Since the Crisis CEE’S Top Office Developers: 2008 - 2012

Volume 18 | Issue 3 | March 2012 Since the Crisis CEE’s Top Office Developers: 2008 - 2012

CZK 150 | HUF 1900 | PLN 26 (8% VAT incl.) | RON 25 | € 5.90 | index 37332X This issue is printed on 100% recycled paper 2 regional Contents

4 REGIONAL Editorial

Banks first, sovereigns second

Moody’s heartless Valentine’s day gift for six European nations came a day early this year in the form of credit downgrades, as Italy, Malta, Portugal, Slovenia, Spain and Slovakia received the verdict many had feared for months. To prove it wasn’t ignoring Austria, France and the U.K., Moody’s sent those nations their very own notes, with the message that their own ratings were officially at risk. This was precisely the sort of news the markets, along with most property professionals, had feared ever since the last quarter of 2011, when it first began to look as if things were unraveling.

The situation had shifted somehow over the summer and by the end of autumn, there was very clearly a different atmosphere than the cautious optimism that had reigned for the first half of the year. By the end of last year, when the Greek crisis was uppermost in people’s minds, property developers and investors alike were complaining that banks seemed to have largely turned off the liquidity taps, even for quality investments and projects. Putting two and two together (euro-fears and plummeting liquidity), some began fearing that a collapse could be imminent.

Still, if that were the case, shouldn’t the downgrading of several European nations have caused a bigger stir than it has done thus far? The standard response to this is that the markets were not surprised by the news, and that the ratings agencies were simply getting around to reflecting a reality others had already recognized. This suggests, that if nothing else, market makers are using at least some level of common sense, some portion of their own collective brain, rather than blindly pro- moting the fiction that the agencies used to produce. These agencies are now more realistic, but perhaps less powerful at the same time.

But there’s something else going on as well. Just weeks after taking charge of the ECB, Mario Draghi announced the bank would lend banks as much as they wanted for three years. Banks lined up for the loans in droves, coming away with an astonishing €490bn. Draghi had to overcome that institution’s inflationary fears to achieve this, and he took criticism from those who thought he was being too cautious. Lending to the private sector still fell in December, but the action seemed at least to take the sting out of a growing fear of another liquidity crunch.

The ECB is now hinting that another offer of loans to banks could be made in the coming weeks. Added to this more direct support for the euro are hints that Germany might be convinced after all that increasing the rescue fund for troubled European countries could be considered. Perhaps the timing is more than symbolic. Helping the banks first may suggest precisely where the ECB’s priorities are and suggests that a more pro-active approach to tackling the crisis is finally being formulated from the very top echelons of Europe’s financial system.

Robert McLean Editor In Chief 140 000m2 OF OFFICE SPACE*

*The equivalent of approximately 20 football  elds.

Wilanów Offi ce Park is made for business. Yet it resembles more a grassy fi eld than a crowded town. A vast area, large distances between the buildings, a “green” view from the window, four-storey buildings – all this, despite the hard work that is done within, makes one feel free and close to nature. Instead of being stuck in city space, we offer architecture inspired by it’s environment. TO LET +48 22 351 96 00 | www.wilanowoffi cepark.pl

WOP Reklama [215x260] 01.indd 1 12-02-03 15:58 Podstawowy niebieskozielonyPodstawowy karmazynowyPodstawowy żółtyPodstawowy czarny 6 REGIONAL Real Talk

highlights Lordship begins Palac Stromovka One quarter of the space will go to Tesco Lordship begins Palac Stromovka | 13 Lordship has announced it’s begun construction on Palác Stromovka Benoy architects designed the mall for the investor in Prague 7 Holešovice, though all that’s currently visible is clearing Offices to follow retail in Olomouc | 7 and site preparation of a plot on Veletržní street next to the Parkhotel. The developers says that the tender for ground works and construc- The original intention was to build 372 houses tion of the underground parking garage is currently underway, and South Pacific into insolvency with 4 projects | 3 that this work is will get underway by the beginning of April. Opposed by local civic activities and unsuccessful in its bid to become the new accommodations for Prague 7’s municipal government, the project has gone through a lengthy planning process. This isn’t surprising, says Martin Pilka, joint managing director of Lordship, as office tenants these days tend to insist on seeing the building come out Offices to follow retail in Olomouc of the ground before they’ll begin negotiations. Retail leasing, on the 13 other hand, is doing far better. One quarter of the space will go to Tes- co, says Pilka, and he says Lordship is in negotiations with a number of Having spent four years in planning, the general contractor Metrostav retailers for the rest of the space. has begun construction of Galerie Šantovka in the Moravian city of He estimates that the total costs of Palác Stromovka will run to CZK Olomouc. The new shopping mall is the first phase of a brownfield re- 1.52bn (€60.4m). Development Director Jan Zamrzla says bank fi- development on a 11 ha site in the center of the city. Office buildings nancing is being negotiated, but claims Lordship will begin construc- and apartment blocks will also be built. Construction of the 46,000 sqm tion using its own money. Completion is scheduled in the fourth mall is scheduled for completion in autumn 2013. Benoy architects de- quarter of 2013. 7 signed the mall for SMC Development, which estimates the total volume of investment into the new neighborhood at CZK 10bn.

South Pacific into insolvency with 4 projects

The Australian Real Estate developer South Pacific has placed its residential project Darwin Residence I, located outside Bucharest, into insolvency. The original intention was to build 372 houses on 2.8 ha of 3 land, but no progress had been made in construction. It’s just the latest in a string of insolvencies for the developer, which bought dozens of hectares of land during the boom years in the Tunari district near Bucharest. South Pacific managed to complete its Sydney Residence project, which saw the construction of 102 villas. Forty of the units are up for sale, while some of the unsold ones have been put up for rent. However, the second project it started, Australian Melbourne Resi- dence, has gone into insolvency after some of the partners who partici- pated in investment left the company, claiming damages. This issue is printed on 100% recycled paper

Real Talk REGIONAL 7

leaving roughly 300,000 sqm of available space in the city. The 42,000 sqm of lease deals for office space in Q4 2011 marked a 39 percent increase compared to that same period in 2010, but just 19,300 sqm of that amount (45 percent) was actual take-up, as the remainder was made up of renegotiations. New supply, the ultimate sign of faith in highlights long-term demand for office space, was notably absent as just 125,000 Vacancy rates fell in the last quarter of 2011 to 14.14 percent sqm was completed. This marked a 55 percent decrease from 2010. 5 | CBRE: Bucharest office take-up still weak

CBRE: Bucharest office take-up still weak

It’s difficult to see where, if anywhere, Bucharest’s office market is headed. Prime rents are going nowhere at the moment, stuck at what is for landlords an agreeable €19.5 per sqm per month. And yet, while Source: CBRE the market could hardly be considered strong at the moment, CBRE re- 5 ports that vacancy rates fell in the last quarter of 2011 to 14.14 percent, 8 REGIONAL Company News

percent compared to January 2011 with the developer claiming some of its customers red group were buying five flats at once. Investment stability was the main reason, according to Czech Invest Red Group has attracted a new tenant into Finep, with two-room flats proving to be the Nagano Park in Prague 3. Vendavo CZ has biggest hit. Sales had already increased by 30 CzechInvest mediated CZK 33.7bn worth signed a lease contract to take 954 sqm in the percent year on year in December. of foreign investment in the Czech reconstructed office complex, bringing the Surprisingly, however, the VAT increase that Republic in 2011, double the amount it total occupancy of the 26,000 sqm Nagano took effect as of January 1 has not seemed to managed in 2010. In all, the Czech foreign to 90 percent. Two existing tenants -- News slow down sales, says Finep’s sales director investment agency oversaw 233 Outdoor Czech Republic and ZTE Czech have Vladimír Zuzák, though the developer has investments, 24 more than in 2010, said extended their lease contracts in Nagano helped matters through price discounts. Czech Industry Minister Martin Kuba. Park. Studio Modema has both extended Cross-border investments reached CZK and expanded its lease in the building to 728 13.5bn, while local companies and foreign sqm. Telefonica O2, Lego Trading, UPC, GTS . investors present in the country made up Czech, Kapsch and Wolters Kluwer are CZK 20.17bn of the total. Car production among the other names on the tenant list. global property capital attracted the majority of the total investment volume, with roughly CZK Global Property Capital, a Swiss minority 15.5bn pouring into the sector. The largest shareholder in the residential developer single investment came from Teva Czech Central Group, is in liquidation. The investor Industries which injected CZK 2.15bn into 02 Arena bought a 10 percent stake of Central Group in its its Opava plant in order to boost output. 2008, having paid CZK 1bn (€40m). This Petr Kellner (PPF) and Karel Komárek (KKCG) included an option to increase its stake to 49 are reported to have won control over the O2 percent in the course of three years. Arena in Prague. PPF and KKCG are among Spokeswoman Veronika Ježková told the the creditors of Bestsport, which was the website E15 that Central Group plans to set mpv owner and operator of the arena. Under a up a holding company in Cyprus and to new court ruling, Bestsport and the arena will expand into foreign markets. MPV Develop plans to build two apartment be transferred into a newly established blocks in Bratislava Nové Mesto. The vehicle called Bestsport Arena. The basic project, worth approximately €7.5m, is capital of the company will be increased undergoing an EIA. The blocks will be built while the secured lender, The Bank of New on 10,500 sqm of land and will have five York Mellon, will get shares in it, as will non- segro and eight floors, offering a total of 8,000 secured lenders, n amounts proportional to sqm of usable space. Construction should the size of their claims. This step is part of an The preparation works on the construction start 2012-13. the other names on the overall restructuring program which should of Segro’s most recent project have kicked tenant list. be realized over the next several months. off in the city of Wrocław. Segro created a special purpose vehicle together with Polish Real Estate Holding (PHN) last year in order to carry out this 40,000 sqm logistics and warehouse complex in Lower Silesia. The Fast food finep scheme is being planned on a 30ha plot owned by the city of Wrocław. The first phase Fastfood chains continue their expansion Finep produced a record level of residential of the project is planned to deliver 7,000 sqm in the Czech market. While Burger King sales in January. The numbers jumped 30 of space. finally succeeded to open its flagship This issue is printed on 100% recycled paper

Company News REGIONAL 9

high street restaurant in the center of to Prague 7 Holešovice has encouraged Poland, southeast Europe, Belgium and Prague, and McDonald’s and KFC consider Orco to announce reconstruction plan the UK. The concern plans to increase the Czech market as one of their most for its Elektrické podniky building next dividends by 20 percent to €0.12 per successful in Europe, eight new fast food door. The prominent functionalist share. In 2010 the company scored a net brands are looking to enter. Papa John’s building above Vltavská metro station, loss of €35m. Pizza should be the next addition, as it which Orco Property Group offered hopes to find a partner which would enable Prague 7 as a potential city hall, will be the opening of 15 to 20 restaurants within refurbished into a modern 30,000 sqm seven years. Great American Cookies, office building called Galilei Business Marble Slab Creamery or Church’s Chicken Center. Reconstruction should be pointpark properties - Texas Chicken are some of the others completed in 12 months. looking for franchisees in a market, which PointPark Properties (P3) have unlike Western Europe shows no aversion completed a build-to-own project for towards US fast foods, writes Hospodářské Audia Plastics and its affiliates noviny. Washington Penn Plastic and Uniform wienerberger Color Company. The warehouse and production facility located in Trnava – Wienerberger has achieved a net profit Voděrady in Slovakia offers 17,200 sqm of of €41m in 2011. The Austrian brick warehouse space and 1,500 sqm of office. orco property group producer announced it foresees an P3 provided management of the upward trend in 2012 as-well, despite the acquisition, development, construction Relocation of the headquarters for the economic uncertainty affecting demand and fit-out of the € 11m investment. Galileo global navigation satellite system in some of its key markets, such as 10 REGIONAL EuroNews

Prologis off-loads UK portfolio king deal at a rent equivalent to £1,000 per sq ft. This deal demonstrates Prologis European Properties has sold a UK portfolio the continuing strength of Bond Street and the increased demand for in a transaction worth €180.3m. Earnings from the sale prime shops by the larger fashion brands, proving that these high rents will be used to further deleverage the business. The are not confined to the small jewelry shops around Asprey,” says Paul portfolio includes ten UK logistic assets offering 231,650 sqm of fully Endicott, director of retail at Savills. He predicts continuous rental incre- leased space, located in the Midlands and North East of the UK. The ase on Bond Street, with yields falling below 3 percent. transaction is part of the wider disposal of UK portfolio agreed by Pro- logis and Blackstone. “This disposition is in line with our objectives to actively manage the portfolio to optimize value, through focusing on AXA Real Estate accelerating office letting core assets and locations where we have critical mass,” said Peter Cas- AXA Real Estate Investment Managers has signed 96 le- sells, chief executive officer of PEPR. ases representing a total of 175,000 sqm of space across its French office portfolio in 2011, a significant increase of 23 percent on a total of 142,000 sqm let in 2010. In all, 58 new leases Bond Street breaks letting record represented 63,000 sqm of the total, while the remaining 38, accoun- Salvatore Ferragamo has signed a new lease agreement ting for 112,000 sqm of space, were lease renewals and extensions. with NFU Mutual, represented by Savills, and agreed a AXA Real Estate also succeeded to pre-lease the entire building 17 Ave- new rent for its store on Old Bond Street. The Italian lu- nue Matignon to the law firm Hogan Lovells on a long term lease. The xury fashion brand will pay €1.88m (£1.6m) annually for the 697 sqm sto- 7,000 sqm prime office building, developed by AXA Real Estate, will re stretching from the basement, ground floor and first floor. Salvatore serve as the French Headquarters of Hogan Lovells. Located in Paris‘ Ferragamo has been using the space at 24 Old Bond Street since 1967, 8th arrondissement, the building is managed by AXA Real Estate for but has expanded the space by taking the first floor. The brand plans to an institutional client and is due for delivery in April 2012. Despite the complete fit out works in time for the London Olympics. “Following on current economic uncertainty, AXA Real Estate witnessed an increase from the recent letting to Belstaff this represents another record brea- in demand for space. In 2011 several new high-profile multinational

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EuroNews REGIONAL 11

tenants were added to the AXA Real Estate French office portfolio. The largest new office letting of 2011 was at AXA Real Estate’s Osmose Occupancy Cost 2011 2012 building in Toulouse, where the 13,000 sqm building was let to Airbus. € per sqm/yr Ranking Ranking Along with attracting new tenants, AXA Real Estate has completed a London 1978 2 2

significant number of lease renewals, including those with Areva, Era- Paris 875 9 9 met, Natixis and Philips France. Stockholm 694 14 13 Oslo 630 18 14

C&W: Marginal EMEA Munich 519 23 19 office market growth Madrid 476 22 24 Cushman & Wakefield’s Office Space Across the World Warsaw 438 27 28 for 2012 describes rental performance in EMEA as “lar- Brussels 435 30 29 gely subued”, citing growth of just 1 percent. While this was an impro- Vienna 381 34 36 vement from the 1 percent drop in 2010, it fails to capture the depth of Prague 361 38 39 the problem in Athens, which registered a drop of 14 percent. But simi- Budapest 360 40 40 larly, a true picture of the region’s office sector must take into account Bucharest 332 43 42 that the biggest growth (3 percent), which was recorded in CEE, was substantially influenced by the unusually high growth of Moscow’s Bratislava 297 49 47 market (41 percent). Slow economic improvements in Europe at the Zagreb 228 134 38

beginning of 2011 helped support gradual improvement in the rental Source: Cushman & Wakefield markets. Western Europe just managed to keep its head above water, as it were, with 1 percent growth.

ProLogis Meet 12 REGIONAL Financial Page

Pekao Bank to finance Echo scheme this confirms the trust that fixed income investors still continue to place Echo Investment has secured the financing it needs to in Aareal Bank,” wrote the bank in a results statement. “Pfandbriefe to- start work on the second phase of its residential project talling EUR 2.7 billion were also issued, once again proving how very called Pod Klonami in Poznań. The agreement signed important this instrument is to Aareal Bank’s refinancing mix.” February with Pekao bank makes available PLN 29.9m for the project. “Poznań is a very active market on which Echo is recognized as one of 1 Jan - 1 Jan - Change the best developers,” says the developer’s deputy financial director 31 Dec 2011 31 Dec 2010 % Grzegorz Iwański. “By signing another agreement for Poznań project’s Profit and loss account €bn €bn financing, Pekao bank confirms its belief in this marker and in the quality of the projects Echo is undertaking.” The residential complex is being Net interest income 547 509 7 developed at the intersection of Rubież and Czarnucha Streets in Allowance for credit losses 112 105 7 Poznań and will add 145 flats and 35 detached homes to the city’s stock Net interest income after allo- 4 4 94,500 of housing. wance for credit losses Net commission income 144 123 17

Net result on hedge accounting 6 -2

Net trading income / expenses 14 8 75 Results from non-trading assets -29 -12 142 Results from investments accoun- 1 5 -80 ted for using the equity method

Results from investment properties 10 -17

Administrative expenses 382 366 4 Net other operating income / expenses -14 -9 56

Impairment of goodwill 0 0

Operating profit 185 134 38 Income taxes 52 40 30 Aareal profits defy Q4 gloom Net income / loss 133 94 41 Aareal Bank Group profits rose 38 percent over 2010 to €185m, while its consolidated net income more than doubled to €93m. The bank says that the success can be traced to a significant increase in net interest income, which benefited from the high-margin business from 2010. By taking an active role in UBS secures pbb funds for retail buy the market where possible, the bank managed to increase the volume pbb Deutsche Pfandbriefbank will be providing UBS of new business to €8bn. Having predicted credit losses of €110m to Global Asset Management with around €30m for the ac- €140m, the final figure came in at just €112m (€7m more than in 2010). quisition of the Bolton Gate Retail Park, located in Bolton, Aareal’s CEO Dr Wolf Schumacher said “We exploited the opportuni- along with Central Retail Park in Havant, Southampton. The loan, in which ties available to us during the year under review, and delivered on our pbb acted as the arranger, agent and the sole lender, was closed in Janu- promises despite a challenging market environment.” ary. The Bolton shopping center was built in 1997, while the one in Ha- Last year’s results were also notable for the strength of the final quarter, vant is more modern, having been completed in 2007. Both are thought when Europe’s economic and fiscal situation was deteriorating. Not only to offer significant asset management opportunities as they have over did the bank produce an operating profit of €47m in Q4 2011, this was 10 years unexpired on their leases. Bernhard Scholz, a board member at €7m higher than in 2010. In the crucial area of funding in 2011, Aareal pbb Deutsche Pfandbriefbank, says property fundamentals were what managed to raise €4.3bn in medium and long-term funds on the capital convinced the bank to back the acquisition. “The properties are well-let markets. “The issue volume of long-term, unsecured funds amounted to and the sponsor has exciting plans to further improve the assets in the €1.6bn in a very difficult environment, especially for unsecured issues; future,” he said. 240x290_v1.pdf 1 2/20/12 3:23 PM

