CEE region continues apace despite choppy political waters
In a large room on the top floor of the Palais, far away from the bright early afternoon Cote d’Azur sunlight, seven market leaders were questioned about CEE region fundamentals.
Poland Today’s second panel at MIPIM focused on the CEE region, the first half concentrating on the bigger economic picture, and the second half looking at what international investors are saying about the newest and fastest growing sector—business services. The panelists, featuring the Mayor of Poznań, market-leading developers Ghelamco, Griffin Real Estate and Skanska, automotive giant Mercedes-Benz Manufacturing Polska, international law firm Noerr LLP and real estate consultancy Colliers International, said there’s new capital flowing into the region and where Central Europe was once a bit over-hyped, now it’s a mature region and investors are here to stay. Poland has experienced tremendous development and doesn’t show signs of slowing down, they added. The session, being a long one at 90 minutes, was moderated by Judi Seebus, Editor of PropertyEU magazine, and Wiktor Doktor, CEO of the Pro Progression Foundation, a leader in business services know-how.
The Mayor of Poznań, Jacek Jaśkowiak, kicked off the discussion by saying that his city – with its low unemployment rate, well-educated people and a pro-European mentality – is a good place to invest in. He commented that the city is almost as close to Berlin, in terms of mentality, as it is to Warsaw.
Jeroen van der Toolen from Ghelamco said the inflow of tenants has never been so high in Warsaw as it is today. After Brexit, people seem to be moving from Western countries to Poland at an accelerated pace. There is also a trend, he said, for companies to take space in the centre of the city at the expense of less central areas. Warsaw, he claimed, has the highest net take up in Europe after Paris and London. In response to a comment by Omar Sattar of Colliers International about the high Warsaw vacancy rate of around 15%, Jeroen said that this was misleading, and in centrally-located, new-build schemes – even those in the pipeline – the vacancy rate was much lower. Finally, van der Toolen pointed out that companies are moving their offices from India and China to Poland and other CE countries. The cost is higher, but so is the quality of employees and quality of life, he said.
As for business support services, Katarzyna Zawodna from Skanska Commercial Development Europe said the CE region has great professionals – over 3 million new graduates each year, from a combined population of over 80 million – excellent R&D centres and quality of space. These qualities, as well as sustainability and overall well-being, will always attractinvestors and businesses to move to the region. Concerning the Warsaw office market, Katarzyna said that rental levels are very competitive so investors know the buildings aren’t over-rented and that they will have space to grow the rents. She also highlighted the large population cities that Poland has other than Warsaw, in which Skanska has invested greatly with major projects in most Polish cities, including Kraków and Gdańsk.
Ewa Łabno-Fałecka talked about why Mercedes-Benz decided to build its new engine plant in Jawor, Poland, on 50 acres of land. The decision-making process, she said, started well before the government elections of 2015 but anyway the government had, in their experience, been extremely attentive and helpful. Production at the plant will begin at the end of 2019 and will be the first Mercedes engine factory outside of Germany. The company considered 35 locations in seven countries before choosing Jawor, in large part because of its micro-high unemployment (in that the rest of Lower Silesia has a lower unemployment rate). She also mentioned the proximity of the meeting of the A4 and S3 highways.
Omar Sattar from Colliers International in Czech Republic took on the role of Poland-sceptic on a panel full of Poles or Poland-residents, reminding the audience – and the panel – that the CEE region is much more than just Poland. He pointed out the dynamism in Romania and the renewed market vigour in Hungary and Czech. He also added that perception is a big factor of an investor’s decision making, therefore the media coverage about the political situation and a potentially overheated office market can affect decisions taken by investors. The panelists counteracted his statement by remarking that investors mainly look at long-term investments. While governments change, they said, tenants will always look for the best offer with amenities and spaces that meet their demands.
Maciej Tuszyński from Griffin Real Estate said that while the general commentary might have been that the CEE markets – and in particular Poland – carried certain political and tax risks, the actual reality was that the markets have already adjusted to the situation and transactions are closing, with a generally positive – even ‘hot’ situation. Investors, he said, were showing an even more elevated appetite than usual.
Finally, Paweł Zelich put the panel in context by saying that Poland, despite some less-than-ideal PR in the last year or so, has done pretty well from a business point of view, and underscored this by saying that the legal community has played its part in supporting business development by keeping up with its legal needs and servicing it well. Also latest legal developments enacted under the new government, despite some controversy, have not really changed the overall legal environment for the business community, therefore continue to provide for a stable legal framework for the further economic development in Poland.