Bring in the new

Lipowy Business Park, the second project in Poland of Hochtief Project Development Polska, will cost EUR 60 mln. The company is also looking at the residential sector, not only in Warsaw

Ewa Andrzejewska, \'Eurobuild Poland\': "To all intents and purposes, work on your company\'s flagship project - the Rondo 1 office building in Warsaw - has ended. Have the first tenants moved in?"
Piotr Olbryś, managing director of Hochtief Project Development Polska: "Caylon bank opened its office on the 24th floor in the first week of February. Our largest tenant, Ernst & Young, also moved in last month, while Baker & McKenzie, the legal firm, is also coming. Eurohypo bank is another to open an office in Rondo 1 (250 sqm-edt.), one of the most recent transactions to have been finalized. The building already boasts almost a 50 pct occupancy, with further tenancy contracts being negotiated, several for very many square metres of office space. I am confident of having a 70 to 75 pct occupancy rate by the end of the year."

If that is the case, there will be no shortage of investors wanting to have Rondo 1 in their portfolio.
"We have already sold the building at a very good price, but the fact is that it is the subject of continuing interest on the investment market. I have heard that talks are under way to transfer ownership yet again."

Now that Rondo 1 is completed, does Hochtief intend to start work on the investment on ul. Żwirki i Wigury, opposite the Marina Mokotów estate?
"Indeed, there was some talk about this project in 2004, when we purchased the plot from the Central Petroleum Laboratory (CLN). Last year we were granted a permit to build a business complex which we have called Lipowy Business Park. We have also been working on a design for the reconstruction of ul. Żwirki i Wigury and for the connecting media. But we also have to bear in mind that, under the terms of the contract with CLN, they have the usufruct rights to the land until September, when they are moving to the Praga district."

So when will construction commence?
"I think we shall start work on at least one building in the first half of this year. Lipowy Business Park is to consist of four buildings, each of around 11,000 sqm rentable space.

How much is the whole project going to cost?
"About EUR 60 million."

In your opinion, where should offices be built in Warsaw?
"In good locations easily accessible to employees and business partners. Tenants tend to prefer the left side of the Vistula river, however I think companies will also soon become interested in the eastern part of Warsaw, with considerable opportunities already opening up for the development of quality office projects. However, the public transport problem must firstly be resolved for that to come about, specifically several more bridges have to be built as well as the planned underground. The city authorities really should stimulate the growth of east Warsaw. Żoliborz, Bielany and Wola are also future locations. Much attention continues to be focused on connections with Warsaw airport, which is why the centre of the Warsaw office market is presently in the south of the city, but this gives rise to enormous transport headaches, significantly diminishing the attraction of properties in those districts."

A number of developers who have previously worked on commercial and shopping projects are now entering the housing market. Is Hochtief Project Development following suit?
"Yes, we are also looking at extending our operations into housing projects."

The residential market is so starved that it can consume anything and everything, so when can we expect your first housing project?
"For the moment this is classified information. We are studying several Warsaw localities, but entering the housing market is not so easy."

Which \'housing\' localities are of interest to you?
"There are not very many really good plots in Warsaw, which means that developers are fighting for them to a degree often beyond the limit of profitability. Let me stress that we are not interested in \'squeezed\' projects, that is, those where a maximum number of flats are built on a small site, so as to offset the mind-boggling price of the land. We will have nothing to do with such poor quality. Our entry on the housing market could result in an expansion of the company and even the creation of another one."

Does that mean you are thinking of developing homes not only in Warsaw?
"We are observing, assessing and negotiating the purchase of land in Gdańsk and Kraków. But good locations are complex locations. What we are interested in are sites in city centres, although clear-cut residential projects are never built in such places - usually they contain a shopping and services section as well."

Is Hochtief Project Development looking at commercial projects outside Warsaw?
"Of course we are! We still have not purchased a site, but are in the course of discussions. We are studying such locations as Gdańsk, Kraków, Wrocław and Poznań, well aware that opportunities to do good business exist there. And we also know just what the market requires.

Which of the cities that you mentioned seems the most interesting?
"Kraków and Wrocław, though there were many who would have put their money on Poznań not so long ago. The existing industrial set up clearly increases the attractiveness of local markets, as do hotel facilities - if of a decent standard, as in Kraków and Wrocław. Transport, including by air, is also a major factor.

It is an indisputable fact that many developers are interested in Wrocław and some are already investing there. Are you not afraid that when you buy a plot and start investing, you will find it difficult to survive on the market, if it start becoming saturated with office space?
"Competition can only provide us with even greater motivation. It is my opinion that competition between projects produces much greater benefits than drawbacks. We feel much better working in a mature market, than in blazing trails on our own. Operating in a virgin market has its negative side though, e.g. it is not well perceived by investors.

When could the first project outside Warsaw take off?
"Before the end of this year, I hope."