poland today business review+ no. 012

No. 012 / 25th November 2013 / www.poland-today.pl / magazine, conferences, portal, newsletter

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MANUFACTURING & PROCESSING

Slovenian white goods maker Gorenje plans equity boost and listing in Warsaw page 2

GM merges Polish car and engine factories into single business unit page 2

BANKING & FINANCE

PKO BP sells 66% of leading merchant acquirer eService to US EVO Payments page 3

ENERGY & RESOURCES

CEO of power utility PGE steps down over Opole power plant row page 4

Polkomtel is Poland's first mobile operator to sell electricity page 5

PROPERTY & CONSTRUCTION

Israeli founders exit retail center developer Globe Trade Centre page 5

Warsaw Spire office tower construction moves above ground page 6

SERVICES & BPO

Accenture to create 100 jobs at Łódź center page 7

Capgemini expands Wrocław software unit page 8

TRANSPORT & LOGISTICS

Stena Line puts fresh ferry on Gdynia route as discussions on new terminal continue page 10 DCT Gdańsk is Poland's first terminal to handle 1m TEU in one year page 11

CONSUMER GOODS & RETAIL

Tesco seeks buyers for 35 investment sites page 12 Nowy Świat remains Poland's priciest retail street despite drop in rents, report says page 13

KEY FIGURES

Up-to-date macroeconomic figures, currency & stock market data and lots of other hard-to-find info pages 16-18

PM Tusk said the new nominees are to bring "fresh energy" into his cabinet. Photo: KPRM

Gov't shakeupGov't shakeupGov't shakeupGov't shakeup seesseesseessees sevensevensevenseven new ministersnew ministersnew ministersnew ministers In a long-awaited government reshuffle, Polish Prime Minister Donald Tusk has nominated seven new members of his cabinet, including a new finance minister, hoping to reverse the declining fortunes of his Civic Platform (PO) party. page 14

Goodman to builGoodman to builGoodman to builGoodman to buildddd first first first first hubhubhubhub for Amazonfor Amazonfor Amazonfor Amazon Global industrial property developer Goodman will build the first of three Polish distribution centres for e-commerce giant Amazon. The 95,000 sq.m facility is to reach completion next year near Wrocław, creating some 2,000 full-time jobs. page 9

weekly newsletter # 012 / 25th November 2013 / page 2


Top Top Top Top Slovenian white Slovenian white Slovenian white Slovenian white goods maker Gorenje goods maker Gorenje goods maker Gorenje goods maker Gorenje plans equity boost plans equity boost plans equity boost plans equity boost andandandand listing in Warsaw listing in Warsaw listing in Warsaw listing in Warsaw

Slovenia's Gorenje, one of Central and Eastern Eu-rope's top household appliance makers, plans to raise EUR 45m by selling new shares through the Warsaw stock market, in addition to the Ljubljana Stock Ex-change, where it is currently listed. Gorenje, a manu-facturer of energy-efficient appliances under multiple brand names, said it planned to offer up to 10.44m new shares, equivalent to about 36% of its current share capital, at EUR 4.31 each. Gorenje said it would use approximately two thirds of the proceeds from its se-cond equity boost to deleverage, while the rest will be allocated to strategic investments. In a statement, the company emphasized, that the share price remains the same as in its first capital in-crease, which saw Japanese corporation Panasonic acquire EUR 10m worth of Gorenje shares. "The new capital increase will take place in two rounds. In the first round, Gorenje will address the current shareholders; in the second round, further di-vided into two steps, Gorenje will invite its employees, followed by new investors. The stock will be offered in Slovenia and Poland; in the latter market, Gorenje will invite both institutional and retail investors to sub-scribe the new shares. All Gorenje shares will presum-ably be listed on the Warsaw Stock Exchange, in addi-tion to the Ljubljana Stock Exchange, by the end of this year," Gorenje said.

"The current capital increase, following the successful forging of the partnership with Panasonic, is an im-portant step in Gorenje's development strategy. The proceeds will be used to further improve the Group's financial stability and to fund the strategic projects upon which the Group's further growth is based," commented Gorenje's President and CEO Franjo Bobinac.

Gorenje's is well known across the CEE region for its kitchen and bathroom appliances. Photo: Gorenje Panasonic said it would take up to 13% of Gorenje back in July, as the Japanese giant seeks to boost its pres-ence in Europe's fastest growing region. Gorenje's de-but on the Warsaw Stock Exchange underlines the in-creasing appeal of CEE's largest bourse for companies across the region. "The secondary listing on the Warsaw Stock Exchange will allow Gorenje broader access to the capital mar-kets and improve the Group's recognition in the inter-national financial markets, with financial institutions, business partners, and customers. Moreover, second-ary listing may improve the liquidity of Gorenje's shares," said Gorenje CFO Peter Groznik.

Gorenje, which has a market capitalization of EUR 121m and is already listed in Slovenia, sells its products to 90 countries and exports 95% of its output. In the first nine months of 2013 Gorenje turned over EUR 897.1m (down 1.5% on the same period last year) and posted an operating profit of EUR 23.6m (+6% y/y). Its net result was a EUR 18.2m loss, caused largely by one-time events. The company has chosen DM BZ WBK to act as sole global coordinator, joint bookrunner and of-fering agent in Poland, while Nova Ljubljanska banka would be the joint bookrunner and offering agent in Slovenia.


GM merges Polish car GM merges Polish car GM merges Polish car GM merges Polish car & engine factories into & engine factories into & engine factories into & engine factories into single business unitsingle business unitsingle business unitsingle business unit US carmaker General Motors has consolidated its two production plants in Poland, the Opel factory in Gliwice and the former Isuzu diesel engine plant in Tychy into a single business unit. Following the mer-ger, General Motors Poland employs more than 3,500 workers. "This makes us the only GM unit in Poland with both car assembly as well as engine capabilities, which cer-tainly strengthens our position when competing for new models," says GM Poland spokesperson Przemysław Byszewski. "It also gives us additional flexibility as far as staff and technology transfers be-tween the two plants are concerned." Launched in 1999 the Tychy engine factory used to be part of Japan's Isuzu Motors. GM acquired a 60% stake in the business back in 2002 and purchased the outstanding 40% earlier this year. According to the


company, the transaction underlined Europe's im-portance of Europe for GM, as "one of the most com-petitive car markets in the world with highest custom-er demands in terms of fuel economy and CO2 stand-ards." With a staff of just over 500, the Tychy factory currently makes the Circle L 1.7l diesel engines. Since its founding, the plant has turned out more than 2.5m engines.

GM is Poland's No. 3 car manufacturer Car production in Poland by maker in '000 units

0

100

200

300

400

500

600

VW

Opel

Fiat

2009

2010

2011

2012

Source: Samar

GM's main Polish production unit is the Opel plant in Gliwice, which made 125,300 cars last year, down by some 50,000 from the 2011 level and well below its to-tal annual capacity of 207,000 units. Opel employs some 3,000 staff in Gliwice and cooperates with an es-timated 100 suppliers in Poland. The Polish plant manufactures the Astra IV compact in several versions (hatchback, sedan, GTC, and OPC). Recently it has added the new Cascada convertible to the mix, which required investments to the tune of EUR 55m. The Cascada is part of Opel's multi-billion euro model of-fensive introducing 23 new vehicles and 13 new powertrains from 2012 through 2016. In mid-2015 GM seeks to launch production of the next generation As-tra V in Gliwice, which will require capital expendi-tures to the tune of EUR 200m.

No official announcements have been made so far with regard to GM's plans for the Tychy powertrain plant, but according to a number of sources the US carmaker is currently analyzing potential production sites for a next generation diesel engine, as the 1.7l units made in Gliwice may soon become obsolete due to the increas-ingly strict EU emissions norms. GM and its partners produce vehicles in 30 countries. Together with its subsidiaries and joint venture enti-ties the company sells vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Isuzu, Jiefang, Opel, Vauxhall and Wuling brands.

DATA BOX: INDUSTRIAL OUTPUT

Poland's industrial output increased by 4.4% y/y in October vs. 4.7% y/y growth expected in the PAP consensus survey, as output rose 6.0% from the prior month, the stats office GUS announced. Analysts surveyed by PAP had expected a monthly jump of 6.3%. Polish seasonally adjusted industrial output in October was up by 3.8% on a 0.2% monthly increase. In September, Poland's industrial output increased by 6.2% y/y and by 9.6% m/m.

