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edition 12 (236)
December 2018
Office & mixed-use development

First contact developer

Interviewer Tomasz Cudowski

First contact developer
Arkadiusz Rudzki, managing director, Skanska Property Poland

What has been the most important event of the last year for Skanska? Let's start in the corporate sphere...

Arkadiusz Rudzki, managing director, Skanska Property Poland: The answer to this is simple – moving to the Spark building in Warsaw. All the group’s companies are finally under one roof, which has enabled us to consolidate our operations and to improve the cooperation between our construction and property development divisions. These are basically two different worlds and effective cooperation is now all the more important because the construction sector is facing many challenges at the moment.

Which of these are the greatest challenges you are having to face?

The staff shortages – and this is currently an issue for the entire sector. The poor state of the subcontracting segment is mainly due to the problems we are having finding workers for the construction sites. The prices of building materials and services have also been growing. But we are pleased that Skanska now has a steady, reliable group of subcontractors who want to work with us, so we have no problems fulfilling our schedules. There is also the shortage of good plots, that is, sites unburdened with technical or procedural issues, is another problem facing the sector. Our company generally operates in the centres of large cities, where there are fewer and fewer plots like this – a shortage that has partly been caused by the boom in the residential sector.

How are you coping with this?

We are trying to create advantages for ourselves and make the best use of them: we design using BIM. We are assessing the risks carefully – including when we are buying plots. We have the potential and experience of an international corporation. And we have a group of reliable subcontractors. With these advantages we are able to provide tenants and investors with competitive terms without compromising on quality.

What will the end of the year be like for you in business terms?

Very good. We expect results similar to our record-breaking year, 2017, when it comes to the amount of space under construction, 250,000 sqm at present, and the space leased, around 100,000 sqm. Furthermore, we have started the construction of the first skyscraper of Generation Park in Warsaw by launching the third phase of the project; and we have also launched a large number of innovation schemes, such as the Connected by Skanska system and the use of anti-pollution concrete. We have become pioneers in the introduction of the Well certification system. And we have also entered our seventh Polish market – the TriCity, where we are building the Wave office complex.

Are investors are still eager to buy from you?

We’ve got no problems in that regard. The best indicator of the confidence they have in us is the fact that investors who are just entering the Polish market are so keen to approach us. That has been the case with German funds Hans and KGAL. We are also in talks with a large new fund from outside Europe.

Could you at least reveal which country the fund is from?

The fund is from Asia and has not yet bought anything in Poland. I think we have earned the privilege of introducing new investors to the Polish market because of what and how we build. We are a ‘first contact developer’. The global reach of the company and the fact that our brand is recognised all over the world also helps us of course.

What do you expect the next year to be like for you?

I would like it to be at least as good as 2018 and 2017. We have ambitious plans – and intend to maintain last year’s scale when it comes to projects and leasing, while focusing on seven of our markets.

And what will 2019 bring for the entire office sector?

I think the strong dynamics will continue when it comes to leasing, but for launching new projects the market will no longer be so amenable. Developers who have already started projects will do well out of them. Poland still has good rating, which means that for safe funds we are still a great country to invest in. Furthermore, the investment market is diversifying – more and more companies are developing mixed-use projects, so new ‘product lines’ have been emerging, such as student halls and homes for the elderly. This is good because the market has to be diverse and varied if we want it to be less susceptible to the kinds of turmoil that could arise. But as a developer that employs our own funds, we are virtually immune to any possible upheavals on the financial market.

Finally, what gift for the sector would you like to find under the Christmas tree?

It would be good if REIT funds, which will soon be introduced in Poland but probably only for the residential market, were also launched for the Polish office market. This would be an important instrument not only for developers but also for individuals, as it would enable them to support the Polish economy and make a decent profit while doing so. I think the Polish market is mature enough for REITs to be extended to the retail segment and to benefit everyone on the real estate market.

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