City in Focus - Bailystok
Fit for a king: The reconstructed 18th century Branicki Palace survived many invaders until the Nazis destroyed it in World War II. It now houses a medical school.
Bialystok is perhaps one of the most eco-friendly cities in Poland. Tucked away in the far northeast, only 55 kilometers from Belarus, it's the regional capital of the Podlaskie Province, dubbed the "green lungs" of the country.
The province boasts a host of natural features including three national parks: Biebrzanski, Narwianski and Bialowieski, and landscaped parks such as Knyszynski and Nadbuzanski. Some 32% of the region is forested and home to rare fauna such as bison, elk, deer, wild boar, lynx and wolves. Not surprisingly, given the surrounding environment, Bialystok is the center of special environmental programs.
Agrotourism has become an important branch of tourism in the region. As a result, Deputy Mayor Marek Kozlowski said ecology has led to the creation of fresh employment opportunities in agrotourism and eco- farming. "We have an eye on the environment," he said.
With more than 285,000 people, Bialystok is not an old city by Polish standards, and first gained municipal status at the close of the 17th century. The city owes its name to the nearby Biala river and from the beginning has been a crossroads of various cultures and religions. Today, the international Berlin-Warsaw-St. Petersburg-Moscow railway still runs through Bialystok.
Taking stock of the flock: A statue of Jesus looks onto Bialystok - a region where Orthodox christians make up a large portion of the population.
As a borderland province, Podlaskie is home to the largest Orthodox Christian population (300,000) in the country. As a result, religious differences among Bialystok residents often cloud local decision making, especially during elections. "Minority issues are a very subtle thing to tackle," Kozlowski said.
Along with the environment, Bialystok is renowned as a center for education with about 39,000 students attending 15 academies, a university, a polytechnical institute, a medical school and several business schools.
But despite an abundance of well-qualified workers, the jobless figure in Bialystok is high, as 13% of city residents are unemployed and 15% of the province's 1.2 million are without work. The Podlaskie Province was hit by a double whammy in recent years with the Russian crisis of 1998 and the introduction of tourist visas by the government, which restricted border trade. "Unemployment is one of the major problems we have to contend with," Kozlowski said, adding that labor costs are lower in the region making it a viable center for developing trade relations with neighboring countries.
After the fall of communism, free trade flourished with Belarus and Lithuania. "We had a boom in trade and everyone profited," said Henryk Szczygiel, the president of Hema, a Bialystok real estate agency.
"Exchanging goods, like clothes, with neighboring countries was no longer worthwhile," he said. Through 1999 and 2000 entrepreneurs trading in clothes, household appliances and other goods tried to restore former business connections, but he admitted it would take a long time to rebuild trade.
As a center for investment, Bialystok has suffered from the crises of the late 1990s. "Despite the potential, we are at a different stage of development compared to other Polish cities of the same size," Kozlowski said. He added that until the 1970s, Bialystok was more like a colonial town, close to the eastern border and far less developed than the rest of the country.
Up until liberalization in 1990, the city and province was well known for its textile industry, which formed the basis of the local economy. After Lodz, it was the second center of clothing production in Poland. A handful of plants are still operating today, but few are doing well.
The local Biruna plant in Bialystok produces woolen goods, upholstery materials and fur. Other local textile companies include Agnella, which makes carpets; Polped and Maria Bland, which produce clothes; and Pasmanta, a manufacturer of haberdashery goods.
Nevertheless, the future is far from secure for many of these firms. "More and more layoffs, that's all I hear about in the textile industry in Bialystok," said Przemyslaw Kurszewski, spokesman for Dojlidy brewery, based in the city.
Szczygiel agreed that the textile industry is in terminal decline. "It's not even half of what it used to be," he said.
But despite the uncertain fate of local textiles, Bialystok has a healthy food-processing industry. Przedsiebiorstwo Przemyslu Miesnego (PMB) supplies meat across the country. Other successful firms include frozen-food producer Agros Bialystok, and Mitex, a dairy. Local brew: Dojlidy beer one of the few businesses attracting foreign investment. The largest of the Polmos distilleries is based in Bialystok and last year recorded revenue of zl. 1.2 billion ($272 million). Dojlidy produces about 600,000 hectoliters of beer annually. German investor Binding Brauerei Frankfurt invested zl. 180 million ($44 million) in Dojlidy in 1997-1998 and now holds a 49% stake in the company. "We meet all the European standards in terms of production technology," said Dojlidy's Przemyslaw Kurszewski.
