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Interview with Piotr Krawczyński - Managing Director of KSP

Sep 24 2013


Can you compete if you focus on mid-sized renovations, when there is a boom in large new schemes?

This is our biggest advantage. We are looking for exceptional buildings in which we are able to realize their full potential. An unquestionable advantage of such facilities, in addition to a beautiful architecture, are their locations. Our buildings are located in city center and in a prestigious neighborhoods. Recently, we have acquired a building located in the center of Warsaw, at Three Crosses Square - a kind of Warsaw’s high street where there is no chance to build a new office building. And we're going to make it the most advanced and prestigious building in Warsaw, perhaps also in Central and Eastern Europe. Such places are few and such places now have the highest value for a specific group of tenants, which we want to attract.

And you see many projects of this type currently available on the market?

There’s an abundance available on the market but many of the projects are in poor shape and completed in the 1990s, which makes them quite old if you plan to add value to them in order to sell after another five years. Additionally, the building and construction standards back then differ considerably from what is used today. This leads to the question of whether it’s really worth investing in the revitalization of this type of building, even with relatively low construction costs.

Why don’t you want to build?

One of the reasons is that it’s easier to obtain a building permit for renovation, even when it’s connected to historic buildings. We do have a piece of land at Chmielna for which we’re waiting for a building permit. But this is likely to remain the exception that proves the rule for us, as we do not intend to build a land bank at this stage as this market is poor at the moment. Also, the projects we’re interested in have a value of their own in terms of location, architecture and tenant mix.

Are you interested in distress?

Though we don’t see many distressed assets in Warsaw, it doesn’t mean there aren’t some currently available, especially in the city center. The question is also whether the asset itself or if it’s the landlord that is distressed, though we see those even less often than we see distressed assets. With so many investors looking for this type of asset, it makes you wonder for how long the prices will remain low, because that’s what makes them so attractive.

Who else is interested in these smaller, non-core buildings?

There’s a market of €10m-€15m buildings crowded with the private investors who seek to locate their capital surplus on the real estate market. These are usually domestic investors, as we currently do not see any foreign capital in this segment. In our sector, not much has changed.


Source: CIJ Journal, author: Donata Karpik

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