Creative distance

“This is our 20th year in Poland, but building the same thing every year from a mental point of view wouldn’t be satisfying. We want to stay creative. It’s very important to us to create something. So we like to build new types of projects and in this way distance ourselves from the rest of the market,” says Marc Lebbe, a managing director of Liebrecht & Wood. And with Warsaw projects such as Plac Unii (developed with BBI Development) and Koneser (also to be developed with BBI), the company is certainly trying its hardest to dispel such notions. Plac Unii offers over 56,000 sqm gla, including a 15,000 sqm shopping centre and 41,000 sqm of office space in the centre of Warsaw. The project has now been completed and is already on the market awaiting a buyer; but according to Marc Lebbe, Liebrecht & Wood is always analysing the market, looking for the ideal moment to sell its assets: “At the moment yields are roughly the same as last year: retail is around 6 pct or lower, while offices are above 6 to about 6.5 pct. Retail is still better priced than office, as usual. Of course, yields are not everything – in a sales process other factors can be as important. In Plac Unii most of the contracts are ten years, which is pretty long. Investors are interested in this, so there might be a top-up on the normal price,” he explains.

Neither Wola or Mokotów
The Koneser project is no less impressive: 75,000 sqm of office, retail and residential space (22,500 sqm of retail and 22,000 sqm of offices) is to be developed in a former vodka distillery across the river on ul. Ząbkowska in Warsaw’s Praga district. Many of the buildings on the site are listed historic monuments that will require the close supervision of the city conservator, but a number of new buildings have also been proposed. “It is the first project of its kind on the other side of the river in Warsaw. We like to do special projects, so you’re not going to see us in the Mokotów or Wola business districts,” Mr Lebbe makes clear, before adding: “The Koneser project will be a real mixed-use development, with offices, retail, residential and hotel functions. Roads will go through it, so it won’t be regarded as a single project but as a part of the city in itself.” Liebrecht & Wood has now completed due diligence on the project and the investment contract with BBI is being drawn up.

Further expansion with Fashion House
But Poland is not the only country in the region in which the Belgian developer is active. The company has built up the Fashion House chain of outlet centres in Poland and the Czech Republic, as well as in Romania, Russia and Serbia, so it is certainly not shy of difficult markets. But does Russia deserve its daunting reputation? Marc Lebbe has a different view: “It is strange that the question of difficulties in operating in Russia keeps coming back to us. As a Belgian developer in Poland for the first time permit procedures were complicated for us. So going into Russia it was not a surprise to see similar procedures. In Poland we always tried to follow the procedures step-by-step – and we have adopted the same approach in Russia.” Fashion House has already opened in Moscow (20,000 sqm in the first stage, eventually to be expanded to 40,000 sqm in three stages) and the company has all the necessary permits to build a similar centre in St Petersburg (20,000 sqm). Although Marc Lebbe complains of the difficulties of finding a competent general contractor in Russia, the potential rewards of the market seem huge: “The spending power is much higher in Moscow than in Warsaw. For St Petersburg our research shows that the spending power is less than Moscow but still much higher than in Poland. We are now signing a deal in Yekaterinburg for another outlet centre,” he reveals.

Not quite the same in Romania
The difficulties in Romania are somewhat different: “The Romanian market was hit very badly by the crisis – salaries went down drastically, for instance. But last year we were already seeing quite a good recovery in sales figures at Fashion House Bucharest and we expect things to slowly get back to normal. Tenant interest is up and they are expanding their areas. I still think Poland is a more promising market, but in Romania things are getting back to normal and with normal you can do more business.” The company is currently developing Cernica Park retail park, 10 km east of Bucharest – a project first announced in 2011. Eventually the park, which is to be built in a number of stages, will offer 87,319 sqm gla: “We are at the stage of finalising the road construction there,” says Marc Lebbe, but this isn’t the end of the developer’s plans for Romania: “We also have a big new residential project on the outskirts of Bucharest – 2,000 units on 180 ha,” he adds.