Upbeat and in-person
Events
As it turned out, people still had to the lockdown out of their systems and the desire to meet face-to-face once again had clearly not been satisfied. As a result, the year’s largest Eurobuild conference, where the main trends on each real estate sector over the last twelve month are discussed, pulled in over 150 attendees, each of them keen to hear the insights of the experts and meet up with some old faces they hadn’t seen for a long time. The conference began with a concise presentation talk by Marek Zuber, an economist and financial market analyst, to provide us with a picture of the state of the Polish economy and real estate sector in 2021. He also covered the main factors that are set to shape the economic situation into the near future. One of his main themes was the inflation rate, with the figures for November coming in at the highest they had been for 20 years. “I’ve found myself being asked a lot lately – mainly by young people – what exactly is this “inflation” thing? Older people know very well what it is from the former communist times, but it hasn’t been a significant problem for the last two decades in Poland,” related the economist, who went on to tell us that he didn’t believe the rise in inflation would stop at the November figure of 6.8 pct.
After the presentation, Mateusz Skubiszewski of BNP Paribas Real Estate Poland took to the stage to moderate the first panel, which happened to be on the investment market. “Just as 2020 was a time of waiting for capital investors, 2021 turned out to be a time of adjusting to new circumstances and assessing risk,” pointed out panellist Piotr Trzciński of Savills IM. “However, new factors have emerged in Poland that are hindering the market. For example, investors are frequently asking about the migration crisis on Poland’s eastern border, anxious that it could lead to the closure of the border, thus cutting off the transport corridor to China. That would again disrupt supply chains, but still, foreign capital is being invested in Poland and is unlikely to dry up during 2022. Money is most likely to flow into the warehouse and living sectors,” he predicted.
The pandemic has had a slight effect on the PRS sector, which was the topic of the next panel, led by Kamil Kowa of Savills. “The coronavirus temporarily disrupted the student housing market, but it stabilised quickly. At the worst moment, the occupancy of our student residences fell to 60–70 pct, but there was no such turbulence in the rental apartment market,” explained Maria Dąbrowska of Zeitgeist. The panellists all agreed that the living sector in Poland is going to develop rapidly over the next few years and attract a lot of investment.
After the break, everyone listened with interest to a presentation on the Polski Ład (Polish Deal) economic reforms, which was provided by Sylwia Toczyska and Daniel Banach of tax advisory Alto. One of the most important changes that will be coming into force on January 1st is that it will no longer be possible for real estate companies to write off all of their depreciation costs against tax and the ceiling will be the value of those costs written off under accountancy rules and the current regulations for any given financial year. It will also not be possible for depreciation costs for apartments to be written off against tax – and this includes properties purchased before 2022.
After the presentation, for the first-ever time at the Eurobuild annual convention a panel entitled ‘Breaking News’ was held. This section of the conference, which was moderated by Kinga Barchoń of PwC, was devoted to the most important up-and-coming trend of the last year: ESG. “We’ve been seeing growing awareness of this issue for the past two or three years and it’s beginning to have an effect on, for example, the talks we are having with investors. They are no longer just interested in whether a building was developed in an environmentally- sustainable way – they are also starting to ask detailed questions about whether the company that built it follows such principles at the corporate level,” revealed Adam Targowski of the office section of Skanska.
After this, it was the turn of a panel entitled ‘Back from a Long Journey’, led by Joanna Blumert of Cushman & Wakefield. The panellists agreed that hybrid work, a system that took shape during the pandemic, is definitely going to remain with us into the longer term, so office space should be adapted to accommodate this and the safety of office users needs to be ensured. Only then will tenants start returning. “Trying to force them to come back is counter-productive. What you have to do is create the right conditions and then wait,” advised Maciej K. Król of GTC. “This is exactly what has been happening with shopping centres, which have recently reopened. However, customers get stressed out when they have to return when they don’t want to. And it’s the same when it comes to offices,” he argued.
The retail market is also making up for its lockdown losses. After lunch, Magdalena Frątczak of CBRE moderated a discussion in which the panellists were all noticeably upbeat. “What I’m really pleased about is that the cinemas have all bounced back. Just look at what happened during the première of the last James Bond movie – the theatres were packed out,” enthused Marek Noetzel of Rockcastle Poland, who then added: “Also, fashion and sports brands used the most difficult period to prepare for their re-openings – they’ve improved their product ranges, they’ve retrained their employees and improved their supply chains. Contrary to the gloomiest predictions, it’s only been a handful of individual firms that have gone bankrupt and it’s only those that already had financial issues before the pandemic.”
During the final discussion of the conference, which was on the topic of warehousing. This was moderated by Tomasz Mika of JLL. The success of this sector in Poland has a lot to do with the fact that it is easier to acquire land here than in other neighbouring countries as well as the fact that the cost of labour is cheaper. This has resulted in Poland having the cheapest rents in the region. With internet shopping continuing to grow and as the Polish population becomes more affluent, tenants are constantly in need of more space. But utilities and building material costs are rising rapidly and the slow pace of bureaucracy could slightly dampen the current boom. Despite this, everyone seemed to leave the conference in a good mood, declaring that they would come again next year. Let’s hope that once again it will take place in the real world with the same encouraging, upbeat mood.
Tomasz Cudowski
