poland today business review+ no. 026

No. 026 / 17th March 2014 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING

January PMI reading highest in three years, says HSBC page 3

Kulczyk bids on Ciech but observers say the billionaire may need to sweeten his offer page 3

BANKING & FINANCE

Talanx to complete Warsaw listing by July page 4

PROPERTY & CONSTRUCTION

Warburg-Henderson teams up with Palmer Capital on new retail property fund for CEE page 4

New project to create 20,000 sq.m of office space in Gdynia page 6

TRANSPORT & LOGISTICS

Goodman inks huge BTS deal with the Mousquetaires Group in Poznań page 7

Regional airports seek more public handouts as budget car-riers trim routes page 8

SERVICES & BPO

Owen-Illinois to shift European back office operations to Poznań page 10

Work Service teams up with Fiege's staffing unit in Germany page 10

TRAVEL & LEISURE Slovakia's TMR acquires Polish ski resort in Szczyrk page 11

CONSUMER GOODS & RETAIL

Leroy Merlin and OBI are potential buyers for DIY chains Praktiker and NOMI page 13

IT & TELECOM

Alcatel-Lucent sees opportunity in Polish broadband roll-out page 14

POLITICS & ECONOMY

Consumer inflation at 0.7% in February page 14

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 15-17

Poznań City Center combines a large retail center,with a train & bus station. Photo: Bose Architects

ECE & Resolution buy new Poznań mallECE & Resolution buy new Poznań mallECE & Resolution buy new Poznań mallECE & Resolution buy new Poznań mall Germany's ECE and UK's Resolution Property have acquired the newly completed Poznań City Center shopping mall in what is likely to be one of the largest deals on the Polish investment market in 2014. ECE is also about to break ground on a large retail project in Bydgoszcz, company representatives said. page 12

ScaniaScaniaScaniaScania downsizes Słupsk factorydownsizes Słupsk factorydownsizes Słupsk factorydownsizes Słupsk factory Faced with dwindling demand for its Omni city bus range, Sweden's Scania has decided to cut workforce at its Polish factory in Słupsk from 500 to 300 employees. page 2

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Conference: Primetime Warsaw II Developing a sustainable European metropolis3 April 2014, Conference Center Muranów, The Museum of the History of Polish Jews

LEAD SPEAkErS:

• Keynote: Elżbieta Bieńkowska, Deputy Prime Minister & Minister of Infrastructure and Development

• Professor Hanna Gronkiewicz-Waltz, Mayor of the City of Warsaw

• Professor Sven Bienert, MrICS, Professor of Sustainable real Estate at the University of regensburg and ULI Sustainability Fellow (Europe’s leading expert in the financial implications of sustainable development)

ToPICS:

• Infrastructural and Social Challenges for Warsaw within the new European Funds Perspective 2014-2020

• Wola & Praga: two of Warsaw’s most dynamic districts, soon to be joined by the 2nd metro line

• Cutting away the ‘green’ Pr fluff: what are the financial results and implications of sustainable development?

• Can Warsaw come up with a comprehensive ‘high street retail’ plan?

• Trends & issues in the office and retail sectors

• The art of Placemaking: creating attractive public spaces in and around commercial properties

Building on the success of our first conference about Poland's capital, we bring you all the major issues and opportunities, in Central Europe's pre-eminent city.

Patrons Partnersorganizing Partner

Media Partner

weekly newsletter # 026 / 17th March 2014 / page 2


Scania to sack 200 staff Scania to sack 200 staff Scania to sack 200 staff Scania to sack 200 staff at Słupsk at Słupsk at Słupsk at Słupsk bus plant, bus plant, bus plant, bus plant, asasasas its its its its rivals boost sales rivals boost sales rivals boost sales rivals boost sales

Swedish bus manufacturer Scania is embarking on a major cost-cutting program that will see 200 jobs lost in Słupsk, Poland and 50 at Scania's head office in Södertälje, Sweden. According to the company, the planned employment reductions are to generate annu-al savings of approximately SEK 70m (EUR 7.9m). Talks with trade unions are underway, Scania said.

Scania Citywide made in Słupsk, has failed to im-press European buyers, forcing the Swedish compa-ny to make some tough decisions. Image: Scania Sales of Scania's Citywide model, made in Słupsk, have declined since the record years 2010 and 2011, when more than 600 units were delivered to public transport systems in Sweden, the Netherlands and the United Kingdom, among other countries. The struc-tural changes will involve research and development, purchasing and direct production of city buses as well

as related administration. The 200 redundancies in Słupsk, where the Swedish bus manufacturer current-ly employs 500 staff, will affect both blue collar and white collar employees. Owing to several years of vola-tile demand for fully-built city buses, Scania has tried different approaches, in cooperation with local trade unions, with the aim of retaining employees at the production unit in Słupsk, which turned out merely 96 buses last year, down from 341 in 2012 and 500 in 2011. "Due to intensified competition and increased price pressure, we now have to adjust staffing to lower lev-els. This has not been an easy decision to take, but un-fortunately it is necessary for our long-term survival as a bus and coach bodybuilder here in Słupsk," says Pe-ter Björk, Head of Scania Production Słupsk.

Polish bus production up 4% in 2013 Leading makers & bus output figures

Maker 2013 2012 2011

Units Share Units Share Units Units

MAN 1,512 40.7% 1,343 37.7% 1,566 33.8%

Solaris 1,229 33.1% 942 26.5% 1,140 24.6%

Volvo 699 18.8% 699 19.6% 922 19.9%

Scania 96 2.6% 341 9.6% 500 10.8%

Other 179 4.8% 235 6.6% 504 10.9%

TOTAL 3,715 100.0% 3,560 100.0% 4,632 100.0%

Source: JMK Analizy Rynku Autobusow

Scania is one of the world’s leading manufacturers of trucks and buses for heavy transport applications, and of industrial and marine engines. Employing some 41,000 people, the company operates in about 100 countries. Research and development activities are concentrated in Sweden, while production takes place in Europe and South America. In 2013, net sales to-taled SEK 86.8bn (EUR 9.8bn) and net income amounted to SEK 6.2bn (EUR 0.7bn). The Swedish company belongs to Germany's Volkswagen AG and its truck & bus unit MAN, which together control over

of votes 88% at Scania. Incidentally, MAN's bus facto-ry in Poland turned out 1,512 vehicles last year, up from 1,343 in 2012. Poland Today asked Scania's whether the Słupsk re-structuring should be viewed as part of as broader ca-pacity realignment within the VW-MAN-Scania group, but spokesman Hans-Åke Danielsson denies that is the case: "Scania's restructuring of the industrial operations in Poland is made due to overcapacity and the need of making the Scania Omni range competitive – and prof-itable. Scania had to make about 120 people in Słupsk redundant already back in 2012 due to lower demand. As the order situation hasn't improved but worsened since then, Scania unfortunately has to make further staff reductions." Sales & production pick up in 2013 With skilled labor at a fraction of the Western Europe-an costs, Poland has emerged as one of Europe's key bus exporters over the past decade, thanks to investors from Germany (MAN) and Sweden (Volvo & Scania), as well as the domestic player Solaris Bus & Coach. In 2001 Polish factories exported merely 373 buses, but in little more than a decade the figure grew nearly tenfold, making Poland number three in Europe after Germany and Sweden. After reaching its lowest level in more than five years in 2012 (3,560 units), Poland's bust production bot-tomed out last year and topped 3,715 vehicles (+4.3% y/y), of which 3,303 were exported, mainly to Germa-ny, Sweden, and Norway according to market re-searcher JMK Analizy Rynku Transportowego. The two key categories were city buses (3,025 units; +10.6% y/y) and long-distance buses (543; +10.6% y/y). With 1,512 vehicles completed last year Germany's MAN remains the leading bus producer and exporter in Poland, followed by Polish Solaris (1,229), Volvo


(699), and Scania (96). In addition to complete buses, Polish factories made 700 chassis and 250 bus bodies as well as 75 trolleybuses.

Shrinking domestic bus sales Buses made in Poland: domestic sales vs. exports

0

1,000

2,000

3,000

4,000

5,000

2007 2008 2009 2010 2011 2012 2013

Exports Domestic sales

Source: JMK Analizy Rynku Autobusow

Domestic carriers purchased 1,389 buses last year, marking an 8.6% improvement over 2012. The number one seller in Poland was Mercedes Benz with 542 vehicles registered in 2013 (including bodies from oth-er manufacturers mounted on Mercedes chassis), marking a 19.6% increase against 2012. Polish Solaris came second with 318 units (+23.7%), followed by MAN (63) and Autosan (62). The latter, one of Po-land's oldest companies, has been in receivership since October last year.


PMI PMI PMI PMI reading best in reading best in reading best in reading best in three years, HSBC says three years, HSBC says three years, HSBC says three years, HSBC says

The Poland Manufacturing PMI index grew to 55.9 points in February compared to 55.4 in January 2013, reaching the highest level since December 2010, said

HSBC and Markit Economics in a press release. The PMI figure has remained over the 50 points benchmark that separates expansion from contraction for the past eight months, signaling improving condi-tions in the country’s manufacturing sector. The biggest improvement last month was seen in new orders, which grew at the fastest pace since April 2004. This growth was generated by both domestic and export demand. Foreign demand grew at the se-cond-fastest rate in more than three years, HSBC said.

