Real estate Lokale Immobilia
12:24 6 March 2023
Post by: WBJ

Match-makers - Fitting in 23 years of experience in the Polish/CEE market

WBJ catches up with the Managing Directors of Neo-Świat Paweł Brodzik and Rajmund Węgrzynek to discuss the current real estate market outlook and what makes Neo-Świat stand out from the pack.

Match-makers - Fitting in 23 years of experience in the Polish/CEE market

Interview by Morten Lindholm

WBJ: Let's start by getting to know you – tell us about the history of Neo-Świat.

We started the company 23 years ago when we came here from Australia. We had a business in a similar industry there already, but we realized Poland offered massive potential for what we do best, so we decided to stay.

More than 20 years ago, workers on building sites did not take pride in their work. So when we began hiring people, we took the obvious approach, starting with training and a focus on building team spirit to help them feel pride and esteem in their work.

We have built our company on certain specific values, such as trust, respect for people, creative energy, and a positive approach for which nothing is impossible. We want to do things because we do them for and with our friends, our families, employees, and customers.

We run our company as a family business based on these fundamental values. Even when part of the company, including us as management, was purchased by JLL/Tetris, we continued this approach within the larger “corporate” organization. We worked in the corporate world for 6-7 years and created a very successful business within JLL and Tetris. Honestly,  we think it was recognized as number one in Poland in our industry, but in the end, the differences in our values were too significant, so now we are back as Neo-Świat.

We find that flexibility and agility in business is extremely important. We still manage our own team in Neo-Świat. That brings immense value because flexibility in carrying out work is crucial when you fit-out complex projects, especially within an office, which is a place of business. You are working within a living organism. How much can you do at night? Can you work weekends or during public holidays? Obviously, the flexibility element is enormously important – it is a must in the fit-out industry.

Did Neo-Świat also exist while you were part of JLL?

When we decided to join Tetris, we only sold off part of the Neo-Świat business. The workers doing the on-tools work, connecting the cables, fitting the corners, and painting the walls remained part of the original Neo-Świat. But, of course, they were exclusively under contract to Tetris. So honestly, Neo-Świat has existed before, during, and now after Tetris. 

When we parted ways in October last year, we sat down here with the 30 or so key people who came with us, and we asked them a simple question: “Are you serious about getting the business back on track?” They all said: “Yes, let's go for it.”

We are nothing without our people. We always say that this business is a relationship business, which is true for 80% of the customers who come to us through our network and contacts. But it is the same internally – our people are the company's primary asset. We know we can trust [them to hold up their end of the business.] Our job is to make ends meet; we are responsible for coming up with solutions. We are the ones sitting down with the owners, the developers, and the tenants. When we promise the best course of action and the right solutions, we must have complete confidence in our contractors, partners, and employees. Therefore, people and contractors – trust and relationships – are what we stand for.

So now we are again 100% devoted to Neo-Świat, together with the 120+ people who work for us.

Can you define your new challenges and goals?

Our job consists of interior decoration and fit-out, and this includes the interior of any space. So whether it's an office, retail, residential, or hotel project, we do all the installation systems all the finishes and joinery. So we call ourselves "A general interior contractor." 

Contacting clients since our return to Neo-Świat, has brought an amazing response—it has not been whether we can do business for them, but rather about how much business can we do for them. This enthusiasm highlights our point about the importance of relationships in this business. Our company is built on strong personal relationships. People want to do business with you when there is trust, reliability, and care.

Rajmund [Węgrzynek] has done a huge job on keeping the market up to date with the changes that are taking place around us. He hasn’t stopped for a moment, talking to our contacts for the last three months, explaining the news, what has changed, and how we are still here for them and have never ceased existing.

We believe that there are significant opportunities out there for us. Without getting into details and figures, the real estate industry is in a difficult situation, and everyone is looking to reduce costs  even by 10 - 20% for interior fit-out. In this crazy world, the clue is to be always positive – a definite opportunity for us, as we are no longer a corporate company and carry less overhead, is that now we can offer our clients a more attractive (cheaper) offer than before.

What about opportunities in Poland and the CEE?

A good aspect of spending the last six years as part of Tetris is that it was a huge learning curve for us. We developed a lot of contacts and networks in the CEE during this time. We now see this as an opportunity – because we have a great deal of knowledge about these quite different markets.

We were responsible for the CEE market and part of Germany which gave us significant insight into the external markets around Poland. We have learned about opportunities, problems, people's mentality, what the markets can or cannot handle, etc. Today, for example, when we are speaking with a client about a nice residential project in Budapest, we are suddenly recognized as experts there. So, yes, there is an opportunity. 

If you are (and we are) quite well connected with a huge network of contractors here in Poland, then finding somebody from the south of Poland to manage a project in Budapest is not a problem, it's less than 500 km away.

There is another sad situation, but also an unknown for the future. Nobody knows what will happen with Ukraine, but we strongly believe that this country will win. After the war it will require a lot of support and rebuilding. However, we have Ukrainian-speaking staff, the experience needed in rebuilding (since the Polish market was in a rebuilding phase back in the 1990s), and the benefit of being located quite close to Ukraine.

What is the future of your market? What possibilities do you see?

Over the last 3-4 years, we have seen an enormous shortage of labor and in generał the labour force is getting older. Naturally, companies like ours must look for ways to attract and train young and motivated people—not just the management side of the business but also the blue-collar workers. Furthermore, the fit-out industry must focus on technology and ways to reduce tedious on-site work, such improvements must increase the flexibility and efficiency of the fit-out process. Many buildings are getting older and will require adjusting to be compliant with current regulations and expectations. Considerable investment will be required to make this happen, for example, to  follow or become aligned with the ESG regulations and sustainability practices.

So, even though the market has temporarily paused, demand will grow (and then so will the prices). Opportunities are still out there. Perhaps it could be more obvious, but, for example, [aging] shopping centers are destined to be rebuilt or converted into mixed-use properties. They don't have any other option to survive, and it has already slowly started. There are hundreds of these types of assets currently in Poland. 

New investors are coming in, as the market is adjusting, so we are sure opportunities will grow. We are curious about the future of the office sector. It has yet to be determined what will happen with the hybrid work model and how many square meters companies will need to match their needs in the future. However, we will know this when Warsaw starts to be in low supply.

If we look back five years ago, 2018 was when the highest amount of stock was released on the market. Now the lease agreements signed then are coming up for re-negotiation. Tenants are facing quite different choices now, versus five years ago. What they choose and how they adapt their new offices for the next five years will be different. It will definitely be an opportunity for companies doing interior fit-out to provide these new solutions.

From your press release, I saw you are active in many sectors. Which ones are you most focused on? 

Office, retail, residential, and hotels are the four pillars of what we do. But, we are closely following changes [that the future may bring] regarding the industrial part of the market as a potential business line.

Looking at our pipeline, residential and hotel are the most significant drivers , and when I say residential, I mean the private rental sector (PRS), so it's not individual residential. This sector is undergoing a huge boom now. Residential with hotels is, I think, now 60-65% of the business. On top of this we also have quite a sizable retail project at the moment, which will probably take about 18 months to complete, and that will likely bring in around 20% of the revenue and the remaining 20-25% is going to be office related.

Do you have any final words?

We are still committed to doing what we do best because we know that the market expects nothing less. 

The market must know that we are still the same. We were Rajmund and Pawel when we joined Tetris – we are still Rajmund and Pawel now that we are Neo- Świat again. We bring the same great values and positive energy to the market.  We build strong relationships, have skills and experience and have great people who are truly the key to our success in this market.  

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