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Rates 2011 MAIN ECONOMIC INDICATORS 2011

consumer price indices, index 2005=100 CZECH REPUBLIC

Month 07 08 09 10 11 12 Month 06 07 08 09 10 11 12 Canada 112.2 112.5 112.7 112.9 113 112.4 Unemployment rate 8.0% 8.2% 8.2% 8.0% 7.9% 8% 8.6% Czech Republic 117.7 117.4 117.2 117.5 118 118.5 No. of unempl. (in th.) 478.8 485.6 481.5 458.2 451.9 476.4 508.5 Germany 111.0 111.0 111.1 111.1 111.1 111.9 CPI monthly change -0.2% 0.3% -0.3% -0.2% 0.3% 0.4% 0.4% Hungary 135.1 135.0 134.8 135.8 136.7 137 CPI yearly change 3.5% 1.7% 1.7% 1.8% 2.3% 2.5% 2.4% Japan 99.3 99.5 99.5 99.6 99 99 24.02.2012 | Source: ČSÚ, MPSV Poland 119.7 119.7 119.8 120.7 121.5 122.0 Slovak Republic 119.7 199.8 120.2 120.4 120.9 121.0 hungary Switzerland 104.5 104.1 104.4 104.4 104.2 104.0 Month 06 07 08 09 10 11 12 United Kingdom 119.4 120.1 120.9 121 121.2 121.7 Unemployment rate 10.8% 10.8% 10.8% 10.7% 10.8% 10.6% 10.7% United States 115.7 116.0 116.2 115.9 115.8 115.6 No. of unempl. (in th.) 461 463 463 462 468 460 459 24.02.2012 | Source: OECD CPI monthly change -0.2% -0.3% -0.1% -0.1% 0.7% 0.7% 0.2% CPI yearly change 3.5% 3.1% 3.6% 3.6% 3.9% 4.3% 4.1% currency exchange rates, national units per usd 24.02.2012 | Source: HCSO Month 07 08 09 10 11 12 poland Canada 0.96 0.98 1.00 1.02 1.03 1.02 Czech Republic 16.81 16.92 17.84 18.09 18.77 19.39 Month 06 07 08 09 10 11 12 Hungary 183.21 189.69 206.89 216.18 227.5 231.57 Unemployment rate 11.8% 11.7% 11.8% 11.8% 11.8% 12.1% 12.5% Japan 80.97 76.95 76.82 76.66 77.5 76.92 No. of unempl. (in th.) 1936.8 1914.3 1914.3 1963.8 1963.1 2002.3 2082.6 Norway 5.38 5.44 5.62 5.64 5.74 5.95 CPI monthly change -0.3% -0.2% 0.0% 0.0% 0.7% 0.7% 0.5% Poland 2.74 2.88 3.15 3.17 3.27 3.39 CPI yearly change 3.7% 3.6% 4.0% 3.5% 3.8% 4.4% 4.5% Russian Federation 27.90 28.77 30.49 31.51 30.87 31.45 24.02.2012 | Source: GUS Switzerland 0.84 0.78 0.87 0.9 0.91 0.93 United Kingdom 0.62 0.61 0.63 0.64 0.63 0.64 romania Month 06 07 08 09 10 11 12 24.02.2012 | Source: OECD Unemployment rate 4.8% 4.8% 4.8% 4.9% 4.9% 5.1% 5.2% No. of unempl. (in th.) 436.0 435.2 435.2 444.0 444 461 461.3 long-term interest rates, percent per annum CPI monthly change -0.3% -0.3% -0.3% -0.3% 0.6% 0.4% 0.2% CPI yearly change 7.9% 4.9% 4.3% 3.5% 3.6% 3.4% 3.1% Month 07 08 09 10 11 12 24.02.2012 | Source: WS, MMSSF Czech Republic 3.8 3.4 3.0 3.1 3.7 3.7 Germany 2.7 2.2 1.8 2 1.9 1.9 slovak REPUBLIC Hungary 7.4 7.5 7.6 7.9 8.5 9 Japan 1.1 1.1 1.0 1.0 1.1 1.0 Month 06 07 08 09 10 11 12 Norway 3.2 2.6 2.4 2.6 2.5 2.4 Unemployment rate 13.1% 13.1% 13.1% 13.1% N/A N/A N/A Poland 5.8 5.7 5.7 5.7 5.8 5.8 No. of unempl. (in th.) 356.5 357.8 357.8 357.8 N/A N/A N/A Russian Federation 8.0 8.2 8.0 8 8.1 8.2 CPI monthly change 0.2% -0.1% 0.1% 0.3% 0.2% 0.2% 0.1% Slovak Republic 4.6 4.6 4.3 4.3 4.7 5.2 CPI yearly change 1.0% 3.7% 4% 4.3% 3.8% 3.1% 3.9% Switzerland 1.4 1.1 1.0 1.1 0.9 1.0 24.02.2012 | Source: ŠÚSR United Kingdom 3.3 2.8 2.5 2.5 2.3 2.2 24.02.2012 | Source: OECD RATES AGAINST EURO SHORT-term interest rates, percent per annum Canadian Dollar CAD 1.30 Month 07 08 09 10 11 12 Czech Koruna CZK 25.27 Canada 1.2 1.2 1.2 1.2 1.2 1.2 Danish Krone DKK 7.43 Czech Republic 1.2 1.2 1.2 1.2 1.2 1.2 Hungarian Forint HUF 293.3 Germany 1.6 1.6 1.5 1.6 1.5 1.4 Japanese Yen JPY 102.310 Japan 0.3 0.3 0.3 0.3 0.3 0.3 Norwegian Krone NOK 7.55 Hungary 6.7 7.1 6.2 6.2 7.3 6.5 Polish Złoty PLN 4.24 Norway 2.9 3.1 3.1 3.1 3.2 3 Pound Sterling GBP 0.83 Poland 4.7 4.7 4.8 4.9 4.9 5 Romanian Leu RON 4.36 Russian Federation 5.8 5.1 5.8 6.9 7.1 N/A Swedish Krona SEK 8.81 Switzerland 0.2 0.0 0.0 0 0 0 Swiss Franc CHF 1.21 United Kingdom 0.9 0.9 1.0 1.0 1.1 1.1 US Dollar USD 1.30 24.02.2012 | Source: OECD 24.02.2012 | Source: ECB This issue is printed on 100% recycled paper

Banking regional 15

The brave new Fear, and stricter regulations are leading banks to give up on the old world of property risk-taking model in order to focus finance more on simply providing liquidity

It’s been a torrid six months for the banking last quarter of 2011 was the deep level of At least they didn’t used to be. In fact, at sector. The first hints of trouble arguably distrust they had for each other. In the the heart of what’s changing for real estate started coming to the surface over the good times, when cash is plentiful, banks financing is what some would argue is a summer as investment deals started hitting think nothing of funding each other and long-overdue return to more conservative financing roadblocks. Due diligence, parking their cash in each other’s virtual banking values. A basic realignment of risk. which had already turned into a seemingly vaults overnight. Those simpler times, “The point,” as Peter Szamely says, “is that endless process, was suddenly no longer however, are gone. banks are there to provide liquidity, not the prime culprit. The market, it seemed, to take risks. At least that seems to be the had gotten used to spending two to three “It changed,” says one banker, asking to direction we’re going now as banks.” quarters on a deal, when three months speak off-record. “If you figure that at least during the boom had once seemed an one of the banks out there is in trouble, has Szamely is the head of the CEE and SEE eternity. serious problems, you all end up looking team for the commercial real estate at each other wondering ‘is it you’?” That’s financing department at HYPO NOE Perhaps the best way to express it is that not a general atmosphere that’s conducive Gruppe Bank in Vienna. Even without the world of the first half of 2011 was one to keeping the money liquid and flowing, prodding from Europe’s regulators, banks of suspicious hope. There was enough and if you throw in a legitimate, specific were already reducing the LTV they were positive investment energy built up from concern, like the Greek crisis, and the willing to take on. But Szamely says the the last few months of 2010 so that -- at potential is there for things to genuinely fall imposition of strict new rules under Basel III least in Poland and to some extent in apart. After all, if Bank X had quietly bought is producing a far different environment for the Czech Republic -- deals were at least enough billions of Greek bonds, and the some of the basic assumptions developers going through, after the painstaking due country suddenly diligence already mentioned. defaulted on them, you really wouldn’t But if the first six months of last year began want to have your with a strange mix of hope and suspicion, money parked it ended with fear and distrust. The fear at Bank X at that for the banks was the uncertainty over particular moment. the very backbone of the financial system. Countless European summits and constant It’s a classic credit brinkmanship by everyone from the Greeks crunch scenario, to the American Congress left the financial with trust between institutions suddenly afraid to open their banks slowly purse strings, so unsure were they over the evaporating, and fate of the euro and even the European with it liquidity. Union. Lending to banks ironically becomes The other parallel emotion was distrust. something of an This was not the standard sort of skepticism adrenalin sport, and banks simply have to use when considering bankers are in their the loan requests they receive on a daily DNA very definitely basis. What was so unsettling about the not big risk-takers. 16 regional Banking

Bank market shares: Romania Bank market shares: Poland

and investors used to make. deals were completed even at the end of that these days, banks are now even willing December. This year has begun, if anything to turn down projects they believe will “Some people read Basel III in the sense with the opposite mood, and the more succeed. Other aspects of the company, that just as if you’re an individual home optimistic observers are predicting a slight including its former behavior, are now buyer, you’re fully liable for the loan, if slowdown in market activity. This can be being considered more closely. “If I come you’re a business taking out a loan, you’re seen in the level of loans likely to be made with a client I’ve been trying to get for also going to be fully liable. All the assets of available. years, because he was always going to the your company are going to be subject to competitor that had the lowest margin, it’s liquidation if things go wrong. That means “Probably the most important thing that going to be very hard for me to persuade that this kind of SPV and non-recourse happened in 2011 was the awareness of our management that we want to business lending that’s become such a phenomenon capital constraints and the urgency on with him now. Not after he’s been playing over the past 20 years may disappear.” the part of bank managements that they this kind of game with us.” are lacking capital that they have to do The clear sense one gets when speaking something about it,” says Vladimír Krno, Pavol Hajdu, head of Project & Real Estate to bankers about the coming year is that head of real estate lending at Slovenska Finance at VUB in Bratislava, says his bank’s 2012 looks to be, at best, the opposite sporitelna. “In some cases it was enough real estate portfolio is roughly €500m and “we of 2011. Last year began positively, with to brush up the ratings but in any banks don’t plan to go down,” he says. “Slightly up, positive economic signs, large investment it’s necessary to slow down lending and but market share isn’t a priority for us now, transactions in some countries, and a probably that will slow down 2012.” profitability is. That means we’re selective, generally strong stock market. Momentum and each project has an appropriate price for eventually slowed by the end of the year, Krno says his bank is certainly not pulling which we may offer financing. If someone but despite all that gloom, substantial out of the real estate market, but warns sees it as too expensive, then we cannot help.” This issue is printed on 100% recycled paper

Banking regional 17

Perhaps what’s most remarkable in the Before the crash, after all, Tier 1 capital a positive vibe from rising stock prices current environment is this willingness to levels at banks had fallen to incredibly globally at least made the idea seem let quality-looking projects along, projects low levels, as they sought to leverage possible. Still, with so many investors that would likely pass risk committee every last dime to the hilt, in order to interested primarily in the next big thing, inspection. It’s a seismic shift from the maximize profits, much like developers. the next boom sector, what would be the previous era, when banks would chase any Today, however, in the new regulatory short-term attraction of buying stocks in a and all deals that the risk valuers gave the environment, they have been required sector where ever-heavier regulations was thumbs up. Today, even though far fewer to bring those Tier 1 levels up sharply, squeezing the profits out (for example, by projects now pass the risk department’s to within a single percentage of double increasing as mentioned the Tier 1 capital inspection, banks will only compete for digits. requirements). some This meant they either had to withdraw This is unlikely to go away any time soon. A new sobriety and a healthy respect for some equity, by reducing their loan Banks, and their customers, will have the risks of property lending is one of the books, or raise new money on the capital to get used to the idea that the lending reasons banks are going back to basics. markets. This may sound simple enough, habits being established now are gradually But the impact of the new regulations but neither are simple procedures. With becoming the norm. While there’s still shouldn’t be underestimated either. If most banks in the same boat, refinancing ample reason to believe that we will developers complained bitterly that banks a competitor’s loans as they try to exit a emerge from the crisis in the not-too- were asking for exorbitant levels of equity, project is difficult indeed since the last distant future, there’s far less cause to hope they may have taken some secret pleasure thing most banks needed was new debt. that five years from now, banking will from the fact that banks were getting a look anything like it did five years ago. The large helping of their own medicine. Raising money on the world’s capital sooner the industry gets used to that idea, markets was also no easy task, though the better for everyone.

Bank market shares: Czech Republic Bank market shares: Hungary 18 regional Banking

S&P’s European Ratings

Local Foreign T&C Local Foreign T&C No. Country No. Country Currency Rating Currency Rating Assessment Currency Rating Currency Rating Assessment 1 Austria AA+ AA+ AAA 17 Slovak Republic A A AAA 2 Belgium AA AA AAA 18 Slovenia A+ A+ AAA 3 Bulgaria BBB BBB A 19 Spain A A AAA 4 Croatia BBB- BBB- BBB+ 20 Switzerland AAA AAA AAA 5 Czech Republic AA AA- AA+ 21 Turkey BBB- BB BBB-

6 Denmark AAA AAA AAA 22 Ukraine B+ B+ B+

7 Germany AAA AAA AAA 23 United Kingdom AAA AAA AAA 8 Finland AAA AAA AAA 24 Russia BBB+ BBB BBB 9 Greece CC CC AAA 10 Hungary BB+ BB+ BBB 11 Italy BBB+ BBB+ AAA 12 The Netherlands AAA AAA AAA 13 Norway AAA AAA AAA 14 Poland A A- A+ 15 Portugal BB BB AAA 16 Romania BB+ BB+ BBB+

S&P explained the downgrading of several European countries in January by saying the policy initiatives Europe’s policymakers took in the weeks prior hadn’t convinced them they’d be able to deal with tightening credit conditions, increasing risk premius, the risk of government and household deleveraging and weakening economic growth prospects. The agency believes the crisis has been caused by an inability by Europe’s periphery to balance its books and by rising imbalances between the EMU’s core and the periphery. This issue is printed on 100% recycled paper

Banking regional 19

Poland and the Czech Republic seem to be Kim Politzer Jos Tromp highest on most investors’ wish lists and it is likely to remain like that during the (Invesco) (CBRE) remainder of the year.

What do the ratings What do the ratings tell tell you about the you about the standing standing of CEE countries vis a vis of CEE countries vis a vis Western Europe Thomas Beyerle Western Europe in terms of economic in terms of economic stability, and the stability, and the potential for future potential for future growth? (IVG) growth? What ratings do tell one is the way I don’t think it’s a key driver of the way we countries are perceived by the financial What do the ratings look at markets. It’s an aspect of the market markets. However, they do not tell you tell you about the in looking at all markets and of course we the whole story you need to know when standing of CEE countries vis a vis keep an eye on it but it’s not the be all and selecting one country above another. Western Europe in terms of economic end all. We know the CZ market is more An example is Poland, which has ratings stability, and the potential for future stable than the rest of Europe. The economy below the Czech Republic’s. This can be growth? isn’t as volatile, the general population explained by the fact that Poland has First of all it’s a long way from a rational is more affluent, it’s a reasonably stable substantial outstanding debt – actually rating from a macro perspective to a government and that’s reflected in the AA the highest in Central Europe – as bottom-up view and market appraisal. rating. But we wouldn’t use that to say it’s well as a relatively volatile currency. It means you can´t translate it directly. less risky than Spain because it’s a double A. Czech Republic’s debt (in absolute and If I try to make comparisons between relative terms) is lower than Poland’s, the west / CEE region one can see A good example would be Poland, which however, its economic prospects are really clearly that “the big picture” of has just an A rating here while Slovakia also less impressive. In addition, the Czech our fundamental market is reflected in has an A rating. But when we’re looking at Republic is more strongly dependent the S&P picture. But again - a financial/ the markets we’d much prefer Poland to on Europe as is Poland, again a factor to currency rating has no direct correlation Slovakia because of the size and liquidity of take into consideration when looking at with a single property. the market from a real estate perspective. ratings. How do the ratings the ratings of If Russia, Ireland and Italy are triple B, Which of the CEE countries is reacting the countries in CEE correlate with which of them would we want to take on? pro-actively with market-positive your view of the risk for real estate With Ireland, there’s always a question, strategies? investors, banks and developers? if the Eurozone starts losing members, if In general I would say a lot has been In our risk models we use the risk it would decide to go or not. With Italy done in Central Europe as well as in premium of a country - which is a hard we know that the problem is how they Southeastern Europe in order to attract means measurable factor for investors. In deal with an enormous amount of debt foreign capital. Some examples: Poland other words: what do we expect - in basis with an economy that doesn’t grow has strongly improved its image based points - when we make an investment in, very fast. Russia is a completely different on fighting corruption and reducing red say, Hungary, which at present is 250 bps set of risks: it’s political risk, economic tape. Romania implemented structural over the net initial yield. volatility, and it’s almost a one-trick fiscal improvements recently. Croatia is economy because it’s so dependent about to join the EU. On the other hand, Which of the CEE countries is reacting upon its natural resources. But those BBB the perception of Hungary decreased pro-actively with market-positive ratings don’t reflect the difference in the amongst investors based on a range of strategies? real estate, or the difference in the legal events that took place. For now especially Speaking negatively, not Hungary! But protection you’d have as an investor. we see a big effort in Poland. 20 regional Top 50

Since the Crisis CEE’s Top Office Developers: 2008 - 2012

The listing is based on information we have gathered to the best of our abilities, provided primarily by the developers themselves. We welcome any feedback, corrections and additions.

