What crisis?

Eurobuild's first conference of the year was dedicated to the office market, and it took place on March 28th at the Intercontinental?Hotel in Warsaw. The first speakers discussed the situation in Poland - and the economic and financial crisis in particular. Anna Kot of Jones Lang LaSalle was the moderator of the ?Recession or no recession, that is the question?' panel. As she emphasised at the beginning of the presentation, in spite of everyone talking about the ongoing crisis, it's one that doesn't seem evident from the market data. The Polish office market continues to develop dynamically. Developers are working hard and - as a result - 450,000 sqm of new office space will have been built by the end of 2012. Another 500,000 sqm should also have been completed by the end of next year. The climate for investors is improving thanks to the high demand generated by the rapidly growing BPO/SSC sector, among other factors. The next speaker, Krystian Bestry, a representative of Infosys BPO Europe and the Association of Business Sector Leaders (ABSL) in Poland, furnished us with a few of the facts confirming this. "By the end of 2012, in the region of 20-30 new business centres will have been completed in Poland," said Krystian Bestry. This increased demand on the market has also been noted by investors. Arkadiusz Rudzki (Skanska Property Poland) revealed that his company is keeping local markets under careful observation and intends to develop new buildings in Łódź and Katowice. Waldemar Lesiak (Echo Investment) stated in turn that office tenants tend to look for a location to rent immediately, which might pose a challenge for developers. Paweł Kłosiński of SwedeCenter emphasised that office projects are often launched as a response to individual enquiries. On the next panel, ?Full-time manager or external company?', which was devoted to the management of office buildings, the participants discussed the best models for office space management. Bartosz Soroczyński, a representative of IBM and International Facility Management Association Poland, moderated, starting things off with a presentation demonstrating that the range of services under management is expanding. "At the moment there are 400 such services. Given this fact, it is worth considering whether to operate on your own or via an outsourced company," said Bartosz Soroczyński. Zuzanna Paciorkiewicz of DTZ Management Poland claimed that outsourced companies have indispensable experience, often gained on European markets. Moreover, they accept the responsibility for maintaining good relations between the tenants and owners, which very often means mediation. Tomasz Kwiatkowski of Warbud Vinci Facilities suggested a mixed model. "There is no turning back from outsourcing services," concluded Krzysztof Poznański (ISS Facility Services). Another topic, ?Croatia, Enter Now or Wait for EU Accession?' provoked a heated discussion. Vedrana Likan from Colliers International chaired the panel. David Boruta of HB Reavis Croatia and Arn Willems of GTC Croatia shared their experiences of running businesses in Croatia. According to the Croatian office market data provided by Vedrana Likan, ten new projects were started in 2011 - Adris Project and Svetice Office Building, among others. All the panellists agreed that the climate for investors will improve as soon as Croatia joins the EU. They do not expect, however, any significant change in the situation. Developers HB Reavis Croatia and GTC Croatia assured us that they intend to continue their operations in Croatia, despite the difficulties ahead, such as the stricter credit policies adopted by banks. The participants of the discussion agreed that the Croatian market faces one very important challenge - green construction. After the coffee break, the ?Demolition or Additional Investment?' debate started, chaired by Bartek Włodarski of Cushman & Wakefield. Participants Wojciech Papierak (PHN Group), Maciej Gołębiewski (Avestus Real Estate), Jakub Szczepanik (Catalyst Capital) and Bartłomiej Hofman (Immobel Poland) concluded that the most important factor in this issue is the economic calculation. Bartłomiej Hofman offered Okrąglak in Poznań, bought last year from CDI, as an example. "The refurbishment of the building is almost finished. We now intend to sell the project," he declared. Catalyst Capital is also planning to modernise Moniuszki Tower. "We are going to make an additional investment in the building," said Jakub?Szczepanik. Avestus Real Estate has different plans. They are to demolish a building in Kraków and build a completely new one on the same site. PHN Group is also considering demolition.
The discussion about the position of Poland among other countries in the region also proved interesting. The speakers on the ?Poland or Elsewhere in Central Europe?' panel were Thomas Beyerle of IVG Immobilien AG, Tomas Picha of Invesco Real Estate, Edgar Rosenmayr of Kulczyk Silverstein Properties and (the chair of the discussion) Philippe Mer of BNP Paribas Real Estate. Each agreed that Poland is more visible to investors and has been included by them in the Central Europe region faster. Although the Polish office market is not big, it still has some potential. The discussion focused mainly on investors who might be about to enter Poland, with German and Austrian funds being the most likely. "Offers from Asian countries, especially?China, have also been slowly coming to Europe," emphasised Thomas Beyerle. American funds, in turn, expect a significant, two-digit return on their investment, which under Polish conditions is not possible. Consequently, their influence will not be substantial. "Last year we witnessed the entry of two funds. This year we are expecting five new ones," concluded Philippe Mer.
The next panel, ?Budapest - a city of opportunities?', included James Berry (Jones Lang LaSalle Hungary), Csongor Csukás (BNP Paribas Real Estate Hungary) and Gerhard Mayer (CA Immo Real Estate Management Hungary. Thomas Beyerle (IVG) was also invited to the discussion. The panellists felt that the Hungarian market is difficult and business development is additionally hindered by the uncertain political situation in the country. In their opinion, the problems include obtaining finance, low demand and a relatively high percentage of unleased space. The European Union can change much in this respect, but it will take time.
The next item on the agenda ?Is it Better to Change or Profit as Long as Possible?' consisted of a case study of three projects owned by Arka BZ WBK Real Estate Market Fund FIZ and Arka Real Estate Market Fund II, presented by Agnieszka Jachowicz, managing director of the funds. The presentation focused on the introduction of changes to existing buildings. She highlighted three buildings in which the company has decided to invest: Pasaż pod Błękitnym Słońcem (Wrocław), Red Tower (Łódź) and Business Park Teofilów (Łódź), each facing different problems in terms of renovation work. Agnieszka Jachowicz pointed out that it is necessary to consider every investment in detail and take into consideration unforeseen expenditures.
The final debate, on green technologies, was moderated by Patryk Kruszewski of CBRE FM. The panellists included Krzysztof Suliga of General Property Facility Management, Artur Morawski of Hochtief Facility Management Poland and Marek Dąbrowski of Buro Happold. They all agreed that cost-saving technologies are becoming the standard on the market. This was an excellent introduction to a broad discussion about green solutions, which will take place in June at the ?Switch to Green' conference, also organised by Eurobuild Conferences.