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FILM COMPANIES BATTLE IT OUT WITH SMALL FAMILY-OWNED PARKS FOR EUROPEAN LEISURE TIME
Construction of theme parks booms to the billion bracket USD 3.5 Billion Opens Floodgates Make or Break for Regions Attractions Everywhere By Kamilla Sevel Fact: Source: Mintel Fact Box: Source: Mintel/Europarks Next Theme Park: Legoland Germany
(Source: Amusement Business)
(Source: Europarks)
For further information, contact: Europarks, the European Federation of Amusement and Leisure Parks, Mr Jeff Bertus,
Secretary-General, Floralaan West 143, 5644 BH Eindhoven, the Netherlands, Tel: + 31 40 21 28 526, fax: + 31 40 21 14 050, e-mail:
CONSTRUCTION IN EUROPE TO GROW BY 5% IN THE YEAR 2000 A resolution on the development of Europe's construction sector in the year 2000—the dawn of the new millennia
During 1999, the European construction sector will have a volume of USD 850 billion. This represents a comeback
from 1994, when overall construction activity and investment shrank to their lowest levels in recent memory, not beginning a slow rally until 1995. The Western European construction sector during 2000 Economic growth and low interest rates in Western Europe have given a boost to private investment in residential
construction and renovation, which will result in rapid gains for these 2 sectors during the remainder of 1999 and again in
2000. During the same period, tho-ugh, investment in commercial construction will be low, due to the fact that many office
developments remained vacant after the commercial construction boom of the late 1980s and early 1990s.
The public construction sector in Western Europe continues to be plagued by budgetary shortfalls. To solve this
problem, Western Europe's political establishment is working hard to transition more public construction projects into private sector hands.
Civil engineering activity in Western Europe will expand slightly by about 2 percent during 2000. The humble growth
ahead on this front is the consequence of the strength of existing infrastructure in these countries, which have been fully developed; growth will be fuelled more by road renovation or expansion than new construction.
The construction sector in Eastern Europe Building volume in Eastern Europe during 2000 will am-ount to about 8 percent of total European construction activity
(USD 55 billion), Russia and Poland construction activity account for 2/3 of total volume.
Still, 8 percent is an improvement overngineering sector will ultimately see the most robust growth, as Eastern Europe will
require an enormous amount of new construction and renovation in the infrastructure sector soon after
2000.Construction concentrated in the capital citiesConstruction activity in Eastern Europe continues to be concentrated
during 1999 in and around the capital cities, and most projects are being carried out on behalf of Western companies. and
their staff.During 2000 and the years immediately Afterward, Eastern Europehome building, though, growth will pick up
considerably in Eastern Europe during 2000 and thereafter, thanks to the impact of the region's expanding middle class, government subsidies, and new financing tools such as mortgages and home savings contracts.
This view is born out by a review of trends in home purchases during the 1st and 2nd halves of the 1990s. During the 1st
half, the average buyer was obliged to pay 50-100 percent up front in cash, which meant that only 2-3 percent of Eastern European households could afford to buy their own home.
During 1999, to the contrary, the situation has improved considerably, as a legal framework is now in place to regulate
financing. As a result, by 2000 5-6 percent of the population will be in the position to take the plunge into homeownership.
Civil engineering will start off slowly in 2000 with growth of 5-6 percent because the economies of Eastern Europe are not
yet strong enough to finance large numbers of major infrastructure projects. However, the civil engineering sector will
ultimately see the most robust growth, as Eastern Europe will require an enormous amount of new construction and renovation in the infrastructure sector soon after 2000.
Construction concentrated in the capital cities Construction activity in Eastern Europe continues to be concentrated during 1999 in and around the capital cities, and
most projects are being carried out on behalf of Western companies. and their staff. During 2000 and the years immediately Afterward, Eastern Europe will become increasingly less centralised and better
covered in terms of highway, airport, and other types of transport infrastructure. This will pave the way for major investments in hotels, offices, and distribution centres in major cities in the provinces.