Purchasing Managers' Index (PMI) The 50 mark separates growth from contraction

45

50

55

60

Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14

Source: Markit & HSBC

"The PMI survey remains in line with our 2014 macro outlook. This assumes a further pick-up in GDP growth through 2014 with limited inflationary pres-sure and CPI staying below the 2.5% central bank tar-get," CEE economist at HSBC Agata Urbańska-Giner was quoted as saying. "The record high rate of job cre-ation in January is a particularly positive indicator, implying stability of the current improvement. The above-expectation PMI reading will also fit in with re-cent upbeat comments from policy makers, including several MPC members, on a positive GDP growth out-look. For the time being improving manufacturing ac-tivity does not lift inflationary pressure. Input prices

rose marginally in January while output prices fell for the fourteenth month in a row," she added.


Kulczyk bids on Ciech Kulczyk bids on Ciech Kulczyk bids on Ciech Kulczyk bids on Ciech but observers say the but observers say the but observers say the but observers say the billionaire may billionaire may billionaire may billionaire may needneedneedneed to to to to sweeten sweeten sweeten sweeten hishishishis offer offer offer offer

Polish billionaire Jan Kulczyk has placed an unex-pected bid on Polish chemical producer Ciech, in which the government maintains a substantial minori-ty stake. Kulczyk Investments, via its subsidiary KI Chemistry, seeks to acquire 66% of Ciech, offering PLN 29.5 per share. The bid was lower than the prior day's closing price of PLN 32.5, and much below aver-age projections of analysts, some of whom expect Ciech's share price to climb to PLN 40 over several months, on the back of its ongoing restructuring and assets sell-off. "We are confident that thanks to Ciech's global expan-sion we will be able to significantly increase the com-pany's value, to the benefit of all shareholders," com-mented Sebastian Kulczyk, who has recently taken over management of the company from his father Jan. Kulczyk's buyout bid cannot succeed without at least a partial participation from the Ministry of Treasury, which holds a 39% stake in Ciech. Although the gov-ernment is hard-pressed for cash, it is unlikely to ac-cept the investor's offer unless Kulczyk decides to sweeten the pie. "Ciech is earmarked for privatization. The Treasury is pleased to see investor interest in the company and will take KI Chemistry's offer into consideration," the


ministry said in a communiqué distributed to the me-dia. Ciech is one of Poland's leading chemical companies with a stock market capitalization of more than PLN 1.7bn. The group includes more than 30 companies that produce, among other, soda ash (Ciech is its num-ber two supplier in Europe), sodium bicarbonate, salt, fertilizers, crop protection chemicals, epoxy, polyester resins and other organic chemical products that are used in glass, furniture, chemical, construction indus-tries and agriculture. Besides several production units in Poland, Ciech owns factories in Romania and Ger-many. In 2012 Ciech turned over PLN 4.38bn and posted a net loss of PLN 431m, and in the first half of last year the company posted a PLN 62m net profit on PLN 1.88bn turnover. Ciech is currently seeking buyers for a number of attractive assets, including the site of its former headquarters on Warsaw's Powązkowska street that seems like a perfect spot for a large office project.

BANKING & FINANCE

Talanx to complete Talanx to complete Talanx to complete Talanx to complete Warsaw listing by JulyWarsaw listing by JulyWarsaw listing by JulyWarsaw listing by July

German insurance firm Talanx plans a secondary list-ing on the Warsaw Stock Exchange by mid-2014, company spokesperson Martin Schrader told Poland Today. "The exact date of the listing will be communicated to the media upon short notice. The listing of Talanx shares on WSE will not include selling new shares or raising capital. We simply would like to give investors

in Poland the opportunity to buy Talanx shares direct-ly in Poland, not in Frankfurt or Hannover, Germany). Two years ago Talanx International and its Japanese partner Meiji Yasuda entered the Polish market with a splash by acquiring two of Poland's top insurers, Warta and TU Europa. The two partners paid EUR 770m to buy 100% of Warta from Belgium's ailing KBC group, and slightly more than EUR 200m for a controlling stake in mortgage insurer TU Europa. Pri-or to the Europa and Warta deals, Talanx had been operating in Poland through two companies in motor, general liability, property and life insurance: HDI Asekuracja and HDI-Gerling Życie. Upon applying for Polish financial markets watchdog KNF's permission to buy Warta and Europa, Talanx pledged to have its shares listed in Warsaw within two years from finalizing the takeover transaction. KNF gave its blessing for both transactions in May 2012. "Indeed, the listing follows our acquisitions of the Polish insurance companies TU Europa and Warta. Due to these acquisitions, Talanx is now the second biggest insurance group in Poland with a market share of approximately 20%. Poland is our second biggest core market in the retail business, right after our home market Germany. This shows the importance of the Polish insurance market for the Talanx Group. We want to underline this importance, and we plan to do this through a dual listing. With gross premiums written of some EUR 1.2bn in Q1-Q3 2013, the Polish business accounted for some 40% of Talanx's international retail insurance opera-tions. Warta was on track to achieve EUR 70m EBIT target for full year 2013, "with delivery on integration targets ahead of schedule," Talanx said in its Q3 2013 report.


WarburgWarburgWarburgWarburg----Henderson Henderson Henderson Henderson teams up with Palmer teams up with Palmer teams up with Palmer teams up with Palmer Capital on new retail Capital on new retail Capital on new retail Capital on new retail property fund for CEE property fund for CEE property fund for CEE property fund for CEE

In the last issue of PT Business Review+ we spoke to Ben Maudling, Head of CEE at the UK-based property fund Palmer Capital, about the recent launch of their office in Warsaw. Little did we know that the guys at Palmer Capital would soon have more big news to communicate, as their company has just inked a deal with Warburg – Henderson Kapital-anlagegesellschaft für Immobilien mbH, to source deal and manage assets for their newly founded Cen-tral European Retail Fund. According to Warburg-Henderson, their new fund, aimed at institutional investors, will invest in retail properties in Poland and the Czech Republic. With a total target fund volume of c. EUR 250m, including 40% to 45% leverage, the fund targets an annual in-come return of 8%. The fund invests primarily in retail warehouses, smaller and well-established shopping centers, as well as high street buildings, focusing on locations with good infrastructure and solid economic fundamentals. It will also look to focus on catchment areas with high population density and growing, or at least stable, demographics. As Investment Manager, Warburg – Henderson is responsible for the institu-tional fund wrapper, including strategy, fund man-agement and reporting. "With the launch of the Central European Retail Fund, we are widening our range of products by investing in attractive, new markets," commented Eitel Coridaß,


Managing Director and responsible for Portfolio Man-agement at Warburg – Henderson. "Poland and the Czech Republic are established destinations for real estate investments with good market transparency, that still offer yield premium of at least 100 bps com-pared to the German market today," he added. Warburg-Henderson will be targeting mainly retail warehouses, which as well as shopping centers in ur-ban areas, and high street assets in the city centers. According to the company, retail warehouses are a less mature market compared to large shopping centers. They are seen as a growth segment for the coming years due to their suitable format, even for smaller catchments and the increasing motorization of the wider population. The Hamburg-based Warburg – Henderson Kapital-anlagegesellschaft für Immobilien mbH, is an Invest-ment Manager that currently manages 17 property funds for over 100 German and international institu-tional investors, the majority of which, as property Spezialfonds investing in European commercial prop-erty. Their assets under management amount to approx. EUR 4.4bn as at 31 December 2013. Palmer Capital was established in London in 1992 and expanded to Continental Europe in 2007. Besides its continental European headquarters in Munich the platform Palmer Capital Investments GmbH compris-es a team of 34 employees in six offices located in the Netherlands, Poland, the Czech Republic, Bulgaria, Romania and Russia. In Central and Eastern Europe Palmer Capital manages 84 assets with c. 3,000 ten-ants and c. 350,000 sq m lettable space in 39 cities. Globally, Palmer Capital manages over GBP 1bn of real estate across over 250 properties that it manages on behalf of discretionary investors or third party segre-gated mandates.

Poland Today talks to: Eitel Coridaß, Managing Director at Warburg - Henderson

• PT: Poland has been the target of German property funds for a number of years now. Why has W-H de-cided now was the time to invest here? Eitel Coridaß: With a high market transparency, Po-land and the Czech Republic are established markets for property investments and we believe the time is right for investments in retail warehouses and shop-ping centers in these two countries. With a positive macroeconomic outlook, property markets in both countries are stable and healthy. Prices are attractive, particularly compared to those in Germany. Initial achievable returns are at least 100 basis points higher compared to similar German assets. Only few investors are taking advantage of the potential the retail ware-house sector has to offer, as the main focus of many investors investing in Poland and the Czech Republic is on larger shopping centers. As such, the retail ware-house sector offers attractive opportunities, in particu-lar. Precisely here, investors are able to benefit from the expected development of this market sector by en-tering now. • PT: Investing in small regional retail properties takes much more "on-the-ground" presence and local expertise than buying prime assets in key cities. Palmer Capital have entered Poland only recently with only a single office deal completed to-date. Do you think together you will be able to penetrate the

large and rapidly expanding Polish retail property market? EC: Although Palmer Capital has only recently entered the Polish market under its own name, its senior staff has been active in the Polish market for over 15 years, acquiring assets for managed funds of HypoVereinsbank and Invesco throughout the country. Now, with active asset management in six countries in Central and Eastern Europe, Palmer Capi-tal is one of the leading real estate fund and asset man-agers in these parts of Europe. Currently, more than 80 properties with some 350,000 sq.m rental space and around 3,000 tenants in almost 40 cities in CEE are supervised by Palmer Capital. Furthermore, Palm-er Capital supervises project developments of more than EUR 50m. With a long experience in internation-al asset management, we believe to have found the perfect partner in Palmer Capital for this fund. • PT: When do you hope to reach the target funding for the new CE Retail Fund and how many properties will it buy you, based on average deal values in the target segment? EC: The distribution process has just started. The ini-tial feedback we have received from investors was pos-itive. With a target volume of EUR 200 to EUR250m, the portfolio is planned to include approximately 10 to 15 properties with a maximum asset volume of c. EUR 30m. • PT: How will the funds be divided between Poland and the Czech Republic, according to your projec-tions? EC: The target country allocation ranges for both countries from 40 to 60%. • PT: Does W-H have plans for any other funds tar-geting Polish properties? EC: Poland's key asset is its stable economy, which makes it attractive for real estate investments. During 2008 and 2009, Poland was one of the few countries


that did not experience a recession. Until 2018, the In-ternational Monetary Fund expects an annual eco-nomic growth of around 3%. Therefore, even without current specific plans for additional products, we will consider this market in the future and continue to monitor its development.

