Taking the plunge

Small talk
The shake-up of the real estate market post-Covid has led some developers to shift their focus. One of of these is Develia, which is turning to the residential and PRS markets. We spoke to Tomasz Wróbel, a member of the management board, on what the company is planning to sell and where it’s now casting its eye.

In your recently published five-year strategy, Develia announced that it was pulling out of the commercial market to concentrate on residential development and that as a result that you are preparing to sell off the family jewels. What assets are up for sale?

Tomasz Wróbel, management board member of Develia Group, president of the board of Sky Tower and Arkady Wrocławskie: The most important is definitely Sky Tower – an iconic building in Wrocław. For the last two years we’ve been working to ensure that the complex is not seen just as a shopping gallery with apartments, but as a placemaking project, where people can meet – and we’ve been very successful in this. To ensure the building is better suited the situation on the market, we’ve converted some of the retail space into offices, which has leased very well. As a result our tower has lost none of its attraction. We’re also looking for buyers for our Wola Retro office building in Warsaw and for a large development plot in Malin outside Wrocław. The spatial plan for the 160 ha site is currently being changed so that it can be used for logistics. This is the largest site of its type in the Wrocław region and it also has a superb location to the north of the city next to the S5 expressway.

And what about Arkady Wrocławskie? Surely this is not the best time to be selling off retail assets?

Well, that is true. That’s why we’re keeping a close eye on the market and still considering what decision to take in this case. This centre has very good footfall, is in an excellent location and the people of Wrocław have certainly come to appreciate it. However, it’s clear that the pandemic has changed our shopping habits and significantly sped up the development of e-commerce.

According to your strategy you are targeting 3,100 apartment sales in 2025. Isn’t that a bit too ambitious?

I believe that this is perfectly achievable if we concentrate all our efforts on the residential sector. We aim to achieve such sales by offering our products to both individual customers and to PRS funds. We will also offer institutional investors leasing management and building maintenance. We are an experienced developer with extensive know-how and a professional team.

Which markets is the ‘New Develia’ planning to operate in? Are you aiming at geographical expansion?

For the time being we are concentrating on those cities where we are already present: Warsaw. Wrocław, the TriCity and Kraków. In these markets, we are pursuing an ambitious purchasing programme on the residential market and preparing to expand our landbank for PRS projects. We need to free up capital from our commercial projects to rapidly expand our investment in apartments and PRS.

Why do you feel so optimistic about PRS in Poland?

In a nutshell, the ‘sharing generation’ has grown up. The young people now coming onto the market as consumers or users do not feel the need to possess things, as did those who grew up under communism. For us what was important was ownership, which was something that had been denied us until the political transformation in 1989. For the younger generation, the prospect of owning your own apartment is not so attractive. The ability to move around freely is more important (for example, to find work). That’s why younger people are more willing to accept renting smaller apartments. Besides, the pandemic has changed everything in other real estate market segments. Warehousing projects have become far more popular, such as those designed for e-commerce, but there are also more self-storage centres – small warehousing projects for storing personal effects and furniture. Thanks to these, people don’t have to cart around loads of baggage when moving to another rental apartment. Offices are changing too. They are becoming places to meet and exchange ideas. The concept of flexibility has led to something of a shake-up, with short term leases now included in the price as well as the possibility of increasing and decreasing the size of the area leased.

Finally, a personal question: how has the pandemic affected your holiday plans?

Unfortunately, it has messed them up quite a bit. I’m passionate about cave diving, but due to the lockdown I had to put off a trip to Mexico. Luckily, I now know that I’ll be able to go cave diving once again this summer. The amazing peace and quiet that envelops you under water not only allows me to relax completely, but also enables me to think about my priorities in life.

Interview: Tomasz Cudowski