XANGA Group is a 100% privately owned investment and development group based in Debrecen. The following article is a summary of the conversation between XANGA Group’s president and CEO, Mr István Herdon, and ITL Group’s Managing Director, Mr Alessandro Farina on XANGA Group’s activities and role in developing the local economy in Debrecen and in the region.
The company has initially started as a consulting firm, helping foreign businesses settle in Hungary. Identifying a gap in the market, XANGA group has started actively supporting companies in finding and creating the appropriate places to settle. In 2006, the company started to develop the Innovation and Technology Centre at Határ Street Industrial Park. XANGA, as operator and developer of the industrial park, expanded it to the actual 130 hectares. The industrial park currently has more than 60 companies and 6000 employees, nearly half of them having college or university degrees. Mr Herdon noted that together with the development of the industrial park, XANGA Group has slowly specialised more and more in investment and infrastructure development.
Investing in Debrecen International Airport
In 2011, XANGA acquired majority shares in Debrecen-Airport Ltd. operator of Debrecen International Airport, but later, in 2018, due to changes in related legislation, XANGA Group has handed back its majority share to the Municipality of Debrecen. By this handover the owners’ aim was to ensure the governmental financial background essential for airport infrastructure’s development for the airport’s dynamic growth in passenger numbers. XANGA remained a minority owner with 25% and kept the right to develop the surroundings. The development of such a regional international airport is costly, it has already gone beyond the confines of a private company and even the city needs significant government assistance. XANGA remains committed to the development of the airport: as a strategic partner of the city, they are building a cargo and maintenance base.
Industrial infrastructure development
XANGA develops turn-key industrial facilities for its clients. The main locations for projects in Debrecen are XANGA’s Science & Technology Park and the Airport Multimodal Logistics Centre – both are developed by XANGA. Over these we recently added the new „South Industrial Park” to main locations for „build-to-suit” projects.
Being the largest industrial developer in the region XANGA operates it’s 130 hectare Regional Innovation Science and Technology Park where such 160.000sqm industrial and service infrastructure has already been developed – mainly in build-to-suit (BTS) construction and partly on risk capital investment basis.
In cases if clients wish to have a facility catering their specific needs for a long term (5-10 years lease), then XANGA Group is willing to invest in new facilities constructed, with specific technical features, appropriate for its clients. As Mr Herdon explained, while they are managing these projects, they are not a construction company, therefore the building is always outsourced to the best local/regional construction companies.
Besides BTS projects, XANGA has existing facilities to be rented out. XANGA developed ready-to-lease infrastructure with 27.000sqm in total at the Airport Multimodal Logistics Center right next to Debrecen International Airport. Here XANGA offers warehouses and offices for its partners.
In order to provide stable funding for the investment projects, in 2019 XANGA has created the XANGA Ventures private equity fund manager Ltd. and set up its own private equity fund, enabling the group to realize build-to-suit projects on a total volume of 100 million EUR in the coming years. The Debrecen Industrial Development Fund’s purpose is to invest in projects that meet the needs of infrastructure for high value-added industries (electronics, pharmaceuticals, etc.).
In 2020, a similar fund was launched for Nyíregyháza. MFB Invest (member of MFB Group), city of Nyíregyháza and XANGA’s XID Investment Ltd. co-founded Nyíregyháza Industrial Development Fund. Here as well the Fund’s management tasks are performed by XANGA Ventures private equity fund manager Ltd. The purpose of this fund is to stimulate the region’s economy, create new jobs and promote the development of manufacturing and service infrastructures.
Debrecen and The Local Economy
Mr Herdon also briefly shared his view on the coming BMW factory in Debrecen and the speculative investments in the region. Regarding the BMW factory, Mr Herdon explained that BMW usually focuses on its core activities and outsources the rest to subcontractors. This will certainly mean a significant boost to local companies and the local economy. The BMW factory is followed by the suppliers. It is expected that nearly twenty of tier 1 suppliers will apply who follow the company here as well, that are awaited by industrial infrastructure and even ready halls – thanks to XANGA -, can be rented immediately on demand.
Mr Herdon also briefly shared his concern on speculative investment in the region, especially when it comes to buying land. In any case, real estate prices have risen sharply, but not nearly as much as in other rapidly developing settlements. Speculation in the development process is very harmful! The city has done a lot to delay the price explosion, or at least slow down the pace of rising prices.
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