Adding value in PolandRegional markets
‘Eurobuild Central & Eastern Europe’: In Autumn this year, Poland will be upgraded from an emerging market to a developed market. What effect will this have on the real estate market?
Beata Kokeli, country manager Poland and head of asset management at TriGranit: Poland has become a developed economy, with very strong GDP growth (5 pct y-o-y for Q3 2017), which has been mainly driven by very high domestic demand largely due to a very favourable labour market with an unemployment rate below 5 pct. The Polish real estate sector also shows this with its current yield figures, their current compression trend and the volume of transactions last year, but it’s not only these factors. There has appeared a new field of investment, one that is well known and recognised in developed economies, ie. hotels, students’ housing as well as the private rented sector, which is currently seeing a massive boom.
TriGranit has several office development plans in Poland. One of them is Bonarka for Business. The first buildings, A and B, opened in 2011, and you still have free plots there. Where are you with the construction of the next buildings?
The B4B project is a long-term project, and that has always been our exact aim – having several plots at one site gives our tenants the opportunity to enlarge their office space if necessary without being forced to move to another location. This opportunity is a great added value to our tenants, and it played a key role for several of them, when they chose B4B as their HQ. As for our exact development activities in the B4B centre - we started the construction of the eighth, Building H, in October 2017, and the structural concrete work had started already at the beginning of January with no delays and on schedule. Delivery is planned for Q2 2019 and there is still free office space to be leased. Because of the high demand on the Kraków office market, the final sections, Building I and J are already in the pipeline and will highly probably be launched in 2018 and 2019 with 10,000 sqm gla each. Eventually, Bonarka for Business will comprise ten office buildings with a total leasable area of 95,000 sqm developed in an investment of EUR 200 mln.
You’re also planning an office development in Katowice. Why Katowice? Can you see other Polish secondary cities becoming ever more attractive to the BPO/SSC sector?
The BPO/SSC sector in Poland has been continuously expanding for many years, and this trend will very probably continue over the coming years. Secondary cities are one of the biggest beneficiaries – especially cities with thriving economies and a high number of universities producing qualified future employees. And why Katowice? After developing the Silesia City Center in 2005 in the city, a huge plot remained in TriGranit’s ownership. And we can see that the time is now appropriate for developing the Silesia Towers Office Buildings. It is highly probable that the development will begin in H1 2019, adding a total of 40,000 sqm gla to the city’s office market.
Now that LEED and BREEAM accreditation are the standard for new buildings, how can TriGranit demonstrate its green credentials?
Sustainability has always been important for TriGranit – All our new buildings are BREEAM certified and we are granted ratings of ‘Very Good’ on a regular basis. Furthermore, the K&H bank headquarters in Hungary was the first office building to awarded LEED ‘Gold’ in the country in 2011. Nowadays, not only because of tenant demands, but also because of more restrictive energy efficiency norms, new office buildings are subject to strict technical regulations and require innovative solutions so that they are built in a green way. In other words, every new office development is green nowadays. And this is the future. Due to EU regulations, buildings that receive an occupancy permit after the end of 2020 will be subject to much stricter technical standards, and as an effect, buildings will be approaching zero emissions. When you consider the extra cost of green buildings – though it might sound strange – if an office building aims for an average certification such as BREEAM ‘Very Good’ or LEED ‘Silver’, there is no overall extra cost, as today’s standard building practices are already green compatible. As a result the extra cost is only the certification fee itself. However, with LEED ‘Platinum’ or BREEAM ‘Excellent’ certification, the extra costs will reach at least 10–20 pct, or even more of the total project cost.