The view from the top
Agnieszka Barteczko: How did Poland promote itself at EMPEX fair in London?
Alan Colquhoun: We were recently involved in a tender for one commercial landmark building in Warsaw and initially we were representing one of 12 buyers. Having up to 12 interested investors at such an early stage in the process is evidence that the Polish commercial property market does not really need a lot of advertising. There is no great need for a company such as ours to be meeting more investors when we already have more investors than we have readily available deals.
Rather, what Poland needs is to work on improving its image abroad with foreign investors and foreign tourists. Poland as a country needs to concentrate more on attracting new foreign-direct investment in general economic terms rather than purely in real estate.
Yields in Poland are decreasing to European levels. What kind of sign is this for foreign investors?
The influx of foreign investors chasing deals is what causes yields to fall. Many foreign investors will be attracted because they will see the immediate signals that the perceived risk level has come down and that it is a stable market. It also shows that the market is maturing very quickly. Other investors, on the other hand, may say, "hang on, the market is getting a bit too hot for me, and I need to maybe do a development deal to get higher returns." The more opportunistic investor may be looking at Bulgaria or Romania.
In recent years Poland, and especially Warsaw, saw a number of prime office locations change hands. Will this trend continue?
There have been a number of transactions done at six, seven, eight percent in the last three to four years, where these properties still could change hands. The mix of new supply and available stock means that there will be a healthy turnover.
Why was Złote Tarasy withheld from the market?
That is a simple matter of a cash-flow exercise, where it may be that the developer has done the calculation that there will be no income coming in for six or nine months, but when it does get on the market, it will achieve a better rent. The extra rent that you get at the end with the yields coming down creates more value in the property than just leasing it immediately when you are competing with other empty spaces.
Is DTZ considering entering the residential market?
DTZ is definitely expanding in Poland. We are looking at various opportunities be they new market sectors, such as residential, new business levels, such as building services, or new markets, such as provincial cities. In terms of building services we already have full-time staff, and we are expanding. Initially the building services team will concentrate on office fit-out and project management. Last week we signed an agency agreement to do a major business-park development in a provincial city.
DTZ in the UK is very strong in residential - it is part of our core activity. There is an opportunity on that market. I do not see many companies such as ours really doing it properly - giving development advice, finding land, advising developers on exactly what to do.