Industrial output & producer prices

-12%-8%-4%0%4%8%12%

Feb12

Apr12

Jun12

Aug12

Oct12

Dec12

Feb13

Apr13

Jun13

Aug13

Oct13

Industry output, y/y change

Producer Price Index, y/y change

Source: GUS, the central statistical office

BANKING & FINANCE

PKO BP sells 66%PKO BP sells 66%PKO BP sells 66%PKO BP sells 66% of of of of Poland's top Poland's top Poland's top Poland's top merchant merchant merchant merchant acquireracquireracquireracquirer eService to eService to eService to eService to US EVO PaymentsUS EVO PaymentsUS EVO PaymentsUS EVO Payments

EVO Payments International, a major payment service provider operating in the United States, Cana-da and Europe has teamed with Poland's top lender PKO BP in the payment processing and acquiring business. Under the proposed transaction, EVO Pay-ments International will acquire a 66% stake in eService, PKO's existing merchant acquiring busi-ness. In addition, the parties will establish a 20 year al-liance under which they will continue to work togeth-er to grow further eService’s business within Europe. PKO will receive USD 113.5m for its stake, plus an ad-ditional earn-out based on future performance. The transaction, which is subject to regulatory approvals, will have a positive effect on the bank's capital ratios, PKO BP said in a statement. "We expect gross profit on this transaction at PLN 377m," PKO BP's official Paweł Borys told a press con-ference after PKO BP announced the sale in mid-November. "The transaction is to be concluded at the turn of 2013 and 2014." At present eService, with over 35% of market share in terms of transaction count and volume, is the leading Polish merchant acquirer. The eService acceptance network consists of more than 80,000 POS terminals and represents the largest network of terminals sup-porting contactless payments in Poland. The company also performs a key role in the development of PKO's mobile banking solution IKO. In 1H 2013 eService


posted a net profit of PLN 19.3m, marking a 67% in-crease y/y, becoming Poland's top clearing agent. Ac-cording to The Nilson Report, eService ranks in the top 30 of the largest European merchant acquirers. PKO BP will remain a minority investor in the firm and has signed separate deals with EVO detailing co-operation between the two sides, PKO BP said in a market filing. The two allies will now seek to expand eService's reach beyond Poland, leveraging EVO’s ex-perience as a payment processing partner, while al-lowing both EVO and PKO to focus on introducing in-novative products and services to eService's existing and future merchant customers. "eService has achieved a leading position in the Polish market, is highly profitable and well positioned to ex-pand internationally. Now, with a prominent and one of the most dynamically developing payments service providers in the world, we can mutually focus on fur-ther developing eService as a leading merchant ac-quirer in Poland, while expanding throughout Central and Eastern Europe," said Zbigniew Jagiełło, CEO of PKO Bank Polski. "This alliance fits perfectly with our strategy of ex-panding our global reach and strengthening our posi-tion in an important European market. We have been very impressed with the eService team and will con-tinue to support them in growing the market and the region by bringing our proven sales solutions to ex-pand the market. We intend on making our existing products available to eService, while leveraging the remarkable eService infrastructure," commented James G. Kelly, CEO of EVO Payments International. Listed on the Warsaw Stock Exchange, PKO BP is Po-land's largest universal bank in terms of both scale of business activities and financial results. In the first half of 2013 the bank reported a strong bottom line of PLN 1.53bn. During 1H 2013, its gross credit portfolio

increased 3.7% and reached PLN 153.8bn, whereas its deposit portfolio rose 2% and came to PLN 157.9bn. PKO BP is in the process of acquiring the Polish arm of Swedish bank Nordea. Founded in 1989 and based in New York, EVO Pay-ments International is among the largest fully inte-grated merchant acquirers and payment processors in the world. EVO operates as a payments service pro-vider for both face-to-face and e-commerce transac-tions for all major credit cards, debit cards, commer-cial cards and electronic bank transfers. EVO can pro-cess in nearly 50 markets and 120 currencies around the world. Through its European subsidiary, EVO op-erates as a principal member of MasterCard World-wide and Visa Europe.

ENERGY & RESOURCES

CEO of power utility CEO of power utility CEO of power utility CEO of power utility PGE steps down over PGE steps down over PGE steps down over PGE steps down over Opole power plant rowOpole power plant rowOpole power plant rowOpole power plant row Krzysztof Kilian, former close friend of Prime Minis-ter Donald Tusk, has resigned as CEO of Poland’s top power utility PGE, reportedly due to disagreement with the Polish government over the planned con-struction of a PLN 11.6bn coal fired power station in the southern city of Opole. According to Mr. Kilian, the project, which the government regards as key for Poland's energy security, would not be profitable for PGE. Officially, Kilian cited recent management changes as the reason for his resignation. His close associate and board member Bogusława Matuszewska, in charge of strategy and development, was fired last month along with CFO Wojciech Ostrowski. The supervisory board

of PGE appointed deputy CEO Piotr Szymanek as act-ing CEO, and decided to launch a competition for the CEO post the company said in a market filing. Wood & Co. analysts said the market would not be pleased with the news. "The previous management had demonstrated strong capex discipline, a key dif-ferentiator within the Polish sector. We believe it is reasonable to expect that new management will be considerably more compliant with the state treasury regarding projects 'in the national interest,' which, all things considered, could mean a worsening outlook for dividends and the company's balance sheet over the rest of this decade," they said.

The giant investment in Opole has become a major bone of contention between the government and PGE's management. Photo: PGE Although the PLN 11.6bn expansion of PGE's Opole power plant was meant to be the largest ever project in Poland's energy sector, recently it has started to look like a yet another never-ending investment saga. Earli-er this year, PGE decided to abandon the project, say-ing that falling energy prices had decreased its poten-tial profitability, but the Polish government, which controls the energy giant, wants the investment to


move ahead as planned. Back in June Prime Minister Donald Tusk said that the government will find fi-nancing and necessary means to build the two new coal-fired power units, 900MW each at the Opole power plant. The contract was awarded to a Polish consortium of Polimex-Mostostal, Mostostal-Warszawa, and Rafako, but its implementation has seen some serious setbacks due to appeals from environmental activists as well as uncertainty over the main contractor Polimex-Mostostal, which barely escaped bankruptcy and had to be rescued by the state-owned Industrial Development Agency ARP. France;'s Alstom, which is to supply some crucial parts of the project, may partic-ipate in its financing, but so far no agreement has been sealed. In its Q3 financial report, PGE said the general contractors were told that the final decision on the in-vestment would be issued by 15 December 2013. The reason the government is pushing for the Opole project has to do with the imminent closure of Po-land's oldest and most polluting power stations, amid the expected growth in demand for electricity. Some experts argue that without huge new investments by 2016 Poland may face blackouts. However, domestic and foreign environmental activists strongly oppose construction of new coal-fired units, even though the country lacks a viable clean domestic alternative to coal, despite a robust growth of the country's wind en-ergy sector. PGE's consolidated sales revenue rose 9% last year and totaled PLN 30.1bn, while its net earnings came to PLN 3.2bn. Its net electricity generation volume rose 1% and topped 57.05 TWh. Besides the Opole project, the company is responsible for building Poland's first nuclear power plant, with an estimated price tag of PLN 50bn.

ENERGY & RESOURCES

Polkomtel is Poland's Polkomtel is Poland's Polkomtel is Poland's Polkomtel is Poland's first mobile operator first mobile operator first mobile operator first mobile operator to sell electricityto sell electricityto sell electricityto sell electricity Polkomtel, owner of the Plus network, is Poland's first mobile operator to sell electricity besides tele-communications services. Tailor-made telecom & en-ergy bundles are currently being offered to Polkomtel's business customers, with a similar prod-uct for individual users is to be introduced at a later point. The company will buy electricity on the TGE commodity exchange and from the ZE PAK power plant group, which has the same majority shareholder as Polkomtel: Polish billionaire Zygmunt Solorz-Żak. The operator emphasizes that since Poland's energy sector was liberalized, customers are free to choose any power supplier operating on the market. Accord-ing to figures, since 2011 some 25% of households and 18% of companies in Poland have changed electricity suppliers. "This is good news for us, especially since we estimate the potential of the Polish market at some 13m house-holds and 1m companies," says Tomasz Zadroga, member of Polkomtel's board and former CEO of Po-land's top energy utility PGE. "Our unique offer gives us an edge over competitors, as we are the first in Po-land to offer mobile phone and internet services, tele-vision, and electricity in a single package." Other Polish telecom operators have also been looking into energy sales as a way to prop up their declining revenues. Orange Polska discussed cooperation with PGE, and T-Mobile talked to Tauron, but so far no further steps have been made. For energy suppliers,

which may face large scale rollouts of smart grid solu-tions in the coming decade, cooperation with telcos can also be advantageous.


Israeli founders exit Israeli founders exit Israeli founders exit Israeli founders exit retail center developer retail center developer retail center developer retail center developer Globe Trade CentreGlobe Trade CentreGlobe Trade CentreGlobe Trade Centre Israeli Kardan NV, a company linked to the original founders of the Warsaw-based commercial property developer Globe Trade Centre SA (GTC) has sold its 27.75% stake in the company to Lone Star Real Estate Fund III for EUR 160m. Kardan booked GTC Poland at a value of EUR 194m at the end of June 2013. The Israeli company decided to sell GTC Poland main-ly because of its liquidity needs for its pending bond principle and interest payments in February 2014 and February 2015.

GTC's new shopping center in Warsaw's Białołęka district is set to open in 2015. Image: GTC

Established in 1994 in Warsaw, GTC currently oper-ates in Poland, Hungary, the Czech Republic, Roma-nia, Serbia, Croatia, Slovakia, Bulgaria, Russia and Ukraine. The company develops new projects and


manages completed properties in three key sectors of real estate: office buildings and parks, retail and enter-tainment centers and residential. To date, GTC has developed approximately 950,000 sq.m of net com-mercial space and 300,000 sq.m of residential units. The company currently manages a combined 602,000 net sq.m of completed and operational commercial space and holds a large portfolio of investment pro-jects at various stages of development that will enable it to develop of 1.1m sq.m of commercial space and 615,000 sq.m of residential space. GTC's total assets exceed EUR 2.2bn. Its shares are listed on the Warsaw Stock Exchange on the WIG30 index and they are in-cluded in the international Dow Jones STOXX East-ern Europe 300 index, the GPR250 index, which com-prises the 250 biggest and most liquid real estate com-panies of the world, and the FTSE EPRA/NAREIT Emerging Index. In October Warsaw-listed GTC and European real es-tate private equity firm Avestus Capital sold their Galeria Kazimierz shopping mall in Kraków, Poland, to a subsidiary of Invesco Group for EUR 180m. Each of the sellers received EUR 90m, according to a GTC stock exchange filing, and the transaction were to gen-erate EUR 50m in net cash proceeds for the Polish de-veloper (see PT Business Review+ No. 007 page 10). GTC, which developed one of Warsaw's most popular shopping centers Galeria Mokotów, is currently get-ting ready to break ground on two new massive retail projects in the Polish capital's fastest growing residen-tial districts of Wilanów and Białołęka.GTC estimates that phase one of Galeria Białołęka will open its doors in 2015 with a GLA of 64,000 sq.m, whereas Galeria Wilanów is to welcome its first customers in 2016 with an initial GLA of 61,000 sq.m. "We are completing with great success a complex sale in an especially challenging market. The sale of the shares in GTC Poland is a major step for Kardan in dealing with its liquidity situation. Kardan will contin-

ue to focus on real estate and water infrastructures in emerging markets, which are expected to have faster growth than developed markets," Kardan's CEO Shouky Oren told Israeli paper Globes. Lone Star Funds is a US private equity firm that in-vests globally in distressed assets. Since the establish-ment of its first fund in 1995, Lone Star has organized twelve private equity funds with aggregate capital commitments totaling over USD 45bn. Lone Star Real Estate Fund III formed in October 2013, held its final closing in October 2013 with USD 7bn in combined capital commitments. Transactions consummated and targeted by Lone Star Real Estate Fund III include in-vestments in distressed commercial real estate debt and equity products in the Americas, Western Europe and Japan.


