Sven Von Der Heyden talks to Ewa Kielak Ciemniewska and Norbert Piwowarczyk

You are German, but since you have worked and lived in various countries, you are truly a citizen of the world. For 15 years, you have been doing business in Poland. How important for you are the operations on the Polish market?

It is an extremely important market for us, as shown by the diversity of our businesses here. Activities in Poland constitute around 40 percent of all operations of Von Der Heyden Group. Another 40 percent are generated in Spain and the remaining one-fifth in Germany, the company's country of origin. Naturally, we intend to increase VDH Group's activities in Poland even more.

We have worked in Poland for 15 years and so we have been watching the economic and democratic transformations in the country since the beginning. A lot has changed over this time. The burden of bureaucracy has diminished, but we can still feel it. There is, in turn, a lot more of professionalism, in a broad sense of the word. The market in Poland is becoming more logical thanks to, among other things, a lot of competition, tenders and the fact that the market simply adapts to international standards. At the same time, however, the Polish market is getting saturated, there is less and less room for new participants and with time, Poland will become relatively less attractive for new firms because the market will be to a much larger extent controlled by players who are already there.
Poland cannot be defined as an emerging market, that is a thing of the past. The accession to the European Union was of confirmation of the Polish economy's stability and the effects are already there. It is enough to take a look around to see how many businesspeople keep coming from countries such as Spain, Ireland and Italy. Poland is experiencing a second wave of investment capital, the first came in the early 1990s from large and traditionally strong countries in terms of the economy—the United States and Germany.

Countries east of Poland are opening to foreign capital. Is it a threat to the growth of the Polish market?

Poland would face great opportunities if it opened more to the East, that is, established very close relations with Ukraine. Both countries form a market of 90 million people. Poland's support for the Orange Revolution stimulated the victory of democracy in Ukraine. The results of Poland's policy concerning Ukraine include opening the doors to structures of the EU and NATO. My company is open for Ukraine, we are attentively following the developments there and the directions of changes. Thanks to our presence in Poland, our outlook on the country is much more complete and exact. I can see the enormous role Poland can still play in the transformations in Ukraine, I can see opportunities that stem from cooperation instead of competition.

When you started your business in Poland, our country had only entered the path of rapid development. Absence of any modern office space whatsoever generated fast profit for developers who rented out office space at some of the highest prices in Europe. Today a change has taken place and the market belongs to tenants. Is it harder to be a developer these days?

In some ways, those times were indeed easier. It was easier to make money, as nearly all of modern office space found tenants at once. However, it was more difficult to obtain the necessary debt financing for one's developments. Sometimes it verged on a miracle, even if the design of an office building was ready and we had signed long-term contracts with many important tenants. I can still recall how one such project took us months to arrange for the debt financing and we had already had a long-term lease with the likes of PriceWaterhouseCoopers in place. In other words, there are always problems, but they change in time. Today we do not have problems like that anymore, instead, we are facing a fierce tenant's market. Incidentally, it is not caused by a real surplus of office space: as compared to other European capitals, Warsaw does not have a lot of such space at all. Take Berlin or Frankfurt as an example. The cities have around 2 million square meters of vacant offices, which is the amount of modern office space that Warsaw has in total. This shows that the Polish capital city still has an enormous construction potential in the long term along with a required organic growth of the service industry. When it comes to the profitability of developer activities, it remains at the same level, despite lower rent rates. Seven years ago, a building which generated an income of 1 million euros from rent could be sold for 8 million euros to an investor. Today, the owner of the same building could sell it for 12-13 million euros. However, buildings like that no longer bring a yearly income of 1 million, but 700,000-800,000 euros. However, since the market is safer and more reliable, you can generally obtain a higher sales price in transactions. Since foreign investment funds have entered the market, it has been also easier to sell a completed office building. Taking into consideration these parameters, profits in both cases are comparable.

How is VDH Group doing when it comes to renting out space?

