Hoping for the best

Eurobuild CEE’s special December conference brought together financiers, bankers, developers and real estate experts, 
all anxious to find the answer to the big question of the year

 

At the end of 2008, the eternal question “To be or not to be?” seemed to have been revised to “Crisis or correction?”. While few doubt that the Western economies have entered what might be a long recession, the situation in CEE countries, especially Poland, is still generating a lot of debate. This is why ‘Eurobuild CEE’ decided it was the right moment to gather optimists, pessimists and realists to discuss the effects of the global financial crisis. The result was the ‘Crisis or correction’ conference, which was held on December 9th in the Hyatt hotel in Warsaw.

Capitalism is not dead

When it comes to coping with critical situations there is no better person to open a conference than Prof. Leszek Balcerowicz, the former deputy prime minister, finance minister and president of the National Bank of Poland until 2006. Prof. Balcerowicz made it clear that what we are now seeing is the biggest crisis of the capitalist economic model since World War II, but that it is not a crisis of private property. “The current situation only shows that there are disorders in the way the system works. There are regulations, but until now these have not been enforced properly,” he said. 
He noted that Poland is one of the few European countries expected to see a positive GDP growth in 2009, but added that the country is far from being immune. Concerning other, smaller countries in the region, Prof. Balcerowicz expressed the viewthat: “Government intervention to help sinking economies tends to be very expensive for the smaller countries in the long run.” In line with the prognoses of most eonomists, the professor thinks that clear signs of improvement might be seen by the end of 2009 at the earliest.

New players

The lack of an adequate response might lead to a very long-term crisis, a crisis that would keep returning every now and then, warned another respected speaker, Prof. Witold Orłowski, chief economic advisor to PricewaterhouseCoopers. According to him, one of the major consequences of the crisis will be a significant change in the make-up of the most important global players, with China taking a major share in the financial world. “The subprime loans are clear proof that economic freedom was over-exploited. The real question now is how successful we are going to be in finding a balance between economic freedom and the mechanisms of regulations,” was Prof. Orłowski’s conclusion to his excellent speech.

Two other experts from PricewaterhouseCoopers, Brian O’Brien, partner and real estate leader, and company manager Marta Kamionowska, presented a list of 10 useful hints on how to improve the performance of real estate and add value, including service charge benchmarking and recoverability, property reporting and audits. “When performed well these simple things may create up to 15 pct more income,” they claimed. 

Ryszard Petru, an independent economist, Marcin Herra, the president of PL 2012, Beata Stelmach, the president of the Polish Association of Stock Exchange Issuers, in a panel moderated by Radio TOK FM’s journalist Maciej Głogowski, agreed that the worst is yet to come. However, for those looking for opportunities, the timing couldn’t be better. “Faster spending of EU funds, especially on infrastructure projects, will bring some life to the slowing economy,” said Marcin Herra. 

Relax, it’s under control

From the bankers’ point of view the situation seems to be under control. Krzysztof Pietraszkiewicz, president of the Polish Bank Association, Piotr Cyburt, president of BRE Bank Hipoteczny, Andrzej Arendarski, president of the National Chamber of Commerce and Michał Macierzyński, an analyst at Bankier.pl, 
believe that the lack of trust between banks has an emotional background, as the banking sector remains strong with positive growth perspectives.

There are also those who are already preparing for the upturn. “Do or die… issues facing business in Poland” was a panel that included Aleksander Kwiatkowski, president of A.T. Kearney, Michael Dembinski, head of policy at the British Polish Chamber of Commerce, Robert Jaworski, managing director of Siemens’ south region, Oliver Murphy, a partner at Deloitte, Rafał Grzeszczyk, chief specialist in the Department of Urban Development and Investor Relations on Radom City Council and Dr Richard Mbewe, a managing partner of Atria Real Estate Partners. The panel recognized the infrastructure gap in Poland as one of the biggest opportunities for growth, as long as EU financing is still being injected.

The real estate panel brought together Paweł Dębowski, partner at Clifford Chance, Jarosław Szanajca, president of Dom Development and chairman of the Polish and European Association of Developers, Hadley Dean, managing partner of Colliers International, Artur Pietraszewski, marketing director at Capital Park, Agata Jurek-Zbrojska, a legal advisor at Garrigues law firm and Krzysztof Olszewski of ‘Wall Street Journal Polska’. The discussion revealed some frightening statistics: over the last few months the sale of residential property in Poland has dropped by 90 pct, while 4 out of 5 projects are currently on hold. The office market is holding up better, but developers should be aware of the imminent downturn. What should one do in uncertain times like these? Buy land in the middle of 2009, was the participants’ view. Or just hope for the best. The many costs of the crisis were the topic for the closing panel moderated by Roman Młodkowski of TVN CNBC Biznes. ν (MP)