b ig gest offic es

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b ig gest offic es

Volume 21 | Issue 07-08 | July-August 2015
CZK 150 | HUF 1900 | PLN 26 (8% VAT incl.) | RON 25 | € 5.90 | £ 4.80 | USD 7.80 | index 37332X
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Editorial
If there’s something that the managers of shopping malls have always tried to make clear to anyone who will listen is that retail outlets are a living organism. That they require constant attention to detail, planning, contact with tenants and an understanding both
of what consumers know they want, as well as a feeling for what might capture their imagination. Their jobs, say such managers,
are far more complex than those who look after office buildings, which have a static clientele who pay a constant rent and service
charges for five to ten years. Office buildings simply need adequate maintenance and renovations and the occasional paint job to
stay up to date and competitive.
EDITOR’S LETTER
Certainly it’s never great for an office building when a tenant moves out, but when there’s empty space in a shopping center it casts
a shadow across the whole center. It only takes a couple of darkened windows in a shopping center to go dark for shoppers to get
the feeling of walking down a slightly dangerous, seedy street. If a new office building opens up down the road, this has no impact
on the original buildings, whereas shiny new malls can have a dramatic impact on existing ones.
All these points are true for individual shopping malls. But along with these challenges, the owners of shopping malls in Central
Europe today are faced by a series of strutural changes to which they must adapt their properties at the same time. The first is the
shift to on-line shopping and the impact this is having on some of their traditional anchors, especially stores like electronics and
sports stores. These retailers will continue to need to rent physical space, but increasingly they will perform the role of a showcase
for goods. If a mall’s retailers fail to react to such trends, the owner’s bottom line will suffer as time goes on.
But the trend towards online shopping, in which shoppers are able to order exactly what they want from the convenience of their
home or office, is replacing one-stop shopping in vast stores that try to offer everything. Hypermarkets in Central Europe were once
an exciting phenomenon, offering the public an overabundance of goods after decades of planned-economy consumer starvation.
But increasingly, that’s all looking very much like a relic of the pre-smartphone era. It’s perhaps too much to say that iPhones killed
the hypermarket, but certainly, they are part of a future in which shopping centers will have to rely on a different set of anchors, and
a different philosophy, to survive.
Robert McLean
Editor In Chief
4 REGIONAL
Real Talk 4 | Company News 6 | EuroNews 8 | Financial
10 | Politics 11 | Top 50 Biggest Offices 12 | People 53
Economics 54 | Numbers 55 | Green Pages 56 | DBH 58
Events 60 | MitziLinka 61 | Spotlight: Guy Barker 62
Top Digital Most read June 63
CONTENTS
24 CZECH REPUBLIC
Single concept stores replacing hypermarkets 24 |
Eaton expands R&D center in Roztoky 25 | Low-energy
homes replace brickworks 26 | Legal: How good is
the good faith? 27 | Praha City Center repositioning
completed 28 | Lenka Kostrounova (ČSOB): Older
buildings tougher to finance 29
30 GERMANY
Foreign investors push into secondary German
residential 30 | News 31
32 HUNGARY
12
Hypermarkets losing their edge 32 | News 33
34 POLAND
Malls search for new anchors 34 | News 35 | Empik
Media & Fashion selling GAP 36 | Preleases helping
tame the boom 37
38 ROMANIA
Bucharest’s biggest malls still booming 38 | Big deals on
office market confirm expectations 39 | Improving image
boosts country‘s investment sector 40 | News 41 | Banks
gain confidence, developers benefit 42 | Mega Image
continues to grow 43
28
44 SLOVAKIA
City Arena to grab market share in Trnava 44 | Banks
fight for project loans and refinancing 45 | Slaninková
(UniCredit): New schemes still need preleases for
funding 46 | News 47
48 UK
UK News 48
50 USA
New Urbanism sweeps into Florida 50
SunRail‘s second phase given Federal boost 51
36
CEO | Robert Fletcher
SALES DIRECTOR CR & SK | Ing. Zuzana Vodrážková
USA
EDITORIAL
OFFICE ADMINISTRATION | Bc. Pavla Plášilová
SALES & EVENTS | Bill Neville
EDITOR IN CHIEF | Robert McLean
HUNGARY
GERMANY
CZECH EDITOR | Nina Fibigerová
SALES & EVENTS | Robert Fletcher/Marta Niezgoda
SALES & EVENTS | Andreas Bille
JOURNALIST | Donata Karpik
POLAND
UNITED KINGDOM
CONTRIBUTORS | Amelia Turp-Balasz, Marcin Śmietana,
SALES & EVENTS MANAGER | Marta Niezgoda
SALES & EVENTS | Robert Fletcher/Marta Niezgoda
Monika Siennicka, Dinu Boboc, David Karch, Andreea Ceasar
RESEARCH ANALYST | Monika Siennicka
DESIGN | Jozef Nevedel
OFFICE ADMINISTRATION | Tomasz Kaźmierczak
POLISH PHOTOGRAPHER | Bartosz Modrzewski
ROMANIA
CZECH REPUBLIC & SLOVAKIA
SALES & EVENTS MANAGER | Monalisa Musteata
WWW.CIJJOURNAL.COM
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Real Talk
HIGHLIGHTS
WORK UNDERWAY AT TWIN CITY IN BRATISLAVA
PSJ started construction on the third building in the Twin City
office complex, under development by HB Reavis in Bratislava’s
3 Old Town. The project will offer a total of 65,000 sqm of leasable space in three eight-story buildings. There will be shops and
services on the ground floor. PSJ oversaw construction of the
project’s first two buildings. Swiss Re is the first tenant and is
scheduled to relocate to the complex in September, when the
first building is expected to get use permit. Building C will connect to an underground roundabout PSJ helped build in the first
phase. The project will also include a redesign of the surrounding
area, including parks, terraces and bike routes. HB Reavis is also
planning to widen Továrenská street with a green isle down the
middle.
The project will offer a total of 65,000 sqm of leasable space
WORK UNDERWAY AT TWIN CITY IN BRATISLAVA | 3
The due date for submission of bids is 15th September 2015
BUDAPEST DREAMS OF OLYMPIC GOLD REAWAKEN | 11
Ballymore said it would not react to speculation
CRESTYL WINNER OF BALLYMORE‘S PRAGUE PROJECT? | 4
Olympics would speed up the city’s development. He admitted
that he had harbored skepticism initially about the city’s chances
but was persuaded by the IOC’s “Olympic Agenda 2020” reforms,
which emphasize the use of existing venues and lower spending.
However the scheme needs to be approved by the Hungarian
government and parliament. Paris, Hamburg, Rome and Boston
11 have already declared their candidacies. The due date for submission of bids is 15th September 2015. The idea is not entirely a
new one, having been cultivated by some city planners and sports
leaders before the financial crisis. At that time, enormous new stadiums and development zones had been envisioned. Fortunately
for the city, these plans never progressed beyond the point of no
return. Whether the country actually has the financial muscle and
the political karma to pull off a successful bid is very much a matter for debate.
CRESTYL RUMORED WINNER OF BALLYMORE‘S
PRAGUE PROJECT
BUDAPEST DREAMS OF OLYMPIC GOLD REAWAKEN
A general meeting of the Metropolitan Municipality in Budapest
voted in favor of putting the capital of Hungary forward as a candidate to host the Summer Olympics in 2024. Budapest Mayor Istvan
Tarlos said “Budapest can only be a winner” because hosting the
It’s being reported that the developer Crestyl has won a tender
for the purchase of Savarin, a huge project along Wenceslas
square that the Irish developer Ballymore worked on for several
4 years. Ballymore said it would not react to speculation, however a reliable sources close to the transaction claim no deal has
been finalized. The estimated price of the transaction is being
reported in the vicinity of CZK 2bn. There had been reports earlier that AFI Europe was the front runner but that developer has
admitted it didn’t win the tender. The Irish state agency NAMA
Real Talk
HIGHLIGHTS
“I do not see many synergies between Ahold and Delhaize“
18 | AHOLD BUYS OUT DELHAIZE
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18 first surfaced. “I do not see many synergies between Ahold and
Delhaize operations in CEE, as both retailers operate in different
geographical parts of the region,” he said. “Ahold is the leading
player in the Czech Republic, whereas Delhaize Group holds market leadership in Serbia, sits in the top three retailers in Greece
and has a strong position in Bucharest (Romania).”
Lordship has warned it could start arbitration proceedings
11 | PRAGUE 7 DEMANDS CHANGES TO PALAC STROMOVKA
PRAGUE 7 DEMANDS CHANGES TO LORDSHIP’S PALÁC
STROMOVKA
is overseeing the forced sale.
The project features re-building of a cross-shaped complex
of buildings running from Wenceslas Square to Panská street
and from Savarin in Na Příkopě to Jindřišská street. Ballymore
planned to revive its shopping arcades and build 30,000 sqm of
new retail space and 20,000 sqm of office, but has not succeeded to secure planning permit for the project designed by Cigler
Marani Architects.
AHOLD BUYS OUT DELHAIZE
Dutch retailer Royal Ahold has acquired its Belgian competitor
Delhaize Group in the largest food retail deal of the decade. The
transaction, worth €9.32bn, will create the fourth-largest European and fifth-largest US supermarket retailer. The company,
created in the merger, will be based in the Netherlands, which is
Ahold’s homeland and headed by its CEO Dick Boer. The merger
still needs to be greenlighted by the regulators, with completion
expected by mid 2016.
Ahold shareholders will get a 61 percent stake in the group, to
be called Ahold Delhaize, with Delhaize’s investors getting 4.75
Ahold shares for each Delhaize share they own. “Our first take
is that the merger agreement comes short of expectations for
Delhaize investors,” KBC Securities analyst Alan Vandenberghe
told Bloomberg. Together, the group should have revenues in
excess of €54bn.
But does it matter to Central Europe? Milos Ryba, of the analyst
group IGD, made his opinion clear in May when rumors of a deal
Prague’s 7th district demands that Lordship change its mixeduse project Palác Stromovka, located on a plot it’s leased since
2002 from the municipality next to the Parkhotel. The current
plan calls for a small shopping center and offices. The municipality now insists that the project should include also flats and a
memorial. It also dislikes the plan to place the local city council
behind the shopping mall.
Lordship only has a construction permit for the underground
parking garage, and is awaiting a decision for the remainder of
the scheme. If no agreement is reached with the municipality,
11 Prague 7 can terminate the lease contract. Lordship, which pays
CZK 5m annually to lease the plot, has warned it could start arbitration proceedings, writes ČTK.
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Company News
the key criterion. Construction is expected
to start in 2018.
STARBUCKS
After closing its cafe at AFI Palace Cotroceni
last fall, Starbucks reopened at the
Bucharest shopping center. The new 450
sqm ground floor unit includes an outdoor
terrace and a winter garden. Starbucks
entered the Romanian market in 2007. The
company operates 18 cafes nationwide: 12
in Bucharest, one in Cluj-Napoca, one in
Timisoara, one in Constanta, one in Brasov
and two in Iasi.
ICELAND
UK food retailer Iceland is expanding on
the Czech market. The chain recently
opened its fourth Czech store in the Luka
shopping center in Prague 5. The frozen
food grocer invested CZK 11.5m into the
new shop, and its general director says the
company will soon open another outlet in
Prague-Hloubětín. It’s also planning to sign
contracts on an additional three shops, to
open in 2016. The chain will focus on Prague
for the time being but also plans to open in
large regional cities, including Pilsen, Brno
and Olomouc. Iceland will invest CZK 12m
into each new unit.
BORGERS
Borgers leased 12,000 sqm at Prologis Park
Pilsen–Stenovice in the Czech Republic. The
German automotive company started
operations at the site in May, while Prologis
continued to work on the warehouse. The
deal was brokered by 108 Real Estate Agency.
Prologis Park Pilsen-Stenovice offers 58,500
sqm of modern logistics and distribution
space. Following the recently signed 3,000
sqm expansion agreement with Sony DADC,
the park is now 100 percent leased.
ORACLE
D.E. MASTER BLENDERS
The D.E. Master Blenders 1753 (formerly
known as Douwe Egberts) has signed a
lease for 877 sqm at the Alkotás Point
office building in Budapest through the
involvement of CBRE, which acted on
behalf of the landlord. Alkotas Point is
owned by Heitman and managed by
AIG/Lincoln. The tenant was introduced
by Property Support. Judit Varga of CBRE
says the deal brings the occupancy rate
of the building to 85 percent. “The
central Buda location, the green
environment and ample services
available in the area played a major role
in the selection of the new headquarters,”
says Varga.
NDS
The Slovak national motorway authority
(NDS) is planning to add a second tube to
the Horelica tunnel. At the moment,
motorway traffic along the D3 is forced into
a single, two-lane tube. The NSD is currently
holding a tender for the building
documentation for what in all amounts to a
new 4 km long section of the D3 between
Oščadnica and Čadca. The winner will
provide documentation for the construction
permit and coordinate the permitting
process. Bids are due by July 10, with price
Oracle has reached a deal with Portland
Trust to lease 20,000 sqm at Oregon Park,
currently underway in Bucharest’s Pipera
district. Portland bought the 4 ha plot from
Nusco last year. Oracle Romania is planning
to hire 2,000 new employees. In February,
the IT giant leased 10,400 sqm at Sky Tower
in Bucharest. The company also leases
32,000 sqm at Floreasca Park and Nusco
Tower.
HOCHTIEF CZ
Hochtief CZ profits reached CZK 64m in
2014, triple the result it achieved in 2013. The
result lagged behind expectations,
however, according to Tomáš Bílek,
Hochtief’s chairman of the board. The
Company News
construction company has CZK 6.7bn worth
of orders that represents 18 months of work.
Hochtief’s revenues increased last year as
well, from CZK 4.8bn in 2013 to CZK 5.1bn.
KAUFLAND
Kaufland plans to open its first hypermarket
in Lugoj in western Romania on Timisoara
street. Mayor Francis Boldea confirmed the
impending arrival of the German retailer,
presenting the area’s urban plan at a press
conference. After a long period of
negotiations with landowners in the area,
Kaufland identified what it calls the best
piece of land in town for the new retail unit.
Construction on the 2,500 sqm hypermarket
will begin next year, but company
representatives are not specifying a
completion date yet. Kaufland is planning to
hire 100 people to work in the new store.
Kaufland Romania posted a turnover of RON
7.9bn last year, 10 percent higher than in
2013. Profits grew 5 percent to RON 409.7m.
district from a subsidiary of Global Asset
Capital. The investment volume amounts to
around €210m. The property was
constructed in 2004 and offers 61,500 sqm
as well as 470 parking spaces in underground
surface level parking lots. The building is
fully leased, through a long-term agreement
with Deutsche Bahn AG. Knight Frank
advised Allianz, while Colliers International
acted for Global Asset Capital.
Allianz Real Estate Germany acquired the
Stettiner Carree office building, located at
Caroline-Michaelis Strasse in Berlin’s Mitte
7
LC WAIKIKI
Fashion retailer LC Waikiki plans to open four
stores in Romania by the end of the year,
bringing the size of its network to 18 units. The
company also said its staffing levels would rise
from 300 to 400. LC Waikiki entered the
Romanian market in 2009 and now runs 14
stores located in nine cities along with a logistics
center.
CITY PARK MALL CONSTANTA
City Park Mall Constanta was sued by the
owner of a cafe which operates a store in the
shopping center. NEPI, the developer of City
Park Mall, started renovating the shopping
center two months ago. Marrone Rosso has
asked in a lawsuit filed in Bucharest that the
previous layout be restored. The cafe’s
terrace has been shut down due to the
renovation. NEPI is investing €40m to expand
the shopping center.
KELLY SERVICES
ALLIANZ REAL ESTATE
GERMANY
REGIONAL
US temporary staffing agency Kelly
Services leased 600 sqm of office space at
Kálvin Centre in central Budapest. Located
on Kálvin Square, the scheme offers 9,167
sqm of space. There is also underground
storage and parking. Main tenants include
AEGON Magyarország, Faludi Wolf Theiss
Ügyvédi Iroda, Texas Instruments
Hungary Kft and Alpiq Energia
Magyarország. Europa Capital acquired
Kálvin Centre as well as two other
Budapest office buildings for its
investment fund Europa Fund IV. The
building is managed by ConvergenCE.
B&L GRUPPE AND CENTRUM
B&L Gruppe and Centrum sold a retail
center at Bahnhofstrasse in Berlin’s Köpenick
district to a pension fund represented by
Bayerische Versorgungskammer. The center
was completed in 2012 and offers 15,500
sqm of usable area as well as 324 parking
spaces. Current tenants include Saturn,
Rewe, TK Maxx, dm-Drogeriemarkt,
Woolworth and Tiger. The parties agreed to
keep the sales price confidential, however
media reports claim the new owner paid
€70m for the property. Comfort brokered
the transaction.
RAIFFEISEN CAPITAL
MANAGEMENT
Raiffeisen Capital Management is planning
to offload its warehouse portfolio, according
to British media outlets, which includes assets
in Poland, France and Germany. Worth
roughly € 100m, the transaction is reportedly
already in advanced talks with a potential
buyer. The portfolio’s Polish assets include
Gate 1 Business Park.
8
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EuroNews
RYANAIR ORDERED TO CUT AER LINGUS STAKE
The Competition and Markets Authority (CMA) has ordered Ryanair to cut its stake in Aer Lingus from 29.8 percent to 5 percent. The low-cost Irish carrier is calling the
decision “ridiculous” and “legally flawed” and intends to appeal.
In May, the Irish government agreed to sell its 25-percent stake in Aer
Lingus to International Airlines Group. IAG, which owns British Airways,
is offering €1.36bn for the shares. The deal, however, hinges on Ryanair
selling its Aer Lingus shares. Ryanair spokesman Robin Kiely said the CMA
order is “manifestly wrong and flies in the face of the current IAG offer for
Aer Lingus.” Ryanair tried to buy Aer Lingus two years ago, but the deal
was blocked by the European Commission.
Ryanair chief executive Michael O’Leary recently said he would consider
any offer from IAG. Market watchers suspect O’Leary is holding out for a
couple of IAG’s slots at Heathrow airport.
EMIRATI INVESTORS GAIN EASIER ACCESS TO
EUROPE
Recently lifted travel restrictions of residents of the
Emiratis to the Schengen area of the European Union could have a substantial impact on their willingness to invest
in Europe‘s property sector. In May, visa restrictions were lifted for
Emiratis residents visiting the European Union, whereby they will
receive a visa upon crossing into the Schengen zone good for 90
days over any 180 day period. The UK has had a similar arrangement in effect for more than a year through which visitors register
online for the visa waiver at least two days before arrival. It‘s estimated that roughly 50,000 people used the system in 2014.
