Building reputations

With the Central Statistical Office (GUS) appraising the total 2006 revenues of the Polish construction industry at over zł.98 billion (counting only companies with more than nine employees), and PMR Publications estimating the value of the industry at over zł.41 billion for the first three quarters of 2007, multinational giants have their eyes on the booming sector. And occupying a number of the top spots in the Polish industry are Austria's largest construction firms.

A strategic cornerstone

"Poland is a cornerstone in Immoeast's overall investment strategy," Karl Petrikovics, CEO of Austrian Immoeast, told WBJ. "It makes up 12.4 percent, or EUR 1.34 (zł.4.86) billion fair value, of our total property portfolio, which is worth EUR 10.85 (zł.39.34) billion," he said.

Nicole Ziegler, a spokesperson for Strabag, which claims to be the third-largest construction firm in Poland in terms of revenue, said, "Macroeconomic indicators show that the Polish economy is constantly growing. A high rise in the level of investment in the economy has been observed. Poland's economic figures show that many of the positive EU effects are acting once more."

She explained that a significant acceleration of economic growth was observed as a result of increased industrial production, sales and consumption demand. Larger inflows of EU funds were also absorbed and used to finance projects.

Ziegler told WBJ that Strabag's construction output in Poland grew by 27 percent to some EUR 700 (zł.2,538) million in 2007. She said, "Thanks to the consistent expansion of [its] countrywide presence in the road construction and building construction/civil engineering segments, Strabag has been able to further increase its market share in this important strategic market."

A consortium in which Strabag holds a 27-percent stake last week won a R490 (zł.1,781) million tender to build a highway. Work is scheduled to begin in March and last more than two years.

Riding the boom

While firms like Strabag have focused on infrastructure projects that have the benefit of EU backing, Immoeast is trying to capitalize on Poland's booming property market to boost its construction portfolio.

"At the moment we are working on several large-scale development projects, primarily in the fields of office property in Warsaw and residential schemes in regional cities," said Petrikovics. He added, "Our first large development, IO-1 in Mokotów, was recently finished and we have now more than 90 percent of the space let. The largest projects in Warsaw are the Equator office building in the Jerozolimskie Corridor, where construction work is under way for the first building stage with more than 25,000 sqm total useable space and the Rondo, a first-class office building in the center with around 20.000 sqm of useable space."

But Petrikovics noted that the boom wasn't restricted to the Warsaw region. "Equally promising are our residential projects Dębowe Tarasy in Katowice - where we are building 1,000 freehold flats ... and where we will achieve 35 percent yield - and Vertano Residence in Łódź."

"The rising rents in Warsaw, especially in the office market, underline that the Polish market has a remarkable upside potential," claimed Petrikovics. "Compared to other Central European markets, Poland is especially appealing due to its sheer size, the rising rental levels and finally rising international confidence in the country after the previous general elections, which will spark international investments, too. Together, this makes Poland an attractive market and we will definitely continue to invest here."

Strabag's Ziegler expressed similar confidence in the market. "Due to the new government, a more efficient work flow is expected, which means projects can be finished in a shorter time," she said.