DATA BOX: PROPERTY INVESTMENT MARKET IN 2013

• Polish investment market volume in 2013 hit a

record EUR 3.12bn. German investors accounted for

the largest share of the total transaction volume, 25%,

and were the largest group of buyers. Polish investors

came in fourth place accounting for 8% of all deals

(EUR 263m).

• The retail sector accounted for 44% of the total

volume and settled at around EUR 1.38bn, a rise of

approx. 20% on the previous year. The biggest deal

was the acquisition of Silesia City Center in Katowice

for EUR 412m by an international consortium of

investors led by German financial services group

Allianz.

• The office market accounted for 38% of the total

volume and was the best performing sector with 27

deals totaling EUR 1.19bn. Growing office deals outside

Warsaw (EUR 0.19bn), however the biggest deal was

closed in the capital, where US Hines Global REIT

purchased New City office complex for EUR 127m.

• Transaction volume on the industrial market in 2013

totaled around EUR 0.44bn (14% of total volume), a

fall of around 5% on the value recorded in the peak of

year 2012. The key transaction was the Norges Bank

Investment Management’s acquisition of 50% shares

of Prologis portfolio.

Source: Cushman & Wakefield


New project to create New project to create New project to create New project to create 20,000 sq.m of office 20,000 sq.m of office 20,000 sq.m of office 20,000 sq.m of office space in Gdynia space in Gdynia space in Gdynia space in Gdynia

Polish developer Euro-Styl, which has built a number of residential and office projects in the Tricity area in recent years, is about to break ground on its first office scheme in Gdynia. Located at 8 Łużycka St. the Tensor office park will include up to 20,000 sq.m of office space in three buildings, the first of which (4,960 sq.m) is to reach completion in 2H 2015. The three buildings will be accompanied by 446 parking spaces. "We are in advanced talks with a number of potential tenants, but it is still too early to speak of any sealed deals," Euro-Styl's marketing director Bartosz Podgórczyk tells Poland Today. "Our office comple-tions to-date include Opera Office and BPH Office Park, completed during the 2011-2013 period with a combined GLA of 28,000 sq.m. At the moment, we are treating them as long-term portfolio investments. In the residential sector, we have so far completed apartments with a total floor area of more than 180,000 sq.m, and we have a further 38,500 sq.m un-der construction and 52,800 sq.m in projects that will be commenced this year." The Tricity area has emerged in recent years as one of Poland's hottest offshoring destinations and Tensor's developer had the project designed to match the ex-pectations of BPO/SSC tenants. Besides all the stand-ard class-A amenities, it will include a number of envi-ronmentally friendly solutions, such as energy-efficient façades and heat recuperation systems. The leasing agent for Tensor is the property consultancy JLL.

"Tensor offers not only an excellent quality and effi-ciency of office space, but also rents at a very reasona-ble level. Headline rents in prime office locations in Tri-City range from between EUR 12.5 and 13.5 per sq. m./month. Tensor is also going to fall within this range," said Magdalena Reńska, Director of JLL's Tri-City office.

Tensor will include three buildings, the first of which will be completed next year. Image: Euro-Styl

Since limited availability of modern office space tends to be a major hurdle to development of regional cities, the planned 20,000 sq.m at Tensor represent an im-portant addition to Gdynia's office stock.

The Łużycka St. area became one of Tricity's office hubs thanks to another local developer Allcon and its Łużycka Office Park which has a GLA of 22,500 sq.m and includes Geoban, Pramerica, and Det Norske Veritas among its tenants. Allcon is currently work-ing on its extension, Łużycka Plus, with a further 5,770 sq.m of net office space.


DATA BOX: TRICITY OFFICE MARKET IN 2013

• Take-up in the Tricity market in 2013 reached

45,600 sq m, of which new leases accounted for more

than 53%, with pre-lets making up around 13%. This

was down by around 16,800 sq m compared with

2012. The largest transaction was Thomson Reuters’

lease renegotiation of 9,000 sq m in Baltic Business

Center. Other notable deals included the lease renewal

for 2,800 sq m in Łużycka Office Park by Geoban

(Santander group) and the IT services provider Sii’s

lease of 2,700 sq m in the Olivia Business Centre

complex.

• Last year Tricity finished on a record high supply of

71,800 sq m, which pushed Tricity’s total office stock

up to 433,000 sq m at the end of December 2013.

Projects delivered in 2013 included TPS’s Olivia

Business Centre – Point and Tower buildings totalling

23,900 sq m, Torus’s Alchemia in Gdańsk-Oliwa

(16,700 sq m) and Euro Styl’s Euro Office Park (9,300

sq m), which became headquarters of the BPH Bank.

• Asking rents stood at EUR 13–15/sq m/month, and

effective rents were EUR 12–13/sq m/month. Robust

supply pushed the vacancies up to 48,500 sq m at

year end, accounting for 11.2% of Tricity’s total stock.

Source: Cushman & Wakefield


Goodman inks huge Goodman inks huge Goodman inks huge Goodman inks huge BTS deal in Poznań BTS deal in Poznań BTS deal in Poznań BTS deal in Poznań

Following the last year's 100,000 sq.m BTS deal with Amazon, the Australian-owned property developer

Goodman has struck another huge contract in Po-land, this time with the Mousquetaires Group, Po-land's leading operator of franchise-based supermar-kets and DIY outlets. Under the contract, Goodman is to build a new central warehouse and office facility in Poznań for the Mousquetaires Group as well as ac-quire the latter's existing storage and office properties in the city. The overall transaction covers a total of 127,885 sq.m of logistics and office space and will ena-ble the efficient replacement of the Mousquetaires Group’s current properties for modern, higher quality facilities, the companies said. By the end of March, Goodman will break ground on a 73,872 sq.m food storage and distribution facility for the Mousquetaires Group, alongside a new 8,513 sq.m two-storey office which will become the company’s new headquarters. The storage area, which includes freezing and cooling facilities, will be handed over in January 2015, with the office building following two months later. The new Mousquetaires Group’s ware-house will be situated in Swadzim, 15km from the cen-tre of Poznan. Its location, with direct access to the S11 expressway and 10km to the A2 motorway, provides the site with ideal road transport connections. The lease agreement will be for 10 years. Goodman has also agreed to acquire from the Mousquetaires Group's existing warehouse and office premises at Janikowska St. in Poznań, totaling 45,500 sq.m. The new owner will refurbish and redevelop these properties after delivering the new storage and office space to the Mousquetaires Group, Goodman's PR representative Bartosz Sroka told Poland Today. According to Tomasz Kasperowicz, Director of Indus-trial and Logistics Agency at Colliers International, which was the agent behind the transaction, "the Goodman/ the Mousquetaires Group deal is by far the largest and most complex agreement signed in 2013." Besides the Janikowska St. warehouse in Poznań, the Mosquetaires Group's Polish distribution network in-

cludes also a logistics hub in Sady, in the outskirts of the city, as confirmed by communications director Eli-za Orepiuk-Szymura.

The planned new Polish headquarters of the Mousquetaires Group near Poznań will include a gi-ant distribution center and offices. Image: Goodman "Flexibility was the key factor in selecting a partner for this investment, and through its decision to acquire our existing properties, Goodman came out on top. Of equal importance was Goodman’s highly skilled team, who supported us with their technical knowledge throughout our work together. The facility will be used to store food, which from a technical viewpoint means that the project is far from simple,” said Philippe Jammes, General Director of ITM Polska Sp. z o.o., which represents the Mousquetaires Group in Poland. Goodman commenced operations in Poland in 2005 and owns and manages over 375,000 sq.m of facilities in various locations throughout the country for cus-tomers including Whirlpool, DHL and Amazon. The group holds strategic land sites in all of Poland’s key logistics centers, which are capable of providing ap-proximately 1.3m sq.m of additional warehouse space. It has a significant pipeline of active enquiry and a land bank that enables it to accommodate the individ-ual requirements of all potential customers.


