Quality over quantity

Marcin Gomoła, CEO, Polnord: Whenever you’re about to join a company that’s in the kind of situation Polnord was in, it’s clear that there are going to be many challenges ahead of you. High administrative costs, some not very profitable and even unprofitable projects... these were just some of the challenges that were waiting for me.

What were your first few decisions?

It was necessary to reorganise and optimise the company’s operations, and this required changes in competence. We started introducing organisational changes and developing a new company strategy – and now we are well on the road to doing this.

But you could let us in on what it might be... ?

Well, I can say this: in recent years Polnord has not been among the leaders in terms of the number of apartments built. We want to focus primarily on the quality of the apartments and on the margins they generate. Furthermore, we intend to focus on residential projects in the ‘eco-premium’ segment.

What are the defining features of this segment?

In a nutshell: these are high-margin projects built in harmony with nature. We will use only environmentally-friendly technology and materials. The homes are to be passive or semi-passive and equipped with smart systems, while heat pumps and solar panels will be an important source of energy. The plots will be in the best locations, and we will develop them in a responsible manner sensitive to the local natural environment, for example, by avoiding the felling of any trees near the buildings being constructed. Other ideas we have come up include ‘gardens instead of chimneys’ – which involves creating roof gardens for the residents so that they can lie back in green surroundings with beautiful views.

But so far your projects have actually been in the mid-range segment. What has prompted this change of tack?

The fact that our society is becoming increasingly affluent means that the demand is growing in the premium segment and so satisfying this is a profitable course to take. We want to be increasingly involved in it. And in anticipation of your next question: this doesn’t mean that we are pulling out of the mid-range segment – we’ll still be active in it. In the current market, the race to develop the largest number of completed apartments no longer makes any sense: financial results and margins are more important. For this reason, we intend to develop primarily in Warsaw and the TriCity, since these cities can give us the profits we are seeking.

Which of your new projects could be classified as high-margin?

For example, the Haffner complex in Sopot, which will comprise a hotel as well as a residential and service section. We are expecting to be issued with the building permit this year. The project is to be constructed on a plot of almost 3 ha in the Dolny Sopot area, 150m from the beach. One of its features will be a return to its pre-war environment with the replanting and re-creation of an avenue of lime trees.

What are you planning to do in Warsaw? Polnord is not one of the city council’s favourite developers...

We have a history of court cases against each other – this happens in business. But there is a new city council in Warsaw, which may mean a new chapter in our relations. I fully expect this to be the case and we have already received signals that lead us to believe we will be able to sit down together and find ways forward that are satisfactory for both sides. Our future in the capital city lies with Miasteczko Wilanów II, which is the part of that district on the other side of the future motorway, where we have a total of 16 ha of land. After the completion of the motorway and the South Bridge, it will be one of the hottest locations in Warsaw – with excellent access to the metro line and to the airport, and as a convenient exit point from the city in a number of directions.

Are you planning to add more to your land bank?

We are looking for opportunities to do so, but we are also very picky. We’re not interested in ‘difficult’ plots or those in inferior locations. But at the moment we’re in quite a comfortable situation – our land bank currently amounts to 1.2 mln sqm. This will keep us going for many years to come.

The news that you are interested in the German market comes as something of a surprise in this context. What is it that has drawn your eye in that direction?

It’s a very profitable market – extremely demanding, but it generates high margins. We are currently analysing the various ways we could make our presence known on the German market. Nothing concrete has been decided so far, but our intentions are serious – Polnord is already a member of the Polish-German Chamber of Industry and Commerce.

And you are planning all this in a situation when other Polish developers are pulling out of Germany?

I worked on that market for ten years and I know it’s worth being there. I also know how to operate there and succeed.