Development Wave Energizes Central, Eastern Europe

“Refurbishments: Brownfield and Greenfield Developments” panel at Expo Real 2019

The housing market continues to be one of the strongest sectors in Europe. Despite the continent dealing with an aging population and slower demographic growth rates than other parts of the world, demand remains consistent and construction is far from meeting the needs of the European Union residents.

Revitalization spurs potential for new and, in some places, urgently needed spaces. With many cities having plenty of fallow land or neglected buildings, greenfield and brownfield development is on the rise. In one of the last panels at Expo Real in Munich, experts tried to establish the best approach to these types of projects and also provided some examples from Central and Eastern Europe.

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In Prague, Czech Republic, for example, Penta Real Estate is breathing new life into a former aviation engine factory that used to span across almost 1.8 million square feet. Upon completion, Waltrovka is set to include 650 units and 50 houses, as well as office and retail components. The $220 million project’s first phase is already 90 percent sold. “We managed to recreate a new district consisting of a mixed-use scheme. One has to be creative unless you want to go to green fields out of town. You have to be creative in finding those spots that allow some development,” Pavel Streblov, business director at Penta Real Estate, said at the panel.

Streblov also talked about the challenges his company had to overcome in bringing this project to life.  “What’s challenging is to find the concept that will create sufficient gravity and make it sustainable and viable. This is the challenge we had with Waltrovka because even though it was near a metro station, there was no people traffic. There was just a factory that had been closed for many years and, also, the morphology of Prague is a little bit complicated. So we had to come up with a concept, a mixed-use scheme, to create traffic.”

A city within a city

“Refurbishments: Brownfield and Greenfield Developments” panel at Expo Real 2019

Development in Eastern Europe is also picking up steam. In countries coming out of a transition, such as Romania, there are plenty of brownfield spaces and available land to build. The city of Bucharest is planning the redevelopment of a former military base within the city’s District 5.

“It’s important to start with the necessities of the city, to understand the communities and to start with a vision of a proper urban development that will slowly attract private investment. We want to drive the transformation of the city. It’s a refurbishment entirely driven by the local administration. We are the engine in this, not the private sector,” Rareș Hopincă, general director of the Bucharest Centenary Project mentioned.

A masterplan has been drawn up for the development of a 1.6 million-square-meter project (approximately 17 million square feet) on almost 250 acres owned by public authorities.

“Cities are changing, people are changing, we have to understand in every refurbishment that people are not the same as 20 or 30 years ago. We need to take everything closer to their homes: their jobs, their parks, their schools. If the public sector leads a major project, a large-scale development, it’s a guarantee for the success of big developments,” said Hopincă.

The $1.8 billion Bucharest Centenary Project is slated to include 10,000 new apartments, retail and office spaces, as well as four schools and six kindergartens. Half of the land will be set aside for green areas and parks. “The entire area will accommodate between 40,000 and 100,000 people. We estimate the start of the construction work for March 2020. I think our project is a great example of urban reconversion,” Daniel Florea, mayor of Bucharest’s District 5, said.

Building near the river

Warsaw, Poland, has also jumped on the refurbishment train. The Praga District on the eastern side of the Vistula River is currently going through a massive transformation. This part of the city has experienced little refurbishment works following the Second World War, so there was plenty of potential. The approach, however, was somewhat different. Rather than going for large projects, the Warsaw local authorities started with small, local interventions.

“The district has lots of isolated parts, which complicates things even more because it’s hard to get from one place to another. In Poland, we have a liberal landing system, which for us, city planners, causes many problems because our control of development is not as strong as we might be dreaming of. Until 2015, there was no special regularization act, so we couldn’t use strong instruments like expropriations,” Wojciech Wagner, chief architect of the City of Warsaw, explained.

Social cohesion

The trend toward redeveloping brownfields definitely has the potential to lead to the gentrification of the adjacent areas. However, the phenomenon is not a cause of concern in Warsaw’s district. “Praga is not jeopardized by gentrification as much as other refurbished districts might be because of property structure. There aren’t huge house owners that could rise rents suddenly and then thousands of people would have to leave in two or three years. Here, people own their houses or the city owns their houses. We are sustainable in terms of brutal gentrification.”

Streblov, on the other hand, explained that gentrification is a real threat. “Who should be the driver? The public or the private sector? I think it’s easier for the public sector to be the driver if they are the owners of the land, but as soon as you have private owners, your flexibility is limited. We try to have a balance between private and public ambitions and motivations. It’s helpful to see the population involved, they feel much more comfortable with what’s happening because they have the information about it. They have the feeling that they can influence the outcome,” Streblov concluded.