Investment Warsaw: Ireland's largest housebuilding firm launched its international division last week to handle property developments in Poland, writes Jack Fagan
Ireland's largest housebuilding firm, Menolly, formally launched its international division last Thursday when it opened new offices in Warsaw to handle the first of a number of property developments planned for Poland.
Menolly Poland will shortly lodge an application for a building permit for the first phase of a €200 million development close to the centre of Warsaw which will include up to 800 apartments, a 160-bedroom hotel, 15,000sq m (161,500sq ft) of office and retail space and 1,000 car parking spaces.
The company's Polish-based operations manager, John Geoghegan, is already in discussions with two leading international hotel groups interested in operating the five-star hotel.
There has also been a particularly strong interest in the residential element with more than 600 inquiries being logged since billboards were erected around the site. A new metro station planned for the edge of the site will greatly enhance the appeal of the development.
The arrival of Seamus Ross's Menolly Group in Warsaw has attracted considerable attention in the local business and property world because of the success of the Irish company in landing what is seen as one of the best remaining large sites in the city - a high-profile 10 acres next to Warsaw University and within a few minutes' walk of the old city.
The site also faces directly across the Vistula river which divides Warsaw in two.
Menolly paid €30 million for the land which includes a former heat and power generating plant, part of it dating back to 1905 and listed for preservation.
The company is in discussions with city officials about how best to deal with the conservation issue.
Ever since Menolly outbid the French property company, Bouygues plc, for the site, land prices in the city have been rising rapidly in the expectation of economic growth following EU entry and a strong inflow of funds into the property investment market.
Since joining the EU, residential prices in Warsaw have been moving steadily upwards because of falling interest rates and a desire by the country's newly created middle class to buy their first home since the fall of communism. But there has been a limited supply and, due to an absence of master plans for development and lengthy permit procedures, construction has not been able to keep up with demand.
There is also concern that with more than with 200,000 Polish workers - many of them with skills in the construction industry - now in the UK and at least another 135,000 more in Ireland, local construction companies may have to look to neighbouring countries for the tradesmen to complete the increasing number of building projects coming through.
Many of the skilled workers in the Polish construction industry are earning between one-third and a half of the wages available in the UK and Ireland.
According to a recent report by the Knight Frank estate agency, residential sale prices in Warsaw last year grew by 10 to 20 per cent, depending on location, with the most significant increases being as much as 30 per cent in the central Srodmiescie district and in Mokotow, both areas dotted with old buildings that have recovered their pre-war elegance after costly renovations.
Even cramped apartments in the drab communist-era housing projects and the decaying pre-war buildings on Warsaw's right bank are becoming ever more costly as labourers abandon farm life for city living.
Only four per cent of Poland's population lives in the capital compared with 10 per cent in other EU countries. This discrepancy may be due in part to the fact that more than 84 per cent of Warsaw was destroyed during the second World War.
Apart from the former heat and power generating plant, Menolly has also acquired another piece of Polish history - the old home of the president of Warsaw which has just been expensively upgraded and converted into company offices.
The large period house, located in the city's embassy belt, was the home of President Stefan Starzynski who secretly made radio broadcasts from there during the war urging the Poles to rise up against the Germans. He was later executed by the Nazis.
Around 120 business and professional people as well as municipal officials attended a reception in the new offices on Thursday evening to mark the launch of the Menolly Group's international division. The attendance included Ireland's Ambassador to Poland, Declan O'Donovan, the eminent Polish architect Stefan Kurylowicz, who is handling the master plan for the Menolly site; Kevin Knightley of the AIB subsidiary, BZWBK Bank, and Gerry Byrne, director of AIB in Poland.
Ross and his son, Seamus, who is a director of Menolly Poland, hosted the reception which was also attended by senior management of the company.
Menolly is on target to build between 1,500 and 2,000 residential units on eight different sites in the greater Dublin area this year. Most of these will be located at the former Baldoyle racecourse.
The company's overall landbank is expected to accommodate at least 10,000 homes. To speed up delivery of the units and improve the quality of buildings, the company has set up its own Alcrete factory at Kill, Co Kildare, where it produces pre-cast walls, floors and ceilings to reduce the build time for new homes.
Menolly has also branched into the hotel industry over the past year, opening a four-star hotel and spa complex at the historic Dunboyne Castle. The €40 million complex has been trading well ahead of expectations since it opened in April.
Later this summer the group will open a top-of-the-range boutique hotel, Dylan, in Eastmoreland Place, off Baggot Street, in Dublin 2, and in 2007 another boutique hotel, Mount Hybla, will be ready to receive guests at Farmleigh Wood in Castleknock, Dublin 15.