2 3

Slavomir Piotr Jankovic Kroenke Chairman of General Director the Board

Ghelamco Jeroen van der Toolen Managing Director HB Reavis Group GTC Country: Poland Country: Slovakia Country: Poland Total GLA of Projects: 171,913 sqm Total GLA of Projects: 140,060 sqm Total GLA of Projects: 130,615 sqm Total Projects Completed: 6 Total Projects Completed: 3 Total Projects Completed: 7 This issue is printed on 100% recycled paper

Top 50 regional 21

Top 10 Office Developers Poland

4 5 Total GLA sqm No. Company Name 1 Ghelamco 171,913 Árpád Remon 2 GTC 130,615 Török L. Vos 3 Echo Investment 85,000 CEO Managing 4 Skanska Property Poland 65,682 Director 5 Grupa Buma 49,400 6 Hochtief Development Poland 39,278 7 Karimpol Poland 38,279 8 Allcon Investment 31,360 TriGranit Development Corp. CTP Invest 9 Adgar Development 25,840 Country: Hungary Country: Czech Republic 10 AIG/Lincoln 10,400 Total GLA of Projects: 94,500 sqm Total GLA of Projects: 91,339 sqm Total GLA is from projects completed Total Projects Completed: 4 Total Projects Completed: 3 from 01.01.2008 until 31.01.2012 6 7 8

Piotr Peter Nicklas Gromniak Noack Lindberg Chairman of Managing President the Board Director (Skanska Com- mercial De- velopment Europe (CDE)

Echo Investment Hochtief Development CR Skanska Property Poland Country: Poland Country: Czech Republic Country: Poland Total GLA of Projects: 85,000 sqm Total GLA of Projects: 66,000 sqm Total GLA of Projects: 65,682 sqm Total Projects Completed: 4 Total Projects Completed: 2 Total Projects Completed: 3 10 9

Stefan Oana | Country Manager Tomáš Velemínský BlueHouse Capital Director and Country: Romania Executive Head Total GLA of Projects: 62,546 sqm Total Projects Completed: 3

Erste Group Immorent ČR Country: Czech Republic Total GLA of Projects: 62,301 sqm Total Projects Completed: 3 City Gate Olympia Tower 22 regional Top 50

Top 10 Office Developers Czech Republic 11 12

Total GLA No. Company Name 1 CTP Invest 91,339 Steven Jean- 2 Hochtief Development CR 66,000 Tichy François Ott 3 Erste Group Immorent ČR 62,301 General Manager CEO and Founder 4 AIG/Lincoln 59,000 5 ORCO Property Group 57,800 6 Finep 50,000 7 Lighthouse Group 43,300 8 Red Group 36,000 AIG/Lincoln Orco Property Group 9 PASSERINVEST GROUP 30,000 Country: Czech Republic Country: Czech Republic 10 J&T Real Estate 22,713 Total GLA of Projects: 59,000 sqm Total GLA of Projects: 57,800 sqm Total Projects Completed: 2 Total Projects Completed: 3 Total GLA is from projects completed from 01.01.2008 until 31.01.2012 13 14 15

Jozef Tomáš Oravkin Pardubický Managing Managing Partner Director

Willbrook International Penta Investments Finep Country: Romania Country: Slovakia Country: Czech Republic Total GLA of Projects: 53,000 sqm Total GLA of Projects: 52,600 sqm Total GLA of Projects: 50,000 sqm Total Projects Completed: 2 Total Projects Completed: 2 Total Projects Completed: 1 17 16

Konrad Dziewoński Peter Chairman of the Board Korbacka Chairman of Grupa Buma the Board Country: Poland Total GLA of Projects: 49,400 sqm Total Projects Completed: 4

J&T Real Estate Country: Slovakia Total GLA of Projects: 47,774 sqm Total Projects Completed: 2 Rondo Business Park This issue is printed on 100% recycled paper

Top 50 regional 23

Top Office Developers Slovakia

Total GLA No. Company Name 18 1 HB Reavis Group 140,060 2 Penta Investments 52,600 Robert Snow | CEO 3 J&T Real Estate 47,774 GTC 4 TriGranit Development Corp. 24,800 5 Ballymore Properties 24,500 Country: Hungary Total GLA of Projects: 46,870 6 S IMMO AG 20,762 Total Projects Completed: 2 7 VSH Development 20,000

Total GLA is from projects completed Spiral I from 01.01.2008 until 31.01.2012 19 20 20

Lance Tamir Adrienn Bozman Winterstein Lovro Managing CEO CEO of Hungary Director

AIG/Lincoln Lighthouse Group Ablon Country: Hungary Country: Czech Republic Country: Hungary Total GLA of Projects: 46,461 sqm Total GLA of Projects: 43,300 sqm Total GLA of Projects: 43,300 sqm Total Projects Completed: 2 Total Projects Completed: 2 Total Projects Completed: 2 22 23 24

Gábor Piotr Futó Stark Founder, CEO Member of the Board

River Invest Futureal Hochtief Development PL Country: Romania Country: Hungary Country: Poland Total GLA of Projects: 43,000 sqm Total GLA of Projects: 42,877 sqm Total GLA of Projects: 39,278 sqm Total Projects Completed:2 Total Projects Completed: 5 Total Projects Completed: 1 24 regional Top 50

25 27 Harald Richard Ness Jeschek Managing Director Managing Director Red Group Country: Czech Republic Total GLA of Projects: 36,000 sqm Total Projects Completed: 1 Karimpol/ Immoeast Country: Poland Total GLA of Projects: 38,279 sqm Total Projects Completed: 2 The Orchard 26 28 29

Ovidiu Robert Ferenc Sandor Neale Daróczi CEO Managing Managing Director Director

Modatim Portland Trust Hochtief Development Country: Romania Country: Romania Country: Hungary Total GLA of Projects: 38,000 sqm Total GLA of Projects: 35,000 sqm Total GLA of Projects: 32,500 sqm Total Projects Completed: 1 Total Projects Completed: 1 Total Projects Completed: 1 30 31 32

Kay-Uwe Ignác Sergiusz Blandow Torma Gniadecki Managing CEO Chairman of Director the Board

IVG Hungary GRT Group Allcon Investment Country: Hungary Country: Hungary Country: Poland Total GLA of Projects: 32,208 sqm Total GLA of Projects: 31,792 sqm Total GLA of Projects: 31,360 sqm Total Projects Completed: 3 Total Projects Completed: 2 Total Projects Completed: 2 This issue is printed on 100% recycled paper

Top 50 regional 25

33 33 Top Office Developers Hungary

Total GLA sqm No. Company Name Radim Liviu 1 TriGranit Development Corporation 94,500 Passer Tudor 2 GTC 46,870 Chairman of Owner 3 AIG/Lincoln 46,461 the Board 4 Ablon 43,300 5 Futureal 42,877 6 Hochtief Development 32,500 7 IVG Hungary 32,208 PASSERINVEST GROUP Genesis Development 8 GRT Group 31,792 Country: Czech Republic Country: Romania 9 Skanska 26,000 Total GLA of Projects: 30,000 sqm Total GLA of Projects: 30,000 sqm 10 WING 18,300 Total Projects Completed: 1 Total Projects Completed: 2 Total GLA is from projects completed from 01.01.2008 until 31.01.2012 35 36 36

David Matthew Allen Proskine Partner CEO

Chayton Capital Avrig35 Upground Estates Country: Romania Country: Romania Country: Romania Total GLA of Projects: 28,723 sqm Total GLA of Projects: 27,000 sqm Total GLA of Projects: 27,000 sqm Total Projects Completed: 1 Total Projects Completed: 1 Total Projects Completed: 1 39 38 Andreas Lindelöf George Managing Director Argentopoulos CEO Skanska Country: Hungary Total GLA of Projects: 26,000 sqm Total Projects Completed: 1

Baneasa Developments Country: Romania Total GLA of Projects: 26,000 sqm Total Projects Completed: 1 Nepliget Center 26 regional Top 50

Top Office Developers Romania 40 41

Total GLA sqm No. Company Name 1 BlueHouse Capital 62,546 Eyal Árpád 2 Wilbrook 53,000 Litwin Török 3 River Invest 43,000 Vice-President CEO 4 Modatim 38,000 5 Portland Trust 35,000 6 Genesis Development 30,000 7 Chayton Capital 28,723 8 Avrig35 27,000 Adgar Development TriGranit Development Corp. 9 Upground Estates 27,000 Country: Poland Country: Slovakia 10 Baneasa Developments 26,000 Total GLA of Projects: 25,840 sqm Total GLA of Projects: 24,800 sqm Total Projects Completed: 1 Total Projects Completed: 1 Total GLA is from projects completed from 01.01.2008 until 31.01.2012 42 43 44

Mike de Mug Sven Michael M. Group Retail Lemmes Stanciu Director Country Manager President & CEO

Ballymore Properties AIG Lincoln & Dinu Patri- Search Corporation Country: Slovakia ciu Global Properties Country: Romania Total GLA of Projects: 24,500 sqm Country: Romania Total GLA of Projects: 23,000 sqm Total Projects Completed: 1 Total GLA of Projects: 24,000 sqm Total Projects Completed: 1 Total Projects Completed: 1 46 45 Peter Korbacka Alois Chairman of the Board Vyleta Managing J&T Real Estate Director Country: Czech Republic Total GLA of Projects: 22,713 sqm Total Projects Completed: 1

CA Immo Czech Republic Country: Czech Republic Total GLA of Projects: 22,000 sqm Total Projects Completed: 1 Westend Square This issue is printed on 100% recycled paper

Top 50 regional 27

47 46 Martin Jaros Roger Chairman of the Board Dunlop CEO PSJ Invest Country: Czech Republic Total GLA of Projects: 22,000 sqm Total Projects Completed: 1

Avestus Real Estate Country: Czech Republic Total GLA of Projects: 21,100 sqm Total Projects Completed: 1 Main Point Karlin 49 50

wards A W IJ in C n

e r Friedrich Tomáš Wachernig Kašpar Board Member Managing Director

S IMMO AG VSH Development Country: Slovakia Country: Slovakia Total GLA of Projects: 20,762 sqm Total GLA of Projects: 20,000 sqm Total Projects Completed: 1 Total Projects Completed: 1 Mokotow Nova (Ghelamco)

ard ard ards Aw s W Aw s W Aw W J i J i J i I n I n I n C n C n C n e e

r r

Amazon Court (CA Immo) Deloitte House (Skanska Property Poland) Millenaris (WING) 28 regional Top 50

Top 50 Since the Crisis - CEE’s Top Office Developers: 2008 - 2012

No. of Projects Total GLA No. of Projects Total GLA No. Company Name Country No. Company Name Country Completed in sqm Completed in sqm 1 Ghelamco Poland 6 171,913 26 Modatim Romania 1 38,000 2 HB Reavis Group Slovakia 3 140,060 27 Red Group Czech Republic 1 36,000 3 GTC Poland 7 130,615 28 Portland Trust Romania 1 35,000 4 TriGranit Development Corp. Hungary 4 94,500 29 Hochtief Development Hungary 1 32,500 5 CTP Invest Czech Republic 3 91,339 30 IVG Hungary Hungary 3 32,208 6 Echo Investment Poland 4 85,000 31 GRT Group Hungary 2 31,792 7 Hochtief Development CR Czech Republic 2 66,000 32 Allcon Investment Poland 2 31,360 8 Skanska Property Poland Poland 3 65,682 33 PASSERINVEST GROUP Czech Republic 1 30,000

9 BlueHouse Capital Romania 3 62,546 Genesis Development Romania 2 30,000

10 Erste Group Immorent ČR Czech Republic 3 62,301 35 Chayton Capital Romania 1 28,723 11 AIG/Lincoln Czech Republic 2 59,000 36 Avrig35 Romania 1 27,000

12 ORCO Property Group Czech Republic 3 57,800 Upground Estates Romania 1 27,000

13 Willbrook International Romania 2 53,000 38 Skanska Hungary 1 26,000 14 Penta Investments Slovakia 2 52,600 Baneasa Developments Romania 1 26,000 15 Finep Czech Republic 1 50,000 40 Adgar Development Poland 1 25,840 16 Grupa Buma Poland 4 49,400 41 TriGranit Development Corp. Slovakia 1 24,800 17 J&T Real Estate Slovakia 2 47,774 42 Ballymore Properties Slovakia 1 24,500 18 GTC Hungary 2 46,870 AIG Lincoln & Dinu Patriciu 43 Romania 1 24,000 19 AIG/Lincoln Hungary 2 46,461 Global Properties 20 Lighthouse Group Czech Republic 2 43,300 44 Search Corporation Romania 1 23,000 Ablon Hungary 2 43,300 45 J&T Real Estate Czech Republic 1 22,713 22 River Invest Romania 2 43,000 46 CA Immo Czech Republic Czech Republic 1 22,000

23 Futureal Hungary 5 42,877 PSJ Invest Czech Republic 1 22,000

24 Hochtief Development PL Poland 1 39,278 48 Avestus Real Estate Czech Republic 1 21,100 25 Karimpol Poland Poland 2 38,279 49 S IMMO AG Slovakia 1 20,762 50 VSH Development Slovakia 1 20,000

The listing is based on information we have gathered to the best of our abilities, provided primarily by the developers themselves. We welcome any feedback, corrections and additions.

ard ards aw s w aw w j i j i i n i n C n C n e

For more information please contact:

Robert Fletcher | CEO | +48 506 074 042 | [email protected]

Eurovea (Ballymore Properties) Spielberk Office Centre (CTP Invest) Swan Office & Technology Park (Chayton Capital) Residential Developers

Industrial Developers Retail Developers

Real Estate Office Agencies Developers

50 reasons why 2012

For more information please contact:

Robert Fletcher | CEO | +48 506 074 042 | [email protected] 30 Czech Republic Q&A

Prague‘s Deputy Mayor says a Tomáš Hudeček: simplified master plan would help Simplicity is root out endemic corruption corruption‘s enemy

As someone with no history in local politics, with no connections, cartographer, I find it very difficult to read it. you’ve rushed into the Prague planning system like a flood. No one seems to know what to expect from you. It sounds like what you really want to do is activate the anti- They don’t realize that that’s good. If I had any connections, then I’d development activists. have a problem. It’s not activating them, but making discussion possible. The state of society now is that citizens assume there’s corruption involved, and so So that unpredictability is an advantage for you? they fight every project more aggressively because of that. So the only I haven’t thought about it that way. I just try to use common sense, thing I can do in that situation is to make it possible for investors and though common sense is quite difficult for politicians, and especially citizens to understand the investment plans and to make discussion for civil servants, to apply. If there’s some kind of a system that’s been possible beforehand. The simpler it is, the more open. running, whether it’s master planning, changes to the master plan, construction permits and zoning decisions, you run into a great You only have until 2015 to do this. Can you make it? With all the number of conflicting tendencies and pressures. objections that have to be considered and the mandatory waiting periods? You claim you want to get rid of corruption. How? We have to make it. Because the ministry hasn’t said what comes Today, the existing master plan is so rigid that to build anything you after that. Based on the time line that we’ve worked out, it should be have to request a change to it. And because you have an investor possible to complete it in time. The waiting periods are no problem, applying for the change, and you have a politician sitting here [on they work out to just half a year. the other side], the change takes place on the basis of bribes. A sort of protection charge. So the new master plan will have just You’re also trying to change the way Prague deals with its “large four categories: landscape, recreation, residential and production. development zones”. These categories will be on top of each other. If it’s possible to build In this case, the city should act like a developer. It should take an some sort of production project, then you can also build residential interest in seeing the zones developed. It hasn’t shown this so far, and recreational projects there. That would mean there are just it’s more like a caboose following the train, waiting to see what the two categories of land: investors will do. Whether it’s the city’s various train stations, or the so- construction and non- called “Trojmezi” zone [between Prague 10, 11 and 15, it should work construction. A black and the way it does in England where they have a development agency to white master plan. whom the city gives all the responsibility for what gets built in those regions. And you think you can get rid of corruption that way? But most of those zones now belong to the private sector don’t It would free up Prague, and they, so how can the city just come in and start deciding what can the activities of investors and be done there? Isn’t that stealing? its citizen. They would be able No, that’s not the way it is. The development agency should help to become involved much where there are problems. That means, where the City of Prague has more easily. land and wants to develop it, or in places where there are four owners and they can’t decide how to proceed. Bubny and the Trojmezi zone Just because they’d be able are typical examples. You can’t reach an agreement there without the to understand the master city taking an active role. If there’s just one owner, then it’s fine. He can plan? build what he wants. But Prague missed its opportunity when it got Yes. Even though I’m a rid of that land. This issue is printed on 100% recycled paper

Development Czech Republic 31

Will office tenants beat the retailers to pre-leasing space in Diamant in the downtown Prague? rough Nina Fibigerová

When developers first started trying to Carlo Gradl, managing director of the Max says a wide variety of units is on offer, do something with Vaclavske nam. 3, Immo brokerage, says, a lease contract for ranging from 170 to 920 sqm, as one of there was no such thing as environmental the 1,480 sqm of residential on the top the three floors has been cut to small certificates, energy efficiency for two floors could be signed immediately units. buildings was unheard of, and sustainable with an extended stay apartments development was scoffed at as the realm operator, but finalizing the nearly 6,000 The building, designed by the architect of crazy left-wing nut jobs. But despite sqm of retail space on the lower floors is Václav Hlaváček, is scheduled for the city’s acceptance that the ugly the current priority. completion in September this year. Diamant building that used to infest the plot could be torn down and replaced, Modern office and retail tenants may Tenants wanted the project went exactly nowhere from be putting increased importance on the 1990’s until the most recent recession. environmental credentials, but achieving them is no guarantee of success. “There Now, with the skeleton of the new are potential tenants, German and US in building nearing completion, the particular, whom we could not address if developer has announced the building the project would not be certified,” says will achieve a gold LEED certification. Gradl. It’s ironic, perhaps, that the project remained stuck throughout the real He spent over a year in negotiations with estate boom of the ‘aughties, but began a department store operator for all 5,770 taking shape, finally, once the crash sqm of retail, but an agreement on the began hitting hardest. Apparently rent was never reached. The investor, hoping to take advantage of a lack of Wolfgang Muller, then decided to cut the competing projects, the developer space into two, hoping it would be able began construction without pre-leases to get two fashion tenants to take the in place. With just a few months before space without being forced to give up on completion, this situation hasn’t changed. the prime rents it requires. The 3,510 sqm office segment is vacant as well. Gradl

Ernst & Young takes other name on the still quite short list of fu- the economy. A record drop of 9.2 percent 10,000 sqm of office ture users of the space in Florentinum. is foreseen in 2012 for the sector, which Penta has signed up its first has been on a downward track for three tenant for Florentinum. Ernst Construction successive years as it is. In 2013, it’s hoped & Young has agreed to take 10,000 sqm of sector suffering this downward spiral should level off at the total of 49,000 sqm in a project that will The crisis in the construc- least a bit to “just” a 3.9 percent decrease, replace Česká Typografie building at Na Flor- tion sector is set to deepen according to analysis by CEEC Research. enci. The whole complex, including 8,000 over the course of 2012, warn the big Medium to small businesses will be the sqm of retail, will be completed in two years, players in the construction industry, argu- hardest hit, as the lack of jobs force the just as Ernst & Young ‘s lease in Charles Square ing that the austerity measures being im- big contractors to shift their focus onto Center in Prague 2 will terminate. Penta is an- posed by the government are throttling smaller orders. 32 Czech Republic Development

In the struggle for control of Opava’s retail market, Develon Developers dueling looks to have won at least the first in Opava round over Crestyl Nina Fibigerová

In February, the developer Develon So was Develon’s leasing the store of the 26,000 sqm of leasable area already announced it had won a tender for the lease simply an attempt to block its rival from taken. of a 1,500 sqm store called Slezanka from acquiring square frontage? Develon the city of Opava on the city’s main square partner Radim Bajgar insists that the However, Crestyl’s CEO claims he’s Horní nám. On the face of it, this seems a intention was simply to increase the determined to complete his project as well. bizarre move for a company that’s hoping volume of retail space it controls in “I honestly would not have signed a new to complete a 26,000 sqm shopping mall Opava, but it bears the hallmarks of a amendment to the future purchase contract just 300 meters away. A competing scheme, long-term game of real estate chess is on the land with the city [in February] if I Crestyl’s Opava City Center, is located just off being played out. thought it was no good,” says Omar Koleilat. of Horní square in the same block of buildings “If I’d have preferred to walk away, I could as the store Develon has just leased, but it In the short-term, Develon’s shopping have.” His company focuses on centrally lacks direct frontage to the square. Slezanka center Breda & Weinstein is looking like the located shopping malls in the regional cities, could have provided a natural connection to winner, despite having started later than and it’s with this experience that he insists Crestyl’s planned scheme, but the developer its rival Crestyl began Opava City Center. Opava City Center has a superior location has always maintained that the price the city Crestyl, which has been working on the site with natural footfall. The building is to be was demanding for it was simply too high. since 2004, now concedes that its project is located just behind Slezanka on a plot Having given up on selling the building, the unlikely to be completed before 2015. Breda connecting Opava’s central historical square city of Opava opted to lease the space, and & Weinstein, which Develon didn’t start with the only pedestrian zone in the city. the highest rental offer was submitted by developing until 2006 is now scheduled for “The project is tall and it will have enough Develon. completion in November, with 80 percent visibility. It has been designed so that we do not need Slezanka,” says Koleilat. “We have a Breda & Weinstein looks to be winning the race to open first in Opava ten meter wide, four meters high passage to Opava City Center from the square.”