The cost of European properties has been falling in recent
months as the value of the euro has fallen, making them of even
greater potential interest to foreigners. London is expected to
remain the primary target for most property investors, given the
historic liquidity of the market. But making it significantly easier
to travel to the continent will encourage more price-conscious
investors to look through the region.
PREQUIN: SEPARATE ACCOUNTS RE
INVESTMENTS SKYROCKET
Prequin revealed in a recent study that the number
of capital investors committing to separate account
strutures hit record levels in 2014, following a sudden and sharp
uptick in the popularity of this type of investment vehicle in 2013.
From 2007 to 2009, the percentage of capital invested through
such structures never accounted for more than 10 percent of the
aggregate capital that was raised. However, this has changed
quickly since then, so that last year, it suddenly made up 18 percent. More concretely, the number never exceeded $7.7bn in 2011,
but by last year, it had risen to a remarkable $17.8bn.
“The largest real estate separate account formed since 2014
is Goodman China Logistics Holding, a partnership between
Goodman and CPP Investment Board (CPPIB), which invests in
logistics properties in China,” writes Prequin. “The largest separate account formed in 2015 so far is Pacific Multifamily Investors,
a partnership between Pacific Urban Residential and California
Public Employees’ Retirement System (CalPERS). The vehicle was
funded with an initial $200m allocation from CalPERS, which
rose to a total commitment size of $650m in February 2015.”
LOGICOR PURCHASE 19 PROPERTIES FROM
GOODMAN
Logicor has purchased 19 industrial properties from
Goodman European Logistics Fund (GELF), choosing
a collection of facilities in France and Germany. The French portion of
the portfolio includes 300,000 sqm of space, while the nine assets in
Germany total 179,000 sqm. Logicor is the European logistics unit of
Blackstone Group. Set up in 2012, Logicor‘s arrival in Europe seemed
to spark a series of other investors to move quickly to accumulate
European industrial exposure. The company has already grown its
portfolio to more than 7 million sqm.
GELF‘s fund manager Emmanuel Van der Stichele said that “with this
sale we are delivering on our strategy of selectively rotating assets
within the GELF portfolio and recycling the capital to new prime properties from the strong Goodman development pipeline as well as to
selected market acquisitions.” The price of the transaction isn‘t known
but is being estimated at somewhere between €300m and €400m.
Encompassme has Property box and Jobs
postings now available
www.encompassme.com
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Finance
Financial
BERLIN HYP REFINANCES HIGH TECH
CAMPUS EINDHOVEN
Ramphastos Real Estate Investments B.V. secured
€85m from Berlin Hyp to refinance High Tech Campus
Eindhoven. Cushman & Wakefield advised Berlin Hyp on the valuation of the High Tech Campus, while Loyens & Loeff acted as the lender’s counsel. Nauta Dutilh acted as the legal counsel for Ramphastos.
High Tech Campus Eindhoven houses more than 135 companies
and institutes, including NXP Semiconductors, Philips and Intel.
The complex includes 45,000 sqm of R&D facilities, 185,000 sqm
of office space and 6,000 sqm for technology start-ups. It also
has 125,000 sqm open for development. Surrounded by many
of Eindhoven’s high-tech companies and located in proximity to
the Eindhoven University of Technology, the campus generates
half of the Netherlands’ patent applications.
Swiss franc. Many Polish lenders with large volumes of franc-denominated loans were heavily hit by the Swiss central bank’s decision.
NEW TITLE INSURANCE PRODUCT TACKLES
DONATIONS
Secure Legal Title and Besso Insurance Group have
launched a new type of insurance policy targeting
a specific need on the Italian market. The companies say that
“Secure Donations” is intended to mitigate the risks involved in
properties donated for tax or succession planning purposes. The
donation renders any sales, purchases and mortgages almost impossible to finance, which essentially reduces the level of liquidity in the Italian property markets. What the insurance does is to
protect any buyers or mortgage banks “against possible claims
by unknown heirs and other possible claimants.”
Nick Kennedy of Besso explained that: “Donazione Sicura is
unique in providing an insurance product enabling the sale
and purchase of over a million Italian properties. This is a classic
example of London Market expertise and creativity being harnessed to cover a previously uninsurable risk.”
EVOREAL SECURES €124M TO FINANCE
MUNICH RESI SCHEME
Evoreal secured €124m from pbb Deutsche Pfandbriefbank to finance construction of a new residential scheme on Prinzregentenstrasse in Munich. The Hamburg-based developer will use the loan to refinance the purchase
of the plot where it plans to build a 240-unit apartment block
over 25,000 sqm. Evoreal originally purchased the land through
its own capital. The scheme was designed by Munich-based architects Hild und K. Completion is set for the beginning of 2018.
NBP: CORPORATE LENDING TO GROW 9%
THIS YEAR
Lending activity from Poland’s financial institutions is
expected to grow by another 9.3 percent this year, with
the biggest jump anticipated within the corporate lending sector. Investment loans are expected to grow by as much as 14.4 percent by the
end of the year, while consumer lending will increase by 13.6 percent.
=This latest prediction follows worse-than-expected lending results
for the first quarter of the year. According to the Polish National Bank
(NBP), the overall credit volume at Polish banks grew by 6.5 percent
y-o-y in the first three months of the year. However, market watchers
said the results were unreliable following a sharp appreciation of the
This
This issue
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Politics
PRESIDENTIAL ELECTION HITS WARSAW
STOCK EXCHANGE
Andrzej Duda’s surprise win in last month’s presidential elections and a possible change of government this fall will continue to have a heavy influence over
the Warsaw Stock Exchange throughout the rest of the year,
predict analysts from mBank brokerage house. While the market’s blue chip businesses are expected to suffer the most from
political turmoil, WSE’s small and medium-sized companies are
expected to prove more resistant, but only in sectors that are
seen as the biggest beneficiaries of the country’s GDP growth.
Michał Marczak, the chief analyst at mBank, is predicting that
Poland’s opposition party, Law and Justice, may win this year’s
fall elections. “Investors fear that the party will be impacting
Poland’s banking sector, which provides the biggest capitalization on the Warsaw Stock Exchange,” he says. Foreign
investors are also wary of an idea to convert Swiss franc-denominated loans into Polish złoty, which currently makes up a
significant part of Polish lenders’ portfolios.
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vakia with an 82-percent share of the country’s output. Italy’s
Enel owns 66 percent in SE, while the Slovak state has 34 percent.
OPINION: OTILIA DHAND, TENEO
INTELLIGENCE ON FICO
Does Slovak Prime Minister Robert Fico have an
Orbán envy? In a way, yes, he does, and he is not
alone. Hungarian Prime Minister Viktor Orbán’s most controversial steps have been designed to either alter the system
or increase his party’s (Fidesz) popularity to help him remain
in the driver’s seat. And it is his populist steps that CEE leaders tend to mimic. Across CEE, many features of economies
(from dependency on Russian energy supplies, to relatively
high budget deficits, to boom in FX lending in the early 2000s)
are shared across the region and turned out troublesome for
political leaders at almost the same time. Orbán’s measures
invariably favor the local consumers (or businesses) over foreign investors, which has won him considerable popularity. At
various points, other leaders have borrowed Orbán’s solution
seeing it has sorted out his problem, boosted his popularity,
and he got away with it.
But nobody has the same drive or parliamentary power to force
systemic changes to entrench themselves in power. And these
are perhaps Orbán’s most significant steps with long-term impact. Anti-Brussels rhetoric is present across the region, but it
is not Orbán’s invention.
BABIŠ DENIES PLANS TO BUY TESCO
SLOVAK GOV‘T WANTS MORE POWER
CONTROL
The new Slovak economic minister, Vazil Hudák,
said on a Sunday television news show that the
completion of two new blocks in the Mochovce nuclear power plant is a priority for Slovenské elektrarne (SE). He also said
that the state wants to strengthen its position in strategic sectors such as the power industry. This could lead to the Slovak
state seeking to increase the state’s share in SE to 51 percent,
or it could achieve similar results through regulations, he said.
Slovenske elektrarne is the dominant power producer in Slo-
Czech Finance Minister Andrej Babiš has denied
a report published in the economic weekly Euro
that he has plans to buy Tesco. Euro claims that
Babiš reportedly wants to acquire Tesco in partnership with
Mid Europa Partners (MEP) through the investment fund
Hartenberg Holding, which manages the finance minister’s private assets. Babiš, however, said at a press conference in June
that he does not plan to take over the troubled UK retail chain.
Jozef Janov, managing partner at Hartenberg Capital, told ČTK
that Tesco has not announced plans to sell.
The chain operates 200 stores, 19 petrol stations and seven
shopping centers in the Czech Republic through its branch
Tesco Stores ČR. It’s valued at around CZK 55bn. The chain reported a loss of CZK 4bn in the 2013/14 fiscal year, with revenues down 3.5 percent to CZK 42.4bn.
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With over a decade of office development having taken place in Central Europe, the region has
produced an impressive volume of modern administrative space. Investment in such properties
by institutions and private sources fell off during the financial crisis, but transactions are now
taking place across the region with remarkable frequency with investors looking for those with
the right mix of size, success and quality. Produced in collaboration with market sources and
some of the region’s key real estate agencies, the CIJ Top 50 Biggest Offices listing is a comparison of the Top 10 office buildings (by size) in each of the five Central European markets (Czech
Rep., Hungary, Poland, Romania and Slovakia).
2. Warsaw Spire
GLA (office space): 62,110 sqm
Developer/Owner: Ghelamco
Year of completion: 2016
Location: Warsaw, Poland
1. Eurocentrum Office Complex
Developer/Owner: Capital Park
3. Rondo I
Developer/Owner: Deutsche Asset & Wealth
Management
REGIONAL
13
GE
ES
2
TOP
E
50
BI
G
5 CEE & SE
01
ST OFF
IC
TOP 10 Czech Republic
Building name
4. BOC Tower
Developer/Owner: Globalworth
Location: Bucharest, Romania
5. Gdanski Business Center II (C+D)
Developer/Owner: HB Reavis
8. Bucharest One
Developer/Owner: Globalworth
GLA (office space)
Developer/Owner
Year of completion
Florentinum
43,006
Penta Investments
2013
City Tower
42,000
PPF Real Estate
2008
ČSOB
37,700
ČSOB
2007
Kavčí Hory Office Park
36,840
Hochtief
2008
BB Centrum DELTA
32,535
Passerinvest Group
2015
BB Centrum GAMMA
30,000
Passerinvest Group
2006
Metronom
29,924
HB Reavis
2015
Enterprise
29,069
Erste Group Immorent
2015
T-Mobile Center
29,000
T-mobile
2003
BB Centrum Filadelfie
28,160
Passerinvest
2010
List produced in collaboration with Cushman & Wakefield and market sources
6. Q22
Developer/Owner: Echo Investements
9. Puławska Financial Center
Developer/Owner: Centrum Finansowe Puławska Sp.
z o.o.
7. Warsaw Financial Centre
Developer/Owner: Allianz Real Estate and Tristan
Capital Partners
10. Konstruktorska Business Center
REGIONAL
11. PZU Tower
Developer/Owner: PZU
GE
ES
TOP
E
BI
G
5 CEE & SE
01
50
2
14
ST OFF
IC
12. Florentinum
Developer/Owner: Penta Investments
Location: Prague, Czech Republic
13. City Tower
Developer/Owner: PPF Real Estate
15. Sky Tower
Developer/Owner: RPHI
14. Plac Unii
Developer/Owner: Invesco
16. Metroffice/Iride City
Developer/Owner: Immofinanz
We have your new office
• Highly efficient offices
• Direct access to underground
• Full glazed facade with maximum natural light
• Green areas on the roof
• Attractive working and living environment
• Flexibility of growth and phasing
Spectacular and distinctive urban concept
REGIONAL
ES
GE
E
TOP
BI
G
5 CEE & SE
01
50
2
16
ST OFF
IC
TOP 10 Poland
Building name
GLA (office space)
Developer/Owner
65,860
Capital Park
Warsaw Spire (Tower)
62,110
Ghelamco
2016
Rondo I
60,000
Deutsche Asset & Wealth Management
2006
Gdański Business Center II (C+D)
51,015
HB Reavis
2016
Q22
50,000
Echo Investements
2016
Warsaw Financial Centre
49,783
Allianz Real Estate and Tristan Capital Partners
1998
Puławska Financial Center
49,113
Centrum Finansowe Puławska Sp. z o.o.
1998
Konstruktorska Business Center
48,338
HB Reavis
2013
Eurocentrum Office Complex
(Beta, Gamma, Delta)
17. Platinum Business & Convention Center
Developer/Owner: Willbrook
18. ČSOB
Developer/Owner: ČSOB
21. Kavčí Hory Office Park
Developer/Owner: Hochtief
Year of completion
2014
PZU Tower
47,170
PZU
2000
Plac Unii
41,307
Invesco
2013
19. Apollo Business Center I
20. BRD Tower
Developer/Owner: HB Reavis/Hannover Leasing
Location: Bratislava, Slovakia
Developer/Owner:
22. Átrium Park I-II
23. Digital Park II
Developer/Owner: WING/Immofinanz AG
Location: Hungary
Developer/Owner: Penta Investments
Developer/Owner: Portland Trust
GE
ES
2
25. Floreasca 169A
TOP
E
24. Center Point GLA (office space): 35,814 sqm
Developer/Owner: GTC
REGIONAL
50
BI
G
5 CEE & SE
01
ST OFF
IC
26. S-PARK
Developer/Owner: Immofinanz
28. Capital Square GLA (office space): 32,567 sqm
Developer/Owner: Hochtief/CA Immo
27. Aupark Tower I
Developer/Owner: HB Reavis/Heitman
Location: Slovakia
29. BB Centrum DELTA
Developer/Owner: Passerinvest Group
17
REGIONAL
GE
ES
TOP
E
BI
G
5 CEE & SE
01
50
2
18
ST OFF
IC
TOP 10 Hungary
Building name
30. Westend Gate
Developer/Owner: J&T RE
GLA (office space)
Developer/Owner
Year of completion
Átrium Park I-II
36,740
WING/Immofinanz AG
2008
Center Point 35,814
GTC
2006
Capital Square 32,567
Hochtief/CA Immo
2009
Gateway Office Building
31,987
Ablon/CPI
2007
Bank Center
29,305
Trigránit/GLL Real Estate
1996
Duna Tower
29,075
Real 4 You Gmbh
2006
Roosevelt 7/8
28,831
BHG/GLL Real Estate
2006
Park Atrium
25,944
ING/GLL Real Estate
2004
BSR Center
24,990
BSR/GLL Real Estate
2008
Vision Towers
24,421
Futureal
2009
List produced in collaboration with CBRE and market sources
31. Tower 115
32. Gateway Office Building
Developer/Owner: J&T RE
Developer/Owner: Ablon/CPI
34. Bratislava Business Center V
35.BB Centrum GAMMA
Developer/Owner: Heitman
33. Green Gate
Developer/Owner: Green Gate Development
36. Metronom
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office ◆ capital markets ◆ valuations ◆ corporate residential
industrial ◆ project management ◆ retail ◆ land
◆
REGIONAL
37. Bank Center
Developer/Owner: Trigránit/GLL Real Estate
GE
ES
TOP
E
BI
G
5 CEE & SE
01
50
2
20
ST OFF
IC
38. Duna Tower
Developer/Owner: Real 4 You Gmbh
39. Enterprise
Developer/Owner: Erste Group Immorent
41. Slovenská sporitelna HQ
Developer/Owner: Owner occupier
40. T-Mobile Center
Developer/Owner: T-mobile
42. Roosevelt 7/8
Developer/Owner: BHG/GLL Real Estate
REGIONAL
21
ES
2
GE
E
50
TOP
BI
G
5 CEE & SE
01
ST OFF
IC
TOP 10 Romania
Building name
GLA (office space)
Developer/Owner
BOC Tower
57,600
Globalworth
2009
Bucharest One
49,277
Globalworth
2015
Sky Tower
41,200
RPHI
2013
Metroffice/Iride City
40,000
Immofinanz
2016
38,000
Willbrook
2011
BRD Tower
37,000
/
2004
Floreasca 169A
35,000
Portland Trust
2009
S-PARK
34,186
Immofinanz
2007
Green Gate
30,700
Green Gate Development
2014
Cubic Center
27,000
ExpertRoInvest / DPGS
2009
City Mall / City Offices
27,000
Globalworth
2014
America House
27,000
GTC Romania / AEW Europe
2005
Bucharest Financial Plaza
27,000
/BCR
1997
Platinum Business &
Convention Center
43. BB Centrum Filadelfie
Year of completion
List produced in collaboration with Colliers International and market sources
44. America House*
Developer/Owner: GTC Romania / AEW Europe
*4-way tie for 10th. See Romania Top 10 listing
45. Park Atrium
Developer/Owner: ING/GLL Real Estate
46. VUB Tower GLA (office space): 25,000 sqm
Developer/Owner: Owner occupier
REGIONAL
GE
ES
TOP
E
BI
G
5 CEE & SE
01
50
2
22
ST OFF
IC
TOP 10 Slovakia
Building name
GLA (office space)
Developer/Owner
Apollo Business Center I
37,440
HB Reavis/Hannover Leasing
Year of completion
2005
Digital Park II
36,189
Penta Investments
2009
Aupark Tower I
32,580
HB Reavis/Heitman
2007
Westend Gate
32,460
J&T RE
2014
Tower 115
32,100
J&T RE
2006
Bratislava Business Center V
30,625
Heitman
2004
Slovenská sporiteľňa HQ
29,000
Owner occupier
2008
VUB Tower 25,000
Owner occupier
2003
Lakeside Park I
24,650
Trigranit
2008
City Business Center I 23,867
HB Reavis
2007
47. BSR Center
Developer/Owner: BSR/GLL Real Estate
48. Lakeside Park I
49. Vision Towers
Developer/Owner: Futureal
Developer/Owner: Trigranit
50. City Business Center I GLA (office space): 23,867 sqm
TOP 50 CEE & SEE Biggest Offices
Name
GLA (office space)
Developer/Owner
Year of completion
Location
1
Eurocentrum Office Complex
65,860
Capital Park
2014
Warsaw, Poland
2
Warsaw Spire
62,110
Ghelamco
2016
Warsaw, Poland
3
Rondo I
60,000
Deutsche Asset & Wealth Management
2006
Warsaw, Poland
4
BOC Tower
57,600
Globalworth
2009
Bucharest, Romania
5
Gdański Business Center II (C+D)
51,015
HB Reavis
2016
Warsaw, Poland
6
Q22
50,000
Echo Investements
2016
Warsaw, Poland
7
Warsaw Financial Centre
49,783
Allianz Real Estate and Tristan Capital Partners
1998
Warsaw, Poland
8
Bucharest One
49,277
Globalworth
2015
Bucharest, Romania
9
Puławska Financial Center
49,113
Centrum Finansowe Puławska Sp. z o.o.