Development will be distributed as follows:
Source: European Construction Research - e-mail: By Amalina Malli Rockwool invests USD 24 million in an insulation production factory in the Moscow area When the going got rough, we stepped up our engagement.
"Though the Russian economy still shows great inefficiencies, the market for manufacturing building materials is picking
up, says Bent Mogensen, head of the north-eastern subdivision in Europe's Rockwool-one of the world's largest
producers of insulation materials. Many other foreign companies, though, are missing this transformation and, thus choosing to end their engagement in Russia.
"Instead of packing up and moving away from the Russian market, as most foreign companies have done, Rockwool adopted an alternative approach by increasing its presence and investments in Russia."
One of the main deterrents for foreign companies operating in Russia in 1999 is the economic crisis that began on August
7th, 1998, which has devalued the Rouble and made imports far more expensive compared to locally produced products.
Hoping to neutralise this factor, Rockwool purchased a 2-production-line factory for USD 24 million on February 11th, 1999, in Zheleznodovrosni, 35 km away from Moscow.
"Only one of the two lines is currently running, but due to unexpected high productivity levels and sales in a very short
period of time, the 2nd line is scheduled to start operating in September of 1999", Mogensen adds. The new Rockwool factory employs 500 people.
"It took a little over 2 1/2 years for us to take over this factory. This is because we were involved in a long negotiation
process with Russia's Menatep Bank, the bank that wanted to sell the plant. The difficulty was that we wanted to make sure everything was done according by the book," says Mogensen.
"We paid off all the debts that came with the factory and started a new company from scratch."
"Our partner in this affair has been the Danish Investment Fund of Eastern Europe, which holds 44 percent of shares, while Rockwool holds a 56-percent stake", notes Mr. Mogensen.
Higher quality, higher price, and brand name products According to Mogensen, "in the early 90's, the Russian construction market had few choices for insulation products and,
most importantly, it was difficult to distinguish between shoddy goods and quality products. While 1993 saw the birth of
a new luxury goods market, it was not until 1995, that the middle class began to demand quality brand name goods."
"In 1998, however, the market made a U-turn, with demand for brand name-quality products remaining high, but with
Russian consumers no longer being able to afford them at the import prices they were being sold at. This caused a boom for locally manufactured construc-tion materials."
"However, Rockwool was one of the very few foreign companies to quickly adapt its business practices to the situation
on the Russian construction market, and one of the most important ways it did so was by opening Rockwool's first
production company in Russia. If we cannot sell them our products at European prices, then we will sell at their own prices", says Mogensen. The challenges of selling to Russia
"The main issues we face are obtaining payment, negotiating delivery terms, finding good local partners, and establishing
a distribution network. Russia's distribution system is still greatly underdeveloped because of infrastructure problems,
such as poor transportation links, high transportation costs, and the lack of local and regional wholesalers," replied
Mogensen when asked to list the barriers that Rockwool must overcome to sell its products in Russia.
"Therefore, to increase sales, Rockwool needs to set up its own nation-wide distribution network. However, we want to
take these national ambitions one step at a time and are going to build up market share in one region at a time and then build up a launchpad into the next ", says Mogensen. Poor Russians, rich Russians
The harsh reality is that Russians can be divided cleanly bet-ween haves and have-nots. While the poor earn an average of only USD 40-50 per month, the wealthy often make wages that compare favourably to
their Westerner counterparts. "While the wealthy in Russia still represent a minute percentage of the population, it includes several million people,
mostly living in Moscow and other major Russian cities, such as St. Petersburg. This is the segment of the market that we are trying to reach with insulation for luxury homes," explains Mogensen.
"Moreover, it is this segment of society that will be fuelling demand for hotels, offices, entertainment facilities, and retail
development, and this is where Rockwool's brand name, expertise, and high-quality and competitively priced products
come into the picture. Still, we are not concentrating exclusively on the new construction sector we are thinking about the 'Big Picture', which means Russia's renovation sector", adds Morgensen.