Giving up on Slezanka was a matter of necessity, as the math for the project just wasn’t working, says Koleilat. “We couldn’t afford to pay CZK 200m (€8m) just to tear it down and get a 1000 sqm plot.” But with the Czech economy faltering and the Eurozone teetering, Koleilat has also down sized his own vision. Originally planned to offer 27,000 sqm of commercial space, Opava City Center is now designed for just 15,000 sqm. “We really adjusted the project to the current market conditions,” says Koleilat. “Of course it would be better if it weren’t for Breda & Weinstein. But there will be another cycle, the tenants will expand, and we believe we have a very good location.“ This issue is printed on 100% recycled paper

Retail Czech Republic 33

The other big hamburger vendor Burger King breaks finally grabs a spot in the center of through with Prague Prague flagship Nina Fibigerová

Two years since after the first Burger King Ultimately, the opportunity to sell to the AmRest will have met its expansion target restaurant opened in the Metropole Zličín hordes of visitors to Prague filling the for the brand in 2012, but Watson leaves food court, the chain has finally broken center proved too attractive to pass up. door open for unforeseen opportunities. onto Prague’s high street. AmRest, one of the three franchisers of Burger King in “We should be able to attract tourists from “We need to diversify, as we have Burger the Czech market, has opened a flagship Wenceslas square and we are also hitting Kings only in the shopping centers. Our restaurant near Wenceslas square on 28. all the Můstek metro exits. And this is quite focus will be more on the drive-thrus, with října street. traditionally a walking street between which you can build the brand image very Národní to get to the downtown Na well and target both walking customers This short stretch of car-free sidewalk is Příkopě. From my point of view, it ticked all and drivers,” says Watson. a rather short, but forgotten extension the location boxes we were seeking for our of Prague’s high street, running in the flagship downtown store,” says Watson. AmRest will be looking to open more KFCs opposite direction as Na Příkopě at the and Starbucks this year, though it thrives in bottom of Wenceslas Square. It’s only been The next flag on the Burger Kings map will the tourists area of the country. recently that the image of this area has be Nová Karolina in Ostrava, scheduled begun to move away from a dormant retail to open at the end of March in Ostrava, “Starbucks target is for 5 this year, that zone occupied by cheap discount shops. where AmRest has leased space for the is our stated aim. We are looking in The arrival of the attractively-designed three brands it operates in Czech Republic: downtown Brno, where we want to open new Burger King will do much to improve KFC, Starbucks and Burger King. By our first store.” the street’s standing in the eyes of other opening these two Burger King outlets, retailers, though the transformation is still in its infancy. The chain’s flagship restaurant has been a long time coming While it’s more used to opening its Burger Kings in shopping malls, Amrest jumped on the opportunity to open a two-storey restaurant in a newly restored, historical building called Elhenův dům. “Rents are 40-50 percent lower on 28. října compared to Na Příkopě,” says Jan Kotrbáček, head of Cushman & Wakefield’s retail team, who brokered the lease.

Fraser Watson, the AmRest’s real estate manager for AmRest in CEE, admits the rent package was important for AmRest: “This restaurant is 400 sqm, so if you are talking about such a large area then it easily becomes disproportionally expensive to the sales you can make,” he says. 34 Czech Republic Development

It wasn‘t part of the original plan, but driving footfall up is now all Can extinct Dinos that matters at Liberec Plaza save Liberec Plaza? Nina Fibigerová

In a move designed to fill some of but it’s uncertain how much permanent regular footfall the mall needs,” says the the empty space at the Liberec Plaza traffic it will manage to produce. source. shopping mall, its developer Plaza Centers CR opened a DinoPark at the Having opened four DinoParks already in Liberec Plaza hasn’t managed to beginning of February. Spread over 6,000 the Czech Republic, the park’s operator bring in the standard mix of retailers sqm and two floors, the new DinoPark is West Media is enthusiastic about its that inhabit most malls in the Czech certain to bring in families at least once, premier shopping mall location. “Liberec Republic, as they have gravitated to is the first city where we’ve built a the city’s other malls like Forum Liberec Will enough parents shop too? DinoPark completely inside,” says Jiří (by MultiDevelopment) and and Nisa Machálek from West Media. (developed by ING). This new attraction is a recognition of the existing balance of “Its better than having empty space,” retail power in town and an adaptation says one CiJ source. “But this kind of to the situation. “DinoPark is the first lease doesn’t produce much profit. step in the repositioning of LiberecPlaza,” In functioning malls, it’s more of a says PlazaCenters CEO Sagiv Meger. “We complementary service.” DinoParks are want to focus further on entertainment, very popular at the moment and will relaxation, education, sports and health inevitably attract more people to the & beauty concepts. DinoPark is the first location, some of whom will will spend and very important step for us on this money in the mall. “But it’s not the kind of journey.“

CPP claims end of the 5 percent VAT rate hike that took ef- ing prices for new properties,” explains price cuts fect on January 1. The more successful Němeček. Prices have fallen further at the scheme, the more likely its developer With more than 250 units of a total of Central Park Praha, at least is to pass on the expense to its clients. 547 now sold the troubled project may on 20 units the scheme’s developer CPP But Němeček says sales at CPP were rela- be heading out of the immediate danger now acknowledges are proving more dif- tively strong in 2011, spurred on perhaps zone, but few are predicting the city’s resi- ficult to sell. While the most attractive by concerns about the rate increase. “Last dential market will be better than last year. flats are still selling for CZK 75,000, the year, we sold 90 flats, which is an excel- price per square meter on some others lent number considering that the stand- Has the bottom been reached? has fallen in recent weeks to just CZK ard residential project nowadays has 50 55,000. CPP’s director Radomír Němeček units on average,” he says. “Just before insists the latest price cuts are the last the VAT increase we signed six contracts that will be made, and that the remaining a week.” units have now reached their final level. “The increase of the VAT rate means it is In fact, it could be argued that the deci- more difficult for many people to buy a sion not to increase prices is in itself a new flat because the developers have to price cut. That’s precisely what other incorporate the increased expenses into developers are arguing, as they’ve in- their prices. Central Park Praha has decreased prices at their projects to match cided to go against the trend of increas- Topics covered will include:

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ced_invest_advert.indd 1 2/27/2012 12:13:13 PM 36 Czech Republic Industrial

CEE demand for industrial space C&W: Czech is rising just about everywhere, industrial space except for the Czech Republic demand falls Nina Fibigerová

Demand for modern industrial just 770,000 sqm. The highest year-to- Ferdinand Hobil (C&W) warehouses fell in the Czech Republic in year increase in activities was seen in 2011, going against a trend of increasing Slovakia, where take-up volume almost take-up across Central Europe. In fact, doubled. there was a record level of take-up across the region, with the 3.2 million Vacancy rates have declined across the sqm far out-stripping the 2.8 million sqm region for the second year running, leased in 2008. “The increasing demand having reached an average slightly in reflects businesses’ confidence in the excess of 10 percent at the end of 2011. market,” says the Head of CE Industrial While more than one-fifth of the modern Team, Cushman & Wakefield Ferdinand industrial space built in Hungary is Hlobil. (These take-up figures are for available for rent, Slovak vacancy fell to the Czech Republic, Poland, Slovakia, just 5 percent in 2010, and it has stayed Hungary and Romania.) there. In Romania, vacancy rate plunged by ten per cent, year-on-year, to the Poland saw the largest share of leasing current 4.7 percent. Despite declining actvity, as it was responsible for almost leasing activity, Czech vacancy havs 60 percent of the CE volume of deals improved to just 6.3 percent as of the last year. But in the Czech Republic, end of 2011. leasing fell from 863,000 sqm in 2010 to

Bubny office scheme The office complex should be built on a 1.5 services component will be included in the passes EIA ha plot that once served as a used car lot. It project for use by employees and visitors to Skanska Property has re- will offer 24,900 sqm of office on seven floors, the building. Skanska Property will be seek- ceived its EIA approval for with parking garage and storage space on ing LEED certification for the scheme. an office project it plans to build on land it three underground levels. A small retail and bought from the developer Orco in Prague 7. North East Corner, the name of the project Skanska Property could take the first steps to rejuvenating the old Bubny railyards which describes its location in the Bubny rail station site, was designed by Cigler Marani architects. The EIA documentation indicates a start of construction in autumn 2012, but a CIJ source admits that complicated planning issues could extend this process. However, the developer has managed to have the construction ban for the plot rescinded, a sta- tus which applies for the whole Bubny area. Completion of the building could take place in 2014. Wilson and Partner is pleased to announce that is has been awarded “Law Firm of the Year” for the third year running in the prestigious CIJ Awards 2011, Czech Republic.

We would like to thank all our clients and business partners for their c o-operation and support in 2011 and to wish them all a successful 2012.

REA L E S T A T E BANKING & FINANCE

Law Firm of the Year

Wilson & Partners

C O R P ORA TE / M & A ANTITRUS T / REGULA T O R Y www.wilsonscee.com 38 Czech Republic Retail

If retailers were expanding faster, OC Central in Jablonec would no Permits, market doubt be completed sooner delay Jablonec mall Nina Fibigerová

The opening of Crestyl’s shopping center in The developer says that a lack of power Crestyl’s attempts to complete the scheme. Jablonec nad Nisou in North Bohemia has infrastructure in the location is behind been postponed for two years. Originally the refusal of local authorities to issue the Acquisition and leasing director Martin Novák scheduled for completion next year, OC needed permit, though the state-run energy admits that the overheated retail market in Central is still waiting for its construction company ČEZ is said to be building the the nearby neighboring town of Liberec has permit, which means its opening will have to needed electric substation. It seems possible always influenced progress at OC Central. wait until 2014 in the best case scenario, or therefor that market issues could be blunting Just 15 kilometers away, Liberec became a later. battleground for most of the retail developers active on the market, with some winners With Liberec so near, retail schemes have trouble taking root in Jablonec nad Nisou and some spectacular losers resulting. Just last year, the second phase of the successful project Forum (MultiDevelopment) opened, as did Plaza Liberec, whose inability to attract enough standard retailers has led to the inz UIE 215x120+3:Sestava 1 1/10/12 3:31 PM Stránka 1 opening in recent days of a dinosaur park on two levels.

In view of this situation, the developer of OC Central seems to have found it prudent to wait for a couple years for the market to settle when shoppers from Jablonec might be more interested in shopping opportunities closer to home. “This 50,000-resident city has a different catchment than Liberec,” says Novák.

He claims Crestyl is negotiating with tenants about pre-leases, including discussion with H&M about the final concept of the mall, which would be the only centrally located center in Jablonec. Mezinárodní Mezinárodní Mezinárodní veletrh veletrh investiãních veletrh techniky Štvanice Island a modern sports and relaxation zone. To Back to the drawing board komunálních pﬁíleÏitostí, pro tvorbu a ochranu starts over again actually hold the tender, however, the city technologií podnikání a rozvoje Ïivotního The city of Prague launched first has to cancel a lease contract it signed a sluÏeb v regionech prostﬁedí a tender to choose a design a decade ago with the company Meridian company that would prepare a study for Spa, which had planned to build a fitness I www.bvv.cz/urbis-technologie I www.bvv.cz/urbis-invest I www.bvv.cz/envibrno the future use of the Štvanice island, lo- and wellness center on the island. The cated between Prague 1 and 7 in the mid- company is seeking a financial settlement dle of the Vltava river. For years, the city’s with the city before it agrees to cancel SoubûÏnû probíhají: vision has been to redevelop this area into what amounts to an 88-year lease. 24.– 27. 4. 2012 Brno - V˘stavi‰tû This issue is printed on 100% recycled paper

News Czech Republic 39

Shell for Nová companies as well. Nová Karolina Park, de- European Commission Karolina office nears signed by Vít Máslo and David R. Chisholm, foresees recession completion CMC architects, and built by Gemo Olomouc The Czech economy will PasserInvest Group will com- is general contractor, is scheduled to open in grow by 0.7 percent, ac- plete the shell of Nová Karolina Park in Os- spring 2013. cording to European Commission, which trava in mid-March. The administrative build- is more than can be said (by the EC) about ing, which should be BREEAM certified, will PasserInvest ‘s scheme in Ostrava the rest of Europe. But not everyone offer 24,600 sqm of office space plus 2,960 agrees with that prediction, including sqm of retail on the ground floor, with units some highly placed local economists. The starting at 60 sqm. “At the moment, I can say Czech National Bank, for example is much that the ground floor premises are being suc- more skeptical, predicting stagnation in cessfully occupied,” says Tomáš Kadeřábek, its January analysis of the prospects for project manager for PasserInvest Group. the country’s economy. The Czech Minis- “This demand is particularly due to the prom- try of Finance is somewhere in between, inent location of our building within the en- predicting a rather negligible 0.2 percent tire project of Nová Karolina.” The office part pace to economic growth, according to of the complex offers units starting at 300 the news server iDnes.cz. sqm and Kadeřábek says that PasserInvest’s The EC predicts that overall, its previous leasing strategy is not to focus just the big- hope for 0.5 percent growth has been inz UIE 215x120+3:Sestava 1 1/10/12 3:31 PM Stránka 1 gest tenants, but try to attract a mix of smaller downgraded to 0.3 percent contraction.

Mezinárodní Mezinárodní Mezinárodní veletrh veletrh investiãních veletrh techniky komunálních pﬁíleÏitostí, pro tvorbu a ochranu technologií podnikání a rozvoje Ïivotního a sluÏeb v regionech prostﬁedí

I www.bvv.cz/urbis-technologie I www.bvv.cz/urbis-invest I www.bvv.cz/envibrno

SoubûÏnû 24.– 27. 4. 2012 probíhají: Brno - V˘stavi‰tû 40 Czech Republic News

Ikea profits down year-on-year. Greek bonds have taken SMK Reality, is discussing plans to build a for 2011 a bite out of their profits, which could new stadium in Bazaly in Ostrava. Archi- Ikea’s Czech operations saw otherwise have increased by billions of tects from Projektstudio have designed both profits and revenues crowns. The economic server E15 write a modern sport complex, which includes fall for its financial year, which ended in that CSOB’s net profit dropped by 17 a football stadium built into a hill, an August 2011. The furniture and home percent in 2011 to CZK 11.2bn due to indoor sports hall, retail space and a furnishings retailer announced profits its Greek investments, while Komerčni parking lot. The investor claims the new of CZK 254m, down from CZK 337m in banka’s net profit of CZK 9.5bn was down facility should help stabilize the club’s 2010. Its four Czech stores have seen re- one-third. Česka sporitelna and Raif- financial situation. If plans were to produced revenues despite an increase in feisenbank are the only banks on the ceed smoothly, the new stadium could the number of visitors to them, accord- Czech market with no Greek debt in their be completed in three years, according ing to the company’s annual report. Ikea portfolio. to SMK Reality. dropped prices on its furniture and ac- cessories by an average of 5.6 percent. Czech bank profits were impressive Private sector to Ikea is feeling the downturn aid public in energy saving The Czech government has offered to allow private businesses to get involved in improving the energy consumption of state-owned buildings. The Ministry of Industry and Trade has proposed that contractors finance the needed refurbishment of government buildings, and that the work be paid for using the money saved on operational Czech banking costs. Hospitals and regional authorities sector in the black have already started using this model. for 2011 EU member states have been ordered Czech banks did well last to refurbish their state-owned buildings year, despite the economic uncertainty. New stadium for FC and the properties they operate to make Statistics from the Czech National Bank Baník Ostrava? them nearly energy neutral by 2018. All indicate the net profit of the sector was The new owner of foot- new buildings will have to meet this cri- CZK 53.7bn, only three percent lower ball club FC Baník Ostrava, terion by 2020, according to ČTK.

A portal you can control that distributes to various mobile devices from a free application

Surround yourself with www.encompassme.com Czech Republic 41

PointPark Properties shows positive figures

The past year, 2011, was markedly successful won the EuropaProperty award in the states, this increase in the number and for PointPark Properties. Throughout “BREEAM application in-process” category. size of deals that we have completed Europe, P3 leased a total of 472,750 sqm of Other major transactions include the rental has been most pleasing. There exists a warehouse space and completed four new of warehouse space to Luís Simões at the situation where there is demand for class build projects. This equates to a year-on- P3 park Alovera, Spain; construction of a A warehouse in core locations but little year increase of 104 % of transactions. Even Build-To-Own project for Audia Plastics in or no supply. Developers have not been though last year’s economy wasn’t favourable, Trnava-Voderady, Slovakia; and a warehouse building speculative warehouse for almost 2011 turned out to be one of P3’s most facility for Schnellecke Slovakia at PointPark 3 years now. Any empty space of the right successful years. Bratislava in Lozorno, Slovakia. The high- standard that was built in the “boom” years quality warehouse at PointPark Bratislava has now almost entirely been let. There are Among the greatest successes was the won the CIJ Award in the “Best Warehouse / still some difficult regions within countries completion of a Class A warehouse and Logistics Development” category. such as France and Spain where supply production facility for PF Concept at PointPark is still far greater than demand but even Poznan. Due to its built-in environmentally Ian Worboys, P3´s CEO, says: “Despite the here there is take up. At P3 we see 2012 as friendly elements, this Build-To-Suit project torrid time facing the euro and sovereign building upon 2011.”

POINTPARK PRAGUE D1 - hala DC A - 12 000 m2 sklady - 290 m2 kanceláře - 2 přímé vjezdy PRAHA EXIT 15 VŠECHROMY - 12 nákladních můstků VELKÉ POPOVICE - cross dock - flexibilní dělení prostoru - 10 m světlá výška D1 - rozměr 120x100 m - modul sloupů: 12x25 m BRATISLAVA - building DC A - 12,000 sqm warehouses DC A BUS - 290 sqm office space - 2 drive-in - 12 docks DC B - cross dock - flexible space division DC C - 10 m clear hight - size 120x100 m BUS DC D - grid 12x25 m Build-To-Suit 42 hungary Industrial

Ablon will hand out a rare Lease deal sparks construction contract after a construction at deal with Benteler Distribution Ablon scheme Robert McLean

Benteler Distribution Hungary Kft has Airport City Logistics Park, which is being anywhere in the city, makes her confidence signed a lease contract for 6,300 sqm of developed on 120,000 sqm of land that sits about the project. „Last year, the new warehouse and office area with New Sites on and beyond the border of Budapest, is in supply of industrial space on the Hungarian Kft, a company belonging to the Ablon a sense a post-boom project. While the land real estate market was 10,000 sqm and this Group. The agreement has sparked the was purchased back in 2005, construction year, they‘re saying there will be another beginning of construction of building H, work was not begun on the first building 10,000 sqm. If so, we‘re happy to be or the third phase, of Airport City Logistics until 2008, when the bubble was already providing 6,800 sqm of it. The industrial is Park. Located near the Budapest airport in rapidly deflating. Progress for the scheme very weak here.“ She expects Airport City south-Pest, the new building is scheduled was not quick, which is hardly surprising to be 80 percent occupied by the time this for completion in December 2012. considering the ferocity of the downturn third building is completed. in Hungary‘s fortunes beginning that same Benteler Distribution is a leading year, but Ablon clearly had no intention Still, while Lovro doesn‘t say so directly, stockholding and processing company for of taking big development risks. The first weak demand tends to make for frustrating, steel and stainless steel tubes. „Benteler building is fully leased, but while the time-consuming lease negotiations. Distribution opted for Airport City following second building still has space to offer, this „Tenants are constantly considering moving a thorough market screening and a tender hasn‘t stopped construction from going here from other projects because of the conducted under strict conditions,“ said ahead on a third building. facilities and the services. But this kind of said Ilona Böszörményi, managing director decision in these cases is not up to the of Benteler Distribution Hungary. „We are Adrienn Lovro, managing director of Ablon Hungarian management, but it‘s decided sure that the logistics park of Ablon Group Kft, suggests that along with her own by the foreign management. Sometimes will serve as an ideal home for our tailor- confidence in the project‘s location, its at the end of the story we negotiate with made, new and modern headquarters.“ unique services, like on-site customs, the them for a long time and then they stay lack of new competition in the vicinity, or where they are.“

The logistics and industrial sector is more sensitive than most to changes in the fundamentals of an economy, so developers of such schemes are often the first to notice the winds of change. Lovro, however, isn‘t getting excited just yet. Asked directly how long the current economic misery is likely to last, she‘s blunt. „I don’t dare to guess,“ says Lovro.

