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
JUNE/JULY 2019 ~ No. 06/07 (52)
business magazine in English
For daily news visit us at wbj.pl
WORLD BANK’S
Country Manager for Poland and the Baltic states, Carlos E. Piñerúa, discusses Poland’s economic success
Hunting for unicorns
Why Europe is behind the US and China in VC investments
END OF PLASTICS
YEARS
WBJ Honors Poland’s Democracy
1989-2019
Can edible plates and paper cups reform the food industry?
Ethical vehicles
Finding a uniform system of rules for autonomous cars can be tricky
MEDTECH | SCOOTERS, BIKES AND CAR SHARING | CO-LIVING AND DORMS | EASTERN POLITICS
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IN REVIEW
JUNE/JULY
News highlights from the previous month from wbj.pl
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OPINION
Exit interviews......................................................13 Business cycles...................................................14 Interview: Decision-making..............................16 Interview: Eastern Partnership....................... 18 Interview: Norwegian-Polish ties.................... 20
22 43
Exclusive Interview World Bank – Carlos E. Piñerúa........................22
TECH
Tech News............................................................ 43 Interview: MedTech............................................ 46 Disaster Recovery.............................................. 47 Interview: AI ethics............................................ 48 Interview: VC market in CEE............................. 52 Fujitsu World Tour 2019.................................... 54 Interview: Human-centric technology.............56
In Focus: Subscription Economy Feature: City Transit – Scooters, bikes and other things 29 Mobility for all – Interview: Bolt 34
59
LOKALE IMMOBILIA
Real estate news................................................ 59 Interview: Atrium................................................ 65 Student accommodation................................... 66 Interview: Filling in the gaps............................ 69 Co-living trends................................................... 70 Interview: Amstar............................................... 74 Urban planning................................................... 80
83
LIFE + STYLE
Zoni: A place full of spirit(s).............................. 83 Interview: Senses............................................... 84
86
EVENTS
2019 CEEQA Gala................................................ 86 Content Marketing Awards 2019..................... 87 Baltica Equestrian Tour..................................... 88
Green Initiatives
Feature: The end of the PLASTIC AGE 36 Feature: No more greenwashing 40
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FROM OUR EDITOR
All things ‘CO-’
Morten Lindholm Editor-in-Chief/Publisher mlindholm@valkea.com
Beata Socha
Managing Editor
THE PREFIX “CO-” MEANS “JOINT” OR “COMMON.” What made me think about it is that while the macro political landscape seems to be heading in the opposite direction to COoperation, you could even say towards disintegration, the micro-economic trend is towards a sharing economy, where we look for joint benefits of being close together and not separating ourselves from our surroundings.
CO-working
There has been a massive wave of CO-working space reaching the Polish office market in recent years. Is it a sustainable trend and in what direction will it develop? Flexible space that makes it easy for companies to scale up or down obviously makes sense, so does the possibility of having a meeting space for virtual companies that don’t have a physical office. Still, I can’t see the real benefits of an office space where you have to share a sofa, a pool table, a kitchen and a toilet with others. Isn’t it more disruptive than advantageous? I mean, we are living in times where home office is also an accepted and healthy solution. Isn’t it more effective to be focused on your work, eliminate the travel time to the “office” and if you lack inspiration, exchanging ideas and camaraderie with people, then break up your working day with calls, Skype meetings, a meeting at a café or the gym, or simply use the local coffee shop where the internet is great and you will always feel welcome. It will certainly be exciting to see how the business of workplace-centric coffee shops evolves.
CO-existing
Another big and hot topic, particularly when another heatwave envelops the city, is how we – humans – treat the Earth, nature and the animals and species living with us here. Global warming is a fixed item on the agenda, at least in countries and societies that can afford to think about more than survival, but the progress towards a common plan with measurable results still seems far away. Real estate developers and architects have talked about green for a decade now, and we are finally starting to see how nature is actually being integrated in parts of new buildings. It’s done mainly for people and their wellbeing, but also to support nature and focus on the needs of plants and trees and the air that we all breathe!
COoperation/COllaboration
The whole idea about having a company is that people have different skills and if you put them together in the right mix then 1+1 no longer equals just 2. Here, however, we can also see disruption on the horizon, it’s maybe not human COoperation, but human and AI COllaboration that will secure companies’ success. The big task here is of course to ensure that it will be actual COoperation. But if the darkest scenarios of ruthless AIs that become smarter than people come to pass…, then we may be facing COllapse rather than peaceful CO-existence with machines.
CO-owners
Are we children of the world or are we just borrowing the earth and passing it onto our children? I cannot end my little “CO-story” without pointing to perhaps the biggest challenges to our and future generations. Ensuring that there is a future worth experiencing will require making a CO-responsible and COmmon plan that will bring world leaders and all of humanity together in realizing that COoperation is now the COre issue to our survival. – Morten Lindholm
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bsocha@wbj.pl
Adam Zdrodowski
Managing Editor, Lokale Immobillia
azdrodowski@wbj.pl
Krzysztof Maciejewski Editor
kmaciejewski@valkea.com
Kevin Demaria Art Director
Michael Evans Copy Editor
Contributors
Ewa Boniecka Konrad Krzysztofik Anna Rzhevkina Alex Webber Sales
Magdalena Klimiuk mklimiuk@valkea.com Monika Makarczyk mmakarczyk@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
wbj@wbj.pl
WBJ.pl WarsawBusinessJournal
@wbjpl
All photographs used in this issue are courtesy of partners and companies unless specified otherwise.
Copyright © 2018 by Valkea Media SA All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permissionof the publisher. Published by
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NEWS HIGHLIGHTS OF THE PAST MONTH FROM WBJ.PL
If the Sejm adopts the bill in its current form, it will not only be the end of the whole loan institution industry, but also an earthquake for the entire financial sector, including banks,” Jarosław Ryba, president of the Polish Association of Loan Institutions (PZIP), criticized the proposal of changes made by the Council of Ministers in the draft amendment to the anti-usury law, adopted by the government on June 18.
INTERNATIONAL
US-China trade war would reduce Poland’s GDP growth – Fitch If the US imposes tariffs on a further $300 billion worth of imports from China, and if Beijing responds to the move, the growth rate of Poland’s GDP in 2020 will decrease by 0.3 percentage points compared to the baseline scenario, according to Fitch agency forecasts. In its baseline forecasts, Fitch assumes that the Polish economy will grow by 3.5 percent next year.
SHUTTERSTOCK
BUSINESS
Polish stores losing €1.7 bln annually due to theft – report Annual losses resulting from theft in Polish stores reached €1.7 billion, while in 11
European countries (including Russia) they exceed €49 billion, according to the “Security in retail trade in Europe: going beyond losses” report by Crime & tech. The losses suffered by stores in Poland are estimated at €1.1 billion per year, with € 0.6 billion being spent on store security. Polish respondents surveyed for the report pointed to shoplifting as the main cause of losses in stores. BUSINESS
Idea Bank to lay off 750 employees by year end Idea Bank is planning massive layoffs that could affect a maximum of 750 employees this year, the company has announced. The reason for the planned job cuts is the need to restructure the bank’s operating costs,
which also means reducing employment costs. This became necessary after the Polish Financial Supervision Authority (KNF) did not agree to Idea Bank’s merger with Getin Noble Bank. INTERNATIONAL
Eurostat: Poland’s GDP per capita reaches 71% of EU average Poland’s GDP per capita last year amounted to 71 percent of the average for the entire EU, the statistics office Eurostat has revealed. Poland performed better than other CEE/SEE region countries such as Hungary (70 percent), Latvia (70 percent), Romania (64 percent), Croatia (63 percent) and Bulgaria (50 percent). The EU average was exceeded by countries such as Luxembourg
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WBJ
In Review (254 percent) and Ireland (187 percent). Eurostat emphasizes that GDP per capita mainly reflects economic activity, with private consumption remaining a better indicator of the actual living standard in a given country. In Poland’s case, this ratio increased to 77 percent of the EU average in 2018.
Asked when Poland will join the Visa Waiver Program, Trump expressed hope that it will happen “very soon.” He added that “we know that the situation is quite complex: not many countries belong to this elite group, we want Poland to belong to this elite group, perhaps in the next 90 days.”
DOMESTIC
DOMESTIC
Tusk: VAT fraud connected with common European market The intrinsic nature of VAT fraud is connected with the common European market and the way in which VAT is settled within the EU, former Prime Minister Donald Tusk argued during his hearing before the VAT investigation committee. “The situation that took place in Poland is also taking place today in many other EU countries... and I am afraid that we will see such events in our country, as well as in the EU, in the future,” Tusk added. DOMESTIC
5,900 electric cars on Polish roads There are currently 5,900 electric cars on Polish roads, while from January to May this year the number of electric car registrations in Poland increased by 100 percent compared to the same period of 2018, results from the “Electromobility Counter” have shown. The counter was launched and is being updated by the Polish Alternative Fuels Association (PSPA) and the Polish Automotive Industry Association (PZPM). Using it, you can find out how many different types of electric vehicles are currently on Polish roads and how many charging stations are in operation. INTERNATIONAL
Duda and Trump sign new defense agreement Polish President Andrzej Duda and the US President Donald Trump have signed a new defense agreement that will see the deployment of 1,000 additional US troops to Poland. “The declaration on further cooperation in the field of defense and the US military presence in Poland is a breakthrough,” Duda said in Washington, DC. Trump stressed that Poland will provide infrastructure for new troops and thanked Duda for a “partnership with Poland for common security.”
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Deloitte: 2018 revenues of Ekstraklasa clubs at PLN 528 mln The revenues of all the football teams playing in Poland’s Ekstraklasa league amounted to nearly PLN 528 million in 2018, according to a report by Deloitte. Revenues from transfers amounted to PLN 96.8 million, of which PLN 87.4 million was generated by foreign transfers. Legia Warsaw is still the club with the biggest revenues. DOMESTIC
Mazovia remains the most indebted region in Poland In the first quarter of this year, credit and non-credit arrears of Poles increased by over PLN 2 billion and the number of unreliable debtors grew to approximately 2.8 million, according to a report by BIG InfoMonitor and BIK. Mazovia tops the ranking of the most indebted regions. As BIG InfoMonitor points out, unreliable debtors’ arrears amount to enough to purchase seven major WSE-listed companies. The BIG debtors’ register includes those who do not pay their rental fees, telephone and internet bills, and loan installments.
TRENDING STATS
18.3%
New orders in industry increase in May 2019 (GUS, y/y)
4%
predicted GDP growth in 2018 (MF, Euler Hermes)
40.9
bln PLN State aid in 2017
(UOKiK)
978,711.7
mln PLN State Treasury’s debt at the end of April 2019 (Ministry of Finance)
7.7%
Industrial output increase in May 2019 (GUS, y/y)
INTERNATIONAL
Poland boasts smaller gender pay gap compared to the EU The gender pay gap in Poland is relatively small compared to the EU average, according to the latest ALEO.com report, but men still earn 7.2 percent more than women. As checked in 2017 by Eurostat, in the EU men earn an average of 16 percent more than women. In order to earn as much as a man in a year, the average European woman with similar qualifications, in the same position and on the same work schedule would have to work for 14 months. Among EU countries, the smallest gap occurs in Romania, where women earn on average 3.5 percent less than men. The largest inequalities were recorded in Germany, the Czech Republic and Estonia. In the latter, for every €1 earned by a man, a woman earns only 75 cents.
2.2%
Consumer inflation (CPI) in May 2019 (GUS, y/y)
1.7%
Core inflation in May 2019 (NBP, y/y)
$11.48
bln Inflow of foreign direct investment (FDI) to Poland in 2018 (UNCTAD)
WBJ
In Review
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High life As many as 41 percent of Poles will spend at least PLN 4,000 on their annual leave this year. However, 48 percent of Poles do not plan to exceed this amount, according to a survey carried out by the tourist search engine KAYAK.pl. Over 70 percent of respondents admitted they need to save for a holiday trip. The most popular way of saving, used by 57 percent of Poles, is to regularly set aside a fixed amount from their salary. Every third person limits the expenses for shopping or going out to save for the trip.
The kitesurfing is known as a sport having relatively high initial financial barrier to entry. The rate to reach the IKO 2 level is about PLN 1,000. Kite, kiteboard, harness, pump and a wetsuit will cost you approx. PLN 8,000.
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first exclusive INFINITY The aparthotel in the heart of ZIELENIEC Poland’s top ski resort SKI & SPA
P
oles, Czechs and Germans have been coming to the Zieleniec Ski Arena mountain resort for years. Soon, they will have the highest class facility to enjoy – the INFINITY Zieleniec Ski & Spa Aparthotel. Tourists, investors and the whole region will benefit from this stunning aparthotel, implemented by CGA Invest, a well-known Polish developer specializing in mountain infrastructure. Located in Lower Silesia, Zieleniec Ski Arena is one of the most popular and recognizable ski resorts in Poland. Despite the intensive development of infrastructure in recent years and the increasing number of tourists, the region lacked five-star standard facility. That is changing on account of CGA Invest, which has already begun construction of the exclusive INFINITY Zieleniec Ski & Spa Aparthotel. The offer will include 352 modern apartments sold in the popular condo system. An investment of this scale and at such level will increase the attractiveness of the center and the region, which will benefit the whole community.
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BROUGHT TO YOU BY
An aparthotel on the slope The class of the new resort is proved not only by its unique architecture, which blends perfectly into the mountain landscape, but also by its extremely favorable location. It is located directly on one of the ski slopes in the center of Zieleniec, providing easy access to all the attractions of the village. Zieleniec offers guests a unique mountain microclimate, which has a beneficial effect on the body, supporting the production of red blood cells. A characteristic feature of the region is the long-lasting snow cover, allowing visitors to enjoy the charms of the winter season for over 160 days a year – much longer than other resorts in the country. Tourists are also attracted by the well-prepared infrastructure and excellent skiing conditions. The picturesque location and the large number of attractions are a draw for visitors to Zieleniec at any time of the year. The Bystrzyckie and Orlickie mountains are perfect for hiking trips and bicycle rides. After the demanding tours and kilometers traveled, visitors can relax and enjoy the various recreational activities. Guests have access to, among others, year-round cable railways, DiscGolfPark, mountainboarding, SkiGrass, an equestrian center and even a trout fishery. In love with mountains A proven developer is a guarantee of a good investment. This is the case with CGA Invest, which has been involved in the development and promotion of the entire Sudeten region for over a decade. Its portfolio includes the modern, year-round mountain resort Czarna Góra Resort. Its success is also clear in the numbers: eight completed hotel facilities sold in the condo system, 14 built and modernized ski runs and numerous ski lifts and cableways, including the fastest six-passenger Luxtorpeda railway in the country. You can add to this list numerous other attractions, including the Alpine Coaster Black Viper, outdoor swimming pools, singletrack cycling routes or the Czarna Góra rope park, which was opened just last summer. The experience gained over the years has allowed the company to develop proven solutions, which are used in
all new projects. Investors can be sure that by investing in INFINITY Zieleniec Ski & Spa, they are investing their savings properly. Well-thought-out architecture and respect for nature The aparthotel will consist of three blocks situated in a terraced area on the slope in the center of Zieleńca. The building has been designed by experienced architects in a way that perfectly blends in with the mountain landscape. The property is nestled into the slope, which forms one of its walls. From street level, only the upper part of the glazed facade with well-thought-out lighting system is visible, achieving an effect of visual lightness. Glazing in the pool area integrates the building with the surrounding landscape and allows guests to enjoy breathtaking views. Design at the highest level INFINITY Zieleniec Ski & Spa attracts attention not only from the outside, but also from the inside. The design team has made sure to create interiors that will satisfy the tastes of even the most demanding customers. The luxurious and spacious apartments are characterized by a combination of functional modernity with a timeless and subtle elegance. Most apartments are equipped with loggias or balconies, and each of them will have a breathtaking view of the ski slopes and the majestic Eagle Mountains. All premises are sold in turnkey condition, complete with fittings and equipment of the highest standard. Condo – a new dimension to investment Aparthotel INFINITY Zieleniec Ski & Spa is sold in the popular condo system. It is a safe way to invest capital, which involves buying apartments in hotel facilities. Then the real estate is rented by the operator, and private investors enjoy a guaranteed, permanent profit. In the case of the CGA Invest facility, the condo system works exceptionally well. The purchase of each apartment is confirmed by an entry in the individual land and mortgage register, and thanks to the lease agreement with the operator, the owner gains a return
rate of as much as 7 percent of the net investment over the year, regardless of whether the property is rented or not. Contracts are concluded for five or ten years or for an indefinite period, and all fees associated with renting (utilities, property management costs, insurance) remain on the side of an experienced operator. Investors enjoy a regular profit, but that is not the end. Investor Package – permanent profit, rest and top benefits The revolutionary Investor's Package launched in March this year for apartment owners in INFINITY Zieleniec Ski & Spa is a real treat. It contains an unlimited number of days per year to be used for your own stay in an aparthotel or in any other hotel facility in CGA Invest’s current portfolio. It is worth emphasizing that you can take advantage of this offer at any time of the year, during both summer and winter holidays. In addition, each investor is entitled to a personal VIP card that guarantees attractive discounts on all services offered at INFINITY Zieleniec Ski & Spa and Czarna Góra Resort. Added to this is the free use of hotel swimming pools, saunas and car parks. Satisfied customers are return customers The fact that investing in INFINITY Zieleniec Ski & Spa Aparthotel is beneficial is easily proved by the numbers. Buyers have already occupied half of the 352 apartments, and satisfied investors are returning to invest in subsequent projects implemented by the developer. So, let's choose an apartment adapted to individual requirements. The first guests will arrive in Zieleniec in December 2020.
Are you interested in an investment? Call +48 743 067 606 or send an email to infinity@czarnagora.pl. You can also find more information at www.infinity.czarnagora.pl
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CUSTOM PUBLISHING Valkea knows how to create branded media in print. For 7 years, we have been Poland’s leading custom publishing agency. We work for the biggest brands on several dozen projects every year. Our team consists of enthusiasts from many sectors with the highest editorial standards. Valkea utilizes cutting-edge ideas compatible with brand DNA, while assuring top-notch visuals and graphic design. See more at www.cp.valkea.com
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Opinion EXPERT VIEWS ON CURRENT BUSINESS AND SOCIAL TRENDS
Time to say goodbye – Exit interviews
E
SHUTTERSTOCK
ven if we try to implement the right solutions, from work organization to HR matters, we can never be sure if they are really working. It’s particularly difficult in large companies with staff of 50 or 100 employees. It’s simply true that employees are reluctant to share. An unpopular opinion or criticism – even the extremely valuable constructive kind – is not so easy to express. Employees refrain from talking about what bothers them because they fear it may ruin their chances for a bonus or a promotion. But the employer is not entirely at a loss here. That’s where exit interviews come in handy. Many HR experts and managers say that employees are open to sharing their thoughts during exit interviews because they no longer have anything to lose. They no longer fear their boss’s reaction. That’s when they can give you the most valuable insights, which the employer could never discover through e.g. employee questionnaires. It also signals to the employee leaving the company that their work and dedication have been noticed and their opinions matter. A company that regularly conducts exit interviews has a great employer branding tool at their disposal. Word of mouth can be very valuable when attracting new talent. Besides, given how dynamic the labor market is, it makes no sense to burn bridges – employees may one day choose to return with more experience and competencies.
Agnieszka Surowiec HR and Communications Director Intrum
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Opinion ECONOMY
Growth or decline?
At what stage of the business cycle are we now? While inflation is being kept in check and economic growth is maintained, the current cycle may be much younger than we think.
U
nderstanding the economic business cycle is one of the crucial skills any investor or entrepreneur needs to master. Many people who failed to recognize the state of the business cycle did not get out of the stock market before the great recession hit. To make matters worse, they fear returning to the stock market at the beginning of an expansion cycle when it is the right time to do so. Reading the business cycle allows you to adjust asset allocation in order to take advantage of economic phases. The traditional progression of the business cycle is very familiar. The economy expands as consumers demand more products, and companies hire more workers to increase production, so unemployment goes down. In the expansionary period, GDP increases, (usually) in line with inflation and interest rates. Why? Being
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charged with keeping the economy strong, the Federal Reserve System (also known as the Fed) has two main aims: maximizing employment and stabilizing prices. In an effort to stave off inflation, the Fed will often “tighten” or raise interest rates to keep price levels stable. An expanding economy eventually runs short of the resources needed to supply demand, prices rise, central banks hike rates to curtail inflation, and the economy slows. When GDP hits its low in that cycle, we hit a trough, which is characterized by high unemployment, low interest rates, and low inflation. In an effort to stimulate the sluggish economy and stabilize price levels, the Fed will often “ease” or lower interest rates. This lowers the cost of borrowing, which theoretically encourages consumers to spend again. Then inflationary pressures ease, central banks cut rates, demand grows, and the cycle starts afresh.