"Our co-operation with the Mousquetaires Group is a unique example of a complex transaction between a property developer and investor and its customer. As a Group with a strong capital base, we are capable of taking part in such bespoke transactions and satisfying our customers’ most specialised requirements,” said Błażej Ciesielczak, Regional Director Goodman Cen-tral and Eastern Europe. The Mousquetaires Group unites more than 240 inde-pendent Polish entrepreneurs who operate retail out-lets under the Intermarché and Bricomarché logos. The Group's Polish chain consists of 202 Intermarché grocery supermarkets and 93 Bricomarché DIY stores. Mousquetaires are present in 6 countries in Europe: Poland, France, Belgium, Portugal and on the Balkans. In 2012 Group's total turnover came in excess of EUR 39bn.


Regional airports seek Regional airports seek Regional airports seek Regional airports seek more public handouts more public handouts more public handouts more public handouts as budget carriers trim as budget carriers trim as budget carriers trim as budget carriers trim routroutroutrouteseseses

City governments in Poland will be propping up their regional airports for the foreseeable future, as low-cost carriers trim routes and authorities wait for the Polish market to catch up to its European peers. Fuelled by EU funds for infrastructure and eager to at-tract investment and tourism, many of Poland's medi-um-sized cities have developed or expanded airports over the past few years. But these airports have failed to gain enough passengers to stay afloat, and continue to be funded by local governments.

Often these airports' entire business depends on Rya-nair. Other than charters, Ryanair is the only passen-ger airline flying out of Warsaw Modlin airport and the airport in Bydgoszcz, a city of some 360,000 in northern Poland. For several other airports, Ryanair operates a vast majority of the passenger flights.

In February the European Commission asked the municipalities of Gdynia and Kosakowo in the north of Poland to repay the EUR 21.8m worth of public aid they had spent on converting a former military air-field in Gdynia into a new passenger airport. The Commission said that the funding represents an un-due economic advantage over the airport's competi-tors, in particular the Gdańsk Airport, located only 25 km away. According to EU officials, Gdynia's busi-ness plan for low-cost, chartered and general avia-tion traffic was unrealistic considering the lack of congestion at Gdańsk Airport, which uses only 60% of its capacity. EU rules bar member states from du-plicating airport infrastructure where there is not enough demand, thus distorting competition and wasting taxpayers’ money. Image: Gdynia Airport That leaves them vulnerable to route reductions and puts them in a difficult position if Ryanair demands lower airport charges. Nevertheless, local govern-ments will continue to offer financial assistance to the airports, because they are seen as necessary to attract tourists and investment.

Lublin, a city of about 350,000 in south-eastern Po-land, opened an airport in December 2012. It managed less than 200,000 passengers last year, though it has a capacity of 300,000. The facility has major competi-tion from an established airport in Rzeszów, just about two and a half hours away by car. "Lublin officials say that because they have the airport they were able to bring in investors, and from that they will obtain tax revenue to support the airport," said Grzegorz Sobczak, editor-in-chief of Skrzydlata Polska, a monthly magazine covering aviation. He added that EU rules allowing local authorities in re-gions that are far-flung or poorly connected to support airports would mean that cities such as Lublin would continue to offer them financial assistance. In the first two months of this year Łódź Airport, in central Poland, saw passenger traffic plummet by 34% compared to the same period last year. Ryanair's deci-sion to cut routes in Poland – over 30 across the coun-try according to Ewa Bieńkowska, the airport’s spokesperson – hit Łódź especially hard. Now the air-port is asking city authorities to grant it more money to promote routes in an effort to win back more pas-sengers. "We need money," said Ms Bieńkowska. "We have to have money to support the promotion of new routes. This is money that comes from the city." She complained, however, that officials in Łódź were less generous than those in say, Lublin or Rzeszów. "The city doesn't understand that it has to support the connection. Other cities give a lot of money to airlines to promote connections. Our city doesn't think it makes sense, and this is a big problem." She added that if there was money to promote a route to Paris or Rome, the airport could potentially con-


vince Ryanair to establish the route. “Maybe we could convince them,” she said. Officially, Ryanair cut routes because of a lack of air-planes, but experts say that many of the cities couldn’t generate enough business for the routes make sense. Passenger numbers in Poland have grown overall, but at only a few airports. According to Poland’s Civil Avi-ation Authority, traffic at Warsaw Chopin Airport, the country’s largest, grew by 11 percent over the first three quarters of 2013. Kraków, the country’s second busiest airport, grew at a much slower rate of 4.8 per-cent. Traffic at the above-mentioned Rzeszów grew 1.2 percent. Eight of Poland’s other major airports all saw drops in the number of passengers. In Lublin, which was still in its first few months of operation, was work-ing at below-capacity. That’s because Poles still haven’t adopted flying to the extent that their Western peers have. The average Pole only flies about 0.5 times per year, far below the EU average of 1.6. Experts say this means that while many small airports are suffering now, they could see more traffic in the near future. General economic growth could help as well. Poland’s GDP grew 1.6% last year, its slowest rate since 2009. But this year it could nearly double that pace, say economists. Nevertheless, even the biggest airport in Poland takes a significant hit when Ryanair takes routes away. Both Ryanair and Wizz Air, which had formerly flown to Warsaw Modlin, moved their flights to Warsaw when Modlin had to close to repair its runway in early 2013. When it opened back up mid-year, only Ryanair went back. Passenger numbers this year are therefore 5-6% lower than they were at this time last year, said Przemysław Przybylski, the spokesperson for Warsaw Chopin Airport.


Warsaw ring road Warsaw ring road Warsaw ring road Warsaw ring road tendertendertendertender attracts 23 attracts 23 attracts 23 attracts 23 international bidders international bidders international bidders international bidders

A total of 23 companies and consortiums from all over Europe as well as China, Turkey, and Azerbaijan are hoping to grab the highly lucrative contracts for the construction of the southern segment of the Warsaw beltway, a strategic project with a combined price tag of some PLN 6-8bn. Their bids in what is viewed as one of the largest infrastructure tenders of the decade, will now be reviewed by Poland's roads authority GDDKiA. The project is part of a larger program to close the ring of expressways around Warsaw by 2019, announced by Prime Minister Donald Tusk at the break of Sep-tember last year. The ring road is of strategic im-portance for the Polish capital and its completion is vi-tal to reducing congestion in certain key areas and funneling transit traffic out of the city. The first southern section of the beltway (S2), linking the Konotopa junction (where the A2 highway from Berlin reaches Warsaw) with the Chopin airport and Ursynów (Puławska) cost approximately PLN 4.3bn and was opened in September 2013. Although its com-pletion brought relief to many commuters and helped distribute some through traffic, it also created massive jams on Puławska street, one of Warsaw's key arteries. This is where the ring road ends at the moment, alt-hough according to plans it should be extended fur-ther east, cutting though the residential areas of Ursynów and Wilanów and across the Vistula river to connect with the S17 Warsaw-Lublin road.

The ongoing tender, concerns precisely this 18.5km piece of motorway, which will be divided into three sections, each posing a different challenge, such as a 2.7km tunnel under Ursynów, new bridge over the Vistula river, and a chain of overpasses in the Ma-zowiecki nature park. The GDDKiA will now take a few months to review the submitted bids, including the ones from Power Construction Corporation of China, Turkey's Güllermak, and Azerbaijan's Evrascon, after which shortlisted parties will be asked to place detailed offers. The whole investment to reach completion in 2018-19.

The planned sections of the Warsaw beltway are marked with dotted lines, whereas green and red lines indicate sections that are opened to traffic. Image: Wikipedia CC

Besides the design & build tender mentioned above, the GDDKiA is also seeking engineering firms inter-ested in designing the next section of the S2 motor-way, east of the planned junction with the S17 towards the Mińsk Mazowiecki beltway. The subsequent ten-ders for the eastern sections of the Warsaw ring are expected in 2015 and 2016, as the road authority is yet


to get environmental permits for those projects. A sep-arate procedure is currently underway for a bypass of the notoriously congested suburb of Marki in the north east of Warsaw. In approximately three years, once the Marki bypass as well as the S8 fork near Raszyn and Janki in the south west reach completion, drivers should be able to easily get around the western and northern outskirts of the Polish capital.

SERVICES & BPO

OwenOwenOwenOwen----Illinois to shift Illinois to shift Illinois to shift Illinois to shift European European European European back office back office back office back office operations to Poznańoperations to Poznańoperations to Poznańoperations to Poznań

US glass packaging giant Owen-Illinois (O-I) will re-locate back office operations from its European head-quarters in Switzerland to Poznań, Poland as part of a broader asset optimization program in the region. "Our new Business Services Centre (BSC) in Poznań will handle O-I's centralized administration services functions for Europe including standardization and implementation common 'back office' functions for all of our European operations: accounts payable and re-ceivable, master data management and expense re-porting. At the moment the European Headquarters in Bussigny-Près-Lausanne in Switzerland is handling the processes," Michael Praeger, Director of Commu-nications Europe at O-I, tells Poland Today. "The BSC will be opened in July. When fully operational, this or-ganization will employ approximately 40 people." O-I has been present in Poland since 1993. The com-pany operates 2 glassworks in Poland – in Jarosław as well as in Poznań-Antoninek and hires total 730 em-ployees. The glassworks in Jarosław is one of the big-gest glass container manufactures in the world. In ad-

dition one of the two machine service centers in the world is localized in Poland. O-I has dominant posi-tion of glass containers in baby food, spirits, beer and non-alcoholic beverages. O-I's entire European opera-tions employ close to 8,000 staff across 11 countries and generate a turnover of approximately USD 2bn per annum. Following the planned reorganization of O-I's European business, Poznań will be also home to the company's regional headquarters in charge of northeastern Europe.