1998
Warsaw, Poland
23
GE
ES
2
TOP
E
10
REGIONAL
50
BI
G
5 CEE & SE
01
ST OFF
IC
Name
GLA (office space)
Developer/Owner
Year of completion
Location
Konstruktorska Business Center
48,338
HB Reavis
2013
Warsaw, Poland
11
PZU Tower
47,170
PZU
2000
Warsaw, Poland
12
Florentinum
43,006
Penta Investments
2013
Prague, Czech Republic
13
City Tower
42,000
PPF Real Estate
2008
14
Plac Unii
41,307
Invesco
2013
Warsaw, Poland
15
Sky Tower
41,200
RPHI
2013
Bucharest, Romania
16
Metroffice/Iride City
40,000
Immofinanz
2016
Bucharest, Romania
17
Platinum Business & Convention Center
38,000
Willbrook
2011
Bucharest, Romania
18
ČSOB
37,700
ČSOB
2007
19
Apollo Business Center I
37,440
HB Reavis/Hannover Leasing
2005
Bratislava, Slovakia
20
BRD Tower
37,000
/
2004
Bucharest, Romania
21
Kavčí Hory Office Park
36,840
Hochtief
2008
22
Átrium Park I-II
36,740
WING/Immofinanz AG
2008
Budapest, Hungary
23
Digital Park II
36,189
Penta Investments
2009
24
Center Point 35,814
GTC
2006
Budapest, Hungary
25
Floreasca 169A
35,000
Portland Trust
2009
Bucharest, Romania
26
S-PARK
34,186
Immofinanz
2007
Bucharest, Romania
27
Aupark Tower I
32,580
HB Reavis/Heitman
2007
28
Capital Square 32,567
Hochtief/CA Immo
2009
Hungary
29
BB Centrum DELTA
32,535
Passerinvest Group
2015
30
Westend Gate
32,460
J&T RE
2014
31
Tower 115
32,100
J&T RE
2006
32
Gateway Office Building
31,987
Ablon/CPI
2007
Budapest, Hungary
33
Green Gate
30,700
Green Gate Development
2014
Bucharest, Romania
34
Bratislava Business Center V
30,625
Heitman
2004
35
BB Centrum GAMMA
30,000
Passerinvest
2006
Czech Republic
36
Metronom
29,924
HB Reavis
2015
Czech Republic
37
Bank Center
29,305
Trigránit/GLL Real Estate
1996
Budapest, Hungary
38
Duna Tower
29,075
Real 4 You Gmbh
2006
Budapest, Hungary
39
Enterprise
29,069
Erste Group Immorent
2015
40
T-Mobile Center
29,000
T-mobile
2003
41
Slovenská sporiteľňa HQ
29,000
Owner occupier
2008
42
Roosevelt 7/8
28,831
BHG/GLL Real Estate
2006
Budapest, Hungary
43
BB Centrum Filadelfie
28,160
Passerinvest
2010
44
America House*
27,000
GTC Romania / AEW Europe
2005
Bucharest, Romania
45
Park Atrium
25,944
ING/GLL Real Estate
2004
Budapest, Hungary
46
VUB Tower 25,000
Owner occupier
2003
47
BSR Center
24,990
BSR/GLL Real Estate
2008
Budapest, Hungary
48
Lakeside Park I
24,650
Trigranit
2008
49
Vision Towers
24,421
Futureal
2009
Budapest, Hungary
50
City Business Center I 23,867
HB Reavis
2007
24
CZECH REPUBLIC
Retail
Single concept
stores replacing
hypermarkets
The space hypermarkets occupy
in shopping centers across the
country is now in transition
Nina Fibigerová
Not so long ago, the key to a successful
shopping mall always seemed to include
a big hypermarket selling everything
from apples, to detergents to bicycles
and laptops. Developers and property
managers insisted that retail centers
change constantly as the habits of
consumers change, and that constant
innovation was necessary. But at the
same time as developers were filling
cities like Prague with as much, if not
more retail space than it could handle,
the rise of e-commerce and radically
different concept of shopping quickly
changed the landscape.
“Hypermarkets are downsizing, groceries
are moving to smaller formats and
on-line formats, and it‘s the same in the
electronics sector,” says Ryan Wray of
DTZ. The old question of how to keep
customers in the center still applies, he
suggests, but the answers have changed.
“The key is to create a destination.
Before, they used the cut-price route
with hypermarkets offering everything
under one roof. Now, demand is much
more specific, so if you only compete on
price in a shopping center you‘ll almost
inevitably lose because on-line retailers
will undercut you on price.”
End of days for big hypermarkets?
The result is arguably the beginning
of the end for hypermarkets. Ten years
ago, stores stretching across 15,000 sqm
boasted they had tens of thousands of
types of goods for sale, cheap. Those
days are over, however, with many
hypermarkets gradually shedding their
non-food offering to concentrate more
on food.
Robert Neugroschel, Chairman Business
Development Central Europe for Unibail
Rodamco, insists that malls still need
a food anchor, though he admits they
needn’t be as big as they used to be
in order to succeed. “It can be either a
3,000 to 5,000 sqm hypermarket, or a
supermarket and a discount store,” he
says. But the best illustration of what
Unibail-Rodamco feels is needed today
can be seen in its current extension
of Centrum Chodov. Along with a
new concept for the food court, the
developer is finally adding a leisure
element: the largest multiplex (18
screens) in the country. By the time
the investment is completed Centrum
Chodov will have grown from 60,000
sqm to 100,000 sqm. This includes a
15,000 sqm Albert hypermarket, and
there are persistent reports from the
market that the retailer would prefer
that number to be lower. “They have
five years yet to go [on their lease],” says
Neugroschel. “We would welcome any
new concept they would present,” says
Neugroschel.
Out of town locations may still prove
popular for some shoppers who cling
to the habit of buying thousands of
crowns worth of goods during a weekly
shopping trip. But the new concept
hypermarkets are finding they can
make do with 5,000 to 7,000 sqm. In
centrally located shopping centers,
convenience stores are now preferred,
allowing people to do daily shopping in
under 30 minutes, carrying what they
buy home with them without the aid
of a car, says Martin Šimek of Cushman
& Wakefield Property and Asset
Management Team.
Šimek says that reducing the large
hypermarket space can be rather
complicated, as it inevitably involves for
example dividing up the air conditioning
to match the requirements of different
stores. Large units can be leased to
a single concept stores, potentially
electronics stores, or leisure concepts
for children, or else they can be cut into
numerous small units located along
the entrance to the hypermarket. Such
changes, however, can cost tens of
millions of crowns and it’s generally the
landlord that gets saddled with the bill,
says Šimek. Globus, a typical operator of enormous
hypermarkets, is now said to be
developing a smaller sized store of just
5,000 sqm and could be launching a
small format concept store, a route Tesco
went down several years ago.
Industrial
Eaton expands R&D
center in Roztoky
Eaton opened its new European
Innovation Center (EIC) at the Science
and Technology Park (VTP) in Roztoky
outside Prague. The US industrial giant
will develop energy systems there,
and the company is planning to work
with students from the Czech Technical
University (ČVUT) in Prague.
CZECH REPUBLIC
25
The high-tech sector continues
to drive demand for space in and
now around Prague
Nina Fibigerová
innovation centers it runs worldwide,
and the only one in the EMEA region.
The others are located in the US, India
and China. In Prague, the company
currently employs 75 people, with that
number expected to increase to 300,
jobs it will fill largely with scientists
and graduates from ČVUT. EIC will
also serve as training center for the
technical university.
Modern hi-tech space on the edge of Prague
Eaton has been leasing space at the
park, developed by Trigema, since
2012, but the need to expand forced
it to relocate to the newest building
there called Park vědy (Science Park).
The 7,064 sqm building includes
laboratories, research and development
facilities, offices, an underground
parking garage, and a café connected to
a green roof terrace. Trigema completed
the building in January. Marcel Soural,
general director of Trigema, says that
negotiations are currently underway
with other potential tenants, and he
believes the space will be completely
taken by the end of the year.
Park vědy cost a total of CZK 340m.
It was financed by a combination
of the developer’s own equity, EU
funds and the Czech state budget.
For Eaton, the location is one of five
ZONING CANCELLED FOR
PPF’S POLAR BEAR
OFFICES IN PRAGUE 6
The City of Prague has cancelled the planning permit issued for the
project nicknamed Polar Bear, an office
building PPF Real Estate planned to build
at Vítězné square in Prague 6 Dejvice. The
city’s construction office said that the investor must change the project, following
a ruling by the city court cancelling changes to the master plan governing the size
of the building. The decision is in line with
the last year’s statement by the Ministry of
culture, that the building is oversized for
the location.
The project, designed by Czech architect
Radan Hubička on an empty plot in the
northern part of the square should offer
office as well as services, shops, and parking. The building was originally intended to
serve as the new Prague 6 city council headquarters, until the municipality decided to
renovate its existing building.
26
CZECH REPUBLIC
Residential
Low-energy homes
replace brickworks
In June, KKCG Real Estate laid the
cornerstone for top’ rezidence, its latest
project in the Šárecké valley on the
outskirts of Prague 6. Located on the
site of a former brickworks area, the
new complex will offer a total of 50
low-energy family houses in two phases
scheduled for completion in 2017.
A revamped luxury project in
Prague 6 is betting on low running
costs and an attractive setting
Nina Fibigerová
The general director of KKCG Real Estate,
Petr Pujman, says that nearly half of the
25 houses planned for the first phase
have already been sold, clearing the way
for a development loan by UniCredit.
The developer has not yet started to
make reservations for the second phase
despite what he describes as strong
interest. The pace of sales, however,
The project was redesigned to feature town houses rather than enormous villas
suggests that work on the second phase
could begin before the first batch is
completed in the third quarter of 2016.
Houses in the complex are on offer for
CZK 75,000 to CZK 86,000 per sqm.
Prices for houses with five to six rooms
on 176 sqm and a two-car garage start
at CZK 13.3m, (including VAT), while the
largest homes (300 sqm) will go for up to
CZK 26m. A show house, with interiors
designed by the Olgoj Chorchoj studio,
will open in February 2016.
Architects Jaroslav Šafer and Oldřich
Hájek of SHA studio completely
redesigned the project KKCG bought
from Irish developer Avestus, which
called for eight high-end villas and
large gardens. Šafr says the new design
includes row houses, duplexes and
a common area in the middle of the
project, with a club room to be built
around a chimney restored from the
original brickworks. The area will also
offer a park with a water element, a
playground and a 24-hour reception
desk, along with a variety of services.
The houses are expected to use around
20 kWh/sqm per year for heating. The
project represents an investment of
roughly CZK 600m.
BAŤA TO REFURBISH
BAROQUE PALACE IN
PRAGUE 1
Czech shoe producer Baťa
is venturing into the property business.
The company started refurbishing the baroque Harrachovský palace in Jindřišská
street near Wenceslas Square in Prague
1. Baťa is planning to expand both the
retail and office space in the historical
palace to 4,000 sqm. The project, scheduled for completion in 2016, is expected
to cost CZK 100m. Viktor Šimeček, head
of Baťa’s property arm, says that this is
the company’s first development project
and that additional projects are in the
works. In past years, Baťa refurbished its
department store at the bottom of Wenceslas Square, as well as its store on Česká
street in Brno and on Masarykovo Square
in Ostrava.
Legal
How good is the
good faith?
It all looked so well. After more than two
decades in which property acquisitions
were subject to legal issues, eventually, this
year it all should change and improve. The
difficult and rather expensive examination
of the legal circumstances of the property
prior to an acquisition should be a thing
of the past. Due to the implementation of
good faith in property acquisitions this year,
this so called “Due Diligence” examination
should no longer be needed.
Like in Germany, the purchaser of the
property should simply rely on the
entry in the land register without any
restrictions. Even if the entry proves to
be wrong afterwards, his good faith in
the correctness of the entry would be
protected. In extreme cases, the purchaser
of the property is in fact able to buy from
someone who is de facto not the owner.
This applies particularly as long as the seller
is kept in the land register as the owner.
This “purchase in good faith” obviously
puts the unsuspecting actual owner at a
disadvantage, who through no fault of
his own is running the risk of losing his
property.
To avoid this, he has to enter the
METROSTAV-SWIETELSKY OFFER LOWEST D3
BID
Construction of a new section of D3 motorway between Bošilec
and Ševětín in southern Bohemia will
be cheaper than expected. Metrostav in
consortium with Swietelsky, submitted
the lowest bid in a tender held by by the
CZECH REPUBLIC
27
Legal risks on property acquisition
still not eliminated
Martin Holler, attorney-at-law
Denisa Molnár, attorney-at-law
corresponding notation in the land register
against the incorrect entry within three
years. Afterwards, the entry is regarded as
correct. Though rather unfavourable for the
actual owner, this regulation protects the
purchaser acting in good faith. Actually,
it should mark the end of due diligence
examinations.
It was the declared intention of the
legislation to make the acquisition
of property easier and more secure.
Unfortunately, formulating the
corresponding provisions the legislation
was insufficiently accurate. Yet, before
the new provisions were introduced on
January, 1, 2015, certain legal experts
declared, that first of all a “good faith”
requires the legal circumstances to be
examined in depth. Following this opinion,
a due diligence examination would still be
needed. Although this legal view is rejected
by other experts, it should be noted that
so far there is no judiciary, which would
remove the re-emerged uncertainty. Before
the acquisition of property, but also before
registration of a mortgage obtaining
competent legal advice is more than ever
recommended. Good faith alone is still not
sufficient to be safe.
Road and motorway directorate (ŘSD).
The consortium offered to complete the
work for CZK 1.248bn, 38 percent lower
price than expected. The state expected
the price to be in the vicinity of CZK 2bn
for the 8 km section. The tender attracted considerable, with eleven companies
bidding.
Work on the new D3 section could get
Martin Holler
Denisa Molnár
underway in autumn. ŘSD also hopes to
start construction on yet another motorway project, the D1 section between
Přerov and Lipník. Skanska won the tender with lowest bid. ŘSD is to sign the
contract shortly, with construction expected to start in two months, writes the
server ekonomika.idnes.cz.
28
CZECH REPUBLIC
Office
Praha City Center
repositioning
completed
Repositioning an existing office
building is easier said than done
and can only work if its location
and building spec was high to
begin with
Tristan Capital Partners has completed
its renovation of Praha City Center,
having given the building a modern
front lobby and reception area and a
complete overhaul of the building‘s
public space. The work represents an
investment of roughly €1 million and
was undertaken without interrupting
service to the building‘s existing
tenants. Along with the new look,
Tristan is pleased by the fact that
the building managed to retain all of
its main tenants and the building is
currently 65 percent leased.
entry doors, the installation of
new slimline LED lighting, but also
increasing the heights of all entries
to give a new experience, a newly
designed reception desk. The investor
renovated the common areas on the
upper floors, installing new doors, new
and higher ceilings, LED lighting and
adding decorative green features. The
building‘s retail passage was completely
remodeled and redesigned to give it a
more stylish, attractive look. The design
work for the work was handled by
Chapman Taylor.
The refurbishment work was extensive,
as it involved not just new entrances,
New office tenants have their choice of
ceilings, new carpets will be installed
Common areas all refurbished
The refurbished lobby of PCC now looks attractive and up to date
as will internal ventilation. Still to come
are the replacement of the building‘s
exterior canopies as well as new
exterior cladding that will emphasize
the entry points at Samcova and Nam
Peterske.
The building was developed in 1995
by EPD as the first institutional grade
office building in Prague 1. Moreover,
in recent years, a number of large space
users moved out, making it clear that
the building needed to reposition
itself if it hoped to compete with new
generation office buildings.
Without a face-lift, it would not have
been possible to maintain rental levels,
hold on to the remaining tenants and to
attract new ones. The building‘s tenants
have all had their leases renewed for 5-7
year periods.
Q&A
Kostrounova: Older
buildings tougher to
finance
CZECH REPUBLIC
29
Lenka Kostrounová (ČSOB) says
tougher regulatory conditions
are forcing banks to make careful
choices on financing
How willing are banks now to lend on new projects?
Banks definitely want to finance now. The market is very active, so
banks that don‘t have a troubled portfolio want to finance. We‘re one
of the banks that likes to finance quality projects with experienced
players, whether it‘s with an investment or a development loan.
There‘s a difference, of course, because with a completed project you
can see how the project is functioning. It has tenants, so it‘s easier to
finance because there‘s less risk for the bank. That‘s reflected in the
pricing. But we definitely have an appetite for development with
experienced players, and in a sensible, conservative way, meaning
projects with leases or pre-sales.
Banks are loosening their criteria, but only slightly, with leverage of
55 – 60 percent LTC/LTV now around 65 – 75 percent. The payback
schedules are also getting longer. So for example, with offices there
was usually a 15-20 year payment calendar but this is now being
stretched up to 25 years from the completion of the project.
If there‘s oversupply in Prague, is it because of ‚too much‘
financing? If not, how is the boom being financed?
I am of the opinion that majority lenders are reasonably conservative
– requiring preleases in office financing of at least 30 to 50 percent. For
those who are financing on a speculative basis, with no preleases or
very limited, I‘ll keep my fingers crossed. They could run into problems
with regulators due to Basel III.
The stronger developers can also issue corporate bonds and sell them,
companies like CPI, HB Reavis, Penta. These sorts of players are trusted
by the market that they‘ll be able to pay off the bonds from other
activities. But if the project is sensible, then the banks prefer to finance
them directly, via loans. Even the office projects.
Even speculative offices?
I would say not very much, but there are some madmen who will
finance speculative projects. Our bank would never get involved
in a project without any preleases, even if it had a very high level of
equity financing. So that‘s one of the criteria: that developers have to
finance speculative projects on their own and once they‘ve leased the
building, the bank can refinance part of the equity.
The bank joins the process at a much later point as a result, but it‘s
best if developer start discussions with the bank from the beginning.
Because the bank needs to have some kind of control mechanisms
for monitoring the construction, or set up some rules. It‘s difficult for a
bank to enter a project when it‘s already half built. The developer can
also finance the entire construction himself and leases the project and
then the bank can refinance it.
How difficult is it to refinance existing office buildings in Prague,
given the development boom and the need for new capital
expenditures in old buildings?
It‘s incredibly difficult. It‘s one thing if it‘s newly built, because you can
finance that. But if the first period is over, five years, and the average
lease expiry time is one or two years, then financing is a problem.
What do you do after two years? Will the tenants go elsewhere?
