Shopping City Suceava owners: The mall is a big disappointment financially

The representatives of UK's Argo Real Estate investment fund, owning Shopping City Sibiu and Shopping City Suceava shopping centres, say the city in northern Moldova cannot sustain the sales of the four retail projects it includes, a reason why they expect some retail spaces to be given a new destination.

Suceava is the city with the highest density of modern retail spaces, with more than one square metre of retail per capita after the development of Shopping City, Iulius Mall, Galleria projects and Real hypermarket, which also includes a shopping gallery.

"The shopping centre of Suceava is a big disappointment from a financial point of view. (...) We were shocked when we saw other companies are starting to build after us," stated Magnus Lofgren, managing director of Argo.

The company launched the project in Suceava last April, with the tenants of shopping centre with a 47,000-sqm lettable area including Carrefour, BauMax, Media Galaxy and Mobexpert.

"I believe our project has the best location and is attracting the highest number of visitors, around 10,000 people daily, but this is still not enough. We had to apply some rent cuts for most retailers, so that they may stay in the centre. Still, part of them cannot afford staying and they may close down their shops by yearend," Lofgren said.

Argo invested around 65m euros in this project and expected the investment to be recouped in 10-11 years. These plans were upset, though, by the too high number of shopping centres in the city and the financial crisis, which has further eroded sales.

"(...) As long as we have tenants in the centre and they pay their rents so that we may pay our loans, we're not stressed out by this project. The fund has a 7-year life span, until 2013, when assets could be sold or taken over by another vehicle of the company," explains Argo manager.

The company also owns Shopping City Sibiu, which it took over in 2006 from BelRom Belgian firm for 83m euros and then expanded in the wake of investments of above 30m euros.