„In the beginning I thought it would be 2012 because usually banks need 3-4 reporting periods to clean up the loans. But it’s not [2012] so it’s not worth guessing. If it gets better, that‘s great, but it’s smarter to make the business and structure it for the current situation.“ THE LEADING ORGANIZER OF REAL ESTATE EVENTS IN THE CEE REGION

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part2.indd 56 29/09/2011 13:02:34 This issue is printed on 100% recycled paper

Industrial hungary 45

EU funds have helped the Subsidies helping developer InfoGroup bring production and logistics Polgar Industrial investments to Eastern Hungary

Park Robert McLean

The Hungarian developer InfoGroup is fill them. These include Bosch, Jabil, Volvo, one. “We definitely wouldn’t build new hoping to build as much as possible over Gyermelyi and Flextronics. Last year, one buildings on spec,” he says. Unlike some the course of 2012, in case the country of its tenants, Kuehne+Nagel informed investment subsidies, the tenants don’t proves unable to hang on to crucial the developer it wanted to leave its 6,000 run the risk of having to return state aid if funds from the European Union. The vast sqm space, preferring to concentrate on they fail to meet certain conditions, or if majority of modern industrial and logistics a contract it had won near Kesckemet, they’re forced to shut down their business. space in Hungary is built in the vicinity of Hungary. Adam Szekely, InfoGroup CEO, “Of course you have to make several Budapest, because the ability to service says a solution was found for the situation undertakings towards the state, but the the Budapest market takes precedence when his company identified Toyota point is we are on the site so we can make over just about everything else. Tsusho, which agreed to move into the long-term undertakings. So this is our space the day after its predecessor moved raised risk, rather than the tenant’s.” But this is of little use to certain industrial on in the middle of January. investors looking for new production A recycling plant has been built on site space near selected labor pools, or to This year, Szekely says he will likely which produces heat and electricity as the logistics companies that service such build at least a 7,000 sqm extension to a by-product, meaning that potential companies. For several years, InfoGroup the scheme’s largest building (a 10,000 tenants won’t have to worry about a lack has been building up the Polgar Industrial sqm structure) and that a new 9,000 of energy. A rail siding is also in place, park, located 175 km northeast of sqm building could follow, if current as InfoGroup’s long-term vision involves Budapest. It’s done so with the blessing negotiations for roughly half the space are creating a multi-modal transport hub. In of state bodies that are interested concluded successfully. 2011, the developer was awarded with in developing investment and job the Best Industrial Park Award by the opportunities in Hungary’s less-developed But the current business model has Hungarian Investment and Trade Agency. regions. been quite dependent on the provision of subsidies, so it remains to be seen if One of many prime tenants The town Polgar offers a population of the park has established sufficiently to just 8,500 inhabitants, but it also has continue growing if funding were taken vocational and mechanical schools, away. The conditions vary considerably, and crucially, it offers access to the M3 depending on the type of company the motorway and to a major train corridor. new space is being built for, but the It will not have escaped the attention general principle is that funds are given of potential investors that wages are 20 to the developer, who then passes on percent below the national average in this the savings to the customer in the form region. Investors can also draw on a wider of reduced rent. Depending on the level labor pool, as cities like Miskolc, Debrecen of employment the tenant can offer, and Nyiregyhaza are not too distant. such assistance can amount to anywhere between 15 percent to With only 25,000 sqm of space actually built in a fairly remote location, the project 40 percent of the construction costs. hasn’t received a great deal of attention, Despite the readily available cash for such but InfoGroup has been slowly building schemes, Szekely says the approach of up a collection of buildings, and tenants to the developer has always been a cautious 46 hungary News

Budapest transport The fragile forint the year, but a top official has now re- system under fire When it was bad, the Hun- vealed that stagnation, or a decrease in Local tram and bus lines garian forint was very, very GDP of 0.5 percent is more likely. in Budapest are making bad. And that wasn’t very In a similar mood, the IMF has put its di- the international news, as the Hungar- long ago. In early January, when the first agnosis for 0.3 percent growth for Hun- ian capital’s public transport company real story of the year was a wake-up call gary on review, as Eurozone concerns BKV has become the subject of discus- over what had been going on over the have reduced the country’s immediate sions between the government and IMF holidays in Budapest, the forint fell to a economic prospects. This will put further and EU officials. It’s not clear whether the nerve-wracking HUF 320 per euro. This pressure on Budapest to reach some type pressure on BKV originates from the gov- came at a convenient time for European of accord with the IMF and EU officials in ernment or its potential creditors. There officials, who were able to use disinte- a dispute over recent legislative meas- are suggestions that the multinational grating faith in Hungary’s long-term abil- ures at the same time as Hungary is seek- bodies are insisting that subsidies from ity to meet its debts as leverage to try to ing a bailout from the two bodies. the national budget have no business get controversial legislation rescinded. Since being confronted by European and keeping the city’s transport company And in truth, since those ugly days, there IMF officials the Hungarian government afloat. Either way, however, the company had been a gradual unwinding of the has seem to be backtracking on at least will have to restructure its operations so pressure as the troubled currency inflat- some of the most controversial of its poli- that emergency financial injections to ed again. Many analysts put this down to cies passed at the end of 2011. One of the keep it running are no longer necessary. an underlying faith that the government matters where Budapest may choose to In 2010 and 2011, the state had to come of Viktor Orban would eventually see rea- do a deal with the IMF is over its 16 per- up with HUF 140bn in order to keep the son, and return the European fold politi- cent flat tax on income. The IMF is insist- trains and buses running. cally, on the one hand, while accepting a ing that this must be changed, or else a The government is making it clear that €20bn bail out on the other. €20bn deal could fall through. Hungary while a functioning public transport sys- But the fragility of that position became has billions of euro in needs to roll over tem is in the country’s interest, the city obvious in the latter half of February, during the course of 2012, and belief in will have to be responsible for its funding when the EU sent Budapest a slap, in its ability to do so, on its own, is waning. from now on. However, the dispute over the form of a threat of sanctions over The three major ratings agencies cut the how to solve the city-owned company’s the country’s inability to meet the deficit country’s credit rating to junk level in No- difficulties places the bankruptcy of the target of less than 3 percent of GDP. The vember. Hungarian airline Malev into fresh relief. European Commission warned it would withhold €495m in development funds, Hungary needs a deal with the IMF nearly 30 percent of its take of so-called End of the free rides for BKV “cohesion fund” if no action were taken. The impact on the forint was an immediate 0.6 percent slip against the euro.

Hungarian GDP downgrade Things are less hopeful than they seemed some months ago when the Hungarian government was predicting at least slight growth for the economy in 2012. Previ- ously, the government of Viktor Orban had foreseen growth of 0.5 percent for This issue is printed on 100% recycled paper

News hungary 47

National Instru- gy (EIT). Infopark E was the Hungarian company runs two high-capcity produc- ments moves into project to have been bestowed with a tion facilities in Hungary. “Our company is Infopark LEED rating. Its energy grade was an A, developing rapidly, our production capac- National Instruments Hun- which indicates the building requires 30 ity and sales volume are both increasing gary decided to move its headquarters of percent less energy than Hungarian build- year-by-year,” says László Apró, director of Infopark Building E, a LEED-certified building code requires. Overall, the building Partner in Pet Food supply chain. “We de- ing. The change of venue took place at the achieved a silver LEED. National Instru- cided to centralize our logistics and stor- end of January in a move that leaves just ments’ first overseas production instru- age for faster and higher quality service 25 percent percent of the space available. ment took place in Debrecen in 2001. for our domestic and international clients. The company is a subsidiary of a global Besides the high level infrastructure we company that develops and manufactu- National Instruments moves into Infopark have really appreciated the flexibility of ers software and hardware products for the operators of WestLog DC.” engineers and scientists. They use the György Szucsány, managing director of equipment to test and control design ap- WestLog DC, says the company has tak- plications. The office will serve as the com- en 2,200 sqm of high-bay logistics space pany’s Eastern European headquarters. that offers reasonable pricing and a use- The company agreed to take 1,500 sqm of ful location. Colliers International acted as space. The move was made in large part agent in the deal. with the company’s employees in mind.

“Our experience shows that employee WestLog picks up Partner in Pet Food satisfaction largely depends on the quality of the everyday work environment,” says Timea Novák. “The environmental- conscious features of Infopark Building E make the house stand out from the current selection on the office market, which Partner in Pet Food is why we have decided for the green of- moves into WestLog fice building.” WestLog has signed up a National Instruments will occupy nearly new tenant for to the grow- the entire 2nd floor, and its neighbors will ing list of companies that have taken include companies such as Lufthansa Sys- space in the logistics center. Partner in tems, Kraft Foods, and the European Insti- Pet Food is a market leader on the Euro- tute for Innovation and Technolo pean private label pet food sector. The

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www.encompassme.com 48 poland Development

Three men connected with the failed developer Leopard are in Developer’s top custody on fraud charges management jailed Marcin Śmietana

Three men associated with the developer The charges are based on a forensic “In addition, the CEO and deputy CEO Leopard have been jailed, and have been accounting audit of the company that’s heard charges of not filing a bankruptcy charged in proceedings concerning the been in the works for more than a year. The petition in time, meaning between 14 company’s residential project Wierzbowa in spokeswoman for the public prosecutor’s October 2007 and 13 February 2009,” she Kraków. They have been taken into custody office in Kraków, Bogusława Marcinkowska, said. Marcinkowska could not disclose any for three months upon the request of said that the trio tricked customers into information on another investigation in prosecutor’s office in Kraków. making payments to finance a residential progress, concerning two other Leopard project, claiming the company had investments in Kraków. There, too, as in the The investigation has been underway since sufficient funds to complete the project. case of Wierzbowa, Leopard turned to its 2008, during which time they collected She said they were also believed to customers to pay extra money for the flats. evidence from over 200 parties who are have been untruthful when informing believed to have been swindled. Two of the about Leopard’s financial condition, and If that was not enough to complete an men now behind bars are Leopard’s CEO and concerning the performance of preliminary already murky story, the three were also deputy CEO. A third individual is thought sales contracts concluded with customers. charged with siphoning PLN 14m (€3.4m) to be formally outside the company’s from the company Telkom Telos by selling organizational structure, but is seen as a “The charges of acting to the detriment it bonds issued by Leopard in 2008. This power broker at the company. The three are of the company covered an amount despite the fact that it should have been charged with acting to the detriment of the exceeding PLN 17.5m (€4.2m) in the case clear that Leopard had no chance of paying company while deliberately misleading its of Leopard’s deputy CEO, Bogusław Z., them back. To make this possible, according customers. The developer is charged with whereas the joint actions of CEO, Jacek P., to the charges, Bogusław Z. was appointed cheating 230 customers of more than PLN and Grzegorz A. amounted to the loss of chairman of Telkom Telos in January 2008, 55m (€13.2m). over PLN 30m (€7.2m),” said Marcinkowska. while Jacek P. was also on its supervisory board. In this unprecedented case, developers could be held to account for their actions In a parallel civil case, the Supreme Court overruled the decision of a court of appeals and re-instated a ruling of the regional court cancelling the mortgage on the residential premises of the unfinished investment. The decision was reached on the grounds that it breached the rules of social conduct. The mortgage was used by Leopard as a temporary security for bonds purchased by the American fund, Manchester Securities, in 2006, which were issued without telling its customer. This ruling puts customers on an equal footing with Manchester Securities in terms of claiming damages from Leopard, whose assets have been seized by a trustee. Two Great Events in One Day April 17th 2012 | InterContinental Hotel | Warsaw

CEDEP: Schedule and Topics Discussed 2012 Residential Conference CEE (click on the logo to enter the website) 08:30 – 09:00 | Arrival Coffee 09:00 – 09:45 | Buyers or Sellers: Whose market is it anyway? 09:45 – 10:30 | Investing in residential: Smart move or black hole? 10:30 – 10:45 | Coffee Break 10:45 – 11:30 | Residential finance put to the test in 2012 11:30 – 12:15 | Consumer dreams and broker nightmares 12:15 – 13:30 | Lunch

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Rank Progress seems to see little Retail developer reason to stop developing now, continues its push just because there’s a crisis on

Rank Progress Capital Group has made a officials aren‘t planning to slow down, we‘ll start several new projects at the new deal with US Blackstone Real Estate and are gearing up for new investments same time, both development and pre- fund to sell its Galeria Tęcza shopping in 2012 when they expect to launch development schemes.” mall in Kalisz for €37m. Thanks in part several new projects. This starts with to this transaction, the company’s sales the latest purchase of plots in the city Among the investments which are went up to PLN 580m during the last of Piła being announced in February. currently getting underway are those in three quarters. “Galeria Tęcza in Kalisz is “A lot of developers are holding up Chojnice, Grudziądz, Miejsce Piastowskie one of our most successful investments. their activity, we don’t see such a need,“ near Krosno, Kielce and Duchnów. The After a month since the opening more says the company‘s CEO, Jan Mroczka. company is also considering locations than 500,000 customers have visited the “Paradoxically, the crisis might gives us in Olsztyn, Tychy, Opole, Gliwice, Siedlce mall,“ says Jan Mroczka, Rank Progress the chance for higher growth. In 2012 and Jarosław. CEO. Rank Progress sees Galeria Tęcza as one of its most success schemes ever “It‘s possible that new investments will take place soon as interest in our project is growing,” he adds. However, the biggest deal for Rank Progress in 2011 was the Twierdza Zamość shopping mall sell-off, which provided company with PLN 190m in cash.

Apparently unconcerned by the economic chaos around it, Rank Progress

Robyg to build two stages, which is currently getting Robyg giving offices a try in Warsaw offices underway, is expected to provide 8,000 The traditional residen- sqm of space with 2,700 sqm intended tial developer Robyg for retail and services, and another 5,700 is changing gears for its next project, sqm for offices. The first retail lease has announcing that it will be trying out already been signed, in fact, with an the local commercial real estate market Alma market store prepared to occupy with a mixed-use scheme called Robyg most of the space on the ground floor Business Center. Through a subsidiary, of project’s first building. “Our project is Robyg is about to launch what would very popular, which can be seen in the be its first-ever commercial investment negotiations we have with major busi- in Warsaw, now that it’s received the ness partners,” says Zbigniew Wojciech necessary construction permit for the Okoński, Robyg’s chairman. The company project. Robyg Business Center will be has focused exclusively on residential built in two phases to create a total use- properties until now and and it took third able area of 35,000 sqm. The first of the place overall residential sales in 2011. www.encompassme.com

february_part2_CS5.indd 43 2/3/2012 12:34:54 PM 52 poland Office

Infosys signs onto The developer‘s faith in a state- of-the-art sustainable office Skanska’s Green scheme in Łódź seems to be Horizon paying off

Skanska Property Poland has signed improved again,” says Krystian Bestry, Green development comes to Łódź up a new tenant for Green Horizon, its managing director of Infosys BPO office complex in Łódź, increasing the Europe. amount of space it’s leased in the new building to 15,000 sqm. Infosys BPO “We are winning new business contracts Poland is to move into its new premises and expanding the scope of projects in November 2012, taking space in the carried out so far. By the end of 2012 first phase of Skanska’s complex. we are planning to increase the number of employees in our Łódź centre by at Launched in the second quarter of last least 300. Moving our headquarters year, the first stage of Green Horizon to Green Horizon will make it possible is expected to be completed towards to consolidate all the departments of the end of 2012. “We have decided to the company and further develop our increase the volume of office space business,” he says. He hints that this leased in Green Horizon due to the fact might not be the last lease contract for that growth forecasts for Infosys BPO office space the company would sign in Poland for the next few months have the city of Łódź.

Due diligence Financials 2010, a must for the JV Partner The Compass Report is a new yearly report, which will present the most comprehensive assessment of the property and real estate sector in Central and Eastern Europe. Information will be based on data provided by various organizations and sources within the industry and focus on office, retail, logistics and residential companies in the market place, with a ranking ratio so you can see who the winners and losers are. The Compass Report is coordinated and published by Roberts Publishing Media Group.

Only 100 copies will be produced, pre-order your copy today. For more information please contact Robert Fletcher | CEO | +48 506 074 042 | [email protected] This issue is printed on 100% recycled paper

News poland 53

No let up for has welcomed a new tenant. The law firm headquarters because they offer prestige Ghelamco BSJP Brockhuis Jurczak Prusak signed a and good working conditions,” he adds. Ghelamco Poland closed lease agreement in February for 600 sqm Robert Mandźunowski, CEO of LHI, recently 2011 with 45,000 sqm of of office space. announced that his company has a second leases, including its biggest deal with the The 10-year lease takes effect in May, project underway at Chmielna 25. Polish company PKN Orlen. Poland’s larg- when the company plans to move into est refiner of crude oil, and a market lead- the six-storey building and occupy the er in CEE, PKN Orlen took 9,000 sqm of entire third floor. BSJP Brockhuis Jurc- Nowy Dom Jabłkowskich space at the Senator office building, now zak Prusak is the second tenant in the underway in Warsaw’s historic district scheme, which is a JV between LHI and on Bielańska Street. The company will Dom Towarowy Braci Jabłowskich. be sharing space with Robobank, which signed up for 3,000 sqm along with Eu- “We decided to make Nowy Dom ronet (1,707 sqm) and BRE Bank (1,666 Jabłkowskich our new headquarters be- sqm) which is expected to open its new cause the location of the building meets offices this year. Now 75 percent leased, our expectations,” says Maciej Prusak, Senator will provide 25,000 sqm of new managing partner in BSJP. “Chmielna 19 office space to Warsaw’s office market. Street is a unique address in Warsaw. A lot Once it’s fully leased, Ghelamco is likely of companies, including law firms, look to start the process of selling it off, as it’s for these kind of unique locations for their now gearing up for three new investments in 2012. Having acquired 8 plots in Warsaw, the company plans to provide around 300,000 sqm of new office space over the next five years.

The 25,000 sqm Senator building

Dom Jabłkowskich chooses Dom Jabłkowskich Delivered last year after a through refurbishment, the 4,500 sqm Dom Jabłkowskich office on the corner of Warsaw’s Chmielna and Bracka Streets 54 poland Office

Procedural issues A civic group has dealt another doom latest blow to Treimorfa‘s attempt to Skeletor plan re-develop Skeletor

Skeletor’s extra 8m is the problem On 24 February a regional administrative The investor’s plans call for the court in Kraków cancelled another land redevelopment of Skeletor and for the development permit that the developer addition of smaller buildings around Treimorfa had hoped to use in the it. While Treimorfa has a valid land use completion of the “Skeletor” building permit for its project with Skeletor at and the land around it. its current height, its aim is to add the 8 meters. This skeleton of a highrise is an eyesore which has spoiled Kraków’s landscape, The two planning documents that have ever since construction work on it halted been rejected in recent weeks (either in the 1970’s, just as the shell was being of which could have served as the basis completed. for final planning permits) would have made it possible for Treimorfa to create The court’s rejection of the land use 95,000 sqm of new real estate in the document marks the second straight complex. victory for an environmental association that’s been fighting the developer‘s Land development conditions like the plans to increase the height of the ones that have just been rejected are Skeletor building from its current 94.5 to issued when there is no local master 102.5 meters. plan in place. Kraków’s city hall will try to pass a master plan within a year to help As it did in January, the Court justified its the investor carry out its scheme. But ruling on the grounds that the developer this would mean another year’s delay for had made procedural mistakes in the developer, whose efforts to re-start preparing the document for approval, the building’s construction began more and thus that Kraków’s city hall had been than five years ago. wrong to issue land development permit.

