1. Good Practice Example: Sustainable Urban Development (Northern Budapest, Hungary)

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1 1. Good Practice Example: Sustainable Urban Development (Northern Budapest, Hungary) List of relevant key words Brownfield Rehabilitation, Sustainable Urban Development, Green Space Development, Functional Change, Monument Protection Óbuda Gas Factory and Graphisoft Park Óbuda Gas Factory and Graphisoft Park are located on the northern part of Budapest, on the right bank of the Danube. The total area of the land is ca. 21 ha. The former owner of the land, the Fővárosi Gázművek Zrt. (Capital Gas Works Ltd.) gave in 2004 the whole territory over to the Municipality of Budapest. In 2006 the Municipality of Budapest set up a development company in order to prepare and manage the development. This development company is the Budapesti Városfejlesztési és Városrehabilitációs Zrt (Budapest Urban Development Ltd.). The responsibilities of the Budapest Urban Development Ltd. include the preparation and coordination of real estate development and environmental remediation. The Graphisoft Park was implemented on the territory of the former gas plant by the Graphisoft, which is a Budapest-based multinational software development company. The real estate development has begun in 1998 and since then there is a continuous progress. As a result of this rapid growth, the real estate development department was separated from the company and so was created the Graphisoft SE, operating as a public European corporation. Background, objectives, implementation measures and financing The Óbuda Gas Plant was built between 1911 and 1914 and it was one of the most modern gas plants in Europe to date. At this time this area was located outside of the city but due to the rapid growth of the city in the following decades it is located now in the middle of the 3. district. Beside the factory there was also built housing estates for the officers and workers of the plant and there live people nowadays, too. The plant burned coal to produce so called city gas used for heating. It was in operation until 1984 and in these 70 years it produced the whole gas needs of Budapest. In 1984 the production was stopped because of the conversion of the heating system to natural gas. Since then this territory is one of the heavily contaminated lands of Budapest with no function. The Graphisoft Park is the result of a real estate development since 1998 in the middle of the former gas plant s land. The area of the office park has continuously grown. In the beginning Graphisoft started to bulid the office park for its own purposes but due to the success of the

2 development grew the tenant needs for offices. By this time there have settled 60 big companies with more than 2000 employee. The majority of the companies are operating in the fields of information technology and biotechnology. The biggest multinational companies are present here such as Microsoft, SAP, Canon, Servier pharmaceutical company. Graphisoft formed not only high-quality offices but also paid attention to preserve the green spaces and the architectural heritage of the former Óbuda Gas Factory. The new office buildings follow the style of the industrial monuments and they fit into their environment. As a result of these, the buildings are in harmony with the surrounding natural environment and architecture. Though Graphisoft used high-quality materials to build the office buildings they don t use actually any energy saving system or renewable energy source because at the moment it is too expensive in Hungary and it takes too much time to return the costs. The office park provides high-quality information technology education in English language. The purpose of Aquincum Institute of Technology is to train professionals for the companies settled down in the office park. After the Municipality of Budapest had acquired in 2004 the whole land of the gas plant it has decided to rehabilitate it. The land of the Óbuda Gas Factory is one of the most important development area of the city, here is going on one of the most meaningful real estate development of Budapest. The main development priorities are to give a recreation-cultural function and a R&D Technopolis function to the area, based on the activities of the neighbouring Graphisoft Park. The Development Plan 2012 plans to create thematic innovation and knowledge park, cultural centre, entertaining and recreation places and a city centre with mixed function on this land. The main purpose of the development is to create a high status district with many functions, green spaces, cycle path, and a promenade on the Danube bank. The development area has a high value due to its industrial monuments and very favourable location with big potential (it is located along the Danube, good infrastructure: suburban railway, high status areas and proposed developments (e.g. Aquincum bridge, underground line) in the nearby. On the land there are 16 buildings under monument protection, the investors are obligated to leave them unchanged. The majority of the other buildings have to be removed. The building complex consisting of four towers is a monument having a great significance in the cityscape. It could be developed through this project to an international significant symbol of the city. Due to the heavy contamination of the land and the many Roman Age finds under the surface the development process is highly complicated. Environmental remediation and archaeological excavation is needed before the development starts and these increase the costs and time of the project. Graphisoft SE has already done these processes on its own territory, however on the rest of the land owned by the municipality they are in progress at this moment. In t hazardous waste was removed from the gas plant s land. In the Development Plan has been laid down that the financing of the development is possible only through the own benefits of the Urban Development Ltd. without any central budget subvention. As a consequence of this the benefits of finished developments have to be returned to finance the further investments. By the end of 2012 the Budapest Development Ltd. spent ca. 1 million EUR on the project. There is ca. EUR 5m available for the further expenditures in 2013 and 2014.The total estimated costs of the finished and planned developments are ca. EUR 280m (where of EUR 120m belongs to Graphisoft Park). Because of the high costs and limited sources it is necessary to involve the private sector. Cost benefit, effects and results achieved

