate their headquarters or branches because of its location, but also because of the significantly lower office maintenance costs. A few years ago, the Asbud Group opted for the Wola district as the site for its flagship residential projects. The Wola district is now going through the process of being shaped into a modern downtown, which is taking place on land that used to house industrial space. Dynamic changes are taking place before our eyes. Our company is now selling office space in the Metropoint Office project that is being developed at 85C Grzybowska Street. This business model, not present in the market until now, has proved to be a success and has been appreciated by the market as most of the space in the building has already been sold to a foreign company for their headquarters. The project is scheduled to be commissioned in the fourth quarter of 2019. Today it is safe to say that we are witnessing the formation of a new downtown on post-industrial sites located in the immediate vicinity of the city center.

Imad Filip Zein Sales manager at the Asbud Group

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THE SUCCESSFUL WOLA VENTURE

Developer Ghelamco Poland received the Office Trendsetter of the Year award at the 2018 Book of Lists gala for its continued investment in Warsaw’s Wola and its contribution to reinventing the district as one of the most important office locations in the city. WBJ met with Jeroen van der Toolen, managing director CEE at the company, to talk about the current situation in and prospects for the office property market in Wola, and Ghelamco Poland’s further development plans there INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

Warsaw’s Wola has become one of the Polish capital’s office hotspots in recent years. When you were establishing your presence in the district over a decade ago, was it clear that the location would attract tenants? Jeroen van der Toolen: Well, our decision to focus on Wola was, in a sense, risky, but it was a calculated risk. A decade ago, most office developers in Warsaw – including us – were concentrated on either the Mokotów

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district or the CBD. However, neither location had the potential to house truly ambitious projects that would offer a bit more than just office space. Warsaw had no proper center at that time – the new office towers in the CBD were isolated islands, surrounded by older buildings and cut off by major roads. Meanwhile, Wola – with its planned subway line and a lot of available land – seemed the perfect place to launch largescale schemes which would also

include attractive public areas and would transform entire neighborhoods. We knew that the city center would, in a natural way, expand westwards and this is now happening. We started to accumulate land in the Rondo Daszyńskiego area of Wola more than ten years ago. Since then, many other developers have bought sites there. In 2011, in the new location, you launched a project with some 100,000 sqm of GLA…

When we were starting to build Warsaw Spire, many people in the market doubted whether such a big project could be successfully commercialized. Just a few years had passed since the outbreak of the global financial crisis and no new office schemes of this scale had been launched in Warsaw since the completion of Rondo 1 in 2006. We decided to invest in the latest technologies to attract innovative companies from such sectors as IT who are usually the first to move to new locations. That worked – we secured Samsung and others followed. Wola has become so popular with office developers in recent years that some fear it could be turned into another Służewiec – the business area of Mokotów that has long been notorious for its office monoculture. Do you see such fears as justified? I think that Wola has every chance of developing as a properly planned location with many urban functions. The Rondo Daszyńskiego area has already attracted a number of new residential projects and a big shopping center is expected to be built there in the near future. The much-visited Warsaw Uprising Museum is located in the neighborhood. The area is vibrant after office hours and it will be even more so in a few years once more new commercial and residential projects have been completed. You are currently developing your The Warsaw Hub mixed-use project near Rondo Daszyńskiego, which will comprise even more leasable space than Warsaw Spire. How is the commercialization of the scheme going? Demand for office space in Warsaw is today stronger than ever and we are seeing lots of tenant interest in this project. The overall leasing level at The Warsaw Hub – including both office space and hotel and retail areas – cur-

rently stands at between 35 and 40 percent. Some of the tenants who are leasing office space in Wola these days used to be in noncentral locations in Warsaw with substantially lower rents. What is the reason for their changed preferences? This trend results, for the most part, from the current situation in the labor market. It is an employee’s market and young people today want to work in nice locations with good transport infrastructure. They do not want to waste time being stuck in traffic jams. If they want to stay competiWe knew that the city tive and attract and retain the best center would, talent, companies – or at least those which can afford it – often in a natural way, expand need to rethink their office space leasing strategies, even if that westwards means slightly higher rent costs. What is the status of your next office project in the area – Spinnaker – that will be located across the road from The Warsaw Hub? You have not officially announced the launch of the scheme yet, but the underground floors of the tower are almost ready… We have decided to build the underground floors of the sky-

