ING Real Estate to move into Silesia
ING Real Estate has signed a letter of intent to develop several multi-million dollar projects in three Silesian cities, the Dutch developer said last week.
The size of the investment, however, has yet to be determined due to continuing ownership disputes.
"We have to settle agreements with private landowners," said Jan van Hensbergen, general director of ING Real Estate in Poland. Van Hensbergen hopes to obtain building permits in the second half of the year.
Czestochowa is the first site where ING is looking to invest. According to van Hensbergen, the city has a good retail sector and a strong economy. Initial plans are for a 30,000 square-meter development worth $44 million. The new developments will include office space, retail, restaurants and an entertainment complex with a multiplex cinema. "It all depends on how much land we get and the solution we choose," van Hensbergen said.
ING also intends to invest in similar developments in Katowice and Zabrze worth $20 million and $55 million respectively. The sites are near the cities' railway stations. "They (ING Real Estate) have perfect locations," said Grzegorz Pekalski, the commercial director of Cefic, a French developer with retail projects around Poland.
The company admits that investing in Silesia is a risk. But with more than 4 million Silesians earning higher than average incomes and low unemployment, Van Hensbergen is optimistic. "Pre-investment studies show the potential," he said. But Pekalski said Silesia could be a tough investment location. "Silesia is a risky region," he said.
In 1998 ING built Holland Park, a 15,000 square-meter grade-A office building on Plac Trzech Krzyzy in Warsaw. The company's next development is Holland Park Apartamenty, a luxurious 82-apartment residential complex.
The biggest venture so far for ING Real Estate will be Zlote Tarasy in Warsaw, which should start in the second half of this year. The developer, in cooperation with city authorities, plans to invest zl. 1 billion ($217.4 million) in a 205,000 square-meter center with office and retail space, restaurants, a multiplex cinema and parking.
Battle for movie goers continues
I.T. Poland Cinemas, an operator of Cinema City theaters, opened its second multiplex cinema in Warsaw's Bemowo district last month. The 11-screen movie theater cost zl. 61.3 million ($14 million). "Bemowo was a movie desert," said Piotr Olak, manager of Cinema City. According to Artur Nowakowski, general director of Belgian multiplex operator Kinepolis, the city's Wola district is ripe for investment as it has no entertainment facilities.
I.T. Poland Cinemas is owned by Israel's I.T. International Theatres, which plans to invest about zl. 650 million ($141.3 million) in 10-15 outlets with 250 screens during the next five years in major Polish cities. The upcoming project is to be completed next year in Krakow, with an IMAX theater.
According to industry analysts, developments of multi-screen complexes are approaching saturation level around Poland, especially in Warsaw. So far, the capital has seven multiplexes. "Nobody with common sense would open another big movie theater in Warsaw," Olak of Cinema City said. He said the average number of visitors fell last year as only 18 million Poles went to the movies. But Nowakowski is more optimistic, saying there is still room for more cinemas. He plans to open an outlet on Warsaw's Aleje Jerozolimskie in 2002, after Kinepolis' Megaplex in Wroclaw opens later this year.
New office building in Poznan
Poznanska Grupa Kapitalowa (PGK) plans to develop a 10,000 square-meter office building on ulica Marcelinska in Poznan. The building will be located next to the 8,000 square-meter PGK Centrum, which is 85% occupied.
According to Michal Melaniuk, representing Golub Polska, construction should start in March 2001 and take 18 months to complete. The zl. 40 million ($8.7 million) development will have 15 stories, with three below ground. "Hopefully, we'll be able to market it well, like the first one (PGK Centrum)," Melaniuk said. Rents in the existing building are $22 per square meter.
Market predictions in Poznan are good, according to Dorota Gilewicz of real estate consulting firm Knight Frank Nieruchomosci. "The market will pick up by the end of the year," she said.
With the increasing supply of office space in the city and projects under construction, rents for the second PGK development are likely to fall to $20 a square meter. "We are flexible with rents," Melaniuk said. Buildings like the recently completed Poznan Financial Center, with 14,500 square meters of office space, have prime rents of $26-$28 a square meter, but in the next two to three years more than 50,000 square meters of grade A and B+ office space will come on line. "Rents will definitely fall," Gilewicz said. According to annual research conducted by Knight Frank, Poznan can soak up as much as 76,000 square meters of modern office space.
