Top of the shops

Ex-fighter pilot and diplomat in the Amazon, AFI Europe’s CEO Reuven Havar is now facing his toughest mission ever taking the biggest mega mall Bucharest has ever seen to the prize-fight for the fickle retail dollar. Report by Corina Ilie

December 2009 - From the Print Edition

Shopping centres in Bucharest cannot stop opening. Even though malls seem to satisfy every customer need and location, developers will not stop building them. And more are on the way.
Last year the first large mall in north Bucharest, Baneasa Shopping City, and Libery Center in the southwest launched. Retailers’ revenues were slashed by the declining rate of disposable income – and prices for rents also took a tumble.
Still - most of the retail developers managed to find enough tenants to fit into their big boxes. Grand Arena Mall in Berceni and Militari Shopping Center in Militari opened this year. The Turkish Anchor Grup extended Plaza Romania on Blvd Timisoara. Sun Plaza, developed by EMCT in southern Bucharest at Piata Sudului metro, has been delayed until February 2010, while Cocor in Bucharest’s centre has no clear opening date.
But grabbing the headlines this year was AFI Palace Cotroceni, at the junction between Blvd Timisoara and Blvd Vasile Milea, a stone’s throw from the President’s house. It has already attracted one in five Bucharestians – and at peak periods can often be found surrounded by a long queue of cars.
The developer, Israeli company AFI Europe, chose the perfect moment for the opening - just before the Christmas holidays, when consumption is high, while shopping on the high street is a chilly affair. The mall, a 300 million Euro investment, covers 241,000 sqm, includes 250 shops, a skating rink, the first IMAX in Romania and two casinos. It managed to attract 300,000 visitors in its first three days.
But AFI Europe Romania’s CEO Reuven Havar is aware that high customer traffic does not equal big bucks. Many people see a new mall as a day-out to view the goodies on display, not a shopping excursion. “We have so many visitors now, because the people are curious to see the mall, but the number will drop in a few months,” says Havar. “I think that it will take us one year to build a customer portfolio and the number of visitors will be around 60,000 per day during the week and a little bit more at the weekends.”
Although the shopping centre is only a few minutes away from Plaza Romania, Havar denies there is competition between the two malls, because the concepts differ. “We are not in competition with Plaza Romania, because when AFI Palace Cotroceni opened, Anchor Grup’s mall was already open for five years,” says Havar. “A few days after our opening, Plaza still had a lot of visitors.” Plaza Romania has built up a stable customer portfolio, an effort AFI Palace has just started, yet it has fewer facilities than AFI Europe. The two malls also have a few brands in common, such as jewellery retailers Altinbas and Cellini, stationery store Diverta and clothes retailers Esprit, Etam, Kenvelo, Levi’s and Mago. Meanwhile AFI Europe’s new mall has brought brands such as footwear retailer Bata, clothes retailers Calvin Klein, Lee Cooper and New Yorker.

More mall

Meanwhile Havar, who helped the Czech Republic build up its mall culture, is ready to expand AFI Palace Cotroceni with an office building on top and a four-star hotel. He will also start a new mall project on Blvd Bucurestii Noi, on the premises of the ex-Laromet factory. This is a 155,000 sqm land plot acquired by the developer in 2007 for 77.5 million Euro. This AFI Golden Palace project will also include 4,000 apartments. “We have land plots for eight projects in Romania - but we have selected two of them, the office and the mall, to develop next year, because we believe that these two projects will help us in the next two years to get over the crisis.” says Havar. “We do not have the financing for the mall yet and as long as we do not have it, we will not start building. But we invited a lot of bankers to the opening of AFI Palace Cotroceni, to convince them that we can develop a good project.” AFI Europe Romania’s CEO believes half the 250 retailers within AFI Europe Cotroceni will open shops in the new mall.
Right now the mall on Blvd Timisoara is 93 per cent rented, but Havar says he receives demands from new tenants daily and he will bring in new brands not present on the Romanian market.
AFI Europe came to Romania in 2005, two years before the boom in the real estate market. “We decided to come to Romania four years ago, which was already too late, but it is better later than never,” he says.
The developer invested between 150 and 180 million Euro in eight land plots in Bucharest, Arad and Ploiesti (Prahova county), with plans to build between 10,000 and 15,000 residential units and three shopping malls. “In one or maximum two years Romania will get out of the crisis and we will develop of the rest of our projects. In five or ten years we will have 100,000s of built sqm,” says Havar.
In Bucharest AFI Europe has presented the residential projects AFI Towers (near Parliament Palace), to be developed on the premises of Inox factory, including over 700 apartments. “We will build high towers, but less than 20 floors,” says the CEO. “The main advantage is the location. There are few projects including such a high number of apartments so close to the city centre as AFI Towers.” AFI Village (Baneasa), AFI Golden City (on Grivita Lake) are two other projects which the Israeli developer is planning to bring on the Bucharest market. Another, Pipera’s AFI Gardens, will comprise around 2,500 apartments and 5,000 sqm of commercial space. The company will also make investments in the infrastructure in the area, which is in a poor condition.
In Arad and in Ploiesti, AFI Europe is working on two mid-town shopping centres. AFI Palace Arad will stretch over 130,000 sqm and will be accompanied by another 14,000 sqm of office space and 700 apartments. In Ploiesti AFI Europe aims to deliver a street mall – a kind of covered high street similar to a Victorian arcade.

Who is Reuven Havar?

Israeli Reuven Havar has done it all in sixty years – from flying ighter jets, acting the diplomat in South America to pioneering the mall culture in the Czech Republic and Romania. Nothing phases him, nothing surprises him and he has a relaxed attitude to the fact that he is handling 100 millions of Euro on the shaky ground of Romanian real estate. Havar has been CEO of AFI Europe Romania since 2006 after running the company operations in the Czech Republic. He is no stranger to Romania - between 1996 and 1998 he was the CEO of the central bottling plant for Pepsi Cola and juices in Bucharest. With an MBA from the Bar Ilan University, between 1994 and 1996 he was Israeli economic attache in Colombia and Venezuela. But the man’s first love was flying - he graduated from Israel Air Force Flight Training School and served as a field unit deputy commander in the Israeli Air Force until 1989, retiring with the rank of lieutenant colonel.