Many domestic and international firms have also sought to use the city as a springboard to the East. "Many companies treat (Bialystok) as a base for further expansion," Szczygiel said. Bialystok is developing healthy industries in electronics engineering and furniture production, which have attracted foreign investment.
The local Bison-Bial is majority owned by Warsaw-based Metalexport, which controls 80% of the market for specialized steel products. The local Biawar, with Sweden's Nibe Industries as strategic investor, produces industrial water heaters. The Netherlands' Philips Domestic Appliances and Personal Care and Schuttersveld Holding have signed a contract with the local Biazet to assemble household appliances in the city. The Dutch giant also produces plastic parts in Bialystok.
Since 1995, Scandinavian companies have come to Bialystok looking for investment opportunities. Local packaging firm Pakpol is owned by Norway's Akerlund & Rausing. Orkla Media Newspapers, also from Norway, has a 98% stake in local newspaper Kurier and a 50% share in dailies Poranny and Gazeta Wspolczesna. It has also built a modern printing house in the city.
The U.K.'s BP, Norway's Statoil and the Anglo-Dutch company Shell also have outlets in and around Bialystok.
Shock of the new: New apartments built during Bialystoks temporary housing boom in the late 1990s.
Residential
For the past couple of years, construction of housing estates has been on the rise in Bialystok. But the pace has slowed recently as people's earnings have not kept up with the number of homes for sale. About 2,800 flats were completed last year while the number of new apartments built was 350 per 1,000 inhabitants. For 2001, only 1,900 apartments are under construction.
"We experienced quite a demand in the past four years but now it's cooled down," said Boguslaw Debski, the deputy mayor responsible for investments and property issues. According to Szczygiel, the market has now evened out with much of the old stock gone. "When it comes to apartments, it's about 30% oversupplied," he said.
However, Bialystok is the headquarters for several large construction and development companies. Local firm Wersal Podlaski has built more than 2,350 apartments in Bialystok and has several projects in Warsaw, including residential complexes on ulica Wawozowa, Cynamonowa and Belgradzka. Another big firm with Bialystok roots that specializes in developing residential and office buildings is Budimex Nieruchomosci, previously called Unibud Development. After being taken over by Warsaw general contractor Budimex, Budimex Nieruchomosci will soon be based in Warsaw, but it remains a key player in Bialystok with projects such as the Kameralne housing project on ulica Zachodnia or the Lesna Polana housing project.
The cost to buy an apartment in the city ranges from zl. 1,600-zl. 2,400 per square meter. According to Szczygiel, the residential sector is relatively stable. Its development is held up by high interest rates for loans, high unemployment and the low purchasing power of Bialystok residents.
Retail
Bialystok is significantly behind other provincial cities in terms of retail. The first hypermarket was opened in 1998 by German wholesale chain Makro Cash and Carry, which invested zl. 80 million ($19.5 million) for the 12,000 square-meter outlet. France's Auchan opened an 8,000 square-meter hypermarket in December. "We would like to see more of this kind of investment because of the jobs they provide," Debski said.
Other operators have bought land in and around Bialystok. GBS Polska, representing Germany's Metro, bought seven hectares in the city to develop a shopping center that would include retailers Adler, Praktiker and Real. France's Carrefour, L.Eclerc and Gemini are currently looking at the city. Nevertheless, doubts remain whether Bialystok will be a good retail investment destination. "The purchase of land doesn't mean they will build an outlet," Szczygiel said.
Office
The city has few modern office buildings. Most financial institutions, legal firms, health clinics and construction companies are housed in refurbished offices dating back to the 1970s. Entire complexes, formerly occupied by state-owned companies that have since gone bankrupt, are now for sale. "A company can buy decent office space for zl. 7,000 per square meter," Szczygiel said. For rentals, he said it's difficult to find clients willing to pay zl. 15 per square meter.
"The situation with office space is not great at the moment, especially with only a few modern office buildings developed by Wersal Podlaski and Unibud," he said. According to Szczygiel, there's no demand for office space in Bialystok as few companies are based in the city.