Using this traditional progression, it would be easy to conclude that the business cycle is entering a late stage. In the face of low unemployment and rising wages, the Fed has been tightening rates since December 2015, and, since the end of 2018, growth has been slowing. With this perspective, bond markets seem to concur that a slowdown is upon us, already pricing in that the Fed will soon cut rates. But we can also look at the same set of data and draw a different conclusion. Yes, the Fed has been hiking rates, but only to normalize the policy toward “neutral” levels. With little inflationary pressure, the Fed has little reason to clamp down on demand. Through this lens, it might be months or years before the economy runs short of resources, requiring the Fed (or other central banks) to hike further. In our case, we think inflation will rise at only a modest pace, allowing for a continuation of the steady-growth, low-rate backdrop we have experienced over the past few years. There are signs that the global economy is stabilizing and that the Fed’s pause has also helped provide a near-term reprieve for risky assets. Bond markets seem to be saying the Fed has raised short-term rates too much, yet equity markets are buoyant. We think that the flat yield curve has more to do with a changing view of longer-term inflation than expectations of an economic slowdown, but we will look for confirmation of this view in the months ahead. In our view, the bond market is currently telling us more about inflation expectations than the likelihood of a recession. But with higher valuations curtailing future investment returns, and the possibility of volatility as markets worry about policy errors, we keep a more balanced exposure to risky assets, and use hedges where appropriate. In our tactical asset allocation, we have added several positions that would benefit if the benign backdrop continues.
Mark Andersen Managing Director and co-head of Asset Allocation at the UBS Chief Investment Office
SHUTTERSTOCK
WBJ
BUSINESS SPOTLIGHT
WELLBEING FOR EVERYBODY!
Situated in the exciting, fast-developing area around Służew train station in Mokotów, Danish fitness Club LOOP has opened their flagship club in Warsaw
DIFFERENT FROM THE TRADITIONAL FITNESS CLUB CONCEPT LOOP was first established in Denmark in 2004 and today has more than 100 clubs in a country of only 6.5 million inhabitants. What has set LOOP apart from the traditions of the fitness industry is its simplicity, its focus on being for everyone and creating a community space where health is important for both body and soul. Through intensive research and based on the groundbreaking technique of HIT systems, LOOP identified a unique system with 16 machines in a circle and 24 minutes of timed training that works all the body’s muscles, providing a full workout that is very good for your health. This, combined with relatively small clubs and post-workout relaxation spaces with free coffee, has created a strong and successful development concept.
NEW IN POLAND The concept has taken Denmark by storm, city by city, even town by town, sometimes LOOP has opened in towns with less than 10,000 inhabitants and become the “center” of the city. The concept is for everybody, but it has seen growing interest from members aged 50+ and people who
never visited fitness clubs because they felt uncomfortable and different. LOOP has no mirrors and focuses on family values and thereby it attracts a whole new target audience for fitness clubs. The plan is the same for Poland. Elder generations are today more focused than ever on health and energy, so they can spend time with family and children or grandchildren. LOOP gives them a convenient, time-efficient and stressfree way to keep their body and soul young and strong.
FITNESS AND HYGGE LOOP has coaches (they’re not called trainers) as they are much more than just fitness advisors; they are socially interested and involved in the members’ lives, so people feel comfortable. It is also about hygge (the Danish word that became a buzz-word a couple of years ago) meaning a relaxed and enjoyable style of approaching life. Time is key. It really takes only 24 minutes. It is easy for people to include it in their routines. In a professional and busy day, even a mother taking their kid for a walk, while the kid sleeps the mother has a chance to work out. Additionally, the clubs also have a kids’ corner; the family aspect is very important, and LOOP has many family members.
CO-INVESTORS AND FRANCHISE-TAKERS With the flagship club open and a membership of several hundred, which is growing by the day, LOOP is now moving to phase two of its Polish expansion, having already secured several interesting location and lease agreements. The expansion can move quickly as the space requirements for LOOP clubs are not that big; 400 sqm is enough space for a club. This is unique for the industry and opens up opportunities for startups in both residential building as well as offices. The IT systems, the systematic and programmed training also translates into relatively reasonably investments with good ROI opportunities. The fixed costs per club stays the same whether the club has 200, 500 or 1,000 members. If the right Polish partner comes around – so expansion can go faster and easier – then LOOP is also open for talks, especially with a focus on Warsaw in the nearest future. For more information contact: Szymon Okrojek, Country Manager Tel: +48 605 447 789 www.loopfitness.pl/pl/franczyza/ szy@loopfitness.email
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WBJ
Opinion MANAGEMENT
Follow you gut, or your head?
Mikael Krogerus and Roman Tschaeppeler were keynote speakers at the exclusive ULI Poland Annual Conference, where they discussed the tools needed to improve decision-making INTERVIEW BY MORTEN LINDHOLM
A
Finn, a Swiss and a Dane meet in the fashionable lobby bar of the Raffles hotel in Warsaw where they speak in Danish about decision-making. Mikael is a Finnish-born fast thinker and reporter based in Switzerland who works for the renowned weekly Das Magazin. Roman is a Swiss visual thinker producing documentaries and cultural projects in his studio dubbed guzo, based in Biel, Switzerland. They have written four books together, the first of which – titled The Decision Book – is a compilation of the 50 best models used to make decision-making easier with the help of structured designs and diagrams.
WBJ: Is this your first visit to Warsaw? Mikael: Yes, it’s our first time in Warsaw. Unfortunately, we have not had a chance to see the city outside this lovely hotel.
Any impressions from your visit and the ULI conference? Mikael: It struck me that the mentality of the people we met is evolving; it’s a very positive and encouraging perspective on how we constantly make progress
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and we believe we can (and will!) improve Warsaw and Poland. What was also very exciting about the crowd we spoke to is that real estate developers, architects and investors make their decisions on a long-term basis and must be very imaginative as they build and re-build cities that need to last and make a difference for decades. How did you come up with the idea for The Decision Book? Mikael: We started wondering why it is so difficult to make decisions. As we went deeper into the subject, our curiosity started to grow, so – having been trained in visualizing complex theories – we decided to publish a small book mostly for ourselves, creating diagrams (visuals) and explaining just how to make decisions. Most people lack decision-making skills. But it is actually something you can learn and there are tools that can help you. We investigated cultural, gender and age influences, and found that all humans usually have the same struggle while making decisions – they have to choose between going with their head or their gut.
In general, it is worth remembering that decision-making is subjective, which means that the right decision for you may not be the best choice for me. So, we say there is not an objective right choice for everyone, we say there are hard choices, because the decision is often between similar values, but certain issues differ and influences subjectively affect the decision-maker. If you find the “right” woman to marry, you are sure she is the right one at that moment, but it might not be the right decision as years go by. The nature of decision-making is imagining or guessing, and most people are not good at making decisions; they feel uncomfortable about it. You probably know that feeling when you postpone a decision because you want to have more details and information. It’s nothing unique, most people struggle with it too. But there are many tools (SWOT, the Buyer’s Decision model – to name just two) that can help you practice and simplify your way of making decisions. That is what the book delivers; 50 well researched methods (visually described) that can help you answer simple daily questions about what to buy, as well as more difficult questions about how to manage your team. You have already had four books published, do you have plans for more? Roman: We write a weekly column in Das Magazin about smart working – i.e. about how you can take notes, how you can plan your day or week. Maybe the research and a compilation of those articles will be the foundation for an “effective at work” book. What message would you like to send out to my readers? Roman: The Decision Book hasn’t been translated into Polish yet. Believing in the value and guidance it can bring to people, we hope that one day it will also be published here. The Decision Book is available at online bookstores. It was first published in 2009 in German. Following its success, it was translated and made available in English in 2010. Today the book is available in 20 languages.
BUSINESS SPOTLIGHT
1. VALIDATE YOUR EMPLOYEES Show your employees that you know they are doing a great job. A small team win is important to acknowledge, as it is small teams that build big companies. So why not set a budget for team outings to celebrate occasions such as winning new business, completing a complex project, or recruiting a new team member.
2. IMPROVE COLLABORATION Facilitating a more social setting for teams and departments to really get to know each other results in stronger collaboration, and more effective, efficient work.
3. RELAX, RESET AND GET CREATIVE
4 REASONS WHY A COMPANY OUTING IS A GREAT WAY TO GIVE SOMETHING BACK AND MOTIVATE EMPLOYEES
I
n this day and age employers are continuously brainstorming how to improve engagement among their employees. It is no secret that Poland has become an employee-dominated market, and this, combined with remote working and the requirements of millennials, places more demand on employers and raises concerns of how to win over – and most importantly retain – a loyal and engaged workforce. Today, we see a shift in what employees expect from their work. It is not just a job for them, it is their life and gives them a sense of purpose when they get up in the morning. Their boss is not a dictator, but a coach who guides them through life. Money is still important, but it is not the sole driver of success for employees today; it is about development, support and the feeling that they are making a difference. And just like in
life, employees need recognition; they want their employers to take the time to appreciate their progress and create more opportunities to develop. This recognition also needs to come from the right level of manager. The “open door” management policy has never really encouraged that much interaction with bosses, but it is recognition from the people in charge that modern employees crave so much. Try to connect leadership with employees, so they can feel like they are part of a larger purpose. Just like you invest in marketing and recruitment, you should also invest in company events, as positive results can exceed your expectations. Below are four reasons why a company outing is the way forward and how you can not only say thank you, but at the same time provide more motivation to your employees.
Don’t always make your team take a break from work at the cost of their free time. Dedicate the whole afternoon off to having fun outside the office to really boost productivity. It’s when we let our brains take a real break from the pressures of the projects and deadlines that we can step outside the box and find better solutions and deliver more effective work.
4. LEARN FROM THE BEST Encourage the bosses of the managers to be the ones who invite teams out. Create a safe environment for knowledge sharing. These outings can take various forms: small team lunches, less formal but bigger dinners or even large events starting in the afternoon with a show and tell section that can be a good introduction to later conversations. It is easy to put on an event in a restaurant, but it is key to choose one that offers something different and interesting. The Alchemist Gastropub, set in the center of Warsaw, boasts stunning interiors, excellent food, lovely service, and also a self-service wall of craft beer, cider and prosecco where guests can pour drinks themselves – an excellent way to facilitate interaction and an easy “ice breaker,” especially if you want to start a conversation with your boss. We are here to help you plan your next event – contact us at: info@thealchemist.pl. www.thealchemist.pl
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Opinion POLITICS
Eastern promise
The Eastern Partnership (EaP), a Polish-Swedish initiative created in May 2009, reaches its tenth anniversary. Is it still one of the EU’s great assets and what role does Russia play in the equation?
(Above) Leaders of the EU and Eastern Partnership group pose for a photograph during the 10th EU-Eastern Partnership council meeting in Brussels, Belgium on May 13, 2019
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WBJ: What should be our role in strengthening the EaP in the EU and
what it would mean for our interests? Anna Maria DYNER: The EaP, which was a Polish and Swedish initiative, is from the Polish perspective a crucial EU program dedicated to eastern partners. It covers Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine – former soviet republics. The EaP corresponds with the main goals of Polish Eastern Policy; spreading democratic values, strengthening the economy and independence of our eastern neighbors. One of the most significant dimensions of the EaP is cooperation with civil society and strengthening peopleto-people contact. Why is all of this so
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important? Because it helps to stabilize Poland’s neighborhood and strengthen the possibilities of cooperation according to rules of the EU. How can we do that? We propose strengthening ties between EaP countries and the EU. More specifically, the EaP includes plenty of initiatives focused on policy, economy and society. Its main aim is to support all six countries in implementing reforms that they can’t do on their own, developing infrastructure and civil society, and strengthening their security and stability. The EaP is financed primarily from the European Neighborhood and Partnership Instrument (ENPI). Moreover, there are some special funds that EaP countries may use in the European Investment Bank and European Bank for Reconstruction and Development. The countries that are part of the EaP were members of the Soviet Union and only regained independence after its collapse. Later, Georgia and Ukraine were invaded by Russia. Ukraine is still at war with Russia, so Moscow is strongly against those countries building links with the EU. Also, in the EU there are some members who are more interested in building close relations with Putin’s Russia. How do you see it? The situation in which there are some EU countries that don’t pay attention to the EaP is a challenge for Poland and some other countries are seriously engaged in this program, like Lithuania and Sweden. It is our obligation to promote this idea among other EU countries and show off the results that we have achieved so far. We have to stress that for five out of the six EaP countries the EU is the biggest trade partner and for the sixth – Belarus – it is the second biggest. Moreover, the EaP is probably the best way to build not only a stable eastern neighborhood, but also the resilience of those six countries. Another question is the way Russia interferes in political processes, including elections, in the EU and the US. Russia uses social manipulation, propaganda and fake news to change political scenes in western countries. It could be very
For five out of the six EaP countries the EU is the biggest trade partner and for the sixth – Belarus – it is the second biggest
dangerous if those radical parties backed by Russia gained the possibility to change political systems in the EU. And this is one of the dimensions of hybrid warfare we have to tackle. And how is the relationship with Ukraine progressing? We are doing quite well. I know it may sound strange, especially since in the mass media we rather hear about historical issues. But, at the same time, economic relations with Ukraine are developing; Poland became the first importer of Ukrainian goods and trade between both countries is growing. Moreover, Poland, together with Lithuania, strongly supports military reform in Ukraine and we cooperate in this field. When it comes to political relations we are now living in a time of change. The new Ukrainian president, Volodymyr Zelensky, just took office and called a snap election. So, there will be a serious change in the Ukrainian political scene. And last but not least, we also have to stress that Poland is the main target country for migrants from Ukraine. Belarus, another member of the EaP, is under strong pressure from Russia and has problems conducting an effective foreign policy and developing strong relations with the EU. What can we do? We can’t do much because of strong political, economic and military ties between Belarus and Russia, but we can still support the development of political relations between the EU and Belarus, supporting Belarusian authorities in their efforts to sign a Single Support Framework with the EU and a visa facilitation agreement. We can also engage in creating and strengthening the country’s civil society, people-to-people contact and develop trans-border cooperation. There is also a huge role for Poland in
supporting the discussion about Belarusian history, culture and self-identity. It all leads to the question of how to deal with our relations with Russia in times of uncertain changes in the world. The country has powerful nuclear weapons in its arsenal and plays a major role in many parts of Europe, Asia, Africa and the Middle East. Its policy towards the US, China and India, its strong propaganda against democratic rules in international politics and hostile position towards the West are all disconcerting. How can Poland and the EU deal with it? That’s a very difficult question. We have to be more global; not let Russia impose its way of perceiving the world – a world divided into areas of influence, with powers that dictate the fate and future of the smallest countries, and where the “ruling state” may intervene in any area it considers its own. One way to do it is to maintain the sanctions policy towards Russia as long as the country refuses to change its aggressive policy towards Ukraine. Moreover, there are many things we can do to withstand Russian propaganda and fake news. There are such institutions as the East StratCom Task Force. And to cut a long story short, I will use a slogan associated with NATO; united we stand, divided we fall.
Anna Maria Dyner
an expert at the Polish Institute of International Affairs,
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Opinion POLITICS
Building ties
Norway and Poland go way back. Sizable grants allocated to Poland and energy cooperation including the Baltic Pipe will link the two countries even more closely
WBJ:
From the time Poland joined the EU in 2004, Norway – which is not a member, but belongs to the European Economic Area – has transferred millions of euros to Poland in the framework of the so-called Norwegian Fund. What is the reason for your significant financial help for Polish development? Ambassador Olav Myklebust: When Poland joined the EU and also the EEA in 2004, Norway and Poland became even closer partners. For Norway it is important to contribute to cohesion in Europe and reduce economic and social differences. This is one of the reasons why we are happy to provide funds to Poland for these purposes. The funds also bring our populations, companies and institutions closer together. So far, 3,000 projects have received almost PLN 5 billion and the results are amazing not least due to the fantastic work by our Polish partners. Projects include the modernization and greening of power plants in many Polish cities, including the Siekierki plant in Warsaw. Some of the most renowned sites of cultural heritage have also been
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restored, such as the Warsaw Museum, the Wilanów Palace and the Sukiennice in Kraków. Now we are excited about starting the third period of grants and PLN 3.5 billion will be spent all around Poland over the next five years. Was the help related to decisions made in the EU or is it Norway’s independent decision? The overall framework of the funds is negotiated between the donors – Norway, Iceland and Liechtenstein – and the EU. The overall priorities, as well as the distribution of funds between the beneficiary states, are agreed in those negotiations. The donors then negotiate with each beneficiary state on more specific priorities, and one and a half years ago the donors and Poland agreed how to spend the €809 million that was allocated to Poland for this period. We agreed that the funds will go into 11 different programs such as environment and energy, local development, education, research etc. Most of these programs are operated
by Polish authorities in cooperation with partners from Norway, but for the donors it is important that the Civil Society fund, which has been allocated some €52 million, will be operated independently of local, regional and central government. This is a general principle that applies to all states that receive grants. The civil society organizations operating these funds will select which projects to support based on the merits of the applications, and for Norway, supporting civil society is a very important part of the grants. Are Norwegian-Polish relations close in your opinion? The warm and close relations between Poland and Norway come from a number of sources and go back centuries. We are allies in NATO, partners in the EEA, we are energy partners and we trade more and more. But perhaps the most important thing for our relations is the friendship between our people. We remember the crucial Polish contribution at the Battle of Narvik in 1940 and we remember the 1980s when Norwegians
3,000 projects PLN 5 billion
have received almost from the Norwegian Fund.
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teamed up to support the heroic battle of the Polish people and the Solidarity movement against communism. What is the value of our trade and in which areas it is developing the fastest? Trade between Poland and Norway has increased significantly over the past 20 years and is now close to PLN 20 billion. Poland is among Norway’s top ten trading partners both for export and import. And even with Poland as the largest importer of Norwegian seafood in the world and the fact that it imports a substantial amount of military equipment from Norway, Poland has had a trade surplus with Norway for a long time. Polish exports to Norway are varied, and include vehicles, metal goods and furniture. I believe the strengthening of our energy cooperation holds the biggest potential for increased trade and investments between our countries, not least when it comes to diversification and greening of the energy mix here, but also when it comes to the defense industry I see scope for stronger cooperation to the benefit both countries. One of Poland’s top priorities is energy security, with the Baltic Pipe project playing a big role. The project has finally been accepted. How are the preparations going for this huge investment? The energy cooperation between Norway and Poland has developed significantly over the past ten years, including through Polish investments and activities on the Norwegian Continental Shelf. The next big step when it comes to gas is the construction of the Baltic Pipe which will make it possible to send gas from our continental shelf through Denmark to Poland. The ambitious, but I believe realistic plan is to have the pipe operational in 2022. When in Poland, the gas can be used here or sold to other neighboring states depending on the infrastructure. Norway already has pipelines sending gas to the UK, France, Germany and Belgium so we have lot of experience in running gas pipes. But what is essential for
Polish-Norwegian relations is the fact that the Baltic Pipe will strengthen a long-lasting, close Norwegian-Polish partnership in the energy sector. How do you see relations with Russia in the changing world and the situation in Ukraine? Norway and Poland both have a common border with Russia. And even if our history with Russia differs, we are allies in NATO and I find that to a large extent we have common views when it comes to security and defense-related issues. Russia’s use of force in contravention of international law has weakened security in Europe. At the same time Norway has a longstanding tradition of cooperation with Russia in areas of mutual interest such as environment and fisheries and this cooperation continues. The situation in Ukraine is obviously very difficult. Ukraine is a big and important country for Europe and Norway continues to provide substantial support to Ukraine for the reform programs. Norway is a member of the Schengen area; is your society open to receiving immigrants? Norway is an open society, we have an open economy and we are open to foreigners. We have welcomed a large number of immigrants from different parts of the world over the past decades. Now immigrants constitute around 15 percent of our total population. This has provided Norway with new skills, a bigger workforce and diversity. The immigrants include quite a large number of refugees and we are one of the countries that accepts the most refugees through the UN system, taking into account the size of our population. We should also remember that migration is nothing new – 1,000 years ago Princess Geira, daughter of Polish King Bolesław the Brave, married Norwegian King Olav Tryggvason and moved to Norway. And a 150 years ago Norwegians migrated in huge numbers to America. Today there are almost as many Americans saying they have Norwegian origins as there are
PLN 3.5 billion No. 1 of Norway’s funds will be spent all around Poland over the next five years.
Poland as the largest importer of Norwegian seafood in the world.
people living in Norway. So, while there are domestic political discussions about immigration, I am convinced that Norway will remain an open society and continue to welcome foreigners. You have quite big Polish group living and working in your country. How do you assess this situation in Norway? Around 100,000 Poles live and work in Norway and they constitute the largest group of foreigners in our country. In addition, some tens of thousands of Poles come to Norway to work for shorter periods. In general Poles are highly respected in Norway as hard working, law abiding and polite. And my impression is that those who have moved to Norway are happy there. Now and then cases related to childcare in Polish families living in Norway were critically reported in the Polish media, but I would like to stress that the number of those cases has been very small. And actually, per family, the number of Poles who receive any kind of help or advice from child welfare authorities is much smaller than the number of Norwegian ones. There are more than 500 Polish young people studying Norwegian at university level here – something which makes me very humble and proud. We have almost 2,000 Norwegian students in Poland and in the summer season we have around 5,000 Norwegian tourists here every day. You can hear Polish spoken all across Norway, just as you can hear a lot of Norwegian spoken here in Poland. That makes me very optimistic about the future for the ever-stronger relations between our countries.
Monika Sadkowska Actor, cultural manager, climate activist against open-pit mining, co-organizer of Climate Camp
100,000
Poles live in Norway, making them by far the largest group of foreigners.
