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The Warsaw Voice » Real Estate » February 23, 2010
The Real Estate Voice
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Largest Deals in Time of Crisis
February 23, 2010   
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Andrzej Lulka, legal advisor and partner responsible for the Real Estate Department in the Warsaw Office of Gide Loyrette Nouel, talks to Beata Gołębiewska-Chęciak.

How would you describe the Polish real estate market? Does it have any distinctive features, or does it directly reflect worldwide trends?
There is no clear-cut answer, rather elements of both situations. The financial crisis, and especially the end of easily available financing, adversely affected the Polish market. Fortunately, Polish companies were not deeply involved in foreign financial instruments, and therefore the credit crunch influenced them to a lesser extent. On the other hand, the fall in real property prices in Western Europe led to reduced interest among investors in the Polish market. This trend has recently shown signs of changing, and things may be improving. Poland has benefited from the growth of the GDP index and a stable economic situation, and is now regarded as a safe haven, worth reaching before others take the best opportunities.

In what way did the credit crunch influence the activities and strategies of your clients?
As the situation deteriorated, everyone was taking a more cautious approach. As a result of this and because of a lack of financing, the activities of real estate developers were reduced to a minimum. Financial investors also preferred to analyze the state of their assets rather than to make any new investments. Everyone waited for 2010 to arrive, bringing with it hope for a brighter future. As soon as it became clear that this was a real possibility, many investors began to speculate about what would happen after the end of this unfavorable period, and there was a sharp rise in investor interest last year.

Is it possible that the Polish shopping mall market will attract new players in the near future?
I don't expect to see any new developers arriving on the market and constructing a new network of shopping malls in Poland from scratch. It seems, however, that new financial investors, including investment funds not present on the market, are interested in purchasing shopping malls in Poland.

Despite the current difficult situation, your real estate department ended 2009 with a significant transaction on the shopping mall market. Is that correct?
That's absolutely correct. Last year was surprisingly successful for our law firm. Given the scale of the investment, closing the transaction, in which we advised Mayland, required a lot of effort and involvement on our part. However, this was not the only impressive transaction we were involved in last year. For instance, in the first half of 2009, when investment conditions seemed even more pessimistic, we had the opportunity to negotiate an investment agreement between Neinver and PKP concerning the development of the railway station in Katowice.

What is the role of a law firm in investment transactions?
In the early stages of an investment, the role of a law firm involves mostly supervising and correcting investment plans or business arrangements made by the client. In the event of any obstacle, the advisor is expected to propose alternative solutions that may be used to reach the business aims. In the case of negotiations concerning a specific acquisition of real properties, the next step is a legal due diligence investigation, after which the contractual documents are analyzed. Even if an investor is reluctant to admit it openly, companies usually seek law firms that can replace them in sorting out the precise provisions of contractual documents and help them avoid getting into the "technical details."

In this case, the complete coordination of the project at all levels is necessary. The advisor must take care of all aspects: factors resulting from the financing structure, tax conditions and technical features of the project. The investor must have complete trust in the law firm, and the investment team must be composed of experts in various fields.

GLN provides legal advice on all aspects of building law and real estate management law on all market segments, that is with respect to construction projects and the commercialization of real estate, including lease, as well as financing and the acquisition of commercial, office, logistic and residential facilities.
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