scraper now, even though we are currently focused on the commercialization of The Warsaw Hub. No completion date has been set for Spinnaker yet and we are not offering small or medium-sized office areas in the tower at this moment. But if an anchor tenant with a very large office requirement comes to us, we will be able to complete the skyscraper for them relatively quickly. Do you have any other sites in Wola that you will develop in the coming years? We have land for four other high-rise projects in the Rondo Daszyńskiego area, but I cannot reveal their exact locations yet. We prefer to talk about our development plans when building permits are in place. How long can the office boom in Wola continue in terms of the availability of sites? As for the Rondo Daszyńskiego area, in five years’ time most sites will likely be developed. Developers will then probably focus on plots located between Rondo Daszyńskiego and Rondo ONZ, as well as on land located a bit farther north of Warsaw’s second subway line.

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LOKALE IMMOBILIA | OFFICE WBJ:

NO POINT WAITING FOR BETTER TIMES

WBJ talked to Harald Jeschek, managing partner at the Karimpol Group, about the company’s Skyliner project – one of the biggest ongoing office schemes in Warsaw – and its further development plans in the city INTERVIEW BY ADAM ZDRODOWSKI

Until recently, there was much talk of the office market in central Warsaw potentially becoming overheated as developers kept announcing new high-rise projects, but now a supply gap is being reported there. What is your view of this situation? Harald Jeschek: Personally, I have actually never warned of an overheating of the market. Of course, every developer faces the question of when they should start a new project. In my opinion, simply waiting for better times is never the right thing to do. If you believe that the market is becoming overheated, you should take more precautionary measures while executing a new scheme to be better prepared for possible setbacks, rather than putting the planned development on hold. Admittedly, we do not need to make such a decision right now. If you had not launched the Skyliner project earlier, would you launch it now? That is a very hypothetical question (laughing). The decision to launch a particular project at a particular moment also depends on the offers which you receive at that given time and it is very hard to predict what the offers would look like currently. In general, we have been witnessing a significant increase in the prices of construction services so it is very likely that if we had decided to launch the Skyliner project at a later date, the scheme would have cost us much more. So, would you say that you launched Skyliner at the right moment? Yes, I think so. Of course, it could have been launched at a better time, but it could also have been launched at a worse time. I do not claim that we have always had the perfect timing for each and every one of our projects, but the majority of them have worked out very well.

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Will the increase in construction costs that you mentioned affect rents? The trend could possibly affect rents. You could think that the tenant does not care much about how much a project costs as he just wants to have his rent, but it is not only the tenant who decides. If construction costs become too high and developers’ margins virtually disappear, developers will indeed be put off starting new schemes. We are already witnessing a slight increase in rents in Warsaw – this may not be visible in headline rents yet, but if you look at the overall terms of lease agreements, an upward pressure can clearly be seen. The vacancy rate in Warsaw's office property market is going down… This is also part of the story – due to the decrease, rents are stable, if not going up. How advanced is the construction work on Skyliner? There is nothing spectacular to report from the construction site at the moment as we are still working on the underground floors of the skyscraper and these always take the most time to build. The project is on schedule and is set to be completed in the summer of 2020. What about the leasing process? We have not signed any lease deals yet, but we are currently in negotiations with three potential anchor tenants interested in taking up from approximately 7,0008,000 sqm to around 20,000 sqm of space in the building, which testifies to the strong condition of the Warsaw market. At this stage of the commercialization process, we are not negotiating with smaller tenants. One major lease agreement could possibly be signed before the end of this year. Will you sell Skyliner upon its completion?

It is very likely that if we had decided to launch the project at a later date, it would have cost us much more

Generally speaking, it is our strategy to have a turnover – we build and lease office space in order to sell it to institutional investors. However, from time to time, we decide to keep a particular asset in our portfolio. For example, here in Warsaw, we have one building that we have already held for eight years as it proved more profitable for us to keep it and have the lease revenues than to sell it. When it comes to Skyliner, I cannot give you a clear answer yet. Have you already seen some investor interest in the project? Yes, but it is not our strategy to sell in the middle of the construction process. We have been involved in forward-purchase deals before, but in general we do not want to miss out on the profits that come with project completions – completed and leased out projects gain in value. If you decide on a forward-purchase deal you get rid of some risks, but as a developer we accept those risks as they are part of our business. We tend to go through the entire development cycle, from the purchase of the plot to the sale of the completed project. What are your plans for the remaining part of the Skyliner site? We do have further development plans for the site, but it is too early to reveal them. What I can say now is that the planned project will definitely be a mixeduse scheme – we are considering a number of various func-

