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Mercedes «effect» : Voestalpine guards itself against real estate « sharks »

Real estate greed makes foreign investors take supplimentary measures in the case of greenfield investment they want to undertake in Romania.

The Austrians in Voestalpine will sign precontracts for the 700 ha they intend to use for the construction of a siderurgical unit as they have understood what happened to the Germans in Mercedes. Thus, they will sign precontracts with the owners of the land in the Agigea area where, on a surface of 600 – 700 ha they would like to build a siderurgical unit. As known, Daimler gave up the idea of building a greenfield unit in Timisoara, investment worth 800 million euros, due to infrastructure issues – the lack of highways- but the extremely high price of the land as compared to Hungary. The “ blunder” of the local authorities to let everybody know about Daimler’s interest in the area made the land price soar overnight. According to the Mercedes calculations, this detail was very important, besides the major issues connected to infrastructure. Voestalpine seems to have understood the Mercedes “ experience” and said they would sign precontracts with the owners of the land so that the latter would not raise the prices in the case they decide to build in Romania a Voestalpine unit, an investment of 5 billion euros. Voestalpine had 12 locations in mind in Bulgaria, Romania, Turkey and Ukraine. What is interesting is the fact that the Austrians chose the solution of signing precontracts only in Romania to avoid the real estate problems. The company’s officials admitted that the “ final decision, which depends on the feasibility study and the availability of the land, which could be taken before the end of 2008”. Voestalpine will undertake specialty studies for all the possible locations by the end of 2008 and will take a decision regarding the construction of the unit. This unit will produce 5 million tons stainless steel/year starting with 2013. The siderurgical group Voestalpine is made up of 300 production and sales companies with over 40,000 employees in over 60 countries, with revenues of over 10 billion euros. Voestalpine is world leader on the stainless steel technology and equipment and number one in Europe for the production of rails and special categories. If Romania is chosen for the Voestalpine investment, this would be the most important achievement of our country. If it loses it, it would be the second failure since the Mercedes investment, according to which Romania would have benefited from total investment worth 2 billion euros, according to specialists’ estimate. On the other hand, business people warned about the fact that Romania would risk losing the most important investments as they do not invest in infrastructure, they alter legislation too often, do not monitor the real estate market and do not offer investors investment facilities similar to the neighbouring countries. Moreover, the level of corruption in Romania could send foreign investors away, the country’s image being quickly deteriorating, especially as the economic results have been less attractive lately. Direct foreign investment in Romania was last year worth 7.069 billion euros. For the four months of 2008, the total of foreign investment was 3.2 billion euros. The specialists estimate that this year Romania could draw foreign investment worth 7 billion euros, Voestalpine not being included. Sursa: http://www.actmedia.ro

Tags: would euros billion romania investment voestalpine estate foreign mercedes

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