Are you ready for us?

When Eurobuild heard that AM Development, hitherto unknown in Poland, expressed its desire to expand operations in Central Europe and to open an office in Warsaw, we were naturally curious. Who was this company and why did they think that they'd be able to successfully enter a market which was already well established?

A different kind of philosophy

AM Development is one of three operating groups belonging to AM NV a Dutch holding company. It is a developer of city centres, shopping centres, and office projects on a European level. The AM group recorded turnover of Euro 1.13 billion in the financial year 2003 with an operating margin of 10.7 pct. Recently it has stated that it wishes to grab more of the market for retail centres, particularly in Central Europe. Indeed retail represented 43 pct of its turnover in 2003 compared with 22 pct the previous year. Eurobuild met Nico Veldhuis, AM Developments' manager for Poland. At the moment Mr Veldhuis is flying to Warsaw weekly in order to discuss potential projects with investors, however he informed us that an office should be open within two months time. He also confirmed that a native Polish manager has already been chosen, but his identity remains confidential, as is information about potential deals. However, he set out the company's philosophy, and AM's style of project. Talking with Mr Veldhuis he stresses the long-term nature of his projects and claims that he isn't looking to work with investors seeking short-term, opportunist rewards. This is the reason that he gives for the Dutch firm's late arrival into the Polish market. "We are known for bringing a different kind of project [to the market], with a different kind of philosophy. Maybe we are one or two years too late. However, we consider ourselves to be one of the developers who go in for the next generation of shopping centres."

Control and Quality

He elaborates, "After 1989 [the fall of communism] there was a real demand for shopping facilities, and whoever came along with a project, did it. There was no control or zoning. There was no checking for quality. Now, this is starting to come." He believes that as authorities take more care over how their municipalities develop, the change in requirements will suit AM's strengths. So, what could we expect from AM Development here in Poland? Hopefully the same quality projects as developed overseas, because a look at projects elsewhere in Europe does reveal impressive designs. The Forum Alveiro, an open air, canal-side retail, leisure, and residential development in Alveiro, in the North of Portugal, won the MIPIM award for the Best European Shopping Centre in 1999. The two-phase Metropolis project in Lisbon will include retail, office and residential units build around Sporting Lisbon's new football stadium and an existing metro station and bus terminus. A prominent feature of Metropolis is the five-storey glass "Food-ball" containing restaurants and leisure facilities.

'Vibrant Tenant Mix'

AM's first foray into Central Europe has been in the Czech Republic. Two retail projects have been realised through a joint venture with the Dutch retail group Ahold. The first, called Olympia Plzen, opened in March. The second, Olympia Olomouc, will open in the second half of the year. Citing positive signs in the Czech market, AM recently exercised an open to buy Ahold's 50 pct holding in the company. A third centre, which is being co-developed with Rodamco Europe will open in 2006 and be called Centrum Chodov. Eurobuild sought the verdict of real estate consultants who'd visited Olympia Plzen. Nigel Young, managing director and owner of M.I.P.A., a real estate consultant and agent was generally positive. "It seems to have been excellently put together, using quality material." He considered it aesthetically pleasing too, and benefiting from good access. On the negative side he did find that the food court was awkwardly situated. Regarding the centre's tenants, Colin Waddell, responsible for investment consultancy services at CB Richard Ellis in Prague, described Olympia Plzen as having a "vibrant tenant mix". Nigel Young remarked how the centre had attracted outlets that hadn't previously been present in the city. Mr Waddell gave more information about the centre's theme. He said that Olympia Plzen has been designed to look like a small town, with brick effect buildings. However, both men confirmed that it is in fact an out of town centre, albeit "strategically situated", and isn't an extension of, or redevelopment of the city itself. This is also the case with Olympia Olomouc. Both of AM's Olympia centres are also anchored on hypermarkets (Hypernova - from the Ahold stable) which take over 40 pct. of the floorspace.

The next phase

AM's first project in Central Europe doesn't appear to be revolutionary, so is it superior to what is already on the market? Nigel Young's opinion is positive, though he said that he wouldn't class it as the next generation "...but the next phase". As for Warsaw, Nico Veldhuis said that any project would be at least 40,000 - 50,000 sqm in order to achieve a critical mass. However, one developer in the city had doubts as to how the Dutchman would proceed. He told Eurobuild that "all the good sites have already been snapped up by developers". He felt though that a new arrival might be attracted by Prokom Investment's Miasteczko Wilanow site (a new town development in the southern suburbs of Warsaw). The idea of this project would be compatible with AM's focus on...

...Creating the public space

Mr Veldhuis explained why this is important. "For us it is a condition of being involved: streets, squares, landscaping. However, this isn't easy to achieve. If you create lots of space it doesn't bring in money directly. You can build a boulevard 20 metres wide or 10 metres. Make it narrower and you can obviously put more shops on it. It is our job to convince the investor of the importance of open spaces where people will want to stay longer, and thus spend more. Think of the Champs Elysees".