CREN - Croatian Real Estate Newsletter

Transcription

1 CREN - Croatian Real Estate Newsletter Volume 22., January 2008 CREN PATRONS TABLE OF CONTENTS 1. INTERVIEW Ana Mrak Taritaš, The Ministry of Environmental Protection, Spatial Planning and Construction INVITATION FOR APPLICATIONS WE SEEK TO PURCHASE WE PRESENT YOU Shopping Center Prebendarski vrtovi WE PRESENT YOU IMMO INDUSTRY GROUP CROATIA STATISTICS Average Asking Prices of Real Estate Offered for Sale in Statistical Reports of the Central Bureau of Statistics from the Area of Civil Engineering Construction work indices, November PRESSCLIPING PAST EVENTS DO NOT MISS OUT WE POINT OUT TOPIC OF THIS ISSUE: THE INFLUENCE OF SPATIAL PLANNING ON THE IMPLEMENTATION OF LARGE REAL ESTATE DEVELOPMENT PROJECTS Ana Mrak Taritaš, B. Arch., Head of division at the Directorate for Spatial Planning of the Ministry of Environmental Protection, Spatial Planning and Construction

2 1. INTERVIEW Ana Mrak Taritaš, B. Arch., Head of division at the Directorate for Spatial Planning of the Ministry of Environmental Protection, Spatial Planning and Construction THE INFLUENCE OF SPATIAL PLANNING ON THE IMPLEMENTATION OF LARGE REAL ESTATE DEVELOPMENT PROJECTS Could you tell us something about the official spatial planning documents? It is important to know that Croatia has a long tradition of spatial planning reaching as far back as after the Second World War. In addition, the tradition of spatial planning was always continuously supported by spatial planning legislation and spatial planning documents. After all the changes that affected this region, the Spatial Planning Act was adopted in 1994, followed by spatial planning documents drafted according to this Act. We can differentiate between county plans, spatial municipality or city plans, and detailed development plans. On 1 st October 2007, the new Act on Spatial Planning and Construction came into force, and it merges two preceding pieces of legislation (the Spatial Planning Act and the Construction Act). In accordance with this Act, the spatial planning documents have remained the same, but there is no longer the obligation to develop a City Master Plan. However, all the city master plans, which are currently at their drafting stage or which have already been adopted shall remain in force for another 10 years, and they cannot be changed in this period. The main spatial planning document at the national level is the strategy, that is, the Spatial Development Programme of the Republic of Croatia, as adopted by the Parliament. Secondly, there are county spatial plans, which are adopted by the counties, and then the municipal, or city spatial plans (now we have defined the term large cities ), and then there are city development plans, and detailed development plans. Can you explain to us the role of spatial planning in the implementation of large real estate development projects in the tourism sector? Allocation of land for tourism development is very interesting for Croatia, in view of the region we live in. This is a Mediterranean region, which is very interesting for investments. The Regulation on the Protected Coastal Belt was adopted in 2004, and it regulates what, how and under what conditions anything can be planned, developed and constructed along the sea coast. The Regulation was built into the Act and the legal provisions. Here, we are discussing large separate zones allocated to tourism development single-allocation zones. They have to be planned in the County Spatial Plan, and their location, maximum surface, allocation and the maximum number of beds have to be CREN - Croatian Real Estate Newsletter / January / 27

3 defined. The spatial development plans of individual municipalities or cities elaborate the details of the zone, for instance they can reduce the planned capacity of the zone. However, they do not allow for planning new zones, if such zones are not included in the county spatial development plan. The county spatial development plan, which is the main document at the county level, has to be approved by the Ministry of Environmental Protection, Spatial Planning and Construction. The Ministry also has to approve all spatial plans, which are adopted for the protected coastal area. Singleallocation zones can influence some changes, as they require new proposals concerning the traffic, water supply, wastewater collection and issues of electricity and energy supply. This is planned in the County Plan. The municipalities can reduce such facilities, but they cannot change them. What are the difficulties, which you encounter with the T1 and T2 tourism zones? The problem with T1 and T2 zones is that companies, either local or foreign, buy land in the zones allocated to tourism, but in the implementation stage it becomes evident that the project is not about tourism, but about apartments, which are sold on a large scale. There are legal provisions, which state that within the zones allocated to tourism, we must differentiate between residential and non-residential zones. The rules for residential zones are the same as for any other residential areas, but nonresidential zones within singleallocation areas are defined differently. The problem that appeared, which was regulated by the law, is that the parcelling out the land and registration of condominium ownership is not possible in those zones. To repeat what I have said, this means that there is no parcelling out and no condominium ownership. We are striving to allocate large zones exclusively for tourism, so that it is possible to identify tourism there. Unfortunately, our experience has frequently been that under the guise of an allocation for tourism apartments were built for the market. Can you explain how large real estate projects in the retail sector are organised from the point of view of spatial planning? When we speak of large projects related to the real estate development in the retail sector, these are mostly projects in large cities, where there are frequent transformations of individual areas. These are mostly areas allocated for industrial production, since there is a tendency to move industrial facilities out of the cities, and these pieces of real estate are reallocated for commercial centres. These commercial centres do, however, have certain limitations. This is mostly related to transport and other infrastructure. The best locations for situating commercial centres are on the outskirts of the city, where they are isolated from the city in terms of traffic. To locate a commercial centre in the city, along the existing transportation routes, which are frequently already burdened, results in the collapse of transportation. I remember when the first shopping centre, Mercatone, was opened in the city of Zagreb, or more precisely in the municipality of Donji Stupnik, there was chaos along the entire traffic route. The City of Zagreb decided to allocate Jankomir on the West and Žitnjak on the East for the development of shopping centres. This re-allocation is already evident in Jankomir, whereas the transformation has only just begun in Žitnjak. This kind of experience has proven to work successfully abroad, and it is being implemented in Croatia as well, and we consider it acceptable. Defined CREN - Croatian Real Estate Newsletter / December / 27