Warsaw Spire office Warsaw Spire office Warsaw Spire office Warsaw Spire office tower construction tower construction tower construction tower construction moves above groundmoves above groundmoves above groundmoves above ground Few office buildings attract as much media attention as Flemish developer Ghelamco's Warsaw Spire complex, and the latter's cornerstone laying ceremony last week featured a rare selection of distinguished guests. The foundation act for that landmark project was signed among others, by Janusz Piechociński, Deputy Prime Minister of Poland, Minister of the Economy, Raoul Delcorde, Belgian Ambassador to Po-land, Ilkka Laitinen, Executive Director of the EU border agency Frontex, Paul Gheysens, President of Ghelamco Group, Jeroen van der Toolen, Ghelamco’s Managing Director CEE and, Kris Peeters, Minister-President of the Government of Flanders, all of whom attended the event on 18th November that marked the

beginning of construction of the aboveground section of Warsaw Spire's main 220-metre tower building, which will reach its maximum height by the end of 2014.

Warsaw Spire is Ghelamco's most ambitious project to-date. Image: Ghelamco

It has taken Ghelamco two years to complete the un-derground section of Warsaw Spire, a BREEAM-certified project that will include three office buildings (the main tower plus two 55m-tall buildings) with a combined office space of 100,000 sq.m. The initial stage of construction, which took eight months to complete, included a 55m-deep slurry wall, for which the company used more than 22,000 cb.m of concrete. It has taken them another year to build an under-ground parking lot for 1,200 vehicles. It is no coincidence that last week's event was attend-ed by Frontex boss Ilkka Laitinen, as the EU border agency will be the main tenant in Warsaw Spire, occu-pying some 14,600 sq.m in its main tower.


As for Ghelamco, after more than two decades of de-veloping offices and industrial properties, the compa-ny is getting ready to break ground on its first retail projects. The Belgians have recently unveiled plans for three neighborhood shopping centers (see PT Busi-ness Review+ No. 011 page 9) in the greater Warsaw area (Piaseczno, Łomianki, and Wilanów) with a com-bined GLA of nearly 30,000 sq.m and they are actively scouting sites for subsequent developments of similar size (7,000-12,000 sq.m per project). Over the past 22 years Ghelamco has developed nearly 0.5m sq.m of offices and warehouses. Their other ma-jor recent and ongoing developments include Łopuszańska Business Park with 17,000 sq.m, and the new T-Mobile HQ, a 40,000 sq.m office complex on Marynarska 12. Outside of Warsaw, Ghelamco is de-veloping a 60,000 sq.m. class A project Synergy Busi-ness Park in Wrocław. Earlier this year the company sold its Warsaw office projects Mokotów Nova (to Curzon Capital Partners III fund for EUR 121m) and Senator (to Union Investment for EUR 120m). The Belgians have also made inroads into the residential segment with and upscale Warsaw project Woronicza Qbik (350 soft lofts)..

SERVICES & BPO

Accenture to create Accenture to create Accenture to create Accenture to create 100 jobs at Łódź 100 jobs at Łódź 100 jobs at Łódź 100 jobs at Łódź delivery centerdelivery centerdelivery centerdelivery center Global consultancy & service outsourcing giant Ac-centure is expanding its technology unit in Łódź. Af-ter relocating to brand new 1,700 sq.m offices in Łódź's University Business Park, Accenture Łódź De-livery Center seeks to recruit 100 new professionals next year and reach a staff of 500 in 2015.

"With the new, larger office we seek to consolidate our team and accommodate the constant expansion of our business. Over the past three years employment at the Łódź branch has nearly tripled and currently totals 220. A further 140 staff are located in Warsaw," says Witold Rogowski, head of Accenture Delivery Center Polska.

Developed by GTC, Łódź's University Business Park will offer 38,710 sq.m once fully completed. Image: GTC

Accenture Łódź Delivery Centre is the company's main technology unit in Poland and one of 50 centers worldwide that constitute the Accenture Global Deliv-ery Network. It specializes in retail and e-commerce solutions, billing & revenue management and other tailor-made solutions for the banking and finance in-dustry. Some 50% of its clients, which include top banks, retailers and mobile operators, are foreign companies. Every year the centre creates some 70-100 new jobs for students and graduates with engineering, IT, and technology credentials and foreign language skills. Accenture has been present in Poland since 1990 and currently the company employs some 1,750 staff in the country, at the consulting unit Accenture Sp. z o. o. as well as the outsourcing arm Accenture Services Sp. z

o.o., which encompasses its technology solutions and business process outsourcing operations . According to company representatives, it is just a matter of time be-fore Accenture's Polish staff numbers reach 2,500-3,000.

Decade of remarkable growth Number of foreign-owned business services centers in Poland

0

50

100

150

200

250

300

350

400

450

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: ABSL *) projected

In February last year a new management consulting unit was established at Accenture's Warsaw centre, with plans to hire 150 staff by the end of 2012 and some 500 in two-three years' time. The Polish capital beat Prague, Bratislava, Bucharest, and Madrid to the project, which is part of Accenture's global talent and innovation network. Unlike many other outsourcing companies, which have been focusing lately on Poland's regional cities, where wages are lower and competition on the labor market less severe, Accenture remains focused mainly in Warsaw, praising the city's good transport connec-tions to other European countries where it recruits specialists (for instance Russia, Ukraine, Estonia, Spain, Germany, and the UK) as well as its intellectual


potential, represented by thou-sands of university graduates. Headquartered in Dublin, Accenture is a NYSE-listed multinational management consulting, technology services and outsourcing company. With a net turnover of USD 27.9bn in the financial year ended in August 2012, the company has more than 275,000 employees worldwide.

DATA BOX: ŁÓDŹ OFFICE MARKET IN 1H 2013

• At the end of Q2 2013, Łódź’s office stock stood at 302,000 sq m. In H1 2013 four office buildings entered the market, including phase II of Skanska’s Green Horizon complex (14,000 sq m) and Film Hotel’s small building MediaHUB (3,850 sq m) located near Hilton’s hotel Double Tree. The second part of the office project at 35 Targowa Street to provide 8,000 sq m is still to be completed.

•Take-up in the first two quarters of 2013 was almost the same as in the same period of 2012 and reached 12,000 sq m following several major deals such as Infosys’s lease of more than 4,100 sq m in the Green Horizon building and Accenture’s lease of 1,700 sq m in the University Business Park complex.

•The vacancy rate at the end of Q2 2013 rose by 3 percentage points to 15% compared with the rate at the end of 2012. Headline rents remained flat at EUR 12–14/sq m/month, with effective rents at EUR 10–11/sq m/month.. Source: Cushman & Wakefield

Poland's business services sector currently employs some 115,000 people and since the sector is growing at the pace of 15-20% a year, the figure is likely to reach 140,000 next year. According to estimates by the in-dustry organization ABSL the number of foreign-run

outsourcing centers in the country will come in excess of 450 by the end of 2013.

SERVICES & BPO

Capgemini expands Capgemini expands Capgemini expands Capgemini expands Wrocław software unit Wrocław software unit Wrocław software unit Wrocław software unit

Global technology outsourcing and consultancy giant Capgemini seeks to create 150 jobs at its Software So-lutions Center in Wrocław, an R&D unit devoted to creation, testing, and implementation of advanced IT solutions. In a move to accommodate its growing staff numbers, the center, which currently employs some 500 staff, will relocate to new offices in Millennium Tower IV. "Our Wrocław centre is handling a growing number of projects for our current and new clients," Capgemini's Joanna Nowocień tells Poland Today. "In recent weeks we signed a framework agreement with Po-land's social security administration ZUS regarding development and upgrade of their IT system KSI, one of Europe's largest. This contract is a perfect match for Capgemini's competences and strategic expansion plans in Poland." The company is recruiting both experienced staff as well as IT graduates for the software solutions unit in Wrocław, which cooperates closely with Capgemini centres in Germany and provides services to many German clients, such as Daimler, BMW, and ZDF. The centre specializes in change management, business process outsourcing, IT infrastructure management services and tailored software solutions. Its clients in-clude top brands from the automotive, finance, logis-tics and media sectors. One of its best-known imple-mentations in Poland is the Express Elixir system for

Poland's national clearing house KIR, which enables immediate transfers between banks. Overall in Poland Capgemini has five centers (Kraków, Katowice, War-saw, Wrocław, and Opole) that employ 5,500 staff and deliver a whole range of services in nearly 30 lan-guages. "We are already Poland's number two BPO employer, and considering our growth pace to-date, we are on track to pass the 6,000 employment mark in 2015." Earlier this year Swedish tooling, materials technolo-gy, mining and construction group Sandvik awarded Capgemini BPO with a five year, multimillion euro contract, to standardize and optimize its global trans-actional finance activities, implementing the new model in 29 countries across all business areas. The key part of the project will be migrating Sandvik’s global financial processing for accounts payable, ac-counts receivables and general accounting to Capgemini’s delivery centers in Brazil, Poland, China and India. In Poland, the Sandvik deal created some 50 new jobs.