tions, rather than just the office function. You have recently completed another office investment in Warsaw – Equator IV – which is located in the Ochota district of the city. How is the commercialization of the project going? The project is currently around 70 percent leased out. The location has always been popular with tenants – we bought the site in 2001 and had no difficulty in leasing the space in the previous three phases of the scheme. Apart from the Skyliner site, what are your further development plans in Warsaw? We want to invest more in Warsaw, but we do not have any other sites to develop here at the moment. Warsaw is one of the most important markets for us and we are now starting to look for land in the center of the city. What about the biggest regional office markets in Poland? We have been watching the quick development of the office markets in such cities as Kraków and Wrocław, but we are not planning to expand there in the near future. Those cities offer attractive investment opportunities, but there is a certain amount of capital that we can allocate in Poland and we do not want to divide it between a number of cities. Entering new office markets in Poland would mean more costs as we would need to hire more people in the country. We will most likely remain focused on Warsaw in the coming years.

W B J OCTOBER 2018

SHUTTERSTOCK

LOKALE IMMOBILIA | PROPERTY MANAGEMENT

TAKING THE HUMAN FACTOR INTO ACCOUNT

Modern property management is as much about people as it is about buildings BY ADAM ZDRODOWSKI

ith the office and retail property markets being radically transformed by global technological and social trends, and the real estate sector in general becoming more and more competitive, the property management (PM) business, too, is undergoing major changes. If the “P” in PM used to be all about property, it now also increasingly often stands for the people using commercial real estate, Michał Pszkit, Head of Property Management in Central and Eastern Europe at BNP Paribas Real

OCTOBER 2018 W B J

Estate Poland, argued in an interview with WBJ. Buildings are products that need to present a certain value to at least three groups of people and entities: the investors who own them, the companies which lease space in them and the people who spend their time in them, Pszkit explained. While property managers previously mainly focused on the two former groups – their corporate clients – they currently also take into account the needs of the individual end users, be it employees working in an office building or buyers visiting a shopping mall, he said.

USER EXPERIENCE

When it comes to the retail sector, gone are the times when the market was dominated by shopping center owners and any newly completed retail space automatically attracted tenants and visitors. At a time when everything can be bought online, mall owners have to try harder. “If shopping centers are to remain attractive products for tenants and visitors, they need to be places where people will want to spend their time,” Pszkit stressed. Therefore, it is no longer enough for malls to have a retail function – they should offer many additional amenities, too. It is the role of the property manager to watch the changes in the market and help tailor the offer of a given shopping center to the needs of its visitors. Each mall should have its distinct identity and find a market niche for itself. The manager supports the owner in coming up with the proper tenant mix that will attract the desired group of buyers – which is difficult in a tenant’s market – and should have a vision of how a given shopping center will operate over the next few years. The focus is on so-called “user experience” – the perception of a particular shopping center by individual visitors and the satisfaction that those visitors have while visiting the mall. Of course, all owners aim to make their shopping center a nice place that is worth coming to. A higly visible aspect of this trend is the drive towards arranging new public areas around shopping centers, which feature attractive greenery and street architecture, can house cultural functions and serve as meeting places, teeming with life even when the malls are closed.

Property managers collect information on employees’ satisfaction with their workplace – BNP Paribas Real Estate Poland conducts regular surveys with the emphasis being put on the opinions of regular workers, rather than office managers – and use the data while planning improvements. Employees are asked about services and solutions that they would like to have access to in their building. This also includes access to services that can be used outside the workplace, in employees’ private lives.

MANAGING RELATIONS

The focus is on so-called ‘user experience’

Large-scale mixed-use projects, the number of which has been rising in the Polish market in recent years, also present a significant challenge for property managers, even if the challenge is of a different kind. In the case of such schemes, the developer usually sells the various functions as separate products, but from the perspective of the future owner, the development is one big organism and it is the role of the property manager to manage the relations between its elements. In a well-functioning mixed-use property, people are attracted by more than just one of the functions. For instance, an office worker is enticed – possibly through special offers – to stay at the hotel, buy in the stores and eat in the restaurants that are part of the same complex. Again, this is all about managing the community of a particular real estate, which is something that will continue to grow in importance in the coming years. “Perhaps in the future, community manager will be the new name for property manager,” Pszkit said.

