BIG IN SERBIA

INTERVIEW

"Serbia is one of the main growth engines of our company and we plan on continuing the development of our projects in many more Serbian cities and towns and bringing the brand BIG closer to all Serbian people," says Lev Weiss, CEO at BIG CEE

By:

GORDANA KNEŽEVIĆ MONAŠEVIĆ

Photo:

BIG CEE

I

srael’s BIG Shopping Centers established BIG CEE in Serbia in 2008 with a vision to develop shopping centers in this region as one of the fastest growing markets in Central and Eastern Europe. 14 years later, BIG CEE grew into one of the most significant investors and developers in Serbia, proving that the vision was good. We talked to Lev Weiss, CEO at BIG CEE, about current retail projects of the company, BIG Residences – their first and so far the only residential project, as well as BIG CEE expansion plans throughout the region.

What were the best decisions of the company and major difficulties in your development mission in Serbia during those 14 years?

— BIG Shopping Centers is an Israeli company, founded by Mr. Yehuda Naftali, who moved to the USA in 1973 and moved back to Israel in 1994, when he established BIG Shopping Centers with the idea of bringing the American concept of power centers to Israel, which didn’t exist in Israel at the time. When BIG CEE was established, the retail sector in Serbia was still very much under-developed. There were almost no significant retail projects outside of Belgrade and definitely not enough international tenants. The idea was to develop and continue the success of BIG in Israel here in Serbia. BIG’s first project – which was built in 2012, BIG Novi Sad, and today it is a very successful shopping center – was a greenfield investment, developed on a plot on the outskirts of town. There were many skeptical viewers who did not believe in this idea and location, and it was very hard to secure bank financing and anchor tenants for this project at the time. Clearly, this has proven to be a good investment, as BIG Novi Sad is of cca 46,000 sqm today, 100% leased, and the results are very good and growing. I believe this starting point of developing the first project was the biggest difficulty, and also the best decision the company could have made.

Today, 10 years later, we are the owners of 9 shopping centers in Serbia, with a total of more than 210,000 sqm of GLA, from Zrenjanin in the north to Kruševac in the south. We have all seen the amazing growth Serbia has been showing in the past decade, and I am happy to say we were one of the first international investors to identify its potential and believe in the country. Serbia is one of the main growth engines of our company and we plan on continuing the development of our projects in many more Serbian cities and towns and bringing the brand BIG closer to all Serbian people.

With which retail product or concept do you seek to expand?

— Our core product, for which we are well known, is retail parks, which are basically open-air shopping centers that provide easy access, lots of parking places, and convenient, easy-going shopping. For maximum accessibility, we position our projects at the entrance to the cities and close to the main roads. We target the population that lives in the city but also the outskirts of the city and surrounding villages. Our plots are at a minimum size of 30,000 sqm with 10.000 sqm of retail GLA, usually bigger, depending on the area and its potential based on our detailed analysis.

This retail scheme is very beneficial for both the tenants in the retail park and the customers, as it provides easy access to all the basic necessities such as supermarkets, pharmacies, cosmetics, DIY, furniture, electronics, services, and, of course, a fair number of fashion stores. We also always make sure to have cafes and restaurants to complete the experience. This concept allows lower rental costs and maintenance fees, which makes it very attractive for tenants.

When and where will you open the jubilee 10th center?

— The opening of Center number 10 in Serbia has already been announced to be by the end of Q1 2023, right between Stara and Nova Pazova, and we are very excited about it. The first phase will consist of almost 16,000 m2 and will have all the main tenants on the market.

We are actively working on extending almost all of our existing projects, to which we will add almost 25,000 m2 all together in 2023. Additionally, we have already secured plots in a few more cities and are currently in the planning and design phase. We also have additional expansion plans throughout the region. We intend to be the biggest player in the field of retail parks and very dominant in the field of shopping centers and general commercial real estate. Not only in Serbia and Monte-

BIG Fashion Belgrade

negro, we are aiming towards developing and acquiring a significant portfolio of projects throughout Albania, Northern Macedonia, Bosnia and Hercegovina, Romania, the Czech Republic, and Poland.

What makes your retail projects so special? What makes you different compared to your competitors? — I believe that it is our unique philosophy and the fact that we don’t see ourselves as just developers or investors; we are shopping center operators who are handson with our projects day in and day out. We have no intention of selling any of our projects, and we have a unique approach towards our tenants. Our tenants know that they have a reliable and realistic partner who understands their needs and will support them closely in every scenario. Therefore, they know they can trust us. The success of the tenant is our number one prior-

ity, and we make sure they are making money. If they don’t make enough, we support them with rent reductions as much as needed based on the sales. This was always our practice, and especially in hard times such as the COVID Crisis.

