Brownfield or Greenfield? Which Land Should You Choose?

Greenfield Investments on Undeveloped Land

Greenfield refers to land that has not previously been built on or used for industrial or commercial purposes.

Typically, such lands are agricultural or forest areas lacking full technical infrastructure, electrical, water, or sewer connections. Additionally, there may be insufficient or legally required access to the property. Investing in such areas may require the investor to bear the costs of building access roads and related administrative procedures or bringing in infrastructure.

However, investing in greenfield sites offers significant benefits—primarily flexibility in design. Greenfields do not have burdens associated with the need to remove pollutants or to modernize or adapt to existing structures (such as underground technical infrastructure or roads).

Investors who opt for these ventures often have a broader range of options regarding location, guided by various factors such as raw material availability, transport infrastructure, or market potential according to their needs.

When Is Greenfield Land the Right Solution?

Investing in a greenfield site requires thorough preparation. It is essential to study the property to identify any factors that could prolong or significantly complicate the investment process.

The primary document to analyze is the local spatial development plan. It is crucial to ensure the intended use in the local plan and building parameters to ensure that the planned investment is feasible on the chosen site. Choosing agricultural land not covered by a local plan can be problematic. In some cases, there is a risk of not obtaining the necessary decisions from local authorities to proceed with the project. Check our article on important changes in spatial planning regulations.

During the realization of greenfield investments, challenges related to soil and geological conditions or terrain configuration often arise. It is important to be aware of specific geological conditions or less favorable water conditions from the outset to plan the foundations and other necessary actions to enable construction on the site.

Brownfield Investment – Post-Industrial Sites

Brownfield refers to land or property that was previously used for industrial or commercial purposes and requires revitalization or modernization. It is characterized by a history of industrial activity, which often involves potential environmental contamination that needs to be removed.

Many brownfield investments have existing infrastructure related to previous use, such as buildings, roads, power lines, or rail sidings. However, the greatest asset of such areas is their location. Situating post-industrial sites in cities contributes to reduced transportation and logistics costs—making them ideal for last-mile logistics and SBU.

Advantages and Disadvantages of Brownfield Sites

Areas previously used industrially or commercially usually have better infrastructure connections and are often located closer to city centers, facilitating communication and reducing commuting distances. Investors increasingly choose locations based on the availability of their future employees, and in the case of high-tech industries, specialized staff.

Post-industrial sites are predominantly within city administrative boundaries and at attractive transport points. Thus, such areas are more adapted to local service provision.

Moreover, brownfield investments typically require lower financial outlays regarding technical infrastructure and the possibility of reusing existing buildings and roads. There is also limited risk of lack of access to utilities and public roads.

As advisors in the real estate market, we must not forget the important aspect of space management. Investments in brownfields contribute to the revitalization of local communities and have a significant impact on reviving areas that were previously degraded, neglected, and deserted.

Choosing brownfield avoids the need to occupy new green areas or agricultural lands, providing a more environmentally sustainable solution. We avoid urban sprawl!

Undoubtedly, choosing a brownfield site over a greenfield has many advantages, but the fact that post-industrial areas can be severely contaminated cannot be ignored. This is one of the biggest risks, as it requires additional financial outlays. Once contamination is detected in the soil or groundwater, costly and time-consuming remediation actions become necessary.

The ownership structure of post-industrial sites is also important. They are usually state-owned lands given for perpetual use, which involves annual payments. It is also worth noting that post-industrial sites where economic activity was conducted much earlier may be subject to bankruptcy procedures, which results in their limited availability. Purchasing such sites can be difficult, and the transaction process can be time-consuming, especially due to the prolonged procedures associated with corporate bankruptcy.

Greenfield and Brownfield Investments – Different Solutions for Different Investments

Given the limited availability of industrial or commercial land in convenient locations, post-industrial sites are becoming an increasingly popular alternative.

Before starting an investment, it is crucial to determine primarily the preferences regarding location, the characteristics of the desired property, and long-term development plans.

Both approaches, whether choosing a greenfield site or a post-industrial brownfield, have their advantages and disadvantages. Each investment site has different conditions that must be checked and risks associated with purchasing such property assessed. After reading our article, you are, however, an informed investor.