COMMUNITY MANAGERS

In a similar vein – and this is truly a sign of our times – there is now more and more focus on the perception of office buildings by their end users, Pszkit pointed out. In a labor market that is an employee’s market, location is still important but is not everything. People want to work in nice buildings and the younger generation of office workers is particularly demanding in this regard. Property managers have to bear this in mind and treat all the users of an office building – from the boss to the regular worker – in the same way. “The office is no longer for the CEO only. In fact, it is often the majority, the rank-and-file employees, who decide where the future office of a company will be,” Pszkit noted. Indeed, a property manager sees all those using an office building as one big community. “The proper identification of the needs of such communities in the quickly changing market is probably the biggest challenge that property management is facing today,” Pszkit admitted. At stake is often the efficiency with which a particular company will function.

FACTS BNP Paribas Real Estate Poland The CEE activity of the property management department of BNP Paribas RE in numbers:

57 number of properties under management in CEE 1,215,900 sqm amount of space under management in CEE, including:

388,800 sqm of retail space

401,200 sqm of office space

410,900 sqm of industrial and logistics space

15,000 sqm of residential space

W B J OCTOBER 2018

LOKALE IMMOBILIA | LOGISTICS City Logistics Łodź I

ENABLING LAST MILE DELIVERY

WBJ sat down with Robert Dobrzycki, CEO Europe at industrial developer Panattoni Europe, to talk about urban logistics projects and the company’s development plans in the sector INTERVIEW BY ADAM ZDRODOWSKI

WBJ:

Panattoni Europe earlier this year revealed its plans to invest approximately €1.2 billion in urban logistics projects across Europe over the next three years. What are the reasons for launching this ambitious program? Robert Dobrzycki: The main reason is the continued development of the e-commerce sector, whose share in retail sales in Poland is expected to grow further in the coming years. We have come to the conclusion that there will be more and more tenant demand for urban logistics projects, and we are also getting signals that such schemes are seen as an attractive product by institutional investors. We also see our entrance into the sector as a way of diversifying our business and increasing our development volumes.

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E-commerce companies have been active in Poland for some time now. Was Amazon – for whom you have completed several big out-of-the-city developments over the last few years – not interested in entering urban locations? No, Amazon actually still mainly services the German market from its Polish fulfillment centers. Our urban logistics projects are targeted at retailers who want to invest in so-called last mile delivery here in Poland. How big could this market ultimately become? We estimate that the sector could, in the long-term, account for some 10-20 percent of the total existing logistics space supply in Poland. Urban logistics projects are relatively small, but they can

be built in a large number of citdevelopers, as everyone will find ies, not just in the biggest agglom- room for themselves in this marerations. ket. However, in those locations where buildings with several difWill you enter smaller cities in ferent functions can be built, we Poland too? are faced with competition from Absolutely. So far, we have residential, office and retail develannounced projects in Warsaw, opers. An industrial developer is Wrocław and Łódź with the bignot able to pay the same price for gest cities being a natural place a site as a residential or an office to start as they have the biggest developer as we build much less retail markets. However, conspace on the same amount of sumers also live in smaller citland. Unlike residential and office ies and there will be demand for buildings, warehouse buildings urban logistics schemes in such have just one floor. locations too. Our out-of-thecity logistics parks are now also What is the difference in devellocated in medium-sized agglom- opment costs? erations across Poland and the Construction costs are the same, same will happen with regard but the cost of land in cities is as to urban projects – they will be much as four times higher than built in cities with populations of the cost of land in out-of-the-city 200,000-300,000 or even less. locations. As a result, rents in cities are approximately 25 percent Will this expansion happen as higher. Admittedly, this is not a part of the three-year program major problem for tenants lookthat you have launched? ing for this kind of space. Units in Potentially yes, but we will defiurban logistics projects are relanitely also be focused on this tively small and rents are not, sector afterwards. The €1.2 bilin this case, a big cost element lion sum that we plan to invest in for companies with large-scale urban logistics projects across logistics operations. Meanwhile, Europe over the next three years proximity to consumers means is just the beginning. that those companies can save on delivery costs. How are urban logistics projects different from regular out-ofWhere are you now looking for the-city schemes? sites for future urban schemes? Because of the shortage of large Our target is all cities with popuplots, urban projects are smaller lations of more than 100,000. – they typically comprise from Because of the difficulty in 10,000 sqm to 20,000 sqm of obtaining proper sites, we do not space. Despite this, they are have a list of cities that we will much more difficult to develop. enter first. We need to constantly While the construction process look at many cities and buy sites itself looks more or less the when attractive investment same, the preparatory phase is opportunities arise. much longer. It can take up to two years to prepare an urban Are your urban projects specuscheme as it is more difficult to lative schemes? secure a proper plot and obtain Yes, such projects are, for the the necessary administrative most part, developed on a specupermits. The planning situation in lative basis. We do have clients cities is not always clear. who commission urban logistics space from us, but this usually And the competition from other regards single units, rather than developers is stiffer in cities… entire buildings. We will rather Exactly. We are not worried about not see the development of typicompetition from other industrial cal BTS projects in cities.

