Preatoni renews plans for shopping center

Italian businessman Ernesto Preatoni has renewed plans to build a shopping mall on the site of the decrepit building of VEF electronics factory in Riga.

The construction of the $60 million retail and recreation mall, named Domina Shopping, was halted last summer because of a lack of investors and after allegations surfaced in Estonia that Preatoni's real estate firm Pro Kapital was involved in fraudulent business deals.

Pro Kapital was delisted from the Tallinn Stock Exchange and Preatoni left the Baltics, putting his ongoing projects in question.

Now he is back - and he has money.

Domina Shopping will include a hypermarket with a floor space of 7,000 to 8,000 square meters, four or five specialized stores, a gallery of 70 to 80 small shops, seven or eight cafés and restaurants, a cinema complex and a recreation area.

It will be located on 46,000 square meters, according to plans. The center will have parking spaces for up to 1,900 vehicles.

It is scheduled to be completed by 2003.

Preatoni himself will provide about 40 percent of the complex's funding. The rest will be bank loans, he said.

If the banks refuse to extend loans, Preatoni says he has enough money to fund the whole project himself.

Preatoni blamed the Estonian media and its reporting on the Pro Kapital affair for sullying his reputation with local banks.

"Banks are famous for giving you an umbrella when it's sunny and taking it away when there is rain," he said. "I prefer my own umbrella."

The press conference in Riga was Preatoni's first in the Baltics since the accusations.

About $8 million have already been invested in the shopping center, Preatoni said.

The Latvian company Re&Re and the Italian company Sitei were awarded construction contracts..

The center was to be finished by this spring of 2002 and was to include Riga's first hypermarket.

In the meantime, two hypermarkets have been opened in Riga. The Lithuanian-owned Maxima in Plavnieki and Norwegian Alfa Center on Brivibas Street have stole some thunder from Preatoni's plans.

However, he says his plans remain unchanged.

The success of Domina Shopping will be its location. According to calculations, 600,000 Riga residents, well over half the city's population, will be able to reach it within 20 minutes.

The second advantage is its size.

"Bigger is better as you can provide everything people need in one location," Preatoni said.

Preatoni said his experience in the retail business was another advantage over potential competitors.

Another Preatoni shopping mall, the Kristiine center in Tallinn, is now fully rented and draws an estimated 20,000 people.

But Preatoni is not the only retail developer with big plans in Riga. Several large supermarkets and shopping centers have been built and several more from Norwegian, Lithuanian, Finnish and British companies are currently in the planning.

The rapid growth of the number of shopping centers has already pushed down prices, making them equal or even lower to those at open markets, which are quickly losing market share.

Preatoni's other projects in Latvia are also quite ambitious. The first part of a planned $70 million private housing development at Kliversala, near the Radisson SAS Daugava hotel, will be completed in 2003, Preatoni's representative Iveta Vanaga said.

The area will comprise 50,000 square meters and include multi-story residences, a yacht wharf and a golf club.

A $9 million hotel is planned for Pulkveza Brieza Street, a kilometer from Riga's Old Town, and a complex of hotels and office buildings is planned on the site of the former Soviet moped factory Sarkana Zvaigzne. Another residential complex is planned for a 27,000-square-meter site on Tallinas Street.

In Estonia, Preatoni plans to extend the Kristiine shopping center and his Ilmarine hotel. "We also plan to develop the St. Petersburg road near Tallinn where there's room for a shopping center," he said.

Preatoni says he is now in charge of tourism and hotel projects under the trade name Domina.

"This name Domina will be very famous in the former Soviet Union in 5 years," Preatoni said.