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The Warsaw Voice » Other » November 18, 2009
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Emerging Stronger From the Crisis
November 18, 2009   
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Ryszard Danielewicz, chairman of Pirelli Pekao Real Estate, talks to Beata Gołębiewska-Chęciak.

The media has increasingly been saying that the economic crisis may slowly be coming to an end. What is the situation on the real estate market- do you think the worst is over?
It seems that after the storm that hit the real estate market, we can see the first rays of sun emerging through the clouds. What I'm going to say may sound strange, but I believe that at the end of the day, the situation on the market during the past year or so may do the entire sector good.

Really? How?
Paradoxically, yes, especially in Central and Eastern Europe. Contrary to how it may appear, it is by no means a simple thing to run a business rationally and responsibly in overheated market conditions. It's easy to make an expensive mistake that can even lead to bankruptcy. The most noticeable effect of the crisis is market stabilization. I do not want to predict how prices will change, but the process is sure to be much more rational.

Any other upsides?
Back to the storm metaphor, the storm did uproot some of the weaker trees, but those with strong roots remained intact. This means that in the future, there will be competition between well-established companies with thought-out strategies and long-term investment plans. This situation is doubly advantageous, because firstly, it will make it easier to build trust and good relations with customers. Secondly, there is the question of finding funding for new investment, which at present is the main problem facing developers. I hope that banks will soon realize they are dealing with serious players and as a result ease up their lending policies, especially because the need for investment remains high.

How do you think the market in Central and Eastern Europe will develop? Which segment will recover fastest from the crisis?
In discussing long-term forecasts for such a vast market, we need to adopt a somewhat broader perspective. We should not concentrate on the crisis alone, even though obviously the crisis significantly affects the pace of new projects. Central and Eastern Europe is an area that over the coming decade or so will undergo considerable transformation. Let us not forget the EU was enlarged relatively recently and affluence will continue to rise in the new member states. Not as fast as up to now, but it will still rise. When you link this fact to the housing problems most countries in the region have been coping with, we can expect this market segment to be the one most likely to recover from recession first.

Do you mean cheap housing for the masses?
Let's rather call it popular housing. But please notice how standards in these types of projects have changed in just over a decade. Popular apartments no longer need to be located in remote suburbs without access to proper infrastructure and urban amenities.

Is Pirelli Pekao Real Estate planning such projects?
Our most important project in the coming years is a residential quarter planned for the Bielany district of Warsaw, near the former Warszawa Steel Mill. We are planning 7,000 new apartments and with enough extra space to provide all necessary facilities such as schools, nurseries, healthcare units and churches. In our opinion, the scope of this project reflects the housing needs of Warsaw, which remain high and will continue to grow in coming years.

Do you think that a former industrial area is a good location for a residential estate?
I would even say it's a perfect location. Warsaw cannot afford to waste land with such excellent transportation infrastructure. The metro, the projected Północny (Northern) Bridge and the N-S expressway will turn it into one of the most attractive parts of Warsaw in terms of investment. Then, there's the very good infrastructure designed for industrial production. Besides, this location allows for comprehensive design of a residential quarter to meet all the expectations of the future residents according to assumptions of integrated development. In order to make that happen, we are ready to consult on the project with both the city authorities and members of the local community. We thus want to avoid mistakes that previously occurred when housing projects of a similar size were built.

Have such projects been carried out elsewhere in Europe?
So far they have been seen in Western Europe, for example in Barcelona, Borneo Sporenbung in Amsterdam and Hafen City in Hamburg. They are considered to be the biggest achievements in the redevelopment of land that from the urban planning point of view were incapable of being used for years. A similar trend has recently emerged in Central and Eastern Europe. Cities like Prague, Belgrade, Sofia and Coresi in Romania will have apartments for a total of several hundred thousand people built in post-industrial areas. The Bielany project, developed by our company, would perfectly reflect these latest urban trends in Europe and set new directions in the development of Warsaw.
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