Andrei Pogonaru, member of the administration board of Prodplast Imobiliare, the company developing the Veranda shopping center in the Obor area of Bucharest, talks to BR about the developer’s expectations for the project and future real estate investment plans.
How advanced are works on the project and do you plan future extensions?
We have now completed more than 70 percent of the project. The concrete foundation and the supporting structure are done and in some parts we have reached the point where we are working on the finishings. Works are on schedule and the project will be opened in the last quarter of this year.
One of the building’s characteristics is that it is modular. This enables future expansion. Given that demand is higher than the gross leasable area (GLA) we have available, we are considering a future expansion. We are also considering building a cinema multiplex.
How much of the shopping mall has already been leased?
The occupancy rate has surpassed 70 percent, which means over 20,000 sqm out of the available 30,000 sqm GLA. We are also negotiating with a series of potential tenants the lease of another 20 percent. Visitors will find a diverse tenant mix for both the shopping area and the food court.
How much have you invested in the project and how easy was it to secure financing?
Veranda will require a total investment of EUR 60 million. We have a financing agreement with Raiffeisen Bank and Raiffeisen Bank International for EUR 25 million which can be increased to EUR 28.5 million. The remainder of the investment, meaning almost 60 percent, is covered by our own capital.
Given the current economic climate, dealing with banks can be delicate and time consuming. However, a well thought out project that shows potential is of interest to them. At Veranda, we made sure as early as the design stage that the project integrates and adapts to what’s already on the market in the area, as well as its specifics, which contributes to a very large extent to the success of the shopping center.
Do you plan to sell the project after completion and what other real estate investments are you considering?
The project was meant from the planning and design stage as a family business and a long-term investment. We will certainly not give it up in the near future.
We are always looking at new opportunities in the market, especially on the industrial sector, but for now we are focusing on completing the Veranda commercial center.
You mentioned at the end of last year the possibility of also investing in a residential project. Do you think that the recent debt discharge law will lead to a slow-down of new developments on this segment?
We are always looking for new opportunities, including on the residential segment. The changing of the legislation in this field has already produced effects in the market, especially considering the reaction banks have had. The real estate sector will most likely react shortly as well.
What turnover do you expect Veranda will post in the first year after opening and why did you decide on the ‘proximity mall’ concept?
We expect it will generate rent of approximately EUR 7.5 million. We are optimistic about the results given the high occupancy rate we have reached long before the official opening.
The particularities of the Obor area support this ‘proximity mall’ concept. We see the proximity to the Obor market and its complementary offer of products as a key element for Veranda’s success. Moreover, this concept represents the future of commercial centers at an international level. Why should consumers go to the other end of the city for their shopping? Veranda is the version of a modern Obor which is adapted to the needs of the more than 430,000 inhabitants in the area.
How do you think the Bucharest shopping center scene will evolve in the years to come?
Bucharest’s retail market is still in full development, studies show. The capital continues to hold room and potential for new commercial centers and there are parts of the city whose needs are not fully met, such as central and north-western Bucharest. Moreover, compared to other European capitals, Bucharest still has about a third if not less of the average built commercial stock.
What do you think will be next for local shopping centers?
Beyond the city’s potential and increasing demand, competition is very high. This brings about more changes and new approaches to the experience shoppers enjoy. Whether we are talking about diversifying the shopping or entertainment options, I think all shopping centers should focus their attention on improving the experience shoppers have in their projects.
Green buildings are a trend we have noticed and adopted in designing our project. We have therefore developed an energy-efficient building with a low impact on the surrounding environment for which we have applied for a BREEAM certification.
Andrei Pogonaru – CV
He is a member of the administration board of Prodplast Imobiliare, the company behind the Veranda shopping center in Obor. Pogonaru has spent ten years in financial services and energy-related projects. He is also a partner of Central European Financial Services. Pogonaru graduated from the University of Cambridge with a major in applied mathematics.
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