4 separated areas, new construction zones, which would be allocated solely to commercial purposes, are currently not possible. The same applies to other cities in Croatia. For instance Zadar also has industrial facilities, which it has attempted to transform through its spatial plans into areas allocated to shopping centres. To a large extent, these shopping centres have already been implemented. The same applies to Split, where shopping centres were built on the premises of deserted industrial facilities, which were once on the outskirts of the city, but the whole location was no longer considered adequate as the city developed. What are the reasons why industrial facilities are leaving the cities? Has this anything to do with utility fees? Utility fees are certainly one of the reasons. Operating within the city area has certainly become very expensive for industrial facilities. Industrial production requires a great deal of space. We are talking about tens of thousands of square meters. The utility fees are high, and in the near future we can expect the introduction of location fees, which already exist in some western countries. It means that a fee is paid as if the plot is used to the maximum. This calculation will definitely result in moving all industrial facilities to less attractive areas. Another reason are transport connections. Motorways have connected the whole of Croatia with Zagreb, so that in European and global terms, Zagreb can be reached in very little time. Do you think that industrial zones have truly been accepted in Croatian in the real sense of this word? They develop depending on the development of capital. Dugopolje near Split is a good example. A zone was established near the motorway, and it seems to me that it is actually very attractive, it should attract investment. I believe that the price of land should be considered as input data, and the utility fees should be left as they are, because this is what the municipalities live off. Once the land is sold, it has been sold for ever. It is better to sell the land for a lower price, and leave the utility fees as revenue for local government units. Do you think that the cities should initiate a reduction in the price of land? It all depends on the development strategy of every individual city. It is certain that there is no single rule for everybody. A city, which does not want to develop industrial production, provided that it has sufficient secondary and tertiary industries, will surely raise the price of land. Actually, this is related to the strategy, to economic development, employment strategies and unemployment rates, and spatial planning is only there to provide assistance in all this. What is your opinion of the residential sector? The City of Zagreb has one great advantage, and this is that it is attractive to live in. It is attractive for people who come to Zagreb to study, they come from different environments and they stay. It has been determined that about 30,000 apartments are lacking in Zagreb, however there are also very many apartments, which are not being used. Their owners do not live in Zagreb, but they have an apartment there, because this is a matter of prestige. These are mostly apartments of about 50 square meters, which are best sold on the market, and always sought after. Another type of apartments are apartments in the CREN - Croatian Real Estate Newsletter / December / 27

5 northern part of the city of Zagreb, which has always been allocated for residential purposes. However, I am of the opinion that the northern part of Zagreb has been devastated, and that there is no longer room for quality residences there. For instance, the connection roads to these so-called urban villas are only 3 m wide. This is no longer an exclusive place to live. There will have to be further development to the west of the city, for instance towards the neighbourhood of Gajnice or possibly outside the Zagreb area, towards Zagorje. The southern part of the city has always been less attractive for living. It is my opinion that the possibility that Zagreb had in the northern part of the city to allocate it for elite residential areas has for the most part been exhausted. What we see today in that area is far from the concept of urban villas. We would like to highlight the importance of the City Development Plan (UPU)? Can you tell us for which kind of projects is a City Development Plan needed? The City Development Plan is a plan, which can be classified as an implementation plan. So, the main allocation of the land, and construction zones are defined in the municipal or city spatial plan, and it is on the basis of this plan that the city development plan is adopted. In accordance with the Act adopted on 1 st October 2007, the city development plan has to be adopted for construction zones, which have not yet been developed. This concerns all construction zones whose surface area exceeds 5,000 square meters, and which have not been developed. So, if we have undeveloped areas, without a defined transport and utility infrastructure, then a city development plan (UPU) is mandatory. It is also mandatory for transformation or rehabilitation of certain parts of the city, which I have already discussed. The city development plan (UPU) is also drafted for separate areas outside the construction zones, certain tourism developments and entrepreneurial zones. The obligation to develop an UPU is regulated by law. What is the time period needed to adopt an UPU? It is very hard to say, because the body responsible is always the municipality or a city. On principle, it can be funded from different sources, for instance by private investors, by payments to the budget or in a different way. The experience is varied, but it takes about 9 months to a year from the beginning of development of a UPU to its adoption. To implement it within a shorter period is virtually impossible for the simple reason that this is a process, which requires active participation by the public. The public has to be involved from the beginning to the end, and they need to know what has been planned in certain areas, and they need to be continuously informed throughout this process. What would you recommend to local and foreign developers? The first step, which they have to undertake, and in most cases they seem to be misinformed about it, is to check the spatial planning documents meaning the city/municipality spatial plan to see what can be planned in a certain area. Very often, investors are promised that their planned projects will be implemented, time and effort are invested, without any final results. Primarily, the investors have to consult the city or municipality spatial plan and see what it envisages. If it envisages a certain zone allocated to tourism or an entrepreneurial zone, it is a much lesser problem to order and draft the CREN - Croatian Real Estate Newsletter / December / 27