"Most modern buildings in Russia today were erected during the 60's. According to our forecasts, in the next 15 years
many will require some sort of renovation work, with facade insulation being the most important because of the brutal Russian winter. Thus we see a great market for our products ", says Mogensen.
Mixing business with politics leads to missed opportunities "Rockwool's experience has been that business can be done successfully in both good times and bad times. The
deciding factor is the level of the need for one's particular products", Mogensen points out.
Allowing the political situation to affect company thinking can blind it to opportunities. A case in point is the decision to
deploy the 2nd production line in spite of the country's continuing instability: Rockwool expects to increase production volume by 200 percent within 3 months of bringing the new line online. The Competition
Rockwool's main competitors in 1999 are Finnish companies, such as Partek. However, Finnish companies operate
exclusively in the sales side of the business and currently lack any production facilities in Russia. Rockwool's only foreign competition for production on the Russian market is Germany's Pfleiderer, which began
produc-tion in 1999. Pfeiderer' prod-ucts are sold under the "URSA" brand name. Further information: Rockwool Russia: By Amalina Malli Key Facts on Rockwool Worldwide
Key Facts on the Russian insulation market
IN BRIEF EUR 175 million in Slovenia for motorway development
To finance the construction of a 17-km motorway between Blagovica and Vransko in central Slovenia, the European
Investment Bank (EIB) is lending EUR 175 million to the Slovene state motor-way company Druzba za avtoceste v Republiki Sloveniji, DARS.
The loan for the final section of the Ljubljana-Maribor motorway brings the total funding, which is provided by the EIB for the completion of this important link between the 2 major cities, to EUR 395 million.
The Ljubljana-Maribor motorway forms part of the Priority Corridor 5 of the Trans-Euro-pean Road Network (TEN) which runs from Italy to the Ukraine through Slovenia, Hungary and Slovakia.
The Slovene National Motorway Building Programme foresees the completion of the "Motorway Cross", which will
connect the country's 4 corners with one North-South and one East-West corridor, with a hub in the capital Ljubljana. These are Priority Corridors 5 and 10 of Trans-European Network for Central and Eastern Europe.
The EIB is planning to sign another loan for Slovenia's motorway programme worth EUR 160 million in 1999 to be used
for a 15-km motorway section between Klanec and Srmin, located south-west of Lubljana. The additional roadway will improve access to the Adriatic port of Koper significantly. Key Facts
The new motorway comprises of 4 tunnels and some 20 bridges and will also significantly improve road safety and reduce traffic congestion in several towns in central Slovenia.
Total EIB lending for transport development projects in Slovenia exceeds EUR 800 million, of which some EUR 450 million was provided during the last 5 years. Further information: USD 3.4 billion for Kosovo's reconstruction
The reconstruction of Kosovo will cost up to USD 3.4 billion. The total cost of rebuilding the whole region could reach
USD 32 billion according to European Commission estimates. The tally of damage to infrastructure for Kosovo and Serbia combined is estimated by NATO to be:
The European Agency for Reconstruction (EafR) has been established in Pristina, Kosovo's capitol, by the European Union to oversee its reconstruction aid. Further information: Private financing of USD 1.3 billion hydro power project
In Birecik in south-eastern Turkey, work has begun on the world's largest privately financed hydroelectric power station for USD 1.3 billion.
This power station will feature a 2.5-kilometer-long, 60-meter-high dam outfitted with six 112-megawatt turbines.
The project is organised as a Build Operate-Transfer (BOT) project and will open up in the end of 2000. The power station
will be run by a project company, led by Germany's largest contractor, Philipp Holzmann, for a period of 15 years. Further information: Estonia: EUR 15 million loan for new roads
A EUR 15 million loan has been granted by the European Investment Bank (EIB) to Estonia for the development of road infrastructure.
