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Changed geopolitical position, growing ESG appetites, as well as new market needs, and innovative solutions could translate into new real estate investment interest and opportunities in Poland. But fully tapping the potentials in the current era of high inflation and interest rates requires savvy strategizing and cooperating within the entire ecosystem.
We did it again. We went to search and dig for future outlooks and answers to the most pressing issues that the real estate and land use professionals face these days. This year’s edition of the annual ULI Poland conference ‘New World Order’ took place on 19-20 April at the spectacular Raffles Europejski Hotel in Warsaw. The event gathered crowds of participants and speakers from all lines of the industry’s work, and multiple geographies, ready to reflect upon and discuss the changing world, new and global challenges thrown their way, best ways to cope with them, and the strongest prospects for growth.
Thimon De Jong – a globally recognized behavioral expert, founder of WHETSTON, author of “Future Human Behavior: Understanding What People Are Going To Do Next” (Amsterdam)
Going in and out of crises, together
The comprehensive agenda of the conference commenced with an opening gala dinner and an inspirational talk by our fantastic special guest speaker, the acclaimed behavioural expert and author Thimon De Jong. He took attendees on a thought-provoking and much-needed journey through rough waters of pressures felt while living in times of polycrisis, complexity and uncertainty, and their impacts on social behaviours and mental health. He explained how people embrace changes, and the importance of knowing what our “automatic elevators” are in our personal, team and organisational lives. “Add a human or emotional element to every change you want to implement,” he reminded everyone present before the evening continued with a great dinner, network reconnecting, and socialising.
Marek Matraszek, Chairmen, CEC Group (Warsaw)
Poland regaining momentum
The next day began with two opening speeches, and a subsequent Q&A session covering geopolitical and economic outlooks as well as respective drivers affecting the Polish market and investors’ sentiments.
“Poland is back at the centre of both investor attention and concern,” Marek Matraszek, Chairman of CEC Group, pointed out in his presentation on where the world heads today, and how the fallouts of the Russian war in Ukraine, along with the EU and transatlantic dynamics, could impact the perception of the CEE region. “Companies in Poland, particularly in the construction and building sector, will be looking for future contracts and trade opportunities in Ukraine’s reconstruction efforts, and may have a good chance to benefit from them,” he added. Polish general elections in the autumn could bring an investment tailwind as well from unlocking of EU funds.
prof. Witold Orłowski, Chief Economic Advisor, PwC Polska (Warsaw)
Other market opportunities might derive from the current macroeconomic situation. “This surely is a horror century, given the financial crisis, pandemic, or an open war in Europe, but somehow we are surviving and going through it,” said prof. Witold Orłowski, Chief Economic Advisor at PwC Poland. “Poland’s economic growth will come back in H2, although I expect it to be moderate. The risk of recession is temporary, the risk of stagflation is there to stay,” he added. Despite the ongoing war in Ukraine, Poland enjoys record high FDI levels. Therefore, a lot will depend on the way Poland responds to the current economic landscape and seizes opportunities. “We will experience problems with the financial sector; however, this will not produce any major financial instability,” he concluded.
Didde Maria Trachsel Kristensen, Partner & Head of Investor Relations at NREP (Copenhagen)
ESG: How important is it to equity investors?
What do investors expect from fund managers in terms of ESG? This is the question Didde Maria Trachsel Kristensen, Partner & Head of Investor Relations at NREP, addressed in her presentation and discussion session ‘ESG in the investment process’. She also provided some splendid examples of meaningful ESG actions by NREP in the Nordics: an upcoming carbon net-zero logistics development in Stockholm, and a Danish housing project developed with re-cycled materials. “The real estate as a whole has been lacking focus when it comes to creating and developing sustainable real estate,” she warned.
from the left: Didde Maria Trachsel Kristensen, Head of Investor relations, NREP; Anna Duchnowska, Managing Director – Investment Management Europe, Invesco Real Estate; Łukasz Białecki, Head of Real Estate Financing, Bank Pekao; Hajo Engelke, Managing Director, Westbridge Advisory International AG (moderator)
While European and Polish firms continue to grow their ESG capabilities and processes, integrating social and environmental factors into their business models for good, they also enter the phase of practicality grounded realization on what the ongoing sustainable transformation will really require from them and their stakeholders. “One of the key points we look at when making an ESG-related credit decision is the continued ESG suitability of an asset for its buyer or owner in the long-term,” said Łukasz Białecki, Head of Real Estate Financing at Bank Pekao, in the subsequent panel discussion. “Looking ahead, in the future we will need to place more focus on redeveloping and retrofitting as opposed to constructing new buildings,” he pointed out.