6 city development plan (UPU). If such zones are not envisaged, in line with the county spatial plan, then it is absolutely impossible to implement the project. All promises that a project will be possible once the spatial plans are amended should be taken with reserve. County plans are amended at the county level. If you want to plan a new zone, this means that 80 percent of all the zones, which are already planned, have to be already developed. Therefore, I repeat: the main and primary rule should be to check the spatial planning documentation and see what the options are, and to plan all activities within these limits. Can you inform future investors on the most important changed related to spatial planning? The law stipulates that, all cities and municipalities have to adopt new spatial plans by March The project to adopt new spatial plans is in its final stages. About 10 percent of spatial plans have still not been finally adopted, but consultations with the public have finished. If a city or a municipality does not adopt spatial plans within this deadline, they will not be able to issue permits. You will not be able to obtain any permits on the basis of the old plan. Only those projects, which were envisaged in the county plan, will be able to be implemented, as they determine the infrastructure. The new act just incorporated all the elements of the former act, along with all the experience gathered, and it also incorporated the regulations. In relation to spatial plans, it abolished the City Master Plan (GUP), but the existing ones will remain in force for another 10 years. Another important thing is that if more than 9 months lapse since consultations with the public, the plan can no longer be adopted, and the consultations have to be repeated within 8 to 15 days. How can investors participate in the process of adopting spatial plans? They can get involved just like any other interested stakeholders. This means that the process of adopting spatial plans involves preliminary and public consultations. They can be used to express certain demands, wishes and interests, and if they are identical with the interests of the municipalities, and not in conflict with important interests of the county or with relevant strategies, they can be taken into consideration. If their interests are not in line with the interests of the state, the county and the city, then they will be rejected. For certain projects, which are planned, it is necessary to elaborate more detailed spatial plans, and then it is actually their role to try and fund the detailed plan or to stimulate municipalities or cities by direct payments to their budgets, which makes it possible for such plans to be given priority. What is the procedure for funding the city development plans (UPU) by investors? Private investors may fund the UPUs. As we have already mentioned, they may fund the UPU by direct payments to the municipality budget, and then the municipality starts to develop the plan, according to the same procedure as when it funds it itself. Another way is to make a trilateral agreement, from which it is evident who funds the UPU. In that case, the investors donate the plan to the municipality, and the municipality may in return reduce their utility fees or something else. Everything has to be transparent, and one should not start developing or funding such plans without the involvement of the local government CREN - Croatian Real Estate Newsletter / December / 27

7 units. One may only develop individual feasibility studies, which elaborate the intended projects. But the body responsible for the development of a plan is always a specific body within the municipality, which implements this procedure according to the law. The investors are obliged to respect the will of the municipality or a city. The funds they contribute may only help accelerate this process, so that it is dealt with not in 4 years time, but earlier, at a time, which is acceptable to them. Is it possible for municipalities or cities to refuse certain investors as possible contributors of funding for spatial development plans? It is possible for local government units not to accept a certain contribution, because it would require too extensive investments in infrastructure, or if it is not in line with the development of the municipality. There are different options. It is the municipalities and the cities, which according to Croatian legislation have the right to decide whether or not they will allow anybody else to fund the development of plans affecting their territory. CREN - Croatian Real Estate Newsletter / December / 27

8 2. INVITATION FOR APPLICATIONS.. INVITATION FOR APPLICATIONS for the post of Real Estate Sales Manager With the aim of further developing our business operations in the commercial real estate sector consultations and development, we are seeking applications for this post: Requirements: University degree in economics or a related field; Active knowledge of English; Excellent MS-Office skills; B category driver s licence; Previous work experience in sales and acquisition of commercial real estate, participation in commercial real estate development projects and in other work related to the real estate market in Croatia and abroad; Managerial skills for independent management of all stages of the projects and for leading the business team; Good communication skills; Knowledge of construction-technical legislation. The employment contract is for an unlimited period. Please send your applications with a CV in Croatian and English within 30 days from the publication of this advertisement to the following office@filipovic-advisory.com INVITATION FOR APPLICATIONS for the post of Real Estate Market Research Analyst With the aim of further developing our business operations in the commercial real estate sector consultations and development, we are seeking applications for this post: Requirements: University degree in economics or a related field; Active knowledge of English; Excellent MS-Office skills; B category driver s licence; Previous work experience in estimating the market value of commercial real estate; Priority will be given to applicants who are familiar with international standards of estimating the market value of commercial real estate; Previous work experience in sales and acquisition of commercial real estate, participation in commercial real estate development projects and in other work related to the real estate market in Croatia and abroad; Knowledge of construction-technical legislation. The employment contract is for an unlimited period. Please send your applications with a CV in Croatian and English within 30 days from the publication of this advertisement to the following office@filipovic-advisory.com CREN - Croatian Real Estate Newsletter / December / 27