The loan will go toward the rehabilitation of some 120 km of key sections of Via Baltica a crucial Trans-European Network
(TEN) corridor crossing the 3 Baltic countries to link Helsinki in Finland and the Polish capital, Warsaw as well as for the
reinforcement of about 115 km of sections of the Tallinn-Narra road link. In addition, part of the loan will help finance the Porn bypass on Via Baltica and the Kurkuse-Johvi bypass on the Tallinn- Narva road.
Another EUR 12 million loan is to be used for water provisioning, waste-water disposal, solid waste, urban renewal
projects, new municipal transport initiatives, as well as other environment-friendly measures, and is expected to be finalised in the near future, once it has been addressed in the Estonian Parliament.
Some 65 towns and small municipalities throughout Estonia will be affected by this loan. Key Facts The EIB was set up in 1958 under the Treaty of Rome to lend capital for investments that further European Union policy
objectives, especially regional economic development, Trans-European Networks (TENs), and energy and the environment.
The Bank also provides loans to some 120 countries outside the EU, including 10 countries in Central and Eastern Europe which have applied for EU membership. Further information: Private bids on The Netherlands High-Speed Train The private sector has been allowed to compete in the establishment of a high-speed train service in the Netherlands. The
USD 3.9-billion project includes the development, construction, financing and maintenance of the HSL-Zuid high-speed rail link between Amsterdam and the Belgian border.
Still, Netherlands Railways (abbreviated as "NS" in Dutch) will have the opportunity to make the first bid on the tender issued by HSL-Zuid project organisation. Further information: The International toy company Lego has decided to sell 25-28 of their distribution warehouses around the world in order to cut costs. Large-scale centralised warehouses will be built or bought instead. EUR 40 Million for power Plants in Turkey The EIB is providing loans worth EUR 40 million to support cleaner energy production in Turkey.
The EIB funds are being left in the hands of Turkey's two largest private sector development banks, Türkiye Sinai
Kalkinma Bankasi (TSKB), and Sinai Yatirim Bankasi( SYB). The two Turkish banks will then lend directly or via leasing
arrangements in smaller amounts. These loans will then go on to finance the construction of some 5 to 10 power plants planned for by the Ministry of Energy and Natural Resources. Key Facts: I
The electricity demand is growing in Turkey on average of 8.9% a year since 1990. Since 1995, the EIB has contributed more than EUR 500 million towards projects in Turkey. Key Facts: I
The EIB Bank has been entrusted with a EUR 2.3 billion mandate from the EU for the 1997 - 2000 period. The loan will be
used to fund projects to 12 non-EU Mediterranean countries, which have signed co-operation or association agreements with the EU. Further information: USD 3.6 billion property merger in France The 2 French property companies Sefimeg and Gecina have merged, creating France's largest publicly listed property company with a total volume of 1.8 million square meters in its portfolio worth USD 3.6 billion . Annual turnover is approximately USD 235 million. Germans make USD 21- million investment on Hungarian property market
With its recent purchase of the 10,600-square meter Central Business Centre in Budapest, Hungary, the German mutual
fund Despa has made one of the first forays into Eastern Europe through a major Western institutional investor. The property agent DTZ acted on behalf of Despa. USD 115-million railway project initiated in Germany
Work has begun on the construction of the USD 115 million high speed railway link between Nürnberg and Ingolfstadt in southern Germany. The project is slated for completion in 2003.
Bilfinger+Berger is the contractor, and the project sponsor is Deutsche Bahn, the German national railway. Further information: 5 percent growth in housing starts in Finland
Home building will grow by 5 percent in Finland during the year 2000 to 35,500 units per year, according to figures released by the Finnish Contractors Association.
Finland has USD 13 billion in total construction volume; 1/3 from the housing sector. The largest contractors are YIT Corporation, with USD 1.1 billion in turn over in 1998, followed by Swedish owned
Skanska Oy, with USD 650 million, Lemminkäinen, with USD 680 million and Swedish owned NCC Puolimatka, with USD 390 million. EUR 10 million for infrastructure development in Palestine
The Palestine Authority (PA) has received a EUR 10-million loan from the European Investment Bank (EIB) for upgrading
the Palestinian autonomous territory's roads, communal buildings, and water provisioning services in Gaza and the West Bank. Further information:
The US hotel chain Marriott International and the Danish mortgage company Nykredit have begun work on the construction of the 500-room
Copenhagen Marriott Hotel at the harbour-front. The hotel will be finished in 2001. The Hilton Hotel Group is also at work in Copenhagen at Kastrup Airport.
