Laying the
foundation stone of phase one (left to right): Sándor Vermesy, CEO of Strabag MML Kft.; Hans Frauenhoffer, manager of the
company that owns the major part of
ipark Pécs, IPP-Airport Invest Kft.; Dr. Zsolt Páva, mayor of the city of Pécs; and Béla Barna, General Director of Pécs Holding Zrt., the
minority owner of
ipark Pécs.
The final touches on the ipark Pécs are about to be finished. We had a conversation with the Austrian Hans Frauenhoffer, manager of the company that owns ipark Pécs, IPP-Airport Invest Kft., over the creation and the future of the park.
How did you get to Hungary and specifically to work on this project?
I have been living in Hungary since 1992 and I was even doing business in Pécs. I was the manager of an Austrian company that operated two meat factories with a head office in Pécs. They also owned a food chain and an amount of real estate with retail profile. From the year 2000 I worked with an Austrian partner to build up the Stop.Shop chain in Hungary. The concept was our invention. Together with a real estate financing group we built 14 such centres countrywide between 2002 and 2009. In the meantime there are about 85 such shopping centres in Europe and even in Russia. In 2008 we began with the Corso-Group, which among others established and operates a shopping centre with connecting office surfaces in Kaposvár, to manage our own activities and become self-dependent.
What is the special thing about the Stop.Shop concept?
We were the first ones to develop this system and put a brand on it. It was something innovative, even in Austria. There were already many specialised store centres here but they had no common standardised concept. On the contrary we had a recognised concept, the renters in the centres knew exactly what they could expect, namely shops situated next to each other with a common parking place, so that the customers can shop in a reasonable way. Over this time period we have established over 130,000 square metres of rentable store space and sold it to the real estate financing agency. We invested part of the profits again in Hungary, beside the activities of the Corso-Group in the industrial park of Pécs.
How did you come across an industrial park while dealing with your retail investments?
Because there was a need in Pécs for such a place. The former Pécsi Ipari Park (PIP) was too small with its 70 hectares and almost fully occupied. In addition, its situation did not allow adding space to it. Its accessibility was not optimal either. As opposed to that, our park lies just beside the highway M6, which did not exist at the time when we started to build our plans for the park. As we firmly believed that the highway would be realised, we were constantly looking for real estate that was situated in a way connecting the city with the airport. In 2004 we began to buy these pieces of land. When we had already purchased about 60% of the present surface, in 2006/2007 the topic of highway construction came up. There was a positive surprise in store for us, since the planned tracks ran right through our land as it happened. When it was decided that Pécs would be a Cultural Capital of Europe in 2010, the government decided that the highway project should receive priority. After that everything happened quickly, the highway was opened on time at the beginning of the year as a Cultural Capital. Our park is situated well not only considering the highway but also the airport, which is only 2 kilometres away. The Kertváros district that has about 60,000 inhabitants is also directly next to our industrial park. So our park has three major advantages coming from its situation, which is unique in Hungary, as almost no other industrial park in the country can offer that.
Are there already some sold spots in the park?
Yes we sold 57 hectares to Auchan in 2009. As Auchan is hoping for a more positive future in the Hungarian retail market again, we suppose that construction will begin soon.
So this is not a pure industrial park?
Indeed, but you should not underestimate its total dimensions. We are speaking about a total area of 270 hectares. Auchan owns about one fifth of this for the aim to develop a retail park. There will be roads on 18 hectares. There is a remaining area of about 200 hectares, where an industrial park can be realised.
What is currently located on this area?
We are supplying 85 hectares with the complete infrastructure; the works will be finished by the end of June. The rest of the area will be used for agricultural purposes so that we do not cause any environmental problems due to weed infestation. The investment for the works for establishing the infrastructure comes to HUF 1.7 billion.
Did you get any grants to finish the project?
The new Széchenyi Plan supported our project with about 26% of the whole investment.
Why should a company invest in Pécs? What does the city have to offer?
I would put the supply of qualified employees as the first thing. Pécs operates the oldest university in the country and at the moment also the largest one with its 20,000 students. There is a very good technical school in town. Due to historical reasons a big part of the population speaks German still. Since the highway construction reached Pécs relatively late compared with the other Hungarian cities, Pécs is somewhat behind with investments. Still there are some famous and important investors present, for example Hauni, the manufacturer of special machines, or British-American Tobacco. However, there are far fewer than in Győr for example, which of course gives us the advantage that the fight for educated workforce is not so harsh here as it is there or in Budapest. In addition there are many possibilities here to get grants and funding, which do not exist in the more developed regions of the country any more. So Pécs is an attractive location with much potential.