There‘s pressure to reduce rents and there‘s a lot on offer. They‘ll find
financing but at worse conditions, lower LTVs and the value of the real
estate could be lower than it was two or three years ago when there
were longer lease contracts. It won‘t be such a dramatic problem for
buildings that have tenants and that are performing.
We can‘t go into something we don‘t like. The Basel regulations are
useful because we have only a limited amount of money that we can
‚put into the market ‚. And so of course we only pick projects that use
as little of our regulatory equity as possible and we lend as much as we
can. In terms of the type of investment transaction, it depends a lot on
asset management as well because if it‘s done well, then they retain
tenants.
GERMANY
30
Residential
Foreign push into
secondary German
residential
In a study of Germany‘s secondary
residential markets, the top five most
attractive investment locations on the
German housing market for 2015 include
Ingolstadt, Regensburg, Darmstadt,
Potsdam and Hanover. Those are the
results of a report published by Catella,
which ranked 70 locations around
Germany based on socioeconomic data,
structural risk, liquidity risk and location
potential. The bottom five investment
locations were Coburg, Siegen, Detmold,
Remscheid and Herne.
“The German housing markets are
experiencing a huge boom phase
from a domestic and international
perspective,” writes Catella in its German
Thomas Beyerle
Yield-hungry international
investors are bypassing the prime
residential markets and heading
for promising regional towns
Robert McLean
Housing Market Ranking 2015 report.
“The scope of this market’s momentum
is reflected in current national issues
such as the ‘rent brake’ and discussions
of rent indices as well as international
aspects such as takeovers and expected
stock market flotations or IPOs. Despite
regulatory interventions, the outlook
remains positive.”
Clusters or proximity to the top locations
are shaping Germany’s regional housing
markets more than ever, according to
Catella. This can be seen in, for example,
Darmstadt, thanks to its close proximity
to Frankfurt am Main, as well as in Fürth
and Erlangen, near Nuremberg.
Catella Property Valuation managing
director Thomas Beyerle jokes that fact
that two of the five cities have football
teams that were promoted to the
Bundesliga this year is just a coincidence.
Far less coincidental, however, is the
presence of universities, which Beyerle
sees as crucial for maintaining the sort of
demographic growth needed to support
a city‘s residential market.
The reason Beyerle‘s team carried
out the study is simple: demand. Low
interest rate environment has pushed
enormous amounts of capital into real
estate and this has greatly increased the
level of interest in German residential
property. It‘s a huge market because
of the propensity its citizens have to
rent, rather than own their homes. For
yield-minded investors, however, the Big
7 housing markets (Cologne, Stuttgart,
Frankfurt, Hamburg, Dusseldorf, Berlin
and Munich) aren‘t really an option, since
such investments currently produce
sub-4 percent returns. Catella‘s Top 5
secondary locations all offer between
nearly 4.5 percent to just over 5 percent,
but with risk levels it believes are as
good, or nearly as good as those found
in the prime residential markets.
Beyerle says there‘s a whole generation
of property in the €25m to €30m range
(blocks of residential flats) acquired 10 to
15 years ago by investors who now want
to sell. This is driven largely by concern
that the expected interest rate hike by
the Federal Reserve in Washington will
come soon, taking the wind out of the
sails of the current buying boom. This
interest in selling, however, is more than
matched by buyers, says Beyerle, who
says the level of non-German capital is
astonishing. In the last investment boom,
“there weren‘t as many internationals,
says Beyerle. “In former days there were
Canadian pension funds, but these days
I can count 10 investments made with
Asian money in the first quarter of the
year.”
Increasingly, however, the returns
available in the primary markets are no
longer attractive in the search for alpha,
putting “secondary and even third-tier
locations much more on the radar,”
says Beyerle. “I have to answer all these
analysts‘ questions from London who
say they have pension funds looking for
something outside Frankfurt and outside
Berlin. That‘s where I see a lot of things
are speeding up.”
News
BERLIN HYP: GERMAN RE
TO BENEFIT FROM
GLOBAL CRISES
Investors are far more bullish
about the German real estate market this
year, at least in comparison with the rest of
Europe. This is the conclusion of Berlin Hyp’s
survey of 140 real estate experts on the German market. Whereas in 2014, just 28 percent
of respondents said the country’s market was
“Much more attractive”, this year’s edition
found that 43 percent believed it to be the
case. (The numbers suggest that the biggest
“loser” on this issue were those retreating
from positions of Germany’s market being
just “somewhat” more attractive). In all, the
proportion of people who see the German
market as more attractive than the rest of
Europe’s rose from 82 percent to 87 percent.
Connected with this question is whether Germany’s real estate sector will continue to benefit from the escalation of global crises. A full
84 percent of respondents agreed it would.
Drilling down into the forces that would influence the market, the questionnaire asked
which issues would have the biggest impact
on the market. Interest rates came out on top
(27 percent) followed by general economic
conditions (20 percent) and supply shortage (12 percent). Foreign investors, investment pressure and rental price trends failed
to make double figures. Seen from a longer
perspective, the most important megatrend
is the urbanization of Germany’s population.
Rural areas, respondents believe, will undergo serious losses as residents move to the
major cities. As the biggest cities bulge with
new residents, smaller towns will only be
able to keep pace if they are within striking
distance of the biggest urban conurbations.
The impact of this demographic megatrend
will be felt by 2030 in the view of 51 percent
of respondents to the study. More than 50
percent of respondents was made up of investors and developers.
When judging the big seven markets, the
study found that Berlin edged out Munich
for top spot, with Hamburg not far behind
in third place. Frankfurt managed no better
than a distant fourth place, while Dusseldorf,
according to the numbers, lags far behind
the leaders. The other primary markets in
Germany are Stuttgart, Cologne, Leipzig and
Dresden.
DEUTSCHE BANK CO-CHIEFS RESIGN FOLLOWING SCANDALS
Juergen Fitschen and Anshu Jain resigned as co-chief executives of
Deutsche Bank at an emergency supervisory board meeting. John Cryan will replace
Jain as co-chief executive on June 30, while
Fitschen will stay on until May 2016. Following Fitschen’s departure, Cryan, who has
been a member of the board since 2013, will
become the bank’s sole chief executive.
The resignations comes after the bank was
hit by a $2.5bn regulatory fine for its involvement in the Libor rate rigging scandal. The
bank was also accused of misstating its financial reports and is paying $55m to settle the
charges, which it has not admitted to nor denied. Deutsche Bank reported its net income
for the first quarter of 2015 had halved to
€559m from the same period last year.
BECKEN SELLS FIRST
PHASE OF MÜHLENQUARTIER IN HAMBURG
Becken Development sold the
first phase of its Mühlenquartier mixed-use
GERMANY
31
scheme in Hamburg’s Wandsbek district to
a real estate spezialfonds based in southern Germany. The price of the deal was
not released. Completion of the first phase
is set for the fourth quarter of 2016. The
project includes 147 apartments, totaling
11,800 sqm of living space, as well as 2,600
sqm of office and commercial space and a
parking garage. Becken has already started
construction on the second phase of the
scheme, which is scheduled for completion
in 2018.The project was designed by Schenk+Waiblinger. Project costs are expected to
total €100m.
HOCHTIEF BUILDING
HOTEL FOR FRASERS
HOSPITALITY
Hochtief Projektentwicklung
began construction on a 144-room hotel on
Petriplatz in central Berlin at the end of June.
The property was purchased by Frasers Hospitality bought off-plan, which will start operating the hotel at the beginning of 2017.
No price has been disclosed.
The hotel consists of a seven-story building with an above-grade gross floor area of
about 7,700 sqm between Scharrenstrasse,
Gertraudenstrasse and Breite Strasse. The
lobby will feature a glass floor slab beneath
which visitors will see an archaeological
monument: the foundations of the vaulted
cellars of old burgher houses on the former
site of the Cölln Town Hall.
“Frasers Hospitality’s long-stay concept is
geared to the rising demand for temporary
accommodation with all the comfort of a
hotel in a premium business location. We
are see a growing demand for this, particularly in Berlin,” explains Gordon Gorski, Manager of the Berlin-Brandenburg branch of
Hochtief Projektentwicklung.
32
HUNGARY
Retail
Hypermarkets
losing their edge
In Hungary, the ban on Sunday
shopping and changing shopping
patterns have hit hypermarkets
hard
Robert McLean
Hungary‘s dominant hypermarket
chains are in a state of flux, as they are
across all of Central Europe, but there‘s a
local flavor to the trend. Unlike in other
markets, the majority of hypermarkets
were built and continue to be operated
by the actual operators. Fifteen years ago
when they began their quest for market
share dominance, they represented a
revolution in shopping. Unused to the
novelty of being able to buy everything
under one roof, consumers flocked to vast
stores covering 10,000 sqm and more.
“Here, most of the hypermarkets came
quite early, bought the land and built
their hypermarket with a little mall in
front of them,” says Anita Csorga, head of
retail at CBRE.
As they are elsewhere in CEE, says
Csorga, consumers habits are changing,
especially when it comes to food. Fresh
produce bought on an almost daily
basis has become increasingly popular,
although there continues to be a group of
people who have stuck to weekly or even
bi-weekly trips.
Csorga says that it takes an hour or
two to make it out of the classic, huge
hypermarket not just because of its size,
but because the operators constantly
change the location of the good in order
to keep customers with more goods and
tempt them into buying unexpected
items. But this goes precisely against the
current shift to carefully chosen, targeted
shopping experiences.
It‘s understandable. A decade ago, there
were still barely any competent retailers
selling a huge assortment of goods.
Government regulations could prove a bigger hurdle than changing retail patterns
Today, with specialized shops for buying
electronics, bicycles, and clothing, the
attraction of buying cheap generic goods
in stores with staffed by underpaid,
indifferent shelf stockers is clearly on
the wane. This is one of the reasons
hypermarkets are in many cases on the
lookout for smaller premises and not
rushing to build huge new retail caverns.
As for food, one retail expert (who
declined to be named in this article)
makes the point that the trend is
sweeping Europe, with chains like Lidl,
Aldi and Biedronka in Poland competing
on convenience, rather than by the range
of goods. But that‘s not all, he says. “The
quality is excellent and the prices are
great, so it really reduces the need to
get in the car and go shopping. I think
the same holds through in Hungary,
with their CBA market, they‘ve taken a
lot of the punch out of Tesco who once
dominated that market.” To keep sales up,
chains like Carrefour and Tesco have cut
into their own hypermarket business by
creating smaller, popular store formats.
Viktoria Szabo, head of retail at
Cushman & Wakefield, believes that the
government‘s intervention by banning
Sunday sales has been the biggest
factor in pushing hypermarkets into
closing some stores and reducing the
size of others. “It really depends on
the catchment area,” she says. “If the
catchment justifies a larger area then
normally it wouldn‘t be a problem.”
Moreover, she says, there are still a lot of
people “who like doing their shopping
at one time per week, on the weekends,
Industrial
and they like to go to a retail hub where
there are big anchors and big boxes. “But
the Sunday closings is making it almost
impossible for them to work.” Stores are
also now required to close at 10 pm,
something the employees that still work
at Tesco (which used to offer all-night
sales) could well have mixed feelings
about.
What we‘re seeing now in traditional
locations like Budaors outside Budapest
is Tesco downsizing its original mall to
make room for H&M and Sportdirect
making these shopping galleries
increasingly similar to classic suburban
shopping centers.
Tellingly, in locations where these
large retailers are tenants (Interspar in
Eurocenter and Allee or Auchan in Savoya
Park) rather than owners of the space, the
size of their stores is consistently smaller.
Tesco owns Campona Center, where it has
UNICEF PLANS SSC
CENTER IN BUDAPEST
UNICEF has become the latest organization to choose
Hungary as a location for a new shared service center, following an agreement with
the country’s government. The new SSC is
the organization’s first, and is aimed at improving efficiency by centralizing certain
finance and human resources operations.
“I would like to reiterate my Government’s
commitment to the unique and noble mission of UNICEF aimed at the protection of
children worldwide,” says Dr. István Mikola, Hungarian Minister of State for Security
Policy Cooperation and International Cooperation. The center will have more than
300 staff and will provide services including
a 10,000 sqm store, but market reports
say it hopes to reduce the figure. Such
evidence suggests that when they build
their own space, they tend to build them
too big to be sustainable long-term.
Furthermore, if less space is devoted to
a low-rent paying hypermarket operator
selling car tires and printers, more space
can be leased at higher rents to attractive
fashion brands.
For the hypermarkets brands, cutting
back space and developing smaller
format stores helps them compete with
the smaller format stores, but it’s a tricky
business, according to Milos Ryba, of the
analyst group IGD. It‘s true, he says, that
large hypermarkets (sales area of +7,000
sqm) have reported a decline in revenue
in Central Europe in the last three years,
“but they are still doing well in Eastern
Europe (Russia). The best example of a
successful large hypermarket operator
is Auchan. Having said that, even
payroll, invoice processing, some human
resources functions, and an IT helpdesk.
INDUSTRIAL SECTOR
BACK ON INVESTORS’
RADAR
Budapest’s industrial sector
has leaped back into full view as a sudden
drop in vacancy rates to just 14.5 percent (as
of Q1 2015) and easing pressure on rents has
been accompanied by net absorption of 128
sqm in 2014. In addition, last year marked the
first year in half a decade that investment
grade logistics assets changed ownership.
“Early in Q2 2015, Colliers International
has already registered three investment
transactions, more than during the course
HUNGARY
33
Auchan started to invest into compact
hypermarkets (3,000-5,000 sqm) a few
years ago and we have seen more
investment into supermarkets in Russia
in the last year.” In Poland, says Ryba,
Carrefour has moved its channel focus
from large hypermarkets to convenience
stores. “However, running a convenience
store can often be more complex and
costly than operating a hypermarket,
as you have to tailor store and product
range to local shoppers.”
So if big hypermarkets and sprawling
electronics stores are no longer the draw
they once were, what‘s the deciding
factor? Who are the new anchors? “Mix,”
claims the anonymous retail expert. “It‘s
all about having the most dominant mix
of stores, and having the most of them,
so that a competitor can‘t come into the
market. You have to have the biggest
assortment to stop customers from
driving and going to another place. “
of 2014,” said Bence Vécsey, Head of Investment Services at Colliers International
Hungary. “Colliers International recently
completed its second logistics transaction
this year, advising a private developer on
the sale of an 18,000 sqm fully-let prime
city logistics asset in Nove Business Park
in Budapest; a deal that establishes a new
benchmark for prime assets within this
class.” The new owner of the building is an
open-ended retail fund managed by Diófa
Fund Management.
“We are pleased to have been involved in
this transaction as well as supporting CA
Immo and Union Investment in selling one
of the largest logistics facilities in Hungary to Prologis a few months ago,” added
Vécsey.
34
POLAND
Retail
Malls search for
new anchors
With hypermarkets falling out of
favor, strong malls could end up
leasing smaller units at higher
rents
Donata Karpik
Once a hot commodity, large-scale
retail has seen its Polish market share
shrink dramatically in recent years, as
growing e-commerce and discount
chains have taken large bites out of
their piece of the pie. While it’s been a
struggle for large-scale retail formats
like hypermarkets, retail landlords could
use the situation as an opportunity
to improve their returns, if properly
approached.
As they have to work harder than ever
these days to fit their projects to the
rapidly changing market environment,
Poland’s retail developers say
hypermarkets have lost much of their
magic, making room for expanded food
courts and leisure offerings. In many
cases, they can no longer afford to
pay for 15,000 sqm stores in Poland’s
malls, so they’re cutting their non-food
offering and trying to reduce the size of
their stores.
“Having been known for their
aggressive price policy, the
hypermarkets have started competing
on a new front -- the optimization of
space,” says Marek Noetzel of Cushman
& Wakefield. “Poland’s retail sales have
been growing slowly relative compared
to the pace of new retail space going up
across the country and this has caused
a disproportion,” he adds. Added to this
has been growing competition coming
from local discount and convenience
store chains.
“I think that hypermarkets have
become more of a weekend option
for shoppers than a daily option...
convenience stores are increasingly
convenient for consumers who are no
longer willing to spend so much of
their time in large shopping centers for
smaller purchases,” says Noetzel.
“At the same time, it’s the fashion
retailers that are most visible in the retail
centers, and it’s the same sector that
hasn’t been hit as hard by the growing
Can mall owners find new, better paying users for unneeded hypermarket space?
importance of e-commerce, as it’s still
requires a shopping experience,” he says.
But even though they’re losing their
anchors, landlords are hoping to use
the situation to their own advantage by
introducing more active strategies to
release space more efficiently to smaller
tenants providing higher rents. This
strategy could work for the biggest malls,
which have a waiting list of tenants, but
will prove more difficult to carry out for
the smaller, less dominant centers.
“Big hypermarkets never were high-income
tenants,” says Jacek Wesołowski, country
manager at Immofinanz. “The rents they
generated were always below average,
which have been negatively impacting total
ROI of the schemes, so it’s good news for the
developers, in this respect.”
Noetzel agrees with this. “The numbers
don’t lie. If a tenant is regularly reporting
drops in sales, it has a negative impact on
rent levels...which hurts the quality of the
real estate in the long-term.”
“It’s always dangerous when the biggest
tenant finds itself under financial
pressure and needs to exit the center.
It’s very difficult for the developer
to find another tenant of this size to
take over such a big unit, so it needs
to make a significant investment to
remodel the space in order to fit smaller
tenants,” says Wesołowski. “On the
current market, smaller units provide a
significant advantage, as they can easily
be adopted to fit the needs of any other
tenant.”
News
PENTA INVESTMENT TO
LAUNCH 2ND POLISH
PROJECT
Penta Investment is preparing its second office investment in Poland.
Having acquired a state-owned plot in the
city’s Mokotów district, located at the corner
of Pańska and Miedziana streets, the group
is planning to develop nearly 28,000 sqm of
leasable space. The value of the transaction
was not disclosed, but the investment is
expected to cost about €60m. Penta said it
needs two years to collect all permits for the
project, which is due for completion in 2019.
“This recent transaction is another step for
Penta to establish itself on the Polish market, which is now being perceived as a key
market in the European Union,” says Damian Grzywacz, Senior Manager at Penta
Investments.
\
HINES CLOSES HPSIF,
SEEKS FINANCING FOR
ACQUISITIONS
Hines announced the closure of Hines Poland Sustainable Income
Fund (HPSIF), for which it raised more than
€155m. The funds will be used for series of
acquisitions in the Polish office and warehouse sectors. So far, the fund has acquired
three office projects, located in Warsaw’s
Mokotow district: Ambassador, Nestlé
House and Sky Office. Mieczysław Godzisz,
CEO of Hines in Poland, said the fund will
now focus on securing financing for further investments to grow the value of the
portfolio to €300m. Leo Chen, head of the
fund, expects fund to grow to six assets in
the next few years. Worldwide, Hines manages assets worth around USD 84.9bn and
concluded USD 8bn in transactions last year.