We have observed immense demand for office in VDH's buildings in the recent months, which makes us very happy. We have signed a few contracts on letting office space in our two buildings in Warsaw—Liberty Corner and Prima Court. Still, this recent prosperous period does not change the fact that the market is tougher than before. Many developers start investments without potential tenants. But all in all, I can see a lot of opportunities before the Polish market and I am very optimistic about its development.

Is your participation in Opportunity Poland meant to help the market develop?

Appropriate promotion is the key to success. I kicked off the project because I believe a lot can be done for Poland. The organization associates 35 companies and individuals and it seeks to promote Poland and capital investment opportunities in the country. In our activities, we focus on opportunities and contacts provided by the real estate market, because so far most members of Opportunity Poland have operated in this area. We collaborate with the Polish-German Chamber of Industry and Commerce, the representative of the Munich Expo Real Fair in Poland, and we exchange ideas how to promote Poland.

Is promotion around the world what Poland really lacks today?

The world at large still has an incomplete image of Poland and the transformation it has undergone. It is important that people in Europe and other countries read and hear about Poland as much as possible. The knowledge of the country is still very low, even in Germany, its direct neighbor. Poland does not advertise itself, its individual regions and cities, to the necessary extent. It fails to adequately promote its achievements and assets, such as the Polish society which has an education higher than the average in Europe; many young people in Poland speak two to three foreign languages. It is only such campaigns that can create a positive atmosphere around Poland. The importance of promotion and its colossal benefits are exemplified by Spain. From a backward and in political terms obscure country, it transformed into one of the most attractive destinations for tourists and businesspeople.

My dream is for your government to engage more actively and creatively in promotional activities. Organizations like Opportunity Poland and the Warsaw Destination Alliance do lots of beneficial and important work, but it takes a large-scale campaign using immense public and private funds—which our non-profit organizations are not able to raise and which only the central budget can guarantee—to yield visible results, positive atmosphere and popularize true knowledge of Poland. Meanwhile, Opportunity Poland and the Warsaw Destination Alliance concentrate on individual markets and problems, as they are unable to carry out a broad image campaign.

Poland is a country with immense value and incredible potential, not just business-wise. I'm talking about its spirituality and solidarity, something that influence economic development as well, as it says a lot about the values that guide the people—honesty, hard work and knowledge are only some of them. Many of those characteristics, ones that not even Poles always realize, were manifested after the passing of Pope John Paul II. That festival of goodness, kindness and solidarity bred optimism and hope that people could come together to act for the common good. The West is losing those values, losing the meaning of unity and solidarity and I strongly hope that Europe can find a way in between. Another thing is, the event resounded globally and when any TV station commented on the pope's death, it talked about Poland. All those reports formed an image of Poland as an extremely friendly country.

Poland has all the promotion tools, including EU resources, it only has to take advantage of them and speak with one voice and not get lost in nonsensical political discussions.

Tell us a word or two about VDH Group's plans in Poland.

Together with the authorities in Wrocław, we are working on a very ambitious project. It is extremely difficult, but I love challenges and so this does not scare us at all. We want to renovate an old theater in Wrocław and turn it into a complex combining culture and trade, but not like a typical shopping mall. This will be something warm, cultural, one of its kind.

We are continuing the construction of the Andersia Tower in Poznań. In Warsaw, we are planning the refurbishment of a residential tenement house, we are about to obtain a construction permit on a building at 22 Wilcza St. It will be an interesting structure for us as well as for the city. We are also searching for new, good locations for housing investments in Warsaw, for example in Żoliborz or Śródmieście districts. We also want to enlarge Liberty Corner at the rear of a historic tenement house on Trzech Krzyży Square. With the latter development we want to contribute something special to Warsaw, not just another ordinary office building, but one with a beautiful courtyard, open for everyone, with gardens and ingeniously designed public space. It is without a doubt a difficult project that will take lots of conservator work. But I have faith in Polish conservators and our architects—they are probably the best in the world.