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INTERVIEW BY BEATA SOCHA
Lessons from Poland
Poland has seen tremendous growth over the past few decades and it continues to outperform most world economies. But how long can the trend continue? What are the biggest challenges for Poland in the coming years and where will the threat come from? WBJ asked Carlos E. Piñerúa, World Bank Country Manager for Poland and the Baltic States, for insights into what fuels the Polish economy and how it compares to the rest of the world
WBJ:
This year Poland celebrates its 15th anniversary of joining the EU. A lot has changed over those past 15 years. How much of the development the country has experienced would you say can be attributed to its EU membership? Carlos E. Piñerúa: Poland is an economic and development success story, as the country achieved high-income status in record time. Worldwide, only South Korea did it faster. Such a success would not have been possible without the EU. We highlight this in our report “Lessons from Poland. Insights for Poland.” We stated there that opening the foreign markets to Polish entrepreneurs was one of the pillars of Poland’s success, as it led to the creation of many jobs and contributed to a significant reduction in unemployment that currently stands at record low levels. It would not have been possible without the single European market. Moreover, Poland is the largest beneficiary of EU funds. Those funds were used in an efficient and effective manner. They helped upgrade infrastructure and improve people’s skills and competencies. Additionally, Poland’s membership of the EU means better perception of Poland in other countries, which resulted in a number of foreign direct investments. Poland has enjoyed uninterrupted economic growth for over a quarter of a century. Last year it was 5.1 percent. Yet, the World Bank expects the growth rate to slow down this year to 4 percent and even more so over the next two years, to 3.3 percent in 2021. Why is it so?
For the past few quarters Poland has been the fastest growing economy among the large economies in the EU. To a large extent, consumption and public investments (fueled by European funds) have been drivers of this growth. We expect, however, that the slowdown expected in Europe and worldwide will have a negative impact on growth in Poland as well. In our latest Global Economic Prospects report, we have downgraded our global growth forecast in 2019 to 2.6 percent, 0.3 percentage point below previous forecasts, reflecting weaker-thanexpected international trade and investment at the start of the year. However, it is unclear to what degree that will impact Poland. Moreover, the space for further dynamic growth of consumption in Poland is limited, as the positive impact of budget transfers like Family 500+ will fade out. Finally, private companies are complaining about a shortage of qualified employees. Given all that, we expect that growth in Poland will slow down, but remain on a robust level, exceeding 3 percent in the next couple of years. How do the global trade conflicts impact Europe and Poland in particular? What might be the transmission channels of a global downturn to the Polish economy? Do you already see the signs that a slowdown is coming? Global economic activity continued to soften at the start of 2019, with trade and manufacturing showing signs of marked weakness. Heightened policy uncertainty, including a recent re-escalation of trade tensions between major economies, has been
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WORLD BANK’S POLAND OVERVIEW Population Life expectancy
37.9 mln (2018) 77.5 years (2018)
Economy GDP total GDP per capita GDP growth
$580.6 bln (2018) $15,310 (2018) 5.1% (2018)
Inequality index Gini coefficient 30.8 (vs. 31.7 in Germany, 27.1. in Finland, 25.9 in the Czech Republic)
Education 43% of Poles acquired tertiary education (2014)
Labor market Unemployment Work productivity Salaries
4.9% (2017) up 51% (2000-2016) up 33% (2000-2016)
accompanied by a deceleration in global investment and a decline in confidence. A weakening of the world’s largest economies may lead to reduced demand for European products, for example German cars. As a result, it might have an impact on Poland, which has very strong ties with Germany. Although Poland’s economy is still developing at a fast pace, we have already noted a slight slowdown in the fourth quarter of 2018. Poland was quite resilient to the last major economic downturn in 2008. Do you think the country is still in a position to come out of another global crisis similarly unscathed? For the time being Poland’s economic situation is stable, without any major domestic risks. There are some concerns regarding Poland’s fiscal position, especially in light of expanding social programs and slowing economic growth, which may only exacerbate budgetary pressures. The profitability of the banking sector is also declining. However, Poland has a relatively low level of public debt compared to many other EU
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countries and is still anchored on a wellcapitalized and liquid banking sector with a moderate level of non-performing loans, which bodes well in terms of resilience to a potential economic crisis. Finally, the stock of foreign currency mortgage loans is declining, lowering households’ exposure to exchange rate risk. Nevertheless, if other EU economies enter recession, Poland could experience falling exports, which would negatively affect its domestic production, employment and GDP growth. In the short term, strong domestic consumption backed with social transfers could compensate for falling external demand, however, at a price of higher deficit and increased debt. How do you see the impact of the current government’s fiscal policy: the expansion of the 500+ program for families, extra pensions etc. In the short term these programs have proven quite beneficial to the economy, haven’t they? What about in the long term? So far, the government’s social programs
have supported Poland’s economic expansion by fueling domestic consumption, which is one of main drivers of GDP growth. The 13th pension payment and the broadening of the Family 500+ program are expected to boost consumption even further. These programs also have the benefit of providing financial relief to many people who have not benefited from Poland’s dynamic growth in recent years. However, removing the income criteria from the Family 500+ means that substantial funds will be transferred to people who are already enjoying a good financial situation. In these cases, it is unlikely that the additional money will translate into extra consumption, but it will rather be saved. Therefore, new welfare programs may not be as effective as the original family benefit. Furthermore, conducting procyclical policy and increasing government deficit in good times lowers the ability of government to stimulate the economy once it needs fiscal stimulus. That is especially relevant in the case of Poland, where public debt is relatively close to the EU ceiling defined in the Maastricht Treaty. How much more can the government increase the efficiency of tax collection? The government has made significant strides in improving tax collections, particularly VAT collections. This improved performance has allowed it to so far finance additional social outlays without resorting to new debt. Nevertheless, there is some space to increase efficiency of CIT collection. The World Bank is now starting a series of advisory activities to support Poland in its tax administration efforts. For example, we will estimate the CIT and Excise Tax gaps and analyze the impact of different tax incentives on the Polish economy. We hope that our studies will help increase the effectiveness of the Polish tax system and improve budget revenues. Some claim that the generous social program has lowered incentives for people, particularly women, to stay in the labor market. Do you think that is the case? Establishing social transfers inevitably leads to some people withdrawing from the labor force as their incentive to work
decreases. After the Family 500+ program was introduced, some families faced a situation that with two working adults the family was excluded from the program due to income criteria. That was providing a strong incentive for one of the parents to withdraw from the labor force. However, the upcoming removal of income criteria is likely to reduce this disincentive to work. When it comes to female participation in the labor force, it has been on an upward path over the last decade. It does not mean that social transfers did not affect their incentive to work, but is rather a result of relatively low participation in the past which is now gradually corrected. Some independent studies show that indeed, the labor force participation of mothers, especially those with lower levels of education, dropped because of the 500+ benefit. Just like many other developed countries, Poland has been struggling with a labor shortage. How much can migration from Ukraine, Nepal and other eastern countries alleviate the problem and how will the labor market evolve? In last five years Poland has experienced intensified migration of workers from Ukraine, but recently more and more people from some southeast Asian countries, such as Nepal or Bangladesh, have come to Poland to work and live. Economic migrations to Poland are inevitably affecting the labor market; however, the labor market – with its numerous opportunities available for foreigners – was already prepared for the inflow of migrants. As the Polish economy expands and many international companies such as big international corporations enlarge their presence in Poland, it should be expected that more people will be attracted to move here. But even with a growing number of foreign citizens entering the labor force, the labor shortage is becoming one of the main issues for employers and entrepreneurs. For instance, the job vacancy rate in Poland has tripled since 2013 and is still on the rise. That is a major challenge for Poland’s economy. Where is Poland compared to other countries in Europe and elsewhere in terms of gender equality and the pay gap?
TRAPPED ‘MIKES’ AND NEW ‘HICKS’ The World Bank classifies countries depending on their income level as well as their pace of development. Some of the categories include: • Trapped MICs (Middle-Income Countries) – countries that have spent more than the average amount in the upper-middle-income range, e.g. Brazil, Mexico, Romania, Turkey. • New HICs (High-Income Countries) – countries that took less than 20 years in the upper-middleincome range, including: Chile, Croatia, the Czech Republic, Hungary, Korea, Slovakia and Poland. • Established HICs – countries that have maintained a growth rate above 2 percent since entering HIC status: Australia, Austria, Belgium, Germany, Finland, Hong Kong, Ireland, Israel and Singapore.
In recent years, Poland has taken important steps with regards to its legal and institutional framework, as well as policy programs on gender equality. Policies like the electoral gender quota system, the extended duration of the basic maternity leave, the introduction of paternity leave and the increase in the accessibility of pre-school education have helped reduce existing gaps.
However, despite these commendable advances, women still show systematically poorer outcomes than men. For example, Poland has one of the lowest female labor force participation rates in the EU. While 62 percent of women are economically active, the share is 76 percent for men. Among the employed, there is a 20 percent gender wage gap, which cannot be explained by differences in characteris-
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tics and occupations of men and women. Accentuated by the rollback in retirement ages, women are projected to experience a dramatic decline in their replacement rate, becoming dependent on voluntary saving schemes, which is unrealistic in the context of high inactivity. Women’s agency remains comparatively weak. In comparison to other EU countries, gender stereotypes and a conservative view of the family seem to prevail. As much as 77 percent of Poles agree with the statement that the most important role of a woman is to take care of the home and the family. And, despite an electoral gender quota system, women represented only a quarter of all seats in the Parliament as of 2016. What about income equality in general – how do you see Poland compared to other developed and developing economies? How would you say the life of an average middle-class professional in Poland compares to that of an average professional in Latin America for instance? One of the main statistics that is used to evaluate income equality is the Gini coefficient. In recent years Poland has performed in that statistic better that the EU average and many western countries such as Italy or the UK. However, a recently published article by World Inequality Lab indicates that Poland is the least egalitarian country in the EU and the income share of the wealthiest 10 percent has almost doubled since 1980. These results seem to be in line with Poland’s development path. A number of well-paid jobs are being created in cities such as Warsaw, Kraków or Wrocław but in many regions and sectors wages were not catching up. The average salary in 2018 grew by 5.3 percent, but many people do not feel that they fully participate in Poland’s economic success. Based on the calculations of the statistics for Poland for October 2016, two-thirds of workers earned less than the average salary. Globally, including in Latin America, these inter-regional disparities in wage incomes are becoming an urgent challenge for policymakers. Focusing on improving economic opportunities and mobility will be at the top of the agenda of many
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governments facing political pressures from constituencies with higher economic aspirations. You were born in Venezuela, you studied in the US, and you’ve worked all over the world, including Croatia, Turkey and the Middle East. You’ve been in Poland for two years now. How would you characterize the quality of life in Poland for someone who has lived and worked in so many other countries?
Given the increasing wages in Poland and a tightening labor market, the Industry 4.0 transformation will become a necessity
I have had the privileged of visiting close to 60 countries and lived in seven of them. In no uncertain terms, Poland offers a high level of quality of life. For a Venezuelan, at the top of factors affecting my dayto-day life is public safety. Just being able to walk around in the evening without concern is a luxury to us. When you add to that the quality of public services, the abundance and richness of cultural life, and the whole variety of culinary offers, it would be hard to improve on this experience for me in the future.
There are concerns that Poland is lagging behind in its Industry 4.0. transformation, that companies here have not been as eager to adopt automation. Do you see it as a threat to the country’s competitiveness? The approach by companies varies and indeed some companies are still lagging behind in terms of adoption of automation, often relying on a cheaper labor force. However, given the increasing wages in Poland and a tightening labor market, the Industry 4.0 transformation will become a necessity, and it is important to use the support from the EU funds well to increase investment rates and facilitate the upgrade. But to prepare society for the Industry 4.0 transformation, certain policies are needed. We know that over the last 15 years, manual jobs across the whole EU have declined by more than 15 percent, while creative and analytical jobs have gone up by the same amount. This trend is accelerating. Therefore, we recommend policymakers boost skills for workers, readying them for new jobs in a rapidly evolving labor market. Cognitive skills, soft skills, vocational education and lifelong learning are key to supporting Polish growth in years to come. Poland has dropped in the Doing Business ranking in 2019 to 33rd spot. Do you see it as a sign of the country losing its appeal to investors? In the latest edition of the Doing Business report in October 2018 Poland was still among the top-performing countries in the world, with a strong pro-business environment. Its stable score in the report reflected the many reforms implemented in the last decade. The year-on-year decline was primarily due to the longer window needed for enterprises to pay taxes. In addition to this, some countries were relatively more active in introducing specific reforms covered by the Doing Business methodology. Comparing the Doing Business ranking to a marathon, we could say that Poland achieved a decent result; however, other countries ran even faster, and that is why Poland’s position has dropped slightly. Like in previous years, Poland was still doing well in the areas of international trade, access to credit and resolving insolvency.
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SOCIAL MEDIA
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IN FOCUS
SHUTTERSTOCK
SUBSCRIPTION ECONOMY
BUCKLE UP
BY ANNA RZHEVKINA
Consumer focus has clearly shifted from owning to experiencing. People are more eager than ever to subscribe to services to get what they want and feel increasingly comfortable with not buying the things they use. The subscription economy is now transforming city transit, with new services and vehicle types popping up every month
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IN FOCUS SUBSCRIPTION ECONOMY
Taking a ride
with Uber, watching movies on Netflix (and other market followers, such as HBO Now, Amazon Prime Videos and soon Disney+), or traveling with Airbnb are just a few examples of how the subscription economy has revolutionized the consumer experience in recent years. The evolving non-ownership culture is associated with mobility, convenience, sustainable use and lower costs. Access and peer-to-peer models will become even more prevalent in a vast majority of industries over the next few years, according to PwC. That includes in areas we did not think possible a few years ago, like home repair tools for instance. “Staggeringly, the average drill is used for merely 10 minutes in its life cycle. We don’t all need drills, ladders, wheelbarrows, bikes, golf clubs, tennis racquets, paddle boards or cars. What we need are the holes drills make, the transport cars provide, the accommodation homes deliver,” John Sullivan, Founder of social renting platform Sharely.us pointed out. Driven by the new consumer attitude, compa-
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nies are transforming their business to pay-as-yougo subscription models. The change in consumers’ mindset is particularly visible in the transport industry. Only 15 percent of Millennials see buying a car as a standard, Goldman Sachs estimated. Peer-topeer services like Uber or Bolt (formerly known as Taxify) have become part of the lifestyle for younger adults.
APP OR TAXI?
Ordering a ride via the Uber or Bolt application in Poland is already nearly as popular as calling a taxi, according to Consumer Forum Foundation, with only 35 percent of younger passengers (below 35) using conventional taxi corporations exclusively. Only people aged 64 and above are diehard taxi-only users. “If you are wondering whether the future of city rides belongs to apps or to traditional taxi corporations, the results clearly show that demographics will dictate the answer,” said Agnieszka Plencler, president of the Forum.
Similarly to other countries, however, the Polish government is facing strong resistance to ride-hailing services from established players, such as taxi companies. In May, the Sejm – the lower house of parliament – passed the so-called “Lex Uber” law to regulate the market for transport activities. The law, among other things, allows the use of mobile applications as an alternative to taximeters and cash registers. However, it also sets the requirements for ride hailing services to register operations and obtain a license, putting extra costs on the companies, which eventually may impact their fares.
Taxi drivers in front of the Ministry of Economic affairs on their second day of protests against Uber on April 9, 2019 in Warsaw, Poland
SHUTTERSTOCK (2)
TO SAVE MONEY AND PLANET
But replacing taxi corporations with app services is just the tip of the iceberg of how the way we move around is changing. In recent years, Poland has been catching up with car sharing services – an option to drive a car on demand, without owning it. Each major city got its own service at first, which then expanded nationwide. GoGet.pl was the first to launch the service in Wrocław: in 2016 the company started with five cars available for rent by the minute. Then Traficar, which currently has the biggest fleet in Poland, began operating in Kraków. Within two months, the number of rentals reached about 250 a day. In the capital, 4Mobility was the pioneer. It now offers several BMW models (including electric), Audi, Hyundai and retro-style Mini One. Traficar, in turn, launched fully-electric mini-cars in June 2019, which are allowed to drive in bus lanes in Warsaw. Owning a middle-of-the-range car in Poland costs about PLN 15,000 per year, including fuel, service expenses and insurance, PwC calculated. On the other hand, the cost of traveling with a car paid by the minute is only slightly higher than by public transport. “A private car is not a profitable investment, because it mainly looses value and requires constant expenses,” Katarzyna Panek, Marketing Director of car sharing Panek said. She is also well aware that it takes time for society to switch from the idea of owning a car to sharing one, but often those who take that step realize there is no need for a purchase. Saving money is not the only motivation for users. Even though not the biggest culprit, transport does exacerbate air pollution in many cities and better air quality is often incentive enough for many to give up their own four wheels. Space is becoming another issue, with garages and parking spaces become increasingly sparse. Since the average car is only used for an hour a day, one shared vehicle could easily replace about 7-10 private ones.
TAXI VERSUS APP IN POLAND Ordering a ride through an application is nearly as popular in Poland as calling a taxi by phone: 50 percent use applications, and 53 percent make a phone call (there are people who do both). People over 50 usually choose conventional taxis, and those over 64 almost always do so. The possibility of ordering by phone and security are named among main advantages of taxis. High prices (48 percent), no information about the cost of a ride (36 percent), no possibility to rate the driver (27 percent) and no information about the route (27 percent) are considered the main drawbacks of using traditional taxi corporations. Passengers under 35 mostly order transport through applications. Only 34 percent in this group use traditional taxis exclusively. Low prices (44 percent), quick non-cash payments (37 percent) and information about the fare (36 percent) are the biggest advantages of ride-hailing services. The lack of a taxi license (23 percent) or the requirement to submit data online (21 percent) are considered disadvantages of ordering a ride through apps. Source: Consumer Forum
TWO WHEELS INSTEAD OF FOUR
With cities becoming denser, the distances traveled every day are becoming shorter. A car may no longer
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IN FOCUS SUBSCRIPTION ECONOMY
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WHAT ELSE DO WE SHARE? The trend of using without buying clearly has an impact on the real estate market. It is not only about hotel owners who struggle with Airbnb competition. The number of long-term rentals has been steadily growing in Poland in recent years, according to the Apartments for Rent Fund (Fundusz Mieszkań na Wynajem). “Renting nowadays has become a symbol of mobility. It is possible to adjust the work location to the place of residence in any moment,” Rafał Malik from the Fund said. Avoiding risks related to financing the transaction and paying installments is another bonus of renting a dwelling rather than purchasing one. The subscription economy is extending to a vast range of industries, which are not immediately associated with collaborative consumption: from clothes to furniture and even food. The world’s largest furniture seller IKEA unveiled its plans to test leasing its chairs, desks, beds and possibly even whole kitchen sets. The retailer positions its program as a way to live greener by giving products a second or third cycle of use. In the apparel industry, companies like US-based Le Tote offer the possibility to rent clothes and accessories for a flat monthly fee. And if customers really like the item, they may buy it for half of the regular retail price. Airlines are next, albeit only in the upmarket segment. American Surf Air allows passengers a luxury service to fly on private jets across the country after booking via an app or website. The users pay a fixed monthly fee of $1,950 for unlimited use. The company calls itself the first private air travel club. SHUTTERSTOCK
be the most time-efficient and convenient option. Shared scooters and bicycles, including electric bikes, have become another trendy and eco-friendly way to move around cities, avoiding traffic jams. Scooter provider Hop.City (formerly Jeden Ślad) argues that driving 10 kilometers to work by scooter in Warsaw is about twice as fast as covering the same distance by car, given parking problems, and the price per month is cheaper than for a bus ticket. Warsaw bike system Veturilo has recorded over 2 million rentals aleady this year, spokesperson of Veturilo’s owner Nextbike Jakub Giza said. In March Nextbike launched MEVO – the largest European bike system entirely comprised of electric bikes. MEVO faced “unprecedented user interest,” which far exceeded initial expectations, he said and added that bikes are popular among both younger and older users. “Adults and seniors who want to use bicycles are also keen on using smart phones – the method of renting is not a barrier for them.” Overall, Nextbike bike fleet has grown by 43 percent, while revenues have jumped by 258 percent over the last year. There are still some obstacles to overcome, such as the need for traffic regulations for electric scooters. Right now, the only legal way to use them is on sidewalks, even though they can reach up to 25-30 km/h. Seeing how popular these scooters have become almost overnight, the Ministry of Infrastructure and Construction is preparing an amendment to the traffic law. One of the largest problems of sharing a thing, however, is that no one feels responsible for handling it well. Driving our own cars, we are well aware of how much maintenance costs, but when driving a rental, all the concerns about driving too fast over speed bumps or parking with one wheel on the edge of the sidewalk go out the window. The same goes for bicycles and scooters. Nextbike has introduced a reward system aimed at incentivizing people to retrieve abandoned bikes and is considering a technological solution to limit the scale of vandalism. “We try to educate people to take care of bikes just as they do of other public property. You can’t eliminate 100 percent of all vandalism, but we believe that people’s sensitivity will increase,” Giza said. Whether on two, three or four wheels, there is a growing demand for convenient, easy to use city transport as an alternative to owning a vehicle. The times when people purchased an apartment with two or even three parking spaces may be coming to an end. Instead, scooters, bicycles, electric bikes and electric mini-cars are poised to become a fixture of city landscape in the coming years.
