Sebastian Mahu, IULIUS: Real estate shows an ever-growing awareness towards sustainability and social responsibility

In an exclusive interview for Business Review Magazine, we sat down with Sebastian Mahu, the Head of Asset Management at IULIUS, to explore the world of asset management and real estate development. Sebastian Mahu offers keen insights into the current landscape, strategic undertakings, and the future vision of IULIUS in this ever-evolving market. The dialogue delved into the trends, challenges, and innovative approaches that shape the property sector in 2024, providing a rare glimpse into the leadership and foresight driving IULIUS towards new horizons.

The real estate market does not strike a discordant note and will face the same challenges that will affect the entire economy. From issues related to labor, inflation, shocks affecting supply chains, to the geopolitical current setting and rising interest rates, we can take into account disruptive factors that, in 2024 as well, will define an unpredictable market approached with caution, and also with taking on as few risks as possible. Equally, this is a context conducive for adjustments, which reveals certain opportunities available to the market players.

Unquestionably, 2024 is a year of transformations, of decisions on strategies aiming to support the smart, astute management of portfolios, with a focus on cost optimization and resilience. Such transformations will be at the forefront, holding a major place in business plans, both those belonging to tenants and those of the real–estate projects’ operators. IULIUS is not a speculative developer, our projects are built to be owned and operated by us and reflect the needs of the market. As already proven in operating contexts that were even more troublesome than now, our projects have the ability to adapt to any fluctuations, being advantaged by their mixed-use format, their ultra-central location, their maturity on the market and based on an anticipatory vision and approach.

This year, we will continue the steps already initiated to relate and represent ourselves, through the companies that manage our project portfolio, as tenant support companies. In short, we want to become a partner of our clients, helping them grow their business, by way of support provided in the real estate area, marketing, services, technology items, and any other element associated with a business location.

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As already noted, 2024 is a year of transformations. An ever-expanding number of current tenants, but also of partners who are set to enter our projects (the mixed-use complexes Palas Iași and Iulius Town Timișoara, the Iulius Mall network covering Cluj-Napoca, Iași and Suceava, and the two Family Market proximity–retail formats developed in Iași – 310,000 sq.m.), are shifting from the old store formats to new concepts, redefining the shopping experience. The actual approach varies, from interactive layouts, pop-up thematic corners, events, and up to immersive experiences. Finally, the main attractions for buyers remain the food & drink venues offer, the entertainment facilities and the green areas. New consumer preferences represent an opportunity, being able to bring brands closer to their customers by means of an interactive dialogue level.

I am sure that we will succeed again, in 2024, to astonish our public with new, different shopping and entertainment solutions, capable to enrich the visitors’ experience. We will probably surprise this year with major moves in already dominant projects. Our vision is that the leader position comes with additional responsibility, and our role is to continue to innovate. For example, such a plan is already set for an area of 10,000 sq.m. in one of our projects, where we will put forward an exclusive retail mix, unique for Romania.

From the perspective of our office portfolio, supplemented last year by Palas Campus Iași, that I think is the only large-scale office project delivered during the pandemic and post-pandemic period, the emphasis is put on quality. We operate 15 premium office buildings, with an area of 242,000 sq.m. and over 130 offices, and the noticeable trend is an interest of companies to return to on-site office work, to foster collaboration and the promotion of organizational culture. Therefore, premium office spaces are preferred, spaces which provide an enriched and flexible experience to employees, and as a result support their productivity. Since the office is no longer just about work, but mostly about the amenities and facilities that support personal life, such as the fitness centers, parks, events venues, and restaurants set in close proximity. At the same time, we notice an increase in requests for smaller office areas, but of a higher quality.

Over the past decade, IULIUS has developed mixed-use urban regeneration projects that include functional uses such as retail, office, cultural, entertainment, park, mobility infrastructure and, more recently, a residential component. We will continue this line of action.

We are undertaking advanced steps in the authorization process for the project located in Cluj-Napoca, project that will capitalize on and render new value to the approximately 14 hectares former Carbochim industrial site, pursuant to the completion of the relevant factory’s relocation and upgrading process. This project already elicits and enjoys a major interest from our partners, being a sustainable, family-oriented concept – in a city where studies show that demand for new brands is present. This is an urban reconversion project concerning an inaccessible former industrial area, with a strong green anchor, the 50,000 sq.m. garden that will integrate for the first time the riverbank of Someș, creating novel leisure facilities: new entertainment solutions, with spaces for indoor or outdoor events, a cultural center and the first performance hall integrated into a real–estate project.

IULIUS also announced in 2023 the signing of a partnership with Oil Terminal for the achievement of an urban regeneration project in Constanța, on a 38-hectare land plot which is currently inactive. This project will be developed with an investment of 800 million euros and will integrate a botanical garden and a park, along with an office component, with shopping and relaxation areas, featuring new retail and entertainment concepts, a fresh market with local producers and entrepreneurs, restaurants, bistros and thematic cafés, but also cultural and entertainment functional uses, intended to ensure leisure opportunities to enjoy one’s free time in a qualitative manner all year round.

Nevertheless, in addition to our plans concerning the important projects under development, we have extensive plans for reorganization, expansion and redevelopment in respect of our projects in operation, emerging from our aspiration to anticipate the evolution of the market and to offer consumers the shopping experience they desire, which is distinct and stands apart from a mundane trade transaction.

The real estate industry shows an ever-growing awareness in relation to sustainability and social responsibility, an aspect that can be found mirrored in the relevant business plans, and which weighs in strategic decisions making during the development and operation processes. From reducing one’s own carbon footprint and energy consumption, to promoting the commitment to community and business ethics, the ESG initiatives are driving positive change in the real–estate industry, and we expect a continuous increase in significance for such initiatives.

For us, both sustainability and digitization represent directions that hold well-established priority positions in the operational management and also in the management concerning the development of new projects, as the beneficial impact resulted therefrom is obvious, both in respect of cost efficiency optimization, and for the comfort offered to tenants.

In the sphere of sustainability, one of the most important projects implemented by IULIUS last year was the photovoltaic panel system at the level of the entire portfolio. We are the only company on the real estate market in Romania that has implemented in all its properties– developed and operated, an extensive project aimed at increasing energy autonomy through the installation of photovoltaic panels. The generated energy is used for our own consumption, and we expect a saving amounting to approximately 10% of the total energy demand consumed at a group level. This investment exceeds the value of 3.5 million euros. The photovoltaic panels project has a total area of 26,000 sq.m., and estimates show that it will generate over 5,500 MWh annually, thus removing from the circuit 1,500 tons of CO2/year, which would have been produced from conventional sources, an impact equivalent to that of a mature forest with more than 20,000 trees.

Also in 2023, IULIUS signed a partnership with IFC, a member of the World Bank Group, for the development of a strategy to decarbonize the company’s entire portfolio and to reach the target of net-zero emissions, through the Green Pathways for Real Estate Institutional Portfolios platform (GRIP), the first commitment of this type in Romania.

As for digitization, in the operation of our buildings portfolio technologies are applied to provide smart, astute, safe and high-performance management. From regulating temperature, light and air quality using sensors, to providing the security of the premises, these are all aspects that have been improved over time with the help of technologies and based on the history of tenant behavior. Obviously, digitization is also making its way to the level of retail activity, precisely to offer current, personalized, and captivating experiences for the consumer.