The new O-I Business Services Center in Poznań will be located in Malta Office Park, which was developed by Echo Investment. Image: Echo Investment "From an operational standpoint, the situation remains unchanged. However, the fact that the Malta House will also be the office for the O-I's of northeast Europe business leadership team, headed by Viivika Remmel, country group executive of northeast Europe, brings benefits at the administrative level." Ongoing economic weakness in Europe and economic volatility in South America caused O-I to post flat sales and flat earnings for 2013. The Perrysburg, Ohio-based maker of bottles and other glass containers reported annual earnings of USD 184m for 2013 on USD 7bn turnover, with both figures showing no change from

2012. Globally, the company employs 22,500 staff at 77 factories in 21 countries. "Over the last several years O-I has invested in Poland over EUR 40m to raise its quality to the highest stand-ards and requirements demanded by the baby food in-dustry. The investments were also designed to mod-ernize the manufacturing sites, putting O-I Poland the leading edge of energy technology," says Michael Praeger.

SERVICES & BPO

Work Service teams up Work Service teams up Work Service teams up Work Service teams up with Fiege's staffing with Fiege's staffing with Fiege's staffing with Fiege's staffing unit in Germanyunit in Germanyunit in Germanyunit in Germany

Poland's leading temporary staffing and personnel outsourcing company Work Service has inked a joint-venture agreement with German logistics pro-vider Fiege. With a target turnover of EUR 100m in 2014, the newly JV will include Fiege subsidiaries, Fiege uni/serv and Fiege worksess and all subordinate German business entities of Work Service. The latter will hold a 51% stake in the JV, which aims to be one of Germany's top ten temporary staffing and personnel outsourcing agencies, with Fiege Logistik Stiftung & Co. KG owning the outstanding shares. In 2013 the Fiege Group said it would concentrate their services on Central and Eastern Europe as well as India and China, and JV with Work Service is part of this strategy. Work Service is one of Poland's largest HR companies providing innovative workforce solu-tions ranging from permanent placement and tempo-rary staffing to outsourcing services throughout Cen-tral and Eastern Europe. Fiege uni/serv and Fiege worksess were established in 2002 as specialists for


personnel logistics concepts for the retail and logistics industry. Currently Fiege uni/serv is listed in the Top 25 of German temporary employment agencies. Work Service's service portfolio has a focus on HR services for banks, insurance companies and the IT industry. "The joint venture is a great opportunity for both part-ners. We contribute our motivated and skillful German team, a great customer base and our excellent German business network. Work Service brings along great know-how, new services and customers like banks, in-surance and IT companies. This enables us to broaden our market offer. The partnership will further strengthen our market position in Germany not only for temporary staffing services but also for HR ser-vices." said Felix Fiege, Board Member of the Fiege Group. The joint venture will be the preferred partner for temporary staffing business services of the Fiege Group in Germany. In 2012, the Group generated a global turnover of EUR 1.5bn with a workforce of around 11,000, 200 units and partnerships based in 17 countries and 3m sq.m of warehouse and logistics space. Established in 1999, Work Service supplies and ser-vices an average of 21,000 workers daily to more than 2,200 long-term clients through several business lines: recruitment and personnel consultancy; temporary staffing; short-term specialist contracting for the IT, financial and medical sectors; quality control out-sourcing; and merchandising processes. The company has 35 offices in Poland, Slovakia, Russia, Germany, Turkey, Romania and the Czech Republic and oper-ates a fleet of 200 mobile assessment centers. To-date, the Wrocław-based Work Service has acquired seven staffing and recruitment companies at the combined cost of PLN 164m, including the Polish firm bought the Polish arm of global recruitment consultancy Antal International, Katowice-based staffing compa-

ny Work Express and Hungarian recruiter Prohuman. Company representatives said recently they hope to end the 2013 with a turnover of PLN 1bn, but thanks to the ongoing and planned acquisitions this year the fig-ure is likely to reach PLN 1.8bn. In the first half of 2013 the group posted a consolidated net profit of PLN 10m (+8% y/y) on sales revenues of PLN 410m (+16% y/y). The key financial investor in Work Service is the glob-al private equity firm PineBridge Investments, which in 2012 acquired a 20% stake in the company for EUR 26m to support its ambitious investment pipeline. Work Service has been listed on the Warsaw Stock Exchange since May 2012. The company is the market leader in Poland, has a strong presence in Rus-sia and continues to increase its market share in the Czech Republic, Slovakia, Germany and Turkey, boast-ing a market share of 18.5% in the CEE region.

TRAVEL & LEISURE

Slovakia's TMR Slovakia's TMR Slovakia's TMR Slovakia's TMR acquires Polish ski acquires Polish ski acquires Polish ski acquires Polish ski resort in Szczyrkresort in Szczyrkresort in Szczyrkresort in Szczyrk

Slovakia's leading mountain tourism operator Tatry Mountain Resorts (TMR) has acquired a 97% stake in Szczyrkowski Ośrodek Narciarski, one of Po-land's most popular ski resorts in Szczyrk. In the me-dium-term horizon, the new owner aims to spend some EUR 30m on development and modernization of the resort by building several new cableways, snow-making systems and other infrastructure, bringing Szczyrk on par with Poland's best ski resorts. "The investment program is to be implemented in the medium-term," TMR's Milena Friedmanova told Po-

land Today, declining, however, to discuss details of the transaction itself as well as the company's further acquisition plans with regard to Poland. "With the Szczyrk acquisition we become a Central European company with key mountain resorts in Slo-vakia in the Tatras, in the Czech Republic in Špindlerův Mlýn, as well as in Poland in Szczyrk; and we believe in their mutual synergy," says Bohuš Hlavatý, CEO and Chairman of TMR's Board of Direc-tors. "The Poles already represent a significant portion of visitors in our resorts."

TMR operates a number of popular ski resorts in the Tatra Mountains. Image: TMR Strategically located in the Beskid Mountains, close to other key holiday destinations, and only 50km from the Slovak border crossing at Skalité, Szczyrk boasts long winter sports traditions. There are some 25km of high-quality ski trails in Szczyrk and approximately 60km of ski trails in the whole region. The town of Szczyrk has a solid accommodation capacity with 10,000 beds. More than four million people live in the 150km radius, which according to TMR represents a great potential for the resort's further growth.


"In Szczyrk we seek to repeat our successful invest-ment strategy, which opened a new era for the Tatras in terms of transportation and modernization of the resorts. Thanks to massive investments and our expe-rience, we have been able to ensure full operation of our resorts and offer high-quality skiing conditions de-spite the exceptionally unfavorable winter conditions during this season, We want to put our experience to use in a resort that would be capable of hosting major sporting events in the future and one that would pro-vide Poland's 2.3m skiers with higher quality condi-tions than what they have been used to locally," Dušan Slavkovský, Director of Mountain Resorts and a mem-ber of TMR's Board of Directors, commented on the acquisition. The acquisition is TMR's first successful venture into Poland, after its failed attempt to acquire the country's cable car and ski-lift operator Polskie Koleje Linowe (PKL) last year. PKL was purchased by the private eq-uity fund Mid Europa Partners, which teamed TMR, which has been listed on the Warsaw Stock Exchange (in addition to Bratislava and Prague) since October 2012, seeks to create a cross border mountain sports area in Slovakia, Poland and the Czech Republic. The secondary listing in Warsaw was meant to support its planned expansion in Poland. The largest provider of tourist services in Slovakia, TMR owns and operates a number of ski resorts and hotels in Low and High Tatras, including Aquapark Tatralandia, the biggest Slovak all-year thermal aquapark. Its capital expenditures had amounted to EUR 190m by the end of 2013. In the financial year ended October 2013 the company posted a consolidat-ed net profit of EUR 6.6m on revenues of EUR 54.3m (up from EUR 43.8m in the prior year) and welcomed 2.25m visitors (against 2m the year before).

RETAIL PROPERTIES

ECE and Resolution ECE and Resolution ECE and Resolution ECE and Resolution Property acquire Property acquire Property acquire Property acquire Poznań City Center Poznań City Center Poznań City Center Poznań City Center

Less than half a year since Hungarian developer TriGranit, Polish state railways operator PKP, and Europa Capital launched the landmark retail project Poznan City Center (PCC), the property was sold to Germany's ECE European Prime Shopping Cen-tre Fund and UK's Resolution Property in what is already looking like one of the largest deals on Po-land's property market this year. Germany's Aareal Bank AG and pbb Deutsche Pfandbriefbank have provided EUR 190m financing to the buyers, each of whom now holds a 50% stake in the SPV that has ac-quired the Poznań asset. The total value of the transac-tion remains undisclosed, but since the capex on the entire development (including the train & bus station) came to EUR 385m, the figure was surely substantial. Located in Poland's fifth largest city of Poznań, PCC opened in October 2013 and comprises of 58,000 sq.m of leasable area, including 230 shops and two food courts on three levels. The centre is 90% leased and its key retail tenants include Saturn, TK Maxx, H&M, Re-served, Bershka, Pull&Bear and Toys’R’Us. ECE will be responsible for the property management and leas-ing of the centre, asset management will be undertak-en jointly between Resolution and the ECE European Prime Shopping Centre Fund. "The footfall at PCC has been satisfactory from the start, owing mainly to its proximity to the train station. The problem is that nowadays negotiations with ten-ants take several times longer than a few years back. Decisions are being made very carefully and verified at

various corporate levels, with plentiful more details being taken into consideration. Hence, it's not easy to fill up 58,000 sq.m and we give ourselves a few extra months to achieve full occupancy," Leszek Sikora, Managing Director at ECE Polska tells Poland Today. The center can be reached easily on foot as well as with public transportation through its central location directly adjacent to the central station and the bus terminal and only a 10-minute walking distance from the city center. A total of 1,500 parking spaces are available for visitors arriving by car. A special feature of the center is the integration of the building into the central station which gives direct access. The project has received a number of awards, including "Retail Project of the Year" at CEE Retail Real Estate Awards, as well as "Project of the Year", "Mixed-use project of the year", and "Retail project of the year" at the CEE Green Building Awards.

