Regardless of the global economic turmoil, the Polish market still remains an attractive place for investors, according to the report "Why Invest in Poland" prepared by Walter Herz, Polish Investment and Trade Agency and People agency. This is evidenced by the large transactions concluded in recent months in the commercial real estate sector, as well as the continuous, intensive development of the business services segment in our country.
The dynamics of changes occurring today in connection with the epidemiological situation is increasing, and the evolution of global business processes related to it has never been so rapid.
The "Why Invest in Poland" report prepared by Walter Herz in cooperation with the Polish Investment and Trade Agency (PAIH) and the People agency shows that Poland has attracted investments worth about USD 196 billion over the last 20 years. In 2018 alone, the value of foreign direct investments amounted to USD 15.3 billion, which constituted 7% of all investments in Europe.
Increasingly higher in rankings
Thanks to such a high level of investor activity, we ranked, as the report reads, fifth in Europe in terms of FDI value and second in terms of the number of jobs created.
In recent years, the modern business services sector has become a star of the Polish economy. We have become a leader in Central and Eastern Europe, both in terms of the number of BSS centres and the volume of employment in the sector. There are more than 1,500 centres in Poland, which is almost 70 percent of all BSS centres operating in the CEE area. More than 300,000 people are already working in them, i.e. almost half of those employed in the industry in the whole region. Now, due to global changes, we have the opportunity to take over the processes in business service centres in other regions of the world.
Grzegorz Słomkowski, Executive Vice President of the Polish Investment and Trade Agency, believes that Poland's main asset in acquiring sector projects is its educated and qualified staff who speak many foreign languages. - Not without significance is also the strategic location of our country in Europe, in a time zone which allows for cooperation with companies from all over the world, as well as the development of modern business infrastructure and the ecosystem supporting the activity of investors - informs Grzegorz Słomkowski.
Supporting the inflow of foreign direct investments (FDI) is one of the main tasks of the Polish Investment and Trade Agency (PAIH). Since 2016, the agency has assisted in the implementation of over 100 BSS investments in Poland.
Global hubs and advanced processes implemented in Poland
An important trend we have seen recently is the development of research and development centres, many of which are linked to the IT segment. - Foreign companies are increasingly striving to create global hubs in Poland, i.e. centres specialising in selected processes, which have a global reach. This is due to the maturity of the Polish market, which allows to locate more and more advanced services in the country,' points out Grzegorz Słomkowski.
One of the recent examples may be the development of Ericsson, which in May 2020 launched a research network of 5G and Innovation Hubs at the Technical University of Lodz. The company cooperates with the Lodz Special Economic Zone, which provides support in the implementation of new technologies.
The human resources potential of Poland is also indicated by Bayer, which in 2012 located its centre in Gdańsk. - The key factors that influenced the decision at that time were access to employees with language skills and university graduates, the offer of modern office space, good infrastructure and the presence of other SSC/BPO organisations. The commitment, proactivity and professional approach of local investment agencies also played an important role. Today these factors are still important to us. We have begun to appreciate the geographical and cultural proximity to our headquarters in Germany. The benefits also come from the fact that Poland is a member of the European Union, which in turn affects our flexibility and effectively reduces the administrative burden in many areas," admits Remigiusz Wojciechowski, Head of Service Center Gdańsk Bayer.
Potential in the staff
Rafał Brzoska, CEO of InPost also sees the greatest value offered to investors by our market in people. - Leaving aside all obvious economic aspects of investing in Poland, the main reason why our country is an excellent destination for business development is simply people. Poles have incredible human capital and the courage to undertake completely new projects, which are only waiting to be used by companies. We have a true spirit of innovation. Despite increasing difficulties on the European labour market, Polish employees are rated very highly in terms of loyalty and commitment. Importantly for investors, we have one of the best value for money. These features make Poland outclass the competition in the field of human capital,' admits Rafał Brzoska.
