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Stricter protection of agricultural land will also significantly affect the industrial space market

The amendment to the Agricultural Land Fund Protection Act, which was approved by the Government last October and is expected to be adopted by the Chamber of Deputies in the first months of this year, will have a significant impact on the construction of production and warehouse properties in the Czech Republic. It will have an impact on the planning and construction of industrial sites, on land classified as Class I and II (according to the Bonitated Soil Ecological Unit, BPEJ). The amended law proposes a ban on the use of agricultural land of this quality for plans to build shops or warehouses larger than one hectare, as well as a ban on the use of these lands for conventional photovoltaic power plants.

"It is, of course, absurd that on areas with the best quality soil, where vegetables or cereals can be grown, warehouses should spring up where the same commodities are stored - but imported from abroad. But this has happened or is happening only minimally. On the contrary, we have serious concerns that this will restrict development around newly built sections of motorways and Class 1 roads that are suitable for industrial developments and often defined by master plans. Not to mention the fact that the usability and quality of agricultural land around traffic routes is decreasing as a result of traffic," comments Jakub Holec, director of the Czech real estate consultancy 108 REAL ESTATE, which specializes in industrial real estate. The amendment may also affect purely manufacturing, technological projects, which very often include warehouse spaces larger than 1 hectare.

According to Michal Diviš, head of the investment department at 108 REAL ESTATE, it would make sense to allow a legal exemption automatically, for example, 500 metres from the axis of a road (only motorways and first-class roads). On the other hand, the new restrictions may contribute to the development of brownfields and the revival of some excluded locations, often in the inner cities, where the possibility of building industrial buildings with more floors is also opening up.

According to consultants from 108 REAL ESTATE, the amendment to the Agricultural Land Fund Protection Act is undeniably necessary and correct, also thanks to the proposed transitional provision of the amendment and the support of the public interest. At the same time, however, they point out that the proposed generalisation of land protection will lead to a certain extent to the fact that even in the most suitable locations for the construction of industrial or logistics parks, such construction will not be possible, and at the same time, quality agricultural production will not be possible there either. This is not only because of the negative effects of car traffic, but also because of the more complicated logistics of agricultural equipment (splitting of fields, the impossibility of crossings, etc.).

It is the network of motorways and expressways that is crucial for the builders and users of industrial buildings in combination with the planning documentation. It is the location, the fast connection to the roads and the parameter of shortening distances that determine the attractiveness of a project. "Although we understand the diction of the Ministry of the Environment, in this case a paradox may occur: construction will stop around the main land transport routes, but the traffic load will increase in more remote locations where the transport infrastructure is not optimal. This will negatively affect not only the environment but also life in transit villages and towns," says Michal Diviš.

The loss of development areas logically linked to transport routes and nodes may also have an impact on the reduced interest in the entry of investors and therefore the slowdown of the Czech economy. In addition to the permitting process, the amendment is another obstacle to territorial development, while machinations around the determination of the suitability of agricultural land cannot be ruled out.

"This is actually a contradiction in terms. On the one hand, the state, by means of a separate law and authority, supports faster development of the backbone transport infrastructure, including the possibility of expropriation, on the other hand, it prevents the subsequent development of segments related to a better quality transport network," thinks Darek Vodehnal, Senior Associate in the Investment 108 REAL ESTATE team.

108 REAL ESTATE consultants agree that the conditions for faster revitalisation of brownfields and long neglected or excluded locations should be addressed by new, effective support instruments. They should focus on removing environmental and other types of encumbrances that disqualify buildings, land or whole sections of towns and cities from the property market.

"Brownfields obviously have a lot of potential - and we see this especially in Prague, where many of them are converting or preparing to convert. However, this is usually the residential segment. The Czech Republic needs tools for the development of new, sustainable construction and logistics or manufacturing space," Jakub Holec believes that public support for the revitalisation or redevelopment of unused or derelict buildings or sites should also be opened up to private developers and investors.

Of course, under clearly defined conditions and on the basis of close cooperation with municipalities or the state administration.