The level of maintenance is at the highest possible level. We basically live in our projects, with a dedicated team taking care of every detail, making sure every public area is well maintained, clean, and safe.

We are also constantly investing in marketing, increasing brand awareness and creating interesting events. This comes with heavy investment from our side, which is mostly not covered by the marketing fees paid by the tenants. We do this because we see ourselves as marathon runners, and we are creating additional value every day.

WE INTEND TO BE THE BIGGEST PLAYER IN THE FIELD OF RETAIL PARKS AND VERY DOMINANT IN THE FIELD OF SHOPPING CENTERS AND GENERAL COMMERCIAL REAL ESTATE

By taking over 66% of AFI Group Properties, BIG has becom even “bigger“. What exactly is the connection between the companies?

— BIG Shopping Centers, which is a public company on the Tel-Aviv Stock Exchange, is the owner of BIG CEE, and fairly recently, also became the majority shareholder of AFI Properties. AFI is a great company with very good and strong management. Both companies are independently managed with separate management teams. The biggest connection between them is that they have the same chairman of the board, Eitan Bar Zeev.

BIG Residences is another big project of your company, with 1,000 new apartments to be on offer on the market very soon. What encouraged you in your decision to turn to residential construction in Belgrade?

— BIG Residences is indeed an exciting project, which we are very proud of. Generally speaking, BIG CEE is focused on its core product, retail parks, and not so active in the residential sector. This is our only residential project. We believe this project is continuing the positive change we have brought to this area of the city, and since we have a big plot right next to our projects – BIG Fashion Mall and Park – it made perfect sense to additionally develop this area, and continue creating an attractive destination. Sales of the project are going very well, and we are in the midst of construction of the first phase, with 3 buildings that have 186 apartments. We expect to start the second phase of construction towards the end of this year, which will add an additional 350 units. In the future, we will also build an office building on this location, which will complete the mixed-use purpose of this project.

BIG CEE recently became the 100% owner of Del-

ta City shopping mall in Podgorica. You said that this acquisition was your entry ticket to Montenegro and only the beginning of your support and investment in this country. So, what are your plans for Montenegro?

— Delta City Podgorica is a great shopping mall, and we have great expectations for it. It is basically the only modern shopping mall in Montenegro, and although it is a small country, we believe there is room for more. We are focused on retail projects, mainly retail parks in dominant cities, and this is the plan for Montenegro as well. We see it as a natural extension to our activities in Serbia, as most of the tenants are the same in both countries, and many of the Montenegrin visitors are aware of and love our brand.

BIG Shopping Centers Group made an important step forward last year by sealing its first deal in the energy branch with wind turbines in Romania. Are you planning to enter the energy sector in Serbia too? — Recently, BIG has started operating in the energy sector as well, by creating a branch in the company that is solely focused on this sector. The project in Romania is still under development, and BIG has great expectations for it. The team responsible for this sector is very familiar with Serbia and is definitely interested in investing in attractive projects in Serbia as well.

Covid-19 is behind us, hopefully, but we have another crisis – the war in Ukraine – which has a great impact on construction industry globally. How much will this crisis affect current BIG CEE building projects?

— The results of the current crisis are still unfolding. This is impacted by the war in Ukraine but also by the growing interest rates, inflation and, of course, the supply chain issues which are a result of the events of the last two years. This has indeed brought about rising construction prices as well. We in BIG are remaining optimistic while taking cautious measures and following the events on a daily basis. BIG is a financially stable company, with a solid business strategy. Therefore, I believe we will overcome the current events.

BIG CEE also recognized the opportunity of investing in logistic centers in Serbia. So far, you have two, in Ugrinovci and Šimanovci. What would be your next step in this sector?

— We are tracking this sector closely and analyzing it as time goes by. Naturally, we see it as an attractive opportunity, especially in Serbia, as it is geographically located on very important transit roads and has very good infrastructure, which we see improving every day. This is a very dynamic sector of real estate which we believe in, and we do have some interesting plans for development, but it is still too early to discuss them at this moment.

You have been in this position in BIG CEE for almost a year. What was your previous experience and how did you adapt to living and working in Serbia?

— I have been working in BIG Shopping Centers since 2015, holding a few different positions in Israel. Since the beginning of 2019, I have moved to Serbia to take on the position of Chief Operations Officer, until my appointment as CEO last September. Adapting to life and work in Serbia was fairly easy for me, since Serbia and the Serbian people are very easy-going, friendly, and warm. Belgrade is a wonderful, vibrant city, which I absolutely love.

BIG Novi Sad