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Dowiedz się więcej w salonach Vespy lub na stronie www.vespa-polska.pl Przykładowe raty zostały wyliczone w oparciu o reprezentatywne dane z dnia 25.03.2019r. oraz nie stanowią oferty w rozumieniu Kodeksu Cywilnego i mają jedynie charakter informacyjny. Podmiotem udzielającym kredytów jest BNP Paribas Bank Polska S.A. Rzeczywista Roczna Stopa Oprocentowania (RRSO) dla Kredytu motocyklowego Niska Rata na zakup nowego pojazdu została obliczona na podstawie reprezentatywnego przykładu wyliczonego na dzień 25.03.2019 i wynosi 9,18%, całkowita kwota kredytu (bez kredytowanych kosztów kredytu) 33 700 zł, całkowita kwota do zapłaty przez konsumenta 43 930,50 zł., oprocentowanie stałe 7,80%, całkowity koszt kredytu 10 230,50 zł (w tym prowizja 1 011, 00 zł, odsetki 9 219,50 zł), 73 miesięczne raty równe w wysokości 593,66 zł oraz ostatnia rata wyrównująca w wysokości 593,32 zł. Kredyt na zakup pojazdu w cenie 46 750 zł z wpłatą własną 13 050 zł oraz zabezpieczeniem kredytu w postaci przewłaszczenia pojazdu pod warunkiem zawieszającym (bez adnotacji w dowodzie rejestracyjnym). Przyznanie kredytu oraz jego warunki uzależnione są od wyniku oceny zdolności kredytowej Klienta dokonanej przez BNP Paribas Bank Polska S.A. (ul. Kasprzaka 10/16, 01-211 Warszawa, pod nr KRS 0000011571, posiadający NIP 526-10-08-546 oraz kapitał zakładowy w wysokości 147 418 918 zł, w całości wpłacony). Szczegółowe informacje dotyczące kredytu i jego dostępności znajdują się u sprzedawcy. Inter Cars S. A. z siedzibą w Warszawie współpracuje z Bankiem i jest umocowana do świadczenia w imieniu Banku usług pośrednictwa w zakresie czynności faktycznych i prawnych związanych z zawieraniem umów o kredyt ratalny. Niniejszy materiał ma charakter reklamowy i informacyjny; nie stanowi oferty w rozumieniu Kodeksu cywilnego.
IN FOCUS BOLT
Mobility for all
While taxi drivers are protesting against Uber, the number of passengers using ride-hailing services are growing. WBJ talked to Alex Kartsel, Country Manager of Bolt in Poland, about the prospects of car services in Polish cities
WBJ: Do you expect the popularity of Bolt services to
increase compared to regular taxi corporations? Alex Kartsel: Definitely. Customers expect transport to be easy to organize, cheap and fast. They also want convenience. With Bolt, a passenger orders a car, knows exactly how much they are going to pay for a ride, they see the route to their destination and as soon as they get out of the car they receive an invoice to their email. Bolt meets all the needs of contemporary and future customers. By the end of 2019 we want to be present in every city in Poland with over 100,000 citizens.
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Often, in those places, the only option people have is to call a taxi and there is no access to modern technologies. Bolt is changing their reality by introducing innovation and fast transport. Are the protests against Uber affecting your business? Yes, but in a positive way. It’s hard to understand the recent taxi drivers’ protests. The amendment to the Road Transport Act that was signed by the President on June 3 imposes a number of new obligations on companies like Bolt, our partners and drivers. It is a compromise, and we are more than ready to adapt to it.
INTERVIEW BY ANNA RZHEVKINA
Obligations towards taxi drivers on the other hand, such as possession of a cash registers and having to pass exams in topography have been abolished. In the GPS era, these are positive changes that reduce higher costs of providing services and do not affect their quality. Our customers understand this. Bolt came to the Polish market in 2016, when Uber had already been here for two years. How is Bolt different from Uber? How do you attract drivers and customers? Yes, we entered the market later than Uber. Nevertheless, only after a few years, I’m confident in claiming that we are ahead of Uber. And even if not, we are bound to become the no. 1 application in Poland sooner rather than later. Back in 2017, we had several hundred rides a day. Now, the number of our passengers has already exceeded 1 million. The number of drivers cooperating with us is also growing, as the commission we have is lower than our competitors. We are reaching 70,000 drivers who cooperate with our application. No other application in Poland operates on such a scale. Poland is our no. 1 market in Europe. Why did you decide to change your name from Taxify? The name Taxify simply ceased to correspond with our product portfolio at a certain point. Our new name, Bolt, reflects our development in Europe and Poland, as well as our philosophy: ease of movement and belief that the future of transport will be electric. We offer more and more in terms of services; in Paris and Madrid we have electric scooters. We are slowly launching a food delivery service in some countries. We want to be available for as wide a part of the public as possible. We have also created a unique service that is also available in Poland called “Without Barriers,” dedicated to passengers with moderate disabilities and wheelchair users. All drivers that provide this service have undergone
special training under the supervision of experts from the Integracja Foundation, so that they can offer passengers professional assistance getting in and out of the car. In some cities, we offer the XL category with cars that can accommodate up to seven passengers. We are evolving and adding new services all the time. And what’s more, we want to take our passengers from point A to B in less than no time. As such, our new name fully reflects our mission and philosophy. What are your plans for scooter rental services – are you planning to expand these services to other countries or cities? Every business decision has to be made very carefully, as we are putting our investors’ money into it. At this moment, there are five operators that offer such services in Warsaw, so we are checking the lie of the land and deciding which services will fit which cities.
“ With Bolt, a passenger orders a car, knows exactly how much they are going to pay for a ride, they see the route to their destination and as soon as they get out of the car they receive an invoice to their email.
What about food delivery services; what are the perspectives for this industry in Poland? We will be looking into expanding the scope of such services in the Polish market. But I don’t want to reveal the details yet. Let’s keep it as a surprise for Bolt’s customers.
Alex Kartsel Country Manager of Bolt in Poland W B J JUNE/JULY 2019
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GREEN INITIATIVES / PLASTICS
The end of the PLASTIC AGE Plastic cups, cutlery and straws are on their way out. How can they be replaced while keeping up with hygiene standards? “Bring your own mug,” edible plates and new biodegradable containers are some of the hottest options right now
By Anna Rzhevkina
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The UK alone produces 30,000 metric tonnes of coffee cup waste each year
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A
s, in March, the European Parliament approved a law banning some single-use plastic items – including plates, straws, and cutlery – cafés and restaurants are now looking for alternatives. Paper straws, edible plates and discounts for clients who bring their own mugs are some of the solutions. Despite the “less waste” concept evolving in Poland, there is still a long way to go. The recycling rate for plastic packaging in Poland is 14 percentage points lower compared to the EU average of 41 percent, according to the Plastics Europe report. In April, the Civic Platform party deputies appealed for changes in regulations regarding the use of customers’ own packaging at food courts, wiadomoscihandlowe.pl reported. With the existing rules, some food outlets are reluctant to accept cups and food containers from customers, fearing that it may breach hygiene standards. “It often leads to an absurd situation in which the seller, for example, brews coffee into a plastic cup, and then pours into the customer’s mug,” the deputies pointed out. Single-use coffee cups are not widely perceived as harmful for the environment, at least not the paper ones; however, in reality only 0.25 percent of them are recycled. This means that the UK alone produces 30,000 metric tonnes of coffee cup waste each year. The problem with single-use coffee cups is that even though they are made out of paper; there is a thin layer of plastic to keep hot liquids from leaking. While it works very well for consumers, most paper recycling plants do not accept such cups, meaning that the waste goes into landfill. EAT YOUR CUP Starbucks has been trying to come up with an alternative to its iconic paper cup for over a decade. Last year the company offered $10 million for a design of a cup that’s easier to recycle. The coffee chain also trialed a 5-pence (PLN 0.25) charge on paper cups in the UK. The move followed a call from the UK Member of Parliament Mary Creagh to introduce a 25 pence levy on coffee bought in takeaway cups. Coffee shops faced widespread criticism for selling drinks in cups that cannot be recycled and leaving the customers unaware of the issue. “There is no excuse for the ongoing reluctance from government and industry to address coffee cup waste,” MPs said in a report. Despite coffee chains’ attempts to come up with a greener cup alternative, there is no revolutionary solution yet. UKbased Frugalpac created a cup in which paper and plastic layers can be easily separated when the mug is put into water. A Bulgarian start-up came up with an edible coffee cup made out of cereals that can be eaten like an ice-cream cone. Finally, US TrioCup offered a disposable paper cup made with an
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Biodegradable plates and cutlery dissolve in only 30 days Polish company Biotrem patented the idea of making dishes from food bran, a byproduct of flour production.
origami-like technique without a need for a plastic layer. Still, until there is an agreed way to tackle the issue, it is largely consumers’ choices that are driving the change. The Polish Zero Waste Association launched #zwłasnymkubkiem (which translates to #withyourownmug) campaign in 2017. The slogan of the movement is “Single use is not trendy.” Jointly with the initiative Oddam Odpady (which aims at promoting recycling), Zero Waste created a map of coffee places that welcome customers to use their own mugs. Since then, the number of coffee chains offering a discount for customers with reusable cups has grown in Warsaw and other major cities. Still, unlike international brands such as Costa Coffee or Caffè Nero, Polish coffee shops rarely have reusable mugs on offer. PAPER VS EDIBLE PLATES In line with the single-use plastic ban, plastic cutlery should be prohibited from use by 2021. This means that in less than two years eco-solutions will no longer be a choice but a necessity. At first glance, paper looks like the most obvious alternative; for example, paper straws have already replaced plastic ones in some food courts. Paper decomposes in about half a year, which is hundreds of times faster than plastic. However, the Polish company Biotrem has offered an even more environmentally friendly solution – biodegradable plates and cutlery that dissolve in only 30 days. The creator of the technology, Jerzy Wysocki, comes from a family with long miller traditions. He patented the idea of making dishes from food bran, a byproduct of flour production. One tonne of bran is enough to make as many as 10,000 biodegradable items. Durability is another advantage of dishes made out of bran. They are suitable for both cold and hot dishes, they protect hands from burning, and can be used in ovens and microwaves. Finally, you can even eat them if you’re still hungry after your meal. Food on edible plates has already appeared in some Polish restaurants, for example, in vegan burger chain Krowarzywa. In March, Ikea said it is testing edible plates in Warsaw’s Blue City shopping mall. “Biodegradable and 100 percent edible,” the company captioned its photo posted on Twitter. Earlier Ikea committed to removing all single-use plastic products from stores and restaurants by 2020.
RECYCLE AND GET MOVIE TICKETS! Polish company EcoTech System has created a recycling bin for plastic and glass bottles, as well as metal cans, with an awards system called “ECO-points” that allocates points for each item. The points, awarded through an app, can be exchanged for cinema tickets or coffee discounts etc. This is the first recycling machine in the world that accepts three different types of containers. The project was developed in cooperation with the City of Warsaw, “Our Earth” foundation and Coca-Cola, which features it as part of its latest global campaign. The company claims it will sell its drinks only in recyclable containers by 2025. By 2030, the firm wants to collect more recycled bottles than it produces.
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GREEN INITIATIVES / COMPANIES
No more greenwashing
Many corporations still use vague and cliched slogans bragging about their supposed commitment to the environment. But the public is increasingly suspicious of the companies that like to call themselves green and sustainable. We look at some that are actually putting their money where their mouth is. By Konrad Krzysztofik
FOSTERING RESPONSIBLE growth by balancing profits, managing people and preserving the planet is slowly becoming the norm for both budding and established businesses in Poland. More and more Polish brands are embracing corporate sustainability by adapting their strategy. Be it large or small, every business can contribute to our long-term goal: to make the planet green again. ECO HOAX Today, eco-friendliness often appears to be no more than just an ambiguous flashy term. Marketing teams go above and beyond to entice customers and make them feel good about their choices, sometimes in a sly way. We’ve seen it all; food manufacturers changing packaging to green and not changing the ingredients, self-proclaimed green hotels encouraging their guests to have their towels washed less often, or advertising that says diapers are made from natural organic cotton while keeping quiet about the petrochemical gel inside them. This so-called greenwashing has been going on for decades. Nonetheless, consumers are becoming increasingly aware of business practices and ruthless in challenging brands through social media. FROM GRAY TO GREEN Businesses are now finding ways to regain customer trust by becoming transparent and specific about their green strategy. Corporations attempt to redeem themselves by trying to create long-term bonds with their customers and employees. Some evaluate their own corporate impact and openly commit to be better. Others engage and educate communities to create equal opportunities and help develop skills. “Business goals are inseparable from the society and environments within which they operate,” said John Elkington, a British author and entrepreneur. Some recognizable Polish companies haven’t stopped at ecointentions. They publish reports, organize events and increase awareness of environmental issues. Here are some examples.
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Ziaja Ltd. Ziaja is a Polish bodycare brand set up 30 years ago by a couple of pharmacists, Aleksandra and Zenon Ziaja. The company manufactures environmentally friendly and reasonably priced cosmetics. Although Ziaja uses animal-derived ingredients (goat’s milk, honey, silk) in some of its product lines, the company does not test its products on animals. Ziaja bodycare products are currently distributed to over 30 countries in Europe and America. Production follows the standards of Good Manufacturing Practice for Medical Products. These guidelines set out minimum requirements that must be met by the manufacturer to assure product quality and safety. The company advocates well-being, cultural and sports activities. It sponsors mammography testing events and a pharmacy students’ association. The firm became a strategic sponsor of Teatr Wybrzeże in its home city of Gdańsk. Ziaja promotes Nordic Walking, running, sailing and tennis. It is the patron of Ziaja Cup, an open tennis tournament for amateurs in the Tri-City.
Solaris Bus and Coach S.A. Solaris is a Polish bus, trolleybus and tram producer, established in 1996. The company supplies public transport vehicles to 32 countries and has recently won a bid to deliver 130 electric buses to Warsaw by 2020 – making it the second European capital, after London, with over 100 electric buses. Solaris’ Impact Report (2017), published on the company’s official site, boasts about its growth across 20 years of operations. Its average employment rate increases by 31 percent year-onyear. Solaris set up a Green Dachshund Foundation in 2012 and reports that their spending on social involvement has exceeded PLN 959,000. The organization has established a nursery, provided training for drivers on road safety and run some vocational programs. Anna Kozłowska, Internal Communication and PR Officer at Solaris, said: “We beat discrimination and have recently advertised a job offer for a female welder.” Solaris’ business strategy turns towards electromobility. The firm wants to sell more zero-pollution vehicles and thus minimize noise emissions and vibration, adding comfort for drivers and passengers alike. Solaris’ efforts have been recognized internationally; its electric bus was the first battery-operated bus to be recognized at the Bus and Coach of the Year awards.
Reserved, LPP S.A. Reserved is a Polish clothing brand, established in 1989 and with over 450 stores in 23 countries. The brand belongs to LPP, a joint-stock company, together with Cropp, House, Mohito and Sinsay. In LPP’s report “Strategy for the sustainable development of LPP for the years 2017-2019” the company states that its sustainable development is built on four pillars: product safety, employee care, consideration for the environment and more ethical principles. The report also discloses LPP’s tax contribution, gas emissions, energy consumption and waste production. The company signed an official agreement with anti-cruelty animal organization Otwarte Klatki (Open Cages), joined an international Fur Free Retailer initiative and permanently ceased using natural fur in 2016. Reserved labels state garments’ organic cotton content and selected models are made using organic processes. “The organic process occurs at every stage of creation in a certified production plant,” the report states. Having product safety in mind, LPP fabrics do not contain harmful chemicals or random pins. The company encourages customers to donate their unwanted garments and boasts that 80,000 pieces of clothing were given to social aid organizations last year. LPP admits to not having their own production plants and that manufacturing of their products is fully outsourced, mostly to China, Bangladesh, Pakistan and India. The company began cooperation with auditors (SGS and ACCORDP) to monitor working conditions at their suppliers in Bangladesh and conducted over 24,000 audits in 2017 alone. Anna Miazga, CSR Coordinator of LPP, said: “As a brand we’re becoming more and more global, yet we remain a Polish family firm that is aware of its impact on the environment.”
Żabka Żabka is a chain of convenience stores in Poland – set up as a local alternative to the proliferation of supermarket chains. The chain started with a modest number of seven stores around Poznań in 1998 and grew its network to over 5,500 stores in 2019. The company prides itself on being a true green business by protecting the environment, supporting local communities, promoting self-development, active lifestyles and responsible food retail. It ran a scholarship program, an internship program for groups at risk of social exclusion and supports charity organizations. Żabka reduces food waste by donating over 200 tonnes of food to those in need in 2017 alone and promotes smaller yet more frequent purchases. The company introduced waste processing and segregation policy as part of its ISO-certified green strategy (ISO 14001) and it’s certified for being energy efficient (ISO 50001). Its new line of ready meals contains certified (RSPO) palm oil and no sweeteners.
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DIGITAL We design a complex brand presence on the internet. We specialize both in creative and technological solutions. We know how to realize web design so that it is impressive and effective. We create and optimize product sites, both for brand image and e-commerce purposes, as well as complex internet services. See our projects at www.valkea.com/projekty/digital
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TECH i n s i g h t s
PRESS MATERIAL
Polish computer game giants announce hits for spring 2020
TECH NEWS
During the Xbox E3 Briefing conference in Los Angeles, Polish computer game producer Techland announced that its game Dying Light 2 will be released in the spring of 2020. During the same presentation, the long-awaited release date of CyberPunk 2077 was announced by CD Projekt. The game is to appear on the market on April 16, 2020, and pre-sales have already begun. In the game one of the protagonists will be played by Keanu Reeves, who played the main character in the Matrix trilogy, the John Wick series and in the movie Johnny Mnemonic. The actor has also been involved in motion-capture sessions. Undoubtedly, the release of the Cyberpunk 2077 trailer and Keanu Reeves’ appearance was the hit of this year’s E3 show. Cyberpunk 2077’s popularity is demonstrated by the huge pre-sale interest in the collector’s edition, which sold out immediately on Amazon and Best Buy in the US, Japan and many European countries. CD Projekt did not reveal the number of available collector’s editions. As with the The Witcher 3 collector’s editions are limited, and the components, especially figurines, are ordered well in advance.
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TECH
PIE: Value of e-commerce increases to PLN 63 bln in 2020 The value of e-commerce in Poland will reach PLN 63 billion in 2020, according to experts from the Polish Institute of Economics (PIE). “Electronic commerce is the most dynamically growing part of retail sales in Poland. In 2015 its value amounted to PLN 27 billion and in 2018 to PLN 49.8 billion,” the PIE Economic Weekly said.
PAŻP: Drone technologies tested in Katowice
Polish cryptocurrency exchange Coinquista has officially opened its exchange, the company said. After the testing phase and the successfully implemented demo version, trading in cryptocurrencies on the newly opened Coinquista exchange is now available to all users in Poland and around the world. The website has been in development since 2017, and on January 22 this year the company was entered in the register of small payment institutions kept by the Polish Financial Supervision Authority (KNF). To keep pace with the development of the cryptocurrency market, Coinquista’s plans include creating a mobile application with a payment card, opening an investment school and applying for a national payment institution license.
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Asseco plans to launch Asseco Voice Banking in Q4 Asseco plans to launch Asseco Voice Banking, enabling online voice banking, in Q4 in selected banks. “The popularity of voice services will continue to grow; that is confirmed by a recent study, which shows that 20 percent of the information searched for on mobile devices by Google is already done by voice, and by 2020 the share should increase to 50 percent,” Asseco said. Asseco Voice Banking is used to perform basic electronic banking operations, such as checking account balance, transaction history, information about the nearest ATM, and also for making trans-
fers. The product is based on the Google Assistant solution.
Alior Bank starts using public blockchain Alior Bank is the first Polish bank to provide a platform with banking documents, the authenticity of which can be verified by using the public blockchain network Ethereum. All customers who have declared that they prefer that the bank contact them electronically will no longer receive letters, which will significantly reduce the unnecessary use of paper and, at the same time, bring significant savings for the bank, Alior Bank has said. Every year, the bank sends over
PIXABAY (3)
Coinquista officially opens cryptocurrency exchange
The Polish Air Navigation Services Agency (PAŻP), the Civil Aviation Office (ULC) and the Upper Silesian-Zagłębie Metropolis (GZM), together with young programmers, have tested ideas for solutions in the field of autonomous drone flights in Katowice. Special emphasis was put on the safety of drone missions, refining anti-collision systems, automatic landing and emergency procedures. At the beginning of February, Deputy Minister of Infrastructure Mikołaj Wild said that the government would likely adopt a strategy on the development of the drone sector in Poland later this year. According to forecasts from the Polish Economic Institute, the value of the drone market in Poland, which currently stands at approximately PLN 140 million, will reach PLN 3.26 billion in 10 years’ time. According to ULC data, there are now over 100,000 drones in Poland.
TECH NEWS
one million letters to its clients to inform them about changes to regulations, fees, commissions and interest rates.
