Vojislav Glavinic, CEO of Delta Real Estate - Construction of four shopping centers and three retail parks to start before 2017

(Vojislav Glavinic)

Delta`s five-year plan includes the commencement of construction of four shopping centers and three retail parks in Serbia, as well as the reconstruction of three hotels. People at this company say that their most significant investment is the one in the biggest and the most exclusive shopping mall in Serbia, worth EUR 200 million, whose construction should kick off in spring 2013 at Autokomanda. After that, the investment cycle will focus on facilities in Novi Sad, Nis and Banja Luka.

In an interview with eKapija, Delta Real Estate CEO Vojislav Glavinic confirms that there is no crisis for Delta.

- During 22 years of existence, we as a company have always been doing things differently than the rest of the market. We observe the situation and try to see two steps in advance, and now we plan big investments for the following period. Our position is more relaxed that those of other companies, mainly thanks to the sale of Maxi market chain to Delhaize, as well as owing to operational assets that operate excellently, primarily Delta City in Belgrade and in Podgorica.

eKapija: What were the parameters for Delta`s decision to start the construction of Delta Planet in 2013? What are your predictions for the development of shopping malls in Serbia?

- The shopping mall market is underdeveloped because there are only two shopping malls in Belgrade. Their performance is excellent, some of their tenants operate very well, while others are not doing that good. When we did an analysis to decide whether to invest immediately, we came to a conclusion that the project would be completed in late 2014 if we started its implementation right away. Until then, the situation in the fashion and food retail markets, which we are interested in, will become more clear. By 2014 we expect almost all serious brands to arrive in Serbia. C&A is already here, Zara is present for a long time, and H&M is expected to arrive early next year along with few other newcomers. These tenants expect to find a space in a big shopping mall like Delta Planet, where they could open a representative store. Serbia and Belgrade, the biggest city in the region and the most interesting as a potential market, still have no such facility.

(Delta Planet)

eKapija: You have mentioned H&M as a new brand in Serbia. How are the talks going with companies that are not yet present in our market?

- We are negotiating with H&M and C&A and other serious brands. We expect the interest in our market to be expressed by Peek&Cloppenburg, for example, as well as by other famous brands. Negotiations with potential tenants are conducted on a daily basis, but their management decides when they will enter the market of Serbia.

eKapija: What kind of buyers do you expect Delta Planet to attract?

- First of all, we plan to attract people from Belgrade, but the focus is not going to be only on the city, but also on the visitors from all over the region, mainly because of the specific position of Delta Planet, which will be situated on the highway and 20 kilometers away from the airport. Delta Planet will be a spectacular facility and an attractive location for people living in neighboring cities. We believe that it will also be interesting to all transit passengers through Serbia, such as those traveling via Belgrade to Greece and Turkey in summer.

eKapija: How does Delta City operate now? Do you believe that the opening of Delta Planet will affect the operations of that shopping center?

- It is for sure that the new shopping mall will attract an exceptional number of visitors. Delta City operates very well and now has 10 percent more visitors than last year. What may be a problem is a lower purchasing power of citizens, which is why the tenants` turnover is not growing, but what is important to us is that their turnover is not dropping either. Last year our buyers were bothered by the reconstruction of Gazela. We expect significant changes to happen with the arrival of large market chains in Delta City over the next year or year and a half. We will change the look of that shopping center. Certain changes will be noticeable as early as in late July and early August 2012. There will be some new facilities, certain stores will be expanded, and we expect few new brands as well. All that will help Delta City find its place in the market even after the opening of Delta Planet. After all, our idea is to coordinate actions between our two shopping malls, so that we expect them to be attractive to new visitors as well. That means that we are already making the first steps and preparing for what lies ahead of us.

eKapija: Delta earlier announced the construction of a shopping center in Despota Stefana Boulevard as well. When will that project be implemented?