USD 3 billion to rebuild Kosovo It would take around USD 1 billion a year for the next 3 years to rebuild Kosovo according to the estimates given by the European Commission, EC. Up to USD 723 million of that total amount will go on reconstruction projects.
Thus, as a part of the rebuilding process, the European Union, EU, will contribute USD 500 million annually over a 3-year period. The EU's grant duration starts in the year 2000 till 2003. This will bring the EU's total contribution to USD 1.5 billion.
However, large international banks, such as the World Bank, are finding themselves in quiet a complicated situation due to Kosovo's political and economic position. This is what is being said by Mr. Christiaan Poortman, the World Bank South-East Europe Coordinator. "The strategy for the World Bank to get involved in Kosovo is somewhat complicated by the fact that Kosovo is a province of Serbia, and Serbia itself is a part of Yugoslavia, and Yugoslavia is not a member of the World Bank Group, WBG. It is neither a member of the International Monetary Fund, IMF," according to Mr. Poortman. Therefore, it is a matter of having the legal work, justification and the legal basis for large international banks to get involved in Kosovo. "We can not provide World Bank loans, and that is obvious because the country is very poor, but not even credit…. We can not provide any assistance that needs to be repaid because there is no guarantor on the other side. Whatever assistance we are going to make available for Kosovo is going to be grant assistance." Mr. Poortman adds. The economic situation It is estimated that, as a result of the conflict and international economic sanctions, Kosovo's GDP shrunk by 90 percent from 1990 to 1999. This contraction made the GDP fall to USD 280 million or less than USD 160 per capita. This makes Kosovo the poorest province in Europe. Moreover, the banking system is not operational yet in Kosovo. So the transfer of money is impossible unless it is delivered by hand and in cash. The impact of the conflict in Kosovo This is an assessment that was released by The United Nations High Commissioner for Refugees, UNHCR,
on July 27th, 1999, on the housing situation. It also includes a few assessments concerning the civil engineering sector. The damage results are:
Because
most damage occurred between March of 1999 and July of 1999, damage assessments are not yet available. It is expected that the first available assessments will be fully available in late September.
Other revised versions, based on more extensive field visits, will be completed by the end of December. A planned high-level donor meeting on medium-term reconstruction needs will be held in February of 2000. Kosovo's infrastructure neglect under the Serbs
Besides the infrastructure damage inflicted on Kosovo during the recent crisis, for the past 10 years, from 1989-1999, after the collapse of communism, Serbia controlled Kosovo's police, courts, social, economic
and educational policies. Since then, maintenance on Kosovo's infrastructure was very limited. Even before the war began, power was out half of the time, the roads were extremely bad, there was very
little running water, communication lines were very difficult and recently there are mines all over the place. The beginning of reparations Shelter and food:
The first most important reconstruction projects that are currently taking place are emergency repairs. These include supplying basic shelter kits of plastic sheeting, wood strips, nails and tools
to make the homes winter-proof. The second most important projects will be agricultural, home, school, and hospital construction. This is according to The UN Food and Agriculture Organization.
Electric power plants: It will cost around USD 9.5 million in order to restore electricity to all of Kosovo. The problem, however, is electricity distribution through cables. This is because many of the pylons have
been mined and have to be cleared before work can start. Water and water treatment plants: Most of the towns and villages have some source of water supply,
such as fountains in village squares. Corpses, however, have contaminated some of the water sources. In other cases, the water pipes are in a defunct state. Telephone lines:
No action has been taken yet on the restoration of telephone lines, since the solution rests with the Yugoslav authorities who remains in charge of the cellular network. The financing process
As of August 1999, most of the financial aid is being used for emergency humanitarian relief efforts and in
financing current expenditures, which include salaries for local administration and public utilities. This is done in order to build up a local administration in the region.
