Prokom Investment to start Wilanow project next year
Prokom Investment announced this month that it would start development of residential and retail projects in Warsaw's Wilanow district next year.
Prokom Investment, a subsidiary of Gdynia-based Prokom, owns 169 hectares of land across the street from Warsaw's prime tourist attraction: Wilanow palace. Next year, the company plans to start developing the area, which is still a field, according to Tomasz Klimarczyk, assistant to Prokom's president and in charge of the project.
The local authorities of Gmina Wilanow have worked on the development plan of the 480-hectare area since 1996. However, the property lacks infrastructure and a gmina spatial plan, which must be in place before Prokom can obtain a construction permit.
The issue has also put on hold a project by the Catholic Church to erect a shrine in the area.
Prokom hopes that local authority plans will be ready by mid-2001. "We plan to start construction next summer," Klimarczyk said.
Although the company won't act as a developer, Prokom plans to sell its property holdings to other developers, he said.
To boost the value of the property, the IT company plans to invest as much as zl. 150 million ($33 million) in 10 years to build roads and other infrastructure in the area.
The company already has an option to sell 10 hectares of land to local developer IDM, a company formerly owned by Canada's TrizecHahn. IDM plans to develop a shopping and entertainment center on the site, which is planned for completion by 2005, Klimarczyk said.
Also next year, Prokom plans to start building a residential project over eight hectares of land in cooperation with several Israeli partners.
Klimarczyk wouldn't reveal names, but the Israeli press reported that three real estate firms, Olimpia Real Estate Holdings, Ben Yakar Gat, and Rubanenko are looking to set up projects with Prokom.
Prokom said that together with the Israeli companies it would invest as much as $120 million to build 1,600-2,000 apartments, planned for completion in 2004.
Israel's press said the three Israeli real estate firms have options to acquire land from Prokom to build 4,000 apartments for $400 million, but Klimarczyk declined to comment on this.
He said that investment to develop the entire 169 hectares of Prokom-owned land would run to $1 billion and take about 10 years to finish.
Nordic Park opens
after years of delay
Nordic Park, the seven-story office building in Warsaw's Powisle district, has finally opened after years of delays caused by financial problems.
The project, which has 7,400 square meters of space for rent, was first slated for completion in 1997. But the development was put on hold when Norwegian developer Pol Nordic Group failed to raise enough financing to complete the job.
"A couple of years ago the initial investor did not calculate the costs properly and faced enormous difficulties," said a property source who wished to remain anonymous.
The completion of the building built on a 4,000 square-meter lot became possible when U.S.-based Equity-Global Properties bought Pol Nordic last year for an undisclosed price.
Property sources said that even with new investors, the building has had to struggle with its dubious reputation.
To date, new tenants include Szmidt & Szmidt, an interior designer and importer of expensive furniture, which took 1,000 square meters on the ground floor, and Gerling Polska, an insurer, which leased 3,000 square meters.
"It's a good start," said Hubert Stachowski of Unikat Commercial Properties, which markets the building jointly with Jones Lang LaSalle. But sources said the developer would have to lower the rents to let the remainder of the building.
The location of the building is also a potential headache for developers. It's sandwiched between the railway bridge and the Poniatowskiego bridge in the Powisle district, which is mostly a residential area. Consequently, road access to the project is a problem, sources said.
On the bright side, the building, which has 220 parking spaces, is close to the Warsaw Stock Exchange and ulica Nowy Swiat.
Platan opens Praga project
The developer Platan Group opened its $20 million Centrum Millenium, a 15,300 square-meter office and retail building in Warsaw's Praga district.
The building, located at the intersection of ulica Kijowska and ulica Targowa, is one of the first modern buildings in the district, which is better known for its high crime and urban decay.
"We would like to have more of these buildings here," said Arkadiusz Urban, mayor of Gmina Praga-Polnoc.
The developer admitted that it would face an uphill task in persuading tenants to set up in this area of Warsaw. "It's a big challenge for us," said Jacek Kozinski, president of Platan. "We have to convince people to accept it, to change their mentality." So far only 10% of the building is leased.
Kozinski said that when more investors eventually move to the area, where many historic buildings need renovating, the district could become a trendy spot for the art world. "(It could be) the Soho district of Warsaw," Kozinski said.
But property sources said there is a huge gulf between Praga and Powisle near Old Town, the capital's art district. "Kijowska is Kijowska," said one source, requesting anonymity. "Looking out of nice offices you see the same shabby buildings and drunkards on the streets. It's not a nice district to work in."
Blue Cactus eyes private parties
Sante Fe Partners, the owners of the Blue Cactus restaurant in the Mokotow district, have completed an extension of the building that will allow it to accommodate private gatherings, said Marc Bushala, Santa Fe's owner.
The zl. 4 million ($900,000) expansion brings another 600 square meters to the restaurant, which previously had 800 square meters of space.
The two-floor extension, called the Iguana Bar, will be integrated with the Blue Cactus. The bar, will however, remain open longer until 2 a.m.
Bushala said the main reason for the restaurant's expansion was a desire to offer greater services.
"Lots of customers wanted to have private events," he said, adding that before the expansion the restaurant couldn't accommodate private parties.
Bushala said Santa Fe received a further boost when it learned that the Hyatt Hotel would be developed just across the street. "It certainly gave us more confidence," he said.
New fund to target Central Europe
Heitman International, the U.S.-based realtor, has launched a $525 million fund called Heitman Central European Property Partners, which will focus on acquiring and developing properties in Central Europe, the company said last week.
The fund will be financed by U.S.-based institutional investors, according to Heitman International, the fund's manager.
Heitman said that Central European properties represent good value to investors because of their current low prices and prospects for growth. "The Central European markets are evolving rapidly," said Christopher Merrill, Heitman International's executive vice president in a statement released last week. "This specialized vehicle (fund) will allow investors to benefit from strong property cash yields in existence today with the potential of and increase in capital values through cap-rate compression in the next three to five years."
Heitman, which has its regional headquarters in Warsaw, said that the new fund would invest primarily in Poland, Hungary and the Czech Republic. The company said it would initially focus on the warehouse and office sectors. However, Heitman said it was also considering entering the residential and retail markets, the firm said in a press release.
