Real estate developer E.L.L. Kinnisvara which belongs to Merko, the largest construction company in the Baltic states, unexpectedly announced on Friday that it will not go ahead with developing the major shopping center project known as Panorama City to be built near Tallinn Song Festival Grounds, reports Äripäev.
The decision made by the owners including Toomas Annus who owns 65% of E.L.L. Kinnisvara was due to the fact that the developer failed to secure enough lease agreements for the space. The 100-million-euro project had already faced delays, with the original 2014 deadline shifted to 2015. Aldo Dapon, CEO of E.L.L. Kinnisara, said that that the precondition of launching construction works the securing of 70% of lease agreements.
"This target was not met and we assessed the investment as too risky," he said. Toomas Annus, controlling shareholder of Merko and E.L.L. Kinnisvara, refused to comment the decision.
In an e-mail in which the company informed potential partners about its decision, it mentioned also other reasons including the economic situation in Scandinavia, the situation and developed of the Tallinn retail market, delays in launching the project, etc. "We decided that it was not possible to continue the project and decided to exit it. We will be terminating the lease agreements that have already been signed and stop negotiations with potential new lessees," said the company.
Representative of the anchor tenant Rimi said that Panorama would have been an attractive and well-located shopping centre. Andrija Lilleoja, head of marketing and communication manager of Rimi Eesti Food, said that there were obviously several reasons why the developer decided to exit the project.
Äripäev wrote in May 2012 that Panorama City, a massive shopping and entertainment centre, was to be built near Tallinn Song Festival Grounds on a property of 114,300 square metres and would have 200 stores and a few thousand parking lots. The developer originally said that the mall would be opened in spring 2014 and cost EUR 100 million.
The mall’s space would have been 77,000 square metres. Two years ago, Aldo Dapon said that the company had already signed 55% of lease agreements. E.L.L. Kinnisvara had said that it was planning to finance the project from own means and from bank loans.
The company said that it will continue developing its existing shopping malls Panorama in Vilnius, Spice and Spice Home in Riga and Saules Miestas in Siaulia. In Tallinn, the company co-owns Viru Keskus. According to the company, its shopping malls were visited by 23 million customers last year. Its 2012 revenues were EUR 46.6m and the profit was 15m euros.
Pro Kapital to continue developing its own shopping mall
Real estate company Pro Kapital will continue developing its own shopping centre project, but says that the location of Panorama City was risky. Allan Remmelkoor, board member of Pro Kapital Grupp, said that the project to be developed near Ülemiste Centre will go on as planned, but did not say when groundbreaking will begin. Remmelkoor said that he had received information from retailers about the problems with the Panorama City. "This shows that location is extremely important with such projects."