Developed by Wrocłąw's Descont, Millennium Tow-ers is a complex of four class-A buildings with a combined office space of 33,500 sq.m. Image: Descont

With more than 125,000 people in 44 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The group reported 2012 global revenues of EUR 10.3bn.


Capgemini's team of over 13,500 BPO professionals (including 9,000 finance and accounting outsourcing staff) provide services to more than 100 clients in 37 languages from an integrated global network of 23 de-livery centers located in Australia, Brazil, Canada, Chile, China, France, Guatemala, India, Poland, Swe-den and the United States. Their key finance & ac-counting outsourcing services include procure-to-pay, bill-to-cash, record-to-analyze and multi-process.

DATA BOX: WROCŁAW OFFICE MARKET IN 1H 2013

• In H1 2013, the transaction volume in Wrocław’s modern office market reached nearly 51,000 sq.m, with new leases accounting for 43% of which pre-lets account for over 50%. It represents nearly a threefold rise on the leasing volume recorded in the same period of 2012. The largest deals were the Getin Group’s lease of 11,700 sq.m in the Sky Tower office building and Kruk’s 7,500 sq.m lease expansion in Wrocławskie Centrum Biznesu.

• At the end of June 2013, the city’s office stock stood at 510,000 sq.m, up by more than 40,000 sq.m compared with the beginning of the year, largely following the delivery of office space in the Sky Tower (28,000 sq.m) and phase II of Skanska’s Green Towers complex (10,800 sq.m). If all projects planned for 2013 are completed on time, this year’s supply will total around 80,000 sq.m.

• The vacancy rate rose in Wrocław by nearly 4.4 percentage points to 12.4% from the rate of December 2012. Headline rents stood at EUR 13–16/sq.m/month, with effective rents at EUR 11–14/sq.m/month. Source: Cushman & Wakefield


GGGGoodman to oodman to oodman to oodman to develop develop develop develop Amazon's Amazon's Amazon's Amazon's first first first first Polish Polish Polish Polish logistics logistics logistics logistics hubhubhubhub nearnearnearnear WrocławWrocławWrocławWrocław

The world's top e-commerce provider Amazon, which merely a few weeks ago confirmed plans to es-tablish three major logistics centers in Poland (see PT Business Review+ No. 006 page 10), has awarded the contract for the construction of the first Polish facility to its long-time partner in Europe, the Australian-owned industrial space developer Goodman. Based in Wrocław, the new development will be the largest free standing logistics facility in Poland, and will be built in record time to meet Amazon's requirements. According to Goodman, the transaction represents the biggest contract for a logistics warehouse in central Europe to date. The development of Amazon's first fulfillment centre in Poland will have a footprint of approx. 95,000 sq.m. Construction of the facility commenced in October 2013 and it is planned that the fulfillment centre will be fully operational in the second half of 2014. Ama-zon's new logistics hub will be located in Wrocław's Bielany Wrocławskie suburb, some 5km from the city centre. The location boasts comprehensive transport links, spanning road (A8 and A4 motorways, together with S8 and S5 express roads), rail (10km to Wrocław's central railway station) and air (15km to Wrocław Airport). The distribution centre for Amazon will be Goodman's fifth development project in the Wrocław area. Previ-ous facilities, totaling over 70,000 sq.m, have been

constructed for Whirlpool, TJX Europe, Walki Group and Casetech. Goodman commenced opera-tions in Poland in 2005 and owns and manages over 275,000 sqm of facilities in various locations in Poland. The Group holds strategic land sites in all of Poland's key logistics centers, which are capable of providing approximately 875,000 sqm of additional warehouse space. "We are proud that Amazon chose to enter the Polish market in partnership with Goodman. The facility we are developing will be the largest free standing logis-tics property in Poland. Construction will be rapid, to allow Amazon to make full use of the warehouse's lo-gistics capabilities in under a year," said Błażej Ciesielczak, Regional Director Goodman Poland.

Polish employees will start sorting, packing, and dis-patching orders for Amazon's European customers next year. Photo: Amazon

"We have decided to partner with Goodman in Poland due to the firm's extensive experience in building similar warehouse facilities for Amazon in Western Europe and its knowledge of the local logistics market, based on numerous projects completed in Poland," said Raimund Paetzmann, Director Real Estate of Am-azon. Since 2006, Goodman has completed over 900,000 sq.m for Amazon across 11 developments in Germany,


France and the UK. A key factor in Amazon's decision to choose Goodman as the developer was its ability to deliver such a large facility in a relatively short time frame, while simultaneously ensuring a high quality finished product. Amazon plans to create up to 2,000 long-term jobs at the warehouse, plus an additional 3,000 seasonal jobs in order to cover peak times during the holiday season. The Wrocław center is part of a larger project by Am-azon that will see the Seattle-based e-commerce giant create 6,000 permanent jobs at three logistics centers in Poland. The company seeks to establish one center in Poznań and two in Wrocław. The Poznań and one of the Wrocław centers will open in August 2014, while the second Wroclaw logistics hub will start op-erations in mid-2015. In addition to full-time employ-ees, as many as 9,000 temporary staff could be em-ployed at peak periods. Poland's central location in Europe, proximity to Am-azon’s European clients and access to a skilled work-force were among the reasons for Amazon's invest-ment decision, Tim Collins, director of retailer’s Euro-pean operations, told reporters at news conference in Warsaw in October. Amazon won't close any of its ex-isting European logistic infrastructure, he added. The three sites will be integrated into the network of 25 centers in Europe as part of an expansion strategy to serve customers in every European country, including Russia and Ukraine, Collins said. He declined to dis-close the value of Amazon’s planned investment, say-ing only it would be in the "hundreds of millions of eu-ros."


Stena Line puts Stena Line puts Stena Line puts Stena Line puts freshfreshfreshfresh ferry on Gdynia routeferry on Gdynia routeferry on Gdynia routeferry on Gdynia route asasasas discussions discussions discussions discussions on new on new on new on new terminal terminal terminal terminal continuecontinuecontinuecontinue Swedish ferry operator Stena Line introduced a new larger ship, Stena Baltica, on the Gdynia-Karlskrona crossing on 24th November. Her predecessor, Stena Allegra, was driven ashore at Karlskrona on 28 Octo-ber during the St Jude storm, less than four months af-ter it was put in service on that route. According to the operator, with a deck area of 2,188 lane meters, the new vessel will be able to carry more freight than Stena Allegra: 120 trucks and 240 passengers in 120 cabins, supporting the rapidly growing traffic between Sweden and Poland. The number of freight units on the Gdynia-Karlskrona route increased by 7% in 2012, while the number of cars increased by 9%. This trend has only strength-ened in 2013. "During the first ten months of this year freight vol-ume increased by 18% while car and passenger num-bers have gone up by 9% and 7% respectively," Tony Michaelsen, Route Manager Baltic Sea at Stena Line tells Poland Today. Besides Stena Baltica, which is de-parting from Karlskrona and Gdynia three times a week, the Swedish operator has two ferries: Stena Vi-sion and Stena Spirit on the route. Mr. Michealsen confirms that the operator has plans to increase the number of cruises in the future. Meanwhile, Stena Line and the Gdynia Port Authority are continuing their talks on the new passenger termi-

nal, which is to be developed in Gdynia by 2016 at the estimated cost of PLN 120m. A PLN 3m contract for the design of the new facility has just been awarded to Dutch engineering company Tebodin. "Since a year back we have a joint project to develop plans and documentation in order to have facts and figures to discuss and negotiate down the line," says Tony Michaelsen, who is responsible for Stena Line's routes Karlskrona-Gdynia, Nynäshamn-Ventspils and Travemünde-Ventspils/Liepaja. Located in the Polskie Quay, much closer to the city center, the new terminal will make it easier for ferries and their passengers to access Gdynia, freeing up space for expansion of the Baltic Container Terminal (BCT). Besides a new terminal with a cargo storage ar-ea of 450 sq.m, the investment will include a parking lot for 100 vehicles and renovation of the existing quay.