9 3. WE SEEK TO PURCHASE.. Filipović Business Advisory ltd. has been an active player in the commercial real estate sector for several years. WE SEEK TO PURCHASE A PLOT FOR THE CONSTRUCTION OF A COMMERCIAL CENTRE ON THE TERRITORY OF THE REPUBLIC OF CROATIA: In cities with a minimum population of 10,000 Minimum surface of the plot amounting to 5,000 m² The plot has to have regulated property and legal status and offer the possibility of constructing a building for commercial purposes. The bid, as a rule, should contain the following: A map of the whole city with the demarcated location of the plot; The extract from the Cadastre records a broader picture with demarcated neighbouring plots; Title deed; Total plot surface; Description of the business opportunity the price of the plot; Excerpt from spatial planning documentation the graphic and textual parts relating to the plot in question; Description of utilities and other infrastructure, to which it is possible to connect the facility on the plot in question; Description of the necessary building permits and foreseeable deadlines. If you do not have all the above information currently available, please submit the information you have by the given deadline. Please send your bids by mail to the following address: Filipović poslovno savjetovanje d.o.o. Trg bana Josipa Jelačića 3/V Zagreb Or by to: office@filipovic-advisory.com within 30 days from the publication of this advertisement. For additional instructions, please contact Natalija Vulić, phone no.: CREN - Croatian Real Estate Newsletter / December / 27

10 4. WE PRESENT YOU Shopping Center Prebendarski vrtovi Spiller Farmer Zagreb The newest and one of the most interesting venture is the building of the Prebendarski Vrtovi Shopping Complex. This complex will be located on one of the most vibrant streets, Tkalčićeva, in Zagreb. Tkalčićeva Street is a pedestrian zone lined with charming historic buildings that house cafes and small exclusive boutiques. The street is vibrant and youthful. Prebendarski Vrtovi are within direct pedestrian reach of most major sights in Zagreb. The shopping centre is 500m from the main square, Trg Bana Jelačića and the Cathedral. It is only 50m from Kaptol Center and 100m from the nearest tram station. The location provides good access to public and private transport facilities. Prebendarski Vrtovi will not only be an attractive shopping centre but will also provide gastronomy, parking facilities as well as office space and luxurious apartments. These amenities will be located on six levels. A modern and an attractive design, Prebendarski Vrtovi will fulfill the most demanding shopper's expectations. The alluring views and the convenience of parking will make Prebendarski Vrtovi one of the more sophisticated shopping centres in Zagreb. Style and fashion will be synonyms for the Prebendarski Vrtovi shopper. Prebendarski Vrtovi will be a commercial/residential building located in Tkalčićeva Street, Zagreb. This complex is located on an attractive area, fulfilling all standards and will be connected to the Kaptol Centre Shopping Complex. It will be a shopping experience unlike any other thus far in the city centre. Spiller Farmer has obtained the exclusive rights to lease this retail project. The project should be completed by autumn We are pleased to act as the lessor for a 21st centrury shopping complex providing a unique and stylish and exclusive shopping environment. CREN - Croatian Real Estate Newsletter / December / 27

11 GENERAL DATA: New, modern, sophisticated shopping centre Located in Tkalčićeva Street in downtown Zagreb Total area of the object: m² Net leasable area of the mall: m² m², whereas interest exists for Interest has aroused from various already existing brands on the Croatian market, but also from divers foreign brands intending to enter the Croatian market No. of levels: 6 Level -2: Level -1: Ground - floor: underground parking partially parking with retail units retail units and gastronomy CREN - Croatian Real Estate Newsletter / January / 27

12 Level +1: Level +2: Level +3: retail units and gastronomy service and gastronomy gastronomy No. of units: 60 Also including luxury apartments and offices Parking spaces: 155 Planned opening: Autumn 2008 Exclusive agent: Spiller Farmer Zagreb 5. WE PRESENT YOU IMMO INDUSTRY GROUP CROATIA During last year Croatian real estate and industrial market was introduced to the international tailor made industrial real estate developer- Immo Industry Group (IIG) that opened its Croatian office in Zagreb in February The group with its headquarters in Aalst, Belgium has, at the moment, local offices in 15 European countries as well as representation offices in USA and China. With Immo Industry Group, referred to as the smartest industrial real estate developer, experienced and specialized in providing a complete range of real estate services, clients are ensured with the most efficient tailor made developments. Such added value ensured by IIG is advanced through the three associated branches active on a pan-european level: - Immo Industry Logistic & Process Solutions (IILPS) offers consultancy in industrial processes, supply chain and logistics infrastructure, that is, consultancy on the optimization of industrial and logistics process activities, - Immo Industry Facility and Property Management (IIFPM) offers facility and property management for all of Immo Industry s projects and enables a seamless evolution from developing that proceeds to and ends with building maintenance and improvement, and - Immo Industry contracting (IIC) through which the complete CREN - Croatian Real Estate Newsletter / January / 27