It currently has 104 development projects
underway.
AMAZON REPORTEDLY
ADDING FOURTH CENTER
IN POLAND
Amazon is reportedly preparing its fourth warehouse investment in Poland. According to media reports, Industrial
Center 33 has already initiated the investment process on the project, set to go up in
Sosnowiec-Pieńki, near the town of Stryków.
Industrial Center 33 is reportedly associated
with Panattoni Europe, the developer behind two of the three warehouses built for
Amazon in Poland. The new three-building
distribution and logistics complex is expected to offer 135,000 sqm of space. Amazon
has not commented on the reports.
in Poznań and Wrocław last year, adding
about 12,000 jobs to the Polish market. Developed by Panattoni and Goodman, the
centers are supporting the company’s operations on the German market. The most
recent investment would cater to Polish
customers.
GALERIA ECHO TO BREAK
GROUND IN JANUARY
Echo Investment is planning
to break ground on its flagship retail project in Katowice at the beginning of next year. Worth PLN 200m, Galeria
Echo will add 42,000 sqm of GLA to Kościuszki street by the fourth quarter of 2017. Echo
said that it will use its own equity to start
and will seek bank financing as soon as it
secures anchors. “Considering we have the
advantage of having Griffin as a partner, we
don’t have to worry about equity, but it’s still
more reasonable to seek external financing
for the project,” said Marcin Materny, head
of the retail department at Echo Investment.
Helios Cinema has already signed on to take
3,000 sqm of space. “We’ve decided to expand the leisure and restaurant offer in Ga-
POLAND
35
leria Echo, which amounts to as much as 30
percent of the entire project,” said Materny.
“This includes a higher-shelf restaurant offer, located on the lower and higher floors
of the project, as well as on terraces.” GTC SECURES GALERIA
PÓŁNOCNA BUILDING
PERMIT
Globe Trade Center obtained
a building permit for Galeria Północna, set
to go up in Warsaw’s Białołęka district. More
details are expected to be released later
today. GTC’s CEO Thomas Kurzmann, said
last year that the company is ready to start
working on the project as soon as it secured
the permit.
The French retailer Carrefour signed on as
the project’s anchor tenant last year, while
talks with a number of fashion retailers
are currently underway. “We’re happy to
see this interest from tenants for both of
our projects [Galeria Pólnocna and Galeria
Wilanów], so we’re quite confident about
succeeding. Some of the agreements have
already been signed, but we expect to see
a real drive after both building permits are
issued,” Kurzmann told Newseria Biznes.
36
POLAND
Retail
Empik Media &
Fashion selling GAP
Empik’s exit from the fashion
sector highlights the weakness of
the franchise system in its current
form in Poland
Donata Karpik
Empik Media & Fashion Group (EM&F)
confirmed in June that it secured a buyer
for the master franchise for the US-based
fashion brand GAP. Negotiations are
set to resume by the end of June, EM&F
said, and the chain is already running
large-scale sales in all its Polish stores
across the country to reduce stock levels
ahead of the deal’s closing. It’s still not
known whether all the GAP stores will be
kept open once the deal goes through.
Currently, it has outlets in some of the
biggest malls in the country, including
Warsaw’s Arkadia, Silesia City Center in
Katowice and Renoma in Wrocław. There
is speculation that Empik could already
be in discussions to exit Arkadia, where
it opened the first 1,000 sqm GAP store
in Poland in 2011.
The move is a part of an ongoing shift
by Empik out of Poland’s fashion sector,
following years of building up a portfolio
of brands that included exclusive
franchise deals with Esprit, River Island
and Aldo. Last year, Empik shut 75
fashion stores on the Polish, Russian
and Ukrainian fashion markets. The CEO
of EM&F, Krzysztof Rabiński, says the
sector no longer provides Empik with a
satisfactory return. “Since we only have
three GAP stores in Poland, the chain’s
operations have no heavy impact on the
group’s overall performance,” he says,
though it’s unclear what the plan for the
other brands will be.
The company says that operating
independently within the group,
the fashion division failed to meet
expectations. “This is mainly due to
the fact we’ve been developing this
business through the franchise model,
which provides low margins, making it
Gap is just one of the brands Empik operates that it’s trying to sell
impossible for the operator to produce
satisfying profits.”
It’s a view that’s shared by other experts
in the franchising sector. “In Poland,
margins for franchise operators do not
exceed 30 percent. At the same time,
the business model itself provides
fewer development possibilities, as
costs of operating the business in the
country are the same for the brand
owners and franchise partners, including
rents and labor costs,” says Grzegorz
Pękalski, chairman of the board of the
development company Libra Project.
Still, the franchise model remains a
popular way for international fashion
retailers to enter the Polish market. This
is due in part to the fact that launch
costs on the Polish market are high,
while purchasing power here remains
low, having only recently equaled
Hungary‘s levels. “It’s standard practice
on the Polish market for fashion brands
to test the market through franchise
partners before investing their own
equity here,” he says. This is exactly what
Inditex did, he says, before it launched its
own stores in Poland.
CBRE’s head of retail, Beata Kokeli, says
that rather than using adventurous
partners to test the market what’s
actually needed is a solid group of
specialized master-franchise operators.
“With EM&F withdrawing from the
fashion sector and Aschaya reducing
its activity, it makes the outlook for the
fashion sector quite pessimistic,” says
Kokeli.
Finance
Preleases helping
tame the boom
POLAND
37
Not all developers are forced to
find preleases for their projects
before beginning to build, but
conservative banks are helping
keep the boom under control
Donata Karpik
Despite an overabundance of liquidity,
new loans for office projects in Warsaw
are becoming even more of a challenge
for developers to secure. This is how it was
supposed to be, as limits to traditional
financing were supposed to act as a
natural regulator, keeping the enthusiasm
of the city’s office developers in check.
The key roadblock for most developers
are high pre-lease requirements that have
even impact top Warsaw projects such
as Warsaw Spire, or Q22, both of which
needed time to spread their wings. This
was due to the financing, which was
released in tranches timed to match how
the project was leasing, according to
market sources.
However, prelease demands haven’t
stopped deep pocketed developers like HB
Reavis or Skanska from building first and
financing later, once leases are signed. This
has the effect of increasing the pressure
on more traditional developers as tenants
are naturally attracted to buildings that are
partially, or nearly completed built.
Despite the difficulty in landing tenants
and securing financing, the voracious
appetite of investors to purchase real
estate assets gives developers real
incentives to do so. There seems no end
to the stream of investors looking to do a
deal in the city. “Cheap financing is driving
the real estate investment market, as
it’s giving value-add and opportunistic
investors the ability to compete for more
core products, thanks to higher leverage
and lower borrowing costs,” says Piotr
Piasecki, Head of Corporate Finance CEE
at JLL. “All this give them opportunity to
compete with foreign investors, including
German funds, which quite often finance
themselves, with their own equity,” he
adds.
Growing competition for pre-leases in
Warsaw is improving the position of
tenants, as the development of megaschemes like Warsaw Spire and Q22
threatens to push vacancy levels even
higher. Smelling blood, some of the
biggest corporate tenants are taking
advantage of the situation. “It’s not just
about securing the lease now, it’s also
about [the developer] having the capital
to afford the lease,” says Otis Spencer,
managing director of Peakside Polonia
Management. “There are cases of profit
sharing now, where a 20 percent tenant
coming in into the building wouldn’t just
ask for the typical package of rent-free
periods, fit-outs, contributions and cash
inducements; they’re also demand profit
sharing.” Spencer says they understand
that by signing a prelease, they allow the
developer to draw down construction
financing and get the project underway.
Moreover, they know that their presence
in a building raises the price for which
the developer can sell it. As a result, says
Spencer, some of them are not asking for
a piece of the profit when the building is
sold. Such practices have been increasing
in frequency over the past two years, he
claims.
In fact, lenders are offering better terms
to refinance existing projects than for
developers to finance new ones, especially
for projects outside Warsaw. “When you
talked about refinancing in the past, it
Otis Spencer
meant that your loan had matured and
there was an issue in terms of how you
were going to pay it back,” says Spencer.
“We’re refinancing now a project in
Poznań, where the bank is offering a
higher loan balance than there is right
now, allowing you to release cash – it’s a
true refinancing in that sense, as our debt
doesn’t expire until 2017,” he says. This is
mainly thanks to rising real estate values,
especially for offices outside Warsaw.
“The issue remains that you need to deal
with the pre-pay penalties of the existing
lender.”
These are usually quite financially
attractive for them since they’re interested
in releasing you from the loan obligation,
so you typically have to pay 50 bps to 75
bps for a pre-payment.
38
ROMANIA
Retail
Bucharest’s biggest
malls still booming
The retail sector’s delayed
development means that
hypermarkets are still key
anchors, but for how long?
Amelia Turp-Balazs
Few cities in Central and Eastern Europe
have seen more new malls open over
the past decade than Bucharest, and
the Romanian capital remains one of
the first choices for developers looking
to expand their retail portfolios. Indeed,
with existing malls expanding and new
malls under construction, Bucharest’s
retail scene could be said to be booming.
But it could be argued that it‘s only
the biggest projects and investors
that are active today. Not surprisingly,
AFI Palace Cotroceni is leading the
way, having spent the last 18 months
adding thousands of square meters by
improving and extending the location of
a number of key tenants (including H&M
and LPP brands). “The latest changes,
which we completed last month, added
more than 1,000 sqm to the GLA,” says
David Hay, the CEO of AFI Cotroceni.
What’s more, AFI has more plans for the
coming year.
Parklake is under construction
“The next expansion we plan is of the
entertainment area,” Hay says. “Here,
more than 1,000 sqm will be added
to the mall’s GLA, with Maxbet Casino
taking over and vastly upgrading the
existing bowling alley.” He said that in
time, another 5,000 sqm of leasable
space would be added to the mall in
order to allow current clients to grow,
and for new brands as well. In all, the size
of Cotroceni would grow from 80,000
sqm to around 90,000 sqm, making it the
biggest anywhere in the region.
Another successful mall, Promenada
– opened in the north of Bucharest in
2013 – and it too is in the process of
expanding. Its developer, NEPI, recently
acquired an adjacent 1.5 ha plot where
it will add another 25,000 sqm of space
to the 40,000 sqm mall. A substantial
portion of the new space will be offices.
One new entrant which has not been
put off by any extensions to existing
malls is ParkLake, a mall set to open
next year in Titan, in eastern Bucharest.
Ingo Nissen, managing director of Sonae
Sierra, Park Lake’s developer, said that
the general mood in Romania “is one of
expansion.” “The economy is positive,
with forecasts looking quite optimistic,”
he said, justifying the company‘s €180m
investment. He says that 80 percent of
the 70,000 sqm is already leased, and the
retailer Carrefour became a co-owner in
ParkLake where it will operate a 12,000
sqm hypermarket.
Another mall set for expansion is the
Sun Plaza in southern Bucharest, as
its owners, Erste Bank and the Vienna
Insurance Group are reported to be
looking to increase the size of the plaza
by around 25,000 sqm.
But this size hypermarket may no
longer be suitable for all shopping
malls. David Hay says that while they
continue to be a big draw in Romania,
unlike elsewhere in CEE, his company is
starting to look at smaller food retailer
formats. “We are changing our concept,”
he says, explaining that future projects
will feature either a small hypermarket
or a large supermarket of around 5,000
sqm. “We think hypermarkets are big
competition to the other shops in the
mall.”
Carmen Ravon, head of retail at JLL, says
the these expansions are driven by a
desire by the leading malls to cement their
positions as market leaders. “It’s somewhat
risky for malls which are not doing all that
well to extend,” Ravon says. “As such, we
are seeing extensions primarily in those
malls which have already proven their
worth. An extension can boost market
position and even put off or block new
entrants to those markets.”
JLL‘s Ravon says that an underdeveloped online retail sector may be
extending the lifespan of large-scale
retail formats. “In other countries – where
home-deliveries are more common –
hypermarkets do not need such huge
spaces as they do in Romania. That’s why
so many hypermarkets are now almost
malls in themselves, and why so many
malls have big hypermarkets as anchor
tenants or even partners.”
Office
Big deals on office
market confirm
expectations
ROMANIA
39
Knight Frank says that optimism
over demand levels at the end of
2014 is carrying over into this year
as take-up grows
Last year was Bucharest‘s most
successful year since 2009, and signs
indicate that 2015 should follow suit.
“Last year’s record demand and preleasing volumes put the office market
in the spotlight again,” says Horatiu
Florescu, chairman and CEO of Knight
Frank Romania. Take-up reached its
highest level (303,000 sqm), equaling
Prague’s demand for the same period.
Momentum increased significantly in Q4,
with take-up exceeding 110,000 sqm, a
37-percent quarterly increase.
sqm on the top nine floors of the tower,
representing a quarter of its total space,
bringing occupancy there to 85 percent.
At the same time, vacancy in the Calea
Floreasca/Barbu Vacarescu sub-market
decreased from 12 to 8 percent. Such
transactions allowed the advisory
company to retain its position as market
leader on the local office sector. In
the second quarter of the year, Oracle
subsequently signed another 20,000
sqm lease, this time at Oregon Park, in a
deal advised by Knight Frank Romania.
Initially, 2015 seemed to start slowly,
but several large transactions closed
in Bucharest over the first months
have confirmed expectations that
take-up by December should reach
the levels achieved in 2014. “We had
quite a positive start to 2015 and have
transacted around 65,000 sqm of office
space so far, out of which over 57,000
sqm was for the IT&C sector alone,” says
Florescu. In April, Knight Frank Romania
advised on the largest transaction of
the year between Genpact and Atenor
Group. The multinational outsourcing
and information technology services
company took 25,000 sqm in the third
phase of Hermes Business Campus,
pre-leasing more than 80 percent of
the building. Developed by Belgium‘s
Atenor Group, the three-phased project
will have a total leasable area of around
75,000 sqm. Just two months before,
Knight Frank Romania advised on
another major transaction, Oracle’s
expansion at SkyTower, a landmark
building on the Bucharest office market.
Oracle has leased more than 10,000
The proportion of pre-leasing is set to
rise, and will contribute to high take-up
figures, as occupiers look to lease the
120,000 sqm set to enter the market
this year and early 2016. “It seems
that transaction activity continues to
be dominated by IT&C players, which
accounted for almost 40 percent of the
market in the first quarter of the year.”
Other indicators point to growth on the
office market, such as a significant drop
in vacancy rates. Although new stock
increased in 2014, a rise in demand for
office space pushed vacancy rates down
each quarter, from 20 percent in Q1 2014
to 14.7 percent in Q1 2015. Furthermore,
Romania’s economy continues to
strengthen and is forecast to grow by 2.8
percent in 2015, in line with 2014‘s result.
This backdrop is set to attract even more
investors throughout 2015. Although
international interest will remain high,
the healthy economic forecast will again
encourage local buyers to invest in
Romania. “Office properties will remain
desirable, particular in Bucharest where
the availability of quality stock has risen,
and it is possible that offices will increase
their market share further this year,” adds
Florescu.
Horatiu Florescu
40
ROMANIA
Investment
Improving image
boosts country‘s
investment sector
Romania is finally catching up to
the pace of investment set by its
neighbors
Dinu Boboc
Signs of improvement for the Romanian
investment sector continue to mount
as sustained economic revival boosts
economies across Europe. That being
said, the Romanian real estate sector had
a relatively slow start to 2015, with an
investment volume of just €20m in the
first quarter. While the Q1 results were
disappointing, Andrew Peirson, JLL‘s
managing director for SEE and Romania,
expects to be boasting of a another strong
year by December. This comes on the back
of an impressive 2014, where total volume
exceeded €1.3bn, putting Romania behind
just Poland and the Czech Republic for
the CEE region (and double the total for
Hungary).
its liquidity and diversity, with outstanding
positive effects,“ he says.
Robert Miklo, associate director for the
investment division at Colliers International,
says that the picture emerging of the
country is increasingly clear for those on
the outside. “The image of Romania is
clearly improving, and this will reflect in
transactions and a market that will grow
But he warns against forgetting that the
country‘s biggest competitors in CEE
still have a huge advantage that they are
unlikely to relinquish, “especially Poland and
the Czech Republic, where financing costs
are low, and there‘s a positive, constantly
upwards perception from the institutions
and they can be compared with mature
markets in Western Europe.“
The promise of such deals is helping drive
positive predictions for higher transaction
volumes in the office sector, according to
JLL‘s Peirson. “While last year saw retail as
the sector with the largest market share (40
percent market share, with offices slightly
below at 35 percent), we expect the office
market to come out on top in 2015, with
three major developers in particular looking
at office disposals in Bucharest,” he says.
This is reflected in what remains a major
pricing gap between Romania and the
main CEE markets, with prime yield
levels averaging at least 150 basis points
higher than prime yields in Prague and
Warsaw. But as these markets continue
to heat up, an increasing number of
investors have been looking elsewhere
in the region for product. It‘s a trend
which is bringing investors to look at
prime assets in Romania that perhaps a
year ago would have been discounted
on a country basis.
At the same time, he notes that investors
will look beyond even Romania to other
SEE locations in their pursuit of quality
real estate assets. “From an investment
point of view, the market is becoming an
increasing competitor to the more mature
CEE markets, but from an occupational
point of view, it is perhaps worthwhile to
see its position from a more micro-SEE
perspective. When looking at new market
entrants for instance, Romania’s biggest
competitor today is probably its neighbor
Bulgaria.“
Investment is picking up in all sectors
Economic expansion is fueling hope of a
market turnaround, as Romania is leading
the pack in some indicators. “Last year, GDP
growth in Romania stood at 2.9 percent,
again second only to Poland at 3.4 percent,”
says Peirson. “This positive trend is expected
to continue in 2015, with GDP growth
estimates at 3 percent, which puts it again
in second position in CEE with, you guessed
it, Poland in first at a repeat of 3.4 percent.
This growth in Romania is of course coming
from a very low base, and on a per capita
level, it‘s still half that of the more mature
CEE markets.“
Daniela Popescu, head of research at
Colliers International, says that on the
leasing front, the push has been led by IT
and BPO companies, and important deals
from these sectors will be finalized in the
second half of the year.
So far this year, the office market in
Bucharest has registered more than 48,000
sqm in lease transactions in high-quality
buildings, with net amounting to almost
60 percent of the total activity. For the year,
Colliers expects to see results similar to
those registered last year (290,000 sqm in
total take-up, of which 130,000 represented
net take-up).