The current location of Gdynia's passenger terminal is problematic for both the port Authority as well as ferry operators. Image: Port of Gdynia

"The new terminal will enable us to develop the Gdy-nia-Karlskrona route by allowing Stena Line to use larger, 240m-long vessels that can carry some 250 trucks and 1,300 passengers," said Marek Kiersnowski, managing director of Stena Line Polska. "Moreover, due to its location near the entrance to the port, the new terminal will shorten the crossing time by up to


30 minutes, thus reducing fuel usage and emissions. A railway siding should contribute to development of in-termodal services and passengers will get access to more convenient facilities. We are hoping that due to its location close to Gdynia's city centre, the terminal will make our weekend trips to Tricity more popular with Swedish tourists." By relocating the ferry terminal to the Polskie Quay, the Port of Gdynia Authority can provide additional room to grow for the BCT container terminal, which is competing fiercely with Gdansk's DCT. BCT's current site at the Helskie quay is becoming cramped. Besides economic benefits, there are also safety issues that a new terminal will resolve. Difficult access to the exist-ing terminal, combined with heavy winds, already con-tributed to an accident last year, which involved the Stena Spirit ferry knock down a BCT gantry crane, in-juring three employees. As for the BCT, it has benefitted from rapid growth of container traffic in the Baltic. In 2012 Baltic Con-tainer Terminal handled 408 722 TEU, which means a 13% increase in comparison with the year 2011. Last year also was remarkable due to the record railway share of handling operations, which reached 42%. To-day BCT services over 40 trains a week. In the coming years the intermodal potential of the terminal will be increased thanks to the implementation of the greatest investment plan in BCT history. The PLN 153m in-vestment will include, among others, new container, yard and railway gantry cranes, surface replacement as well as the preparation of new stations for r-frigerated containers. As much as 35% of the total tab will be picked up by the EU. Since 2003 BCT has been part of the Philippines-based port management giant Interna-tional Container Terminal Services, Inc. (ICTSI). Stena Lina AB belongs to the Gothenburg-based fami-ly-owned conglomerate Stena AB whose interests in-volve recycling, shipping and real estate. Stena Lina is

one of the largest passenger ferry companies in the world - it operates 38 vessels, employs 6,000 staff across nine countries and turns over SEK 10bn.


DCT is Poland's DCT is Poland's DCT is Poland's DCT is Poland's first first first first terminal to handle 1m terminal to handle 1m terminal to handle 1m terminal to handle 1m TEU in one yearTEU in one yearTEU in one yearTEU in one year With more than 1m TEU trans-shipped since the be-ginning of the year, the first Polish operator to brerak that record, DCT Gdańsk is well on track to joining the ranks of the world's 50 largest container terminals in the near future. In merely six years, DCT Gdańsk became a hub port for the CEE region, serving as a true gateway to Poland and other Baltic states, largely due to its cooperation with the Danish shipping giant Maersk Line, which made Gdańsk a port of call on its key Asia-Europe oceanic route. "The increased capacity of Polish ports and the ability to handle large vessels [up to 18,000 TEU in the DCT Gdańsk; ed.] can recapture cargo previously trans-shipped through other northern European ports. Over time, the improved port infrastructure will bring along a change is supply chain management for companies operating in Poland and the wider region as goods will be increasingly shipped via the Polish ports," Tomasz Olszewski, Head of Industrial Department CEE at Jones Lang LaSalle commented in a recent report on Poland's port industry. DCT emerged by attracting deep sea calls to the Baltic Sea and its role is bound to grow as Poland's modern-ized road and railroad network connects key logistics hub across the region. Currently, six major container terminals operate within Poland's three main port

complexes of Gdańsk, Gdynia and Szczecin-Świnoujście. Over the past five years their TEU throughput has doubled and in 2012 stood at 1.66m TEU (twenty-foot equivalent unit). The terminals fea-ture various capacities, shipping directions, infrastruc-tures and development constraints and are, in fact, of-ten competing for different clients.

DCT Gdańsk can receive the world's largest con-tainer ships, such as Maersk's Triple-E vessels. Photo: DCT

"It is crucial for the whole Baltic industry to develop a coherent pattern of container transport, with Gdańsk being the leading container hub port, and other main Baltic ports becoming efficient and modern feeder terminals, " says Maciek Kwiatkowski, President of the Board, DCT Gdańsk. Growing importance of seaports The port of Gdańsk is home to two terminals – the Deepwater Container Terminal or DCT (annual capac-ity of 1,250,000 TEU with expansion capacity to 4,000,000 TEU) and the Gdańsk Container Termi-nal (annual capacity of 100,000 TEU). Only the DCT is capable of receiving the largest container vessels, in-cluding the most advanced ones that can carry 18,000


TEU. With a secured operator, Maersk Line, which es-tablished Gdańsk as its last port of call for the AE10 service, this terminal primarily focuses on the Asia Pa-cific trade as well as trans-shipments to other Baltic ports in Russia, Sweden, Finland and the Baltic States. Furthermore, the DCT's natural features, such as nau-tical accessibility, tide and ice-free access and exten-sion potential, offer a considerable potential for fur-ther growth and leveraging its strengths in the Baltic Sea. Improved hinterland road infrastructure, pro-vides a good connection between the port and the A1 motorway, which enables the port to compete for cli-ents from southern Poland and neighboring countries.

Poland's key container terminals

Handling capacity (million TEU)

0.00 0.25 0.50 0.75 1.00 1.25

GCT Gdańsk

DB Port Szczecin

GCT Gdynia

BCT Gdynia

DCT Gdańsk

Source: terminal operators

The two container terminals in Gdynia: the Baltic Container Terminal (annual capacity – 750,000 TEU) and the Gdynia Container Terminal (430,000 TEU) do not handle any direct oceanic services but ra-ther smaller feeder vessels, which are loaded in the major northern European hubs. Importantly, smaller feeders (up to 2,500 TEU) are often routed through the Kiel Canal, which shortens shipping times by al-most two days compared to the route through the Danish straits. In order to attract deep-sea calls, the

authorities of the port of Gdynia plan to deepen the port channel and develop a larger turning circle.

The least accessible of all Polish seaports is the port of Szczecin (annual capacity – 120,000 TEU) which can handle vessels that carry no more than 1,400 TEU. However, according to experts, it remains an attrac-tive option for local clients as well as those operating in eastern Germany. This port is also supplied by feed-ers loaded in other major European hubs. Plans for the Szczecin-Świnoujście port complex include a number of improvements such as the deepening of its water-ways, modernization of road and rail access and, last but not least, the restarting of regular operations in the container terminal in Świnoujście. "Further improvements in port infrastructure, which also include the development of port-centric ware-housing, coupled with the container ports reaching the critical mass of the handled cargo volumes will lead to a shift in supply chains and will change the landscape of the Polish industrial warehousing market," added Tomasz Olszewski. According to experts, Poland's inefficient fiscal regula-tions are among the key stumbling blocks that hamper the potential throughput increases in Polish seaports. At the moment, importers must settle VAT within ten days, forcing companies to freeze a portion of their working capital. This, however, looks set to change in the near future, following recent announcements from the government. An additional obstacle is customs clearance, which often takes an unreasonably long time. One of the latest proposals which could shorten the time needed to exit the terminal gate is clearing the customs still onboard a ship. According to esti-mates by Investment Partners, some 670,000 TEU di-rected from or to Poland are handled outside Polish ports. According to Jones Lange LaSalle, by adopting customs & tax regulations similar to those used in

northern Europe, Poland could lure some 70% of that cargo back to its own ports. "The Polish seaports are well positioned to become gateways for many of the growing economies of the CEE, Baltics, Russia and the CIS countries. It is worth highlighting that the great advantage of Polish sea-ports is their potential to expand. The largest ports in Europe already face congestion and their spatial re-serves are limited, whereas the supply of land on the Polish coast is seemingly inexhaustible. The simplifi-cation of tax, customs and sanitary procedures and further improvements in infrastructure will help them compete for clients from the industrial hubs of south-ern Poland and parts of the Czech Republic, Slovakia and CIS countries," said Jan Jakub Zombirt, Senior Research Analyst, Jones Lang LaSalle.


Tesco seeks buyers for Tesco seeks buyers for Tesco seeks buyers for Tesco seeks buyers for 35 investment sites35 investment sites35 investment sites35 investment sites

British retailer Tesco, which in recent years has expe-rienced a decline in turnover on the Polish market, is seeking to free up some of the capital it keeps frozen in real estate. The company has decided to "optimize the development of its selected properties across Poland" and to sell off excess land. A total of 35 properties in-tended for commercial developments and located largely near Tesco's existing stores will be put up for sale, Tesco said, adding that their goal is to "extend the offer of Tesco's stores to include additional services." The retailer has appointed property consultancy Cushman & Wakefield to represent Tesco in negoti-ations with potential investors.


The plots to be sold have a combined area of more than 30 hectares and most of them constitute undevel-oped sites adjacent to existing Tesco schemes. The sites could create attractive opportunities for develop-ers of retail parks and strip malls, which are usually located next to big box retailers, such as supermarkets or DIY outlets. Tesco's properties will be marketed gradually and sold through a competitive bidding pro-cess, the retailer said.

Tesco seeks to sell 35 sites, located mainly in Silesia and Western Poland. Image: Tesco

"Tesco has decided to sell its excess land to enhance the retail attractiveness of its store locations. Tesco is a highly recognized brand in Poland with its stores driving strong footfall," said Marek Noetzel, Partner from the Retail Department of Cushman & Wakefield.

Since 1998 Tesco has established a network of approx-imately 450 outlets in Poland. With a staff of 28,000 the company is the largest British employer in the country. However, due to economic slowdown and tough competition from discount groceries, its Polish business has been shrinking lately. After posting a gross turnover of PLN 12.6bn in the financial year 2011/2012, marking a 8.8% increase y/y, the company stopped publishing detailed nominal figures with re-gard to its Polish business. Tesco has confirmed, how-ever, that its like-for-like sales in Poland dropped 3% in the subsequent year and fell a further 6.4% in the first half of 2013-2014 (against a decline of 2.3% and 5% respectively in Europe). The company has been trying to improve its declining position by remodeling many of its stores, as well as developing e-commerce, loyalty schemes and a fashion brand F&F.