Factory Warszawa Annapol Neinver begins Facto- first quarter of 2012. “Ten years after the ry construction opening in [Warsaw’s] Ursus [district] of The developer Neinver the first outlet center in Poland, we are has started construction building the second Factory in War- work on Factory Warszawa Annapol, saw, this time on the right bank of the the second outlet to be developed Vistula River,” says Barbara Topolska, in Poland’s capital. The latest retail general director of Neinver Polska. outlet is to be located between An- Totaling 19,500 sqm of space, the 120- nopol, Toruńska and Białołęcka Steets unit retail facility is to be built by the in Warsaw’s Białołęka district. Neinver Polish contractor Budimex and will be expects to complete the works by the also provideing 1,400 parking places. This issue is printed on 100% recycled paper

News Poland 55

Logistics deals for tional toll routes.” Osiecka warns that only a direct impact on the quality of services Pekaes, Kurier companies that are able to maintain cus- of an operator,” she says. The local real estate agency tomer support and timely deliveries will In other logistics news, Panattoni Europe Axi Immo has assisted in the succeed in the coming months and she has signed up Van Group-owned company conclusion of a new lease in Lower Silesia. says they must be able to respond quickly Kurier for an 8,900 sqm lease at Panattoni The logistics and transport provider Pekaes to changing needs and market conditions. Park Poznań II, located in Żerniki, about 13 has signed up for 4,225 sqm of warehouse “An important element in this “puzzle” km from the city center, along the S11 ex- space from Vatt Investment, which has de- will be optimizing warehouse inventory press road. The company provides both lo- veloped a warehouse park about 8 km from to produce the appropriate network and gistics service as well as customers services Wrocław. The park is situated along the quality of storage space, which may have and warehousing. planned by-pass on the Wrocław-Warsaw Kurier agreed to take nearly 9,000 sqm of space in Panattoni Park Poznań II E67 highway. Vatt is active both on the Polish and the European markets. “Logistics is one of the most important customer groups for industrial developers,” says Renata Osiecka, Managing Di- rector of Axi Immo. She admits that as a sector, logistics operators had a difficult time of it last year, and predicts that 2012 is unlikely to be much different “due to a possible increase in fuel prices and the inclusion in the road network of further na-

real estate advertising agency 56 poland News

Satander targets announced. This year we expect to open came to PLN 296m while its profit grew Kredyt Bank some 100 Delikatesy Centrum stores,” to PLN 120m. The Euro zone’s largest says Jan Domański, Eurocash spokes- bank Satander is looking to man. At the moment, its network covers Orbis Group’s Mercure Hotel buy a controlling stake in Poland’s lender 650 stores across Poland. The company’s Kredyt Bank, currently held by the Belgian sales over the first three quarters grew bank KBC. “Information that Santander is to PLN 941m, 25 percent higher than the interested in acquiring banks in Poland is same period in 2010. true,” Alfredo Saenz, head of the Spanish bank, reportedly said. KBC will now wait till the end of this month for a binding SCP to be sold off offer from Satander. With the 80 percent Gino Rossi has announced stake in Kredyt Bank it currently holds, it will complete its selec- KBC is struggling with its debt to the tion process for a new ad- Belgian government it, and which it ex- visor who would be responsible for the pects to pay back by offloading its Polish sale of its clothing brand, Simple Creative assets. The sell-off started nearly three Products. “We’re already fielding ques- Ministry of Treasu- weeks ago when the Polish insurer Warta tions from investors keen to buy the sub- ry holds up its was sold to German Talanx. According to sidiary. As the first order of business, we privatization plan Reuters, Kredyt Bank’s market value has want the adviser to value the firm,” says Polish Real Estate Holding been estimated at PLN 3.26bn. Gino Rossi president Grzegorz Koterwa. (PHN) is holding up its plan to go public Gino Rossi is offloading the brand mainly this year. Unofficially, the public offering Maciej Bardan (Kredyt Bank) to clear its debts that have risen to PLN had been scheduled for the second half 40m. of June and was to be targeted at both domestic and foreign investors. After examples like PZU, PKO BP and JWS, this was Orbis turns a profit to be one of the largest privatizations eve in 2011 in Poland. “We are confirming the plan to Orbis Group has recorded a enter the main stock exchange market,” 65 percent rise in EBITDA in Wojciech Papierak, CEO of PHN told Parki- 2011 giving the company a profit of PLN et pl. website. “The details of the offer and 288m. Revenues, meanwhile, increased the date of the debut will depend on the by 2.6 percent to PLN 718.9m. “The bet- Ministry of Treasury.” PHN is expected to ter results year-on-year can be attributed submit its prospectus to the Polish Finan- to, among many factors, the sale of as- cial Supervision Authority (KNF) in April. sets. Thanks to the revenue from sales Along with Societe Generale and Deut- the company was able to pay off all of sche Bank, the group has appointed four its loans and liabilities and enjoys PLN banks, as well as three brokerage houses 218.4m on its account at the end of the houses (PKO BP, BRE Bank and BZ WBK) to Eurocash acquire year,” said Marcin Stebakow, an analyst present its PLN 8bn portfolio to foreign in- Tradis from brokerage house BPS. Orbis Group vestors before its IPO on the Warsaw Stock Eurocash has announced has recently sold off stakes in Orbis Ca- Exchange. PHN owns some of the 1.3ha of that taking over the food sino, Orbis Transport, the Hotel Bristol undeveloped land and 200,000 sqm of flo- distributor Tradis will not affect its ear- in Warsaw as well as assets in Tarno- orspace in buildings across the country, lier plan to open 100 new retail loca- brzeg, Płock, Kraków, Szczecin, Kalisz and including Intraco, one of the oldest sky- tions. “We will keep pace as previously Kołobrzeg. The value of the transactions crapers in Warsaw. This issue is printed on 100% recycled paper

News poland 57

Asceco aims Sygnity of 2011. Rather than the predicted PLN Gazeta Wyborcza reported him as saying take over 27m, Lotos shot PLN 93.7m into the that “Growing skepticism towards nu- Poland’s largest IT com- black. clear energy does not change our stance pany Asceco is hoping to While it’s welcome news for the compa- on the matter, especially since 16 EU take over a 100 percent stake in its rival, ny, the number still pales when placed member states are continuing their own Sygnity, with an offer of PLN 250m. Suc- next to its 2010 Q4 result of PLN 251.5m. nuclear programs or are planning to cess in the acquisition, Asceco believes, Revenue numbers for the final quarter start them from scratch.” Poland’s first would strengthen its position in the of the year also went beyond the hopes nuclear plant is expected to be launched banking, public administration, energy of analysts, reaching PLN 8.36bn in the in 2020 to diversify its reliance on Rus- and service sectors. “I am convinced that fourth quarter. Analysts had projected sian oil and gas. this transaction would have a positive operating income of PLN 217.3m, so the influence on the professional develop- result of PLN 190.2m may be something B anking sector ment of Sygnity’s staff. The exchange of of a disappointment. Lotos has had to scores record know-how as well as the inclusion of in- deal with lower numbers because of a profits ternational business divisions at Asceco lowered valuation of its Norwegian as- Poland’s banking sector Group would provide long-term per- sets. It emerged earlier that oil extrac- profits hit a new high when it was an- spectives for the team at Sygnity,” said tion from a North Sea deposit won’t nounced that it had produced a net Adam Góral, president of Asceco Poland. begin by the end of 2012, as originally profit of PLN 15.7bn over the last twelve There’s no guarantee, however, that the planned. months. The sector’s 2011 results, an- offer will be enough, as it works out to nounced by the Polish Financial Super- PLN 21 per Sygnity share. Shareholders visory Authority (KNF), surpassed all have cast doubt on the offer, claiming Pa ol nd sticks to its expectationd by indicating a nearly 40 it doesn’t reflect the true value of the nuclear plan percent increase compared to the same company, while Segnity itself has made The construction sector, period in 2010, when the sector record- no comment on the matter. It appears which has the country’s ed a net profit of PLN 11.7bn. However, instead that negotiations are just get- huge road building program to thank the KNF has advised against paying out ting going. for its relative health, is no doubt hop- dividends for last year just yet. Accord- ing that Prime Minster Donald Tusk ing to a report, 2011 also saw substantial LotosV QI profits sticks to his guns on Poland’s intention consolidation, with the biggest players sharply higher to develop nuclear power. Tusk gave such as PKO BP, Pekao, BRE Bank, ING Polish oil giant Lotos sur- contractors hope recently when he an- and BZ WBK now holding 44.3 percent prised analysts by announced that the country is continuing share in the market. That’s up from the nouncing surprisingly high profits in Q4 to develop its nuclear energy program. 43.8 percent the grouping controlled in 2010.

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www.encompassme.com 58 poland News

Toyota production PLN 10bn acquisition would see KGHM watch games at the railway stations be- in Wałbrzych drops increase copper production by 25 per- cause trains won’t be running,” warned Toyota Motor Manufac- cent this year, and by another 50 per- Grymel. turing Poland (TMMP) an- cent come the end of 2018. Not seen as nounced a significant drop in production a hostile takeover, the deal should close Can PKP keep the trains running? at the one of its biggest production plant by the end of Q1 2012, and would push in the city of Wałbrzych. The Japanese car the Polish company into the fourth spot maker has been hit hard by the slowdown globally on the list of the world’s larg- in the industry and will lay off 200 of its est providers of raw materials. However, temporary employees. The company also the Polish giant still has to wait for the revealed that it would be switching from transaction to be approved by the Su- three to two shifts at its plant, starting in preme Court of British Columbia and by May. “As the number of orders has de- the Canadian Minister of Industry. After clined sharply, we need to lay off workers this, it could proceed with taking over employed on temporary contracts,” said Quadra’s Sierra Gorda project in Chile, Grzegorz Górski, manager of administra- writes Dziennik Gazeta Prawna. tion and corporate affairs at Toyota Poland. He told the daily Gazeta Wyborcza that no permanent workers would lose their jobs. Rail workers at PKP to strike during Toyota’s cutting production in May Euro 2012? No sooner had Polish Rail- ways (PKP) revealed it hoped to make substantial profits during the upcom- Polish PZU goes ing European football championships international than its employees threatened to go on Poland’s largest insurer strike. The cause was joined by employ- PZU has revealed its ex- ees of TK Telekom. Both companies are pansion plan to establish a new arm of due to be privatized, and workers are the company focused on foreign acqui- demanding that any deal with a new sitions. The new company would need owner include employment guarantees around PLN 13bn, say PZU officials, half for current staff. of which PZU can provide. Negotiations The unions are concerned that Sławomir with what appears to amount to a co- Nowak, Poland’s Transport Minister, has investor in the venture are currently not confirmed assurances on the matter underway, Andrzej Klesyk, CEO of PZU given by the former Minister of Infra- revealed. Analysts say the idea is not structure. “The contracts in PKP Cargo without merit, but will present chal- and TK Telekom have been negotiated lenges. “With such money the company Quadra approves but PKP SA does not want to sign them,” could acquire some serious players not KGHM take over says Henryk Grymel, chairman of the only in the region, but even in Western The Polish state-owned Solidarność union. Failure to sign the Europe. The only problem is that there mining company KGHM is contracts by the end of February could are still very few interesting businesses a step closer to its biggest foreign ac- result in demonstrations in March, and for sale,” Tomasz Bursa from Ipopema quisition ever, after 78 percent of the potentially, strike action during the Euro Securities told the Parkiet.pl business shareholders in the Canadian company 2012 tournament, which begins June website. PZU is also expected to go pub- Quadra approved the transaction. The 8. “The minister can set up screens to lic on Warsaw Stock Exchange. This issue is printed on 100% recycled paper

News poland 59

Brussels holds back expectations for future Polish GDP with the same message. PLN 312m for Poland growth numbers, but domestic authori- The ACTA treaty was signed in January Brussels has taken drastic ties are downplaying the adjustments, by the European Union and 22 member action against the Polish claiming there’s no evidence of a funda- countries, including Poland along with government by withholding close to mental shift in the country’s economic Australia, Canada, Japan, Morocco, New PLN 312m from the regional program prospects, Rzeczpospolita daily reported. Zealand, Singapore, South Korea and the Innovative Economy. A letter regard- BNP Paribas revised upwards its growth US. It still has to be ratified by all 27 Eu- ing the matter has already been sent to estimates for 2012 from 1.6 percent to 2.4 ropean countries and approved by Euro- Poland’s ambassador at the European percent, while it envisions 2013’s figures pean Parliament. Union outlining the discovery of substan- rising from 2.4 percent to 2.7 percent tial deficiencies in the functioning of the growth. Goldman and Sachs has also re- management and control system for the considered its previous prediction of 2 Prime minister Donald Tusk program. European Union regulations al- percent growth in 2012. It now believes low countries to fail to live up to a maxi- the country’s gross domestic output will mum of 2 percent of the conditions laid jump 2.5 percent. out for the Innovate Economy Program. “Upward revisions have indeed begun, But Poland was found to be deficient in but so far the ones raising their predic- 3.7 percent of the conditions. One of the tions are those whose previous outlooks biggest problems continues to be viola- have been quite pessimistic,” says Moni- tions in the procedures followed in ten- ka Kurtek, chief economist at Bank Pocz- ders for public contracts in Poland. Until towy. She admitted, however, that recent the situation is rectified, no applications macroeconomic data and expectations for subsidies for the program will be ac- of an improving situation in the Eurozone cepted. The Regional Development Min- economies played a role in the corrected istry has been deemed responsible for prediction. the mistakes and has three months to ex- plain the problem and to find a solution, Dziennik Gazeta Prawna reported. PM Tusk: Supporting ACTA was “reckless” Polish Prime Minister Don- The EU is cracking down ald Tusk has admitted that Polish exports rise the decision to support the European deal in February on Anti-Counterfeiting Trade Agreement Polish exports grew 1.1 (ACTA) was “reckless”. “I was wrong,” percent in February, faster he said. “It would be a sin to maintain a than in Great Britain, Germany, Italy and mistaken belief. The agreement does not Spain. This is higher than the country’s 10 correspond to the reality of the 21st cen- year average, which Jakub Borowski, an tury. The battle for the right to property economist for Kredyt Bank, told Dziennik should also respect the right to freedom.” Gazeta Prawna was 0.5 percent. Econo- He said he’s sent letters to the leaders of mists are confident the country’s strong all the parties that cooperated with his exports will continue as Poland has be- own with a proposal to reject the version come competitive on global markets. Po- of ACTA that’s now being discussed by land is also able to depend on a remark- Is Polish GDP rising? the European Commission. He also sent ably buoyant domestic market, unlike Two major foreign banks letters to prime ministers, chancellors some of the other, more export-oriented have recently raised their and presidents of European countries markets in Europe. 60 Romania Retail

For Romania’s biggest retailers, it’s all about market share...not Crisis not crimping the crisis retail expansion Amelia Turp-Balazs

In spite of pessimistic predictions regarding said François Bouriez, the company’s CEO. Romania contains a rather obvious signal the growth of both the Romanian and “The construction and opening of up to 17 of its expansion plans, announcing its global economies, retail investors continue new hypermarkets and a shopping mall in plans to buy or rent attractive locations to plow money into the sector, with most Romania show our belief in the potential of in smaller towns of less than 50,000 of the important players intent on carrying the Romanian economy.” inhabitants. To support this sort of growth, out major expansion plans for 2012. Of the Lidl plans to open its third logistic center bunch, Cora and Lidl are perhaps the most It’s not the first time the EBRD has financed in Transylvania, adding to the ones it ambitious. the expansion of big-league retailers operates in Ploiesti and Bucharest. Real- in Romania, according to Ina Coretchi, hypermarket has also announced that The Louis Delhaize Group, which runs the communications adviser at the EBRD. “In it will open a new store this year, to be Cora hypermarket network in Romania, will 2009, the EBRD arranged a €150m loan for located in a new mall by AFI Europe called utilize a €210m loan from the European Bank Kaufland, owned by Germany’s Schwarz AFI Bucurestii Noi. for Reconstruction and Development (EBRD) Group, to finance the company’s expansion to open 17 new hypermarkets around the in Romania and Bulgaria,” she says. The property department of the French country. The loan includes up to €140m from retail giant is extremely active, and has the EBRD’s own accounts, and up to €70 Schwarz Group also operates the Lidl recently leased a reported 50 percent of million syndicated to ING and Rabobank. discount chain, which will open six stores Ploiesti Shopping City, a joint venture with in Romania in the first quarter of 2012. At New Europe Property Investment (NEPI). The Louis Delhaize Group has been present the end of last year, Lidl had 129 stores in mall is scheduled to open this year. Along in Romania since 2003, where it currently Romania, of which 22 were new openings. with a hypermarket, it will accommodate operates eight hypermarkets under the If it’s able to secure the right locations, retailers such as the Inditex Group (Zara, Cora brand. “Louis Delhaize is happy to it’s possible that 2012 will see even more Pull and Bear, Massimo Dutti, Stradivarius, continue its investments in Romania, new Lidl stores. Around 60 new units Berska), Sephora, Office Shoes, Altex and which is becoming an important market,” are being planned for. Lidl’s website in Noriel, and others.

Carrefour’s impact as a retail scheme anchor tenant stretches far beyond its native France “We currently manage 25 hypermarkets in Romania - of which nine are our own properties - and 46 supermarkets,” says Anca Damour, Director General of Carrefour Property Romania.

“Both formats are advantageous and we are using them both, adapting to the way the market evolves, the speed of expansion and the liquidity of investors and developers,” she added. With one eye on the post- hypermarket expansion era in Romania, Carrefour has rolled out its latest concept: Carrefour Express. The convenience store format will be developed as a franchise with local partners. Largest business park in SE Europe

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Stewart Title presented the PLP: Title insurance latest PLP, focusing on how title insurance can help get deals practice in Romania done in Romania

Despite weather that was less than land registries are improved and updated, Romanian land registries carry with inviting, the seats filled quickly for the as is the general level of expertise from them unique risks too numerous to list, most recent edition of PLP, the continuing state bureaucracies and property service but they include matters as basic as education seminar organized by Roberts professionals. Put simply, the more mature having to decide which registry actually Publishing Media Group. It featured and transparent the market, the less risk takes precedence. The country’s this time a 90-minute presentation on issues of title tend to present. chaotic history is reflected in its the current theory and practice of title documentation of property ownership, insurance. In charge of the presentation And yet, western markets make great placing increased burdens on the likes was by Stewart Title was its CEE director use of title insurance. Klodowski says this of Gheorge Cuzuc, who spoke at length Tomasz Klodowski, who laid out the is because its purpose is to facilitate the about case studies of problems that primary functions and definitions of the closing of real estate deals. The biggest can arise, and how title insurance solve title insurance product. barrier tfor transactions going through them. The 90-minute meeting included tends to be a lack of agreement on the a good number of questions from the It is the irony of this type of insurance magnitude of a variety of risks. Taking issues floor which were fielded by Klodowski, that the more widely it is used, the less of title out of the equation carries a one- Cuzuc, as well as Katja Huitikka (general urgently it tends to be required. This is time cost, but the savings in concluding counsel) who is based in London. because as property markets mature, their deals make it well worth the expense.