Hans Frauenhoffer: “Our park has three major advantages coming from its situation, which is unique in Hungary, as
almost no other industrial park in the country can offer that.“
Still, the location of the city is not as central as that of Győr or Budapest?
This looks like a disadvantage but it’s balanced well by the numerous advantages that this city can offer. I would like to mention here another factor, which might not be that important when we are making decisions about potential venues for business activities, but it could be still very important for foreign managers: the special ambience of our city and its high quality of life. It is fun to live in Pécs; there is a broad selection of cultural programs and possibilities of good education for children and the young ones. Pécs was always a city where culture and learning was in focus. Life in Pécs is also nice due to its special micro-climate, which is good not only for the people living here but also the local wines. The famous wine region Villány is nearby.
What is the effect of the proximity of the former Yugoslavian countries?
There are still many people living there who have Hungarian roots. While the inhabitants in those countries used to be only potential customers for the companies of Pécs, with the entry of Croatia into the EU now they have become potential employees as well. Especially for those companies, which need a larger number of suitable workers, it is very beneficial that they now have access to a broader selection of human resources. It is just a question of time, maybe about three to five years, until Serbia joins the EU as well. The Central European economic space is growing together more and more.
What companies can you imagine as the future users of your park?
The pure retail segment is already covered by the Auchan Retail Park; it would not make sense to have more of these establishments. The park would be ideal for dealers and service providers, which are connected to the retailers via showrooms or demonstration rooms. Something like companies dealing with interior decoration such as dealers of bathroom and other furniture. In the northern part of the park light industry would be welcome. Companies dealing with semi-heavy industry and logistics are welcomed by us, but only in the southern part of the park next to the highway, in order not to disturb the inhabitants of the bordering residential areas.
Has there been any other contract of sale signed so far?
Until this time only the one with Auchan. We are just ahead of the first intensive selling phase. Since there are some special subventions for industrial companies located in an industrial park, it was necessary that the park is officially recognised as an industrial park first. This is now completed for the entire area. In addition we had to develop the surfaces in the necessary way, since no one wants to begin to build something on a green meadow without any infrastructure already existing
How did you manage to get the title “industrial park”?
It was a very logical step to involve the city of Pécs as a partner and a shareholder to make them interested in our business. Since we have a common cause, the park had significantly less difficulties to complete the necessary administrative tasks. By the way, the partnership of a state or community organisation is one of the conditions to be officially recognised as an industrial park.
How has your partnership been working out since then?
It’s working excellent. It is uncomplicated and worth the trouble. It was also helping our cause that I have known the mayor of Pécs already for twenty years. This way we were able to prepare the park quickly for the arrival of the first investors. We also have our very good collaboration with the city of Pécs to thank for the special price that our park has been awarded by the investment funding authority Hungarian Investment and Trade Agency (HITA). Having Mr Béla Török, who is a specialist of industrial parks, on our board must have contributed to our success too. This Austrian person of Hungarian origin worked before for 16 years for the Industrial Park of Győr, which is now fully occupied.
How did you solve the issue of financing?
We have financed the pieces of land in the first phase of infrastructural work completely from our own resource, costing about EUR 20 million. The infrastructure for the 85 hectares we financed partly from loans, around EUR 4 million. We would like to attract small and medium companies besides the industrial companies, and for that we need the connection to the stations in the city. This has an effect on the costs as well. The structure of the land was also a difficult topic because we had to move around several hundred thousands cubic metres of earth to get a flat surface.
Which bank could you convince to support you?
Our domestic bank from Austria, Raiffeisen, using similar methods as at home in Austria. We did not mean a great risk for them having the state as a partner. The city is interested in having further companies in the park as soon as possible, so that their taxes start flowing back into their treasury.
Do you still work together with HITA?
Yes, they advise us concerning subsidies and they help in building our business network, as HITA is calling attention to the possibilities in our park, or we can join the right economic committees when making foreign business travels. We hope that in the second semester of 2014 the first specific results of our collaboration with HITA will be visible.
How satisfied are you with your collaboration with HITA?
Very satisfied, since the collaboration is highly professional. Besides that we do need to collaborate well with the city, the university, the schools and the employment agency of Pécs. We only sell the land and we cannot directly make sure that the needed professional resources will be available for the buyers. However, we help the interested investors in making the necessary steps. They can profit from our well-established network. This symbiosis with future investors and the ruling authorities results in a win-win situation for all parties concerned.
What are the next steps on your park agenda?
By the end of June the construction of the infrastructure on the mentioned 85 hectares will be ready. Beginning September we would like to open this part of the industrial park with a celebration. At the same time we are having negotiations with several companies about possible settlement in our park.