Nowy Świat remains Nowy Świat remains Nowy Świat remains Nowy Świat remains Poland's priciest retail Poland's priciest retail Poland's priciest retail Poland's priciest retail street despite drop in street despite drop in street despite drop in street despite drop in rents, report says rents, report says rents, report says rents, report says

With rents at EUR 996 per sq.m/year (down by 2.4%), Poland's most expensive shopping street Nowy Świat in Warsaw came 45th globally in Cushman & Wake-field's Main Streets Across the World report, which is widely recognized as the barometer for the global re-tail market due to its annual ranking of the most ex-pensive locations in the top 334 shopping destinations across 64 countries. According to the report, rents in Poland's high streets have dropped due to the "weaker than expected consumption growth and a change in tenants' expectations of revenue growth."

Nowy Świat rents are some 25 times lower than on Hong Kong's Causeway Bay, the world’s most expen-sive retail location for the second year running. Fuelled by competition between both high-end and non-luxury retailers for limited space, Causeway Bay experienced a 14.7% growth in rental values and broke through the USD 3,000 per sq.ft barrier for the first time in the survey's history (or EUR 24,983 /sq.m/year on this side of the big pond). New York's Fifth Avenue and Avenue des Champs-Élysées in Paris, which saw nearly a 40% rental rise, hold on to second and third place respectively. In the CEE region, rents on Nowy Świat are more expensive than the main streets of the Romanian or Bulgarian capitals, but still cheaper than for instance in Prague and Kiev.

Nowy Swiat tops high street rankingNowy Swiat tops high street rankingNowy Swiat tops high street rankingNowy Swiat tops high street ranking Polish high streets & prime retail rents

City Street Prime retail rents

EUR/sq.m/year y/y

Warszawa ul. Nowy Świat 996 -2,4%

Kraków ul. Floriańska 936 -1,3%

Warszawa ul. Chmielna 828 -2,8%

Warszawa ul. Marszałkowska 696 -4,9%

Katowice ul. 3 Maja 672 -3,4%

Poznań ul. Półwiejska 660 -5,2%

Warszawa Plac Trzech Krzyży 636 -3,6%

Warszawa Al. Jerozolimskie 552 -4,2%

Wrocław ul. Świdnicka 492 -8,9%

Szczecin Al. Niepodległości 396 -2,9%

Gdynia ul. Świętojańska 372 -6,1%

Łódź ul. Piotrkowska 312 -3,7%

Source: Cushman & Wakefield

Cushman and Wakefield has also put together a rank-ing of the 12 most expensive retail streets in Poland. Traditionally, the number two spot belongs to Kraków's Floriańska Street (EUR 936 /sq.m/year), fol-lowed by Warsaw's Chmielna (EUR 828/sq.m/year).


Most streets maintained their positions from last year's ranking, with one notable exception being 3 Maja St. in Katowice, which replaced Poznań's Półwiejska St. as Poland's fifth most expensive shop-ping street. "3 Maja's leap in the ranking was mainly due to its re-vitalization, redevelopment of the nearby train station, and completion of the Galeria Katowicka mall. The situation in Warsaw will improve following next year's launch of line two of the city's subway, which will af-fect mainly the Świętokrzyska Street that crosses Nowy Świat. Retail streets are often the only locations taken into consideration by certain luxury retailers. Unfortunately, ownership, adaptation and renovation issues are contributing to a slower than expected growth of such locations," says Tomasz Górski, senior negotiator at Cushman & Wakefield's retail depart-ment.

Prime rents on Warsaw's Nowy Świat Street dropped 2.4% last year, down to EUR 996/sq.m/year. Photo: Cushman & Wakefield

Although global retail rental growth, at 3.2%, was slightly tempered when compared to the previous 12

months (4.5%), rental values in 285 of the locations surveyed for the report (85%) were either stable or rose. Rental growth in the EMEA region increased by 2.1% overall, fuelled by better economic news in Eu-rope, greater finance availability, a very active demand from luxury retailers and improved general consumer sentiment. Specifically, there were encouraging per-formances from Western (2.4%) and Eastern Europe (2.6%). Out of the 33 EMEA countries surveyed in the report, only seven recorded rental falls while the other 26 saw values either stabilize or rise.

POLITICS & ECONOMY

Poland gets seven new Poland gets seven new Poland gets seven new Poland gets seven new ministers in major ministers in major ministers in major ministers in major government shakeupgovernment shakeupgovernment shakeupgovernment shakeup In a long-awaited government reshuffle Prime Minis-ter Donald Tusk has nominated seven new members of his cabinet, including ministers of finance, education, science, transport, sports and environment, hoping the changes will bolster the declining popularity of his Civic Platform (PO) party. Poland's new finance minis-ter, replacing Jacek Rostowski, who held the post for the past six years, will be Mateusz Szczurek, chief economist for Central Europe with ING bank in War-saw. PM Tusk, outgoing Minister Rostowski and the new Minister Szczurek share the same view on macroeco-nomic strategy, which "ensures continuity but also new energy," according to Premier Tusk. Lacking any direct political affiliations himself, Mr. Szczurek, who holds a Ph.D. from the University of Sussex in the UK, said he will try to reconcile budget spending to fuel growth with the need to keep a lid on public debt.

Mr. Rostowski was the face of several crucial yet un-popular reforms, such as the raising of the retirement age to 67 for both men and women, from 65 and 60, re-spectively, as well as a controversial pension overhaul, which will see privately managed sovereign bonds canceled in 2014 cutting public debt to some 50% of GDP, according to government estimates. Under Rostowski watch, Poland's public debt rose to nearly 58% of gross domestic product this year, very near the constitutional ceiling of 60%.

Prime Minister Donald Tusk introduced his new min-isters at a conference in Warsaw last Wednesday. Photo: KPRM

"My job will be to facilitate a developmental leap, not just by releasing the brakes, but also making sure the growth will be sustainable," Mr. Szczurek told a news conference after his nomination. "However, it cannot be a leap into the abyss." His nomination was well re-ceived by market observers, even though unlike his predecessor, the new finance minister will not share the rank of a deputy PM. The latter honor has been bestowed by Donald Tusk upon regional development minister Elżbieta Bieńkowska, whose office will be merged with Transport Ministry after the recent resignation of the former transport minister Sławomir Nowak, suspected of having accepted an expensive timepiece as a bribe.


Mrs. Bieńkowska, who is widely regarded as one of Tusk's most effective ministers for her role in the dis-tribution of EU funding, will be now responsible for Poland's key infrastructure projects. Her task will be to kickstart the spending of EUR 106bn that Poland expects to receive in EU funds between 2014 and 2020, money provided for the country in the bloc's budget passed by the European Parliament. In other changes, Maciej Grabowski, who is currently Poland's deputy finance minister, was named minister for environment and his key task seems to be not so much to protect Poland's natural resources as to facili-tate extraction of unconventional hydrocarbons as a way of boosting economic growth. PM Tusk also struck the innovation-economy note with changes at the helm of the Ministry of Science and Higher Educa-tion and the Ministry of Digitalization. Rafał Trzaskowski will be the new digitalization & admin-istration minister replacing Michał Boni, who said he was going to stand as a member of the European Par-liament in elections next year. Barbara Kudrycka will step down as the minister of science & higher educa-tion to be replaced by Lena Kolarska-Bobińska. The Education Ministry, recently heavily criticized for plans to lower the school starting age to six years-old, will be led by Joanna Kluzik Rostkowska, who replac-es outgoing Krystyna Szumilas. Sports Minister Joan-na Mucha will be succeeded by Andrzej Biernat. New ministers will be sworn in on November 27 ex-cept for Lena Kolarska-Bobińska and Rafał Trzaskowski, current members of the European Par-liament, who will be sworn in on December 3, prior to the December 4 government sitting. Mr. Tusk in 2011 became the first prime minister in Poland's post-communist history to have been re-elected for a second consecutive term. Poland will see municipal elections as well as elections to the Europe-an Parliament next year, and parliamentary elections

are due in 2015. After six years in power, the ruling party is lagging behind its key rival, the conservative Law & Justice (PiS), in polls, enjoying the support of 22% and 31% of Poles, respectively, according to fresh data. Although Poland's economic recovery has been gain-ing traction in recent months, there are still a number of huge challenges ahead of the country and its region-al peers. Cutting down the red tape, promoting inno-vation, reforming the labor market and laying founda-tions for long-term growth that does not rely solely on EU funds will require professional competences, which many in the cabinet seem to have, but also strong political backing. Time will tell, whether the expected economic upturn coupled with the planned government revamp will suffice to win back popular support for Mr. Tusk and his party. So far, none of Po-land's opposition parties has offered a credible alter-native.