News
NATO COMMAND
CENTERS TO OPEN IN
BUCHAREST
In a rare unanimous vote,
Romanian lawmakers approved a proposal
from President Klaus Iohannis to establish two
NATO command centers in Bucharest: the
NATO Force Integration Unit (NFIU) and the
Multinational Division South-East Headquarters (MND-SE HQ). The initiative was supported by Defense Minister Mircea Dusa and interim Prime Minister Gabriel Oprea and has been
sparked by fears over Ukraine’s conflict with
Russia. The two command centers should be
completed by next year and fully operational
by 2018. NATO intends to open a total of six
command centers along its eastern border.
The
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and Northern
Bucharest
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www.imoteca.ro
[email protected]
MCDONALD‘S ROMANIA
INVESTING RON 13M ON
RESTAURANT UPGRADES
McDonald’s Romania plans to
invest RON 13m this year to remodel its restaurants, including new McCafé locations. The
company currently operates 14 cafes nationwide and plans to open another six by the end
of the year, said general manager Daniel Boaje,
in cities like Craiova, Timisoara and Bucharest.
Yesterday, McDonald’s celebrated the 20th
anniversary of opening its first restaurant in
Romania in the center of Bucharest on Piata
Unirii. It served over 15,000 customers that
day. Since then, the company has invested
RON 700m into its Romanian operations and
has a team of over 4,000 employees.
ROMANIA
41
PARKLAKE SHOPPING
CENTER TO OPEN IN 2016
ParkLake, the shopping
center developed by Sonae
Sierra and Caelum Development, is schedule to open its doors in the spring of next
year, following an investment of €18m.
ParkLake will have a leasable area of 70,000
sqm with over 200 stores. Developers have
already signed contracts to lease over 70
percent of the leasing area with tenants
including the Inditex brands, H&M, Koton,
Maxitoys and Carrefour. ParkLake is located in the Titan district of Bucharest, near
the new Mega Mall shopping center, which
was developed by South African fund investments NEPI.
42
ROMANIA
Finance
Banks gain
confidence,
developers benefit
As real estate market prices begin to rise,
and developers pay off their old debts,
banks are becoming more confident
about lending to the big market players.
Bankers are delighted when they see
long rental contracts, stable tenants and
developers who are doing well with their
own funds. Projects with a strong market
position can be refinanced a lot easier
than new real estate projects, said Liviu
Tudor, president of Genesis Development.
Access to funding for developers
and for refinancing is improving,
but only for the strongest players
Dinu Boboc
Association. Nevertheless, appetite from
lenders has increased, especially in the
office sector since the value of real estate
collateral began to stabilize in 2014,
with some sectors even showing a slight
increases in value.
“As far as new projects are concerned,
banks prefer developers with a solid
history who have already developed
several successful projects. Obviously,
if a new developer wants to start its
first project, obtaining bank financing
remains difficult,” he says.
This, in conjunction with new risk policies
based upon well-collateralized lending, will
pave the way for real estate development
to take a more prominent role in the
activities of banks, especially those with
larger portfolios of non-performing loans,”
said Oprescu. Thanks to the stable cash
flow they produce, offices project have a
stronger chance of being able to meet the
schedule of loan repayments, and Oprescu
believes they represent the biggest
potential for new lending.
But the current thaw in lending is only
beneficial for experienced developers
and for established projects that
demonstrate a sustainable cash flow.
Otherwise, banks are still watching
the real estate development sector
cautiously, especially the residential
sector, says Sergiu Oprescu, chairman
of the board of the Romanian Banks
When faced with questions of whether
to refinance a project, Tudor describes
it as a collaborative process (assuming
the conditions of the bank are met). “It is
important to demonstrate that you have
a good track record and solid contracts
with stable tenants,” he says. “In terms of
portfolio, West Gate and Novo Park have
23 tenants, all multinationals, that have
BILLA TO OPEN NEW
STORE IN BUCHAREST
Billa opened a new supermarket this week in Bucharest’s
Gara de Nord district, expanding its Romanian
network to 86 locations. Billa has been active
on the Romanian market since 1999. The German retail group Rewe, which operates the
Billa supermarket chain, is reportedly looking
to sell its Romanian network. Market sources
say that Carrefour, which took over the Billa
network in Italy, is interested in purchasing Billa stores in Romania.
XEROX LEASES 3,000 SQM
AT PALAS IASI
Xerox took an additional 3,000
sqm of space at United Business Center 3 (UBC 3), which is part of the Palas
continuously expanded in recent years
and have long contract periods of up to
18 years in some cases,” explains Tudor.
Oprescu describes the supply of credit now
in the financial system as fairly consistent.
This means that demand is rising for viable
projects offering good yields and large
rental contracts that exceed the maturity
of the loan. When such situations arise,
they become highly attractive for banks,
and this is seen through competitive
bidding. “In this context, it‘s natural that
new valuations are considered for securing
the credit,” says Oprescu. “Don‘t forget that
banks are required to regularly evaluate
their warranties, so the initial impairment
of the collateral has already been taken
into account by the the original bank and
by the client.”
In general, banks are now increasingly
open to helping developers with project
financing or refinancing, but they remain
cautious. Money will be made available
only by those who deserve it and who
demonstrate that they can handle the
pressure and pay back the loan even in
these unstable times.
Iasi complex. The company first signed a lease
on 1,000 sqm in the same office building two
years ago. Xerox has about 1,750 employees
in Iasi, with 450 working out of UBC 3. Palas
Iasi, owned by Iulius Group, offers 38,000 sqm
of space in four buildings. Xerox operates two
centers in Bucharest, three in Iasi and one in
Oradea and has more than 2,000 employees
in the country. The company reported a profit
of RON 12.9m last year.
ROMANIA
Retail
Mega Image
continues to grow
43
The company’s growth has not
been without setbacks, but its
size has become a competitive
advantage
Amelia Turp-Balazs
100 new stores in 2015?
The supermarket chain Mega Image,
owned by the Belgian retail group Delhaize,
confirmed that should once again open
more than 100 stores this year. Research
specialist Lorina Ghindaoanu they opened
114 last year. “We want to continue to
be as close to our customers as possible,”
Ghindaoanu says. “The only brake on our
growth will be available finance and the
state of the real estate market.”
Mega Image entered the market in 1995,
and has been owned by Delhaize since 2000.
It operates more than 400 stores under a
number of different brands, including the
larger flagship Mega Image supermarkets
and the smaller Shop & Go convenience
stores.
The company’s expansion strategy for
this year remains much as the same as
before, with several new stores of all sizes
opening towards the end of the year. Lorina
Ghindaoanu says that 2014 had actually
seen a move towards larger stores in
malls, such as Mega Image Bucuresti Mall
and Mega Image Plaza Romania, and the
ROMANIAN VAT TO
DECREASE TO 19% IN 2016
Romanian lawmakers approved an amendment to the
fiscal code that will lower VAT from 24 percent to 19 percent starting in 2016. Initially,
the draft amendment only called for lowering the VAT rate to 20 percent, but the Ministry of Finance proposed that it be reduced
to 19 percent, which will shave an estimated
RON 2bn off the state budget. Finance Minister Eugen Teodorovici said there is a possibil-
company was open to “all opportunities”
when it came to expansion. “Wherever the
context and the conditions point towards
further success, we will be there,” she says.
Carmen Ravon, head of retail at JLL, says
the sheer number of Mega Image stores
present on the market made them a viable
alternative to the hypermarkets, from which
they are “definitely taking some clients,”
she says. “Mega Image can negotiate
with suppliers from a very strong position
now and offer hypermarket-level prices
now, sometimes even cheaper. They are
ubiquitous in Bucharest and attractive
to busy people with medium and high
incomes who do not have time to go to
hypermarkets.” She says the chain also profits
by including a number of high-end products
and by adapting the size and layout of
the stores (and adding non-food where
possible).
The company’s expansion strategy has not
come without some failures. In late June, the
company revealed that it would be leaving
the Pitesti market. It had four stores in the
ity that the amendment could go into effect
before the beginning of next year. IKEA BUILDING SECOND
STORE IN BUCHAREST
Ikea purchased a 13.7 ha plot
for the construction of its second store in Bucharest. The land is located in
the Bucharest’s District 3 on Pallady Boulevard.
The price of the land deal was not disclosed.
“Many large cities in Romania hold high
city -- two Shop & Go stores and two Mega
Image supermarkets – which proved unable
to keep up with the competition. “We had
to make a difficult decision to close the four
stores located in Pitesti,” said Xavier Piesvaux,
Mega Image’s outgoing director. “We must
take into account the actual performance of
the stores, which is below our expectations.”
Piesvaux will be replaced beginning in July
by Vassilis Stavrou.
potential to open IKEA stores,” said Cornel
Oprişan, Retail Manager IKEA Romania. But
he said the company’s first store in Bucharest wasn’t able to handle current demand
levels to the extent that the experience
for customers was being compromised. In
addition, the location is inconvenient for
some Bucharest residents as it is too far for
them to travel to. “Of course we will not stop
here,” he said. Ikea posted a profit of €2.5m
on the Romanian market in 2014, up from
the €500,000 loss it made in 2013.
44
SLOVAKIA
Retail
City Arena to grab
market share in
Trnava
City Arena in Trnava is expected to
open Aug. 22. The project includes
a new football stadium for 19,000
spectators and a 29,500 sqm shopping
center. The shopping component will
Trnava is no longer going to
be Slovakia‘s only regional city
without a large, modern shopping
center
offer 125 units, a multiplex and an
entertainment park for children, as well
as underground parking garage for 950
cars and a covered pedestrian zone.
A footbridge above Hlboká street will
City Arena will be fully leased by the opening in August
connect the project to the city’s Družba
neighborhood. The project will increase the total
shopping area per 1,000 inhabitants
from 550 sqm to 900 sqm. This in
fact made Trnava a prime target in the
eyes of the developer for a major new
shopping mall to be built. Trnava has
60,000 inhabitants, but with investors
such as PSA and Samsung drawing
employees in from further afield,
the developer will be targeting the
region‘s 560,000 inhabitants as potential
customers.
According to leasing agents Cushman
& Wakefield the center should be 100
percent leased by the time it opens to
most of the standard fashion now active
in Slovakia. A Billa supermarket will
provide groceries, while a multiplex will
offer an entertainment component. The
developer has considerable experience
in building retail schemes in Slovakia,
having constructed a series of Euromax
shopping centers across the country.
PWC TO MOVE TO TWIN
CITY IN BRATISLAVA
PwC Slovakia, a part of the
global network of consultancies, has signed a lease at the Twin City office
complex, under development by HB Reavis
in Bratislava. The company will occupy 4,500
sqm in Twin City A and plans to relocate in
November.
Juraj Tučný, a partner at PwC, said Twin
City meets the company’s needs. The project offers good transport access, modern
technologies and is in close proximity to
the city center.
Twin City A is the first completed building in
the complex, which will be built in 12 phases,
stretching between Mlýnske Nivy, Košická,
Chalupkova, Továrenská and Karadžičova
streets. The first phase will consist of three
buildings, adding 65,000 sqm of modern office space to the Bratislava property market.
Retail, services and restaurants will lease the
space on the ground floor. HB Reavis is hoping to secure a BREEAM Excellent certificate.
Twin City
Finance
Banks fight for
project loans and
refinancing
For banks interested in originating loans
on new projects in Slovakia, residential
is the best bet at the moment, at least in
theory, because it‘s booming. This is one
of the few times we‘re ever likely to see
developers, banks and agents agreeing
on something. Developers, because they
can sell product; agents, because the
pace of sales is great for business; and
banks, because they can see that good
projects are succeeding in attracting
pre-sales and are selling well after
construction starts.
But residential lending isn‘t so attractive
in other ways. First of all, many of today‘s
developers are financially strong, and
their ability to bring equity to the table
leaves banks in a less decisive position
than they are used to in other sectors.
In addition, the volumes involved in
residential are smaller and the term the
money is loaned out for tends to be far
shorter than the typical commercial deal.
With commercial loans, a project
loan is typically just a precursor to an
investment loan of five years. This makes
them quite attractive, but there‘s far less
to choose from in this field and a longer
line of competitors to get past as well.
“Office projects are quite saturated here,”
says Pavol Hajdu, head of project and
real estate finance at VÚB Banka. He
says that while there are a few ongoing
projects, like Twin City, Zuckermandel
and Rosum, winning the deal at
conditions that make sense for the bank
is tricky. “We are quite interested, but the
market is quite aggressive these days,” he
SLOVAKIA
45
Slovak banks are trying to win
real estate lending opportunities
without racking up dangerously
risky deals
Robert McLean
says, adding that all the major lending
banks will be trying hard to win the new
business. “We are prepared to go up to
a certain level of aggressivity but not
over it.” He says his bank‘s tipping point
typically comes at around 70 percent
loan-to-cost, though for an exceptionally
well leased project he might get
approval for 70 percent LTV.
Pre-leases, however, are a prerequistie
on the Bratislava market, something
tenants seem to understand. “Usually
when they come to us they are already in
discussions with a client, and they have
an idea what size of the project should
be leased once they will need a draw
down,” says Hajdu. In the unlikely event
that the developer was unable to land
another tenant, he says, income from
the pre-lease should be able to cover the
debt servicing.
Vladimir Krno, head of real estate
lending at Slovenská sporiteľňa, agrees
about the difficulty of winning deals at
the moment. “The competition is very
tough and is clearly for the benefit of
the client,” he explains. “I would say that
there are no more deals that are ‚no
brainers‘, and the conditions (commercial
and structure parameters) force the
banks to question deeply how far they
want to go and if their expectations
about the future of Bratislava‘s office
market are based on factual grounds or
simply on faith.”
Fortunately, at least for fans of economic
stability, most of the banks in Slovakia
appear to be taking a conservative,
Pavol Hajdu (VÚB Banks)
rational approach to new loans,
though there are exceptions (and
some are more adventurous outside
their home market). “I wold say that
the competition is rational,” says Krno.
“Not all banks present on the Slovak
market would finance development of
an office building. The key parameters
for competition are probably pre-lease
requirements first of all, then loan-tocost financed during construction (and
the sufficient lease-up) period.”
This competition even extends to
refinancing, as banks find they have to
work hard to hold on to their clients – at
least their best ones – when it comes
time to renew old loans. Hajdu says so
long as the owner has done a good job
on building maintenance, employing a
long-term approach to its management,
there‘s no reason it can‘t be competitive.
However, to make sure, loan terms are
generally timed to match lease terms
to give the bank certainty over the
building‘s cash flow situation for the
coming years.
46
SLOVAKIA
Finance
Slaninková: New
schemes need
preleases for funding
There was a great deal of activity elsewhere in the industrial
sector, but Slovakia‘s market has been slower. Is this changing?
I think the potential will come when the highways will be
constructed here, but currently, we see some speculative
development starting. This means that investors believe in the
market and that vacancy is very low. I think low rents and high
yields mean it‘s not very profitable but investors may believe that
the yields will go down. We operate in the Czech Republic and in
Slovakia, and we see very big differences between the markets.
The Czech market has much better values for developers, while in
Slovakia, the developers are still covering costs and making very
small profits.
Is the vacancy low because the market is so healthy or because
there‘s been no speculative development?
Build-to-suit construction helps the logistics market in this way.
There hasn‘t been much speculation, so the vacant spaces were
filled, and today the tenant needs new space. The developer can
build it very quickly. If they have land prepared with permits, then
it‘s only a question of a few months to deliver the space. I think the
logistics tenants are very focused on locations, they have specific
reasons for choosing particular locations, unlike the office market,
which is very unpredictable.
There does seem to be more activity on the transaction front
though. What will the benchmarks be for the first ones?
There are some transactions being discussed but the investors
that are willing to acquire
portfolios have large
portfolios within CEE, and
they expect that they can
create better value when
they merge the markets into
a single portfolio. This could
effectively increase the price
for the Slovak portfolios, but
while I haven‘t investigated it
so recently, the yield would be
around 8 for logistics, while
your development yield is
very close to that.
Greta Slaninková (UniCredit Bank)
says her bank’s no-spec policy is
part of a healthy, conservative
lending philsophy
If yields go down, would it be because the Slovak economy is
improving or because the market reacts to what is going on
outside Slovakia?
I think the market is in a better mood and this applies to the
investors, but of course the macroeconomic figures affect
everything. First of all there has to be demand from tenants, and
they must create higher levels of production, because usually
logistics is for them part of the cost cutting.
But we are affected by the region, so we‘ll see what‘s going on in
the Czech Republic and Poland here after a delay of time. It‘s very
small compared to the other countries, so in terms of logistics,
we can be a part of a package of investments, but not a sole
investment. You need a volume of assets to negotiate with the
tenants and suppliers, so you have more efficient results when you
have a larger portfolio.
VW, KIA and PSA are expanding production in Slovakia. Will this
result in new supplier demand and speculative development?
We see on the market that there‘s new demand for capacity, so
the question for developers is whether they have prepared plots
with the permits and how fast they can deliver the space. We know
that the automotive sector is increasing production and that new
suppliers are coming to the market, and they have demand for new
space.
As a bank, however, we only finance BTS projects, nothing
speculative. We‘re not ready to support speculative development.
I think maybe they can expect to get tenants soon, but the
construction phase is very short, so if you negotiate the contract,
you can really within six months complete the project for
takeover by the tenant. There‘s no reason to build speculatively,
because you have a very short time of delivery.
Is your no-spec policy for everything, or just logistics?
It‘s for all sectors. I can see that the mood of the market is
improving, and everyone believes the old times will come back,
but we still have strict policies with respect with waiting to see
pre-sales or pre-leases. To make cash flow assumptions, we need
to see the market interest, the price of the market and if the
project is sustainable.
News
SLOVAK CONSTRUCTION FASTEST GROWING
IN EU
The Slovak construction sector was growing the fastest of any EU member state in April, according to Eurostat. Construction output in Slovakia increased by 2.5
percent m-o-m and 14.1 percent y-o-y in
April. Construction output for the whole EU,
meanwhile, grew by just 0.3 percent m-o-m
and decreased by 0.3 percent in April. Compared to last year, constr
uction output remained flat in the eurozone,
while it was up 1.3 percent in the EU. Infrastructure construction has been driving
the Slovak construction sector, with a large
number of motorways and expressways
under construction. Spain came in second
with a m-o-m increase of 1.5 percent in
April, followed by Germany and Poland with
1.3 percent growth. The Romanian, UK and
Portuguese construction sectors decreased
by 3.3, 2.9 and 2.5 percent, respectively.
LUKA & BRAMMER
GROUP, VIŠŇOVSKY TO
BUILD SPORTS AREA IN
BRATISLAVA
PSJ sLuka & Brammer Group is partnering
with the Slovak ice hockey player Lubomír
Višňovský to build a €9m sports area in Bratislava’s Rača district. The project is currently
in the early planning stages. The sports area
is expected to offer 25,000 sqm of space
with two skating rinks, a 25-meter swimming pool, and a two-story building with
sports facilities on the ground floor and a
restaurant, accommodations, and kids play
area on the first floor. The scheme also calls
for either a BMX cycling area or four tennis
courts and a tennis club. Construction is
scheduled to start next year, with completion set for 2018.