R22 invests in Romanian tool for running e-stores Technological holding R22 Group has signed an investment agreement under which it will invest â‚Ź1 million in Blugento, the company said. Blugento is a Romanian start-up offering the setup and maintenance of online stores based on the Magento platform. It operates in the SaaS model (Software as a Service). The company has over 350 clients in Romania and abroad, and in 2019 it wants to enter several foreign markets, including Poland.
WIGtech index publication started in June Publication of the WIGtech index started after the June 21, 2019 session, and the index consisted of 42 companies.
The portfolio of the WIGtech index (as of 31 May) includes: CD Projekt, Cyfrowy Polsat, Asseco Poland, Orange Polska, Play, Comarch, 11 bit studios, Selvita, Asseco Bussiness Solutions, Netia, LiveChat, Ten Square Games, Asseco South Eastern Europe, PBKM, Comp, Playway, CI Games, Silvair, R22, PGS Software, Atende, OncoArendi Therapeutics, Synektik, DataWalk, Ailleron, XTPL, Sygnity, Wasko, Vivid Games, Artifex Mundi, LSI Software, Elzab, Simple, NTT System, IFIRMA, OPTeam, Betacom, T-Bull, Talex, Arcus, Quantum Software, and Procad. The share of the largest companies in the index will be limited to 10 percent. Changes will be made once a quarter, along with changes in other indices.
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TECH of 1 million nurses by 2030. The situation doesn’t look much different in Europe. The Charité, Europe’s largest university clinic, tries to attract people from all over the world to come to Berlin, to train them as nurses and doctors to close the gap in an aging society.
FOLLOWING BERLIN’S LEAD IN MEDTECH
AS TECHNOLOGY IS REVOLUTIONIZING THE HEALTHCARE SYSTEM, EXPECTATIONS KEEP GROWING WITH EACH NEW INNOVATION. HOW WIDESPREAD IS MEDTECH’S USE AND DOES IT REALLY RESPOND TO WHAT HEALTHCARE PROVIDERS NEED? WBJ TALKED TO LUTZ HASSE DURING INFOSHARE CONFERENCE IN MAY INTERVIEW BY BEATA SOCHA
WBJ:
What are the current trends in MedTech? Lutz Hasse: Several technologies (apps, sensors, AI, robots, 3D printing) recently entered the healthcare space, enabling new products, services and business models. From telemedicine services and electronic health records to digital biomarkers, robotic companions to the personalization of therapies, technology is supporting humanity to live healthier and longer. The miniaturization of technology (e.g. sensors and hardware) makes the scaling of healthcare point of care systems affordable and accessible to more people while bringing down costs. When do you think we will see the first AI used in medicine on a large scale?
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The question is, how do you define AI? We already see excellent systems leveraging data and science, like Ada Health, a symptom checker, based in Berlin. BioStatistics is a mature subject. What’s new today is the enormous computing power that we can use to play around with large data sets. The challenge of every algorithm or AI that wants to make it into the market and clinical usage is to prove in a clinical trial that it’s safe and effective. What is the attitude of medical personnel to MedTech? There is a massive lack of personnel in the healthcare industry, and that will get even worse in the next decade. In the US for example, 50 percent of nurses are over 50 years old. Healthcare will have a shortage
Does the current state of technology meet the expectations of medical personnel? On average, 27 times a day nurses use technology in a manner that is different from the innovators’ (MedTech provider’s) expectations. It seems they have to “hack” the current technology to get their job done. That’s an unfortunate result for the healthcare industry in times of maximum user-centricity in the consumer space. Besides that, nurses and doctors are facing administrative madness, a tremendous jungle of documentation, while hospitals and doctors are under more and more pressure on the financial side. Technology can only help to a certain extent. Regulation needs to be adjusted to the system and financial flows between the stakeholders need to be re-evaluated; to shift from an output to an outcome-based healthcare system. Berlin is clearly a leading European hub in tech innovation. What did its start-up scene look like ten years ago? Very different. There weren’t a lot of startups around in Berlin ten years ago. The city was easy going, an affordable place to live – not only for artists – and the city didn’t know much about its future as the place to be for European start-ups. As people say: Berlin was poor but sexy. That has changed a lot. And besides the success, a lot of problems have been growing in Berlin, like gentrification, to name one. What made it grow so quickly? Berghain and techno! [laughs]. Well, obviously club culture combined with low living costs and salaries in the capital of one of the biggest global economies attracted a lot of young and talented people, who were seeking opportunities after the financial crisis kicked in ten years ago. Besides that, the internet was a growth
MEDTECH/CYBERSECURITY
factor for the whole world. New business models were developed, built and scaled – not only in Europe. A central influence on the fast growth of the ecosystem in Berlin came from the Samwer Brothers and the Rocket Internet ecosystem. Berlin was slowly but surely gaining in attractiveness on the investor side too. But even today, the shortage of keen VCs in Europe is still a big issue for a strong pipeline of start-ups coming out of Europe. Besides that, successful founders started to invest in other founders. That is important; handing over money, mentoring and sharing experience with the next generation of founders.
NURSES USE TECHNOLOGY IN A MANNER THAT IS DIFFERENT FROM THE INNOVATORS’ EXPECTATIONS ON AVERAGE 27 TIMES PER DAY
HOW TO RECOVER FROM A DISASTER?
FEW BUSINESSES LIKE TO CONSIDER THE WORST-CASE SCENARIOS AND RARELY PREPARE FOR THEM. BUT THEY SHOULD
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MORTEN LINDHOLM
Do you think that the success of Berlin can be replicated? You can’t replicate history. I would rephrase it and ask if you could successfully compete with Berlin? Definitely yes, because Berlin is doing a lot of things wrong! If the place has all the ingredients: a charming city which attracts talent, ideas and investors while providing access to markets and customers, anything is possible anywhere.
LUTZ HASSE Innovation Strategist at FTWK
natural disaster is an extreme case, and luckily Poland hasn’t experienced many in the past. But power outages do happen, and the long hot summers we have been experiencing for the past few years can certainly lead to such problems. What if there is a threat and an entire building is evacuated? And then it occurs that a cyberattack is underway at the same time? The natural thing is to evacuate the building and that is what management does. But what about the continuity of the business? “Around the world we see the whole risk landscape is becoming more complex, more uncertain and more unstable. Organizations have to take this into consideration, as consumers will not hang around for a recovery,” said Patrick Morley, UK Service Delivery Director from Sungard Availability Services, at an ABLS conference in June. Given the rise in threats, particularly from cyberattacks, a new market niche has opened for Disaster Recovery as a Service (DRaaS). It includes defining, documenting and
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TECH testing a company’s resilience and recovery processes on an ongoing basis to keep pace with IT and business change. It also involves building a layer of infrastructure around the firm’s own structures, so that it has a fully functional copy of its work environment on hand to help recover servers, applications, data and workloads after a disruptive event. If, for example, a building needs to be evacuated, it seems like a major problem. “Everyone escalates it up to the crisis management team, but in reality it is really just an operational disruption,” said Sandra Bell, Head of Resilience Consulting EMEA at Sungard. But it is entirely different when a cyberattack occurs, which people tend to overlook. Meanwhile, it could have dire consequences for the business. Oftentimes, these two things can happen at the same time. “Management can handle evacuations, but leaders must have a plan for how to survive the entire situation,” she adds. The problem can come from a very mundane thing. “We are now so dependent on online communication that often the problem occurs when a cable gets broken because of road construction nearby.” That is where DRaaS comes in. "It's a combination of cybersecurity, infrastructure and processes ready for when it happens, … a complete solution for how to get your business through a crisis when it strikes,” Bell explained. We’ve come to live in times of uncertainty, but it doesn’t mean we can’t or shouldn’t prepare for it.
WHO’S REALLY BEHIND THE WHEEL?
SHOULD AN AUTONOMOUS CAR AVOID HITTING A PEDESTRIAN AT ALL COSTS? SHOULD A HUMAN DRIVER BE GIVEN CONTROL OF A VEHICLE IN CASE OF AN EMERGENCY? AND HOW ARE AUTONOMOUS VEHICLES PROTECTED FROM HACKERS? WBJ TALKED TO PAWEŁ RZESZUCIŃSKI ABOUT AI ETHICS IN AUTONOMOUS CARS INTERVIEW BY BEATA SOCHA
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WBJ: Currently, in the case of an emergency, autonomous cars
release control of the vehicle to the driver (or simply brake). This has obvious drawbacks, as the response time of an idle driver will definitely be longer than that of an active one. Do autonomous car producers have any plans to solve this problem? Paweł Rzeszuciński: It is correct that in the advanced driving assistance systems that are currently available the default behavior is to either brake or request that the driver take over control in an emergency situation; however, the entire philosophy of fully autonomous vehicles (AVs) is to be able to act in a way that is the most appropriate in a given situation (which sometimes may be neither of the two mentioned above).
Today’s AVs are equipped with an abundance of different sensor types designed to accurately describe the situation around the vehicle. These include cameras, radars, lidars and ultrasonic sensors. These provide the “senses” of the AVs and give them the opportunity to understand the situation on the road and assess the best possible course of action to avoid accidents. In addition to what’s already available, there are options for further improving the safety capabilities and inter-AV communication. These include Vehicle-toVehicle communication systems (V2V), wireless networks where AVs communicate with each other, exchanging updates (speed, location, direction of travel, braking and loss of stability); Vehicle-toInfrastructure (V2I) in which elements of the infrastructure feed AVs with real-time
data about road conditions, traffic congestion, accidents or construction zones; Vehicle-to-Environment (V2E) which can, for example, inform AVs about the positioning of pedestrians or cyclists. It seems that saving lives should be the ultimate aim in the case of collisions. Is there a universal code of ethics that could govern AIs in such cases? A paper published at the end of last year in Nature shed some light on the results of the Moral Machine quiz – an online questionnaire that presented participants with a set of nine ethical choices regarding fictional driving scenarios. The quiz – in the form of the famous trolley problem – was taken by more than two million people from 233 countries. The questions the respondents had to answer included choosing to kill pedestrians or jaywalkers,
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TECH young people or the elderly, and women or men. Even though the trolley problem in itself is not the best representative of the challenges of the AV industry, it is a useful example as to how people may react to the advent of new technologies. As the report outlines, in general the respondents would save more lives over fewer, children over adults, and humans instead of animals. However, the more granular answers differed across different geographical, ethnic, and socio-economical regions. For example, participants from countries with low GDP were much less likely to sacrifice a jaywalker compared to respondents from countries with stronger economies. At the same time, residents of Asia and the Middle East were more reluctant to spare young people over older pedestrians and were more likely
to protect wealthier people compared to quiz-takers from North America and Europe. These results show that it would be pretty much impossible to devise ethics rules that would be universally acceptable worldwide. Luckily for us, however, the decision-making process of modern AI systems is not a black-white type of choice, but rather a result of complex optimization, always looking for the best solution given the circumstances. It is only natural that a driver faced with an impending collision will try to avoid it and protect his or her own life. What would an AI do in this case? When analyzing the Google search trend for phrase “autonomous cars ethics” there are virtually no instances from before the end of 2013. Six years to solve such a complex task seems like a very short pe-
riod of time. Luckily, an increasing number of scientific bodies and companies are working on trying to find the onesize-fits-all solution. In essence, there are two main approaches. The more philosophical ones are based around trying to address the many aspects of the trolley problem. Luckily not all of the endeavors are based purely on variations of thought experiments. Nicholas Evans, a philosopher from University of Massachusetts Lowell, gathered a group of fellow philosophers and engineers and received a $500,000 grant to write algorithms based on various ethical theories to test which are best suited for the trolley problem. The research team is also interested in some follow-up questions e.g. how, under a given theory, a self-driving car could be hacked. For example, if a car was known to avoid pedestrians even
What is the trolley problem? It’s an ethical thought experiment where a participant has to choose between two bad outcomes of a traffic collision. Imagine you are driving a trolley and there is a group of five people on the tracks ahead of you. You cannot warn them, but you can switch the trolley to another track. However, there is also a person on the other track. There are several variations of the experiment, including one where a surgeon has five patients who will die without a transplant and a healthy traveler comes in for a check-up. The doctor can use his organs and save all five, but it would kill the traveler. The goal of the exercise is to determine a set of rules for what is ethically acceptable to people in a given society.
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at the cost of putting the driver at risk, someone could potentially put themselves in the path of the autonomous vehicle to harm the driver. More extreme cases, not unheard of by airplane pilots, could involve wrong-doers using infrared lasers to try to confuse the car’s sensory system. There is still the question of responsibility. Who is responsible for a car accident caused by an autonomous car: the driver or car producers/AI designers? With the amount of data that autonomous vehicles collect it will be an easy task to determine whether at the time of the accident, the human driver or the algorithm was making the decisions. Should the human driver be in charge, the classical liability as we know it today would be enforced. It becomes more interesting in cases where it was the algorithm that was driving the vehicle. In order to be able to determine whether the vehicle acted correctly, a unified set of rules should be defined that would allow us to assess whether the behavior was right or wrong. For this reason, some researchers suggest an introduction of a sort of “driving license” for autonomous vehicles that would test the reactions of the algorithms to some common situations, exactly as a human driver is during a driving license test. Can autonomous cars be safer than regular ones? I see many analogies to the aviation industry and how its safety functions developed over time. The situation is akin to that of air crash investigations. I personally love watching the TV series “Air Crash Investigations,” which explains aviationrelated disasters and crises, because virtually each episode is concluded with a list of improvements that have been made to improve the safety of the overall industry. When one analyzes the causes of crashes that took place in the distant past and the more recent ones, it becomes apparent how far the entire industry has moved to becoming the safest means of transportation on earth. A very good practice has been intro-
IF A CAR WAS KNOWN TO AVOID PEDESTRIANS EVEN AT THE COST OF PUTTING THE DRIVER AT RISK, SOMEONE COULD POTENTIALLY PUT THEMSELVES IN THE PATH OF THE AUTONOMOUS VEHICLE TO HARM THE DRIVER
duced in California where all autonomous vehicles being tested must keep a continuous record of data from all their sensors for the 30 seconds prior to any incident or collision. This is virtually identical to the flight recorders (black boxes) on airplanes. This allows for every potentially dangerous situation to be reconstructed, analyzed and, if necessary, used to improve the behavior of the system. In essence, the amount of available data will make it possible to hold the car manufacturers accountable according to such higher safety standards that can be applied to humans. It’s also worth noting that, most likely, autonomous vehicles will not be joining the traffic as we know it from the get-go. And imagining the introduction of AVs to our world as a sudden process seems far from realistic. Most likely, at the very initial stages, the deployment of AVs on a
larger scale will be made possible only on dedicated lanes and in less crowded areas, to avoid difficult interaction with human drivers. Such a gentle introduction would give the manufacturers invaluable data to improve their systems, and it would allow humans to get used to the onset of the new types of road traffic participants. Read the full interview with Paweł Rzeszuciński on wbj.pl
PAWEŁ RZESZUCIŃSKI
PhD, Chief Data Scientist at Codewise
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COMPLETING THE VC CIRCLE
EUROPE’S TECH START-UP POTENTIAL CANNOT BE OVERLOOKED. HOWEVER, FINANCING SEEMS TO BE ONE OF THE KEY INGREDIENTS OF THE SYSTEM THAT HAS YET TO BECOME FULLY MATURE. WBJ TALKED TO PATRIC GRESKO DURING INFOSHARE CONFERENCE IN MAY INTERVIEW BY BEATA SOCHA
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WBJ: How strong is the European VC market compared to China
and the US? Patric Gresko: The European Venture Capital (VC) market has achieved a gigantic step forward over the last ten years. A number of data points support that assessment: the number of unicorns created in Europe (18 in 2018 alone), the number of companies exited at valuations exceeding $100 million (close to 40 companies exited through either IPO or M&A in 2018), and the number of high-growth companies raising financing rounds exceeding $100 million (35 companies in 2018). In parallel, the financial performance of the European VC market is finally commensurate to Limited Partner (LP) expectations: in EIF’s portfolio, we have today some 70 funds, which display a net IRR (Internal Rate of Return) exceeding 10 percent. Nevertheless, the work is not over. Total European VC financing ($25 billion in 2018) represents only 25 percent of US and 35 percent of Chinese VC financing respectively. Relative to GDP, European VC financing (0.13 percent of GDP in
2018) is also lagging behind the US (0.47 percent of GDP) and China (0.50 percent of GDP). Two major gaps still need to be addressed in terms of financing of the European VC ecosystem. The first one is the earliest stage of financing, or pre-seed and seed stages, when innovative ideas need significant financial support to make the leap to commercialization and which continue to need intensive capital support in order to fuel the pipeline of VCs, which will take them to the next level. Then comes the growth-stage financing: the European market is producing a growing number of leaders in their respective industries which need significant financing to fuel their growth. Such companies are now raising more than $100 million in a single financing round, while Europe has approximately only a dozen private VCs with sufficient funding to participate in such rounds. As a result, Europe is progressively becoming the pipeline for larger American and Asian players, who are in turn harvesting the benefits of the increased maturity of the European VC landscape.
SHUTTERSTOCK
TECH
V E N T EU-RCEO CMAMPEI RT AC EL
How important is public support in developing the European VC market? It is estimated that public agencies across Europe have provided about 18 percent of the funding of the VC market over the last decade. That includes the European Investment Fund (EIF), which is part of the European Investment Bank Group owned by the 28 EU member states. This level of support can be qualified as significant and reflective of the relatively young maturity of the European VC industry. The market is, however, maturing, with a growing number of VCs being oversubscribed and hence less dependent on public support. How many unicorns are there in Europe altogether? What about CEE? We estimate that close to 90 European unicorns emerged from the European market between 2005 and 2018, with the majority of them reaching such status over the last three years. There is no reason why CEE cannot produce its fair share of unicorns as well, with the latest example being UiPath from Romania, a leading Robotic Process Automation vendor providing a complete software platform to help organizations efficiently automate business processes, whose valuation now exceeds $7 billion. How important are unicorns in a fund manager’s portfolio? If you have a unicorn in your portfolio but you only hold 1 percent of it at the time of the exit, that exit will only generate €10 million in proceeds. The importance of unicorns in a VC portfolio is therefore relative. It is rather more important to have dragons, or home-runs (i.e. companies that will return at least the total fund size when exited). Are there currently more M&As or IPOs in the tech market? Why is that? According to our observations, there are more M&As than IPOs. IPOs are often seen as a liquidity event for the underlying companies that VCs back rather than an exit route. The appetite of larger corporations for strategic acquisitions is higher than ever and this is driving the exit valuations up.
Is fundraising getting easier in Europe? We have indeed observed a growing number of oversubscribed funds in the European VC market, which is another sign that the market is maturing. Players able to demonstrate a consistent top-quartile performance find it easier to fundraise. Nevertheless, the European market is still characterized by the relatively risk-averse nature of European institutional investors, such as pension funds, who have not yet fully embraced the opportunity offered by the EU VC ecosystem. The EIF is a fund of funds. What does that mean? How many funds do you invest in? The EIF supports high-growth and innovative companies by investing in venture and growth capital, and alongside business angels, from the very earliest stages of intellectual property development into technology transfer, to more mature phases of development. In supporting both wellknown and first-time teams, and business angels, we have built a strong track record in the industry. Through this reputation, while maintaining a highly selective process, we take significant minority stakes in funds which provide a catalytic effect on commitments from a wide range of investors, particularly in the private sector. The scale and scope of our investments, along with our added value on fundraising, allows us to promote best market practice and corporate governance for teams we choose to support. Each year we back around 50 to 60 VCs and 20 to 30 business angels with investment volumes ranging between €1.5 billion and €1.6 billion. What is your current involvement level in Poland? We have been actively scouting the Polish market for the last three years. This has resulted in three fund investments so far: Innovation Nest, Market One Capital and Cogito Capital Partners. We are expecting two further investments in the course of this year. Is CEE attractive for private VCs? We are seeing and backing a growing num-
ber of private VCs active in the CEE market and the EIF has backed a dozen of them in the recent years. The highly skilled and less expensive workforce (relative to western EU countries), overall positive macroeconomic indicators and the highly entrepreneurial ecosystem are the key drivers of the market. However, VC fundraising remains low in the CEE region, with only €360 million raised in 2017. Very few institutions invest in the region and the market is heavily dependent on public players such as the EIF or the PFR [Polish Development Fund] in Poland, which is reflective of its still emerging nature. What elements are still missing in the CEE/Polish ecosystem? Success stories of local entrepreneurs are crucial to spin the VC ecosystem flywheel. Success stories and associated positive exits will further attract entrepreneurial talent and grow the local talent pool. Skilled founders and entrepreneurs will then attract more funding that will want to capitalize on the opportunity. Successful entrepreneurs might also become business angels who will in turn provide capital and share their experience to the benefit of new-generation entrepreneurs. And off the back of their track-record, business angels might launch their own VC funds. VC funds set up by ex-entrepreneurs are one of the most important drivers of a well-functioning VC market. Such funds not only invest capital but also provide entrepreneurs with a genuine operational added value, which allows a faster scale-up of the supported companies. These bigger, world-leading companies then bring larger, more visible exits, which in turn attract more talent. The circle is then complete, but at a higher level.
