Real Estate & Construction working group meeting, 4 April 2023, at Arup

Members of the BPCC’s Real Estate & Construction working group met at the new Warsaw offices of Arup to discuss the thorny issue of planning permissions in Poland. Investors complain that the process is unpredictable, differs across cities and regions, and in general takes far too long. This is damaging to Poland’s reputation as an inward-investment location.

Key changes being discussed in the Sejm regarding new legislation to speed up the process were discussed by Zbigniew Korba and Jan Adamus from law firm TaylorWessing. Bernadetta Badura from Arup presented case studies of investments to show typical problems that can arise during the investment process; and Arup’s Monika Janczewska-Leja gave an overview of the current commercial real-estate construction pipeline in Poland.

Participants heard that a strong rebound in the office construction market was likely in 2025, while investment in retail space was down three-fold from 2019 to 2020. The big story in housing was the shift from building homes to sell to developing housing units for rent. The nascent PRS (private rental sector) is seen as a safe investment, though with a currency risk factor (given that rent is paid in złotys).

Turning to the main topic, one reason why planning permissions take so long is that the process tends to be carried out serially, rather than in parallel, with one piece of paper waiting to get signed holding up the whole process. There is a marked difference across Poland, with the old Special Economic Zones generally being much faster in issuing permits than cities where an individual investment makes little difference to the local economy.

One interesting point emerging from the new legislation currently being drafted concerns limiting urban sprawl, or the suburbanisation of rural areas lying beyond the borders of Poland’s cities.

In an attempt to stop the ‘multi-stage game of ping-pong’, the new law intends to sanction those who make egregious objections with penalties, and to cut the time limit for getting a decision from 45 days to 21 days.

The discussion which followed raised interesting points. Although the new legislation might cut the number of days given to the relevant authorities to grant permissions or raise objections, the real problem is lack of people with the relevant skills working in the public sector, and their lack of trust when cooperating with private-sector investors. Public-sector decision-makers are seen as inflexible, unable (or unwilling) to use their discretion, sticking instead to the letter of the application.

‘Educating the other side’ – opening and maintaining a dialogue was agreed as being crucial; much of the problem lies outside of the scope of this particular legislation, residing rather in cultural differences in working practice between public and private sectors. The answer here is to engage in greater dialogue at local level, with the intention to build trust between the two sides.

Sadly, despite multiple invitations to decision-makers in the relevant authorities and regulatory bodies, no one from the public sector was able to attend today’s meeting.

Poland’s current construction law is a jumble of amendments and amendments of amendments – it would be useful to have it re-written not for any substantive change, but simply for greater clarity and ease of use.

Poland is competing not only with its neighbours in the CEE region, but increasingly with Western Europe as prices and wages continue to converge. It is therefore crucial for Poland’s international competitiveness to become an easier place to do business in – more transparent and predictable.

Elżbieta Cichońska, Arup’s director for Poland, opened and closed the meeting, which ended with a tour of the new offices – fitted out with an eye to environmental best practice. By using as many recycled materials and furniture as possible, Arup’s office fit-out came in at 20% below budget.