The sector could, in the long-term, account for some 10-20 percent of the total existing logistics space supply in Poland

W B J OCTOBER 2018

EVENTS

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

23RD BOOK OF LISTS GALA

PHOTOGRAPHS BY PIOTR GAMDZYK

The 23rd annual Book of Lists Gala welcomed 180 guests – top-level executives across all industries. Like each year, the gala focused on major players operating in various sectors in Poland and awarded them with distinctions for their successes. The WBJ Group handed out three Spotlight Awards: Vastint Poland received the statuette for the “Business Park Concept of the Year,” Catella Wohnen Europa was awarded the “Real Estate Pioneer of the Year” title for its No.44 Luxury Rental concept, while Ghelamco Poland took home the “Office Trendsetter of the Year” prize. Cresa Polska was handed the Rising Star Award for its “Real Estate Market Debut of the Year.” As usual, WBJ awarded 26 companies that performed the best in their respective industries with 1st place certificates. The Gala was held in Hotel Polonia on September 17. The annual event marks the issue of the Book of Lists, a Polish-English publication compiling data about major players in the Polish market in all sectors of the economy. It consists of ranking lists divided into categories such as corporate services, advisory, financial, HR and legal services, construction and real estate, education, automotive industry, as well as IT and telecoms. The lists present the top players in each sector ranked by key business indicators such as revenue, total GLA or number of employees.

OCTOBER 2018 W B J

W B J OCTOBER 2018

EVENTS

Warsaw Business Journal relives the most important recent business and industry events Anita Zajączkowska, Key Account Director, TFLS; Wojciech Krawczyk, Customer Service Manager, TFLS; Witold Buczyński, Director, TFLS

Anna Szmilewska, Senior Leasing Manager, Vastint Poland Sp. z o.o; Monika Rozner, Project & Research Manager, Book of Lists

Piotr Kaszyński, Managing Principal, Cresa Polska; Morten Lindholm, Publisher & Editor-in-Chief, Warsaw Business Journal

Dariusz Węglicki, Country Manager, Catella

Justyna Wołowska, Marketing Manager, Ghelamco Poland; Michał Nitychoruk, Senior Account Executive, Partner of Promotion; Radosław Górecki, Communication Manager, Ghelamco Poland 80

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2018/2019

st place

KOCHAŃSKI ZIĘBA I PARTNERZY IN THE BOOK OF LISTS 2018/2019 RANKING POLISH LAW FIRMS

Publisher of Warsaw Business Journal Group

Book of Lists Project&Research Manager

Morten Lindholm

Monika Rozner

Kochański Zięba & Partners, Plac Piłsudskiego 1, 00-078 Warsaw Tel. +48 22 326 96 00 www.kochanskizieba.pl

EVENTS

Warsaw Business Journal relives the most important recent business and industry events Piotr Kochański, Senior Managing Partner, Kochański Zięba & Partners

Jonathan Steer, Executive Director, CBRE

Jacek Żurawski, Managing Director, Hill International

Paula Rejmer, Managing Director, Expert Perm & Response, HAYS Poland

Renata Kabas-Komorniczak, Partner, Rodl & Partner

Michał Młynarczyk, Managing Director, Devire; Paula Rejmer, Managing Director, Expert Perm & Response, HAYS Poland; Agnieszka Kazimierczak, Marketing Manager CEE, HAYS Poland 82