PATRIC GRESKO
Head of Division – Innovation and Technology Investments at European Investment Fund (EIF)
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FUJITSU WORLD TOUR 2019: IN THE ERA OF DIGITALIZATION, WE NEED TRUST 3.0
THE SUBJECT OF TRUST IN THE WORLD OF DIGITAL CHAOS WAS THE THEME OF THIS YEAR’S FUJITSU WORLD TOUR, ONE OF THE WORLD’S LARGEST ANNUAL ICT ROADSHOWS, WITH THOUSANDS OF VISITORS FROM SEVERAL COUNTRIES. “ACCORDING TO FUJITSU RESEARCH, 70 PERCENT OF BUSINESS LEADERS FROM NINE COUNTRIES FIND IT DIFFICULT TO ASSESS THE CREDIBILITY OF INFORMATION POSTED ONLINE. SOME 72 PERCENT ARE CONCERNED THAT ORGANIZATIONS USE PERSONAL DATA WITHOUT AUTHORIZATION, AND NEARLY 70 PERCENT ARE AFRAID OF POSSIBLE CUSTOMER INFORMATION LEAKS,” SAID CHRISTIAN LEUTNER, VICE PRESIDENT, HEAD OF EMEIA PRODUCT SALES AT FUJITSU DURING THE INAUGURATION OF THE EVENT. ACCORDING TO FUJITSU, DIGITAL TRUST CAN ONLY BE GUARANTEED THROUGH PROPER USE OF TECHNOLOGY. 54
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peakers at this year’s Fujitsu World Tour discussed the fact that the breakneck pace of digitization of all aspects of life makes it necessary to redefine trust, which has traditionally been based on trust in family or friends, and later in politicians or government institutions. Over 50 percent of the world’s population is already online. The virtual world is becoming more and more addictive, which in the West translates into one-third of our time awake spent online. Our deep immersion in digital life is evidenced by the fact that last year, for the first time in history, online dating become the most popular form of selecting a partner. Every day, people entrust an increasing amount of private information to dozens of institutions that they must trust in terms of data security. Fujitsu points out that skillful use of technology will be the key to making business operations more credible.
BETWEEN COMFORT AND TRUST Data security was one of the most important issues raised during the thematic sessions. “The rapidly rising amount of information being processed is one of the most important challenges for today’s business. First of all, companies must prevent data loss while responding to customer pressure to deliver products and services faster, cheaper and without interruptions. We have to be very proficient in data control and implement a series of tools to comprehensively protect it – from hardware solutions to appropriate applications and software, and automate as many processes and procedures as possible,” said Dariusz Kwieciński, Managing Director of Fujitsu Poland. Speakers emphasized that to ensure business efficiency and profitability, a high level of data security should be combined with easy and convenient access to data, which is often contradictory. As a result, companies are often afraid of migrating to the cloud. According to Fujitsu’s vision, it is necessary to combine the traditional and virtual world in a technological ecosystem. “The Solomonic solution is to combine the cloud with storing critical information on your own local servers, i.e. a hybrid cloud. It is important to properly match the proportions of traditional and cloud solutions, so that they respond to actual problems and business needs. The key is to consider not only a company’s perspective, but also the attitude of the local market to privacy and how our clients approach it,” said Piotr Brychczyński, Business Development Manager at Fujitsu. CONTROLLED AI SUPPORTS TRUST Fujitsu identifies artificial intelligence as a technology that will have a significant impact on the growth of trust
in processed information. However, the company emphasizes that it will only happen if that technology remains under human control. In order for it to function properly, the results of its analyses must be subject to a final human assessment. According to the company’s experts, the technical accuracy of AI is remarkable, but it lacks human emotional intelligence. In some cases, algorithms favored discrimination or misjudged the criminal tendencies of people. The solution is to control the decisions made by AI. The company has developed so-called Explainable AI, which is a combination of two unique technologies – Knowledge Graph and Machine Learning – with the function of explaining the reason for assessment. This technology has already been applied at Kyoto University in the field of genomic cancer medicine. Artificial intelligence analyzed 180,000 fragments of gene mutation data to identify the one that caused cancer. Combining this analysis with a knowledge-base built of 17 million medical documents and over 10 billion other pieces of information enables the technology to find a link between the mutation and the actual medical cause. TRUST IN THE WORKPLACE OF THE FUTURE The security of customer data also requires special care due to workplace digitization. Today’s employees, especially younger generations, are digital nomads who want to work from virtually anywhere in the world, often connecting to networks made available by, for example, hotels or restaurants. As speakers at the World Tour said, such people should be provided with optimal working conditions, the necessary virtual tools and secure flow of documents and information between them and the company. “In the future, the employee will be able to put a phone on the table and through an application provided by the employer generate a hologram keyboard for comfortable writing. But above all, they will have access to company resources, data, social media or technical support at any time of the day, from anywhere in the world and from any device. Right now, at the office level, we should introduce the so-called IT Connect Bar, where an IT specialist can support our employees in solving problems, carrying out minor repairs or configuring equipment,” said Michał Grzegorzewski, Head of Services, Fujitsu. Fujitsu emphasizes that trust and business success will only be possible if we find a way to build enterprises and society around people (Human Centric Innovation); otherwise, technologies will become useless. This was the conclusion of the Fujitsu World Tour 2019, which brought together 750 representatives of the IT industry in Poland. For an interview with Christian Leutner see next page. >>
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HUMANS AT THE CENTER OF TECHNOLOGY
THE PROBLEM OF TRUST IN BUSINESS TAKES ON A NEW DIMENSION IN THE ERA OF MODERN TECHNOLOGIES. WBJ TALKED TO CHRISTIAN LEUTNER, VICE PRESIDENT AND HEAD OF EMEIA PRODUCT SALES IN FUJITSU, ABOUT WHY ARTIFICIAL INTELLIGENCE CANNOT REPLACE HUMANS AND WHETHER CLOUD AND IT OUTSOURCING IS A ONE-SIZE-FITS-ALL SOLUTION INTERVIEW BY KRZYSZTOF MACIEJEWSKI
WBJ: As Simon Sinek said: “Every person and every organization can
explain what they are doing. However, only a few are able to clearly articulate why they do what they do. ‘Why’ has nothing to do with finances and profits. ‘Why’ is a thing that inspires you and your surroundings.” What is Fujitsu’s approach to this concept? Christian Leutner: I like this question very much, because I know Simon Sinek. I watched his video about the purpose of things that showed this very intrigu-
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ing and really disruptive way of looking at things. Fujitsu’s answer is simple – we need to have a vision. I said that in my keynote speech at the Fujitsu World Tour; people expect a company like Fujitsu to have a vision, and our vision is a Human Centric Intelligent Society. Besides business results, achieving budgets, being profitable and growing, it is all centered around helping to get towards this goal. We believe we can only be successful if we put people at the center of everything and if we use technology to help solve the
problems that we have in today’s society; whether you’re in politics, business, the health sector, automotive, the financial sector – you name it – all the technology we have at the tip of our fingerprints no matter how complex. That’s how a Human Centric Intelligent Society can be achieved. There is a trend – understandable in many ways – to outsource IT. But you stress the importance of Product Business in a world where everyone is talking about services. Do you really think that Product Business is always a better option? I’m responsible for what at Fujitsu we call Product Business, so obviously I’m also interested in this area. At the same time, very honestly speaking, when I talk at events like the World Tour, I very reluctantly raise the subject of hardware. For me, hardware – or infrastructure as I prefer to call it – is kind of underlay for all those services and technological disruptions that we currently have on the market. At the top of this Fujitsu has a unique distinction compared to our US-based
N E W T EEC-HC NO OMLMOEGRI EC SE
THERE ARE CUSTOMERS WHO DON’T WANT TO GO 100 PERCENT TO THE CLOUD FOR MANY REASONS. THEY WANT TO BE AS FLEXIBLE AS POSSIBLE. competitors. We are probably the only company of this size that still combines products and services in one place. Our customers really do appreciate it. You could say that products are exchangeable, while services seem much more front of mind. But at the end of the day I really do believe that it’s not about products or services. It’s about the solution we are offering, which can be a product or a service alone, but very often some sort of combination of both. As we are talking about IT, we are convinced that hybrid IT is the answer to many challenges in the market. Again, it has a lot of advantages to have infrastructure and solutions from one source. In combination with a partner’s ecosystem, that helps us find the right solutions, because we know that we cannot do everything ourselves and we need strategic partners – only then we can help our customers succeed. But do you sense that the demand for traditional servers is decreasing and more companies think about transferring their data to cloud computing services? Last year at Fujitsu our x86 server segment grew by over 10 percent. I know that market behaves differently and we have seen a decline, but it depends on what country and what market segment we look at. For me, the reason why we are selling more servers than ever with more revenue than ever is that we are selling less in volume terms, but much better equipped servers than before. In this way we can see the changes in demand in the market.
There is much more demand for higher capacities when it comes to data, or storage when it comes to data protection. This is related to the effect of hybrid IT. There are customers who don’t want to go 100 percent to the cloud for many reasons. They want to be as flexible as possible. And there are also customers who prefer to stay on their own premises within their own responsibility and within reach. That’s why we provide the infrastructure to these customers, and just SaaS to others, but it is always a consideration that comes from our customers’ requirements. We are currently having a discussion on data security due to the situation between the US and China (including the Huawei case). It all tells me that the market demands the highest possible level of flexibility. In my opinion, hybrid IT is the answer. We just have to be able to tailor our offer according to our customers’ needs. Do you think that there is a possibility to implement more complex solutions, like software as a service (SaaS) for example, to small or medium-sized companies? Definitely, yes. We are already doing 80 percent of our business through SaaS, which we use to serve small and mediumsized companies. Such companies have huge economic power, and we see this all across Europe. It is a necessity for Fujitsu to make sure that solutions we are developing fit the needs of smaller companies as well. This requires standardization and development in a way that is future-proof.
I’m not trying to say that everything we offer can be sold through SaaS, but we must be conscious of this requirement due to a lot of potential in this area. So, what really is the co-creation approach about? It’s about identifying trust as a driving factor in society combined with technology. We must involve not only partners, but also customers to create solutions that really help address issues. We must communicate very intensively to get to the right point. We have established digital transformation centers all over the world. Customers and partners can get together for a discussion, moderated by us. We are there not necessarily to sell our products but just to facilitate. Sometimes we just help them to understand their problems better, with no other role beyond that. There are also a lot of rumors about quantum computing. I heard about Fujitsu’s newly developed Digital Annealer Unit (DAU) chip that creates a bridge between conventional computers and real quantum computers. How does it work? Well, it is meant to solve combinatorial optimization problems that cannot be solved with conventional IT. It is quantum-inspired yet it’s not a quantum computer. The latter would require a huge room, cooling and advanced technology that is not yet ready. DAU was invented for the same purpose; to analyze – with a very high degree of accuracy – very complex, simultaneous computing problems in a fraction of a second. It’s useful in the financial sector for institutions with billions of assets to manage or in manufacturing for process optimization. We intend to sell it in Poland and we already have interest from the UK, Germany and Spain, but we will sell DAU as a service rather than as a product.
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Latest news in the office, retail, logistics, residential and hospitality sectors
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Interview with Scott Dwyer of Atrium European Real Estate
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Student accommodation market
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Co-living projects
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Interview with Christopher Zeuner of Amstar
Investment market IMMOFINANZ to acquire Warsaw Spire tower for €386 mln Real estate investor Immofinanz has revealed it is now in the process of acquiring the Warsaw Spire office tower located in the Wola district of the Polish capital from developer Ghelamco (which completed the property in 2016) and private equity firm Madison International Realty. The value of the transaction, which still needs to be approved by Poland’s anti-trust authorities and is expected to be finalized in the coming weeks, amounts to approximately €386 million. Immofinanz will finance the acquisition with both equity and debt. The 220-meter Warsaw Spire tower – the tallest of the three buildings of the Warsaw Spire complex – comprises around 71,600 sqm of leasable space across 49 floors, including 65,000 sqm of office area. All of the office space in the skyscraper is currently commercialized, with major tenants including Goldman Sachs, Samsung, JLL and Mastercard. >>>
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Urban apartment and condo hotels
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ULI Poland annual conference
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Investment market (continued) BRIEFS MADISON COMPLETES CAPITAL PARK ACQUISITION
Investor Madison International Realty has completed its acquisition of a controlling 65.99 percent stake in Warsaw Stock Exchangelisted developer and investor Capital Park from Patron Capital Partners. The transaction was first announced in March this year. Patron Capital Partners (along with a number of other shareholders) will retain a minority stake in Capital Park. The portfolio of Capital Park currently consists of assets comprising a total of 304,000 sqm of leasable space and is valued at PLN 2.6 billion. The bulk of the assets are located in Warsaw where the company is now developing its flagship project – a mixed-use scheme called ArtN.
€732
mln
the total value of investment transactions closed in Poland’s commercial property market in Q1 2019 Source: Knight Frank
SOUTH KOREA’S MAGI BUYS POLISH WAREHOUSES
South Korean investment manager Mirae Asset Global Investments (MAGI) has acquired two major logistics centers in Poland from Blackstone. The properties are located near Wrocław (over 123,400 sqm, fully leased out to online retailer Amazon) and near Konin (over 39,600 sqm, fully leased out to FMCG sector company Eurocash). Hines Polska advised MAGI during the acquisition process and will asset-manage the newly acquired logistics centers over the entire investment horizon.
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Vastint sells Wrocław offices for €95 mln
Developer Vastint Poland has sold the first three buildings within its Business Garden Wrocław office complex to Philippine fund ISOC Group for over €95 million. Colliers International and Cushman & Wakefield brokered the transaction, representing the seller and the buyer respectively. The buildings were completed in 2016 and comprise a total of more than 37,400 sqm of leasable office space, which is currently fully leased out. The Business Garden Wrocław complex will offer a combined total of more than 110,000 sqm in nine buildings at full build-out, with Vastint Poland planning to complete the remaining six buildings by the end of this year.
Office HB Reavis launches Warsaw office scheme Developer HB Reavis has launched construction work on its Forest office project in Warsaw, which is located on ul. Burakowska in the Wola district of the city, close to the Arkadia shopping mall. The scheme will comprise 78,000 sqm of leasable space, with its phases scheduled to be completed by December 2020 (lower buildings) and in the autumn of 2021 (a 120-meter tower). HB Reavis Construction is acting as the general contractor of the development.
BRIEFS PHN APPOINTS SKYSAWA PROJECT CONTRACTOR
Warsaw Stock Exchangelisted, state majority-owned real estate investor Polski Holding Nieruchomości (PHN) has selected a consortium formed by PORR, TKT Engineering and ELIN as the general contractor of its Skysawa (previously known as PHN Tower) office project in the Polish capital. Construction work on the scheme will launch in the coming days with the value of the contract amounting to over PLN 325 million. Located on ul. Świętokrzyska in the downtown of the city, the Skysawa development will comprise approximately 40,000 sqm of space in a 155-meter skyscraper and an accompanying lower building. The latter structure is scheduled to be completed in the second quarter of 2021,
while the tower is to be ready in Q2 2022. The investment is being commercialized by Colliers International.
city, which is called Fuzja and will include office, residential and retail areas.
ECHO WITH NEW OFFICE PROJECT IN ŁÓDŹ
GHELAMCO SECURES ANCHOR TENANT FOR WARSAW SKYSCRAPER
Warsaw Stock Exchangelisted developer Echo Investment has launched construction work on the first phase of its REACT office project in Łódź, which will deliver almost 15,000 sqm of space. The entire scheme is to comprise nearly 50,000 sqm at full build-out. The REACT development will be located at the intersection of ul. Kilińskiego and Al. Piłsudskiego and will welcome first tenants in the second half of next year. Echo Investment has been active in Łódź for over 20 years now. The company has recently started building a major mixed-use investment in the
Insurance company Warta has leased almost 20,000 sqm at the Warsaw Unit office project that developer Ghelamco Poland is now building in the Wola district of the Polish capital. The transaction, which is one of the biggest lease deals signed in the city in recent years, was brokered by JLL and CBRE, which advised the landlord and the tenant respectively. The over 200-meter Warsaw Unit scheme will comprise approximately 57,000 sqm of office space across 45 floors. The development is scheduled to be completed at the beginning of 2021.
GETIN TO MOVE INTO THE WARSAW HUB COMPLEX IN 2020
Getin Noble Bank has leased almost 18,500 sqm at The Warsaw HUB mixed-use project, which Ghelamco Poland is now developing in the Wola district of Warsaw. The company will move into its new premises in the second half of next year. The lease agreement was signed for the period of seven years and was brokered by JLL (the exclusive leasing agent for office and retail space at the scheme) and CBRE (which represented the tenant). The Warsaw HUB development will comprise a total of 113,000 sqm in three buildings and will include office, conference, hotel and retail areas. The investment is currently more than 50 percent commercialized.
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Logistics BRIEFS
Over
PANATTONI BUILDING OVER 63,000 SQM FOR CARREFOUR
Developer Panattoni Europe has laid the cornerstone for what will be retailer Carrefour’s largest logistics center in Poland. The BTS project is being developed in Rawa Mazowiecka in the Łódzkie voivodship and will comprise over 63,600 sqm of space, with completion having been scheduled for the end of this year. This is Panattoni Europe’s second scheme for this client in the Polish market. In early 2017, the developer completed a 38,200-sqm Carrefour logistics center in Bydgoszcz.
MLP LAYS CORNERSTONE FOR POZNAŃ LOGISTICS PARK
Developer MLP Group has held a cornerstone-laying ceremony at the construction site of its MLP Poznań West logistics park project in western Poland. Located in Dąbrówka near Poznań, the scheme will comprise 83,000 sqm at full build-out. The first building within the development is scheduled to be completed in the third quarter of this year. It will be occupied by logistics operator InPost, which has leased 8,500 sqm. W.P.I.P. is the general contractor of the investment.
P3 TO BUILD PEPSICO WAREHOUSE IN WARSAW AREA
Developer P3 will build the central warehouse of PepsiCo in Poland, which will be located within the P3 Mszczonów logistics park in the Warsaw area. The beverage producer has leased a combined 58,470 sqm of warehouse and office space at the location, with the transaction having been brokered by JLL. The P3 Mszczonów park is located 50 kilometers from the Polish capital, near the S8 expressway, and currently comprises a total of 160,000 sqm in five buildings.
2.1
million sqm the amount of warehouse space that was under construction across Poland at the end of the first quarter of this year Source: Cushman & Wakefield
Hospitality BRIEFS RADISSON OPENS WARSAW HOTEL
Radisson Hospitality AB, part of the Radisson Hotel Group, has opened its new Radisson Collection Hotel, Warsaw in the downtown of the Polish capital. The premium lifestyle hotel, which is located on the city’s ul. Grzybowska, offers 311 rooms and suites. The project entailed the modernization and rebranding of a former Radisson Blu-branded hotel that used to function in the location. Europa Capital is the investor behind the new scheme.
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ROYAL TULIP ENTERS POLAND
A condo hotel, which will be part of the Unique Tower complex that Marvipol Development is now building on ul. Grzybowska in the Wola district of Warsaw, will be operated under the luxury Royal Tulip brand owned by Louvre Hotels Group. This will be the brand’s first location in Poland and in Europe. The five-star Royal Tulip Warsaw Apartments condo hotel will comprise 448 units. The Unique Tower complex, which will also include regular apartments, is expected to be ready in 2021.
LOKALE IMMOBILIA | NEWS
Residential
Golub GetHouse launches rental apartment brand Developer and investor Golub GetHouse has officially launched its Inspirentals brand, under which it will build and operate rental apartment projects. The move is the company’s response to the growing significance of the so-called private rented sector (PRS). Golub GetHouse has already secured sites in Warsaw on which schemes with a total of approximately 1,500 rental apartments can be built. Construction work on the first two developments – Postępu Apartments and Liberty Tower – is scheduled to start in the first and the second quarter of next year respectively. Postępu Apartments will be located in the Mokotów district and will comprise 371 housing units in four buildings. Liberty Tower will be developed in the Wola district of the Polish capital and will offer over 500 rental apartments in a 140-meter building.
BRIEFS EURO STYL TO STEP UP DEVELOPMENT ACTIVITY
Gdańsk-based developer Euro Styl, part of the Warsaw Stock Exchange-listed Dom Development group, has accumulated a significant amount of land for new projects over the last year and plans to gradually step up its development activity and increase its share in the Tri-City residential market in the coming years. At the end of March 2019, the company owned or controlled sites on which 5,246 units can
be built. A year earlier, the figure stood at 1,927. In the near future, the developer wants to launch schemes in locations such as the Młode Miasto area of Gdańsk, where approximately 1,200 units are to be developed. Euro Styl owns nearly seven hectares of land there.
WARSAW’S SŁUŻEWIEC POPULAR WITH RESIDENTIAL DEVELOPERS – JLL
The Służewiec business area located in the Mokotów district of Warsaw, which is
one of the biggest office hubs in the Polish capital and has until recently been notorious for its office monoculture, continues to attract more and more residential developers. According to JLL data, 3,900 apartments were completed there between 2016 and 2018, which is almost 1,000 more than in the years 2010-2015. An additional nearly 4,000 housing units are scheduled to be built in Służewiec between 2019 and 2021, JLL said in a press release.
