Luck on their side
Investment & finance
Do these plans also include a skyscraper on ul. Grzybowska in Warsaw?
Yes, they do. We have a building permit for our flagship project – a 167m skyscraper – but it is not yet legally binding due to objections. We believe that we will manage to make the document final by the end of the year and will be able to start the construction work at the beginning of next year, investing over PLN 300 mln in the project. We are currently negotiating with a number of contractors and companies specialising in façades – a façade always requires a lot of money.
Who objects to the building?
These are the neighbours from nearby buildings who are protesting in spite of the fact that the project for the complex, which includes the Hilton hotel and Platinum Towers, also envisaged the construction of the fourth tower in its initial plan of 2007. So it is not the case that they are against the project... they simply want money. Besides, this is the same across the city – the people mounting objections mostly want money. The city’s approach also does not make it easy for us to develop the project. On the one hand the city has issued us with a permit, but on the other it would like an additional 12.5 pct due to changes to the perpetual usufruct for the land under the planned building. We are receiving signals that other developers holding perpetual usufruct rights to land are also being confronted with such expectations from the city council. This is being justified by the increasing the value of the land in connection with the change in purpose, e.g. from industrial to residential. However, it is worth remembering that higher fees translate into apartment prices and rents, which are ultimately paid by the developers’ clients.
And what does Atlas Estates actually want to build on ul. Grzybowska, will they be apartments?
Yes, but this will be a new product on the market. Two luxury apartment towers are already being commercialised in the city and we do not really want to fight against their developers for clients. They offer large and very expensive apartments for affluent buyers. We will go in a different direction. We are planning to offer the possibility of buying small and very small apartments, as little as 30 sqm. However, our project does not exclude large and very large apartments – with areas of a few hundred metres. Our building will be very flexible in this respect. We are putting a great deal of emphasis on the option of joining and dividing the apartments to make them very functional. We can change the number and area of apartments in the building as well as the number of parking spaces in the underground car park – this is built into the design, which was prepared by the APAKA Kuryłowicz & Associates architectural studio, and envisages app. 500 apartments. Furthermore, all will have fully glazed external walls. The aim is also to offer the apartments at moderate prices – app. 40 pct cheaper than other skyscraper projects in Warsaw. Let’s say that the cheapest apartments will be sold at app. PLN 12,000 per sqm. So an apartment with an area of app. 33 sqm in our tower will cost half a million złoty. This is a price level unattainable in other high standard towers. The building will also be divided into two sections: there will be two separate entrances and front desks. One will be for the section up to the 20th–22nd floor and the other will be for the upper, more exclusive floors. Each section will also have separate lifts. This will make it possible for us to target buyers earning medium and higher salaries as well as more affluent clients. The standard of finishing will be high in both sections, but the more expensive part will feature additional amenities.
There is some talk about Atlas Estates’ plans for the revitalisation of another Warsaw skyscraper – Millenium Plaza. When is this likely to happen?
In the last few years we have managed to change the market’s perception of Millenium. The building now includes the head offices of such interesting and recognisable institutions as Golden Floor, one of the largest conference centres in Warsaw, as well as well-known companies such as Groupon and Dell. We have also invested a few million euros in the renovation of the air-conditioning and fire protection systems in the last two years. A new entrance to the office section of the building will also be designed and built...
And what about the façade?
I know that a lot of people do not like it, but we are not planning to change it in the next few years. Mainly because of the cost – it would require an outlay of many, many millions of euro.
One of the anchor tenants has recently left the tower. How much of the building’s area is currently leased?
A large tenant left the building two years ago, leaving a vacant area of 10,000 sqm. We had app. 60-pct of the area leased at the time. Now we have 75 pct leased in the entire building. The retail area is almost 80 pct occupied. An entire floor in this section will be occupied by a McFit fitness club, which is currently fitting out its area in the building. Meanwhile, the 27th floor includes two very large terraces – of 400 sqm and 600 sqm. Bar 27 is to open there in the summer, offering a panorama of the entire city. No other building in Warsaw features something like that. Added to that, many tenants have extended their areas, including the Mexican Embassy, which occupies an entire floor. It is our aim to increase the area leased to 90–95 pct.
This could be difficult, considering the state of the Warsaw office market...
In my view, all the new buildings currently being developed in Warsaw do not represent competition for us. Their developers demand EUR 14, 15, 16, 17 per sqm per sqm. I can offer rent of around EUR 10 or even EUR 8 per sqm. So this is a very attractive proposal for someone who does not want to pay over the odds for renting an office and wants to be close to the city centre at the same time.
So there is no point expecting more commercial projects to be carried out by Atlas Estates?
As I mentioned before, we are planning to focus on residential projects in Warsaw and finish app. 350 apartments per year. So we are looking for land for new projects. So far we have usually invested close to the city centre: in Wola, Mokotów and Żoliborz districts. We still want to build close to the centre, but we have not ruled out moving into the popular segment. We are considering the purchase of a plot in Warsaw’s Tarchomin district, where we could offer apartments at app. PLN 6,500 per sqm. However, the price of land in Warsaw has gone up, in some cases even by several dozen per cent. So we are going to choose carefully what we buy.
I have not ruled out office projects. However, this is not a good time for such investment. Perhaps in a few years the time will come to invest in land suitable for an office building... I also have extensive personal experience in the construction of shopping centres, so it is also not impossible for the company to take on such a project at some point. And not necessarily in Warsaw. We will have to see. Apart from making precise estimates, luck is very important in business – you need to have some luck on your side.
