An Economic Analysis of Brownfield and Greenfield Industrial Parks Investment Projects: A Case Study of Eastern Slovakia
Abstract
:1. Introduction
2. Background
- Shows how individual buildings and open spaces will be linked.
- Defines the height, overall geometry, and size of buildings, describes proposed relations between buildings and public spaces.
- Determines the distribution of the provided activities or use.
- Identifies the system of movement of people—walking, cycling, car or public transport, service, and vehicles for waste disposal.
- Establishes the basis for the provision of other infrastructure elements and public services.
- Combines the physical form with the socio-economic and cultural context and the interests of all concerned.
- Allows understanding how well an industrial park is integrated with the surrounding context of the landscape and the natural environment.
3. Objects of Study and Methods
- Um(x)—overall usefulness of the evaluated project (stability index), m = 1, 2, 3, …, m,
- αi—the weight of the i-th criterion defined by the decision-making body; Σαi = 1,
- ui(xi)—the usefulness of the i-th criterion for xi, where often ui(xi) = xi,
- xi—the value of the result according to the i-th criterion.
4. Results
4.1. Analysis
- Existing transport and technical infrastructure.
- Existing manufacturing and other objects.
- Good connection to the regional and global freight transport system.
- Good connection to a functioning public transport system.
- Contact with existing subcontractors and services.
- Sufficient workforce in residential areas in the vicinity or within public transport.
- Investor density.
- Job density.
- Non-repayable financial contribution (NFC) per job.
- Occupancy of the industrial park.
- A: Industrial parks achieving above-average results.
- B: Industrial parks achieving average results.
- C: Industrial parks achieving sub-average results.
4.2. Results of the Analysis
- Arranging the development of business in industry, reducing registered unemployment, and improving the life quality of the population.
- Implementation of interactions between public administration, investors, entrepreneurs, and subcontractors, which determine the competitiveness of the industry in the region.
- Reclamation and modernization of former industrial facilities after mining activities for the sustainability of investments.
5. Discussion
- The price of the land is lower in the case of brownfield.
- The cost of land preparation and construction is significantly higher in the case of brownfield.
- The time necessary to prepare land for construction is significantly longer in the case of brownfield.
- The cost of building comparable types of objects is the same, i.e., the type of land in this case is insignificant.
- Brownfields are mainly located in the inner parts of towns and cities, where the rental as well as the cost of real estate are generally substantially lower, and the vacancy rate of the properties is higher when rented.
- The operating costs for brownfields are higher because they are increased by the costs of monitoring the environmental status of the site and additional costs of protecting the building compared to normal costs.
- Governance.
- Infrastructure.
- Territorial issues.
- Finance.
- Culture.
- Environment.
6. Conclusions
- The total cost of new construction.
- The cost of land preparation.
- The time needed for preparation of the land.
- The costs of environmental counselling.
- The developer costs.
- The investor’s own capital requirement.
Author Contributions
Funding
Institutional Review Board Statement
Conflicts of Interest
References
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Brownfields | Economic Description |
---|---|
Suitably located | The market will “take care” of them. Possible public non-monetary intervention can increase the benefits for the local community. |
Less suitably located | Public intervention and, where appropriate, the involvement of public funds, which are the cost gap of the project, is necessary. The usual ratio of public and private investment is from 1:5 or more in this case. |
Non-commercial locations | Require more social goals or environmental protection. The share of public funds is higher than the private funds, usually 1:4. |
Critical state | Dangerous, health- or environment-threatening. If it is no longer possible to find and bring the originator of pollution to the responsibility, the removal of damages is paid out of public funds. |
Factor | f1 | f2 | f3 | f4 | f5 | f6 | f7 | f8 | f9 | f10 | f11 | Σ | αi |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
f1 | 0 | 0.5 | 0.5 | 0 | 0 | 1 | 0.5 | 1 | 0.5 | 0.5 | 1 | 2.0 | 0.05 |