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Retail
Dekada lays cornerstone for Nysa mall Developer and investor Dekada has held a cornerstone-laying ceremony at the construction site of its Dekada Nysa shopping center project in Nysa in south-western Poland. The biggest scheme in the company’s portfolio, the mall will comprise approximately 19,000 sqm of GLA and house around 80 stores and points of service, with BOIG Property Consulting acting as the leasing agent. The Dekada Nysa development, which was designed by the JSK Architekci architectural studio, is scheduled to be completed in the second half of next year.
BRIEF TREI BUYS LAND FOR TWO RETAIL PARKS
Developer Trei Real Estate has acquired sites for two new Vendo Park-branded retail park projects in Poland. The schemes will be located in Kobyłka near Warsaw and in Kutno in the Łódzkie voivodship and will comprise approximately 3,200 sqm and around 5,200 sqm of leasable space respectively. The Kobyłka development is scheduled to be completed towards the end of this year, while the Kutno investment should be ready in 2020. Trei Real Estate currently has 11 Vendo Parks in its Polish portfolio. Their number will soon increase to 16.
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LOKALE IMMOBILIA | RETAIL
It sounds like the public are becoming more demanding than ever? Communities are evolving and becoming far more specific and sophisticated in their demands. People want more than just shopping but their demands differ depending on each specific catchment area, which is one reason why we’ve started conducting exit polls once again to learn about what we might be missing within our centers. The great thing is that tenants are more willing than ever to join our initiatives and experiment with us.
THE LONG GAME
WBJ catches up with Atrium CEO Scott Dwyer to learn about the latest developments at Atrium HQ INTERVIEW BY ALEX WEBBER
WBJ:
How have changes in the retail landscape impacted the Atrium group’s strategy? Scott Dwyer: Of the more notable developments, we have sold two more assets while completing the acquisition of Wars Sawa Junior and a smaller scheme, King’s Cross, both in Warsaw. We have continued to follow a strategy of acquiring dominant schemes in good locations in built-up areas, and while that overall vision has remained much the same, we’ve taken a few more steps down the line.
For the first time in the 21 years I’ve How are Atrium’s centers changing? been in Poland, One of the key things is the number of commuI’ve noticed nity initiatives we’ve introduced to build loyalty landlords and and increase frequency. We have really looked tenants to diversify these activities while using different aligning to schedules to attract different groups. For instance, meet and mornings are a great time to appeal to mums with adapt to consumer kids by holding English-language classes or yoga needs workshops. We’re doing a lot to engage with the
community by donating the spaces we have, staffing them, managing the roster, and maintaining and cleaning them.
How has the center/tenant/customer relationship evolved? What further changes are forecast? For the first time in the 21 years I’ve been in Poland, I’ve noticed landlords and tenants aligning to meet and adapt to consumer needs. The nature of the industry means that the kind of retailers present in a center change, as do retail formats, but even so we’ve noticed a real acceleration in this process. Retailers are strategizing and are now understanding catchment areas and talking about how to adapt to them; they’re planning better and optimizing their business, which in terms of the market demonstrates a huge maturity. Furthermore, the industry is growing closer to the store manager and as a result we’re seeing more of a “concierge” structure emerge. What innovations have Atrium been looking to implement? If you asked 1,000 people to define innovation, you’d receive 1,000 different answers. In our case, we see innovation as something that allows you to solve issues and get closer to the direction you’re aiming for. At Atrium, we’re placing a great deal of value on capturing data that’s vital to our centers so that we’re better able to understand the consumers that visit us. Some of the ideas are original, others tried and tested; we’re a global business, so it’s to be expected that our ideas fly across the world. You’re not downbeat! People in the industry are talking about the impact of online sales, the ban on Sunday trading and the general impending apocalypse that will hit the retail market. But, the truth is we’re growing and that’s thanks to a good strategy that’s been based on strong assets. We’re a long-term player and as such we take a longer view of the market and see a way through the forest.
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LOKALE IMMOBILIA | RESIDENTIAL Student Depot's dormitory in Warsaw's Mokotรณw
DORM DEALS
Purpose-built student accommodation is starting to emerge as an attractive real estate asset class in Poland. With developers planning many new dormitory projects across the country, the sector is set to see more investment transactions in the coming years BY ADAM ZDRODOWSKI
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RISING EXPECTATIONS
On the face of it, the pool of potential private dorm users is getting smaller. Statistics Poland (GUS) data show that in the academic year 2017/2018, the number of students in Poland stood at approximately 1.3 million and was at its lowest since the 1999/2000 academic year. The country’s student population has continued to shrink steadily since the 2007/2008 academic year. However, the number of foreign students in the country has actually been rising and is expected to reach 100,000 within the next two years. Crucially, more and more students in Poland – be it foreign or domestic – are now looking for quality accommodation and can afford to pay for it with many of them seeking space in regular rental apartments. Dedicated student housing remains in short supply. Savills data shows that only 15 percent of the country’s students can be accommodated in the existing dormitories, many of which do not meet today’s requirements. There are nearly 450 stateowned student houses in Poland, which offer a total of more than 120,000 beds. Private higher education institutions have a further 35 dormitories, which comprise a total of nearly 4,000 beds. Private investors who are not affiliated with any university offer approximately 6,500 beds. “Both public and private higher education institutions are downsizing their accommodation offer. This is due to, among other things, students’ growing accommodation requirements,” said Wioleta Wojtczak, associate director, head of research, at Savills. She explained that universities have been closing low-quality schemes, with fewer and fewer students now being accommodated in multi-bed rooms. Studies show that most students prefer singlebed rooms and want to have easy access to such amenities as a store and a gym. Private projects that include such amenities and feature modern architectural solutions drawing on the culture of co-living have been filling the gap in the market. Developers are now working on investments offering attractions such as rooftop jacuzzis.
GROWING SUPPLY
P
rivate student housing projects offering as many as 10,000 beds could be built across Poland by 2021, which would represent a 150-percent increase upon the existing supply, according to a report published by Savills earlier this year. The company’s analysts argue that although the so-called PBSA (purpose-built student accommodation) sector remains a niche property market segment, it is gaining in significance as investors seek to diversify their portfolios and students’ expectations grow.
In Wojtczak’s opinion, the PBSA sector has bright prospects. By combining the privacy of a single-bed room with the merits of co-living, private dormitories provide their occupants with a unique experience that rental apartments cannot offer. New projects comprising a total of approximately 2,500 beds which are scheduled to be completed this or next year are now under construction in Kraków, Gdańsk, Warsaw and Wrocław. The sector’s major investors include Student Depot, BaseCamp and Golub GetHouse. Student Depot, the biggest owner and operator of private dormitories in Poland, already has some 1,550 beds in Poznań, Lublin, Wrocław and Łódź. The company will open a 500-bed scheme in Warsaw later this year, with a development in Gdańsk
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LOKALE IMMOBILIA | RESIDENTIAL set to be completed in 2020. BaseCamp – active in such locations as Łódź, Wrocław, Katowice, Sopot and Gdańsk – currently has over 600 beds in operating assets, but the number is expected to increase to around 3,600 within the next few years. Golub GetHouse is now (in cooperation with US operator CA Ventures) working on its LivinnX scheme in Kraków (710 beds), which will welcome its first students in October. The developer is already planning a new investment in Warsaw (590 beds). Despite developers’ growing pipelines, in the coming years Poland’s largest cities will face a shortage of available units. According to a recent report by Colliers International and CMS, by 2028 the student accommodation shortfall in Warsaw could amount to almost 8,400 beds.
INCREASING ATTRACTIVENESS
Meanwhile, the sector has increasingly been on the radars of institutional investors. The strong demand for student accommodation, resulting in high occupancy rates at private student houses, means that projects of this kind are seen as attractive investment products. According to Savills data, last year the global transaction volume in the PBSA sector reached USD 17 billion. The average global investment volume for the last five years was three times bigger than the average global investment volume recorded in 20092013. A survey conducted among 68 real estate investors in Central and Eastern Europe, Western Europe and North America, and cited in the Colliers International/ CMS report showed that a third of them are either already active in the PBSA sector in CEE or are planning to enter it. The majority of respondents pointed to Poland as the most attractive PBSA market in the region. The vast majority of the investors surveyed were of the opinion that private student accommodation will grow in importance as an asset class in CEE in the short to medium term. In Poland, the sector is still very young, with investor demand currently outstripping the existing supply. However, the global preferences of investors, who are looking for assets that are more resilient to shortterm economic fluctuations, will support the sector’s growth. Banks – which still have relatively little local experience in financing student accommodation projects – perceive the asset class as rather safe and are increasingly interested in participating in development and investment processes in the sector, experts say. The strong development pipeline means that more deals are to be expected. Indeed, the first bigticket transaction in the sector has already been announced. Last month, Oaktree Capital Management offloaded Student Depot for over €60 million. The buyers are Kajima Student Housing – a subsidiary of Kajima Europe and part of the Japanese developer and investor Kajima Corporation – and Griffin Real Estate Partners. The transaction price is equivalent to half of the value of the entire PBSA sector in Poland.
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Golub GetHouse's LivinnX dormitory in Kraków
E X P E RT I N T E RV I E W
Filling in the gaps Purpose-built student accommodation may be an attractive investment alternative as some of the more traditional real estate sectors grow more competitive. In Poland, the existing PBSA stock is still tiny, but there is room for growth, says Marek Obuchowicz, Partner at Griffin Real Estate, which co-owns the Student Depot dormitory platform INTERVIEW BY ADAM ZDRODOWSKI
WBJ:
What is the reason for the growing investor interest in the purpose-built student accommodation (PBSA) sector? Marek Obuchowicz: The PBSA sector may be an attractive alternative for real estate investors who have until now been primarily focused on more traditional asset classes such as offices or logistics. The office and logistics property markets are becoming increasingly competitive, with a growing pressure on yields. PBSA is still a very young sector which offers relatively attractive yields to those investors who are able to accept the often-underestimated risks associated with entering this market. How fast will the sector grow in Poland? Difficult to say; for the time being, the sector is at a very early stage of its development, with new projects being in short supply. Investor interest is definitely there when it comes to both the acquisition of ready products and participation in the development of student accommodation projects. How big is the existing supply? Today, there are a total of less than 5,000 beds in private dormitories across Poland, which is enough to accommodate less than 0.5 percent of the country’s students. By comparison, in the UK the figure is close to 25 percent. In several key western European cities, the figure is admittedly lower – from 5 percent to 7 percent. Nevertheless, whichever benchmark you look at you will see there is still a lot of room for growth in the Polish PBSA sector. Can students in Poland afford the accommodation offered by private dormitories? Polish society has been getting increasingly affluent over the last decades. Besides, private dormitories are also targeted by the dynamically growing group of foreign students in Poland. Those students are accustomed to higher accommodation standards and the corresponding (slightly) higher fees, although it is worth pointing out that the rooms in Student Depot’s dormitories are often more affordable than those in the neighboring single-room apartments.
How do you compete with rental apartments? From a student’s perspective, the main advantages of private dormitories include security, comfort and a sense of community. All of our buildings are controlled-access properties that conform to the latest safety standards. The room reservation process is very fast and easy, and you can complete it online, also in English, which is particularly useful if you are a foreign student. The units are fully furnished and include a private bathroom and a kitchenette. The common areas, including silent study and coworking areas as well as gyms and chillout zones, allow students to spend time with each other. What are your development plans for the near future? We currently have more than 1,550 beds in our dormitories, with a new project set to be completed in Warsaw’s Mokotów district in September, which will bring the number of beds to around 2,100. We have just launched construction works on a scheme in Gdańsk, which will be located within walking distance of the University of Gdańsk and will offer approximately 400 beds. That development will be ready in September next year. In the coming months, we will probably announce at least two new investments. Do you have set targets when it comes to the number of beds you want to have? We want to continue our gradual growth in the near future – the plan is to add from two to three new projects to our portfolio (which means a total of at least 1,000 beds) every year. We are constantly screening the market and looking for opportunities to acquire sites for new schemes. Which cities are you looking at? We are primarily focused on the largest academic centers across Poland, but we are not ruling out the possibility of investing in interesting locations in medium-sized cities.
“Purpose-built student accommodation is still a very young sector which offers relatively attractive yields”
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YIT's planned Smartti Mokotów project in Warsaw
MILLENNIAL LIVING
Poland’s nascent co-living sector is set to soon see more growth. A number of new projects are now in the pipeline as young people’s living preferences and investors’ appetites change BY ADAM ZDRODOWSKI
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The Medici Living Group's Quartersbranded scheme in Chicago
T
he Medici Living Group, a provider of coliving space in Europe and the US which currently operates around 2,000 rooms, is planning expansion into Poland. The company has recently appointed a new director responsible for the roll-out of its Quarters brand in the country. The operator wants to add at least 7,300 rooms to its portfolio by 2023. “On our journey to become the WeWork of co-living over the coming years, establishing a foothold in Poland is another key step,” said its founder and CEO, Günther Schmidt. He added that co-living is becoming more of a pull for the younger generation of Poles. “We are meeting their demand for flexible and, at the same time, affordable housing in large cities with our Quarters concept,” Schmidt argued. The Medici Living Group and Corestate Capital Holding last year launched a €1 billion European co-living program, with up to 20 percent of the sum to be invested in Poland. The initial focus is on Warsaw and Kraków, with other large Polish cities to be considered later on.
SHARING PHILOSOPHY
Co-living has become increasingly popular globally in recent years, in particular in the US and in the UK. Although individual projects can vary a lot, the idea most often boils down to renting a microapartment in a building that also offers high-quality common areas. Experts sometimes describe coliving as buying a residential service, rather than buying residential space. Clients get access to facilities such as silent rooms, reading rooms and din-
ing rooms, as well as gyms as other recreational spaces. In this sense, co-living projects resemble modern private dormitories, but they are mainly targeted at millennial employees. They are also a bit like hotels in that staff take care of the common areas and you can order cleaning and laundry services. The idea of co-living can be traced back to the broader idea of a shared economy and has much to do with coworking. Indeed, some co-living schemes operating abroad attract people working on joint projects. Some offer membership and access to several coliving locations. Co-living projects are predominantly developed with young people in mind, with those who have just finished their studies and are starting their professional careers, said Maximilian Mendel, head of living investment at JLL. He added that such projects tend to be chosen by people who do not yet The scale of know where and with whom they will live in the investment in future, as well as by those who, due to their limited the so-called financial resources, do not want to make a major ‘living’ sec- financial commitment. tor in Europe The pool of potential clients has been growcould this year increase by ing globally, and Poland is no exception. Co-living even 30 per- schemes allow residents to rationalize accommodation-related costs and be part of a community, cent serving as an antidote to the solitude of today’s digital nomads. “Poland is no different from other European countries in this regard, except that those who would like to live in co-living developments in Poland will need to wait for such products to be built,” Mendel said.
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PRODUCT SHORTAGE
To date, schemes drawing on the co-living philosophy have mostly been developed in Poland in situations when the developer was not able to secure a building permit for a regular residential development in a given location. The entry into the country of experienced co-living space operators such as the Medici Living Group shows that there is a lot of potential in the sector and allows one to hope that the scale and number of investments of this kind will grow quickly in the coming years, Mendel argued. Admittedly, this will require operators’ cooperation with property owners and developers. The creation of the first co-living portfolios should attract more real estate investors interested in residential assets, including those who are now looking for such products in Germany. According to a recent report by JLL, the scale of investment in the socalled “living” sector in Europe – which besides co-living projects also includes rental apartments, student accommodation and senior housing – could this year increase by even 30 percent. In 2018, the European investment volume in the sector amounted to €69 billion, JLL data shows. The UK, Germany and the Netherlands were the most popular destinations for living investments. CEE countries accounted for 16 percent of the invested capital. The authors of the JLL report pointed out that the investment landscape in Europe is changing, with demographic, social and economic drivers impacting investors’ allocations. This is reshaping the potential for such asset classes as co-living.
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Residential is likely to overtake retail as the second largest sector in 2019
Indeed, in the opinion of JLL experts, residential is likely to overtake retail as the second largest (after offices) sector in 2019. However, the shortage of suitable products is now cited by investors across Europe as the main barrier to investing in living. Tomasz Konarski, the CEO in Poland of Finnish developer YIT, was positive about the prospects for the co-living sector in the country, but he admitted that co-living is a relatively new phenomenon in the Polish market and his company is actually a trail-blazer there. YIT last year announced the acquisition of land for a major co-living project in Warsaw. Called Smartti Mokotów, the planned scheme will be located in the Służewiec business area of the city and will comprise nearly 1,000 apartments. Besides housing units, the development will include co-working space, retail and service areas, reading rooms, gyms and a rooftop football pitch. Construction work on the investment is scheduled to begin in the final quarter of this year. In Konarski’s opinion, it is still difficult to forecast exactly how fast Poland’s co-living sector will grow and in which direction it will go. He noted there are currently no schemes operating in the country that would have been planned from the very beginning as co-living projects. “However, the growing popularity of co-living projects abroad and the large client, media and investor interest that Smartti Mokotów has enjoyed since it was announced make us optimistic about the future,” Konarski said. “Poland is ready for co-living,” he argued.
The Medici Living Group's Qartersbranded scheme in Berlin
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AN UNDERVALUED MARKET
Luxury residential property in Warsaw is still relatively cheap compared to many other European capitals. The city offers ample room for future value increases, says Christopher Zeuner, Head of Europe at Amstar, co-owner of the iconic Złota 44 residential tower in downtown Warsaw INTERVIEW BY ADAM ZDRODOWSKI
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WBJ:
What is the definition of luxury in the Polish real estate market? Christopher Zeuner: “Luxury” in Poland has progressed greatly recently and some residential properties that were previously described as luxury should not be so today. Luxury in residential real estate is defined by features such as a prestigious location, the best views, the highest level of privacy and security, and the highest level of customer service. Złota 44 was designed in line with the latest trends and the expectations of buyers looking for luxury living – it features a 1,800 sqm recreational zone (including a terrace with a year-round jacuzzi) accommodating such amenities as a 25-meter swimming pool, saunas, massage rooms, a private cinema and a golf simulator. The area also houses business conference rooms. The building offers
concierge services and is equipped with various modern technologies, including a home management system. What is the price level compared to other capitals in the EU? The Polish market is still undervalued compared to some other European markets. Luxury apartments in Warsaw are not only less expensive than luxury apartments in London and Paris, which one would expect, but also than those in Berlin and Prague. According to Deloitte, the prices in Warsaw are up to 50 percent lower than equivalent luxury residential prices in Prague. It is worth underlining that the Polish economy is still doing very well. Therefore, there is a strong argument – that we also believe in – that Warsaw is relatively undervalued and the scope for future capital increases for true luxury residential prices offers significant upside potential. Speaking of modern technologies – were any green building solutions used in the process of designing and constructing the skyscraper? The growing ecological awareness of buyers is an important trend in the luxury market. Złota 44 responds to the expectations of its current and potential residents – it is the first Polish investment of its kind; the façade was made using Triple Glass Unit technology that prevents heat loss from the inside of the building. Moreover, a special solar control film that adapts to current weather conditions reduces the excessive amount of sunlight entering the rooms – consequently, they do not become too hot. These solutions have directly impacted the reduction of costs and energy consumption by up to 20 percent. Such a façade also guarantees optimal acoustic insulation – city center noise does not disturb the Złota 44 residents. Our customers can also benefit from a unique air filtration system and a dedicated water treatment unit – on the one hand, the apartments are provided with filtered and cleaned air, and on the other hand there is no need to buy traditional plastic bottles with drinking water. As a result, the residents of the building contribute to the reduction of waste. What kind of clients are buying apartments in the building? Our customers are without any doubt extremely exceptional people. They not only acquire luxury properties, cars and other high-end goods, but also demand a unique life experience. They are usually people who have made smart life choices and have used their talent well to achieve success. The vast majority of our customers are young and middle-aged entrepreneurs running their businesses in Poland or who have Polish roots but live abroad. Many of them make multiple purchases due to the relatively low cost of the investment in com-
According to Deloitte, the prices in Warsaw are up to 50 percent lower than equivalent luxury residential prices in Prague
parison to other countries in the EU. They find Złota 44 a perfect and comfortable place to live because of its location, prestigious nature, security and exceptional architecture designed by the renowned Polish-American architect Daniel Libeskind. One of the customers is the famous Polish footballer Robert Lewandowski, who has achieved huge success and become well known not only in Poland but also abroad. There are plenty of other high-profile people residing in Złota 44. Our residents describe Złota 44 as a place where they can find everything they need to fulfill the lifestyle they expect and enjoy. How many of the Złota 44 apartments have been sold to date? Złota 44 offers a wide range of apartments – each in its own, unique size, shape and layout. Currently, just under 30 percent of the building remains available for purchase. What is the fit-out in the apartments? The apartments were created using the finest, natural materials; the floors and the walls in the bathrooms are made of top quality marble, while the kitchens are fully equipped with Gaggenau appliances. The floors are made of high-quality wood. All the apartments on offer in Złota 44 feature a home management system. However, there are a few apartments in the building which the future owners can have fitted out according to their own preferences.