ECE says its needs siome time to find tenants for the remaining 10% of space at Poznań City Center. Image: TriGranit

Resolution Property was founded in 1998 with the specific aim of investing in UK and European com-mercial real estate that offers scope for high returns through a combination of good initial stock selection, active management, refurbishment and redevelop-ment potential. Poznan City Centre will be Resolu-tion’s second asset in Poland joining Galeria Pomorska in Bydgoszcz.


"Poznan City Center is a significant addition to our Polish Portfolio and the centre presents strong asset management potential and future development oppor-tunities in line with our European strategy," com-mented Peter Todd, Partner of Resolution Property. ECE has more projects in pipeline ECE currently manages eight shopping centers in Po-land, including in Wrocław, Łódź, Kraków, Gdańsk and Szczecin, with a combined GLA of more than 400,000 sq.m. Its proprietary Polish assets include Galeria Kaskada in Szczecin. "Just today we have completed the final site purchase for the Zielone Arkady project in Bydgoszcz with a GLA of 51,800 sq.m. We are breaking ground on that project on 1 April to open before the end of October next year. We've been also given a go-ahead and budg-et for a 16,000 sq.m extension of Galeria Bałtycka. This year ECE Polska will be busy integrating Silesia and Poznań City Centers into our organization, but we re-main on the lookout for new takeover opportunities," says Leszek Sikora. Founded in 1965, ECE manages 189 shopping centers (including 40 that are managed by METRO-ECE Centermanagement) in 17 countries with a combined retail sales area of 6m sq.m. According to ECE, their 17,500 tenants generate EUR 21bn in annual sales. As for the ECE European Prime Shopping Centre Fund, it manages EUR 775.5m in equity commitments from global leading institutional investors and concentrates on the acquisition of existing shopping centers with value-add potential across continental Europe. "With the acquisition of Poznań City Center, the ECE European Prime Shopping Centre fund is fully invest-ed. I am very pleased that we are now also operating in the fifth biggest city of Poland – the center's highly-frequented city center location makes it even more ex-citing. The management expertise of ECE will help to

further establish the center on the market and to add to its success, commented Dr. Volker Kraft, Managing Partner of ECE Real Estate Partners.

RETAIL CHAINS

Leroy Merlin and OBI Leroy Merlin and OBI Leroy Merlin and OBI Leroy Merlin and OBI mentioned as potential mentioned as potential mentioned as potential mentioned as potential buyers for DIY buyers for DIY buyers for DIY buyers for DIY chains chains chains chains Praktiker and NOMI Praktiker and NOMI Praktiker and NOMI Praktiker and NOMI

Germany's OBI and France's Leroy Merlin are viewed as the strongest candidates to acquire the Polish busi-ness of German DIY retailer Praktiker, which went bankrupt in the summer of last year. The German firm used to be part of the Metro AG group before it was spun off as an independent business in 2005. With 24 stores in good locations across the country, Praktiker may be attractive buy for any home improvement player interested in the Polish market. Praktiker's Polish arm turned over PLN 760m in 2012. Besides Praktiker, also Polish chain NOMI is looking for new owners following the collapse of its business last year. Established in 1993, NOMI used to be part of the UK retail giant Kingfisher (owners of the Castorama chain), which sold the chain to private eq-uity company Enterprise Investors in 2003 for PLN 45m. At the time, NOMI had 39 stores across the coun-try and annual revenues of PLN 0.5bn. Over the 2007-2011 period the business was profitable. In 2012 the company turned over PLN 497m and employed 1,367 staff. NOMI, which currently has stores in 28 medium-sized towns, was last owned by a Polish investment fund i4ventures.

Leroy Merlin Polska CEO Christoph Dubus told the news agency ISB his company would be interested in both chains, while OBI has remained tightlipped on the issue.

Praktiker filed for bankruptcy in July 2013. Photo: A.Savin, Wikimedia Commons

"Polish DIY retail sector is on the verge of major con-solidation process,” Dubus said, adding that some re-tailers, including Praktiker and NOMI, faced solvency problems last year due to a 4% y/y contraction in Po-land's construction sector, creating an 'interesting opportunity' for the likes of Leroy Merlin to expand their portfolios. "We rely chiefly on slow, organic ex-pansion, but we’re closely monitoring the sector and our competitors. If an offer to buy either Praktiker or Nomi is on the table we will consider it," Dubus added. The number one home improvement chain in Poland is the UK-owned Castorama, which boasts an 11% market share with more than 70 outlets. Other top chains include the Bricomarche with 93 franchisee-operated shops, as well as Leroy Merlin and OBI, each with 45 stores. According to Dubus, Leroy Merlin is eyeing 2-3 openings per annum, aiming to reach 80


stores and create 5,000 new jobs in two decades. Cur-rently Leroy Merlin employs some 8,000 staff in Po-land, where its stores are located in large and medium-sized cities. Besides its 45 brick and mortar outlets, ranging from 6,000 to 18,000 sq.m in size, Leroy Mer-lin operates an online store in Poland.

Poland's largest DIY chains Number of outlets as of end of 2013

0 10 20 30 40 50 60 70 80 90

Bricoman

Praktiker

NOMI

OBI

Leroy Merlin

Castorama*

Bricomarche

*) including Brico Depot Source: Cushman & Wakefield Jan 2014

IT & TELECOM

AlcatelAlcatelAlcatelAlcatel----Lucent sees Lucent sees Lucent sees Lucent sees opporopporopporopportunity in Polish tunity in Polish tunity in Polish tunity in Polish broadband rollbroadband rollbroadband rollbroadband roll----outoutoutout

Global communications equipment company Alcatel-Lucent plans to 'refocus' on Poland and several other countries in Europe as it looks to right its ship, the company’s CEO Michel Combes told the press in War-saw last week. "Today Poland is key in the set-up of Alcatel-Lucent," he said. "Poland is one of the countries in Europe where we have decided to refocus." Other EU markets where the firm intends to concentrate include France, Germany and Belgium, he added.

The company has a strong presence in Poland, with 1,000 employees in the country total, between 200 and 300 of which work in R&D, officials said. The firm’s other employees in Poland provide network monitor-ing and customer support services for markets all over the world, as well as sales and support for local cus-tomers. The firm sees opportunity in broadband roll-outs in the regions as the country looks to increase access to high-speed internet, Combes said. Currently, it is co-operating with Hawe and TP Teltech on broadband roll-out projects in the Warmińsko-Mazurskie and Podkarpackie voivodships, as well as supplying Or-ange in two other projects in the Lubuskie and Pomorskie voivodships. Combes told Poland Today that the company does not have any specific plans to expand its R&D centre, lo-cated in the northern city of Bydgoszcz. However, the company does plan to close down R&D centers in oth-er parts of the world, meaning the Polish operation could benefit by taking on some of the leftover pro-jects, Combes said. When asked about consolidation in the telecoms mar-ket in Europe, Combes came out strongly in favour. "The market is too fragmented in Europe. We have too many players, many of whom don’t have the scale and the size to invest in new technologies," he said, adding that the US market was far more competitive and re-ceives much more investment than Europe's. "We need the right balance of consolidation when it makes sense," he said. Combes was made CEO in April of last year, and has implemented a plan to narrow the firm’s portfolio of services and clean up the balance sheet. So far he says the company has cut EUR 360m in costs and taken care of all of its refinancing needs.

ECONOMY

Consumer inflation at Consumer inflation at Consumer inflation at Consumer inflation at 0.7% in February 0.7% in February 0.7% in February 0.7% in February

Poland's inflation rose in February, figures from the Central Statistical Office showed Friday. The consum-er price index rose 0.7% y/y, following a 0.5% rise in January, revised from 0.7% due to the annual change of weights in the inflation basket. Economists were looking for an inflation figure of 0.8%. Food price in-flation remained unchanged at 1.8%. Month-on-month, prices edged up 0.1% in February, same as in January, in line with expectations

CPI inflation in Poland (y/y)

0%

1%

2%

3%

4%

5%

Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14

Source: GUS

"In our opinion, the change of weights will have much smaller impact on the inflation at the end of the year than on the January's reading. At the same time, the pace of price growth will be subdued for the better part of the year allowing the MPC to keep interest rates unchanged until end-year," BZ WBK economists said in an e-mailed commentary.

Registration till 20 March 2014:www.prospectsinpoland.com

During the 3rd logistics conference in Gliwice, representatives of the City, sector experts, investors interested in the region, as well as those who have already put their money in, will discuss how to maximise the potential of the city and its surroundings.