The municipality chose the project in a tender last year and signed a 30-year lease for
the plot at a symbolic rent of €1. City officials
want the investor to raze the worn-down
football stadium and maintain the site’s existing BMX area.
PENTA STARTS CONSTRUCTION OF ROSUM
IN BRATISLAVA
Penta has begun construction of Rosum, an office project in the Bratislava district of Ružinov. Located on the corner of Bajkalská and Ružinovská, the project
will feature two connected towers and offer
22,000 sqm of office. The 12-floor building
will include retail space on the ground floor,
and a green terrace on the roof. The project
was designed by the Helika architectural
studio. The €28m building is expected to
achieve a LEED Gold certification.
SCONTO TO OPEN IN
PHAROS PARK ZONE IN
BRATISLAVA
Sconto is set to open a new
store in Bratislava this fall. The store will be
located in the Pharos Park commercial zone
near the Bratislava airport. This will be the
German furniture retailer’s third and biggest
location in Slovakia, following openings
in Trnava and Nitra. Sconto operates eight
stores in the Czech Republic.
Sconto is the third retailer to open in the
Pharos Park zone. Decathlon and Bauhaus
opened stores there at the end of May. The
Sconto store will offer 8,000 sqm of retail
space on two levels and 6,300 sqm of storage. The store will have parking for 450 cars.
Construction started in September 2014 and
will cost €15.5m. Sconto, active in Slovakia
since 2010, will compete with Ikea and Kika,
SLOVAKIA
47
which both have stores at the neighboring
Avion Shopping Park.
VÁHOSTAV NOT
ALLOWED TO WRITE OFF
ITS DEBTS
TVáhostav will pay its creditors from its own resources, rather than using the cash of its owners, writes the server
ekonomika.sme.sk. The construction company, which is currently being restructured,
will have to pay back its outstanding debts
in full over the next five years. The decision
overturns a previous ruling that would have
allowed it to write off a substantial portion of its debt, according to the Váhostav
spokesman Tomáš Halán. The company will
pay its unsecured creditors 18.75 percent of
their claims in the next five years, starting in
2016, with a further 50 percent to be paid in
the next five-year period. The remainder will
be paid in shares.
The Slovak Guarantee and Development
Bank will offer Váhostav’s unsecured creditors to buy their claims at 50 percent of their
value before the end of 2015. The state will
use the bank’s rescue funds and seek to recover its money from Váhostav. The plan
must still be approved by the EU.
Tough times for Vahostav
48
UK
News
HSBC TO CUT 8,000 UK JOBS
In a move to cut costs and streamline business
practices, HSBC is planning to cut 8,000 jobs from
its UK retail and investment banking operations.
The bank currently employs 48,000 in the UK. It is also planning
to rebrand its high street branches in the UK. HSBC chief Stuart
Gulliver said he wants to create a distinction between the bank’s
retail and investment banking operations.
“We recognize that the world has changed, and we need to
change with it. That is why we are outlining the following... strategic actions that will further transform our organization,” Gulliver said in a statement. The new strategy could see the bank
slashing a total of 25,000 jobs -- about 10 percent of its workforce – globally.
“Global banking now is a far tougher business than it was before
the financial crisis. It is hard to get profits,” said BBC business editor Kamal Ahmed, adding that Gulliver was “running a bank that
investors believe simply doesn’t make enough money.”
in occupation deals. In all, aggregate office take-up grew 4 percent year-on-year.
CBRE writes that this same trend is changing the nature of the
sector on a regional level. It writes that the supply of available office space across Europe, having been broadly stable since mid2013, is now showing clearer signs of tightening. This, combined
with low levels of development in many cities, means that prime
rents are increasing.
“Companies understand that to prosper in today’s marketplace
they need to provide office conditions that reflect the modern
employee’s needs,” says Richard Holberton, EMEA head of occupier research at CBRE. “Increasingly, this means centrally located, well-connected, amenity-rich work places that provide a
destination space to stimulate collaboration and development.
This is one reason why prime rents for the best locations are on
an upward trajectory, as such space is coming under increasing
pressure. The solid start to this year sets the expectation that a
further upswing in the office market is likely for the year ahead.”
UK TRADE DEFICIT FALLS TO GBP 1.2BN IN
APRIL
HUNT FOR TALENT DRIVES LONDON PRIME
OFFICE GROWTH
CBRE reports that demand for prime office space is
rising across Europe as stronger companies realize
that being located in “amenity-rich” central locations will help
them to attract the highest quality employees. The company
writes that along with Madrid, the market best able to accomplish this is London, which saw market occupier demand rise by
12 percent in the first quarter of the year. In fact, CBRE writes
that the West End has seen its most active first quarter in three
years. Madrid had a banner year as well, producing 125,000 sqm
The UK trade deficit fell to GBP 1.2bn in April, from
GBP 3.1bn the previous month, according to the
Office for National Statistics (ONS). An estimated GBP 7.4bn surplus on services helped offset the GBP 8.6bn deficit on goods,
the data shows. While exports saw only 0.3 percent growth in the
first three months of the year, imports grew by 2.1 percent. UK
exports are facing weak demand in the eurozone.
“Monthly trade figures are notoriously volatile but today’s significant improvement is nonetheless very welcome,” said David
Kern, chief economist at the British Chamber of Commerce. “The
longer-term trend still shows a worsening in the trade position
in recent months. It is clear that we are not making enough sustained progress in closing the trade gap.” The UK’s trade deficit
hit GBP 34.8bn in 2014.
ABERDEEN SETS ASIDE $500M IN CASE OF
TROUBLE
Fears of a potential bond market sell-off have led
Aberdeen Asset Management to secure credit lines
that allow it access to $500m in credit lines in case a market selloff escalates into a wave of redemptions. Such an eventuality
could be sparked either by external events, including an exit by
News
Greece from the eurozone or if the American Federal Reserve
raises interest rates. Aberdeen’s chief executive, Martin Gilbert,
told Bloomberg Television that things could get “ugly” and that
“you want bank lines in place in case you have to meet a redemption and there is no market.” American private equity firms have
been making similar moves, with one report claiming that BlackRock has a $2.1bn rainy day fund. It’s thought that Aberdeen
controls around GBP 72bn worth of fixed income assets.
RICS: UK RESIDENTIAL PRICE HIKE
CONTINUES
Prices for residential real estate have been climbing at what for many is an alarming rate in the UK,
but the trend is unlikely to stop. In fact, the Royal Institution of
Chartered Surveyors has come out with a new study that suggests they will rise 25 percent over the next five years, becoming
“ever more unaffordable.” This is being driven by a lack of homes
for sale, a figure measured by the average number of homes on
sale on a chartered surveyor estate agent’s books. This is now at
its lowest level ever recorded.
RICS chief economist Simon Rubinsohn said that there had been
hope that with the absence of political uncertainty, more properties would be put onto the market, “but the initial indications
are that this is not proving to be the case. As a result, it is hardly
surprising that prices across much of the country are continuing
to be squeezed higher with property set to become ever more
unaffordable.” Instead, he said, “the feedback we are getting in
the survey, which points to prices at a headline level rising by
another 25 percent over the next five years, suggests that there
is no real confidence that the measures necessary to deliver a
meaningful boost to new supply will be put in place anytime
UK
49
soon.” He added that the strongest price growth was to be expected in the North West thanks to a government promise to
develop what’s being called the “Northern Powerhouse.”
AVIVA BUYS 66 QUEEN SQUARE FROM
SKANSKA
Aviva Investors Property Trust bought 66 Queen
Square, an office scheme currently underway in
Bristol, from Skanska for about $51.5m. JLL and Alder King advised Skanska on the sale, while Knight Frank advised Aviva.
The class A office project is a refurbishment of a Georgian terrace
property. The scheme also includes a new five-story building. Completion is set for October. Around 90 percent of the project’s 61,484
sq ft has reportedly already been leased, with KPMG signing a 15-year
contract and Handelsbanken agreeing to 10 years. Headline rent is
set at around $45 per sq ft. Alder King and JLL are overseeing leasing.
50
USA
Planning
New Urbanism
sweeps into Florida
A new generation is joining
the rush back to cities, putting
pressure on urban planners to
beef up transportation
David Karch
Urbanization is a global phenomenon,
and while the reasons behind it vary
from country to country, the impact is
enormous. According to an America’s
Market Intelligence report, 1.3 million
people move to cities every week at a
time when half the world’s population
already resides in cities. The same report
predicts two-thirds of the population
will live in cities as soon as 2030.
American Millennials – who came into
adulthood around 2000 - are driving
an exodus from the suburbs that were
populated originally by Baby Boomers
intent on living the American dream
beyond the city line. This makes sense
on a variety of levels. Countless studies
have shown the connection between
obesity and a lack of natural physical
activity, especially walking. In cities,
people end up doing a fair amount of
City life’s back in style
walking, unlike the car-based nature
of suburban life. For Millennials, whose
values are all about efficiency and
convenience, there‘s a compelling logic
to urban life, where entertainment,
shopping and work are physically closer
together.
The commercial real estate sector had
better be paying attention, as lifestyle
decisions will also have an impact on
where people will be willing to work. JLL
recently completed a deal moving the
professional services company Clifton
Larson Allen LLP from the Westshore
sub-market into Tampa’s CBD. John
Heald, JLL‘s vice president who handled
the tenant end of the deal, says that
“increased amenities within walking
distance of the office was a big factor in
the decision to relocate.”
“As a professional services business,
(Clifton Larson Allen) employees are
more likely to see people they do
business with,” says Heald. “Indeed, law
firms and banks are in the immediate
area, and these professionals eat lunch
at restaurants in walking distance to
their respective offices.”
“There is an energy in being downtown,”
explains Nan McCormick, senior vice
president of CBRE. She agrees that
seeing your clients on the streets is one
of the main advantages of having an
office in the CBD. And with an increasing
number of Millennials unwilling to drive
to work or even to pay for car insurance,
proximity to public transportation
becomes an important part of the
equation when deciding where to locate
an office.
Just as the exteriors of where people
live and work are today in flux, there‘s
a paradigm shift in the organization
of work within companies. Rather
than slotting individuals into vertical
hierarchic structures, employees are
being pushed into teams that work
collaboratively on common projects.
The workspace companies offer has
to allow such groups to form, to work
together and to promote cooperation.
Heald says that in place of private offices,
companies are now looking for space
that allows tables that seat four to six
people with cubicles off to the side.
Private phone calls can be made from
the cubicle while the larger table serves
as a common work area. “Productivity
and a positive work environment are
connected,” says Heald. McCormick
added that natural light adds to a
positive environment.
If there are concerns surrounding the
new urbanization, Heald says they
lie primarily in whether planners can
address the new challenges it places on
cities. “How are cities going to deal with
transit?” he asks. There is a finite space
in urban cores. Public transportation
will become critical to the success and
sustainability of urbanization. In Florida,
this will mean continued support for
programs such as SunRail, Lynx, LYMMO,
even bike-sharing, because moving
people into, out of and around the urban
core efficiently is the key to creating a
viable urban alternative.
Development
SunRail‘s second
phase given Federal
boost
SunRail recently received positive news
when the federal government stated
it would release $40m of its $93m
commitment by the end of the summer
for phase two of the SunRail line. The
second phase, a $186m investment,
will extend the line 17.2 miles from
the southernmost station at Sand Lake
Road in Orange County to Poinciana in
Osceola County. Four additional stations:
Meadow Woods, Tupperware, Kissimmee
Amtrak and Poinciana will be built,
presenting developers with plenty of
transportation oriented development
opportunities (TOD).
The federal government will kick in
50 percent of the total project costs,
with the state funding 25 percent, and
local funds covering the remaining 25
percent. The federal government will
release the remaining $53m by the end
of the year. This federal money allows
SunRail to move forward and request
contracts for the work.
USA
51
The government is helping to
get Transportation Oriented
Developments on track for
completion
David Karch
Petersburg, Florida. Mosaic wants to
build mixed-use projects on the Hansel
Plant site and the Toho Square site,
both within a five-minute walk of the
Kissimmee station. The sites allow the
following development mix based on
the city’s PD:
Development will focus around stations
Hansel Plant:
• 260 multifamily residential units
(market rate) in four- to five-story
buildings
• A 120-room, five-story hotel
• Structured and surface parking for 480
cars
• Space for up to 15,000 sq ft of ground
floor retail
• 3,500 sq ft for a community facility
Toho Square:
• 16 townhouses (owner occupied) in
two- to three-story buildings
• 21 apartment units/flats (market rate)
attached to parking structure
• Structured parking for 200 cars plus
additional surface parking
Jessica Keane, public information
officer for the Florida Department of
Transportation, says the work included
the construction of four station
platforms, canopies and amenities
at Meadow Woods, Osceola Parkway,
Kissimmee and Poinciana. She says a
second track would be added along
most of the corridor south of Sand Lake
Road to Poinciana, while an upgrade of
the signal system would be performed.
The City of Kissimmee is moving into
negotiations with Mosaic Development
where many factors will be discussed,
including the ownership and transfer
of the property, property valuation,
specifics of the development
proposal, architectural and site design
standards, schedule and phasing of the
development and the city‘s funding
contribution.
Which stations are poised for TOD?
Kissimmee recently accepted a proposal
from Mosaic Development of St.
“Kissimmee station is unique to many
other SunRail station sites as it is in
the heart of an established historic
downtown and already has most of the
key identifying characteristics in place
that is necessary for TOD development,”
says Doug Etheredge, assistant director
of development services for the City of
Kissimmee. Etheredge went on to say
that the Kissimmee station “is poised
for TOD given the support of civic
and existing uses such as the newly
renovated lake front; diverse uses that
stimulate employment opportunity, job
creation and investment; pedestrian
and transportation connectivity via
Lynx, Amtrak, Greyhound, SunRail
and the future Bus Rapid Transit
service; revitalization of downtown
infill opportunities; and supporting
infrastructure.” The other two stations
in Osceola County – Tupperware and
Poinciana – are designated for greenfield
development.
ECOCITY MALEŠICE
The residential project Ecocity Malešice, developed by JRD, has taken prizes at the regional
round of BEFFA 2014 (Building Efficiency Awards)
as well as in the Czech and Slovak finale, where
it ranked first among apartment buildings. The
project also scored in the national competition
ČEEP 2013 (Czech Energy and Ecological project/
construction/innovation of the year), in which it
got two awards from the Ministry of regional development and from the City of Prague. Ecocity
Malešice, designed by Podlipný Sladký Architekti, was chosen among 230 residential projects in
the Czech Republic and Slovakia.
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People
RAZVAN SIN
Inditex has made Razvan Sin its
new director of expansion for
the Romanian market. Razvan,
a graduate of the University of
Babes-Bolyai in Cluj had worked
for DTZ Echinox since 2007. He
replaces Michael Cioltea who is
now leading Inditex’s expansion
in Russia and Kazakhstan.
TOMAS KREN
Tomas Kren has joined the corporate/finance department of
Wilson & Partners. A specialist
in banking and finance, capital
markets and corporate law, he’s
worked at three legal firms since
2010, including White & Case.
Tomas graduated from the Masaryk University in Brno and has
been an Attorney-at-lawsince
May 2015.
MAŁGORZATA ŻÓŁTOWSKA NAMED COO FOR JLL FOR CEE
Małgorzata Żółtowska has been appointed Chief Operating Officer CEE at JLL, where she will be
responsible for human resources, marketing and the company’s corporate social responsibility
commitments. She will also oversee JLL’s legal department, policy compliance and procurement
on a regional level. Małgorzata, who is a RICS member, will continue to act as Head of Valuations, CEE, a position from which she leads a team of 40 valuers. She’s worked for 20 years in
the region’s real estate markets and is replacing Joanna Gajewska – Sokołowska in her role as
COO, as Joanna has been made Director of EMEA Lease Administration and Corporate Solutions
Centre of Excellence at JLL.
ZINAIDA VOJNÁR TAKES REINS OF INTERNATIONAL
BUSINESS DEVELOPMENT AT HB REAVIS
ALES NAVRATIL
Aleš Navrátil has joined Cushman
& Wakefield’s Property Management Team and concurrently
has been appointed the new
manager of the City Park Jihlava
shopping center. He worked was
a director at Somerston Olympia
for eight years and has worked
on projects such as Nova Karolina
Ostrava and Europark Sterboholy.
HB Reavis has appointed Zinaida Vojnár as its
new International Business Development Director, and will have the task of building and maintaining key occupier client relationships along
with creating new business opportunities. Zinaida, who has nearly 13 years of related professional experience, came to HB Reavis from Orco
Property Group where she had been responsible
for leasing marketing and asset management.
Previous posts include working as a regional
leasing and marketing advisor for AEW Europe
in CEE, along with Sales and Marketing Director
at GTC Real Estate Development and Immobilia.
54
REGIONAL
Economics
Greek default
would hit SEE hard
Opinion: With Europe‘s fragile
economic recover hanging in the
balance, a pragmatic approach to
Greece is required
Dinu Boboc
Who put the Greeks in the euro zone
anyway? It‘s a rhetorical question at this
point whose answer is of no importance.
Not now, at least. Right now, what‘s
important is to find a solution, after
some big mistakes was made in the last
years. After imposing excessively tough
austerity measures, Greece is officially
back in recession, with GDP figures of
-0.4 percent in Q4 2014 and -0.2 percent
in the first quarter of 2015. The IMF
announced a back-up plan in case Tsipras
and Co. fail to reach an agreement with
EU leaders in Brussels. But with national
reserves of less than €100m, default is
close at hand for Athens, especially given
the €1bn in salaries the government
hands out each month. Already, Greece
owes the IMF nearly €10bn and another
€2bn will be due in June and July. Crisis talks began in May, and an
agreement being reached within a few
short weeks, if not days, was seen as
absolutely necessary. Now it‘s June, and
as of this writing, no agreement had been
reached. That hasn‘t stopped financial
experts and politicians were falling over
themselves to warn that if an agreement
fail to materialize, Greece will default on
its debts. This isn‘t just a problem for the
Eurozone, whose founders didn‘t provide
an opt-out clause from the monetary
union. It‘s also a problem for all the SEE
subsidiaries of Greek banks, as their
mother company would be unable to
support them. Given the important role
Greek banks play in the region, the stakes
suddenly look even higher. In Bulgaria and Macedonia, subsidiaries
HUNGARIAN CONSUMER CONFIDENCE
REBOUNDS IN Q1
An increase in retail sales help boost the Hungarian
economy in the first quarter of 2015. Figures show
a 8.2-percent y-o-y increase in January and 6.2-percent growth in
February, suggesting a significant turnaround in consumer spending. Inflation was flat for the seventh consecutive month in March,
due to a plunge in energy prices, while interest rates were cut
and unemployment fell to its lowest level since 2007. Banks are
set to make compensation payments for overcharges on foreign
currency in the first half of the year, giving an additional boost to
household budgets.
