Not just a store

The president of Sonae Sierra, Alvaro C. C. Portela talked to us during the Warsaw conference of the International Council of Shopping Centres about the hottest European retail centre locations, the latest trends in the market and lost opportunities for doing good business in Poland

Ewa Andrzejewska, “Eurobuild Poland”: – You visited some Polish shopping centres during this conference, so what was your first impression of them?

Alvaro C. C. Portela, CEO, Sonae Sierra: – You have very nice shopping centres. Poland is on the cutting edge of the European shopping centre industry.

 But why aren’t you active in Poland?

– We can’t be everywhere. We have shopping centres in Portugal… in Belgium… and in Italy, in Greece… and in Brazil.

 And in Germany, in Berlin, which is very close to the Polish border.

– When it comes to business, it’s not the border proximity that counts, it’s the economy, it’s the language, the culture, the rules and regulations. That makes the difference between territories. So like 10 years ago when we were moving to a new market we didn’t think of Poland. We picked Germany and Italy instead.

 Was it a good decision?

– Well, one never knows, but given what has been happening in Poland for the last 10 years it seems that growth opportunities were much more prevalent in Poland than in other countries and the risk perception of Poland 10 years ago was higher than actually it became. The country has had tremendous economic growth, the political risks were proved to be exaggerated, the financial risks were non-existent. So the companies which invested in this country 10 years ago have done very well, they have done much better business than companies which bet on Germany or Italy, or Greece. So I believe from this perspective it would have been better if we had taken the plunge in Poland 10 years ago rather than in any of those countries.

Are you now planning to invest in Poland?

– We don’t have any plans right now. We believe that now it’s kind of late. Poland has excellent operators, very good developers, very well established companies and superb shopping centres. Therefore we believe it’s a little bit too late for us to come to Poland, so we are now trying to focus our attention on ‘future Polands’, such as Romania for example.

 But only on Romania – or also on other countries? Croatia, Bulgaria, for example?

– Maybe, I’m just giving you our priority ideas. We had to leave and make decisions, basically on the opportunities that we could find. You know, a market can instantly change if you don’t find the opportunities to do new developments or to buy existing shopping centres.

 Maybe you will come and buy some shopping centres in Poland?

– But it’s very expensive already. This market is now almost the same in terms of price as Western Europe. In ten years you’ve gone from 10-12 pct capitalization yields to 5.5 pct. This is tremendous progress, but there are other markets that you have mentioned… a couple of them where we can find better, higher returns. This is the option that we have. We can do what others, who are concentrated on Poland, can’t. Maybe we can do something where they can’t go, because they are more rooted to the Polish market.

 And what do you think about the Ukrainian market – is it also a new and ‘hot’ location for retail projects?

– It could also be a ‘future Poland’. Maybe I’ll be proved wrong, but it seems to me that today Ukraine is a couple of steps behind where Poland was 10 years ago. Poland was a nation politically and socially focused on joining the EU. I feel that in Ukraine there is no such national obsession. There is instead much more political and social instability, and my sense is that economically Ukraine is also much further behind where Poland is now.

 I have read on your website that you have created a new retail format.

– We believe a shopping centre is not only a place where you go to shop. It is also a leisure destination. What we try in a project is to develop a shopping centre where people like to go for fun, for pleasure, where you can find your favourite shops – but also where you can relax, socialize with your friends, where you meet people, where you can have a good time. That’s basically the concept we have been developing for the last 15 years and it has been successful so far. In our shopping centres you’ll find sofas to relax on, you will find churches and chapels, as well as a lot of other services for families and for the kids. For instance, a project that we are opening in Berlin this September will have at 3,000 sqm the largest miniature ‘rail-world’. And alongside this is the 6,000 sqm Kinder City – which is a city for kids, for children to see and feel the city as if they were adults.

 What is the most important trend on the retail market?

– I think the leisure aspect is a big trend. Another trend that has been observed in the industry is a heightened consciousness of environmental issues. We as an industry have to be aware of our responsibilities towards the environment.

 How does your involvement in environmental issues manifest itself?

-         In construction, in design, in operating, and also in educating – which may be a very harsh word. When visitors come to a shopping centre, there is a big opportunity to talk to them and remind them that they have to separate rubbish, because it has to be recycled and we just can’t keep going throwing it away. And we have to think about saving energy also.