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Yann Gontard, CEO, Sodexo Polska

Joanna Zabadała, Marketing Manager, Panattoni Europe

Paweł Kunat, Key Account Manager, Representative of the KRUK Group

2018/2019

st place

HILL INTERNATIONAL IN THE BOOK OF LISTS 2018/2019 RANKING CONSTRUCTION PROJECT MANAGEMENT COMPANIES

Publisher of Warsaw Business Journal Group

Book of Lists Project&Research Manager

Morten Lindholm

Monika Rozner

Hill International Sp. z o. o., ul.ZÅ&#x201A;ota 59, 00-120 Warsaw Tel: +48 22 58 13 777 www.hillintl.com

EVENTS

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

POLAND BUSINESS RUN 2018 A record-breaking number of over 22,000 people arrived at the starting line for the charity run Poland Business Run. Nine Polish cities hosted the initiative, raising over PLN 1,773,000 to help people with reduced mobility Altogether, 22,475 runners in five-person teams took part in the seventh edition of the business relay, running approximately 3.8 km per person. The greatest number of runners, over 5,500, participated in Kraków. The event took place simultaneously in nine cities on Sunday, September 2, at 10:30 a.m. In addition to Kraków, Warsaw, Łódź, Poznań, Katowice, Gdańsk, Wrocław and Lublin, the southern city of Rzeszów made its debut this year. Every year, Polish institutions, companies and corporations get involved in the Poland Business Run. Many of them become co-organizers, sponsors or run partners, encouraging their employees to participate in the relay. The greatest number of runners came from UBS – as many as 64 teams, which equals 320 runners! There were 42 teams from Rockwell Automation, 41 from Motorola Solutions, 39 from Capgemini and 37 from HSBC Service Delivery.

“Great thanks go to the runners and the people, companies and institutions which helped to organize the Run. Compliments to our sponsors, partners, volunteers and all those without whom this event would never have taken place,” said the President of the Poland Business Run Foundation, Agnieszka Pleti. Apart from the starting fees funds, the “I Help More” action helped to raise funds for the charitable cause. It amounted to over PLN 93,000 countrywide. Teams that raised the biggest amounts received yellow jerseys designed especially for the occasion by Dawid Woliński. The event shows the great engagement in helping those who need help the most. Two teams from Leach&Lang in Kraków raised the biggest amount – PLN 13,500. Even though the event is over, the charitable activity of the Poland Business Run Foundation is not coming to an end – now the organization is focusing their efforts on comprehensive help for the run beneficiaries.

BALTICA SUMMER TOUR 2018 The 9th edition of the international Baltica Equestrian Tour competition has come to an end. The event – the biggest horse-riding competition in Poland – took place at the Ciekocinko palace and stables complex located in the Kaszuby region in the north of the country. The palace, which is more than 100-year-old, has recently been thoroughly renovated. Its interior features historic furniture and accessories dating back to the 1920s that the owner has been collecting for over ten years. The property is located amid beautiful surroundings – a historic 22-hectare park, forests, ravines, meadows, a river, a lake and the Baltic Sea are all within arm’s reach. The professional infrastructure, topnotch arenas, unique atmosphere, international attendance, impeccable service, modern amenities and excellent food have been attracting the world’s best horse riders to Ciekocinko for the last five years. During the latest edition, the audience could admire the performances of contestants including Ben Maher, the Longines Global Champions Tour leader, who represents the UK and who won the team jumping gold at the 2012 London Olympics. Over the two weeks of the Baltica Summer Tour, four competitions counted for the FEI Longines Ranking. The qualifiers for the 2019 European Championships for Juniors and Young Riders in Zuidwolde also took place. Among the partners of this unique sporting event were brands such as Illy Polska, G.H. Mumm, Duni, Evian, Badoit and Claas.