The analyses of companies that were considering the possibility of moving their activities to another country are also to Poland's advantage. - We are a company from the IT sector, hence the availability of specialists on the labour market is one of the most important criteria for us. Therefore, when looking for the right place, we focused on such elements as quality, life, cultural cohesion and security. We wanted to clash these parameters with labour costs in order to see how real the attractive vision of working from the beach in Portugal, for example, is. In the course of our analysis, we decided to look mainly at countries in the European Union, including Poland. This was due to the obvious advantages of EU membership and the relatively small differences in time zones. The analysis of the labour cost criterion did not surprise us. The most expensive is in the Scandinavian countries, and the most cost-effective in Bulgaria or Romania, but these countries were characterised by a significant labour cost inflation of as much as 25%. When we superimposed the results of analyses in other categories, such as the World Banks Ease of Doing Business, Global Talent Competitivness or the Corruption Perception Index, it turned out that Poland is a great country compared to other countries. Knowing that staying in Poland is also a familiar legal regulation, the language and the same time zone were obvious. Ultimately, we decided to stay in Poland. In the end, we are working from the beach, only in Gdansk," says Adam Lasoń Board Member of Objectivity.
Magazines on top
Despite the limitations caused by COVID-19, the activity of investors who want to invest capital in our commercial real estate market is still not weakening. The funds are still searching intensively for facilities, only their preferences regarding the asset class have clearly changed.
In the second half of this year the first choice of investors became the warehouse segment. - In the third quarter of 2020, the warehouse segment was responsible for about 70% of the generated transaction volume. As a result, warehouses have already recorded the historically best result in annual terms. About half of the total capital invested this year in the commercial property market in Poland was invested in the segment. In three quarters of this year, the warehouse segment achieved twice as high a result as in the same period last year," notes Bartłomiej Zagrodnik, Managing Partner/CEO at Walter Herz. - The value of investment transactions completed this year from January to the end of September amounted to almost EUR 4 billion. This is only a dozen or so percent less than at the same time in 2019. Considering the situation, it is a very good result. Despite the difficulties related to COVID-19, this year will probably close with one of the highest results achieved by the Polish investment market in the commercial property sector," adds Bartłomiej Zagrodnik.
In the first half of this year, despite the announced pandemic, our investment market recorded its second historically best semi-annual result. The value of transactions concluded on the commercial real estate market in Poland accounted for almost half of the investment market share in the CEE region.
One of the largest transactions concluded this year was the purchase of over 61% of GTC's office and retail portfolio by the Hungarian company Optima Investment for approximately EUR 550 million. CPI Property Group also purchased five office buildings in Warsaw for almost EUR 230 million.
Investing capital in Poland is justified by the competitive interest rates offered by our real estate market compared to Western European countries. According to Walter Herz, in the middle of 2020 yields for the best office buildings in the centre of Warsaw were 4.5 per cent, while in the warehouse market yields are up to 5.5 per cent.
For companies entering our market and developing their activities in Poland, investment incentives granted as part of regional aid are of great importance. Investors may apply for a return of up to 70% of the eligible investment costs. Strategic investments can also obtain support in the form of grants under the government grant programme.
Poland has also been the largest beneficiary of EU structural funds for several years. Under the 2014-2020 financial perspective, EUR 82.5 billion has been allocated to Poland. This is already the third financial perspective with Poland having the largest budget among the Member States. The offer of aid to support business activity will also be broad in the 2021-2027 perspective, amounting to EUR 72.5 billion.
Large EU funds
The report Why Invest in Poland also says that there will be no reduction in the level of funding for research and development and innovation projects in the coming years. Projects involving R&D work, which will result in the introduction of modern products and services to the market, will still be very important. For further business development in Poland, this is particularly important in the context of the current situation related to the economic stagnation on world markets.
In addition, we also have EU funds available from Horizon 2020 to the tune of EUR 77 billion, and from 2021 onwards from Horizon Europe, with a budget of around EUR 100 billion. Both programmes are aimed at carrying out cutting-edge research and innovative solutions in three priority areas: an excellent science base, industrial leadership and social challenges.
To repair the direct economic and social damage caused by the coronavirus, Poland will receive around EUR 64 billion of support from the EU in the form of grants and loans, which should help us to get our business processes back on track more quickly.