f2 | 0.5 | 0 | 1 | 0.5 | 0.5 | 1 | 1 | 1 | 0.5 | 0.5 | 1 | 7.5 | 0.19 |
f3 | 0.5 | 0 | 0 | 0.5 | 0.5 | 0.5 | 0.5 | 0 | 0.5 | 0.5 | 1 | 4.5 | 0.11 |
f4 | 1 | 0.5 | 0.5 | 0 | 1 | 0.5 | 1 | 0.5 | 0.5 | 0.5 | 1 | 7.0 | 0.17 |
f5 | 1 | 0.5 | 0.5 | 0 | 0 | 0.5 | 0.5 | 0 | 0 | 0 | 0.5 | 3.5 | 0.09 |
f6 | 0 | 0 | 0.5 | 0.5 | 0.5 | 0 | 1 | 0 | 0.5 | 0.5 | 0.5 | 1.5 | 0.04 |
f7 | 0.5 | 0 | 0.5 | 0 | 0.5 | 0 | 0 | 0 | 0.5 | 0 | 0.5 | 1.5 | 0.04 |
f8 | 1 | 0 | 1 | 0.5 | 1 | 1 | 1 | 0 | 0.5 | 1 | 0.5 | 3.5 | 0.09 |
f9 | 0.5 | 0.5 | 0.5 | 0.5 | 1 | 0.5 | 0.5 | 0.5 | 0 | 1 | 0.5 | 3.0 | 0.07 |
f10 | 0.5 | 0.5 | 0.5 | 0.5 | 1 | 0.5 | 1 | 0 | 0 | 0 | 1 | 3.0 | 0.07 |
f11 | 1 | 0 | 0 | 0 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0 | 0 | 3.5 | 0.09 |
Sum | 40.5 | 1.00 |
Factor | αi | Brownfield | Greenfield | ||
---|---|---|---|---|---|
Points | Σ | Points | Σ | ||
existing transport infrastructure | 0.05 | 4 | 0.198 | 1 | 0.05 |
existing technical infrastructure | 0.19 | 4 | 0.741 | 1 | 0.19 |
existing manufacturing and other objects | 0.11 | 4 | 0.444 | 1 | 0.11 |
purchase price of the land | 0.17 | 2 | 0.346 | 4 | 0.69 |
quality connection to the regional and global freight transport system | 0.09 | 4 | 0.346 | 2 | 0.17 |
the cost of landscaping | 0.04 | 1 | 0.037 | 4 | 0.15 |
contact with existing subcontractors and services | 0.04 | 3 | 0.111 | 2 | 0.07 |
environmental burden | 0.09 | 1 | 0.086 | 4 | 0.35 |
additional costs of the investment project | 0.07 | 1 | 0.074 | 4 | 0.3 |
operating costs | 0.07 | 2 | 0.148 | 2 | 0.15 |
time of the plot preparation | 0.09 | 2 | 0.173 | 4 | 0.35 |
Sum | 2.70 | 2.57 |
Location of Industrial Park | Region | Type of Industrial Park |
Poprad | Prešov | greenfield |
Snina | Prešov | brownfield |
Lipany | Prešov | greenfield |
Vranov nad Topľou | Prešov | greenfield |
Prešov | Prešov | greenfield |
Jaklovce | Košice | brownfield |
Kojšov | Košice | brownfield |
Trebišov | Košice | brownfield |
Hnúšťa | Banská Bystrica | brownfield |
Detva | Banská Bystrica | brownfield |
Lučenec | Banská Bystrica | greenfield |
Vígľaš | Banská Bystrica | greenfield |
Myjava | Trenčín | greenfield |
Galanta | Trnava | greenfield |
Hurbanovo | Nitra | greenfield |
Diakovce | Nitra | greenfield |
Factor | Brownfield | Greenfield |
Land use data | ||
Land area (m2) | 80,000 | 80,000 |
Built-up area (m2) | 28,322 | 0 |
Building coefficient (built-up area/land area) | 0.35 | 0 |
The current number of landowners | 2 | 2 |
Data on land development costs | ||
Land price (€) | 719,976 | 1,188,342 |
Price of the land preparation for construction | ||
Removing environmental issues (€) | 597,491 | 0 |
Other land preparation costs (€) | 3,314,745 | 2,980,745 |
Construction costs | ||
Cost of construction (€) | 196,176 | 196,176 |
Other costs (€) | 5885 | 1962 |
Soft cost | ||
Legal (€) | 73,027 | 29,211 |
Others—planning, designing (€) | 98,918 | 98,918 |
Environmental consulting (€) | 179,247 | 4481 |
Building loan cost (€) | 560,977 | 272,190 |
Subtotal (€) | 5,746,442 | 5,106,025 |
Developer expenses 5% (€) | 172,393 | 152,185 |
Total cost (€) | 5,918,835 | 5,258,210 |
Total cost per m2 of new construction (€) | 209 | 184 |
Operating cash flow | ||
Number of tenants | 3 | 3 |
Market rent (€) | 1,057,748 | 1,224,656 |
Vacancy rate—market vacancy (%) | 10 | 7 |
Object guard costs (€) | 136,586 | 68,293 |
Costs to monitor the state of the environment (€) | 73,027 | 0 |
Net operating income (€) | 848,105 | 1,156,363 |
Financing and investing | ||
Loan amount (€) | 5,642,131 | 5,274,514 |
Cash flow before tax (€) | 8133 | 20,331 |
Net capital requirement (€) | 282,107 | 214,080 |
Return on investment (%) | 2.9 | 9.5 |
Length of territory preparation for construction (months) | 18 | 6 |
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Pavolová, H.; Bakalár, T.; Tokarčík, A.; Kozáková, Ľ.; Pastyrčák, T. An Economic Analysis of Brownfield and Greenfield Industrial Parks Investment Projects: A Case Study of Eastern Slovakia. Int. J. Environ. Res. Public Health 2021, 18, 3472. https://doi.org/10.3390/ijerph18073472
Pavolová H, Bakalár T, Tokarčík A, Kozáková Ľ, Pastyrčák T. An Economic Analysis of Brownfield and Greenfield Industrial Parks Investment Projects: A Case Study of Eastern Slovakia. International Journal of Environmental Research and Public Health. 2021; 18(7):3472. https://doi.org/10.3390/ijerph18073472
Chicago/Turabian StylePavolová, Henrieta, Tomáš Bakalár, Alexander Tokarčík, Ľubica Kozáková, and Tomáš Pastyrčák. 2021. "An Economic Analysis of Brownfield and Greenfield Industrial Parks Investment Projects: A Case Study of Eastern Slovakia" International Journal of Environmental Research and Public Health 18, no. 7: 3472. https://doi.org/10.3390/ijerph18073472