Money goes west as Cluj becomes magnet for investment

After years of being in the shade of the capital Bucharest, Cluj County seems to be enjoying its moment in the sun. The western county has scooped up some of the most important investments in recent times, with EUR 200 million of projects announced. But will they all be realized?

Andreea Ceasar

Close to the border with Hungary and Western Europe – where raw material comes from and the majority of products go to export – Cluj County seems to have made a good impression on manufacturers and logistic developers. Its location and current mayor, the former prime minister Emil Boc, have ensured investments have found their way here.

Cluj has been buoyed by the absorption of structural European funds, accessing EUR 96 million by the end of last year according to the paper, National Analysis Regarding the Capacity and Involvement of Public Administration in the Absorption of European Funds for Developing Romanian Communities, written by the Institute for Public Policy (IPP). The direct effect of funds which are invested well is to increase the quality of infrastructure and life and bring… investors.

According to IBC Focus, a local research company in the construction field, the figures suggest that the amount of investment will increase by approximately 8 percent in comparison with last year. “But 48 percent of the total announced projects are in the design phase, and only for half of them has construction already started. The fact that the elections are over will help private construction, as we were told by many managers that the political environment had slowed down some work during this period,” said Adriana Bodron, managing partner of IBC Focus. According to Bodron, in 2011 the value of projects fell by 30 percent in comparison with the previous year. And while in 2010 there were 450 mid-sized and large investments, in 2011 the number fell to 320 private investments, 29 percent fewer.

Last year’s decision by the global mobile manufacturer Nokia to leave Jucu industrial park, Cluj, was a major body blow to the Romanian economy, as the firm was contributing 1 percent of the country’s GDP. But life didn’t stop in the area.

The Cluj authorities announced last week their plan for a fifth industrial park – Tetarom IV – with a 60-hectare surface in Luna County, which should absorb the unemployed from the steel producer Mechel Campia Turzii, which fired 1,000 workers in April. In Cluj there are no fewer than three other already built and functional industrial parks: Tetarom I in Cluj-Napoca with 25 firms, Tetarom II with the global leader in technology and engineering Emerson’s three factories and Tetarom III in Jucu where mobile manufacturer Nokia used to operate and where DeLonghi and Bosch will work from. Robert Bosch has also announced a EUR 120 million investment plan for the Cluj area. The production unit in Blaj will be expanded by more than 21,000 sqm, with an investment of EUR 43 million, while a new production facility will be opened in Cluj, requiring the other EUR 77 million. And there is a fourth industrial park under construction designed for small and medium businesses in Feleacu County, making up 85 hectares, of which 15 are reserved for the building of a photovoltaic park. The total investment is around EUR 11 million.

The title of industrial park means five years tax free, courtesy of the municipality for tenants, with exemptions from customs duties and import VAT for machinery, equipment, materials and the tools necessary for the investment, plus exemptions from tax on reinvested profits in technology, infrastructure and so on. This explains the keen interest from investors.

A brand new, and unexpected, EUR 200 million speculative investment announcement has also been made by Graells & Llonch for a 540,000-sqm industrial park in Turda. Approximately 300,000 sqm will be dedicated to production and small industry investments in the automotive, FMCG and textile industries, while 200,000 sqm has been given over to logistic space. “We had been thinking about investing in a second Romanian park after the success of the former industrial park in Prejmer, Brasov. The possibility came about through our partner Europa Capital, which offered us full management of the Turda project,” said Antonio Graells, co-owner of the project. At this moment 25,000 sqm has already been pre-leased. The site will also be an industrial park.

And investments in production don’t stop here. Macromex, one of the largest local frozen products distributors, has announced a EUR 40 million investment in Campia Turzii to develop its existing factory, while the Dutch producer and exporter of metallic parts CSI Invest is putting EUR 8.5 million into a new facility.

Retail boost

The announcement and in particular completion of investments prompts local consumers to shop more and spend more money, which is why supermarkets and DIY players have been showing interest in the area since the beginning of 2011. Last year Dedeman opened a 16,000-sqm store with an investment of EUR 16 million, and this year BauMax set up its second outlet, a EUR 20 million, 15,000-sqm branch in Cluj-Napoca.

Hornbach is also analyzing a possible entrance on the virgin market. “As we are looking at cities of over 300,000 inhabitants we can say that on our list for future investments you can find Cluj, Constanta, Craiova and Iasi,” said Dan Badescu, expansion manager of Hornbach, after announcing a EUR 30 million investment in a store in Timisoara. Rumors are also circulating that Dedeman may open its second local unit in 2013. Lidl, Billa, Profi, Altex, H&M, New Look and Douglas were also major investors last year.

New business, new offices

The lack of funds and austerity of banks manifested itself in a reduction in the number of offices launched on the market in 2011. But Cluj can brag about some interesting projects. British architectural firm Chapman Taylor has just won the design brief for Liberty Center Technological Park, a project which will partly replace a former furniture factory. The project is a EUR 26 million investment made by Fribourg Development. Work on the first phase, which consists of 7,000 sqm of office and retail space, should start by the end of this year. The total surface of the old factory is 45,000 sqm, but the project will include 22,0000 sqm of office and retail space. Last year Iulius Group also announced a EUR 20 million investment in an office building, and Transilvania Bank a EUR 5 million office building in Tetarom I Park, according to an annual real estate analysis by local research company Darian.

andreea.ceasar@business-review.ro

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