Investors admit that despite their willingness to make their business greener, in many respects their hands are tied. “Since we rely on a carbon-fuelled energy grid in Poland, almost every building is somewhat stranded. There need to be decarbonization public policies in place first. We are happy to see a decision on developing nuclear power capacity in the country,” explained Anna Duchnowska, Managing Director at Investment Management Europe, Invesco EMEA. “The best thing you can do on your own as an investor is to work on concepts helping to optimize energy intensity,” she added.
If ESG efforts are to live up to their balanced-out potential, the “S” part will also need to get better attention and emphasis amongst real estate and land use operators. They already face challenges with ageing of populations and consumer behaviour changes. As rightly brought up by Didde Maria Trachsel Kristensen, when it comes to investors and developers’ sustainable transformation, listening to the voice of end-users, and putting them at the centre of designing projects should become a priority for investors, developers as well as municipalities. “In real estate, in the case of products that are more consumer-focused, it is sometimes difficult to reach out, but it is always worth the trying,” she said.
Andrea Carpenter – Co-Founder and Director, Diversity Talks Real Estate (London)
The rising challenge of decarbonisation
The lively discussion set the scene for ‘ULI CChange – mobilising the industry to decarbonise’ presentation by Andrea Carpenter, Co-founder and Director of Diversity Talks Real Estate. CChange is a research and collective expertise program aimed at helping real estate businesses to reduce the number of climate-stranded assets, challenging key barriers to decarbonisation, accurately assessing transition risks, and moving towards net-zero faster. “The main thing that is holding us back right now is that property valuers are not able to properly value transition risks,” Andrea Carpenter explained. “There is no regulation to set deadlines to net-zero at the moment, so there is actually nothing to use as a basis for comparison. We want to look at the decarbonisation risk and recognise that it is a specific technical difficulty that we have as an industry regarding valuations, and that it also has societal impacts,” she added.
Katarzyna Przybylska, Head of Advocacy, Habitat for Humanity Poland (Warsaw)
Affordable housing scale-up
The above “info-burst” opened the floor for another crucial topic, highlighting the ‘Rising challenge of creating affordable living’ presented by Katarzyna Przybylska, Head of Advocacy at Habitat for Humanity Poland. She went through best practices and success stories that could serve as a benchmark or directly cater to the needs of the slowly incubating affordable housing sector in Poland. She also familiarized the audience with the state-supported but broadly unknown housing policy concept Social Rental Agency and explained the importance of similar initiatives for Poland’s sustainable growth. In the discussion that followed, the panellists considered main obstacles and diverse ways in which private, public, and NGO sectors could act together to speed up and scale up the delivery of social housing projects.
from the left: Katarzyna Przybylska, Head of Advocacy, Habitat for Humanity Poland; Marek Obuchowicz, Partner, Griffin Capital Partners; Konrad Wilczak, Associate Director/Senior Banker, European Bank for Reconstruction and Development; Dorota Wysokińska-Kuzdra, Senior Partner, Colliers (moderator)
As Marek Obuchowicz, Partner at Griffin Capital Partners, pointed out, due to Poland’s not very favourable market conditions to create public-private cooperation initiatives, affordable housing projects tend to get dismissed by developers over the commercial benefits. “The development of such projects in Poland is an ultra-complex task,” EBRD’s Associate Director/Senior Banker Konrad Wilczak noted on the other hand. “It engages multiple parties, central and local government, ideally also the private sector. We would be happy to play a role of a broker and investor in such projects, but the first step should be getting all stakeholders on board and establishing what exactly will have to be done. Most of the large developers would probably be willing to engage into such projects if proper incentives were provided. Know-how and skillset are certainly available within the private sector,” he added.
Kevin Turpin, Regional Director of Capital Markets CEE at Colliers (Prague)
How long can equity wait to be deployed?
While 2023 is likely to continue with high inflation and interest rates, Polish real estate pricing and quality of new assets will continue to attract institutional investors who are historically familiar with real estate products in CEE and investment returns in these markets, in particular Poland and Czechia. “The wall of capital we keep hearing about is still there, but a lot of it is waiting,” said Kevin Turpin, Regional Director of Capital Markets CEE at Colliers. According to the company’s most recent report, domestic investment capital continues to be almost non-existent in the Polish real estate market, standing at just 2%, which should be addressed by the local regulators. “When international capital leaves the Polish market or goes back to its home markets, this leaves a big gap. (…) Moreover, the margins that the industry has enjoyed up till a year ago are no longer available. We are probably not going to see any significant activity returning to the market in 2023,” Kevin Turpin explained.
