News Article Brno brownfield Czech Republic housing office redevelopment residential UDI
by Vera Tumova | Investment

The UDI Group has acquired an industrial site in Brno in January, which it will operate for the time being while preparing for future redevelopment. At the moment, the plan is to build offices and hotel-type accommodations. If the city changes the zoning plan, as it seeks to do, the developer's final project may change to reflect this.  Construction would be done in phases, with the first phase to begin within two years. The developer announced the acquisition without disclosing the transaction price.

UDI Group returns to the regions of the Czech Republic where it started years ago. At the beginning of January, it bought an industrial site about 1.5 kilometres from the centre of Brno, right on the banks of the Svitava River, which it plans to develop in the future. The current zoning plan allows for offices, production and hotel-type accommodation. However, the city itself is seeking to change the function of the area in the new zoning plan so that housing, which is prevalent in the area, can be built here. UDI Group will prepare the first phase in accordance with the current zoning plan, i.e. the construction of hotel-type accommodation. The parties have not commented on the price of the transaction. The investment in the redevelopment of the entire site is estimated at approximately CZK 3 billion (€126 million).

"UDI Group started out as a developer of affordable housing in regional cities in the Czech Republic and is returning to the regions years later with its latest acquisition. Brno, the second largest city in the Czech Republic, is very attractive to us. The new acquisition will allow us to build hotel-type accommodation in accordance with the current zoning plan, and probably also housing in the future. In terms of investment, the project is worth approximately CZK 3 billion (€126 million)," explained Marcela Fialková, Director of Strategy at UDI Group.

The group will continue to operate the site, which is now largely occupied by tenants and is used for offices and light manufacturing. "We will still temporarily lease part of the space that is not occupied today. At the same time, however, we will be preparing a project for the redevelopment of the premises. It is very close to the centre of Brno. It is located directly on the embankment of the Svitava River in a classic apartment block development near a tram station, which will take future residents to the centre in about eight minutes," added Fialková. The entire neighbourhood is gradually being transformed into accommodation or housing. Across the river, there is, for example, a brownfield after the former Zbrojovka Brno factory, which will also be transformed into a new residential area.

The current zoning plan allows the construction of buildings for offices, retail, light manufacturing, but also hotel-type accommodation. "If the zoning plan is newly approved at the site, which was initiated by the city some time ago, then it should be possible to build classic housing on our land. However, we are currently working with hotel-type accommodation supplemented by services, retail and offices. We would put the built accommodation units into our upcoming real estate fund and operate them in a similar way as we are planning to do, for example, in our ParkSide project in the Hungarian capital," explained Fialková.

The UDI Group wants to build in the first stage long-term accommodation with a higher standard of service, which is now quite popular in Western European cities, and so there could be a demand for similar modern accommodation near the centre of Brno. The group will develop the modern project in phases on the site, which today has 28 different buildings of varying heights and uses. "We should be able to start building the first of these in about two years," the strategy director said.

Husovice is the first acquisition unveiled by UDI Group this year. In total, the company has earmarked billions of crowns for new land and site purchases this year. It plans to channel mainly into its existing markets, such as the Czech Republic, Poland, and Hungary. The group is currently working on 20 projects along with the latest addition in Brno. Their current value after the revaluation of assets due to exchange rate changes, and mainly after their appreciation as the projects are prepared and construction progresses, is estimated at €445 million, or about CZK 11.35 billion. UDI Group expects revenues of €2.1 billion in the coming years, or almost CZK 54 billion.