However, it was reported in June that Hungary’s GDP growth is
expected to slow from 3 percent in 2015 to 2.2 percent in 2016
due falling consumption and investments, according to a OECD
forecast. However, exports are expected to increase by 5.7 percent
in 2015 as well as 2016. The country’s current 4.8-percent account
surplus is also expected to increase to 5.1 percent, according to
the forecast. Meanwhile, the forint’s depreciation has become a
of National Bank of Greece, Alpha Bank,
Piraeus Bank and Eurobank control
around 22 percent of all banking assets.
Greek banks are also active and important
players in the Romanian, Albanian and
Serbian markets.
The wider fear is that a national default
would probably burn down the roof of
Europe‘s gradual economic recovery or
spark bank runs that European leaders
really don‘t need to deal with now.
With an irritated Russia to the East, and
high levels of youth unemployment
a permanent source of tension across
Europe, throwing Greece on the fire of
default could cause a conflagration.
Instead, if there were ever a time when
the EU needed some unity and wisdom,
this is it. smaller risk than in the past, due to a decline in foreign-currency
debts and a weakening euro.
EU EXTENDS RUSSIAN SANCTIONS
The European Union has agreed to extend the current
regime of economic sanctions against Russia, imposed
in protest of the country’s annexation of Crimea last
year. There had been concern in some circles that fears over a Greek
exit from the Eurozone would sap EU officials of the courage and unity
needed to continue the tough stance. There had even been fears that
the Greek prime minister would use his ability to veto the sanctions
as a trump card in his country’s fight for fiscal survival. However, the
sanctions now appear set to continue for another six months, after the
current batch expire at the end of July. Russian officials say the sanctions are having a minimal impact on its economy, claiming that the
price of oil and gas is of far greater concern. However, foreign investors
have largely frozen new activity as they wait to see what the outcome
of the stand off will be.
REGIONAL
Numbers
55
NUMBERS: QUALITY OF LIFE IN EUROPE
OVERALL LIFE SATISFACTION
HIGH (IN %)
LOW (IN %)
MEDIUM (IN %)
ON A SCALE FROM 1 TO 10
CZ
25.4
CZ
21.3
CZ
53.3
CZ
6.9
HU
37.4
HU
11.6
HU
51.0
HU
6.2
PL
19.9
PL
29.4
PL
50.7
PL
7.3
RO
15.9
RO
19.9
RO
64.2
RO
7.2
SK
26.4
SK
25.0
SK
48.6
SK
7.0
GB
19.1
GB
27.8
GB
53.2
GB
7.3
DE
19.2
DE
25.0
DE
55.8
DE
7.3
HOUSING SATISFACTION
HIGH (IN %)
LOW (IN %)
MEDIUM (IN %)
CZ
16.3
CZ
38.9
CZ
44.8
CZ
‘7.7
HU
26.9
HU
20.7
HU
52.5
HU
6.8
PL
21.3
PL
36.3
PL
42.4
PL
7.4
RO
14.5
RO
28.6
RO
56.9
RO
7.4
SK
18.5
SK
38.4
SK
43.1
SK
7.6
GB
12.4
GB
44.4
GB
43.1
GB
7.9
DE
17.9
DE
37.8
DE
44.2
DE
7.5
SATISFACTION WITH FINANCES
HIGH (IN %)
LOW (IN %)
MEDIUM (IN %)
CZ
41.0
CZ
12.3
CZ
46.7
CZ
6.0
HU
53.2
HU
6.4
HU
40.4
HU
5.2
PL
45.4
PL
13.0
PL
41.6
PL
5.7
RO
30.2
RO
8.0
RO
61.8
RO
6.2
SK
49.7
SK
10.3
SK
40.0
SK
5.5
GB
36.4
GB
18.5
GB
45.1
GB
6.2
DE
36.0
DE
18.7
DE
45.3
DE
6.3
SATISFACTION WITH LIVING ENVIRONMENT
HIGH (IN %)
LOW (IN %)
MEDIUM (IN %)
CZ
17.8
CZ
33.5
CZ
48.7
CZ
7.5
HU
31.7
HU
16.1
HU
52.2
HU
6.5
PL
18.2
PL
39.7
PL
42.0
PL
7.6
RO
14.6
RO
29.1
RO
56.3
RO
7.4
SK
28.3
SK
22.8
SK
48.9
SK
6.9
GB
11.3
GB
38.2
GB
50.6
GB
7.8
DE
15.9
DE
40.9
DE
43.1
DE
7.7.
56
REGIONAL
Sustainable development news and projects
Tryton Business House
Tryton Business House, a class A office building developed by Echo Investment in Gdańsk, earned a BREEAM
Interim certificate with a rating of “Excellent.” The building achieved a score of 73.2 percent. The office building, located near the historical Gdańsk shipyard, uses
a number of sustainable and energy-efficient solutions while integrating with city center development.
The certification process was carried out by Grontmij
Polska. Half of Echo Investment’s BREEAM-certified
schemes have achieved BREEAM Excellent status.
LIKO-NOE
Construction on LIKO-NOE, developed by LIKO S, took
just 27 days to complete. Built on the company’s own
premises from wood and featuring a double layer of
cladding, the project uses solar panels and roof thermal
energy collectors as well as heat pumps to heat and cool
the building. The building also employs a large retention
lake which collects water for use all over the LIKO-S complex. The company, which builds industrial buildings for
its clients, will use the facility for its own product development activities and as a showroom for a new type of
product.
ČESKÁ SPOŘITELNA
FINANCING ENERGY
SAVINGS
Česká spořitelna revealed
it’s granted CZK 1.4bn in loans to finance
energy-saving projects in residential buildings. Once these projects are completed,
the bank will pay out a European subsidy
of 10 percent of the loan to a maximum of
CZK 2.5m per project.
Avia
Avia, an office building by Immofinanz and GD&K in Kraków, was awarded a LEED Core and
Shell Gold certificate by the US Green Building Council. It’s one of the first buildings in the city to
be awarded with this certificate. The project’s strong points include good public transit connections, the promotion of low-emission buildings and water consumption that is 46 percent less
than considered standard for office buildings. A significant proportion of its energy comes from
renewable sources, while the materials used for construction were purchased and made locally.
“Clients will certainly also appreciate that
we finance up to 100 percent of the costs
of their projects and that consequently
they do not need to put down any money
of their own,” says Milan Hašek, director of
the Česká spořitelna’s municipal financing
division. Česká spořitelna set up the “Savings in Residential Buildings” program in
cooperation with the German development bank KFW in 2013, with the most
recent round of subsidy payments made
in April.
Under the program, housing cooperatives
and condominiums can apply for investment loans to renovate and upgrade their
residential buildings, with costs running
between CZK 1m and CZK 25m. The loan
repayment term is for 10, 15 or 20 years.
Česká spořitelna provides these loans to
condominiums without collateral and to
housing cooperatives collateralized by a
blank bill of exchange.
TRYTON BUSINESS
HOUSE EARNS BREEAM
Sadyba Best Mall
The 23,000 sqm Sadyba Best Mall secured BREEAM In-Use International “Very Good” certification for asset and building management, thanks to its environmental policy that takes into account how materials are procured, setting goals for lower energy usage in the building, detailed
building metering and monitoring in the BMS system and regular technical due diligence.
Tryton Business House, an
A-class office building developed by Echo Investment in Gdańsk, has
earned a BREEAM Interim certificate with a
rating of ‘Excellent’. The building achieved
the score of 73.2 percent. The office building, which is carried out in Gdańsk, has fully
utilized the certification potential by combining composition and material elements
with sustainable and energy efficient solutions while integrating with city centre development and the proximity of the historical Gdańsk Shipyard.
Martin Prokes (Karimpol), Grzegorz Boczek (JLL) and Alan Colquhoun (DTZ)
Harald Jeschek (Karimpol Polska)
Andrzej Lany (Karimpol Polska), Katarzyna Jasińska (WIREP) and Beata Latoszek (Deutsche Hypothekenbank)
Marek Krajewski, Zuzanna Kowalczyk (JLL), Beata Szymańska and Zbigniew Pastor (Karimpol Polska)
Poland
June
11
Sep.
10
Oct.
15
Hungary
Oct.
8
Robert Fletcher (RPMG), Martin Prokes (Karimpol) and Philip Jones (Pinnacle)
REGIONAL
DBH
59
DBH is a popular monthly meeting that brings together property professionals and business leaders to network and socialize. The
event is now held in six countries: the Czech Republic, Hungary, Poland, Romania, UK and the USA. 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 2015 DBH calendar
for all countries, please visit our website dbh.cijjournal.com
P3 team
Cora Stolz (P3)
Daniel Cautis (Colliers), Roxana Schintee (P3), Stefania Baldovinescu (Colliers)
Monalisa Carbunaru (RPMG), Andreas Laspadakis (ETEM Systems)
Ksenija Bezrodna, Simona Macovei (P3)
Romania
March
26
April
9
May
21
June
17
Raluca Dorobantu (Chairry Furniture), Cora Stolz (P3), Claudia Stanciu (TPA Horwath), Horia Sontelecan (P3), Cristina Petrescu (TPA Horwath)
60
REGIONAL
Events
FORUM GDAŃSK
Multi Poland kicked off construction of Forum Gdańsk shopping center with a ground-breaking ceremony, to which it attracted a number
of top city officials, along with partners in the project and future tenants in the mall. The 63,000 sqm center represents a total investment of
€194m, including needed infrastructure work. A grand opening is scheduled for 2017.
CUSHMAN & WAKEFIELD POLAND
The Polish Cushman & Wakefield team had a
successful team building day in the Klub Sosnowy leisure park in Warsaw. Nine groups competed for a trophy and champagne in a series of
activities that included wall climbing, archery,
bull riding, puzzles, mazes and segway riding.
The day ended with a volleyball tournament
and an all-night dance party.
CHARITY SOFTBALL
Palmer Capital sponsored the third annual charity Softball Tournament which
was organized in Prague together with
Czech chapter of the RICS. Companies
from Palmer Capital, Capexus with DTZ,
CBRE, Colliers International, Cushman &
Wakefield, JLL, Knight Frank, Svoboda
& Williams, RICS and the International
School of Prague all sent teams. The event
raised CZK 154,000, most of which will go
to Domov Sedlec, a facility that support
people with mental and combined disorders.
Events
REGIONAL
61
PROLOGIS PRAGUE COCKTAIL PARTY
Prologis hosted its fifth annual summer cocktail party on 18th June, at Prague’s U Prince restaurant in Old Town. It took place from a beautiful
rooftop with a view over historic Prague, with over 100 guests, including Prologis’ business partners from the real estate, logistics, transport,
and banking industries.
Patrik Janščo, Branislav Jendek (CBRE), Karolina Gorgiel, Marta Tęsiorowska (Prologis),
Tomáš Ostatník (CBRE), Filip Kozák (DHL Supply Chain CEE)
Ben Bannatyne, MD and regional head (Prologis), Martin
Poland, country manger Czech Rep and Slovakia (Prologis)
P3 WELCOMES TENANTS IN ROMANIA
In January 2015, P3 Logistic Parks made its first
major investment in Romania with the acquisition
of a 215,000 sqm logistics park on the outskirts of
Bucharest, with 40 hectares of land for build-tosuit development. P3 held a welcoming event
called “Park in the Park” for its 17 new tenants and
real estate industry partners at the P3 Bucharest
park on June 10th.
MITZI LINKA
The action has finally started on
big buys this year on all sorts
of levels, with tons of property
deals going through, bad debt
getting worked out and mergers
going through as well, and the
results are sometimes comic.
HELLOHEllohelloo in Poland has
been gobbled up by some winged
creature, though he’s still trying
to swallo. Meaty Zed may have
bought out their rivals, but it spells
the swan song of a storied brand.
As we tick down the list of who is
likely to be at the company long-term, we‘ve come up with at least
one bang on certain casualty. You
really need to pick your enemies
wisely is all we can say. Otherwise,
it appears that the king of regional
malls and liquidation is making
the jump to the big time with
Prague‘s horse market, and if you
don‘t know where that is, read ‚yer
history. There are projects that
have been rotting while the edge
of realization for over a decade,
so you ask yourself why. If you
live in a swankier district of
town on the way to the airport,
and you help promote one of the
networks, well maybe it‘s because
you keep blocking the permits.
Guy Barker
Palmer Capital Investments
Guy Barker is the Managing Director of Palmer Capital Investments, a property
fund and asset manager with €300m of assets under management across CEE.
Barker entered the real estate sector in 1985 after a four-year stint in the British
Army by joining Knight Frank and Rutley. He was dispatched to Dusseldorf
in 1992 to establish Knight Frank‘s operations in Germany and spent six years
managing it. He joined HypoVereinsbank in 1998, moving to Munich to become
head of real estate asset management and building a team of 25. He oversaw
the launch of eight real estate funds during this time, including some
on the CEE market. That unit eventually merged in a JV
with Invesco Real Estate, with Barker being made
CEO of Invesco Real Estate Europe in 2005.
Two years later, he left the company and
together with three ex-Invesco colleagues,
established Palmer Capital Investments
GmbH. Today, the company employs a staff
of 35 in six offices across Europe, managing
nine funds for institutional and private
investors.
CAREER HIGHLIGHTS
· Hired by Knight Frank in London in 1985
· Established Knight Frank’s German operatios in 1992
· Joined HypoVereinsbank as Head of Real Estate Asset Management in 1998
· Made CEO of Invesco Real Estate Europe
in 2005
· Established Palmer Capital Investments in 2007 with three colleagues
TOP 9 DIGITAL MOST READ JUNE 2015
compiled from encompassme.com, CIJ social media & web pages
1. CBRE: České privátní investiční skupiny posilují
4. Invesco prodává Varyádu
v Karlových Varech
7. Na Blanku naváže tunel za
10 miliard v Holešovičkách
by CIJ Czech Republic
By CIJ Czech Republic
Počet českých realitních investičních skupin
podle CBRE rychle roste. Na trhu momentálně působí zhruba 50 uskupení. Zaměřují se
na investice do kancelářských a maloobchodních projektů s dlouhodobými nájemními
smlouvami a ročními výnosy mezi 5 a 6 procenty. Zatímco u administrativních budov je
podmínkou pražská adresa, retail je atraktivní
i v regionech.
Dvě významné nájemní transakce by se měly
podle zdrojů z pražského realitního trhu uzavřít na dvou konkurenčních projektech v Praze
5 – na Metronomu developera HB Reavis v
Nových Butovicích a na Aviatice, kterou Penta Investments vybudovala v Jinonicích. Oba
projekty byly postavené spekulativně. Penta
uzavřela první významnou nájemní transakci na Aviatice s 27.000 metry čtverečními
kanceláří se softwarovou firmou Oracle.
Zprovoznění tunelu Blanka zhorší dopravní
situaci v ulici V Holešovičkách v Praze 8, která
je již dnes dopravně přetížená. Vedení Prahy 8
se proto rozhodlo podpořit výstavbu kilometrového tunelu, který by měl dopravě ulehčit.
Realizace zahloubení ulice V Holešovičkách
bude ale během na dlouhou trať.
2. Baumax odejde
z českého trhu
5. Oracle a SAP se přestěhují
3. Crestyl vyhrál soutěž o
Savarin, transakce není zatím
uzavřena
Developer Crestyl údajně zvítězil v soutěži na koupi Savarinu, rozlehlého projektu u Václavského
náměstí, který irský developer Ballymore připravoval několik let. Ballymore zprávu nepotvrdil, spolehlivé zdroje blízké transakci nicméně
tvrdí, že obchod ještě nebyl dokončen. Cena se
odhaduje na dvě miliardy korun. Podle dřívějších
zpráv byl hlavním kandidátem na vítěze developer AFI Europe, ten ale uvedl, že tendr nevyhrál. Na
nucený prodej dohlíží irská státní agentura NAMA. 8. Magistrát zrušil PPF
územní rozhodnutí na
Ledního medvěda
Irský ministr pro Podporu podnikání a zaměstnanost, Ged Nash, navštívil v rámci oficiální návštěvy České republiky development
Waltrovka v pražských Jinonicích Penta
Investments dokončuje v současné době v
areálu bývalé továrny Waltrovka první fáze
budoucí městské čtvrti: administrativní budovu Aviatica, která nabídne 30,000 metrů
čtverečních nových kancelářských prostor.
Pražský magistrát zrušil územní rozhodnutí na
projekt přezdívaný Lední medvěd, kancelářskou
budovu, kterou PPF Real Estate plánuje postavit
na Vítězném náměstí v Praze 6 Dejvicích. Městský stavební úřad požaduje, aby investor projekt
změnil, a odvolává se na rozhodnutí soudu, který
zrušil úpravu územního plánu týkající se velikosti budovy. Poukazuje také na výrok ministerstva
kultury z minulého roku, že budova takových
rozměrů je pro danou lokalitu nepřípustná.
6. KKCG zahajuje stavbu top’ rezidence
9. Ważny krok na drodze do
realizacji Galerii Echo Katowice
By CIJ Poland
KKCG Real Estate slavnostně poklepali na
základní kámen projektu top’ rezidence
v Šáreckém údolí v Praze 6. Komplex po
dokončení v roce 2017 nabídne celkem 50
nízkoenergetických rodinných domů. Architekti Jaroslav Šafer a Oldřich Hájek projekt
navrhli s důrazem na společný prostor, který
bude tvořit klubovna postavená kolem původního továrního komína v centru areálu a park.
29 maja na sesji katowickiej rady miasta podjęto uchwałę w sprawie nowego planu zagospodarowania przestrzennego dla obszaru
Subcentrum Południe, w części obejmującej
obszar skrzyżowania ulic Kościuszki i Kolejowej. To właśnie tam spółka Echo Investment
planuje realizację centrum handlowego. By CIJ Czech Republic
In a deal worth €160m, Von der Heyden Group
signed a construction agreement with PORR AG
to build for the Blue Tower and the White Tower
in its Bavaria Towers project in Munich. Construction is expected to break ground June 15 and take
38 months to complete. Federation Partner
16-17 September 2015
Slovanský dum
Prague
Property Developments Central
Meeting this September
General Partner
Partners
Associate Partners
Participating Partners
Federation Partners
For more information visit our website at cedem.cijjournal.com
Gala Party
Partner
Organizer
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Partner

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