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LOKALE IMMOBILIA | HOSPITALITY Varsovia Apartamenty Jerozolimskie in Warsaw by J.W. Construction
URBAN FOCUS
The Polish apartment hotel/condo hotel sector continues to grow in the biggest cities BY ADAM ZDRODOWSKI
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Arche's project in Piła
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ew apartment hotel and condo hotel projects – which are schemes offering hotel units that can be held by individual owners – continue to spring up across Poland, with developers being increasingly focused on the country’s biggest agglomerations. The development of investments of this kind in major urban centers is a relatively new trend – until recently, they were mainly seen in holiday destinations. This is now changing fast. Indeed, it is in big cities that the supply growth
dynamics is the most impressive. According to a report published in December last year by InwestycjewKurortach.pl, an industry website, between the end of 2016 and the end of 2018, the apartment hotel/condo hotel market in the largest cities grew by over 170 percent. Over those two years, 15 new developers entered the market. In late 2018, 29 new apartment hotel and condo hotel projects comprising a total of almost 6,500 units were under construction or in the pipeline, mainly in Wrocław, Gdańsk, Warsaw and Łódź.
Between the end of 2016 and the end of 2018, the market grew by over 170 percent
According to the InwestycjewKurortach.pl study, the net prices of units in urban apartment hotel and condo hotel schemes range from more than PLN 5,000 per sqm to almost PLN 20,000 per sqm. Developers promise 5-7 percent returns on investment. Buyers view the purchase of a unit in an apartment hotel or a condo hotel as an interesting investment alternative in a situation when some of the more common forms of allocating capital, including shares, bonds and bank deposits, do not bring satisfactory returns.
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Hotel Poloneza in Warsaw by Arche
Demand in big cities tends to be more stable than in holiday resorts in that it is not defined by major seasonal fluctuations. Warsaw and Kraków are mentioned by experts as some of the natural choices for the sector’s investors. The Polish capital is a popular business destination and business travelers often decide on relatively long stays. For its part, Kraków offers an ideal business mix of weekday demand generated by business travelers and weekend demand generated by leisure travelers. Many of the companies build-
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The sector is becoming more and more professionalized
ing this kind of project (some of which are market-leaders listed on the Warsaw Stock Exchange) used to be predominantly focused on the residential sector, with notable examples including Atal, J.W. Construction and Marvipol Development. From those developers’ perspective, entering the apartment hotel/condo hotel market means diversifying their business and thus also business risks. Additionally, some schemes are built on sites where zoning regulations do not allow for pure residential developments.
The sector is becoming more and more professionalized, with developers increasingly contracting experienced operators to manage their projects. Some of the recently announced apartment hotel and condo hotel schemes will operate under international hotel brands. Marvipol, for one, is now working on a development in Warsaw which will be operated under the Royal Tulip brand owned by the Louvre Hotels Group. The company’s investment in Gdańsk has attracted the Staybridge Suites brand of the InterContinental Hotels Group.
E X P E RT O P I N I O N
A year round season There is stable demand for rooms in urban apartment hotel/ condo hotel projects, says Urszula Krukowska, a management board representative at developer Arche
THE CONDO HOTEL MARKET in cities is developing very dynamically (in 2016 there were fewer than 4,000 units in that market, while in 2018 the number already exceeded 10,000). The largest increases were recorded in Warsaw, Gdańsk and Wrocław. Arche built its first condo hotel in Warsaw – Hotel Puławska Residence – in 2011. Very good results have been translating into profits for investors (i.e. the owners of the individual hotel rooms) almost since the opening of the hotel. In the record year 2018, the hotel achieved a 12-percent return on investment (calculated on the basis of the net purchase price of PLN 10,500 per sqm). Buying a hotel room in the condo system is an alternative to buying a rental apartment. From the client’s point of view, however, the former is more profitable. This product is mainly targeted at people who
expect a maintenance-free rental income. The condo model is a combination of the security given to you by the purchase of real estate (the customer has the ownership right) and the profit opportunities offered by the hotel. Arche guarantees that profit, dealing with everything and making sure that the client gets a monthly salary transfer. Our company is distinguished by the fact that our condos are not only located in the largest agglomerations, but also in medium-sized cities such as Częstochowa, Lublin and Piła. Our experience shows that hotels in smaller cities are able to generate profits similar to those generated by hotels in big cities. We are seeing more and more client interest in condo rooms. The best example is the hotel in Gdańsk where all the rooms that we put up for sale in the first phase of the sales process were booked within a few days. Most of our clients are people who come to us because our projects have been recommended to them by other satisfied buyers. Condo investments in cities are different from investments in tourist destinations, mainly due to the fact that seasonality is not very noticeable here. In urban hotels, the season lasts throughout the year, while spring and autumn can be described as high season due to the increased activity in the spring and autumn months of companies that organize conferences. Arche plans to grow further in this sector and introduce new condo investments. Currently, projects in Warsaw, Gdańsk, Żnin and Piła are being implemented. This year, we are also planning to start the construction of schemes in Kraków and Wrocław. A development in Białystok is in the pipeline too.
“In urban hotels, the season lasts throughout the year”
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THE DRIVE TOWARDS DENSITY Warsaw needs more strategic, longer-term development planning, ULI report says BY ADAM ZDRODOWSKI
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arsaw authorities should support density as one of the key drivers of the city’s future growth – this is one of the main conclusions and recommendations of a new Urban Land Institute (ULI) report, which was launched at ULI Poland’s annual conference in May. The organization’s Grow with Warsaw study was based on an eponymous series of workshops organized last year that brought together Warsaw City Hall representatives and real estate investors, and which were moderated by the ULI Poland as the project partner. According to the ULI, dense cities are better at accommodating population growth in a sustainable way, and they offer better amenities and open spaces. Crucially, they host innovation and tend to be more productive and more investment-ready. Meanwhile, Warsaw can currently be categorized as having “bad lower density.” Many of the Polish capital’s strategic areas remain unplanned, with the city urgently in need of a binding spatial plan that would help optimize the ongoing re-urbanization processes. There is room in Warsaw for more urban revitalization schemes, including those located on municipal land. Mixed-use, place-making developments will help enliven parts of the city that have hitherto remained “dormant.” In order to facilitate the delivery of large-scale multi-function investments, zoning plans should be more flexible and allow for changes to the functions of buildings. Warsaw authorities should welcome new building uses such as apartment hotels. Warsaw City Hall could also support density by imposing or amending planning guidance, which should include requirements for affordable housing. In the Polish capital, much of the ongoing urban regeneration is taking place on former industrial land. While planning further revitalization, the city should think about the long-term needs of its economy. Whereas many post-industrial sites may be converted to residential areas, the need to allocate some of them for future new industries should also be taken into account.
COOPERATION NEEDED There is still the need for better cooperation between the municipal authorities and other stakeholders – including private developers and investors – so that a strong foundation for Warsaw’s continued growth is laid. For instance, models of cooperation which would see private investment channeled into public space should be worked out. Funds need to be sourced to finance the development of infrastructure that will enable new, large-scale regeneration projects. Developers need to see more transparency regarding municipal project opportunities and better information flows so that their investment decisions
are well informed and their investment risks are minimized. Warsaw City Hall is advised to come up with local development plans that will support private investment on sites located along the subway and urban rail lines. Investors need to be given data such as public transport flows to be able to assess the viability of schemes in different areas. Last but not least, the city could appoint a coordinator who would act on its behalf as a project manager with easy access to information in the particular Warsaw City Hall departments. More coordination would mean fewer delayed decisions for investors. During last year’s Grow with Warsaw workshops, the dialogue between the city and the investor and developer community brought some tangible results. Five locations were identified where public-private projects with some 550,000 sqm of usable space can be built.
LAND LEADERSHIP
Established in 1936, the ULI is a global nonprofit education and research institute providing “leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.” It has more than 40,000 members, including over 3,000 members in Europe. The Polish national council was created in 2014. The 2019 ULI Poland Annual Conference was held on May 21-22 in Warsaw, with its keynote speakers including architect and urban planner Guy Perry and Financial Times columnist Simon Kuper. On the first day of the conference, and for the first time in Poland, the ULI organized “product councils,” which are high-level, members-only presentations and discussions of specific sectors and topics. Three councils were formed and attended by some 25 members each. They focused on the residential market, place-making and the urban supply chain. These groups will meet at ULI Poland’s future national conferences and, occasionally, whenever there is the need to discuss a “hot” topic or meet a special guest speaker.
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We are delighted to welcome you to a new gastronomic point inspired by our travels to Paris, Berlin, Dubai, Istanbul and New York. Our restaurant offers its guests the most exciting culinary adventure in Warsaw with delicious Mediterranean cuisine pitted against the memorable flavors of Asia. In addition, we also serve the perfect steaks made just how you like them. We cordially invite you to visit our exquisite world of Mediterranean, Italian and Asian tastes. Al. Krakowsa 248, tel. 575 468 685 instagram.com/perarestauracja, facebook.com/perarestauracja
Life + Style BY ALEX WEBBER
PHOTOGRAPH BY KEVIN DEMARIA
A PLACE FULL OF SPIRIT(S) Having recruited some of the top bar maestros in the country, Zoni’s cocktail offer is not to be ignored. Inspired by the core regions of Poland, head barman Tomek has designed a menu that sings with ingenuity. Of the new drinks debuting this summer, consider the Kurpini. An endorsement of the Kashubian district of Kurpie, the drink looks as rich and verdant as the forests of the north. Composed using Żubrowka infused with amber and mixed with Antonówka apple juice, the result is a herbal-tasting drink whose tart sourness is offset by a cunning drop of Pedro Ximenez sherry. But there’s more, as we sip through Tomek’s latest creations we are treated to other loud outbursts of thrilling experimentation: concocted using Kaszubska
Ratafia (a lightly spiced liqueur), cascade hops and pineapple, one drink is introduced as a meeting of Tiki style with the Baltic coast. Another, taking its cue from the cute painted cottages of the village of Zalipie, is a floral affair that feels deliciously dainty. “I want to show the extent of our amazing culture, as well as showcasing the brilliant ingredients we have at our disposal,” says Tomek. “At the same time, I’m not looking to shock people by overthinking drinks – the taste and concept should always be clear and understandable,” he adds. Job done. Zoni Pl. Konesera 1, muzeumpolskiejwodki.pl
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Life+Style dard you need to know how food “works” and that’s when the chemistry comes in. Nonetheless, the culinary theater that surrounds Senses is a big attraction We provide a one-of-a-kind experience, the kind of meal you won’t find anywhere else in the world. There’s many places you can find really good food, but I want to dig deeper and give something of emotional value. Le Chef magazine named you as one of their Top 100 Chefs on the planet – that must be a buzz, right? It’s big, you can’t deny emotions. But generally, the more accolades you receive the higher the chances that you start skipping your duties or thinking that you have golden hands. Your responsibilities grow, as does the pressure to maintain the standards you’ve set. But honestly, to me I’m just following my life principle – whether you have awards to your name or not, you should be striving to better yourself regardless. After all, you won’t get anywhere if you don’t.
OUT OF THE BOX
WBJ catches up with Andrea Camastra, the Michelin-starred chef who’s taken Senses restaurant to heady, new heights INTERVIEW BY ALEX WEBBER
WBJ:
Senses is famous for its creativity: how do you develop a dish? Andrea Camastra: It’s always a very random process with a dish often being born from a certain technique that we’ve invented. If we’ve discovered such a technique then we’ll develop the dish around it, modifying it and perhaps rolling it out as an amuse bouche to gauge the reaction. We create a frame for it and will evolve it on a daily basis until we’re ready to go with it. What people sometimes don’t realize is that once we’re done with the scientific stage then pens and paper are put
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away – what you see is the result of spontaneous experimentation in the kitchen. A lot is made of this experimentation. People expect to ride a Star Trek shuttle when they come into Senses but this is a misconception. Yes, we do place an emphasis on none by note, molecular cooking, but a lot of dishes have a classic application. Sure, we do things to add wow factor and lend a sense of artistry but these tend to act as a wider frame. Honestly, I’m happy to serve conventional food, so long as it’s the best – but to achieve that stan-
What qualities are needed to work in your kitchen? Discipline. I’m not looking for skills because the moment you start in my kitchen you’re learning from scratch. I don’t care if you’ve got experience in two or three star kitchens, in Senses you readapt from the start. It’s about emotion, and you need to share and understand our vision. In terms of that, what is the long-term vision at Senses? It’s not obtaining three stars, because that’s inevitable. The bigger mission is to establish Poland on the international stage, which is why you find us reinterpreting Polish dishes a little like Noma reimagined Danish cuisine. We want people to recognize Poland, and I think that’s definitely possible – I’m ranked as one of the top 100 chefs in the world, so believe me I wouldn’t be here if I didn’t think that could happen. I believe in the mission here, and I expect those who work with me to do so as well. Quickly, how does your cooking reflect your personality? Out of the box and completely unpredictable!
BROUGHT TO YOU BY L'ORÉAL
L'ORÉAL PARIS AND WOMEN CENTER STAGE
GET THE RED CARPET LOOK WITH 8 MAGNIFICENT PRODUCTS FROM THE CANNES 2019 COLLECTION
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he 72nd Cannes Film Festival is live! The biggest stars and their spectacular looks are on the red carpet! The best quality materials and dazzling jewelry worth a real fortune are on show; from glamour to sublime classic and modern elegance. However, the perfect look is not only stylists’ job, but also many hours of make-up artists’ work! The stairs of the Festival Palace in Cannes are the ideal backdrop for breathtaking red carpet looks – impressive dresses, accessories, hairstyles and perfect make-up. Each day of the Film Festival provides a huge dose of fashion and is a source of inspiration. This year’s edition of the event is also a bow towards femininity. L'Oréal Paris, as the official partner of the Festival, encourages women all over the world to find self-confidence and their own definition of femininity, reflecting the idea of “women’s empowerment” through the #kobietywroliglownej campaign. The brand has engaged global ambassadors – wellknown and respected big-screen stars, women of different styles, characters
and ways of living. There was Helen Mirren, who dazzled in a long, metallic dress and subtle jewelry with a short, pastel hairstyle. Andie MacDowell chose a surprising combination – wide, men’s style pants and an asymmetrical top with an extended side. In turn, Grażyna Torbicka went for the timeless look of an extremely feminine, elegant, black dress decorated with precious stones and pleated applications. For the 72nd edition of the festival, L'Oréal Paris has created a special Cannes 2019 collection, containing eight unique products that provide composite face care and a perfect finish. With this collection, every woman can feel like a real star! Skin-nourishing cosmetics include anti-wrinkle firming cream Ekspert Wieku 50+ and smooth moisturizing Hydra Genius Aloe Water with the addition of hyaluronic acid. These products make the skin visibly fresher and full of natural glow. In the make-up category, there is the legendary Volume Million Lashes mascara and Color Riche Satin lipstick in two colors: intense, sexy Red Carpet No. 357 and sweet pink Rose Tendre
No. 303. These cosmetics have been packed in beautiful, red and gold packages that are not only synonymous with luxury but also represent passion and love. The L'Oréal Paris brand also pays attention to healthy, shiny hair! In the Cannes 2019 collection there are three excellent haircare products. Elseve Color-Vive shampoo combined with Elseve Rapid Reviver Total Repair 5 conditioner will ensure instant, intense, energizing and effective protection, at the same time strengthening the hair fibers and refining color. The last product from the Cannes 2019 collection is Excellence Crème No. 9 hair dye. Very light blonde is the choice of the global brand ambassador Grażyna Torbicka. Thanks to the innovative formula, this product has additional strengthening and regenerating functions, which are especially important for hair undergoing chemical treatment. The Cannes 2019 collection, as well as other L'Oréal Paris cosmetics, were created to inspire and encourage all women, because every woman should play the starring role in her life every day.
EVENTS
Warsaw Business Journal relives the most important recent business and industry events
CEEQA 2019 WINNERS ANNOUNCED
Market giants triumphed at the 16th CEEQA Gala, the main annual real estate awards ceremony in the CEE/SEE region that brought together nearly 900 guests from around 50 countries. Panattoni Europe was crowned Overall Company of the Year as well as Industrial Developer of the Year. Skanska took home four awards – as Developer and Construction Company of the Year, as well as in two green building categories. JLL, too, won in four categories, winning the Property Management, Retail Agency and Industrial Agency awards, as well as the prestigious Industry Professional of the Year Award, which went to JLL’s regional managing director Tomasz Trzósło. Meanwhile, CBRE took home the other two Agent of the Year Awards – for Capital Markets and Office Agency. Dentons was once again named best Legal Firm. In other company recognitions, fund manager Globalworth picked up their first ever CEEQA statuette as the sector’s Best Investor, while pbb Deutsche Pfandbriefbank was again named Lender of the Year. This year’s Rising Star was industrial developer 7R. The winning buildings were H.E.S.A.’s Raffles Europejski Warsaw Hotel, which won two accolades, including Building of the Year for CEE, Immobel’s CEDET (also in Warsaw) and Multi’s Forum Gdańsk. The overall Building of the Year for SEE was The Chedi Lustica Bay five-star hotel in Tivat, Montenegro by Orascom Development.
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EVENTS
Warsaw Business Journal relives the most important recent business and industry events
VALKEA TAKES HOME 8 POWER OF CONTENT MARKETING 2019 AWARDS During this year's Power of Content Marketing Awards 2019, Valkea was awarded in eight categories. Valkea received four gold prizes, three silver and one bronze. The statuettes were presented on May 29, 2019 in Warsaw. The jury, comprising experts in the field of marketing communication, honored projects implemented by Valkea in five competition categories: Content marketing – Shopping malls, Fashion and FMCG and in the two most prestigious: B2C Customer Magazine and Magazine for B2B clients. The golden Power of Content Marketing awards went to Levi Strauss Poland, Unibail-Rodamco Polska, the owner of Galeria Mokotów, the Polish Vodka Museum and the Elanders Polska printing house. The Levi's brand received the award for the special edition of Aktivist magazine All is allowed, in the category Content marketing – Fashion, for its contextual matching and storytelling. UnibailRodamco Polska was awarded for the magazine The Look in the category of Content marketing – Shopping malls, for its quality and elegance and conscious building of a premium brand. The Polish Vodka Museum magazine received a golden award in the B2C Customer Magazine category for the distinctive and original character of the publication. The Elanders Polska printing house was awarded for Printing & More in the B2B Magazine category for a beautiful idea and method of implementation.
Kompania Piwowarska, Monnari Trade and Helios SCC were awarded silver awards. Kompania Piwowarska received the award for the Lech project Everything will change slightly in the Content Marketing – FMCG category for creative storytelling. The Monnari brand was awarded for the It’s trendy to be yourself magazine in the category Content marketing – Fashion, for showing the brand against the background of global trends. Helios SCC, the owner of the Silesia shopping center, was awarded for the Silesia magazine in the Content marketing category - Shopping Galleries for its daring and unconventional implementation of inspiring visual content. NEPI Rockcastle, the owner of Bonarka City Center, was awarded the bronze award for the Bonarka magazine in the Content marketing category – Shopping malls for a well thoughtout and consistent form and the promotion of aesthetic solutions. The Power of Content Marketing Awards are organized by the Content Marketing Polska Association and have been running for over ten years. The awards promote high standards in creating Polish content marketing projects by highlighting and promoting the best projects in a variety of categories. For many years, Valkea has been successful in the competition, confirming the agency's effectiveness on the domestic market of marketing communication.
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EVENTS
Warsaw Business Journal relives the most important recent business and industry events
BALTICA EQUESTRIAN TOUR TURNS 10! A small Kashubian village located 70 km from Gdańsk and 20 km from the nearest city hosting Poland’s biggest equestrian show? Yes, it’s possible, and more than that – it’s worked perfectly for five years. Year by year the tour has gotten bigger and better and it has been recognized by the world’s best riders. Professional infrastructure, perfectly prepared arenas, a great atmosphere, international companies, the prize fund – all these advantages make Ciekocinko one of the best equestrian locations in Europe. Baltica Spring Tour 2019 was the 10th edition of this amazing event. Once again, for three weeks, Ciekocinko became the biggest and most professional equestrian center in Central Europe. Over 300 riders representing 26 countries from all across the globe, 1,000 horses and hundreds of visitors descended on the small Polish village. After the competition, riders and guests could participate in many additional activities such as a Jump and Drive competition sponsored by British Automotive Gdańsk, and a Dorota Miśkiewicz concert to top off the event. Ciekocinko Stables is an integral part of the Palace Ciekocinko Hotel Resort & Wellness
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complex. Both investments – the revitalization and reconstruction of the palace and the park and the establishment of the sports center within Ciekocinko Stud Farm – were carried out in parallel, so that in the end one could complement the other. This goal has been achieved. Returning the palace to its former glory while preserving the spirit of the place – where you can still hear a whisper of history – has been offset by the tap of hooves on pavement, the turmoil of a busy day in the stable and dynamic horse silhouettes among the greenery of the pastures. And last but not least, there is a hefty dose of pure sporting emotion and adrenaline during the many international horse jumping shows regularly held at Ciekocinko Stables. The organizers believe that they are creating a new quality of equestrian events in Poland. They are convinced that this wonderful discipline deserves a unique setting and it is worth all the hard work and organizational effort. They hope that by initiating changes, making the effort to promote horse riding and showing the sport in a positive light, they will find many partners and followers. It is their dream to make horse riding accessible to a broader audience and show its beauty and dynamics, as they believe the sport is encoded in their DNA and is a part of our national genotype.
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