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Chinese Auto Parts Firms, Tesla Suppliers, Explore Production Opportunities in Serbia

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Elon Musk’s plan to start production of cheaper electric vehicles at the Tesla factory in Germany can be very significant for Serbia. According to information, companies in the automotive industry associated with Tesla are interested in initiating the production of auto parts in one of the Serbian cities. What they are currently looking for is affordable production space to move into.

“We are receiving inquiries specifically for Serbia from companies in the automotive industry that produce parts for them. These are mostly companies from China. They are now relocating production here, closer to Europe. Supply chains are disrupted, transport is expensive, takes a long time, and is unpredictable. We might be the best destination for them because we are close to the EU and have favorable conditions,” says Božidar Gaćeša, Head of the Department for Logistics and Industrial Real Estate for the Adriatic region at CBRE, to Forbes Serbia.

He revealed that two Chinese companies in the final stages of securing a deal for Tesla have specifically contacted them. “These Chinese companies will produce parts for the Tesla factory in Germany,” emphasizes Gaćeša.

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The increasing trend in leasing production space throughout the region was a conclusion of yesterday’s conference organized by the CBRE group, where the annual report on the conditions and expectations in the real estate market of Southeast Europe was presented, titled “2024 Real Estate Market Outlook SEE region.”

In the near future, they expect an expansion of both domestic and international investors and an increased interest in smaller cities. Additionally, geopolitical disruptions may shift the focus of investors towards redesigning their supply chains and relocating production to Europe.

The fact that investors from distant China have already been scouting locations in Serbia to lease space is confirmed by Gaćeša for Forbes Serbia. “Two Chinese companies that will produce parts for Tesla recently visited and inspected locations in Serbia. Belgrade is expensive for companies in the automotive industry, and most of them want to start a factory in Vojvodina because it is closest to Europe. However, labor is the most expensive there, so they opt for Jagodina, Kragujevac, Kraljevo…”

He expects that at least five to six new projects with companies from the automotive industry will be realized in Serbia this year.

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Gaćeša revealed that suppliers of the Chinese company BYD, which is catching up with Tesla in electric car sales and has announced the opening of a factory in Szeged, will also come to Serbia. “One of their suppliers contacted us. They plan to start manufacturing parts for BYD here.”

According to him, Serbia is attractive to the automotive industry not only due to lower costs but, more importantly, because the workforce is educated and has experience in this industry. “The arrival in cities with universities, such as Niš or Kragujevac, is particularly interesting to them because they can easily find people who will be engineers in that production.”

Regarding the level of rental prices for production halls and warehouses, CBRE Group does not expect changes in the coming months due to a gradual reduction in inflation and an improvement in the balance of supply and demand.

“As for warehouse space in Belgrade and its surroundings, where the largest number is located, the average rent is 4.75 euros per square meter per month. The highest prices reach six euros, while in other major cities in Serbia, they range from 4.25 to 4.75 euros per square meter,” emphasizes Gaćeša.

When it comes to industrial space, as he adds, the rental price depends on what needs to be done to use that space as a factory. “Someone needs a specific floor, someone needs more ventilation, stronger heating… The price depends on all of that, ranging from five to eight, even nine euros per square meter for a month.”

He does not expect a change in rental prices for production spaces in the next year or two. “CBRE estimates that prices will not change. Inflation is falling, the construction cost, which was the biggest problem, has stabilized, and interest rates should go down, so we expect this market to remain stable.”

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