When, about four years ago, Portugal’s Sonae Immobilaria announced the setting up of a joint venture with the Haragionis group for the development of shopping malls in Greece, it met with a positive response from the entire real estate market. The move by one of Europe’s biggest companies in the sector was interpreted as a sure sign of rising interest in the Greek market, ushering it into a new phase of growth. However, the expectations have been belied; this country’s complex, time-consuming and changing legal framework has proved an insurmountable obstacle in attracting foreign investment to date. Nevertheless, despite considerable delays and repeated postponements, the first modern shopping malls in Greece are now in the final stage of construction and are expected to open early next year. Kathimerini talked to Sonae Imobilaria’s CEO Alvaro Portela on the sidelines of the presentation of the joint venture’s investment in a mall in Pylaia, Thessaloniki, together with Lamda Development. As the head of one of the few foreign companies active in this sector in Greece, Portela’s views on the apparent general reluctance of foreign companies to invest are surely of added interest. «The most important difficulties we face in Greece are the high cost of land, which shrinks the returns to any investment, and the fuzzy status of large areas as regards land use, which creates serious problems and delays in development plans. Another characteristic problem is the extensive bureaucracy, particularly in the initial stages of a project and in obtaining the required licenses,» he says, adding that delays he has witnessed in the country verged on the «paranoid.» He smiles when asked if he is happy with Sonae’s partnership with Haragionis to date. «I really wish I could answer your question in the affirmative but I cannot. Just one development project in the space of four years does not make a positive account. We spend time, money and human potential and, unfortunately, shareholders are not always happy with just good prospects, they expect tangible results.» Portela admits his company was generally aware of the difficulties involved when it decided to expand to Greece in 1998. «Back in 1998, we began looking for new markets. Greece seemed very challenging, as it possessed many of the characteristics we considered important, particularly political stability, high economic growth rates and the minimal – non-existent today – currency risks. Also important is the good profile of the Greek consumer, who likes to shop, and this is attested by the fact that certain categories of spending are disproportionate to incomes here, according to the statistics. Greeks also like to spend a considerable part of their time outside the home and are particularly sociable. All these elements are positive for the development of malls, where people can combine shopping with entertainment and eating out.» According to available data, Greece is one of the laggards in shopping mall space, with just 26 square meters per 1,000 people. Although this indicates growth prospects, it also means a lack of familiarity by the Greek public with malls, and this is a problem. «We must teach the public what a shopping mall is and what it offers the consumer. Athens, on the other hand, is a city of more than 4 million people; according to European statistics, a market of such size can support much bigger malls,» says Portela. The presence of many strong local markets in Athens is not an obstacle to the development of malls, he adds. «The area and population of Athens allow an equal distribution of consumers. Shopping malls and local shops are not in competition but complement each other, bolstering competition and offering more options to consumers.» Portela remains convinced of the favorable prospects of the Greek real estate market and for this reason, Sonae Imobilaria will stay. «We are targeting the big urban centers of Athens and Thessaloniki, and looking for the right spots for new developments. It may sound ambitious, but I believe that Greece can be the next miracle in the shopping mall sector. We made a considerable contribution to such development in Portugal and we can in Greece.» Sonae Imobilaria is also present in the development and operation of shopping and entertainment malls in Germany, Italy and Brazil, and plans to expand to France. Sonae-Haragionis has a 39 percent interest in the Mediterranean Cosmos mall now being constructed by Lamda Development on a 25-hectare area owned by the Orthodox Ecumenical Patriarchate in Pylaia. When finished early next year, Mediterranean Cosmos will be the biggest mall in northern Greece, with a total commercial area of 4.5 hectares. It will include more than 200 large and small shops, eight restaurants, entertainment facilities totaling 1.25 hectares, and a «Greek Village» section, with church, museum and exhibition area. The plans include an open amphitheater seating 500 for cultural events, and parking facilities for 3,000 cars.