3 On the land of Óbuda Gas Factory the development has just begun, now environmental remediaton and preservation processes are in progress. The cost benefit, effects and results of the planned developments are not foreseeable yet. Business results of the Graphisoft Park in 2012: Sales revenue: EUR 8,28m Net profit: EUR 1,84m Operating costs: EUR 0,83m EBITDA: EUR 7,45m Utilization of the office and laboratory spaces (46000 m2) in 2013: 84% Development costs of the Graphisoft Park recently: Development of the central territory of the office park: EUR 0,8m (2012) + EUR 0,4m (2013) Renovation of 2 monument buildings: EUR 2,5m (2012 and 2013) Reconstruction of a monument block for education purposes: EUR 7m (2013 and 2014) Total costs of the finished land development: EUR 3,5m Planning procedures, involvement of stakeholders and possible participation structures Budapest Urban Development Ltd. creates the development plans for the Óbuda Gas Factory. The first plan was made in 2007 at the request of the Municipality of Budapest and it was updated in Budapest Urban Development Ltd. is an independent organisation but it is controlled and operated by the Municipality of Budapest. The main reason of setting up this organisation was to make it possible to involve private capital in the developments as well as the municipality wouldn t have been able to implement this very complex rehabilitation project together with its other tasks. The Budapest Urban Development Ltd. was created by 80% municipality and 20% private (Graviton Invest) ownership but since 2010 it is completely owned by the Municipality of Budapest. Images

4 Landscape of Óbuda Gas Factory and Graphisoft Park with the Danube The towers, the most significant industrial monuments now under renovation.

5 The towers before renovation.

6 Renovated industrial buildings. New office buildings in the Graphisoft Park. InnovatInnovation fostered - local / regional developments triggered Graphisoft created a very attractive office park and many big companies settled here down creating an innovative environment. This has triggered to establish here the Aquincum Institute of Technology for education and R&D purposes. This is a progress creating a technopolis in the Graphisoft Park. Due to its great effect on the land of Óbuda Gas Plant one of the main development targets is the technopolis function based on the activity of Graphisoft Park. Thanks

7 to these developments the value of the neighbourhood has also increased. This is proved by the rash development of Római Part (a part of the city close to the Óbuda Gas Factory, along the Danube) where many luxurious apartments and residential parks have been built in the past few years. Because of the development of this part of the city many big projects are planned by the Municipality of Budapest on this area (e.g. the construction of Aquincum bridge). The planned underground line 5 would also pass through this area and it would also significantly increase its value. Lessons learnt practical recommendations Lessons learnt: Environmental remediation Industrial monument development Waterfront development Creating a high quality urban environment Brownfield development Office park development Integrated development Practical recommendations: Better involvement of the stakeholders Creating a marketing strategy for the project Improving the accessibility and public utility of the land Image building based on the industrial monuments and great tradition of the area