OCTOBER 2018 W B J

PRCH

RETAIL AWARDS

GALA

October 11, 2018, 7:00 PM

POLISH COUNCIL OF SHOPPING CENTERS www.retailawards.org.pl

EVENTS

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

THE 28TH ECONOMIC FORUM IN KRYNICA IT IS THE PEOPLE who make the Economic Forum in Krynica. With their knowledge, experience and readiness to talk. Every year, the group of Forum participants grows, and they admit that participation in the event is a kind of a must. Especially now, when many issues cannot be resolved without multilateral debates, comparing various perspectives, reasons and arguments. Just like the awareness that today, here and now, we are creating a climate of substantive discussion about the future. RECORD ATTENDANCE Krynica this year was visited by almost 4,500 guests and over 600 journalists from 60 countries. For almost 30 years, the Forum has been a space for discussions on how to deal with threats that are largely universal in the world. More and more foreign guests arrive at the Nowy Sącz county every year and in 2018 they made up well over a third of the participants. It proves that in the discussion about the problems of a region or matters important on a global scale we need different perspectives and the will to seek a compromise. During the plenary sessions and panels of the 28th Economic Forum, the themes of reforms, financial and transport challenges that Europe is facing were addressed, as well as means of aid in times of crisis and various aspects of security. A lot of space was also devoted to the prospects for development and cooperation in the region. IT IS THE PEOPLE WHO MAKE KRYNICA This year’s Forum was attended by the most important players in the world of politics, business and media in Central and Eastern Europe, as well as people of science and culture. The guests included former and current prime ministers, marshals of chambers of parliament, ministers and parliamentarians as well as representatives of the most important companies operating both in the region and globally. The most important Polish state authorities were present at the 28th Economic Forum: Prime Minister Mateusz Morawiecki, the Speaker of the Sejm Marek Kuchciński, the Speaker of the Senate Stanisław Karczewski and many ministers from the Polish government. Outstanding international guests included Saulius Skvernelis, Prime Minister of Lithuania; David Roy Lidington, Cabinet Minister and Chancellor of the Lancaster Duchy and Member of the British Cabinet Office; Tibor Navracsics, European Commissioner for Education, Culture, Youth and Sport; Edgars Rinkēvičs, Latvian Minister of Foreign Affairs; Péter Szijjártó, Minister of Foreign Affairs and Trade of Hungary; Angelo Farrugia, Speaker of the Malta House of Representatives; Stepan Kubiv, First Deputy Prime Minister and Minister of Economic Development and Trade in the Cabinet of Ministers of Ukraine; János Latorcai, Deputy Speaker of the Hungarian National Assembly; and Valeri Simeonov, the current Deputy Prime Minister for Economic and Demographic Policy in the government of Bulgaria. The list of the most important guests of this year’s Forum consists of dozens of names from the highest state offices. The upcoming local government elections in Poland brought a large group of local government representatives to Krynica, who discussed the challenges of their “small homelands” as part of a separate thematic path – the Regions Forum. The most important economic topics in Krynica were discussed by representatives of Polish and foreign companies with a regional and global range. Among them, prof. Herman Simon from Simon-Kucher & Partners; Dominika Bettman, President of the Management Board of Siemens Sp. z o.o.; Piotr Dziwok, President of Shell Polska Sp. z o.o.; Mirosław Kowalik, president of ENEA S.A.; Henryk Baranowski, president of PGE Polska Grupa Energetyczna S.A.; Filip Grzegorczyk, president of Tauron Polska Energia S.A.; Filip Thon, member of Executive Committee Retail innogy SE and president of the management board of innogy Polska S.A.; Michał Krupiński, president Bank Pekao S.A.; and Marek Dietl, President of the Warsaw Stock Exchange S.A. The Forum was also attended by: Steven Harman, vice president of Amazon in Europe; Robert Bednarski, director for Central and Eastern Europe Facebook; Piotr Ciski, managing director of Sage Sp. z o.o.; Dariusz Blocher, President of the

OCTOBER 2018 W B J

Management Board of BUDIMEX; Paweł Borys, President of the Polish Development Fund; Tony Housh, President of the American Chamber of Commerce in Poland; Daniel Obajtek, President of the Board and Director General of PKN ORLEN S.A.; Piotr Woźniak, President of the Board, PGNiG Capital Group; Marcin Chludziński, President of the Board, KGHM Polska Miedź; Mateusz Aleksander Bonca, President of the Board, LOTOS Group; and Alicja Barbara Klimiuk, acting President of the Board, ENERGA SA. INTERESTS OR VALUES A Europe of common values or a Europe of common interests – the motto of the Forum touches on the issue of integration, which has gone very well, as long as it was based on economy. Problems started at the beginning of the 21st century, when values became the focus. Since that time more and more cracks have begun to appear on the foundation of the European vision of community – the most spectacular expression of which was Brexit. • D uring the Forum plenary sessions, whose dominant feature is traditionally Europe in a comprehensive approach, the following topics were addressed: • B etween Economy and Politics. In Search of Recipes for Economic Growth • H ow to Effectively Build an Innovative Economy? Experiences – Inspirations – Strategies • E urope – Yesterday, Today and Tomorrow • B rexit and the Future of the European Union • E urope in Search of Values • I nvestments in Health and Health Economy – Health Challenges of the State in the Context of Economic Development