NEW GOVERNMENT MINISTERS: Minister of Finance : Mateusz Szczurek (38) • Chief economist for CEE at ING Group; no previous politi-

cal experience

• PhD in economics, Sussex; Econometrics studies in Inter-

national Centre for Money and Banking Studies in Genève

and London; Academic in Warsaw School of Economics,

University of Sussex and Goethe Business School

Minister of infrastructure & development: Elżbieta Bieńkowska (49) • Appointed as deputy PM; her duties have been extended

to include supervision of infrastructure development

• Minister of regional development since 2007; Senator

since 2011

• Highly regarded as an expert on EU (and previously

PHARE) funds; took active part in negotiations regarding

EU cohesion policy fund for 2014-2020

Minister of administration and digitization: Rafał Trzaskowski (41) • EPP MEP since 2009; recently specializing in Digital

Agenda, privacy legislation and re-use of public data;

Member of EP constitutional committee and IMCO

• PhD from Warsaw University, expert on EU institutions

Minister for environment: Maciej H. Grabowski (54) • Deputy finance minister since 2008, responsible among

others for the VAT legislation and shale gas taxation

• Former deputy head of influential economic think-tank

IBnGR

• His main goals are increasing of use of „natural resources

in Poland”, especially through finalizing works on the shale

gas legislation

Minister of Education: Joanna Kluzik-Rostkowska (50) • Former deputy minister of labor and social policy, and of

regional development (in Law and Justice’s governments),

former campaign chief of PiS leader Jarosław Kaczyński;

the new appointment is her big comeback to politics

• MP since 2007, in Civic Platform since 2011

Minister of science and higher education: Lena Kolarska-Bobińska (66) • EPP MP since 2009

• Professor of sociology, studied at Stanford University and

Carnegie-Mellon University Business School

• Head of the Institute for Public Studies think tank. Former

advisor to Polish Presidents Lech Wałęsa and Aleksander

Kwaśniewski

Minister of sport: Andrzej Biernat (54) • MP since 2005; informal leader of one of PO's factions

• His parliamentary work concentrated on sports issues


KEY STATISTICS

Consumer PriceConsumer PriceConsumer PriceConsumer Pricessss

Data in (%) Jul '13 Aug '13 Sep '13 Oct '13

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

Food & bev +2.5 -0.3 2.5 -1.2 +2.6 0.0 +1.9 -0.1

Alcohol, tobacco +3.6 +0.1 +3.6 +0.2 +3.7 +0.2 +3.6 +0.1

Clothing, shoes -5.0 -2.7 -4.8 -2.7 -4.7 +0.7 -4.8 +3.5

Housing +2.0 +1.2 +2.0 +0.1 +1.8 +0.1 +1.8 +0.2

Transport -1.2 +1.1 -1.4 +0.5 -1.4 +0.8 -2.3 -1.0

Communications -9.7 0.0 -9.7 0.0 -9.7 0.0 -7.2 +2.8

Gross CPI +1.1 +0.3 +1.1 -0.3 +1.0 +0.1 +0.8 +0.2

IIIInflationnflationnflationnflation

-1%

0%

1%

2%

3%

4%

5%

Oc

t 11

De

c 1

1

Fe

b 1

2

Ap

r 12

Ju

n 1

2

Au

g 1

2

Oc

t 12

De

c 1

2

Fe

b 1

3

Ap

r 13

Ju

n 1

3

Au

g 1

3

Oc

t 13

y/y m/m

Retail Retail Retail Retail TurnoverTurnoverTurnoverTurnover

Month May '13 Jun '13 Jul '13 Aug '13 Sep '13

m/m (%) +1.6 +1.5 +3.8 -0.7 -0.9

y/y (%) +0.5 +1.8 +4.3 +3.4 +3.9

Year 2008 2009 2010 2011 2012

Turnover in PLNbn 564.7 582.8 593.0 646.1 676.0

y/y (%) +13.3 +4.3 +5.5 +11.6 +5.6

Residential ConstructionResidential ConstructionResidential ConstructionResidential Construction

Dwellings

(in '000 units)

2008 2009 2010 2011 2012 Jan-Oct

2013

y/y

(%)

Permits 230.1 178.8 174.9 184.1 165.1 117.0 -17.2

Commenced 174.7 142.9 158.1 162.2 141.8 111.6 -11.4

U. construction 687.4 670.3 692.7 723.0 713.1 707.4 -3.9

Completed 165.2 160.0 135.7 131.7 152.5 117.6 -2.1

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

Q3 2013 +1.9% n/a -2.0%

Q2 2013 +0.8% 395,507 -2.3%

Q1 2013 +0.5% 377,815 -3.1%

Q4 2012 +0.7% 442,231 -3.5%

2012 +1.9% 1,522,736 -3.5%

2011 +4.5% 1,462,734 -4.9%

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

2009 +1.6% 1,344,384 -3.9%

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% +1.3% +2.7%

Consumer inflation +2.6% +4.3% +3.7% +1.0% +1.9%

Producer inflation +2.1% +7.6% +3.4% -1.2% 0.7%

CA balance, % of GDP -5.1% -4.9% -3.5% -1.3% -0.3%

Nominal gross wage +3.9% +5.2% +3.7% +2.9% +4.1%

Unemployment** 12.4% 12.5% 13.4% 13.7% 13.2%

EUR/PLN 3.99 4.12 4.19 4.20 4.06

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

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

Sector Q3 2012 Q4 2012 Q1 2013 Q2 2013

A B A B A B A B

Coal mining 5,920 135 8,427 192 6,060 138 6,290 143

Manufacturing 3,463 151 3,522 154 3,491 152 3,560 155

Energy 5,790 176 6,535 198 6,196 188 5,828 177

Construction 3,709 158 3,829 163 3,556 152 3,693 157

Retail & repairs 3,322 142 3,365 143 3,432 146 3,421 146

Transportation 3,543 125 3,816 135 3,439 122 3,547 125

IT, telecoms 6,493 169 6,379 166 6,685 174 6,707 174

Financial sector 5,875 132 6,044 136 6,356 143 6,712 151

National average 3,690 147 3,878 154 3,741 149 3,613 144

Source: Central Statistical Office (GUS)

Construction OutputConstruction OutputConstruction OutputConstruction Output

Month Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13

m/m (%) +7.9 +16.1 +19.1 +7.8 -0.8 +9.4 +14.3

y/y (%) -23.1 -27.5 -18.3 -5.2 -11.1 -4.8 -3.2

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +18.1 +15.5 +12.1 +5.1 +4.6 +11.8 -0.6

Source: The Central Statistical Office of Poland, GUS

Sentiment IndicatorsSentiment IndicatorsSentiment IndicatorsSentiment Indicators

Economic sentiment and consumer confidence indicators

-40

-20

0

20

Jan

11

Ap

r 11

Ju

l 11

Oc

t 11

Jan

12

Ap

r 12

Ju

l 12

Oc

t 12

Jan

13

Ap

r 13

Jul

13

Oct

13

60

80

100

120 Co nsumer confid ence (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 Apr '13 May'13 Jun '13 Jul'13 Aug'13 Sep'13 Oct'13

m/m (%) -0.7% +0.1 +0.7 +0.2 -0.3 +0.1 -0.5

y/y (%) -2.1% -2.5 -1.3 -0.8 -1.1 -1.4 -1.3

Year 2006 2007 2008 2009 2010 2011 2012

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

Construction PriceConstruction PriceConstruction PriceConstruction Pricessss

Month Apr '13 May'13 Jun '13 Jul'13 Aug'13 Sep'13 Oct'13

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

y/y (%) -1.9 -2.0 -2.0 -1.9 -1.9 -1.8 -1.7

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +3.2 +7.4 +4.8 +0.2 -0.1 +1.0 +0.2

Industrial OIndustrial OIndustrial OIndustrial Outpututpututpututput

Month Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13

m/m (%) -2.3 -0.7 +2.6 +1.5 -4.5 +9.6 +6.0

y/y (%) +2.7 -1.8 +2.8 +6.3 +2.2 +6.2 +4.4

Year 2006 2007 2008 2009 2010 2011 2012

y/y (%) +11.6 +10.7 +3.6 -3.5 +9.8 +7.7 +1.0


TTTTraderaderaderade

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

EXPORTS in PLN bn IMPORTS in PLN bn

Jan-Aug 2013

y/y (%)

share (%)

2012 share (%)

Jan-Aug 2013

y/y (%)

share (%)

2012 share (%)

Food and live animals 43,520 +9.0 10.5 61,694 10.3 30,470 +3.1 7.3 44,287 6.9

Beverages and tobacco 5,633 +5.8 1.4 7,967 1.3 2,593 +0.1 0.6 3,989 0.6

Crude materials except fuels 10,501 +7.7 2.5 14,024 2.4 14,118 -7.9 3.4 22,053 3.5

Fuels etc 19,670 +1.7 4.8 29,389 4.9 48,392 -12.8 11.6 85,280 13.4

Animal and vegetable oils 1,088 +60.8 0.3 1,342 0.2 1,736 -8.8 0.4 2,887 0.5

Chemical products 38,680 +6.2 9.4 54,295 9.1 61,502 +0.7 14.7 89,140 14.0

Manufactured goods by material 85,413 -0.2 20.7 126,161 21.1 72,837 -5.0 17.5 110,773 17.4

Machinery, transport equip. 155,077 +3.3 37.5 223,646 37.5 137,560 +1.3 33.0 203,718 31.9

Other manufactured articles 52,390 +4.5 12.7 75,925 12.7 36,624 -7.0 8.8 57,646 9.0

