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Difficult Times for Austrian Investors in Zagreb

Published: December 10, 2010; 21:26 · (Vindobona)

The plan of an Austrian group of investors to build the largest shopping center in Europe in the Croatian capital threatens to fail.

Difficult Times for Austrian Investors in Zagreb / Picture: © www.qbconstruction.com

The "Westgate" shopping center was opened in 2009 in the Croatian capital Zagreb. While investors still see great potential, industry experts question the project.

There are 260 shops on 100,000 square meter, with an investment of € 270m so far, only 30% stemming from loans. The investor group consists of Austrian entrepreneurs, including Ernst Kirchmayr as operator of a shopping center, Guido Schmidt-Chiari, a member of the supervisory board of Immofinanz, fruit juice producer Franz Rauch and architect Christopher Achammer.

While investors still believe in the success of the project, tenants and real estate developers are extremely critical. The viability of the shopping center is being questioned: it is being rumored that it might be turned into a logistics center. In particular, location is considered not optimal, and lack of transport connectivity is criticized. The fact that neither construction hardware stores nor IKEA want to get in is considered as very significant. About a quarter of the area stands empty. Since sales are very weak, sales-based rents are also very low, report resident companies, some of which will move away by year-end.

The investors announce that there were problems only in the initial phase. After that there was a management change and things are going uphill: there are many interested parties and no unexpected problems.