Modern Europe seems to be susceptible to divisions. Is there any chance of finding common values of the continent in both ethnic and political terms? What values should be the foundation for the future of Europe? Answers to these questions were sought during the plenary session summarizing the 28th Economic Forum in Krynica entitled “Europe of common values or Europe of common interests?” The Foundation Institute for Eastern Studies is the organizer of the Economic Forum in Krynica-Zdrój, with the Małopolskie Voivodship as the main partner.

W B J OCTOBER 2018

LAST WORD INCH BY INCH There are still some advantages that people hold over robots and high-tech equipment, for now at least. Implementation costs are one of these advantages, which is why only the biggest players are introducing robots. For instance, Ford recently announced it has completed the testing stage and was equipping the staff of their 15 plants across seven countries with exoskeletons. Also, people are more adaptable, again – for now. Let’s say someone moves a rack in the warehouse. A human worker will simply shrug and go to the new location, but it will likely by an unsurmountable obstacle for the robot to find the rack in question. Creating a robot able to reassess the situation on the go rather than follow the same pattern all the time is currently way too expensive to even be considered. While people will continue to win on versatility, robots are becoming more specialized. Wal-Mart is implementing drones that will fly around the warehouse monitoring every shelf while an AI system verifies whether products on the shelves are what they’re supposed to be. “A job that used to take two people almost a month will be done on a continuous basis by drones, without sick leave or cigarette breaks,” said Bianchi.

AT THE END of the 19th century, the average British aristocrat would have a hard time understanding the idea of a weekend, while a factory worker would spend 64 hours a week on the job. You could easily tell how well-off a person was based on the amount of work they did. It is quite different today, when work is no longer an indicator of social status and it is often the richest who work the hardest. According to Forrester research, 6 percent of jobs will disappear by 2021 in the US due to automation. Drivers, accountants, analysts and lawyers are all facing increased competition from Artificial Intelligence. “Until recently, the stress in Artificial Intelligence was on ‘artificial.’ More and more it is on the ‘intelligence’ part now,” said Guido Bianchi, Country Director, Spring Professional, part of The Adecco Group. Tellingly, it is giants such as Google, Microsoft and Amazon who are the most involved in developing smart machines. “Google practically has the entire internet on its servers. That’s an unthinkable amount of data that robots can learn from.” Automation will invariably lead to mass unemployment. “In the past, unemployment was the effect of e.g. war, which left the country with destroyed factories. Modern unemployment is unavoidable, because people will no longer be necessary to do the work,” Bianchi said.

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NEW ARISTOCRATS Work is more than just a source of income for many people. They see it as a status symbol and derive satisfaction from solving problems. That is how a lot of IT specialists see their work. With video games, you can also gain new skills, receive rewards, get satisfaction from competing with others. And you don’t need to move boxes around or listen to your boss telling you how to do it. That is how a world without work might function: “a group of narrow-scope specialists with unique qualifications, working predominantly for the satisfaction the job brings. Besides them – people who do not need to work and who spend time consuming. Whether you want to live in this world is a question of personal preference,” summarized Bianchi. - B.K.S.

SHUTTERSTOCK

What will we do when there’s no more work?

AGE OF CREATORS As robots, AIs, machine-learning and the Internet of Things make manual and repetitive jobs vanish, an army of people with a lot of free time on their hands will emerge. “Recent years have seen a staggering development in the entertainment industry. New professions such as bloggers and YouTubers are connected with delivering entertainment. The explosion of content marketing is also evidence of people having more free time to dig through new content,” Bianchi explained. “Freeing up time for more people will require providing them with something else to do,” he added. Already, 20 percent of men aged 21-30 in the UK have no employment and play videogames for 70 percent of the time they would normally be working.

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