Not classified 1073 n/a 0.2 2,653 0.5 11,273 n/a 2.7 18,515 2.8

TOTAL 413,045 +3.8 100 597,096 100 417,105 -3.1 100 638,288 100

Poland's ten largest trading partners, ranked according to 2012

EXPORTS in PLNbn IMPORTS in PLN bn

No Country Jan- Sep 2013

share *2012 Share No Country Jan- Sep 2013

share *2012 Share

1 Germany 118,119 25.1% 150,046 25.1% 1 Germany 101,785 21.4% 134,933 21.1%

2 UK 30,740 6.5% 40,184 6.7% 2 Russia 59,388 12.5% 91,033 14.3%

3 Czech Rep. 28,868 6.1% 37,475 6.3% 3 China 44,332 9.3% 57,235 9.0%

4 France 26,520 5.6% 34,862 5.8% 4 Italy 24,315 5.1% 32,782 5.1%

5 Russia 25,476 5.4% 32,290 5.4% 5 France 18,262 3.8% 25,303 4.0%

6 Italy 20,214 4.3% 29,067 4.9% 6 Netherlands 17,848 3.8% 24,543 3.8%

7 Netherlands 18,714 4.0% 26,678 4.5% 7 Czech Rep. 17,304 3.6% 23,327 3.7%

8 Ukraine 13,277 2.8% 17,213 2.9% 8 USA 13,299 2.8% 16,436 2.6%

9 Sweden 12,777 2.7% 15,811 2.6% 9 UK 12,704 2.7% 15,509 2.4%

10 Slovakia 12,273 2.6% 15,288 2.6% 10 South Korea n/a n/a 14,619 2.3%

Source: Central Statistical Office (GUS) *) preliminary estimates, full year

CurrencyCurrencyCurrencyCurrency

Central Bank average rates

as of 22 November 2013

100 USD 310.77 ↓

100 EUR 419.95 ↑

100 GBP 503.51 ↑

100 CHF 341.08 ↑

100 DKK 56.30 ↑

100 SEK 47.26 ↑

100 NOK 51.06 ↑

10,000 JPY 307.15 ↓

100 CZK 15.42 ↓

10,000 HUF 140.83↑

100 USD/EUR against PLN

300

350

400

450

7 D

ec 12

18 Feb 13

26 A

pr 13

8 Jul 13

13 Sep 13

22 N

ov 13

USD EUR

MMMMoney Supplyoney Supplyoney Supplyoney Supply

in PLN m Jun '13 Jul '13 Aug '13 Sep '13

Monetary base 144,260 155,767 153,867 166,620

M1 523,783 530,666 531,124 540,873

- Currency outside banks 112,815 112,565 114,083 113,223

M2 927,345 921,662 928,359 931,042

- Time deposits 418,252 405,900 412,407 405,703

M3 946,586 945,077 949,988 947,228

- Net foreign assets 160,267 159,749 154,035 147,978 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 Jun'13 Jul '13 Aug '13 Sep '13

Loans to customers 900,999 896,635 901,863 908,106

- to private companies 263,453 261,000 263,491 262,963

- to households 553,055 552,503 556,027 560,608

Total assets of banks 1,634,587 1,616,221 1,627,182 1,626,489

Source: Central Bank NBP

IIIInterest ratesnterest ratesnterest ratesnterest rates

Average weighted annual interest rates

on loans to non-financial corporations

Term / currency Apr '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13

PLN (up to 1 year) 5.4% 5.3% 5.0% 4.7% 4.6% 4.5%

PLN (up to 5 y ) 5.9% 5.7% 5.4% 5.1% 5.1% 4.9%

PLN (over 5 y) 5.7% 5.6% 5.3% 4.9% 4.9% 4.8%

PLN (total) 5.8% 5.6% 5.3% 5.0% 4.9% 4.8%

EUR (up to 1m EUR) 2.1% 2.3% 1.9% 2.3% 1.9% 1.8%

EUR (over 1m EUR) 2.9% 3.2% 2.9% 3.5% 3.5% 3.2%

Warsaw Inter Bank Offered Rate (WIBOR) as of 22 Nov 2013

Overnight 1 week 1 month 3 months 6 months

2.60%% 2.58% 2.60% 2.65% 2.70%

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 22 Nov

'13

Change 15 Nov

'13

Change end of '12

↓ Asseco Pol. 50.15 -1% +11%

↑ Bogdanka 139.5 +6% +3%

↑ BRE 555.1 +7% +70%

↑ BZ WBK 383.4 +1% +58%

↓ Eurocash 51.89 -1% +19%

↑ GTC 8.59 +4% -13%

→ Handlowy 122.5 0% +25%

↑ JSW 68.3 +8% -26%

↑ Kernel 44.4 +3% -33%

↑ KGHM 121.4 +2% -36%

↑ Lotos 39.7 +1% -4%

↑ Pekao 191.8 +1% +15%

↓ PGE 18.39 -1% +1%

↑ PGNiG 5.81 +1% +12%

↑ PKN Orlen 45.95 +2% -7%

↑ PKO BP 41.50 +1% +12%

↑ PZU 468.4 +3% +7%

↑ Synthos 5.5 +5% +2%

↑ Tauron 5.2 +2% +9%

↑TP SA 10.8 +2% -12%

Source: Warsaw Stock Exchange

Key indices

as of 22 November 2013

WIG Total index

55554444,,,,888834343434....12121212 Change 1 week +2% ↑

Change end of '12 +16% ↑

WIG-20 blue chip index

2,2,2,2,555590909090....48484848 Change 1 week +2% ↑

Change end of '12 0% →

WIG Total closing index

last three months

45000

47500

50000

52500

55000

57500

22 A

ug 13

13 Sep 13

7 O

ct 13

29 O

ct 13

22 N

ov 13


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Creative Director Bartosz Stefaniak

New Business Consultant

Tomasz Andryszczyk

RRRRegional Dataegional Dataegional Dataegional Data

Poland's regions

(main cities indicated

in brackets)

Industrial output

Jan-Sep 2013 *

Monthly wages (PLN)

Jan-Sep 2013 **

Unemploy-ment

Sep 2013

New dwellings Jan-Sep 2013

Indus-

try

Constru-

ction

Indus-

try

Constru-

ction

in '000 % Num-

ber

Index *

Dolnośląskie (Wrocław) 98.7 90.1 4,199 3,980 148.8 12.8 12,009 117.9

Kujawsko-Pomorskie (Bydgoszcz) 102.0 99.1 3,314 3,235 143.5 17.5 4,618 106.8

Lubelskie (Lublin) 100.5 98.7 3,630 3,014 126.9 13.8 4,435 89.4

Lubuskie (Zielona Góra) 95.9 90.8 3,359 2,975 58.0 15.3 2,239 99.0

Łódzkie (Łódź) 104.3 89.0 3,611 3,024 147.4 13.7 4,537 91.1

Małopolskie (Kraków) 98.0 91.8 3,744 3,313 158.8 11.3 11,234 107.4

Mazowieckie (Warszawa) 107.5 81.0 4,474 4,722 281.0 11.0 20,771 94.9

Opolskie (Opole) 97.3 98.6 3,466 3,147 49.5 13.8 1,324 112.4

Podkarpackie (Rzeszów) 108.1 91.9 3,236 3,029 145.9 15.6 4,388 98.9

Podlaskie (Białystok) 105.4 91.3 3,181 3,769 68.1 14.6 2,801 85.9

Pomorskie (Gdańsk-Gdynia) 102.5 92.5 3,871 3,478 111.0 13.0 8,501 94.3

Śląskie (Katowice) 96.5 89.7 4,465 3,532 205.3 11.1 7,785 115.6

Świętokrzyskie (Kielce) 100.5 88.7 3,339 3,199 86.2 15.9 1,764 84.7

Warmińsko-Mazurskie (Olsztyn) 98.8 84.1 3,160 3,065 107.6 20.4 2,998 84.6

Wielkopolskie (Poznań) 103.5 91.2 3,638 3,589 141.8 9.4 9,791 94.7

Zachodniopomorskie (Szczecin) 111.6 86.7 3,408 3,296 103.3 16.9 4,027 78.4

National average 101.4 87.8 3,880 3,672 2,083.1 13.0 103,222 98.5

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

in Poland -1,365 1,861 1,381 2,886 175 -2,883

Polish DI 836 310 -550 -1,203 957 2,719

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 Q4 '12 Q1 '13 Q2 '13

Trade balance -8,893 -10,059 -5,313 -1,050 -139 1,194

Services, net 2,334 4,048 4,816 1,032 1,274 1,652

CA balance -18,129 -17,977 -13,332 -3,368 -2,313 362

CA balance vs GDP -5.1% -5.0% -3.7% -3.5% -3.1% -2.3%

Source: NBP, BZ WBK

UUUUnemploymentnemploymentnemploymentnemployment

Registered unemployed, in ‘000 and

% of population in working age

1800

2000

2200

2400

2600

Q3 10

Q1 11

Q3 11

Q1 12

Q3 12

Q1 13

Q3 13

6

9

12

15 number (left axis) % (right axis)

Source: Central Statistical Office GUS

IndustrIndustrIndustrIndustrial ial ial ial PropertiesPropertiesPropertiesProperties

by region, 1H 2013

Existing stock, sq.m

Under const ruction, sq.m

Va-cancy ratio

Effective rents EUR/ sq.m/mth

Warsaw central 2,728,000 41,000 15.9%

3.5–5.0

Warsaw suburbs 1.9–3.2

Central Poland 1,021,000 8,000 16.5% 1.9–3.1

Poznań 1,041,000 50,000 3.6% 2.3–2.9

Upper Silesia 1,478,000 33,000 5.8% 2.5–3.1

Wrocław 795,000 84,000 5.5% 2.4–3.0

Gdańsk 192,000 n/a 9.6% 3.2–4.0

Kraków 149,000 n/a 7.6% 4.0-4.1

CommercialCommercialCommercialCommercial PropertiesPropertiesPropertiesProperties

City

New apartments* Offices 1H'13 Retail rents**1H'13

Q2 '13

PLN/sq.m

Change

y/y

Rents** Vacancy Retail

centres

High

streets

Warsaw 8,081 -0.5% 11.5-25.5 10.5% 85 85

Kraków 6,026 -15.0% 13-15 2.71% 41 78

Katowice 5,817 +8.7% 13-14 8.29% 48 56

Poznań 6,341 -8.0% 14-16 14.66% 44 55

Łódź 4,811 -2.8% 12-14 14.97% 31 26

Wrocław 5,970 -7.7% 13-16 12.37% 38 41

Gdańsk 6,403 +0.7% 13-15 11.24% 39 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

Oct09

Jun10

Feb11

Oct11

Jun12

Feb13

Oct13

Wage CPI

Index 100 = Jan 2005. Source: GUS

poland today business review+ no. 012

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