66 Romania Office

NEPI’s acquisition of CBC Timisoara is just the latest in a long string NEPI’s Romanian of successful transactions by offensive Romania’s most active investor Amelia Turp-Balazs

Having become unwelcome elements active investors on the local real estate “Despite the challenging economic in the centers of cities across CEE, the market. The sale was one of Romania‘s environment, this office complex has owners of industrial complexes that largest ever to take place in Romania’s attracted several offers from major survived the fall of Communism have office market outside the Bucharest international players in the last 3-4 tended to sell their sites to property market. Ovidiu Sandor will continue to years,” says Troy Javaher, managing developers and move out beyond the develop the next two phases of CBC director at Jones Lang LaSalle. “As the city’s borders. Ovidiu Sandor, the boss (the fourth and the fifth building) while first major institutional office transaction of the Moda Tim clothing factory in managing the property and leading the outside Bucharest, CBC is of particular Timisoara has managed to break that leasing of the office complex. importance to this evolving market, as it mold by trying to have the best of both demonstrates the continued existence worlds. The total value of the deal has not been of investor demand for regional projects revealed, but NEPI announced that it provided that they are truly prime and Not only did he relocate production will pay €16.5m for the three completed dominant.” outside the city, he then developed buildings, and that it will take over the the factory site himself, creating one debts of Moda Tim Investment and Moda NEPI was one of busiest investors on the of the country’s most successful office Tim Properties (€29.2m). The fourth retail and office local market last year. In parks known as City Business Center and fifth buildings under construction April it began the expansion of Promenada Timisoara (CBC). Consisting of three will be “subject to a maximum forward Mall in Braila, where the group is currently completed office buildings and another transaction price of €46m.” carrying out deep changes to the tenant two buildings under construction, CBC list. These will result in a repositioning of was recently sold to NEPI, one of the most The three existing buildings, totalling the mall by QII 2012. 25,000 sqm of lettable area, are NEPI was extremely active in 2011 currently 90 percent leased to In November alone, it completed international tenants such as IBM, the re-development of a strip mall in PricewaterhouseCoopers, Vodafone, Brasov, while concluding an agreement Alcatel-Lucent, Wipro Technologies, to acquire 50 percent of the owner BCR, Deloitte and Microsoft. Over 2,000 of a former factory site located in people are currently employed at CBC, northwestern Bucharest, where it intends making it an important component of to develop a 56,000 sqm GLA shopping the city’s economy. Construction work center. Other developments include on the fourth building is underway Retail Park Auchan Pitesti, which opened and is due for completion this summer, in December 2011. Over the course of while the fifth building is scheduled for 2011, NEPI also acquired land adjacent delivery by the end of 2013. to Carrefour’s operating hypermarket in Ploiesti and reached an agreement Upon completion, CBC will span over with Carrefour Property to re-develop 43,000 sqm of GLA. For the development the combined properties into a regional of the fourth phase of CBC, Moda Tim shopping center - Ploiesti Shopping City. Investment attracted European funds of “Ploiesti Shopping City is already under nearly €7 million, out of the €11m total construction and we aim to open in 2012,” estimated investment required. says NEPI’s CEO Martin Slabbert. This issue is printed on 100% recycled paper

Office Romania 67

Having made its investments in the country, AEW Europe is content to AEW takes active pro-actively manage its currents office approach portfolio Amelia Turp-Balazs

AEW Europe has been active in Romania an expansion of 500 sqm, amounting The cinema opened in December last since 2007, when one of the funds it to a total new surface of 2,600 sqm, year and is currently the only modern manages purchased America House while IT provider S&T has signed on cinema complex in Mures county. AEW and a shopping mall in Targu Mures, for another eight years, retaining the Europe is also bringing the German central Transylvania. As head of asset 2,800 sqm it currently occupies,” says fashion retailer New Yorker to the mall, management for AEW Europe in Central Louis-Maxime Juhel, asset manager at with an 800 sqm shop due to open this Europe, Isabelle Clerc says that much AEW. Additional negotiations are being spring. has changed in the world, but those finalized to extend the lease of some of acquisitions continue to form the basis the building’s biggest tenants. For the time being, AEW Europe has no of AEW‘s investment approach. plans to invest more in Romania mainly AEW Europe‘s Romanian retail asset has “because there is no financing available “The strategy of AEW Central Europe required no less attention. “Turnover here,” yet Isabelle Clerc believes that the is to manage core and value-added, at our Targu Mures mall increased last country has “a strong consumer base, well-positioned assets. The tenants of year by more than 12 percent compared with customers having a specific taste the assets we manage know we are to December 2010,” says Louis-Maxime for shopping.” In CEE, where AEW Europe active and always work for them and this Juhel. “We’ve been investing money, has €1.5bn of the €18bn it has under makes us successful,” says Clerc. time and energy in this retail project, management, Poland is the company‘s and we have built an eight-screen primary focus but it is also active in the The company certainly took an active cinema in order to bring in Cinema City.” Czech Republic and Hungary. approach when the mobile telecom operator Cosmote last year left America America House is AEW Europe’s flagship investment in Bucharest House, it left empty a large portion (3,900 sqm of office and 700 sqm of retail). Since then, however, AEW Europe has managed to attract new tenants whose quality has only served to increase the building’s reputation. McDonald’s moved its headquarters there in September 2011, taking 740 sqm, and opened a 350 sqm restaurant on the ground floor in December.

World Class – which operates fitness centers all over Europe - has also signed up for around 1,000 sqm will this month open a fitness facility on the first floor. America House has also been successful in renewing the leases some of its long-term tenants. “The law firm Tuca Sbarcea si Asociatii signed for the renewal of its 2,100 sqm, plus 68 Romania News

€8.3m net profit for store in Bistrita, in northen Romania. The According to information posted on Garanti Group new unit is its second in the city, as Kau- the ANRE website, this measure will Romania in 2011 fland opened its first 19,000 sqm store allow the company to purchase en- In 2011, the Turkish fi- in 2006 after an investment of €7.5m. ergy from the market on its own terms. nancial group Garanti recorded a net In January, the retailer opened two Metrorex will thus be able to buy en- profit of €8.3m in Romania, a figure it stores in Eastern Romania, in Sfan- ergy from the Romanian power maker aims to increase by 50 percent this year. tul Gheorge and in Medgidia. In 2011, operator - OPCOM - and then sell the Each division of the group contributed Kaufland added 12 new stores to its energy on to companies operating in to the profit. Garanti’s Bank profit stood network in Romania, where it is some- its own sector, including the Bucharest at €3.1m, while its mortgage arm netted times seen as the most expensive hy- Public Transport Administration or the €2m, and its retail lending division re- permarket operator in the country. Romanian Railways Company (CFR). ported a profit of €1.7m. The group’s leas- According to a statement posted on the There is a context for this ruling, of ings operations produced a €1.5m result. company’s website, Kaufland employs course. It could be advantageous for CFR Over 2011, Garanti’s bank assets in- over 7,600 people in Romania and offers to be purchasing its energy from a re- creased to €1.45bn, while its lending to- around 15,000 food and non-food prod- lated company like Metrorex, as it’s well tals rose 19 percent compared to 2010 ucts in each store. known to have incurred heavy penalties to €936m. Deposits totaled €467m. because of late payments of its electric- Garanti Group is owned by Turkyie Ga- Kaufland employs 7,600 in Romania ity bills. These have has amounted to ap- ranti Bankasi, the second private bank in proximately RON 900m. Turkey, with assets worth €66bn and a consolidated net profit of €1.3bn in 2011. Profi now accepting Lyoness vouchers Huawei wins Vodafo- Profi is the newest trading ne Romania’s mainte- partner of Lyoness, which nance assignment means that all stores of its store will from Chinese IT&C solutions now on be accepting Lyoness vouchers. provider Huawei has won one of the Based in Swizterland, Lyoness is an in- largest maintenance contracts on of- termediary between a large group of fer from the Romanian telecom mar- buyers and vendors with whom it is ket: a five-year contract with the mo- partnered. The company gives dis- bile telecom giant Vodafone Romania. counts to its trading members. Lyon- During this period Huawei will han- ess discounts are between 4 percent dle operations such as maintenance and 35 percent, depending on the and site construction, as well as infra- margin given to each trading partner. structure issues. Vodafone Romania Of the total discount offered by trad- will have 70 of its specialists join Hua- ing partners in order to retain cus- wei, as part of a dedicated team that tomers, 1 percent is retained by Ly- will handle these activities. Neither oness as a commission, with the rest side gave details of the contract value. Metrorex allowed distributed among the group of buyers. to supply electricity Internationally, there are over 18,500 tional Energy Regula- merchants in the network. In Romania, Kaufland opened a tor Agency (ANRE) has the network has more than 1,800 part- new store in Bistrita awarded the Underground Transport ner retailers, including Domo, Praktiker, The German retailer Kau- Administration - Metrorex – with a li- House of Art, Cellini, Sephora, Lukoil, Ot- fland has opened a new cense to act as an electricity-supplier. ter, Leonardo, Cavaliere, Kika. This issue is printed on 100% recycled paper

News Romania 69

Romania’s economy the International Monetary Fund and cost is high. One kilometer of motorway increased slowly in the World Bank, and is supposed to be between Constant and Medgidia was 2011 achieved by the end of June 2012. In ad- found to cost the state between €3.6m The National Statistics In- dition, Mustea aims to have broadband and €5m. At the moment, Romania has stitute (INS) has revealed that the Ro- Internet installed in households in the just 350 km of motorways. mania’s GDP increased by 2.5 percent in rural areas of Romania that still have no 2011. The Eurozone gained 1.5 percent, internet access. Costs for this program compared to 1.6 growth in the EU 27 are to be covered by €80m in EU funds VAT could be axed countries, according to the statistical bu- through its RO-NET project, intended to for hotels and reau Eurostat. Melania Hancila, head of cover 3,650 municipalities by the end of tourist the research and strategy department at 2015. agencies Volksbank, says that a slow recovery has In an attempt to attract greater numbers been registered in construction and re- CFR to fire over 1,000 of tourists, the minister of Regional De- tail, following steep market contractions people velopment and Tourism, Cristian Petrescu in previous years. As austerity measures will propose that VAT charges connected INS data also shows the economy fell by deepen, the Romanian Rail- with the accommodation of foreign tour- 0.2 percent from QIII to QIV of 2011, always Company (CFR) has revealed it will ists be abolished. Petrescu said his min- though the growth in the last quarter of be continuing its restructuring and re- istry will launch a study on the subject the year was 2.1 percent higher than in organization. In a public statement, CFR and submit it to the Ministry of Finance. the last quarter of 2010. By contrast, in said this would include layoffs, which Currently, hotels charge 9 percent VAT Q4, the EU 27’s output fell 0.3 percent. would be carried out according to current while travel agencies have to demand 24 But with tax collection still difficult for labor code guidelines and which would percent more for the state’s cut of their Romanian authorities, it remains to be effect 1,050 employees at the company. business. Petrescu argues that bringing seen whether higher GDP result in the In addition, 50 employees from Travel these rates down to zero would be benefi- increased tax revenues for the state’s CFR and an additional 43 employees of cial for the tourist sector and increase reve- coffers. With that in mind, Premier Mihai CFR - GEVARO would be losing their jobs. nues by making Romania a more attractive Razvan Ungureanu has asked his admin- The new measures follow an agreement istration to achieve a 1.5 percent of GDP between the Romanian government and A VAT ban could help the hotels increase in tax collection within 60 days. the International Monetary Fund, which It’s part of a campaign to combat the is monitoring the country’s finances extensive gray economy in Romania, es- closely. Labor leaders have threatened pecially tax evading activities like smug- industrial action, claiming they were not gling alcohol and vegetables. Razvan has informed or consulted. called the fight against tax evasion a matter of national security, Gazeta Prawna Road construction reported. accelerating Over the past 14 years, Postal services to Romania has spent nearly be privatized RON 75bn on the construction and repair The new Minister of Com- of roads, an amount that works out to munications, Razvan Mus- roughly €19.6bn. Of that amount, nearly tea revealed that one of the primary goals half was spent in just the last three years. of his ministry will be the privatization of Motorway construction has grabbed a the Romanian Post. It’s a sensitive matter, great deal of attention, given how badly as Romania is committed to carrying out the country needs improved transport the sell-off as part of its agreement with links to help the economy grow, but the 70 slovakia Q&A

Vladimír Krno: Risk Vladimír Krno, head of real estate lending at Slovenská sporiteľňa, departments are sees plenty of reasons to be tougher now cautious in 2012

What was significant about 2011, and how are you as we wanted because the size of real estate in the bank was expecting this year to be different by comparison? very small compared to the size of the bank. It’s still small but Probably the most important thing that happened in 2011 it’s becoming more and more important. was the awareness of capital constraints and the urgency of bank managements. Probably most banks realized that they Which sectors are you actively not looking at? lacked capital and that they had to do something about it. In some cases it was enough to brush up the ratings but in many Hotels and land acquisition are not interesting for us. banks it became necessary to slow down lending and this will probably slow down 2012. With logistics, we have low vacancy in that sector, but the rents are very low so very often they don’t even justify the At the end of the year, it became suddenly far more construction costs, but it’s something we are looking at with difficult to borrow money from banks. How does this filter interest. With Bratislava’s office market is something we’re down to your activities? looking at cautiously, because it may run into trouble. I have Say I come to the bank with a client I‘ve been trying to get for the impression that most of the clients are relocations and years but he was always with a competitor that offered the extensions in 2012. best margin and for the lowest fees. Now he comes to us, but it’s very hard to persuade our management that we want to do How about your involvement in the investment market? business with this client if he‘s been playing this kind of game You had some large deals at the end of last year in with us. Bratislava. There aren’t so many quality assets around, we don’t see non- I have to fight for our capital with other business lines and prime or non-prime office buildings being sold. In the case of I have to provide good reasons like profitability and the Aupark Tower it was a fund that bought it, and fund manager strategic nature of the client. So perhaps that the client is motivations are usually different then when you spend your likely to stay with us and we will do some mutually profitable own money. It’s a good product, good tenants, and it’s nicely business. It doesn’t mean our doors are closed but it will be leased, but you have to take this into consideration. slower than in 2011. In 2005 and 2006 we saw a lot of investors even for B class, Will your loan book stay the same? and there were smaller funds as well. Private equity coming in I’d expect it should stay at around the level where it is right and buying a 5m asset here or 10m there or buying land for now. We have some natural repayments over the year and further development, so there was quite a lot of development. we’d like to top it up to the original level but this will depend I mention the B class deals, because for me it’s a sign of what on the deals on the market right now. Because our risk developers believe in. department is a little bit tougher than they were. But I’d say they are rationally tough. We’ve always had to prove that there You’re not overly enthusiastic about the office market is market demand for a specific product. If there’s no demand either, are you? for hotels in Bratislava then no matter what policy we have we We saw some IT companies come in last year but I’m afraid wouldn’t do it. there will be only relocations, so vacancy at 10-11%, that might be OK, but it can easily get worse. Which makes it a So, it’s possible your risk people could approve a project in tenant’s market very quickly. You have a lot of leases expiring theory, but the bank would still not finance it? now because it became fashionable a few years ago to sign Back in 2006 capital was abundant and we could do as much just for five years. We will see a lot of rentals expiring. This issue is printed on 100% recycled paper

Office slovakia 71

Tatra banka HB Reavis has picked up financing finances Košice for Aupark Tower Košice just weeks office before opening

HB Reavis has secured €12m in financing investment loan for our Košice office connected at the base to the Aupark from Tatra banka for its office project project,“ says Roman Karabelli, HB Reavis Košice shopping center, something the Aupark Tower Košice. The four year Group‘s marketing director. developer of the building thinks that loan was provided under what the employees will end up appreciating developer termed as „normal“ market „Despite the general caution on the during their lunch breaks, especially on conditions. Tatra banka‘s involvement Slovak banking sector for financing cold and rainy days. in the office component of the project real estate projects and our own Aupark Tower Košice is now close to is hardly surprising, considering it also conservative approach in the sector, completion financed Aupark Košice, which HB Reavis our positive cooperation with HB Reavis completed last year. spoke in favor of supporting the Aupark Tower Košice. Thanks to its location in „We‘re extremely pleased that even in an exclusive location, the project has this time of uncertainty on financial good potential,“ says Tatra banka board markets, we‘ve been able to build upon member Marcel Kaščák. the historically good credit history of our copany and that just a few weeks after Aupark Tower Košice is scheduled to signing financing contracts for our office go o n-line in the heart of Slovakia‘s project River Garden in Prague, we were second city in the second quarter of able to conclude negotiations about an 2012, offering 11,900 sqm of space. It‘s

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Hungary Romania facebook.com/cij.hungary facebook.com/cij.romania 72 slovakia Q&A

Pavol Hajdů: VÚB Bank’s head of project and Profitability, not real estate finance says the days of market share chasing every deal are long gone

What is the general source of the uncertainty? New When you say you’re selective, you mean within the regulations? Economic fears? Fears about the euro? property sector? For the bank it means where can I get the As you said, one reason could be that everybody is nervous best ratio of risk to margin? about what’s going on in the Eurozone and how this story It might happen that there’d be competition between the real will end up. Nobody knows for sure, and this could lead to a estate and the energy sectors. What’s important is that in real certain slowing down. estate you have to calculate 15, 17, or even 20 year amortization schedules, which means even if you give it a maturity of five years Because people don’t like this existential nervousness? you have a balloon of an additional 15 years. If things get worse then it could happen that demand, even for real estate, might go lower. It doesn’t matter if it’s office How big is your portfolio at the moment, and will it change space, or shopping centers or logistics or residential projects. in 2010?? If appetite is low, then some buyers may not end up making We’re roughly around €500m, and we don’t plan to go down. purchases while some companies may reconsider their If anything, slightly up, but as I mentioned at the beginning, expansion plans so they won’t need more space. The banks market share isn’t the priority for us. Profitability is. So it are of course nervous about how they will end up. Another means we are selective, but each project has an appropriate reason might be that the banks have to increase their capital price, or there’s a price for which we can offer financing, adequacy, in line with Basel III. assuming that the other parameters fit. If someone sees it as too expensive, then we cannot help. Isn’t this what’s leading to lower levels of credit available to developers and investors? What’s happening to real estate values this year? Banks can become more selective. So they could have the Again it depends, because there’s a lack of office buildings. same criteria as they had maybe a year ago, but they may The larger companies won’t come to Slovakia because they be more selective now. They know that they can make only have no space to move into. If they want a couple thousand a limited number of long-term investment loans, because meters in one building you don’t have anything here for them they’re highly capital consuming. I think this is linked to the already. This means the value of administration buildings may price of money. If you’re selective you’ll pick up the loans even go up. The question is how shopping centers will do. on which you earn the highest yield. That’s natural. And it’s With logistics, most has been done BTS so the vacancy is quite legitimate. low, so again I don’t see any reason why the values should go down. Within a bank, what’s real estate’s biggest competitor for scarce funds for lending? If the banks were really pushing developers, they’d be I would say that today, the energy sector is very attractive. Last cutting prices, wouldn‘t they? year were the photovoltaic energy plants. These days we see That’s something that doesn’t work here. I think banks are bio gas stations and bio mass power plants, and co-generation very friendly to developers. We even want to support them, units. So all the renewable energy is very attractive because because we started some business together. The parameters you have guaranteed demand from the state. It’s subsidized, weren’t met but we know it wasn’t because the developer as there’s support for the renewable energy sector and this was bad, but the environment has changed and we can makes the project financeable. The risk is lower, because you understand it. If the developer is doing the best he can and can almost equate it to a state risk. Along with that, you have a he’s supporting the project, then we want to support the 15 year contract, and there’s a commitment based on the law. developer. Of course we can’t lose on it but we can support with some time, so this is what we are doing. Program 2012

The Continued Rise of the Phoenix Developer?