So far, over 100 countries and international organizations have pledged more than USD 2 billion to see returning refugees through the winter.
The specifics of individual pledges are not yet indicated due to their needed legislative authorization before making commitments. However, only the US, Japan, and Denmark have disclosed their total pledges. The
US will give USD 500 million in cash and commodities. The Japanese Government will be contributing to USD 200 million and Denmark will be contributing to USD 42 million.
The European Commission, EC, has so far contributed to USD 510 million, including USD 133 million for reconstruction and USD 372 million in humanitarian aid. Country donations (In millions of USD, as of July 1999)
Private Donors (By country, in millions USD, as of July 1999)
Contractors are not jumping for joy over contracts Surveying construction teams from the UK and the US, who have traveled to Kosovo to secure reconstruction contracts, confirm that construction opportunities that are aimed at rebuilding Kosovo will be located in poor and largely rural Kosovo. They also confirmed that the contracts' values are modest. For the firms who are eager to pick up on construction opportunities in the region, they should await the construction contracts that will be awarded by the European Commission. A good starting point will be to check it the following World Wide Web site: http://www.ted.eur-op.eu.int. *The site is still under construction; when completed it will have the issued tenders for the rebuilding of Kosovo.
So far, no international contracts have been put forth due to a damage assessment project that is still in progress in Kosovo. The assessment reports are being carried out by the United Nations High
Commissions for Refugees and will be put forth in 3 parts. The first is coming out in late September. The second report is scheduled for the end of December. The third report will be done in February of 2000. However, many international contractors are taking quick peeks at the Serbian part of the Federal Republic
of Yugoslavia. There is where the major contracts will be. Currently, however, there are no plans for reconstructing that region as long as Milosevich is in power. China, on the other hand, could be planning on
rebuilding its embassy in Serbia, due to its destruction during a NATO bombing raid. Another reason for the lack of enthusiasm on the part of international contractors is the fact that Kosovo
has little industry and a limited number of water treatment and power plants in need of repair. In fact, 60 percent of Kosovars are farmers and much of the damage there is to individual dwellings.
Moreover, in Kosovo, construction contracts will be awarded on the basis of competitive bidding. This is something that big international engineering and construction firms do not get excited over. The damage to the region as a whole
The total cost of rebuilding the whole region – the Federal Republic of Yugoslavia - could reach USD 32 billion according to European Commission estimates. The tally of damage to infrastructure for Kosovo and
Serbia combined is estimated by NATO to be:
For further information: The World Bank, Mr. Christiaan Poortman: The WB South-East Europe Coordinator, 1818 H Street, N.W. Washington, DC 20433 U.S.A., tel: +001-202-477-1234. The European Agency for Reconstruction, EafR,
has been established in Pristina, Kosovo's capitol, by the European Union to oversee its reconstruction aid. External Relations Department International Monetary Fund Mr. Gram Newman: Chief Officer
of External Relations Washington, D.C. 20431 U.S.A., Tel: +001-202-623-7300, Fax: +001-202-623-6278. UN Office for the Coordination of Humanitarian Affairs, Complex Emergency Response Branch
Ms. Mette Johannson: Chief Officer of South-Eastern Europe, Palais des Nations 8-14 Av. de la Paix Ch-1211 Geneva, Switzerland, Tel.: +41-22-917-1972, Fax: +41-22-917-0368. Kosovo's World Wide Web Links: http://www.france.diplomatie.fr/actual/dossiers/kossovo/huma/aide17.gb.htmlhttp://europa.eu.int/comm/echo/kosovo/activities/index.htmlhttp://europa.eu.int/geninfo/keyissues/kosovo/links_en.htm http://www.coe.fr/cplre/kosovo/index.htm http://www.ecb.int/
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