From the left: Kevin Turpin, Regional Director of Capital Markets CEE, Colliers; Sylvie Geuten, Managing Partner, Mitiska REIM; Anna Duchnowska, Managing Director – Investment Management Europe, Invesco Real Estate; Tomáš Jandík, Chairman of the Board of Directors, REICO; Søren Rodian Olsen, Chair of ULI Poland; Head of Logicenters Poland at NREP (moderator)
Investment transaction is not the only activity to have slowed down. Fundraising has also stalled for some groups of investors, asset classes, and geographies. “There are some fantastic opportunities on the market, for specialized investors,” observed Anna Duchnowska, Managing Director at Investment Management Europe of Invesco EMEA Real Estate. “Unfortunately, in other cases the fundraising has slowed down. Real estate is currently less attractive than other assets classes. It is also difficult to establish the right entry and exit pricing in the current market environment (…) Fundamentals did not change, demand is there, tenants and rentals’ growth are there,” she continued. “The Czech retail at least has been doing very well,” said Tomáš Jandík, Chairman of the Board of Directors at REICO. “Fundraising still means seeing positive amounts of cash. I think the main difference now indeed is in the type of investors you are dealing with – these are either conservative, who factor in fears and risks differently. Or more risk prone investors who invest in the hope that real estate would do fine in inflationary environment, and take more long-term investment views,” he elaborated.
While the new realities and macro scenery have come as a blow to some, they also gave a boost to others. “Retail parks have been tough for us in the past, pre-Covid years, but the pandemic somehow gave us wind in the sails, and triggered the new perception and learning in the market that not all retail assets are the same, and that retail parks are in fact a very sustainable asset class,” said Sylvie Geuten, Managing Partner at Mitiska REIM. “We are prudent but also confident about fundraising. When it comes to investing, we recently closed a big and challenging transaction in Poland,” she added.
When asked about their funds’ compliance with SFDR’s controversial Article 8 and Article 9, panellists noted that Article 8 alignment have already become a market standard, both in Europe and Poland. “In order to attract investors, you have to be compliant with Article 8,” said Sylvie Geuten. “We are not looking at Article 9 compliance yet,” added Tomáš Jandík.
Andrei Martin, Partner, PLP Architecture (London)
Radically rethinking the future of urban mobility
The inspiring and insightful sessions were rounded up by an incredible closing presentation by Andrei Martin, Partner at PLP Architecture Studio, who enchanted our audience members with IUMO. The ground-breaking conceptual project of urban vertical and horizontal transportation systems builds on the idea of introducing efficiently designed grids for under and overground autonomous vehicles. The impressive, sustainable, on-demand and point-to-point solution could help to free up urban space, reduce travel time by as much as 75%, and open opportunities for new architectural concepts. “Our mission is to leverage technology and human-centric design, so that through our built environment we can begin to really tackle and solve some of the biggest challenges of our time,” said Andrei Martin. We truly hope this credo can be jointly shared within the entire industry in the years to come.
Søren Rodian Olsen, Chair of ULI Poland and Head of Logicenters Poland at NREP (Warsaw)
In his final remarks and wrap-up message, Søren Rodian Olsen, Chair of ULI Poland and Head of Logicenters Poland at NREP, said: “The arguments we heard during the conference’s discussions ignited a set of new hopes: Hope of more focus put on the “S” aspects in ESG, and placing end-users at the heart of urban real estate projects. Hope of putting more emphasis on and addressing mental health issues in the corporate working environment. And finally, a prospect of how important Poland will become in Europe in the post-war rebuilding and reconstruction of Ukraine’s economy and infrastructure.”
We hope that ULI Poland’s 2023 New World Order conference was an exciting and inspiring source of new, original, and pragmatic ideas. A massive thank you to all the participants, speakers, panellists, moderators, conference sponsors, and ULI Poland corporate partners without whom this conference would not have been possible! Every input, all the questions, challenges, insights, and ideas coming from the floor lifted our spirit of optimism about the future of Poland’s real estate industry, land use, and visions for urban development.
Thank you to the Conference Sponsors, Partners and Patrons for their support!
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
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2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’
2023 ULI Poland Conference ‘New World Order’