MARKETBEATRUSSIA’S REAL ESTATEMARKET UPDATEQ1 2013APRIL 2013
CUSHMAN & WAKEFIELD 1MARKETBEATQ1 2013INFORMATION RESOURCESCWRUSSIA.RUMarket information, contacts newsMARKETBEAT.RULatest...
INTERACTIVE MAPSOFFICES SHOPPING CENTERS WAREHOUSESYou need Flash player installed and internet connection for the interac...
CUSHMAN & WAKEFIELD 3MARKETBEATQ1 2013AGENDAMACROECONOMYRETAILOFFICEWAREHOUSELANDCAPITAL MARKETS
CUSHMAN & WAKEFIELD 4MARKETBEATQ1 2013MACROECONOMY
CUSHMAN & WAKEFIELD 5MARKETBEATQ1 2013RUSSIA 2013: THE ECOONOMY IS UNDER PRESSURENoticeable slowdown in Q1-10%-5%0%5%10%15...
CUSHMAN & WAKEFIELD 6MARKETBEATQ1 2013MACRO PERFORMANCE AND FORECASTSSource: Ministry for Economic Development, URALSIB Ca...
CUSHMAN & WAKEFIELD 7MARKETBEATQ1 2013WORLD MAIN ECONOMIES IN 2013IMF forecast0%2%4%6%8%10%BrazilChinaIndiaJapanRussiaSing...
CUSHMAN & WAKEFIELD 8MARKETBEATQ1 2013RETAIL MARKET2013 FORECASTNEW CONSTRUCTION IN MOSCOW 180,000 sq mNEW CONSTRUCTION IN...
CUSHMAN & WAKEFIELD 9MARKETBEATQ1 2013RETAIL MARKET VOLUMERussia is No.3 Retail Market in EuropeRETAIL TURNOVER IN EUROPE*...
CUSHMAN & WAKEFIELD 10MARKETBEATQ1 2013RETAILERSDevelopment plansFashion20Children goods4Consumerelectronics1Sportgoods7Fo...
CUSHMAN & WAKEFIELD 11MARKETBEATQ1 2013•In 2012 all the major new internationalbrands came to Russia mostly withRussian re...
CUSHMAN & WAKEFIELD 12MARKETBEATQ1 2013NEW RETAILERSNew reasons for shoppingEXISTINGOPERATORS201322 3 71 3 22 8SOONSuperma...
CUSHMAN & WAKEFIELD 13MARKETBEATQ1 2013QUALITY RETAIL FORMATS in RUSSIA,Q1 2013 (BY SQ M)RETAIL FORMATSShopping centers do...
CUSHMAN & WAKEFIELD 14MARKETBEATQ1 2013Moscow24.0%St.Petersburg14%Krasnodar4.3%Ekaterinburg4%Samara3.5%Moscowregion3%Nizhn...
CUSHMAN & WAKEFIELD 15MARKETBEATQ1 2013SHOPPING CENTERS, RUSSIAExpansionQUALITY RETIAL SPACE ‘000 SQ M, RUSSIA (including ...
CUSHMAN & WAKEFIELD 16MARKETBEATQ1 2013SHOPPING CENTERS – MOSCOWStructural changesQUALITY RETAIL, ‘000 SQ M, MOSCOW NEW SH...
CUSHMAN & WAKEFIELD 17MARKETBEATQ1 2013FOOTFALL, Q1 2010=100%MOSCOW SHOPPING CENTERSQuarterly monitoringVACANCY RATE, %* C...
CUSHMAN & WAKEFIELD 18MARKETBEATQ1 2013MOSCOW SHOPPING CENTERS : RENTAL RATESRental rates are stableQ1 20132 prime retail ...
CUSHMAN & WAKEFIELD 19MARKETBEATQ1 2013MOSCOW HIGH STREETS : RENTAL RATESHigh streets are becoming more importantHIGH STRE...
CUSHMAN & WAKEFIELD 20MARKETBEATQ1 2013LEASE TERMSBehind the rentITEM COMMENTLeaseTerms Standard lease terms for gallery t...
CUSHMAN & WAKEFIELD 21MARKETBEATQ1 2013QUALITY RETAIL STOCK IN RUSSIA
CUSHMAN & WAKEFIELD 22MARKETBEATQ1 2013OFFICE MARKET2013 MOSCOW FORECASTNEW CONSTRUCTION 700,000 sq mTAKE-UP 1,900,000 sq ...
CUSHMAN & WAKEFIELD 23MARKETBEATQ1 2013TAKE-UP (’000 sq m)DEMANDHigh turnover•In total, office take up levels were positiv...
CUSHMAN & WAKEFIELD 24MARKETBEATQ1 2013TAKE-UP (mn sq m) AND NUMBER OF DEALSDEMANDHigh turnover, decreasing net absorption...
CUSHMAN & WAKEFIELD 25MARKETBEATQ1 2013ABSORPTION vs. NEW CONSTRUCTION (mn sq m)DEMANDAbsorption• Absorption is in line wi...
