Flexible friends

The 18th Annual Construction and Property Conference, which preceded the Eurobuild Awards gala on December 6th, was focused on summarising the most important events on the property market as a whole. Every year we take a look at each of the sectors: from the construction industry, through the residential, office, retail and warehouse sectors, to investment. Last year was not an easy one. When announcing the conference we wrote: "The construction and real estate market is going through a testing time. Nothing is certain, and the usual measures are proving to be ineffective." Indeed. The word that was most often used by the conference participants was flexibility: flexibility in negotiations with clients and banks as being the key to success in difficult times.
How do things now appear on the individual markets? The construction sector is going through something of a traumatic period. Around 200 companies went bankrupt in the first three quarters of 2012 - 70 pct more than a year earlier. The problems of the sector were discussed by Tadeusz Jachowicz of Gleeds Polska and Konrad Jaskóła, the former president of Polimex-Mostostal. Tadeusz Jachowicz defended the free market, stressing that there has been no crash in the private contracts sector. Konrad Jaskóła, however, criticised the public procurement system, which in his opinion has led to a price war. In his view, contracts from the energy sector are the great white hope for construction companies. He emphasised the need for changing the law on public contracts so that the price is no longer the most important factor.

On the retail market things are looking much more rosy. However, this does not mean that there are no new challenges that need to be faced. Experts are increasingly pointing to the growing popularity of on-line shopping. Will shopping centres still be needed in the future? Will customers disappear into the virtual reality zone altogether? The issue was discussed with representatives of development companies. And their conclusions? So far, traditional shopping centres are not in any danger, but developers have noted the changes and are monitoring them closely.

Warehouse developers, on the other hand, are definitely in a good mood. Robert Dobrzycki, the managing partner for the CEE region of Panattoni Europe, squared up against Maciej Madejak, the head of development at Goodman Poland - two huge companies and two different development philosophies. Maciej Madejak insisted that it was still worth developing speculative projects in certain regions, while Robert Dobrzycki maintained that it was better to avoid such schemes. Only time will tell which is the better of the two different strategies.

What might be a good project in a time of crisis? It turns out that it could be the purchase of a suite in a condo hotel. But, but... clients are still very cautious and not every developer will succeed with this approach. "The most important thing here is trust, transparency and reliability," argued Janusz Mitulski, a partner at Horwath HTL, who moderated the panel.

Next, the focus shifted to the residential market. Here, just as in the construction industry, the mood fell somewhat short of ecstatic. Falling prices, troubles with financing and oversupply are the main problems besetting the housing sector, as developers have been reminding us for many months. Jacek Bielecki of the Polish Association of Developers (PZFD), who moderated the residential section, even claimed that some developers were sleepwalking into the abyss. But Andrzej Słomka, the general director of Marvipol, offered some calming words: "It will not be easy, but those who show flexibility and respect towards the client should not have any major problems," he said. Some of the secrets of the office market were revealed by Daniel Bienias of CBRE, Jolanta Nowakowska-Zimoch of the Hogan Lovells law office and Bartłomiej Łepkowski of Knight Frank, in three presentations of ten minutes each.

The last sector to be discussed was the investment market. In a slightly provocative way we juxtaposed two worlds - that of the optimist and the pessimist. Tomasz Puch of Jones Lang LaSalle took on the role of the optimist, while the glass-half-full vision of the world was provided by Philippe Mer of BNP Paribas Real Estate with a presentation that caused a degree of commotion in the room. Interestingly, he admitted at the end that he did not agree with the pessimistic version, as he is an optimist himself and was only gloom-mongering for the sake of the discussion. This more cheery view was confirmed by the participants of the investment panel, according to whom Poland is still an attractive market and is going to stay that way. Let's hold onto that thought for now. RG