Location, location, location

Eurobuild talked to Zbigniew Wojciech Okoński, Vice-President of Prokom Investment, about architecture students at Harvard, good locations and investment.

Miasteczko Wilanów is an undertaking, which in the next few years will require an investment of around one billion dollars, making you perhaps the biggest developer in Poland. Prokom Investment doesn't have a great deal of experience in this field, however.
So far we have built a complex of apartments and an office building in Gdynia, an office-residential complex in Warsaw and for the last four years we've been involved in the Wilanów scheme. We're now past the most difficult stages, one of which as all developers know, is to have the project approved by local government. As we stand now, most of the plans have been authorised, and it's got to be said that we've found a great ally in the Warsaw Archdiocese.  As far as I know, a fence will be put up any day now and primary work on the construction of the Temple of Divine Providence will start immediately after.

Is Prokom well-known enough among developers and construction investors, to attract partners for Miasteczko Wilanów?
This isn't a problem. We are in fact talking to a Scandinavian investor, widely known around Poland, who is planning to build a hotel in the 'Town', and we're about to sign a contract with an association interested in constructing a German school there too. We want to found institutions to serve the inhabitants of other districts, so we're talking to investors who are prepared to build a hospital and others who want to open a sports club, which will be located in the vicinity of the future motorway. This is also where the technological park and the offices will be.
We have reached an agreement with the Harvard School of Architecture, and a group of students, together with Marta Schwartz, are coming to spend one semester designing the small architecture of the 'Town', that is the area around the palace, the lawns, the squares and boulevards. The same students were involved in a similar scheme in Milan last year.

How soon can we expect the administrative decisions which will finalise the date of Auchan's construction?
We are in the process of receiving the zoning requirements. In October, an environmental report on issues such as the ground-water level and air and noise pollution was written and, although the author had minor objections, overall the findings were positive. In order to meet Polish environmental standards we must comply with the report's recommendations. The sole purpose of the analysis was to prove to the health and safety inspectorate, the conservator of monuments and the conservator of nature, as well as to other parties taking part in the administrative procedure, that our investment doesn't pose a threat to Wilanów's natural environment. Wilanów clerks are currently waiting for decisions from these institutions to issue the zoning requirements and I think they will need around a week to a month for that. The decision may still be taken this year but we realise that it will only become final after going through the courts, possibly even the Supreme Administrative Court. I believe that shovels will first hit the soil between June and October next year.

What about other investments in Wilanów?
We want the centre to be built first because we think that it will give momentum to the rest of the investment. As far as the 'Town' is concerned, Robyg Development have already started building apartments on eight hectares of land and the first stage will be the construction of a residential 155-apartment building. Indeed, one of its wings, the one on ul. Klimczaka, has already got all its floors and the whole structure will be put to use next year. We are also in negotiations concerning the underground infrastructure along ul. Klimczaka and ul. Przyczólkowa and are about to start building the main drain, which is a vital element of any development work.  It's going to drain the sewage off to the Poludnie purification plant and will be complete in about seven months.

What about the rarely-mentioned part of Wilanów, namely the future motorway's vicinity?
That's right, not much seems to be being said about it at the moment but I wouldn't be at all surprised if the project got going soon. We're negotiating with an investor, which specializes in constructing offices for hi-tech companies, and if we see eye to eye on the choice of investors and the amount of the investment, we may be able to start next year.

Prokom started work on Miasteczko Wilanów four and a half years ago, when the Warsaw residential market looked completely different and lots of flats were being built, of which many are still empty. Doesn't it concern you that the years of plenty for luxury products are a thing of the past, for now at least?
Business experts claim that there are only three things that really matter as far as investing in real estate is concerned, which are: first location, second location and finally location. I think that there is demand for our product, which will grow along with Poland's economic recovery. I believe our accession to the EU will trigger interest in what we have to offer, because people who work for EU institutions will come and the financial standing of Poles will improve, and I think that Wilanów is a place where these changes will be clearly visible.

Prokom Investment is not only responsible for Miasteczko Wilanów. You also own two other construction companies. What sort of investments are these?
A few years ago, we acquired a company called Energobudowa who often build for us, an example of which is the office-residential complex on ul.Grójecka in Warsaw. We are also co-owner of Polnord, a construction firm in Gdansk, and we're seeking to merge these two companies. Despite being their financial investor, we think that it is beneficial for us as a development company to own construction companies because when our firms take part in tenders, they succeed only if they make the best offer. Energobudowa's yields last year reached around PLN 200 mln, of which only 20 percent came from Prokom's contracts.

How much of Prokom's investment in development activity and the acquisition of construction companies in proportion to its overall assets?
We acquired Energobudowa about five years ago, without having to invest enormous amounts of money but we spent PLN 100 mln on Wilanów's grounds alone. Overall, we spent around two thirds of Prokom's funds on all our plots around Poland, Miasteczko Wilanów and our shares in Energobudowa.

Won't you divulge how much you invested exactly?
Prokom Investment is a private equity fund, with a market value of several hundred million dollars, so we're an important player and if I'm not mistaken, we come just after Enterprise Investors.

Have any of Prokom's investments begun to make any profit?
The complex on ul. Grójecka has shown itself to be a success, since all the apartments have been sold and the office building leased.

Yes it was, but to Prokom Software.
At the end of the day it is better to pay rent to one of your own than someone else. We're now constructing an office building in Gdynia where we're planning to move the company headquarters.

Does your identity as a developer stem simply from the fact that you have invested in a plot in Wilanów, and will you cease 'developing' as soon as the project is completed?
It would be logical to continue, having earned valuable experience and in fact, it would be pointless to give up for exactly that reason. We have plots in Sopot and Gdansk as well as an office building in need of refurbishment, which we acquired through a dependent firm, in the centre of Wroclaw. Having said that, we must start thinking about making profits instead of just investing. The turning point in our investment in Miasteczko Wilanów should take place in about four years, when we are hoping to retrieve our investment costs.