13 construction process is being led and strictly controlled. Beginning from client s specific logistics and/or process-related needs and focusing on the client-driven value chain, IIG s in-house specialists with joined competences elaborate the ideal logistic concept or optimum production scheme that encompasses extensive survey, site search, design and construction completing with the handover of fully operational buildings. By understanding client s individual activities IIG meets his specific requirements in any kind of industrial and/or logistics process facility starting the concepts from the inside with an analysis of the processes and finish it with a design to fit outside linking efficiency to support and performance plus meeting the deadlines. The result is ready-to-use, fully customized building backed by state-of-arttechnologies ensuring many years of client satisfaction. Whatever the client s needs are, wherever in Europe including Russia, IIG develops all types of tailor-made logistics or/and production-bound real estate whether as a standalone project or in an industrial park. Industrial parks offer to the clients the opportunity to set up logistics and production activities in tailor made industrial real estate buildings with built-in opportunities for expansion that are fully operational in maximum 20 weeks which significantly saves time and reduces costs. At the moment, IIG offers such services in 17 Industrial Parks on strategic locations throughout Europe, and is planning on opening one in Croatia, Zagreb area, during this year. Taking the full responsibility from the design to the handover of an operational building in close partnership/cooperation with the client Immo Industry Group offers off-balance (Lease/Rent) or on-balance (Design and Build, Project Management) financial possibilities ensuring market competitive prices to its clients. That is the reason why Immo Industry Group has made a name for itself on European real estate market in designing complex customized industrial buildings in which optimizing production, manufacturing, assembly, warehouse/distribution activities and absolute cost-effectiveness are the key drivers. IIG has provided industrial real estate developments: fully equipped tailormade production, manufacture and assembly facilities, as well as warehouses, distribution centres and/or hubs to the whole range of customers. Some of numerous Group s references are: Tupperware, BMW, General Electric Appliances, Rockwell Automation, L Oréal, Iron Mountain, Wheelabrator, Visteon, Stalobrex, Senator, Sanofi Aventis, Rompa, Plastal, Rieter, Puratos, Plastal, Panalpina, Conad, ECI, NPLS / Estamp, APV, Jeyes/ Andreas Schmid, Gefco, Gates, CREN - Croatian Real Estate Newsletter / January / 27

14 TUPPERWARE Industrial Stand Alone Project Tupperware Old Production Facility New IntegratedProductionFacility with EDC One of the representative tailor-made industrial and logistics stand alone real estate development project was made for Tupperware one of the world's leading producer in food preparation, serving and storage products, in Aalst, Belgium whose construction started in August 2006 resulting with the handover of an operational facility in September Project encompassed (old facility) re-location and integration of production facility with European Distribution Centre (EDC). IIG was commissioned to relocate the old production facility of 15,500 sq. m with 3,600 sq.m of office space in a new facility of 6,300 sq. m ground surface, located next to Tupperware s existing European Distribution Centre. IIG was in charge of the total move from the old to the new facility up to the installation and start-up of the machines. IIG s industrial and logistics engineers designed the complete automation within the plant, connecting the product flows directly to the EDC, reducing labor intensive manipulation. This includes a conveyer belt of approximately 500 meters from the production facility directly inside the warehouse. It resulted with a total logistic and process concept of smart production, shaped according to the client needs that ensured optimal production flow between production and warehouse space and reduction of total production and logistics costs. Old production facility on 15,500 sq. m Offices: 3,600 sq. m Proposed new production facility on ground surface of 6,300 sq. m CREN - Croatian Real Estate Newsletter / January / 27

15 BMW Logistic Tailor-made Stand Alone Project One of IIG s tailor made logistics stand alone project facilities is ongoing development project located in Slubice, Poland for the client BMW European leading automotive indutry. BMW as a premium name in the automotive business commissioned IIG to develop a spare-part distribution centre in Poland. The tailor-made facility meets the specific logistics requirements and includes a mezzanine area with shelving, a block-stacking area and a rack-storage area which is split up in a traditional reach truck zone and an inrack shelving zone. Logistics facility: 14,700 sq. m Offices: 550 sq. m Jeronimo Martins / Biedronka Tailor-made Logistics Stand Alone Project One of the most extensive and successive projects on the international level was made for Jéronimo Martins -large Portuguese retailer operating on the Polish market under the name of Biedronka - having more than 1,000 outlets in Poland. At that time (2005) Biedronka was expanding from 635 in 2003 to estimated 1,400 outlets in 2010, and needed additional storage space to accomplish its major expansion plans. Initially, retailer was demanding a builtup of 4 warehouses. Prior to launching the project Immo Industry Group conducted a detailed thorough analysis of the current and future logistics needs that encompassed analysis of logistics and transport infrastructure flows and costs. The survey showed that developing of 6 warehouses in 2005 initially, following with the development of 4 additional ones till 2010 will result with 32% of overall cost reduction for 2010 if implementing IIG solution. IIG Aladdin Group Kiev industrijski park 1 IIG Aladdin Group Kiev industrijski park 2 IIG Aladdin Group Kiev industrijski park 3 CREN - Croatian Real Estate Newsletter / January / 27

