TALLINN - Gazit-Globe, the largest real estate investment company in Israel, announced this week that it planned to invest some $400 million in the Baltics through the Finnish property company Citycon.
Speaking at the Eye on the Baltics real estate forum in Tallinn on June 14, Chaim Katzman, chairman of Gazit-Globe, said that Europe was a logical step for the company after having completed successful projects in the U.S.A. and Canada.
The company has a strict investment policy, Katzman stressed, and invests only in politically stable markets that have high credit ratings.
Katzman noticed that the current situation of the real estate market in Central Europe and the Baltics was similar to that of the United States in the early 1990s, where there were ample investment opportunities but few financing options.
"What plays against the Baltics is the small size of this market, but its quality is an advantage," said Katzman.
He added that because the Baltics' real estate market was way too small for Gazit-Globe, they chose to invest through Citycon.
"Citycon has approved the strategy of becoming a dominant player [on the Baltics' market], especially in the supermarket-anchored shopping centers sector," said Katzman.
Gazit-Globe recently acquired some 40 percent in Citycon, a Finish company with an asset portfolio of approximately 150 properties, namely commercial centers anchored by supermarkets and commercial buildings leased mainly to supermarket chains.
Katzman said that supermarket-anchored shopping centers are recession-resistant since they serve everyday needs of thousands of people.
He warned that abundance of land and relatively easy access to licenses issued by the local authorities may eventually overload the retail space market in Central and Eastern Europe.
In Katzman's opinion, with Central Europe's price-oriented consumers, the region is ripe for a Wal-Mart invasion. He compared Wal-Mart to the plague - "not everybody dies because of it but everybody gets sick."
Gazit-Globe owns about 300 shopping centers in North America.
