Market review Retail Real Estate Market

Transcription

1 Review of Moscow Retail Real Estate Market Market review Retail Real Estate Market Moscow, Q October Prepared by GVA Sawyer

2 Moscow Retail Real Estate Market In Q a supply increase was not observed in the Moscow Retail Real Estate Market. Many Projects, which were expected to be opened by the end of the year, are to be commissioned in Prospects of realization of some largest RC are rather unclear. Price situation remains stable due to negative macroeconomic expectations of market players and statistical indicators which reflect total fragility of consumer market. Economy After July slack, in August and September 2011 sentiments of commercial real estate market players finally came in correspondence with macroeconomic data, which showed a weak economy renewal and a number of negative tendencies in consumer market. Expectations of a traditional Russian pre-election stagnation and a surge of negative news from the euro zone which entailed the increase of pessimist sentiments concerning vulnerability of the Russian economy, gave rise to the current situation in consumer market. Causes for concern are devaluation of the rouble (by 15% in Q3), which suspended a whole number of transactions; the fall in stock markets (the MICEX index has lost 18% in Q3) and deterioration of the growth indicator of industry, retail trade turnover and also contradictory data which concern the dynamics of sales volume and consumer expenses in Moscow and other regions in Russia., Rosstat Table 1. Main indicators of Moscow Retail Real Estate market, Q Main indicators Retail trade turnover, billion rubles Retail trade turnover in prices, comparable to those of the respective period of the preceding year, % Volume of premises in quality RC as of end of the period, k sq. m. of total area (GLA 1, k sq. m.) Commissioned, k sq. m. of total area (GLA, k sq. m.) Q Another Time period ,7 (Jan to August 2011) - 105,1 (Jan to August 2011) / / (end of 2010) 0 / / 161 (Jan to Oct 2011) Share of vacant premises, % 6,5% 7% (end of 2010) Retail spaces announced for commissioning, 2011, k sq. m GLA 341,3 / 196,6 590,8 / 308,2 (Dec 2010) There are also sociologists reports (Romir-monitoring) according to which in most Russian regions the consumer expenses of population have been cut down in September as compared to August (the situation is usually different). A continuing purchaser stratification is noticeable - meanwhile consumers with average and high incomes insignificantly increased their expenses, poor segments of the people considerably cut them down (by 10%). 1 GLA - Gross leasable area. Prepared by GVA Sawyer

3 , Rosstat Chart 1. Retail Trade turnover and consumer price index in Moscow, January to September All-Russian data fortify general nervousness in the market, when in Moscow the expenses in September exceeded the expenses in August by 5,5%. In addition to that the index of consumer certainty in Russia has increased by two points and amounted to 7%. Real incomes of population in Moscow (from January to July) amounted to 91,7% of the indicator at the same period (in Russia - 99,4%; Moscow keeps its position in the first five of leaders in cutting down the indicator together with Tyumenskaya oblast, its districts and Kalmykia). Consumer prices index in September 2011 amounted to 104,7% by December On the whole in July and August the braking of inflation was noted and a temporal assignment of the trend is possible due to problems in economy. Supply In Q none of RC was opened or commissioned in Moscow. Moreover the expected opening of RC Aventura (as a part of residential complex Avenue 77) commissioned in Q2, did not take place; it is also possible that the opening will not happen in Q4. The terms of opening of the first turn Outlet Village Belaya Dacha are put off till 2012 (and the second turn till 2013). The terms of commission of RC Parus and retail gallery of hotel Moskva also raise many doubts. Prepared by GVA Sawyer 2011 In case of commission of the two abovestated objects in Q4 a new aggregate supply on Moscow market in 2011 will reach the level of 196,6 000 sq.m of leasable area. But nevertheless there is information about new RC the opening of which is expected in Chart 2. Projected dynamics of volume of quality supply quarterly for 2011, GLA, sq. m, leasable (GLA) and total (GBA) area, sq.m One part of these projects includes unfreezed pre-crisis construction sites, and the other part represents a number of new comparatively small projects which do not require great investments. Because of this, evidently, redevelopment of industrial premises in RC Otrada and RC Aviamotornaya has gained a certain popularity. Perspectives of large projects remain unclear, though developers from time to time bring some news concerning different kinds of activity which is connected with future RC. For example, in 2011 there 3

4 were no serious works on the construction site of RC River Mall. Negotiations of Immofinanz group on buying the share in RC Gudzon also have not affected the construction activity yet. All the news concerning the Project Paveletskaya came down to regular reduction of GLA (from sq.m to sq.m). Table 2. List of largest RC of Retail Operator s GLA, sq.m name RC commissioned in 1 st half of 2011 Commiss ioning date/ State Chart 3. Projected dynamics of volume of quality supply in , GLA, thousand sq.m Severnoye Seyanie / Q 2011 TPU Planernaya / Q 2011 AFI Mall City / Q 2011 Aventura (Avenue 77) / Q 2011 RC projects (under construction) Hotel Moskva / Parus / Outlet Village 1 ph / Q 2012 Caledoscope / RC Aviamotornaya / Konfetti (Street) / Otrada Mitino / Sombrero / While estimating the number of new projects some may talk about a boom in development (a part of future RC were projected in 2010 indeed, the construction sites are currently neglected, and coming onto the market is expected in the nearest two years). But due to small dimensions of new facilities, total volume of GLA which supplements the market, will remain at the level of the current year ( sq.m in 2012, sq.m in 2013). Total supply of leasable area in modern RC in Moscow did not change at the end of Q3 2011, and amounted to sq.m. Availability of quality RC has remained at the level of about 350 sq. m GLA/1 000 citizens (351, 3 sq. m). Moskvorechie / Fashion House / RC Varshavskoe Shosse / Outlet Village 2 ph / Rio Leninskiy / Vesna / River Mall / N/D 2 RC Paveletskaya / N/D Vodniy / N/D Favorit / N/D 2 N/D project implementation period and implementation state are not determined Prepared by GVA Sawyer

5 Demand The vacant spaces level as of end of Q for the market in whole did not change and remains at 6.5%. The optimistic plans, announced earlier by retailers on the wave of the current neurosis, will apparently be reviewed. The demand for retail spaces in Moscow will decrease. Naturally, this will positively affect the street retail segment, where prices and rent rates are already very close to normal. According to our information, the segment of retail center premises has not yet gained the positive results from the optimism of Q2. Consequently, its situation has not changed in general the demand remains unstable, dependent at a high degree on RC parameters and mood swings on the markets. Financial terms The majority of players on the market expected a price increase and traditional fall rent rates increase. However, the absence of new interesting projects to be ready for opening in the next couple of months and economical problems of August did not allow these expectations to come true. The rent rates remain on the Q2 level. Table 3. Rent rates range for operators of Moscow retail centers, Q Retail operators formats Food hypermarket DIY hypermarket GLA, sq. m Rent rates, $ per sq. m per year, triple net Food supermarket Electronics and home appliances supermarket/hypermark et Clothing department store Clothing/shoes Movie theaters Entertainment center, movie theater Operational costs, $ per sq. m Prepared by GVA Sawyer

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