To sell a lifestyle

Złota (formerly Złota 44) and Cosmopolitan are the two latest skyscrapers in Warsaw built on the twin dreams of a never-ending demand for apartments and a perpetual rise in their prices. The ideas germinated in developers’ heads long before the calamity of the credit crunch. Although they are still under construction, their history goes back many years – starting with the first plans, to the architectural competitions and the construction launches – and in both cases the genesis of the projects go back to the now dimly-remembered boom years. Construction work on Złota (on ul. Złota) started before the crisis broke in 2008. Building work on the Cosmopolitan tower block at ul. Twarda 2/4 – only a few hundred metres away from Złota – started in 2010. Finishing work is currently in progress inside both buildings. Now the sales processes have begun and the respective remarketing machines launched.

Because the inside is what counts
Both developers emphasise that their projects are unique. Both skyscrapers have been designed by stars of the architectural firmament. Złota is the creation of Daniel Libeskind, while the design for Cosmopolitan took shape on the drawing boards of Helmut Jahn’s architectural studio. Both designers are in the premier league of global architecture – but does this actually matter for potential clients? There is no clear-cut answer to this. When it was preparing the project, Orco promoted the skyscraper as a new icon of Warsaw, while the architect himself often appeared in the media, describing the project as one that “reflects Warsaw’s aspirations. A unique building formed out of Warsaw’s history and its prospects”. With both projects now nearing completion, the role of the designers has shifted into the background. Even though “the involvement of a star architect is of extraordinary importance,” according to Michał Borowski, the president of Tacit Development, the developer of the Cosmopolitan project, “this is not just about a famous name. You need to remember that the architectural studios of such world-renowned architects are dynamic companies. They have immense experience and employ the best specialists. Their designs are refined in every detail. When we chose Helmut Jahn, we chose a guarantee of quality,” says Michał Borowski. According to Nicolas Tommasini, the COO and board member of Orco Property Group: “In the case of Złota, the name of the architect was important. We knew we were creating this new luxury downtown residential segment in Warsaw, so we needed the architect to embody the difference and the uniqueness of the project. Daniel Libeskind’s project is a unique. Thanks to the shape of the building, people living here will not have the impression of living in a box. Its curved, dancing elevation, the irregularly arranged windows – all of this makes the building in a way a fantastic work of art.”
Despite these declarations, the developers at this stage are trying to win over potential buyers by selling the look of the interiors. “After all, we are not selling the external architecture. People don’t buy buildings for their shapes, no matter how aesthetic they might be. What they are buying is a different quality of life, which includes the internal architecture, the views, the practical comfort and the services. Our marketing strategy is based on presenting those internal features through our show apartments. At the moment the most important thing is for potential buyers to be able to touch, feel and see the interiors, and feel the quality of service” says Nicolas Tommasini.
As for the Cosmopolitan building, according to Michał Borowski of Tacit Development: “The skyscraper has certain unique characteristics that distinguish it from other projects. First of all it entices you with the views from the windows, which ultimately create the atmosphere of the interior itself. This is why the residential section of Cosmopolitan starts at the eighth floor. The point is for everyone to be able to sense the unique atmosphere of apartments located in skyscrapers.”

No flinging around of money
However, let’s not expect there to be advertisements or information about the Warsaw skyscrapers everywhere we look. “The marketing of the most prestigious buildings must obviously differ from mass-market projects. Our activities are more subtle. But when we look at the luxury project category and compare Cosmopolitan to, for instance, the Opera apartment building [a small Dom Development project near Saski Park in the city centre – editorial note], we can see a huge difference. For small projects only a dozen or so flats are being marketed at the most. In the case of a skyscraper there can be around 250 apartments. So the scale is completely different,” explains Michał Borowski.
But this larger scale does not mean that developers will be flinging their money around. On the contrary, they insist that huge marketing expenses are not feasible. “Generally speaking, our marketing strategy is not based on standard advertising campaigns,” explains Nicolas Tommasini, “although we cannot rule out such an approach in the future.” How big is the marketing budget? Orco is unwilling disclose such information, yet the company underlines that its marketing activities are centred on the 50th floor marketing suite and the show apartments. The costs of finishing and arranging them might be counted in millions of euros, however these can be recovered at a later stage, unlike advertising,” Mr Tommasini points out. In the case of the Cosmopolitan building the marketing costs are also apparently under control. “In our case we are offering the apartments at very attractive prices – they are now fully finished and furnished and ready to move into. But there is no possibility of lowering the prices. That is why it is extremely important to keep the marketing budget in check,” says Michał Borowski. He goes on to add that in Cosmopolitan’s case the marketing budget amounts to around 3 pct of the investment. “I am not sure that if it was as much as 13 pct, the sales results would be considerably better,” he remarks.

Reaching the chosen ones
How big could the potential pool of buyers be? “We have around 200 apartments, the majority of which are unique in terms of their layout. In our opinion, the target group is around 4,000 people. This means that only 6 pct of this group will be able to live or invest in Złota,” says Nicolas Tommasini. “People who can afford to buy an apartment in Złota are the same people who can afford a car for EUR 100,000. Buying an apartment for more than a million euro is not an issue for them. Enough people exist with the sufficient purchasing power. The relevant question is rather: can the lifestyle and product offered by Złota convince them to buy?” says Nicolas Tommasini. Meanwhile, Michał Borowski believes that Cosmopolitan’s target group numbers around 7,000–10,000 people. “This is a very specific clientele who do not make a public display of their affluence. These people do not buy things on impulse. They know the market and they know very well what they want,” he says. Developers often try to avoid agents. “It is crucial for us to be the masters of our own destiny. We want to make sure that our clients are provided with services of the highest possible quality. It’s a bit like with Louis Vuitton showrooms – you can’t buy this brand’s products outside their own shops. Our sales team is experienced in selling luxury products and services. I think this is more important than experience in real estate, for example,” believes Nicolas Tommasini.
So how can this select specific group of buyers be reached? The president of Tacit let us in on his secret weapon. “Our website is a great help. So far it has been visited by around 40,000 people. Some have registered and thanks to that we have direct access to people interested in our offer. We are also carrying out an analysis of private companies. In this way we can reach their owners. This is potentially a very attractive group of buyers. A highly significant element of the entire sales process involves inviting potential buyers to visit our show apartments. The quality of the apartments speaks for itself,” believes Michał Borowski.

Two or three years
Since the marketing budgets are being kept in check, combined with the developers’ unwillingness to reduce prices, the market is watching the sales of these projects with some interest. The developers themselves claim that by around the end of 2015 or early 2016 both towers will be fully inhabited. “Let’s not kid ourselves. The speed of selling such apartments in Poland is certainly not as high as in New York. However, we expect that the sales of apartments in Cosmopolitan will take around two or three years,’ says Michał Borowski. Orco’s representative also speaks in a similar terms: “We expect the sale of all the units to take around 24 months. We cannot sell such apartments in a few days or even a few months, especially since they are unique. So we cannot have a sales strategy based on discounting. Wealthy clients care more about quality, or quality for money. The most important thing is to convince buyers to try this new downtown, all-in lifestyle. This is not easy, because there has been no such offer in Poland so far,” says Nicolas Tommasini.
Will this optimism prove to be well-founded? Only time will tell. There is also the question of whether the possible success of apartments in this class will lead to similar projects being developed in the near future. Michał Borowski himself has some doubts. “I think that we will not have another residential tower like Cosmopolitan or Złota in my lifetime. These are unique projects that will be very difficult to repeat.