CUSHMAN & WAKEFIELD 26MARKETBEATQ1 2013OFFICE STOCKNew construction• In total, 14 office buildings were delivered in Q1 wi...
CUSHMAN & WAKEFIELD 27MARKETBEATQ1 2013AVAILABILITYVACANCY RATE• During Q1 2013, the average vacancy rate in existing qual...
CUSHMAN & WAKEFIELD 28MARKETBEATQ1 2013AVERAGE RENTAL RATE BY SUBAREAS 1Q 2013RENTAL RATE711935108873164573479682084090052...
CUSHMAN & WAKEFIELD 29MARKETBEATQ1 2013RENTAL RATES BYOFFICE SUBMARKETSFlash player is required forinteractive contentMOSC...
CUSHMAN & WAKEFIELD 30MARKETBEATQ1 2013WAREHOUSE & INDUSTRIAL2013 FORECASTNEW CONSTRUCTION IN MOSCOW 1.2 mn sq mFORECAST U...
CUSHMAN & WAKEFIELD 31MARKETBEATQ1 2013MOSCOW SUPPLYNew construction of quality warehouses (Classes A and B)Q1 2013–New co...
CUSHMAN & WAKEFIELD 32MARKETBEATQ1 2013RENTAL RATESRental rates and lease termsCLASS A CLASS B CLASS CCOLDSTORAGESNet Rent...
CUSHMAN & WAKEFIELD 33MARKETBEATQ1 2013SUPPLY MAPDistribution of W&I space in the Moscow RegionEXISTING 2013 PIPELINE02004...
CUSHMAN & WAKEFIELD 34MARKETBEATQ1 2013DEMAND STRUCTUREMoscow regionDEMAND STRUCTURE, MOSCOW REGIONQ2 2012 - Q1 2013• The ...
CUSHMAN & WAKEFIELD 35MARKETBEATQ1 2013DEMANDTake-upThe amount of leased and purchasedwarehouse space in the Moscow region...
CUSHMAN & WAKEFIELD 36MARKETBEATQ1 2013REGIONSRegional rental rates, USD per sq m per annum, triple net$0$20$40$60$80$100$...
CUSHMAN & WAKEFIELD 37MARKETBEATQ1 2013LAND MARKET
CUSHMAN & WAKEFIELD 38MARKETBEATQ1 2013MOSCOW REGIONStable, growing marketMOSCOW REGION AVERAGE INDUSTRIALLAND PRICE, mn U...
CUSHMAN & WAKEFIELD 39MARKETBEATQ1 2013MOSCOW REGIONLand pricesDISTANCE FROM MKADPRICE, mn USD /haMKAD 2.5 - 35 km 1 – 1.5...
CUSHMAN & WAKEFIELD 40MARKETBEATQ1 2013CAPITAL MARKETS2013 FORECASTTOTAL VOLUME OF INVESTMENTS US$ 8 bnFORECAST UNCHANGED
CUSHMAN & WAKEFIELD 41MARKETBEATQ1 2013RUSSIAN INVESTMENT MARKET2013 HAS STARTED POLITIVELY FOR THEENTIRE PROPERTY MARKET ...
CUSHMAN & WAKEFIELD 42MARKETBEATQ1 2013RECORD VOLUME OFINVESTMENT IN Q1 2013 (3.4BILLION USD) WAS REACHEDPRIMARILY DUE TO ...
www.cushmanwakefield.comRESEARCH DEPARTMENTMoscowDenis.Sokolov@eur.cushwake.com
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Marketbeat presentation Q1 2013 [ENG]

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Real estate market in 2013 made a good start. Despite economy slowdown and negative industrial production index market remained solid in Q1 with record investment volumes and strong sector performance. Political and macroeconomy trends in Russia become more or less shaped after turbulent year 2012 and micro level prospects are now more or less clear. Corporations are not planning any significant expansion and focus on operational efficiency. So relocations are well planned driven by solid reasoning.
Extraordinary investment market results (3.4 USD bn in Q1 2013) are driven by two large deals that were negotiated in 2012.
However despite good start of the year we do not change our forecast for 2013 because of the expected slowdown in Q2 and disruption of business caused by March events in Cyprus.
Cyprus jurisdiction used widely by Russian real estate companies and investors due to favorable double tax avoidance treaty, English legal system and flexibility of local banks. Bank crisis will not destroy this system but will disrupt investment activity until major issues are settled down. It is not clear so far will any other jurisdiction may compete with Cyprus for real estate operations, but undoubtly investors will explore other options.
In Q2 economy will face recovery of industrial production so after Q1 destocking half year figures will be similar to previous year. However real estate market will slow down a little bit in comparison with fast start of the year.
Major threat for real estate business is increasing currency risk. Growing budget deficit creates pressure on Ruble which may lead to exchange rate ajustment later this year. However so far it is unclear how government will handle this deficit. That is why our 2013 outlook remains basically unchanged.
