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The Warsaw Voice » Real Estate » February 25, 2011
The Real Estate Voice
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Building Fever
February 25, 2011   
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Hanna Gronkiewicz-Waltz, mayor of Warsaw, talks to Marcin Kłosowski.

Your second term as mayor gives you an opportunity to continue the city’s policy when it comes to spending on municipal projects. What are the policy priorities for the coming years?
The Warsaw of today is a large construction site. The urban fabric of Poland’s capital city, torn during World War II, is becoming increasingly uniform and the city’s transport infrastructure is being consistently improved. The urban regeneration process is increasingly visible.

When I first ran for mayor I came up with a plan for the development of Warsaw covering two terms of office. Warsaw is a city with huge investment needs, which are impossible to meet within four years. The confidence I gained when I was reelected enables me to continue this huge investment plan. Our municipal projects spending plan for this year alone is a record zl.3.6 billion. By 2015 we will spend as much as zl.15.8 billion to develop the city’s infrastructure. Among the most important projects is the construction of a second metro line and the Północny Bridge expressway. We also want to modernize the Czajka sewage treatment plant and build a Museum of the History of Polish Jews. We also attach great importance to cultural and social projects.

Where will the money for the projects come from? Will European Union structural funds still be the driving force behind the city’s development?
As a metropolitan area, we have many opportunities to acquire funding from various sources. We try to finance the development of the city from our own resources, but such a large-scale expenditure plan requires external support. EU funding—a record amount of zl.1.2 billion—will indeed significantly support the municipal projects that are being carried out this year. The role of EU funds in the city’s spending agenda has been growing at a fast pace in recent years. EU funding accounted for 10 percent of our spending on municipal projects in 2009 and 25 percent in 2010. This year, it will account for as much as 40 percent of such spending.

This year, we are also going to privatize Warsaw’s heat distribution company SPEC, a leading supplier of heat in Poland. SPEC manages the largest heat distribution system in the European Union and one of the largest in the world, with a length of almost 1,700 kilometers. We started the privatization process in the middle of February and have already recorded much interest in the deal. We expect that the sale of SPEC will be the largest privatization project to be carried out by a local government in Poland.

We will also be relying on private resources. We have done our homework when it comes to public-private partnership and are now increasingly putting it in practice. We are in talks to replace more than 1,500 bus and streetcar shelters and are going to start preparations to build multi-level underground car parking garages and low-income housing in the public-private partnership system in the near future.

How does Warsaw want to attract foreign investors?
Every year Warsaw enjoys increasing interest among foreign investors. In a recent survey by PwC and the Urban Land Institute, Warsaw emerged as the number 10 location in Europe in terms of investment prospects on the real estate market. The city moved up three notches from the previous league table and was ahead of Prague and Budapest, which were ranked 17th and 25th respectively. The developers, financial institutions and property managers surveyed said that Warsaw’s real estate stock meets the needs of the market.

We are a capital city with the widest range of property and the only European capital offering investors land in the very center of the city. We have relatively the highest level of security, the largest market in Poland, and the best municipal transportation system in the country. The municipal authorities are consistently replacing old buses and trams with new ones and buying more trains for the Rapid Urban Railway system. Green areas cover a quarter of the city’s area. Life in such a city is becoming better and nicer. As a result, we have recorded a rise in the number of new residents and in foreign investment. I wish to encourage investors to talk about Warsaw’s investment prospects at the MIPIM fair in Cannes.

Speaking of the real estate market, what will Warsaw look like in four years? Will we see new high-rise buildings in the city center?
When it comes to local development plans, the process of covering successive parts of the city has gathered momentum in recent months. Under a new development plan for Defilad Square, the construction of high-rise buildings is allowed in the area, but I expect that such buildings will mainly be constructed in the area where downtown Warsaw ends and the Wola district begins.

Currently under construction are projects such as Złota 44, The Warsaw Spire and a building designed by Helmut Jahn on Twarda Street. Several more projects are at an advanced preparatory stage. I hope in four years most of them will be at a stage of well-advanced construction work.

How can Warsaw benefit in the long run from the UEFA Euro 2012 soccer tournament?
The right to host the UEFA Euro 2012 tournament is a great development opportunity for Warsaw and is perceived as such by the city’s residents. The key project being carried out specially for the tournament is the National Stadium for 55,000 spectators, which will be completed in the middle of this year. Additionally, there are around 50 other large projects now under way in Warsaw important for the functioning of the city during the tournament. Financed from the municipal, provincial and national budget, they will cost a total of zl.17 billion, of which zl.6 billion will come directly from the municipal budget.

Last year researchers published their findings from nationwide research into the expected impact of preparations for the tournament on the Polish economy and the economies of individual Polish regions. The report shows that Euro 2012-related projects, especially those in transport infrastructure, coupled with the inflow of foreign direct investment and tourist sector incomes connected with the tournament, will boost Poland’s GDP in 2008-2020.

It is estimated that almost 1 million foreign soccer fans will come to Poland for the tournament. We think that almost half of them will visit Warsaw, where the largest number of matches will be played, including the quarter- and semifinals, and where the international broadcasting center and many VIPs will be present.

The authors of the report estimate that direct benefits for the region from the 2012 soccer tournament will reach almost zl.500 million. This will include mainly the additional income of the tourist sector associated with the arrival of foreign fans for Euro 2012, estimated at zl.410 million, and direct spending from the UEFA budget, estimated at almost zl.70 million. We are also counting on the long-term promotion of Warsaw across Europe.
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