Rebec 2024: Construction costs in Europe growing 20-30% a year, Serbia to import workers from Nepal and India

Serbia will import workers from Nepal and India, the construction costs in Europe are growing 20-30% a year, rail transport is the only sustainable solution for the future, the Balkans are ready for green energy, but they have to be in the EU in order for it to take root – these are some of the messages from the panel on logistics held at the recently completed real estate conference Rebec 2024.

The participants also talked about why the Black Sea and Constanta are the places where logistics companies should be now, whether warehouses will be automated in 10 years and why railroads are the only sustainable solution for the future.

Nearshoring, import of workers, railroads – Trends in logistics

Vladimir Randjelovic, the deputy sales director in Transfera, points out that, in the next five to ten years, more and more companies will be interested in nearshoring, that, is moving the operations to a nearer country.

– We all know about the problem with the Suez Canal, which is why we have delays of 15-20 days from China. Nearshoring became current with the pandemic and then later on with the Ukrainian crisis, there are more and more companies which are interested in coming nearer, especially to Serbia and Hungary. Some investors have already arrived, others are arriving, plenty is happening in that sense at the moment – points out Randjelovic.

He points out that, in warehouses, due to a lack of workers, there’s more and more talk about robots. The costs of a full automation, he says, are too high at the moment, but he believes that, in the next 10 years most warehouses will be robotized due to the development of artificial intelligence and the increased demand.

– There’s another difficulty: if you lose workers in warehouses, you need to employ IT workers who are more expensive, who need to design the process and technology of automation. As a country, we will import workers from Nepal, India, migrations are a trend – says Randjelovic.

When it comes to transport, he points out that the future is – the past, which is rail transport. As he says, Transfera, together with its partner company and a member of Austrian railroads – Rail Cargo Austria, has launched a cargo train from Krusevac to Budapest, from which it travels worldwide.

– That is the only sustainable solution for the future, because there are fewer and fewer truck drivers. By 2030, the EU will have a lack of drivers of 70%. Due to the workforce, the fuel costs and other costs, rail transport is the future. You can put 38 containers in one train, which is a great saving on costs – points out Randjelovic.

And savings are very important, because, as he says, the clients expect low prices and top quality.

– Last year, the prices were at their lowest, they hit the bottom, now they are growing – he points out.

Popular logistics spaces near city center

Jovan Dobric, the business development manager at CTP, reminds that this Dutch company plans to realize its goal of one million square meters of leased space in the next three years in Serbia.

As he says, of the total portfolio, in Serbia, 60% is comprised by production, and 40% by logistics, whereas in Romania, 10% is production, and 90% of the business are warehouses and logistics.

– Inhouse construction enables us to reduce the construction costs, which then means that we are lowering the price of the lease, we can accelerate or slow down the construction as per need. Sometimes, the client needs the space in 3-5 months – says Dobric.

He also notices that more and more companies are resorting to nearshoring.

– EU companies require their suppliers to come nearer and to not produce in the Middle East, due to the Suez Canal. We are ready to fulfill all their requests, so that they can further supply the customers in the EU. There was a case with a Chinese producer, Lianbo, less than a year passed from their first visit to the opening. They saw the opportunity, used it, now they are one of the biggest suppliers for Volkswagen – points out Dobric.

He expects a further growth of the logistics spaces within a radius of 10 kilometers from the city. He reminds that the company has developed the biggest logistics park with 135,000 m2 of warehouse space in New Belgrade, and similar projects are located in Novi Sad and Kragujevac.

– Our tenants rent units of a minimum of 3,000 m2, there aren’t any smaller ones, but we are developing a new concept, the so-called city box, of 500 m2 to 1,000 m2, where there will also be an exhibition space, offices, a small warehouse – reveals Dobric.

Nikolas Bouri: We aren’t allowed to work with Russian and Chinese companies, there’s your opportunity

Nikolas Bouri, a partner in the Romanian company NGB Construction & Management, reveals that, in Romania, the focus is on industrial development, whereas a slowing down in the market of residential and office space is being recorded.

– As a company, we are constantly looking for new markets. At the moment, we are focused on the Black Sea and Constanta. Due to the events in Ukraine, the USA is now building a big base there, so this area will go through a boom. It is already flourishing, the size of the port is doubling, there will be plenty of investments there and I believe that it is the right place to be at the moment – emphasizes Bouri.

He is not hiding that they are facing numerous challenges, from a lack of workers, due to which, as he says, construction companies are bringing over workers from Vietnam, Algeria, Nepal, to the ban on doing business with Russian and Chinese companies.

– Europe is pressuring us not to work with Russian and Chinese companies. I am not allowed to buy anything from them, whether it’s cheap materials or labor force. Serbia can benefit a lot from it and have a great future in that respect – points out Bouri.

Among the challenges, Bouri also highlights the costs of construction, which, as he says, are growing 20-30% a year, which is how much the prices of steel and concrete are to increase in the next five years, among other things, due to the new EU regulations on CO2. That, Bouri believes, will create an opportunity for other countries to make materials, because it will be cheaper in the market.

– In Romania, the price of construction of EUR 500-50 per square meter, which is very high for the mentality of the market, which believes that we are still building for EUR 300-350 per square meter. That means that you have to raise the rent prices, and it is becoming increasingly difficult to convince the local players that those are real prices. In that sense, communication with multinational companies is much easier – notes Bouri.

In order to cope with all the challenges and avoid competing with big logistics groups, his company has focused on the last-mile delivery.

– Most logistics companies in Romania have one larger center and smaller distribution networks in other cities. We are now focusing on parks, but with smaller units, the rent costs are much higher, the costs are lower, and you save a lot when you build smaller units – points out Bouri.

Future – Green logistics

The panelists agree that the green logistics have already become a trend and that, in the future, it will be an inevitable topic.

– At the moment, we have 10 buildings which are covered with solar panels. Production companies are requesting green energy, in the past two or three months, we have signed two agreements, where the clients first required a green certificate. Our practice is to install solar panels within the first 12 months of handing over the building – points out Jovan Dobric of CTP.

Vladimir Randjelovic, the deputy sales director at Transfera, says that a company has to have green energy if it wants to be “green”.

– If you have new warehouses without roof windows, you can have solar energy. If you have natural light, then maybe it’s not such a good investment – he points out.

When it comes to transport, he says, only the use of rail transport is sustainable, but that entails us all thinking in a different way, because a truck reaches a city in a day, and a train in 5-6 days.

– If we want a green Europe, we all have to think differently. The majority of the goods purchased through online trade arrives by plane, we buy stuff from the USA, China, which means that there is more CO2 emission than when you buy at a store. Green energy is now a political issue, it is expensive, it will increase the costs for our clients and a lot of talk and honest answers are needed. We will see what the future will bring, we see that electric vehicles are not that successful, maybe we will use hydrogen – points out Randjelovic.

The Balkans, he says, are ready for green energy, but they have to be in the EU in order for it to take root.

– Our trucks now wait 4-8 hours at the borders and there’s nowhere to charge the vehicle if it’s electric. That is why, now, green trucks can only do the last-mile delivery. Perhaps, in the future, roads will be built where you can charge the vehicle while driving, but that depends on the technology – concludes Randjelovic.

M. Dedic

Transfera Beograd

CTP invest d.o.o. Beograd

Transfera

CTP

NGB Construction and Management

Vladimir Ranđelović

Jovan Dobrić

Nikolas Bouri

Rebec 2024

trends in logistics

nearshoring

import of workers

green energy

automated warehouses

truck drivers

logistics companies

green logistics