The impact of EURO 2012 on real estate in Poland

18th April 2007. Town hall in Cardiff. Meeting of the UEFA (Union of European Football Associations) Executive Committee. Nervous expectation, pressure - everybody is waiting for the verdict. Who will get the right to organize the fourteenth European Championships in Football in 2012? Who will get the opportunity to earn lots of money, to built new roads, motorways, hotels and stadiums and other infrastructure connected with this big event? On the “battlefield” there still stand candidacies of Poland and Ukraine, Italy, Croatia and Hungary. At last, Michel Platini – UEFA President comes on the scene and announces the decision in two words, two key-words, two words which are so important for the winning countries – POLAND and UKRAINE.  

Winning the right to organize Euro 2012 is not only a great chance for economic development but also a logistic and constructional challenge. It is also lots of potential trouble… Can Poland manage this investment? How has the decision about granting the right to organize the tournament already affected or will affect on real estates in Poland in the nearest future? Can any progress be seen in that matter for over one and a half year since the announcement of the decision?

                   The experts estimate that Poland can get about 40 billion euro subsidy from the European Union for Euro 2012 preparation process. Boom is a perfect word to describe what will happen with Polish economy. Forecasts for the growth of nominal Gross Domestic Product are at the level of 6% yearly! There is only one “but”… Plans of modernization and building stadiums, roads and motorways, as well as hotels and other tourist attractions will strongly affect on requirement on building materials and labour force needed for realization of the hereinabove mentioned projects. Prices of materials and labour force will be growing systematically and what must be stressed, those rises are already clearly visible.  These will, without any doubt, exert a harmful  influence on developing companies building apartments. If anyone counted on a gradual decrease in prices of new flats and apartments he could be seriously disappointed. Real estates prices, which are expensive today, in nearly four years will be the prices from old, good years. It seems, that this will be one of few negative aspects of Euro 2012 in Poland.

On the other hand and what is more important the extension of transport and building infrastructure will have mostly positive results, in particular in Warszawa, Poznań, Wrocław, Chorzów, probably in Kraków (probably, because it is not known yet, if the UEFA agrees for adding Kraków to the host cities of championships)  and its suburbs. The funny thing is, that Kraków, from among all host-cities is, so far, prepared the best. Its infrastructure – sport facilities, roads and airport have been for a few years systematically modernized, whereas in other cities – besides Warszawa – the work is still in a  plan-phase or has just begun. Even though, Kraków is still held in reserve.  Apart from Chorzów, those cities are all popular tourist destinations. It is planned to build about 900 kilometers of motorways, make a network of railways and  modernize eight of already existing airports. Three brand new stadiums will be created and three other will be rebuilt to enlarge their capacity. After all thousands of football fans must have a place to stay, a place to eat and, apart from matches and  stadiums, a place to entertain themselves. As the example of Portugal shows – the host country of UEFA Euro 2004  -  organization of such a huge sport event causes long-term growth of  the number of tourists visiting that country every year. It is estimated, that Portuguese  tourist branch has earned over 92 million euro, hoteliers over 70 million euro and business transactions reached an amount of 44 million euro. What is more, in the experts opinion tourist branch incomes after hereinabove mentioned championships were growing during the nearest future on a level of 5% yearly. Comparing the aforementioned phenomena to Polish reality even more dynamic increases are very possible and likely to happen. For example, few hours after the announcement of the winning countries, share prices of Orbis, a  hotel group and one of the biggest Polish travel agencies, rose over 10%.

For about two years, a systematic growth of numbers of tourists visiting Poland has been clearly noticeable, especially in Kraków and Warszawa. Unfortunately, according to last researches, our country occupies one of the last places in Europe, taking the amount of  hotel beds into consideration – for one thousand inhabitants the are only forty beds. Those are sufficient reasons to build – as it is planned – 500 new hotels for Euro 2012.  Having in mind an example of Portugal, it is very probable, that after the event the new hotels will not be empty.

                   It must be stressed that the realization of the hereinabove mentioned investments will be almost impossible without government help. Because of this in September 2007 President of Republic of Poland  signed the UEFA Euro 2012 Football Finals Championships Preparation Act commonly referred to as the Euro 2012 act. According to the experts opinion, this legal act contains solutions, which might be very helpful and facilitating in the championships preparation process.  Unluckily, there are also some unfavorable rules for Polish investors.  Under the provisions of this regulation for financing and constructing investments connected with Euro 2008 will be created State Treasuries special-purpose limited liability companies, commonly referred to as special-purpose companies. It means in practice, that the meaning of private enterprises will be limited to the role of subcontractors. This must be negatively estimated, because private companies fulfill commissioned tasks faster and cheaper than public entities. New special-purpose companies have not any technical or organizational experience, which is definitely  needed to achieve a success.

Positive element of Euro 2012 act is the fact, that the new special-purpose companies will be excluded from Government Procurement Act in addition to correct organization and performance of tasks connected with championships. Such a solution lets to avoid a long-lasting procedure, specified in hereinabove mentioned act.

What is also important, as the experts claim, the hereinabove mentioned companies will not be governed by the act, which limits salaries received by employees employed in State Treasuries companies, called in Polish law-system as the “chimney act”. This will lead to employ people with proper qualifications and experience in management boards of  special-purpose companies, which must take positive effect on the quality of provided services.

                   It should be also mentioned, that in the nearest future government plans to issue an regulation, on which force, all of decisions passed in connection with the Euro-event, will be granted with pain of immediate enforceability. Appealing from those decisions will be restricted by very short time limit – fourteen days. That clause will without any doubts reduce the duration of many procedures, which currently are in Poland very bureaucrative and long-lasting.  

                   Even though it is still more than three years to the first match of the championships, Poland have already won. Designation of our country for co-host of UEFA Euro 2012 will, without any doubt,  positively affect the whole Polish economics and will improve its reputation and increase its significance on the international arena. Thousands of Europeans will remember Poland not as the Soviet-block and poor eastern country, but as a real, modern and civilized  member of the European Union. The only challenge remains to avoid embarrassment because of bad organization or  simply because of delays in realization of planned and necessary investments…

Oh... I have almost forgotten, Polish national team will have the second in the history opportunity to play in the finals of Euro championships…

Karol Obrębski