Portuguese real estate developer Sonae Sierra and the Irish at Caelum Development, co-developers of the Parklake Plaza project in Eastern Bucharest, have started to seek the funds they need from banks - over 400 million euros, to begin construction on the biggest mall in Bucharest, a total investment worth almost 600 million euros.
"Our target is to secure financing for at least 70% of the total value of the investment, and the rest will be contributed by shareholders. Over the last few years, we have worked with only three or four foreign banks such as Eurohypo and Societe Generale, groups with which we are already in talks with," stated Jorge Morgadinho, expansion manager at Sonae Sierra.
So far, Africa Israel has received the biggest loan to develop a mall - 234 million euros, in order to build AFI Cotroceni Park.
Given the international financial crisis that began a year ago, many foreign and Romanian investors are now complaining about how difficult it is for them to get the loans they need to develop real estate projects. The cost of loans has substantially increased, and money is no longer that easy to find.
"Talks with banks are more difficult, and the costs that come with loans are much higher, but no mall can be developed without funding," Morgadinho explained.
Earlier this year, the Portuguese bought 50% of the company that is developing the Parklake Plaza mall in Titan from the Irish.
They hope to be able to get all the necessary permits by the end of the year and start construction works, if they get funding.
On the other hand, a number of foreign investors that operate on the Romanian market, which have already started construction works, are now looking for buyers for their projects.
Whereas a year ago, projects put up for sale would find a buyer "overnight", the situation has changed.
Sonae Sierra entered the Romanian market in the spring of 2007 when it bought River Plaza mall in Ramnicu Valcea, and then started two more projects in Craiova and Ploiesti.
The Portuguese have also been in talks since the end of last year to buy 50% of Arena shopping complex in Bacau, a project they are now managing.
"We are still interested in the project, but have not concluded the deal yet. We are managing the mall and are very happy with the results registered in the first few months of business," Morgadinho stated.
The projects Sonae Sierra is involved in on the domestic market at the moment entail approximately 600 million-euro investments, with even more planned for the future.
"We intend to start at least one more project outside Bucharest this year, in a city where we can establish a dominant position," Sonae Sierra's manager added.
The Portuguese company currently holds 48 shopping centres in Portugal, Spain, Italy, Germany, Greece, Brazil and Romania.
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