16 Logistics Analysis Master Plan 2003 Transport & Rental Costs 2010 Without Additional Warehouses Transpor LESS TRANSPORT 2010 With Additional Warehouses with the office space of 1,000 sq. m was developed. The building was operational within 14 weeks (construction started in September 2004 and was handed over 5 months after, in January 2005). Transpor Re After the IIG cost reduction solution was adopted IIG experts have set up roll-out plan (year per year) of the warehouse build-up in function of the outlets and transport costs with logistic facility developing that was proceeded with. It resulted with constructed tailor made ready to use distribution facilities in strategic locations Kostrzyn and Wojnicz, designed for a very high product throughput. Re MORE RENT Transpor 32% overall reduction for 2010 with IIG Solution or more than 10,000,000 per annum Re After the client was extremely satisfied with IIG s detailed logistics solution and after first development was completed and fully operational, Jeronimo Martins commissioned IIG to develop the following distribution centers. Jéronimo Martins / Biedronka II Woynic, Poland Jéronimo Martins / Biedronka I Kostrzyn, Poland Logistics stand alone facility comprising 20,300 sq. m storage facility (including 1,000 sq.m deepfreeze and cool storage) together In 5 month, as from May 2006, on the other carefully selected strategic location named Wojnicz in Poland logistics stand alone facility with 20,750 sq. m of warehouse space together with the office space of 1,600 sq. m was developed and handed over. IMMO INDUSTRY GROUP INDUSTRIJSKI PARKOVI Immo Industry Group offers to its clients the opportunity to set up logistics or/and production activities using a network of high-quality industrial parks throughout Europe including the Russian region. CREN - Croatian Real Estate Newsletter / January / 27

17 Industrial parks throughout Europe are developed on six main criteria: - customized logistic solutions that offers the client an adapted solution, with built-in opportunities for expansion, - protected site: IIG provides all the measures needed to guarantee security in and around the park, - central utilities: all on site companies are connected to the national electric grid, water supply and sewerage system through one point which is an important cost reducing measure, - green site: IIG runs its park eco efficient, - transport modalities: good accessibility and fluent circulation in the park are crucial, - timing: IIG guarantees buildings operational in maximum 20 weeks. IIG Industrial Parks overview: Belgium IIG Industrial Park Sea Gate Bulgaria IIG Industrial Park Plovdiv Czech Republic IIG Industrial Park Chomutov Poland IIG Industrial Park Komorniki IIG Industrial Park Node IIG Industrial Park Katowice Romania IIG Industrial Park Satu Mare IIG Industrial Park Bucharest Russia IRI Industrial Park Novosibirsk IRI Industrial Park Rostov-On-Don IRI Industrial Park St-Petersburg Serbia IIG Industrial Park Belgrade Slovakia DNV Logistics Park Trnava Logistics Park Ukraine IIG Aladdin Group Kiev Industrial Park 1 IIG Aladdin Group Kiev Industrial Park 2 IIG Aladdin Group Kiev Industrial Park 3 Trnava Logistic Park in Slovakia was awarded in recognition of outstanding Logistički park Trnava achievement in real estate development for the Best Warehouse/Logistic Development by Construction & Investment Journal in Built to the most recent technical specifications, this modern tailor-made industrial, assembly and logistics park ensures optimum performance while providing a reliable solution to user needs, in a strategic, easily accessible location (motorway connection, rail CREN - Croatian Real Estate Newsletter / January / 27