Conference: Hub Silesia – logistics as a driver of the region's economic growth 26 March 2014, Silvia Gold Hotel, Gliwice

Organizers: Media Partner:Content Partner: Partner:

)


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Nov '13 Dec '13 Jan '14 Feb '14

Sector y/y m/m y/y m/m y/y m/m y/y m/m

Food & bev +1.9 +0.3 +1.5 +0.7 +1.8 +1.6 +1.6 -0.2

Alcohol, tobacco +3.6 +0.1 +3.7 0.0 +3.4 +0.8 +2.2 +1.4

Clothing, shoes -4.9 -0.2 -4.9 -0.6 -5.0 -3.7 -4.7 -1.7

Housing +1.8 +0.1 +1.8 0.0 +1.9 +0.2 +1.9 +0.1

Transport -2.3 -1.2 -0.9 0.4 -1.2 -1.5 -1.1 +0.4

Communications -11.7 -4.9 -11.6 0.0 -7.8 -0.3 -3.2 +0.4

Gross CPI +0.6 -0.2 +0.7 +0.1 +0.5 +0.1 +0.7 +0.1

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Feb 12

Apr 12

Jun 12

Aug 12

Oct 12

Dec 12

Feb 13

Apr 13

Jun 13

Aug 13

Oct 13

Dec 13

Feb 14

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month Sep '13 Oct '13 Nov '13 Dec '13 Jan '14

m/m (%) -0.9 +3.6 -5.8 +17.3 -21.3

y/y (%) +3.9 +3.2 +3.8 +5.8 +4.8

Year 2009 2010 2011 2012 2013

Turnover in PLNbn 582.8 593.0 646.1 676.0 n/a

y/y (%) +4.3 +5.5 +11.6 +5.6 +2.3

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2009 2010 2011 2012 2013 Jan

2014

y/y

(%)

Permits 178.8 174.9 184.1 165.1 138.7 8.8 +8.5

Commenced 142.9 158.1 162.2 141.8 127.4 6.5 +56.2

U. construction 670.3 692.7 723.0 713.1 694.0 688.2 -2.1

Completed 160.0 135.7 131.7 152.5 146.1 12.2 -12.8

Source: Central Statistical Office (GUS)

GGGGross Domestic Productross Domestic Productross Domestic Productross Domestic Product

Period Growth y/y unadjusted

GDP in PLN bn current prices

Current account def. in % of GDP

Q4 2013 +2.7% 442,167 -1.5%

Q3 2013 +1.9% 393,725 -1.9%

Q2 2013 +0.8% 389,244 -2.3%

Q1 2013 +0.5% 370,089 -3.1%

2013 +1.6% 1,631,764 -1.5%

2012 +1.9% 1,595,225 -3.7%

2011 +4.5% 1,528,127 -5.0%

2010 +3.9% 1,416,585 -5.1%

Key Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & ProjectionsKey Economic Data & Projections

Indicator 2010 2011 2012 2013 *2014

GDP change +3.9% +4.5% +1.9% +1.6% +3.5%

Consumer inflation +2.6% +4.3% +3.7% +0.9% +1.1%

Producer inflation +2.1% +7.6% +3.4% -1.3% +0.1%

CA balance, % of GDP -5.1% -5.0% -3.7% -1.5% -0.6%

Nominal gross wage +3.9% +5.2% +3.7% +3.4% +4.7%

Unemployment** 12.4% 12.5% 13.4% 13.4% 12.6%

EUR/PLN 3.99 4.12 4.19 4.20 4.09

Sources: NBP, BZ WBK, GUS *) projections **) year-end

GGGGross Wagesross Wagesross Wagesross Wages A: avg monthly wages in PLN B: indexed avg wages, 100=2005

Sector Q4 2012 Q1 2013 Q2 2013 Q3 2013

A B A B A B A B

Coal mining 8,427 192 6,060 138 6,290 143 6,061 138

Manufacturing 3,522 154 3,491 152 3,560 155 3,625 158

Energy 6,535 198 6,196 188 5,828 177 6,021 183

Construction 3,829 163 3,556 152 3,693 157 3,766 160

Retail & repairs 3,365 143 3,432 146 3,421 146 3,408 145

Transportation 3,816 135 3,439 122 3,547 125 3,589 127

IT, telecoms 6,379 166 6,685 174 6,707 174 6,654 173

Financial sector 6,044 136 6,356 143 6,702 151 6,109 137

National average 3,878 154 3,741 149 3,613 144 3,652 145

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14

m/m (%) +7.8 -0.8 +9.4 +14.3 -2.9 +21.5 -64.0

y/y (%) -5.2 -11.1 -4.8 -3.2 -8.9 +5.8 -3.9

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +15.5 +12.1 +5.1 +4.6 +11.8 -0.6 -12.0

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

May 11

Aug 11

Nov 11

Feb

12

May 12

Aug 12

Nov 12

Feb

13

May 13

Aug 13

Nov 13

Feb 14

60

80

100

120 Co nsumer confidence (left axis)

Economic sentiment (right axis)

The economic sentiment (1990-2010 average = 100) is a composite made up of 5 sectoral confidence indicators, which are arithmetic means of seasonally adjusted balances of answers to a selection of questions closely related to the reference variable. Source: Eurostat

Producer PriceProducer PriceProducer PriceProducer Pricessss

Month Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14

m/m (%) +0.2 -0.3 +0.1 -0.7 -0.3 -0.1 +0.1

y/y (%) -0.8 -1.1 -1.4 -1.4 -1.5 -1.0 -0.9

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +2.0 +2.2 +3.4 +2.1 +7.6 +3.3 -1.3

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Jan'14

m/m (%) -0.1 -0.2 -0.1 -0.1 -0.1 -0.1 -0.2

y/y (%) -1.9 -1.9 -1.8 -1.8 -1.7 -1.7 -1.7

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +7.4 +4.8 +0.2 -0.1 +1.0 +0.2 -1.8

Industrial OutputIndustrial OutputIndustrial OutputIndustrial Output

Month Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14

m/m (%) +1.5 -4.5 +9.6 +6.0 -6.2 -9.7 +2.9

y/y (%) +6.3 +2.2 +6.2 +4.4 +2.9 +6.6 +4.1

Year 2007 2008 2009 2010 2011 2012 2013

y/y (%) +10.7 +3.6 -3.5 +9.8 +7.7 +1.0 +2.2


TTTTraderaderaderade

Poland exports and imports according to commodity groups, according to SITC classification

EXPORTS in PLN bn IMPORTS in PLN bn

2013 y/y (%)

share (%)

2012 share (%)

2013 y/y (%)

share (%)

2012 share (%)

Food and live animals 69,304 +9.7 10.9 61,694 10.5 47,906 +6.2 7.4 44,287 7.0

Beverages and tobacco 8,624 +7.3 1.4 7,967 1.3 4,150 +4.0 0.6 3,989 0.6

Crude materials except fuels 15,744 +10.5 2.5 14,024 2.4 21,585 -3.7 3.3 22,053 3.5

Fuels etc 30,013 +1.4 4.7 29,389 4.9 75,539 -11.7 11.7 85,280 13.2

Animal and vegetable oils 1,864 +34.2 0.2 1,342 0.2 2,646 -9.2 0.4 2,887 0.5

Chemical products 59,103 +7.7 9.3 54,295 9.1 92,917 +3.1 14.3 89,140 13.9

Manufactured goods by material 129,915 +2.0 20.3 126,161 21.1 112,392 0.0 17.3 110,773 17.4

Machinery, transport equip. 239,434 +6.1 37.5 223,646 37.4 216,608 +4.1 33.4 203,718 32.1

Other manufactured articles 82,816 +8.5 13.0 75,925 12.7 58,210 -1.1 9.0 57,646 9.1

Not classified 1,782 n/a 0.2 2,653 0.5 16,242 n/a 2.6 18,515 2.8

TOTAL 638,599 +5.8 100 597,096 100 648,195 0.0 100 638,288 100

Poland's ten largest trading partners, ranked according to 2013

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan 2014

share *2013 share No Country Jan 2014

share *2013 share

1 Germany 14,097 26.1% 159,622 25.0% 1 Germany 10,999 20.7% 139,334 21.5%

2 UK 3,488 6.5% 41,503 6.5% 2 Russia 7,852 14.8% 79,601 12.3%

3 Czech Rep. 3,394 6.3% 39,421 6.2% 3 China 5,497 10.3% 60,914 9.4%

4 France 3,313 6.1% 35,745 5.6% 4 Italy 2,357 4.4% 33,703 5.2%

5 Russia 2,140 4.0% 34,058 5.3% 5 Netherlands 1,856 3.5% 25,005 3.9%

6 Italy 2,391 4.4% 27,450 4.3% 6 France 1,971 3.7% 24,533 3.8%

7 Netherlands 2,269 4.2% 25,292 4.0% 7 Czech Rep. 1,869 3.5% 23,778 3.7%

8 Ukraine n/a 2.8% 18,037 2.8% 8 USA 1,209 2.3% 17,350 2.7%

9 Sweden 1,723 3.2% 17,498 2.7% 9 UK 1,295 2.4% 16,861 2.6%

10 Slovakia 1,293 2.4% 16,795 2.6% 10 Belgium 1,309 2.5% 14,913 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 14 March 2014

