Coffee Wars    

Chain café Coffeeheaven may have to get creative with its marketing strategy now that Starbucks is preparing to flood Central and Eastern Europe with grande Frappuccinos as early as next year. AmRest Holdings, which last month signed a preliminary agreement with Starbucks Coffee International to open coffeehouses in Poland, Hungary and the Czech Republic, wouldn’t comment on the planned expansion. Starbucks, however, hasn’t wasted any time; the American coffee behemoth opened its first shop in Bucharest last month, and sources wishing to remain anonymous suggest that the company plans to start serving coffee in Prague at the Palladium office and retail complex opening in October.

“We’ve actually decided to pass on [Palladium],” says Coffeeheaven CEO Richard Worthington, in what possibly sounded like sour grapes. “We felt that the rents that are being asked there are, shall we say, opportunistic. A responsible operator, in my view, understands the importance of a good mix of business for the overall success of the mall. They understand that coffee bars can’t afford the same rent as the fashion, but that they’re important. Are we going to be wrong? Well, maybe. But you can’t be right all the time.”

Last year, Coffeeheaven opened 22 new stores across the region and Worthington says he expects that number to be considerably more in the next two years. He says the coffee chain is looking to expand into Hungary and the Balkans, and is planning to enter the “frothy” Romanian market as early as the end of the year. “We’d prefer to have been ahead of everybody else, of course, but Romania’s a big market and it’s very, very early days.”

Hunger tactics

Around 20 Muscovites began a hunger strike on April 18 in the latest in a series of protests by defrauded home buyers in Russia. Gatherings also took place in St. Petersburg and other major cities, and the Co-Investors Defrauded Alliance (CDA) said it hoped similar strikes would spread to cities such as Rostov-on-Don, Voronezh and Samara.

The participants are among the 200,000 or so people said to have been swindled by residential developers in recent years who have been pushing for authorities to act. A hunger strike in September lasted nine days before members of the State Duma legislature promised to deal with the issue. Protestors claim that President Vladimir Putin has personally ordered action, but bureaucrats have not responded.

The highest-profile cases surround the developer Sotsialnaya Initsiativa (SI), which is said to have allegedly taken advance payments totaling around $555 million USD (€408 million) only for buyers to find that their flats would never be completed, or had been sold to someone else. In the Moscow region alone, SI contracted to build 50 high-rise residential buildings, but most barely made it out of the ground, if at all. At one point the company had 62 branch offices across Russia.

In January last year, SI head Nikolay Karasev was arrested and will now face criminal charges, but media reports say the company’s accounts have yet to be blocked and that SI is still managing to find a few unfortunates ready to hand over their money, albeit under a different name: Dostupnoye zhilye – which translates as Reasonable Housing.

Despite appeals to officials and numerous court cases, few victims have seen any of their money back. Depending on the particular structure of the sales contract and the level of completion of the buildings, the luckiest buyers have seen their flats delivered, thanks to arrangements between local authorities and new developers.

However, even in most of these cases buyers have had to dip into their pockets a second time. The majority, though, are left with few options but to make their voices heard and hope the authorities will act. “We do not see any other way but to continue our hunger strike,” said Boris Korasev of CDA.

“Officials of all ranks prefer either to make no comment or to present the whole issue as a personal problem of the deceived co-investors,” striker Olga Rogova told the press. “But we must keep in mind that local authorities attracted Sotsialnaya Initsiativa to their regions and moreover, some of the officials took part in the PR campaign, providing support and approval of the company’s projects. As a result, most of us lost everything. Some have terrible debts today as they took credit from commercial banks.”

Great Wall of Kielce

China’s biggest construction group China International Industry and Commerce Group (CIIC), a major company behind more than half the key projects for the 2008 Olympics in Beijing, is now making advances into Poland. In early April, CIIC representatives visited Kielce to discuss business opportunities with local authorities. “Even if this was still more of an organizational meeting, we’re looking forward to cooperating with CIIC, particularly in terms of infrastructure development,” says Kielce Deputy Mayor Czesław Gruszewski.

Apart from the city of Kielce, one of the biggest Polish developers, Polnord, has plans for cooperation with CIIC as well. Although Polnord’s managing director Wojciech Ciurzyński declined to confirm anything before another meeting with CIIC later this month, he made references to the development of an office complex in Wilanów to host Chinese companies starting up operations in Poland. More enticingly, he mentioned the potential for cooperation in the construction of roads and stadiums for the upcoming UEFA European Championships. The football tournament will take place in Poland and Ukraine in 2012.

Both Deputy Mayor Gruszewski and Ciurzyński say the cooperation with CIIC will not be limited to development. The Chinese will also provide construction materials as well as workforce, both of which are in short supply in the country these days.

Land sales

Last year’s record-breaking auctions for Warsaw plots saw Spanish developers Lubasa and Sando Inmobilaria fork over €96 and €102 million respectively to take control of former bus depots at Inflancka and Chełmska. Looking to boost the city’s budget, City Hall is stepping up efforts to relieve itself of more plots this year. Developers seem interested in general, but are unwilling to speculate on concrete commitments.

Warsaw is still endowed with enough land holdings to be able to sell off as many as 127 plots this year alone, and about 300 between 2008 and 2009. According to Jolanta Raba from the City’s real estate department, selling all that land will allow the city to make progress on its goal of creating a master plan for Warsaw. Mayor Hanna Gronkiewicz-Waltz has promised to provide planning for at least 30 percent of the city’s area with master plans, but to date it’s proved a horribly painstaking task.

Raba says the city does not have a preference for how the land should be developed. “Plots will vary in terms of their function. There will be areas in Targówek with services and production, but also ones in Białołęka and Wawer that will host houses,” she says. “We would like to make accessible areas for office, congress center, hotel and of course residential development,” Gronkiewicz-Waltz told local press early last month.

She hints that this year’s list of plots for sale should contain at least one hit entry – 6 ha in the area of Wybrzeże Gdyńskie Street, nearly on the bank of the Vistula River, in the prestigious Żoliborz district.

Developers are open in their praise for news that Warsaw is showing the will to introduce some order in its planning policies. However, finding out which particular plots interest them is proving difficult, as they consider recent land sales, like Inflancka and Chełmska, that raised questions about the financial feasibility of paying more than €3,500 per sqm of a plot. Instead, they prefer to keep their cards close to the chest. “Let’s talk once concrete plots are announced for sale by the city,” says one managing director on condition of anonymity.