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Public debt spreads are mostly The ECB’s trillion falling, because the ECB is now euro bet effectively guaranteeing them Charles Wyplosz

Spreads on public debts in the The story is that banks borrow from President Draghi has let it be known Eurozone – with the exception of the ECB at very low rates (about 1%) that the moral hazard must be treated Greece – are falling hard and fast. This and buy public bonds whose yields first and convincingly. Politicians have column argues that this is in large part are much higher. The amounts are responded and produced, at the end because the ECB is now effectively considerable – by the end of December of January 2012, the draft treaty on guaranteeing Eurozone government LTROs had injected €250 billion of fresh stability, coordination, and governance debts. But it cautions that in doing so, cash. Rumours are that the next round in the Economic and Monetary Union the central bank is taking enormous will see an injection many times that – also known as the fiscal compact. If risks. amount. When one realises that the things go well – a big ‘if’, as national total lending capacity of the EFSF is arrangements can fall far short of With immense modesty, the President €250 billion, it is not difficult to see why what is needed to achieve lasting of the ECB Mario Draghi is giving the the LTROs have turned around market discipline – this treaty will establish credit for falling spreads on Eurozone sentiment. a decentralisation of fiscal discipline government debt to the courageous through the adoption in national reforms announced in a number of For months, many observers have constitutions of the German ‘debt brake’ countries, especially those where argued that one of the necessary balanced-budget rule. Decentralisation, former academic economists act as conditions to stop the crisis is an instead of European Commission prime ministers. Oh, how we would love explicit guarantee of public debts to be supervision and control (as was the case to buy Mario Draghi’s interpretation! offered by the ECB (see for example de with the Stability and Growth Pact), While simultaneity is not causality, it Grauwe 2011 and Wyplosz 2011 on this would be a major, long-desired step is hard not to see a link between the site). Under its previous management, (see von Hagen and Wyplosz 2008). impressive decline in bond spreads the ECB had rejected this approach on and the ECB’s long-term refinancing dubious grounds. They had argued: Then the ECB has bypassed the German operations (LTROs). It’s not in the mission (wrong, financial resistance against backstopping public stability is in the mission); It would debt, which explains President Draghi’s create massive moral hazard (wrong, false modesty. By providing commercial the moral hazard can and should be banks with vast amounts of cheap and treated separately); It would expose stable cash, the ECB officially means the ECB to financial risks (true, that is to avert fatal liquidity shortages that why a central bank is not a commercial could take one or more Eurozone banks operation); or It is for governments to along the Lehman Brothers path to sort out their own mess (wrong, they ruin. The other interpretation – which is plainly cannot). not incompatible with the first one – is that the ECB is indirectly backstopping With a seriously trained economist at public bonds. As noted above, it works, the helm for a change, the new ECB so well in fact that many observers and management has clearly seen the policymakers have called it a definitive light. It has still been held up by the victory. moral hazard issue and by Germany’s unreasoned opposition, but it has found Unfortunately, this clever move falls ways around both blocking points. short of bringing the crisis to an end. This issue is printed on 100% recycled paper

Opinion regional 75

The ECB’s Mario Drahgi (left) is taking a high-stakes gamble with EU solvency Much more remains to be done. Greece and Portugal will be unable to grow with their existing debt burden – and this may also be the case for Italy and other countries as contagion takes hold. Current efforts to achieve an orderly debt restructuring of the Greek debt are far too modest. They aim to bring the debt-to-GDP ratio to 120%, which is higher than its pre-crisis level of 110%. Given that a deep enough default will lead to a banking crisis in Greece, the government’s first post-default move will have to be to bail out its banks. This means that the debt must be reduced to, at most, 60% of GDP.

We must then face the fact that many of Europe’s largest commercial banks are in a precarious situation. Serious estimates by NYU economists, constantly updated on V-Lab’s website, suggest that Europe’s largest banks face a risk of $1000 to $1500 billion. A contagious wave of sovereign debt assets. The more that banks accumulate one can assess whether this is a bet defaults would undoubtedly raise this these bonds, the riskier the situation is worth taking, especially since other amount. This gives us a vague but becoming. The ECB seems to be making central banks like the Fed or the Bank of realistic peek into what governments a trillion euro bet. To see that, we should England have directly bought sovereign must be readying themselves to inject recognise that the sovereign debt crisis bonds, taking the risk of default upon into their banking systems. On this is a case of multiple equilibria (Blanchard themselves rather than pushing it into count, Germany, France, and Spain 2011, Wyplosz 2010). With a bit of luck, bank balance sheets. But maybe, given are next in line for the sovereign debt markets could be swayed by the ECB German intransigence, there was no other crisis. This is the result of three years action; most public debts will be once politically possible choice for the ECB. If of Japanese-style forbearance. By again seen as safe and the ECB will have the bet fails, we will blame the German guaranteeing bank access to liquidity, saved the euro at virtually no cost. But authorities, not the ECB. That, too, is the LTROs effectively eliminate the risk a reversion to a good equilibrium is by smart, but maybe a tad too smart. of illiquidity, but they do not address no mean guaranteed. Should markets the risk of insolvency. The devil here is conclude that crucial public policy Charles Wyplosz is Professor of in two big, ominous details. actions are missing, as argued above, a International Economics at the bad equilibrium will prevail, debt defaults Graduate Institute, Geneva; Director In fact, the LTROs make things massively will spread and Eurozone banks will of the International Centre for Money more dangerous. Banks borrow cash fold, imposing such a massive cost to and Banking Studies; CEPR Research from the ECB to acquire sovereign taxpayers that the euro might collapse. Fellow bonds. A plausible wave of sovereign The nature of multiple equilibria is that defaults will turn these bonds into toxic they are truly un-forecastable. So no Originally published by www.VoxEU.org 76 REGIONAL Events

Prologis Poland Prologis kicked of its business events this year with an evening it called “Hot Stuff! Heat up your business in 2012!” It took place February 9 at Flaming & Co Restaurant in Warsaw and while it was cold outside, the atmosphere inside was warm with plenty of business talk, delicious food and sizzling music. Prologis has been organizing these types of parties twice a year (in January and September) since 2005.

Magda Bednarska (C&W), Kamila Pruk (Prologis), Marcin Marta Tęsiorowska (Prologis) and Kevin Turpin (Jones Lang LaSalle) and Ben Bannatyne (Prologis) Sulewski (Savills) and Paweł Żelnio (JLL) Tom Listowski (Cushman & Wakefield)

TriGranit Poland TriGranit broke ground on its largest Polish project, which is the €250m Integrate Transport Center in Poznań. This followed the conclusion of a financing deal for the scheme with a consortium of banks consisting of Bank Zachodni WBK as the facility agent, Raiffeisen Bank Polska SA, Nordea Bank Polska SA, BRE Bank SA, HYPO NOE for a loan Árpád Török, TriGranit CEO officiating at the ground breaking ceremony amount of €119m.

DTZ Hungary TriGranit broke ground on its largest Polish project, which is the €250m Inte- grate Transport Center in Poznań. This followed the conclusion of a financing deal for the scheme with a consortium of banks consisting of Bank Zachodni WBK as the facility agent, Raiffeisen Bank Polska SA, Nordea Bank Polska SA, BRE Bank SA, HYPO NOE for a loan amount of €119m. Czifra Balázs (DTZ) and guests Didgeridoo players This issue is printed on 100% recycled paper

Events regional 77

CBRE Hungary CBRE in Hungary had a team building afternoon called Friday’s Freezing Fun. It took place on an ice rink near the company’s office. Staff members had a chance to bust some dance moves on the ice, while others tested their hockey skills...with varying degrees of success, but with total enthusiasm.

CBRE Hungary team on ice

Galerie Harfa Prague In the midst of a batch of arctic weather, Galerie Harfa in Prague set up a rather unique attraction: an exhibition of ice sculptures of politicians of both Czech and international origin. Czech and Polish sculptors made likenesses of Václav Klaus, Jiří Paroubek, Karel Schwarzenberg, Miloš Zeman, Miroslav Kalousek, Barack Obama, Nicolas Sarkozy, Angela Merkel, Vladimir Putin and Silvio Berlusconi. Mátyas Zorándy (CBRE) playing hockey Dancing on Ice (sort of)

CzecH Lawyer of the Year On January 27 the awards for Lawyer of the Year 2011 were announced and present the winners in Brno. This contest was organized for the 7th time by the website epravo.cz along with the Czech Bar Association. Karel Eliáš, the author of the new civil code proposal, was inducted to Winners of the evening on stage the law hall of fame. Drinks before home

Petr Šrámek (Pointpark Properties), Pavel Aneta Sosnovcová (Clifford Chance), Martin Fučík (Havel, Scháňka (GE Real Estate), Marcel Kolesár Peter Becar (PointPark Properties) Holásek & Partners) and Daniel Kubizňák (PointPark Properties) (CBRE) and Mikuláš Molnárfi (CBRE). and David Emr (Weinhold Legal)

Marek Krajewski (Ghelamco) and Robert Fletcher (RPMG) Craig Maguire (PointPark Properties) Damian Grzywacz (PointPark Properties) and Ian Elliott (Colliers International) and Jan Cieśla (Grontmij Polska)

Robert McLean (RPMG), Monalisa Musteata (RPMG) Victor Croitoru ( Gardiner & Theobald) Mariana Stamate (Jones Lang LaSalle) and Andreas Laspadakis (ETEM Systems) and Denisa Gradinaru (Mivan) and Daniela Cusnir (Panhol) This issue is printed on 100% recycled paper

During these turbulent times the DBH has created a successful monthly meeting point that is sorely REGIONAL 79 needed in today’s marketplace. Now held in four countries the Czech Republic, Hungary, Poland and Romania with our Prague events starting in 2012. For more information regarding sponsorship or to be placed on the invitation list, please contact one of our offices for more information. For the full 2012 DBH calendar for all countries, please visit our website www.cijjournal.com/dbh DBH Calendar 2012

Czech Republic

Feb. 9 Eva Burešova (108 Agency), Jakub Radek Prochazka (Cushman & Mikuláš Molnárfi (CBRE) Tomáš Holec (108 Agency) and Daniel Wakefield), Petra Rychnovska May Ostatník (CBRE) and Filip Kozák (CBRE) Kubizňák (PointPark Properties) (ASB) and Filip Kozák (CBRE) 24

Oct. 17

Jonathan Hallett (Cushman & John Hall (Mayfield) and Henrik Nigel Young (NAI Mipa) Wakefield), Robert Fletcher (RPMG) and Favari (BNP Paribas Real Estate) and Jonathan Hallett Markéta Vrbasová (PointPark Properties) (Cushman & Wakefield)

Poland

March 22

Michał Pluciński and Anna Doyle Sean (CBRE) and Tom April Połeć (EC Harris) Listowski (Cushman & Wakefield) 19

May 17

June Małgorzata Kosińska (Prelios), Maja Biesiekierska (Polish Properties), Piotr Wąs and Martyna Latawiec Łukasz Maciak (BZ WBK), Michał Beata Latoszek (BZ WBK) and Malgorzata 21 (PointPark Properties) Ćwikliński and Marcin Purgal (Savills) Cieslak-Belgy (REINO Partners)

Romania

March 21 Eduard Simionescu (Greko), Oana Bogdan Petcu (The Advisers/Knight April Iovanel , Antoaneta Nuta and available for Frank) and Sarah Negm (HTO) The Advisers/Knight Frank team George Dragne (Marsh Romania) 26 sponsorship

May 21

Gabriela Piele (Regus City Center), Bogdan Untea (Immofinanz), Sebastian James Burgess (C&W), Jukka Leslie Warren (Helios Phoenix) Dragomir (Immofinanz) and Radu- Parkkamaki (Skanska) and Ovidiu and Muler Onofrei (Soravia) Petre Nastase (Adest Arhitecture) Prunea (Property Partners) 80 REGIONAL EventsAppointments

CBRE appointed a new Head of capital CTP Invest has been director of the money transfer Markets for Central and Eastern Europe. making substantial company Western Union Romania Michael Atwell brings 22 years of additions to its staff and Bulgaria. Budurea has previous experience to CBRE, most recently of late, having taken experience in the money transfer as Partner and Head of Cushman & on board Hynek services, having served for six Wakefield’s Middle East operations Rajský and Zdeněk years as group country manager of based in Dubai and Bahrain. Prior to Apeltauer, among money transfer services company this he spent nine years in Central others. Hynek Rajský Angelo Costa Romania. At the same European Cushman & Wakefield offices is a lawyer and will take care of law time, she managed Foreigners in Hungary and Poland. He’s been documentation, contracts for tenants, in Europe, a media company involved in a wide range of high profile banks and state institutions. Prior of Costa Group. Before joining transactions in the region, including to joining CTP he worked for KPMG, Angelo Costa, she was executive both the Metropolitan and Warsaw PwC, T-Mobile and VUT Brno. Zdeněk director of Dollar Express Romania. Trade Tower sales in Warsaw, and the Apeltauer will be in charge of facility Casino (Géant hypermarket) portfolio. management for CTP in the Czech Michael is taking over the reins from Republic and will also be preparing CBRE Poland has Patrick O’Gorman, who will return to documentation for new projects. His strengthened its CBRE’s office in London to take up the working experience includes positions team by making role in the Central London Investment in Bosch Diesel Jihlava and Valeo several new team following four years in CEE. Compressor Europe appointments this month, beginning Igor Klajmon has with Arkadiusz been appointed the L’Oreal Romania has appointed Gilles Dróżdż who took new development Antoine as its new Country General the position of Project Manager of the director of CPI Group Manager. He will be leading the local building consultancy department at as of February. business of the group and managing CBRE. Arkadiusz will be responsible for Prior to this, he was its three divisions and nine brands the project management of office, retail been involved in that are currently on the Romanian and industrial projects across Poland. the development market. He succeeds Richard Meanwhile, Konrad Szaruga was of commercial Matalon, who is moving to a different appointed Property Negotiator who and residential projects in Central position within the L’Oreal Group will be representing landlords in Europe, the United Kingdom and after a four-year local mandate. A office and leasing transactions. Before Brazil for companies such as Avestus Frenchman, Gilles Antoine started this the latest appointment Konrad Real Estate and Bovis Lend Lease. his career in L’Oréal France 17 years has been working at CBRE Facilities At CPI he will be responsible for ago, in the sales organization. Management as a Reporting Analyst. development of COPA Centrum Michał Żelazek will hold the position of Národní along with the reconstruction Western Union Romania and Bulgaria Property Negotiator at the industrial & of Clarion Congress Hotel Ostrava. Daniela Budurea is the new country logistics department.

MITZI LINKA

It‘s hard to keep up with all the comings a posting there. We also came to know xury scheme. Today they‘re happy to hit and goings. We‘re thinking of one guy that a long-time CE guy from Heitman upper middle class prices, which shows we know who worked alternately at is on his way elsewhere, not that we how bad things are. What intrigues, ING, for a King of Karlin, for a guy who know where. If there‘s one project whe- though, is that there‘s more land the- then bought out a fair share of KoK, was re we‘d really like to hear how it actual- re than meets the eye. then on his on now only to pass on to ly went down, it‘s the resi one now led a developer with a passing interest in by the friendliest of folk who sacrificed the sacred. And we‘re sure we missed a career in Slovakia to front a former lu- BROADCASTED to your PHONE as the events happen

www.encompassme.com 82 CIJ Archive

From the CIJ Archives

Czech Republic Poland March 2002 Skanska Property to launch retail scheme March 2007

Skanska Property Czech Republic is about to begin con- Mokotów to struction work on one of its two retail projects, the test its limits Čestlice shopping park located in the Průhonice shopping zone. Like its sister project in Černý Most, the It’s long been a pop- project will bring around 9000 sqm of new retail space to ular location for the market in large retail warehouse units. Dixons is the office developers, anchor tenant for both of them, taking up slightly less but the supply figures for Mokotów are than 70 percent of the two projects. With work almost underway in Čestlice, starting to look as if they’ve gone berserk. completion is expected in the late summer, while the Černý Most development In 2008 alone, developers are claiming should be done either around the end of the year or by the end of next winter. they’ll bring no less than 100,000 sqm of brand new office space to the market, Skanska Property Czech Republic has made huge progress often in buildings sitting within a stone’s since building Čestlice shopping park. Skanska strategy throw of each other in the Służewiec now, is to focus on building environmentally smart of- Przemysłowy neighborhood. Rather than fice buildings. Our latest office development City Green worrying about this explosion of supply, Court raises the green standard in Prague by offering the however, developers are rushing to get Czech Republic its first LEED Platinum pre-certified office. into the ground first. Skanska’s vision is to be the market leader in the Czech Re- public in project development of prime green/sustainable Ghelamco’s managing director Jeroen van commercial buildings and my team and myself will do der Toolen is counting tenants who are in maximum to provide our clients with attractive, efficient a similar rush. “There are tenants who will and therefore competitive solutions. need to occupy in the first quarter of 2008 and that’s where our offer comes in,” he Britta Cesar, Managing Director, Skanska Property CZ claims, referring to the 45,000-sqm Marynarska Business Park.

These include Park Postępu from Echo Czech Republic mortgages are still out of reach for Investment, which comprises 36,000 sqm most people. Take our first projects, of office in a quartet of 6-story buildings at which we divided into three stages. Postępu and Domaniewska. The Kielce- March 1997 The first stage (180 apartments) is based developer promises to kick off with completely sold and we’ve sold 70 construction this April and complete the Tomas Bilek, percent of the second stage which has project in the second half of 2008. Metrostav 136 apartments. All but three, which involved mortgages, were sold for Next in the pipeline is Tulipan House from There’s a lack of cash. That would sound insane in Slough Estates, also at Domaniewska. The money for housing America. No on would pay that way construction of the building featuring construction. because people don’t solve their living 18,000 sqm of lettable space began earlier There is no hous- situation by pulling money out of their this year, and the developer is also hoping ing market and the projects that exist pockets. It’s a crazy situation, but to finish by April 2008. Not far from are essentially the daring moves of despite this, the project has been suc- Tulipan House is GTC’s Platinum developers. So far, the state hasn’t cessful thanks to a class of people who Business Park, located near Galeria actively become involved, because have managed to save money. Mokotów, which boasts 40,000 sqm of This issue is printed on 100% recycled paper

CIJ Archive REGIONAL 83

Czech Republic space distributed equally between five buildings. On the same street, GTC is also developing Nefryt building, a 7-story affair good for 15,000 sqm. March 2007 K&H expanding its branch network As if this weren’t enough, Curtis Development is pushing ahead with K&H Bank, one of Hungary’s largest commercial Horizon Plaza, a two-building com- banks, is to almost double its outreach by adding 150 plex offering more than 34,000 sqm at branches to its network during the next three years, Domaniewska and Wołoska says Marko Voljc, K&H Bank chief executive. The expansion would give K&H, a subsidiary of the Regional Belgian KBC Group, a total of 320 branches in Hungary by the end of 2009, making it the second-largest network in the country. “The current ratio of population to bank branches in Hungary stands at about 61,000. March 2002 This will come down to around 30,000 per branch in 2009. However, this is still high compared to the 10,000 per branch in our home country of Poles reject Belgium,” Voljc said. plans for The K&H chief says that since it was present in all of Hungary’s major Bohumin re- conurbations, many of the new branches would be of modest size in towns loading station of fewer than 20,000 inhabitants.

The construction of an international re-loading facility in Bohumín, Moravia, for goods and raw Romania materials from Asia has been complicated by Polish authorities, who want it to be relocated to the border crossing at March 2007 Věřnovice near Karviná. The terminal, S-Park and ERP sold off which according to initial plans was to be launched in January 2003, would thus be The hectic pace of deals set in 2006 set by invest- on both sides of the Czech-Polish border. ment funds has continued into 2007, with deals announced in and out of the capital. City Capital Construction of the facility was launched Property Adviser has purchased a 5,842 sqm office at a ceremony in October last year when building (3,300 sqm gross) with 60 underground the first part of a wide-gauge railway and parking spots through one of its affiliates. The the cornerstone of the planned terminal, building is entirely leased to cable and satellite electronic communica- were laid. At the same time, Czech, tions provider UPC Romania. Located in Bucharest’s Herastrau district, Ukrainian and Russian authorities, along roughly 5 km north of the city’s center, the building went for €10 million. with the investor, Shiran, signed a letter of “Increased confidence in the investment market and the optimistic eco- intent to support the project linking Asia to nomic outlook after EU accession induced an unprecedented level of Moravia and to participate in the comple- investment on the local market,” says Viorel Lacatus, Senior Negotiator tion of a 120-140 kilometer long section of at CB Richard Ellis Romania. Other deals are happening outside the a wide-gauge railway from Slawkow, capital, including one in Sibiue in which the developer Belrom sold the Poland, to Bohumín. The Polish side is European Retail Park for €83 million to North Real Estate Opportunities dissatisfied that the Czech Republic would Fund. acquire a majority of projected profits if the re-loading facility is built in Bohumín. 111041_Immo_CEE_GLL_Stoerer_MIPIM_215x260_39L_Pfad.indd 1 15.02.12 15:32