18 connection, air) at 40 km from Bratislava: - Bordering the Peugeot-Citroën plant, - Units as from 2,000 sq. m built to measure each tenants needs, -Total buildable area is 180,000 sq. m, -Ideal for distribution, assembling, logistics and industrial process activities, -Central utilities, -Minimum maintenance costs, -Secured park, -More development opportunities. Trnava tenants: Inergy - leading supplier of complete plastic fuel systems, energy and fluid storage technologies, Valéo - major global company focused on the design, production and sale of components, systems and modules for cars and truck, Faurecia - important automotive supplier, specialized in the design and assembly of vehicle modules Streit - major manufacturer and assembler of metal mechanical components for car assembly, Sofitec - important manufacturer of automotive parts regarding sound and water tightness, Datalogic - largest European manufacturer of bar code readers and portable data collection terminals, Premier - part of the DürrGroup, an internationally renowned leading supplier of manufacturing systems and integrated support services for the automotive industry and its suppliers, Magna Donnelly - world's leading producer of automotive mirror systems and a major supplier of automotive window systems and door handle Throughout the experienced knowledge of the (specific) local market and professional know how, General Manager of Immo Industry Group Croatia (IIC d.o.o.), Mr. Dario Markanovic supported by Immo Industry Group headquarter and associated branches provides his clients with the tailor made industrial process and/or logistics developments locally and internationally, both as standalone buildings or as part of industrial park- offering off-balance (rent/lease) and on-balance (Design and build, Project Management) financial possibilities ensuring market competitive prices to its clients. For internationally oriented Croatian or foreign companies Immo Industry local offices all over Europe ensure the minimization of reaction time and costs providing a perfect service in complete harmony with the clients schedule adding a value to his projects. CREN - Croatian Real Estate Newsletter / January / 27

19 6. STATISTICS 6.1 Average Asking Prices of Real Estate Offered for Sale in 2007 ZAGREB Average price Apartments Houses Offices Business premises Office blocks 0 January March May Jully September November COAST Average Price Apartments Houses Commercial space Tourist facilities 0 January March May Jully September November Average is calculated on the basis of the currently quoted prices on the Burza nekretnina d.o.o. (Real Estate Stock Market ltd.), which is available online: Statistical Reports of the Central Bureau of Statistics from the Area of Civil Engineering Construction work indices, November 2007 In November 2007, construction works remained at the same level as construction works in November Construction works in the period from January to November 2007 increased by 2.4%, as compared to the period from January to November CREN - Croatian Real Estate Newsletter / January / 27

20 In November 2007: - by type of construction, 44.6% out of the total working hours were done on buildings and 55.4% on civil engineering works, - by type of works, 60.2% out of the total working hours were done on new constructions and 39.8% on reconstructions, repairs and maintenance. Notice: Building permits issued in November 2007, Central Bureao of Statistics, Zagreb, Building permits issued, November 2007 In November 2007, there were building permits issued, which was by 27.8% less than in November The total number of building permits in the period from January to November 2007 was by 8.4% lower, as compared to the same period of In November 2007: - by type of constructions, 86.5% out of the total number of permits were issued on buildings and 13.5% on civil engineering works - by type of construction works, 79.8% of permits were issued on new constructions and 20.2% on reconstructions. According to permits issued in November 2007, it was expected for dwellings with the average floor area of 80.8 m 2 to be built. Notice: Building permits issued, November 2007, Central Bureao of Statistics, Zagreb, PRESSCLIPING Zagrebački komunalni vjesnik, 16 January 2008 New Residential Blocks in Trešnjevka The population of the neighbourhood of Trešnjevka north will increase from 60,000 to 80,000, and not due to any positive natality policy, but due to the fact that several new residential blocks are being built, says the president of the Neighbourhood Council, Hrvoje Ozmec. In the past, Trešnjevka was known as a workers neighbourhood, with industrial facilities and warehouses, such as Končar, Tesla, the Jadran factory, but also the garages of the public city transport company. However, today, industry is gradually leaving the residential area, which leaves space for attractive business and residential areas. One such block will be built in the triangle between Magazinska, Zagorska and Selska Streets. Another will be built in CREN - Croatian Real Estate Newsletter / January / 27

21 the immediate vicinity, behind the heating station in Trešnjevka, and next to the Agram soccer club stadium. There are plans to set up a sports centre, along with the relevant infrastructure, and assistance is also expected from the funds for small utility projects (MKA) for lighting and support to the Agram club, which is expected to attract young people living in the future neighbourhood. Business tower On the location of the Jadran factory and the Šuma warehouse, according to the Detailed City Development Plan, a large business tower with 12 levels and several residential buildings are planned. This will also be the location of a new primary school and day care centre. This year, the Neighbourhood Council will be discussing the Ferimport warehouse between Drvinje and Nanamanova Streets, which should be used as a location for another residential block. And on the premises of Kemikalija in Rudeš, there are plans for five-storey buildings for about 1,600 people and a department store. Another derelict piece of property, belonging to Taxi-remont, which is currently the location of some barracks and used as a place for leaving bulk waste, next to Adžijina street, should become the location of business and residential buildings, which would accommodate some public institutions and local self-government, as well as a senior citizens home. Such large pressure from new inhabitants will require new regulation of the traffic in the Trešnjevka north neighbourhood. Considering the problems in the city centre, a commission should be established, which would consist of experts from the police, the Traffic Department, and the Neighbourhood Council, to make a decision on extending some streets and redirecting others, and on transforming some two-way streets into one-way streets, which would also resolve the problem of parking. It is already well known that Šarengradska Street will become a fast street after it is extended, and several residentialbusiness buildings are planned there, along with the large tower on the corner of Zagrebačka and Savska... Poslovni dnevnik, 16 January 2008 Prices of Apartments in Zagreb to Stagnate until June 2008 Due to a decrease in sales, there are more and more unfinished apartments and less and less building permits being issued. Official state statistics and the statistics on specialized web sites have recorded four important trends on the apartment market, especially the market of newly built apartments, which is somewhat easier to follow. Although there are still no final data for 2007, according to the latest available reports, it is evident that the number of building permits in general decreased, but the value of the building works increased. Another indicator is the decrease in the number of finished apartments, and a large increase in unfinished apartments. The third indicator is the stagnation of prices, primarily in Zagreb as the largest market. This stagnation is reflected in a decrease in real prices, taking into account inflation and rising salaries. The fourth trend is a decrease in sales. CREN - Croatian Real Estate Newsletter / January / 27

