Poland’s office market is experiencing a Brexit boom as firms shift operations from London to Poland, say property experts.
The Brexit effect should help maintain the transformation of the Polish skylines with new office blocks springing up to meet the new demand.
“Before the vote we saw companies sniffing around Poland,” said Jeroen van der Toolen, managing director for Central and Eastern Europe at Ghelamco, a leading real estate investor and developer in Poland.
“Now after the vote these companies need to have their feet in the EU because they don’t know what Brexit will look like in the end. You have companies coming in and wanting to hire 1,000, 2,000 people. This means there are bigger requirements, which means more construction.”
Poland has long benefited from foreign firms establishing back-office operations, mainly in regional cities such as Krakow and Gdansk. But the Brexit effect, say property experts, is bringing big names to the Poland such as Goldman Sachs and JP Morgan to the Polish capital, and others look set to follow.
“A lot of investment banks and financial institutions are going through the process of looking for space over here,” said Sean Doyle, head of investment properties at CBRE Poland, an international real estate company. “What Brexit has done is given these institutions the excuse they needed.
“If one these institutions, such as a big bank, shut downs, say, 5,000 jobs in the UK they will come under a lot of political pressure,” he explained. “Following Brexit they can say ‘Look. We can’t trade in Europe. We need to have access to the European markets and we’re not guaranteed that in the UK’.”
Experts also point out that the “back-office” operations that helped fuel the Polish property market for years are no longer the seemingly mundane operations the term suggests. IT, for example, which plays a crucial role in the financial sector, now require large amounts of floor space, a lot of staff, and needs to be centred in big cities, if the employer wants to attract the highly-qualified people they need to run them.
Poland has also managed to tap into the Brexit wave by having office rents, according to the property company Savills, 64 percent lower than Paris, and 44 percent lower than Frankfurt.
At the same time improving standards in personal data protection in Poland have also helped reel in tenants. Crucial for sectors such as banking and insurance, which have huge amounts of sensitive information on their files, data protection is being enhanced this year by the introduction of the EU General Data Protection Regulation that will help beef up data security in the country.
And this is good news for Warsaw.
“People had been nervous over the amount of office towers being built in Warsaw, and they didn’t think they would fill them,” said Doyle. “But now for sure they will fill them. There are seven to eight new skyscrapers under construction, and the truth is even that isn’t going to be enough.