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edition 3 (218)
March 2017
Investment & finance

Exit Britain... enter Poland?

Brexit is a fact. Although it hasn’t happened yet. But it will happen. Probably

Tomasz Cudowski

There has been no end to the discussion about the possible impact of Brexit on the global and European economy since last June, when the Brits voted to leave the EU in a referendum. We ask the ExPerts whether, in their opinion, Brexit has already had any effect on the Polish real estate market and what its repercussions are likely to be when it finally takes place. Provided it does

Damian Harrington,

director, head of EMEA research, Colliers International

The real outcome of Brexit has yet to reveal itself, although Prime Minister Theresa May has made it clear that the British government will be seeking a clean break from the European Union and the Customs Union. The outcome of the EU referendum made many nervous that we would see a mass exodus of businesses relocating from London. Indeed, some sceptics predicted that 100,000 finance and business services jobs would be likely to flee to the continent, and just recently HSBC and UBS confirmed that they would start transferring staff within the next two years. To date, however, no business has moved from the UK capital, but contingency plans are being considered. To give this some context, relocation on the scale of 100,000 jobs is not possible to achieve in such a short space of time, as highlighted by the findings from Colliers’ recent Cities of Influence report. The outcome of the study highlights that no single city in Europe has the capacity to absorb 100,000 jobs at short notice, from a talent perspective. These jobs would need to be distributed across a range of target cities possessing the latent capacity and skills to attract them. Even then, this would absorb the available skilled workforce of cities such as Dublin, Frankfurt and Amsterdam. However, although a relocation of jobs on this scale would not be possible, it would be feasible to re-distribute 10,000 jobs across a range of skilled cities. A relocation of 10,000 jobs across a few Brexit target cities (Dublin, Paris, Frankfurt) could generate real estate cost savings of up to EUR 70 mln per year, but this would need to be offset against relocation costs. In terms of the impact on Poland, it seems unlikely there will be any direct relocation upside for Warsaw or any other regional Polish cities as a direct result of office-based jobs relocating from London. Dublin tops the popularity list, followed by Frankfurt. More importantly, the widely discussed relocation of jobs is just speculation at present, and will remain this way until Article 50 is lodged. We’ll need to wait until the end of March for the situation to become clear and the wider sectoral business and investment impact to be known.

Tomasz Trzósło,

managing director, JLL

It is still too early to assess the impact of Brexit on the office market in Poland. However, we have been receiving some positive information. We have been receiving an increasing number of enquiries from potential office tenants related to the strategic decisions of companies whose businesses will be affected by the UK’s exit from the EU. These are currently enquiries about market analyses, but they show that Warsaw is being considered as a potential business location. Poland, as an EU country that is not in the eurozone, may be attractive for some financial institutions that operate in the EU as well as outside of it. Furthermore, in line with current regulations, banks headquartered outside EU borders have to have independent units within the EU in order to be able to provide their services here. Why should they not open such units in Poland? Due to our developed competences in the business service industry, our country is also on the list as a destination for companies interested in the relocation of some of their ‘middle office’ processes. Such news, e.g. about JP Morgan considering moving some of its processes from London to Poland, are a positive, tangible example that we can fight for an influx of investment in the service sector. The development of Goldman Sachs in Poland sends out a similar signal. It is worth emphasising that Poland became an interesting alternative for international business long before the Brexit referendum. JLL is the best example of this. Before the referendum we had moved JLL’s strategic financial processes for the EMEA region to Warsaw. The financial director of JLL EMEA moved here and she manages the finances of JLL’s European operations from Poland. Apart from London, Paris and Frankfurt, Warsaw is currently a key decision centre in terms of JLL’s finances in the EMEA region.

Maciej Zajdel,

member of the board, Kulczyk Silverstein Properties

During our leasing operations and organising a series of conferences promoting the investment potential of Warsaw in key European metropolises, we have clearly observed a growing interest in Poland among upscale and premium brands that want to open their flagship stores on high streets. Many of these brands have already included Poland in their expansion plans, as they have been looking for space for development in more stable economies, such as our country. The Brexit phenomenon is connected with a change in the economic climate in the world, which is having a painful impact on luxury brands. The decline of their main output markets, i.e. Russia, China and France, has prompted them to direct their attention to new markets, where Poland clearly stands out. This is confirmed by data from the latest Bain & Company report we commissioned, in which our country is the only state in Central Europe to have registered an increase in the sale of goods, including luxury goods – of around 7 pct.

Martin Erbe,

head of international real estate finance of Continental Europe, Helaba

From an international bank’s view (and from my conversations with investors) the impact of the current hiccups created by the Polish government might have a much bigger influence on the Polish economy and might even outpace any positive impact from Brexit (if any).

Sabine Barthauer,

member of the board of directors, Deutsche Hypo

Poland maintained its position as the CEE region’s leading real estate market in 2016. The interest of international investors in the Polish market is continuing. An important reason for this is that especially the Polish metropolises have good infrastructure, technically well-equipped properties and well-trained staff. Currently, some companies from the UK are considering relocating back-office activities to Poland. It is quite possible that this development will continue. In my view, Poland has a good chance of benefitting from Brexit, by positioning itself, for example, as a hub for back-office activities.

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