22 If one also takes into account the interest rate growth on housing loans, which was introduced at the end of 2007, and the latest announcements of a new increase in interest rates due to inflation and measures by the Croatian Central Bank, the most optimistic projections by the analyst, Josip Tica from the Economics Faculty in Zagreb envisage stagnation at least by mid According to the data from the Central Bureau of Statistics for November, permits were issued for 1824 apartments in Croatia, whereas in the period from January until the end of November permits were issued for 21,488 apartments. In comparison to 2006, the number of permits in November is almost 28 percent fewer, whereas in the period of 11 months the number of planned apartments is almost the same. Due to the improvement of living standards, the sales of apartments will nevertheless grow in However, if one compares data on the number of finished and unfinished apartments, based on the number of permits issued, a different trend becomes evident. The only data on finished apartments available are for the first three quarters: in that period, 3,961 apartments were finished in Croatia, whereas in the same period of ,981 apartments were finished. In that same period, the number of unfinished apartments amounted to 12,396, whereas in 2006, there were 8,638 apartments. From the above, it is evident that plans for the previous year envisaged 3,000 apartments more by September, but the actual number of finished apartments was almost one thousand fewer. "It is obvious that the only reason why the apartments are still not finished is the fact that the investors did not manage to sell apartments, which were already built, so that they were unable to ensure the funds for the new projects. The value of construction work is growing, because costs are growing, and larger complexes are being built, but a decrease in the number of building permits is still indicative. In the second half of the year, prices stagnated, and if we consider inflation, in reality they were dropping. In 2007, especially in the second half, we were paying the price of an unrealistic growth of real estate prices, which we had witnessed since It is difficult to make any forecasts as to how long this will take, but the expectations for 2008 were that there should be another increase in sales, along with stagnation of prices. However, new announcements of increasing the interest rates are not good news either for the investors or the buyers, so that it is possible that the market will stay at the level of 2007 at least until mid It is difficult to project anything beyond this period or to say whether the stagnation will continue: this will depend on interest rates and sales, explained Tica. According to Centar nekretnina, the average price of a square meter in Zagreb recorded in December amounted to 2,039 EUR or 0.1 percent less than in November. Taking into account the annual average, prices of houses and apartments in the capital were 0.6 percent higher. According to the same source, prices on the coast increased by 13.4 percent. There are only about 20 percent of such companies in comparison to the total number of registered companies in this field. Nobody monitored or presented data on how much time it was necessary to sell an apartment, which would be a very important indicator providing an insight into the market. CREN - Croatian Real Estate Newsletter / January / 27

23 8. PAST EVENTS Date Name Location Web October 27 28, 2007 The Third Croatian Real Estate and following industry Fair Zagreb, Croatia October 29 30, 2007 Commercial Real Estate Forum 2007 II New York, USA www. europaproperty.com November 1, 2007 Annual Convenience Retailing Conference London, England November 6 11, 2007 Barcelona meeting point Barcelona, Spain November 15 17, 2007 MAPIC Cannes, France November 27 28, 2007 New Europe GRI 07 Istanbul, Turkey December 8 12, 2007 The Cyprus Business and Investment Summit Limassd, Cyprus January 1, th Annual Real Estate Conference for CEE Prague, Czech Republic 9. DO NOT MISS OUT Date Name Location Web February 12, 2008 The role and significance of spatial planning in retail development Zagreb, Croatia February 27, th CEE Real Estate Quality Awards Warsaw, Poland March 11-14, 2008 MIPIM Property talks 2008 Cannes, France CREN - Croatian Real Estate Newsletter / January / 27

24 April 8 12, 2008 SIMA 2008 Madrid, Spain April 23 24, 2008 Investments. Construction. Development in Russian and CIS Moscow, Russia May 06 07, 2008 Immobilienwirtschaft Berlin, Germany May 27 29, 2008 REAL VIENNA Vienna, Austria June 1 13, 2008 Retail City 2008 Bringing Together Retailers & Malls In Emerging Markets Dubai, United Arab Emirates June 10 13, 2008 The Italian Real Estate Event Milan, Italia ng 10. WE POINT OUT Interesting Web Pages: CREN - Croatian Real Estate Newsletter / January / 27

25 PROMO 10 ADVICES ON HOW NOT TO DECORATE A SMALL INTERIOR Read in the latest addition of Nekretnine magazine CREN - Croatian Real Estate Newsletter / January / 27