100 USD 304.81 ↑

100 EUR 423.34 ↑

100 GBP 506.75 ↓

100 CHF 348.70 ↑

100 DKK 56.72 ↑

100 SEK 47.75 ↑

100 NOK 50.94 ↑

10,000 JPY 299.98 ↑

100 CZK 15.48 ↑

10,000 HUF 135.02 ↑

100 USD/EUR against PLN

300

350

400

450

28 M

ar 13

10 Jun 13

16 A

ug 13

23 O

ct 13

7 Jan 14

14 M

ar 14

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Oct '13 Nov '13 Dec '13 Jan '14

Monetary base 154,967 153,672 164,010 161,544

M1 536,237 538,837 555,851 546,487

- Currency outside banks 113,174 113,718 114,401 113,455

M2 935,095 934,713 960,361 947,443

- Time deposits 414,941 412,469 421,160 418,259

M3 955,419 953,446 978,924 962,416

- Net foreign assets 150,517 148,702 143,430 140,617 Monetary base: Polish currency emitted by the central bank and money on accounts held with it. M1= currency outside banks + demand deposits M2= M1+ time deposits (inc in foreign currencies) M3= the broad measure of money supply Source: NBP

CCCCreditreditreditredit

The financial sector's net lending in PLN bn,

loan stock at the end of period

Type of loan Sep '13 Nov '13 Dec '13 Jan '14

Loans to customers 901,288 906,298 903,890 914,189

- to private companies 260,585 262,396 259,061 263,063

- to households 559,965 563,157 562,381 567,984

Total assets of banks 1,612,836 1,627,119 1,601,293 1,628,197

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Jan '14

PLN (up to 1 year) 4.6% 4.5% 4.5% 4.5% 4.3% 4.2%

PLN (up to 5 y ) 5.1% 4.9% 4.9% 4.9% 4.9% 4.9%

PLN (over 5 y) 4.9% 4.8% 4.8% 4.8% 4.7% 4.8%

PLN (total) 4.9% 4.8% 4.8% 4.8% 4.7% 4.8

EUR (up to 1m EUR) 1.9% 1.8% 2.0% 1.9% 1.9% 2.0%

EUR (over 1m EUR) 3.5% 3.2% 2.5% 3.0% 2.9% 3.6%

Warsaw Inter Bank Offered Rate (WIBOR) as of 14 Mar 2014

Overnight 1 week 1 month 3 months 6 months

2.59%% 2.59% 2.61% 2.71% 2.74%

Central Bank (NBP) Base Rates

Reference Lombard NBP deposit Rediscount

2.50% 4.00% 1.00% 2.75%

Stock ExchangeStock ExchangeStock ExchangeStock Exchange

Warsaw Stock Exchange, rates in PLN

WIG-20 stocks in alphabetical

order

Price 14 Mar '14

Change 28 Feb'14

Change end of '13

↓ Asseco Pol. 46.9 -5% +2%

↓ Bogdanka 112.05 -12% -11%

↓ BZ WBK 399.5 -5% +3%

↓ Eurocash 38.5 -3% -19%

↓ Grupa Lotos 36.79 -10% +4%

↓GTC 6.8 -8% -9%

↓ Handlowy 103.1 -10% -2%

↓ JSW 41.9 -19% -21%

↓ Kernel 24 -25% -37%

↓ KGHM 101.5 -13% -14%

↓ mBank 485.1 -11% -3%

↑ Orange Pol. 10.69 +6% +9%

↓ Pekao 184 -5% +3%

↑ PGE 18.6 +1% +14%

↓ PGNiG 4.31 -15% -16%

↓ PKN Orlen 40.55 -7% -1%

↓ PKO BP 30.2 -32% -23%

↓ PZU 415 -6% -8%

↓ Synthos 4.96 -7% -9%

↑ Tauron 4.88 +1% +12%

Source: Warsaw Stock Exchange

Key indices

as of 14 March 2014

WIG Total index

49494949,,,,520520520520....84848484 Change 1 week -8% ↓

Change end of '13 -3% ↓

WIG-20 blue chip index

2,2,2,2,341341341341....98989898 Change 1 week -7% ↓

Change end of '13 -2% ↓

WIG Total closing index

last three months

49,000

50,000

51,000

52,000

53,000

54,000

55,000

6 D

ec 13

7 Jan 14

29 Jan 14

20 Feb 14

14 M

ar 14


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New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan 2014 *

Monthly wages (PLN)

Jan 2014**

Unemploy-ment

Dec 2014

New dwellings Jan 2014

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 98.4 82.9 4,076 3,967 161.2 13.8 1,176 72.3

Kujawsko-Pomorskie (Bydgoszcz) 107.6 138.6 3,321 3,143 156.7 18.8 608 91.0

Lubelskie (Lublin) 104.3 84.6 3,787 2,976 140.4 15.0 346 59.2

Lubuskie (Zielona Góra) 117.8 106.4 3,396 3,030 63.5 16.5 434 82.8

Łódzkie (Łódź) 103.9 100.4 3,735 3,094 158.2 14.5 433 71.2

Małopolskie (Kraków) 97.6 100.3 3,708 3,274 172.4 12.1 1,393 70.1

Mazowieckie (Warszawa) 106.5 86.6 4,380 4,776 295.3 11.4 2,491 90.7

Opolskie (Opole) 103.7 146.9 3,509 3,460 55.0 15.0 147 86.0

Podkarpackie (Rzeszów) 102.7 146.9 3,333 2,998 160.4 16.9 585 101.9

Podlaskie (Białystok) 106.4 98.6 3,209 3,613 74.0 15.7 228 69.9

Pomorskie (Gdańsk-Gdynia) 110.6 93.3 3,892 3,305 119.9 13.9 774 85.4

Śląskie (Katowice) 100.1 95.7 4,270 3,493 218.4 11.7 1,030 102.6

Świętokrzyskie (Kielce) 109.0 55.5 3,356 3,153 94.7 17.1 211 106.0

Warmińsko-Mazurskie (Olsztyn) 102.1 137.1 3,427 2,964 121.2 22.4 452 135.7

Wielkopolskie (Poznań) 108.5 85.8 3,769 3,545 152.3 10.0 1,368 137.8

Zachodniopomorskie (Szczecin) 110.7 93.0 3,474 3,422 117.2 18.7 511 69.9

National average 104.1 93.8 4,076 3,967 2,260.7 14.0 12,187 87.2

*) Index 100 = same period of the previous year. ** without social taxes

Sources: Central Statistical Office GUS, NBP, C&W

Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)Foreign Direct Investment (EUR m)

Quarter Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13

in Poland 1,861 1,381 2,886 175 -3,020 -1,794

Polish DI 310 -550 -1,203 957 2,588 -1,529

Year 2007 2008 2009 2010 2011 2012

in Poland 17,242 10,128 9,343 10,507 14,832 4,716

Polish DI -4,020 -3,072 -3,335 5,484 -5,276 375

Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)Current Account (EUR m)

Period 2010 2011 2012 Q1 '13 Q2 '13 Q3 '13

Trade balance -8,893 -10,059 -5,313 -139 1,203 1,017

Services, net 2,334 4,048 4,816 1,274 1,686 1,047

CA balance -18,129 -17,977 -13,332 -2,313 486 -2,027

CA balance vs GDP -5.1% -5.0% -3.7% -3.1% -2.3% -2.0%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1,800

2,000

2,200

2,400

2,600

Q4 10

Q2 11

Q4 11

Q2 12

Q4 12

Q2 13

Q4 13

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, Q4 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 563,000 17,000

22.3% 3.6–5.1

Warsaw suburbs 2,063,000 12.5% 2.1–2.8

Central Poland 1,021,000 80,000 15.2% 2.1–3.3

Poznań 1,023,000 215,000 4.4% 2.5–3.15

Upper Silesia 1,431,000 37,000 9.3% 2.4–3.3

Wrocław 780,000 259,000 11.7% 2.6–3.1

Tri-city 184,000 46,000 9.2% 2.8–3.3

Kraków 141,000 0 4.0% 3.3-4.0

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 2H'13 Retail rents**2H'13

Q3 '13

PLN/sq.m

Change

y/y

Headline

rents**

Vacancy

ratio

Retail

centres

High

streets

Warsaw 8,146 +3.4% 11.5-25.5 11.75% 80-90 85

Kraków 5,989 -13.1% 13-15 4.90% 35-45 78

Katowice 5,898 +9.0% 13-14 7.30% 35-45 56

Poznań 6,351 -6.7% 14-16 14.20% 35-45 55

Łódź 4,780 -3.8% 12-14 14.40% 35-45 25

Wrocław 5,997 -4.3% 13-15.5 11.75% 35-45 40

Gdańsk 6,398 -1.2% 13-15 11.20% 35-45 31

*avg, offer-based ** EUR/sq.m/month; Retail units 100-150 sq.m

Country Credit RatingsCountry Credit RatingsCountry Credit RatingsCountry Credit Ratings

Agency rating outlook

Fitch Ratings A- stable

Standard & Poor's A- stable

Moody's A2 stable

Source: Rating agencies

Real EarningsReal EarningsReal EarningsReal Earnings

Average gross wage vs inflation.

100

120

140

160

180

Jan10

Sep11

May11

Jan12

Sep12

May13

Jan14

Wage CPI

Index 100 = Jan 2005. Source: GUS

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