- We've bought a land, and the work on a preliminary design is underway. All the chances are that that shopping mall will be built after the facility at Autokomanda, meaning that the construction will not kick off before the end of 2014. Until then, all ownership and legal issues pertaining to that location will be resolved. Certain buildings on that site are under the protection of the Cultural Heritage Preservation Institute, and our project must be adapted accordingly.

eKapija: How certain is it that Delta will open shopping centers in Novi Sad and Nis?

- These cities are the next destinations for our shopping centers. We are looking for a location in Novi Sad, and we need to choose between two sites in Nis. Both cities are included in our five-year plan, so that the construction of these shopping malls should commence before 2017.

eKapija: Delta also earlier announced the construction of a shopping center in Banja Luka. How is the regional expansion going?

- We plan to start building a shopping mall in Banja Luka in 2014, where we bought a land as many as five or six years ago. Once the moment is right, we will launch that investment project. By the way, as far as regional operations are concerned, our Delta City in Montenegro operates very well, and the number of visitors grows 15% per year. We have no competition in Podgorica.

eKapija: How far have you gone with the Delta Retail Park project in Belgrade's Block 53? When will the construction of the first Bauhaus facility start? You signed an agreement with the German company last year...

- We are now collecting required permits, and the construction will start as soon as we get them all. The construction of a 20,000-square-meter Bauhaus is expected to commence in late September or early October, which will also be the first phase of construction of this retail park. This park will also include a large Tempo facility, while the other facilities that are typical for such complexes will be built in the next stages of construction.

(Delta Park, Kragujevac)

eKapija: Delta Park already operates in Kragujevac. Do you plan to expand the network of retail parks to other cities in Serbia?

- The first phase of construction is completed in Kragujevac, where Tempo, Forma Ideale and Deichmann are situated. We will bring some new brands in the second phase, which is planned to commence next year, but it all depends on the situation in the market, and we will also check how the shopping center Plaza operates. The plan is to open a retail park in Novi Sad and Nis within the next five years. We are ready and now only wait for big brands familiar with that concept to decide to come to Serbia.

eKapija: How do you see the competition in that sector, given that there is already a retail park in Pancevo?

- It is good that the competition exists and that there are as many competitors as possible, so people could realize the concept of such complexes and accept it. It is also good that they operate successfully because that will attract the brands that have not entered the market of Serbia yet.

(Continental hotel)

NEW CONTINENTAL, PARK AND NACIONAL

eKapija: Will the reconstruction of Continental hotel start in mid-July, as announced before?

- The hotel will be closed July 15th, so the reconstruction works could start. It will be closed for a year, during which the hotel will be completely reconstructed. This investment is worth EUR 30 million. The tender procedures will be finished within the next few days, meaning that we will soon learn the name of the general contractor that will hire subcontractors from Serbia.

eKapija: What will the new hotel, that is, Crown Plaza hotel, offer to its guests?

- This five-star hotel will comprise five restaurants, congress rooms and a new spa center that will be open to both hotel guests and all other people. There will be 418 rooms, 110 of which will be so-called "club" rooms. Thanks to its architectural design, the hotel will quickly become one of the symbols of Belgrade. The design is done with a prior consent of architect Stojan Maksimovic, author of the original design, and with the help of the London-based design studio Virgile and Stone, which usually works on the project of the InterContinental Group.

eKapija: Reconstruction of Park hotel in downtown Belgrade started in late May. What are the plans for that facility?

- Upper floors and the facade will be renovated the first, while the hotel is still open. The hotel will be completely closed in August and reopened on September 1st. All rooms, restaurant and the reception desk will be fully reconstructed. Furniture will be brought from better rooms at Continental hotel. Park will still be a three-star hotel, it will feature a new restaurant and become a real urban city hotel in an excellent location, situated only 50 meters away from Slavija.

eKapija: What are the plans for Nacional hotel?

- We plan to start the reconstruction of that hotel this year. Now we negotiate with two hotel chains. The plan is to buy their franchise and have the reconstruction done according to their requests.

Suzana Obradovic