Indicators to watch in Q2:
-Logistic construction volumes
-Office take up in Moscow
-Shopping centers footfall

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Marketbeat presentation Q1 2013 [ENG]

  1. 1. MARKETBEATRUSSIA’S REAL ESTATEMARKET UPDATEQ1 2013APRIL 2013
  2. 2. CUSHMAN & WAKEFIELD 1MARKETBEATQ1 2013INFORMATION RESOURCESCWRUSSIA.RUMarket information, contacts newsMARKETBEAT.RULatest Marketbeat report, reports archive, interactive mapsICUSHMANMobile application for Commercial real estateprofessionals, available at iTunesSOCIAL NETWORKSWEB
  3. 3. INTERACTIVE MAPSOFFICES SHOPPING CENTERS WAREHOUSESYou need Flash player installed and internet connection for the interactive map to runClick to open in browser
  4. 4. CUSHMAN & WAKEFIELD 3MARKETBEATQ1 2013AGENDAMACROECONOMYRETAILOFFICEWAREHOUSELANDCAPITAL MARKETS
  5. 5. CUSHMAN & WAKEFIELD 4MARKETBEATQ1 2013MACROECONOMY
  6. 6. CUSHMAN & WAKEFIELD 5MARKETBEATQ1 2013RUSSIA 2013: THE ECOONOMY IS UNDER PRESSURENoticeable slowdown in Q1-10%-5%0%5%10%15%2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013GDP growth,% CPI YoY,%THE REAL ECONOMY HAS ALMOST STALLED IN Q1, WITH LESS THAN 1% GROWTH. IT WAS THE FORTHCONSECUTIVE QUARTER OF THE ECONOMY SLOWDOWN.THE INFLATION HAS STEADY UPWARDS TREND WITH A SOFTENING ACTIVITY IN THE ECONOMICS.GDP vs. CPI GDP MAIN DRIVERS-6%-4%-2%0%2%4%6%8%10%12%TOTALGDPCARGOTRANSPORTATIONSINDUSTRIALPRODUCTIONAGRICULTURALPRODUCTIONRETAILSALESTELECOMSERVICESPAIDSERVICESCONSUMERGOODSANDOTHERSERVICES
  7. 7. CUSHMAN & WAKEFIELD 6MARKETBEATQ1 2013MACRO PERFORMANCE AND FORECASTSSource: Ministry for Economic Development, URALSIB Capital, Renaissance capitalTHE ECONOMY WILL LIKELY TO ACCELERATE IN Q2 AND FURTHER, HOWEVER THE GROWTH PACE WILL BELOWER THAN EXPECTED.ON APRIL 12TH MINECON OFFICIALY UPDATED THE 2013 FORECAST, WHERE ECONOMY GROWTH WAS LOWEREDTO 2.4% FROM 3.6% FOR BASE SCENARIO. OTHER KEY ECONOMIC INDICATORS WERE DOWN BY 50 – 100 BPS.ROSSTATSACTUAL2012 2013 2013 2014 2015 2016 2013 2014 2015 2013 2014 2015GDP, % 3.4 0.9 * 2.4 3.7 4.1 4.2 3.1 3.2 3.2 4 4 -CPI yoy, % 6.6 7.1 6.7 5.3 5.1 5.1 6.9 6.7 6.5 5.8 5.5Industrial production, % 2.6 -1.5 * 2 3.4 3.4 3 2.8 2.9 2.9 4 4 -Retail trade turnover, % 5.9 3 * 4.3 4.9 5 5 5.3 5.7 5.7 5.7 5 -Fixed Investments, % 6.6 0.6 * 4.6 6.6 7.2 7.6 5.2 5.8 5.8 6.9 7.2 -Disposable income, % 4.2 3.5 3 4.4 4.6 4.7 4 4.7 4.7 - - -Real wages, % 8.4 5.2 4.5 5.2 6 6.2Mining and extraction, % 1.1 -1.7 * 3.6 3.7 3.8 3.3USD / RUR rate, avg. 31.1 31.1 31.1 32.4 33 33.7 31.6 31.3 31.4 31.4 32.5 -URALS, USD / bbl 110.5 113.1 97 101 104 108 109.6 114.0 117.0 - - -* January - FebruaryMINISTRY FOR ECONOMICDEVELOPMENTURALSIB CAPITAL RENAISSANCE CAPITAL
  8. 8. CUSHMAN & WAKEFIELD 7MARKETBEATQ1 2013WORLD MAIN ECONOMIES IN 2013IMF forecast0%2%4%6%8%10%BrazilChinaIndiaJapanRussiaSingaporeSouth AfricaUnited KingdomUnited StatesEuroArea0%2%4%6%8%10%BrazilChinaIndiaJapanRussiaSingaporeSouth AfricaUnited KingdomUnited StatesEuroAreaGDP GROWTH, % CPI, %THE RUSSIAN ECONOMY IS COMPETITIVE ON THE WORLD’S SCENE.ONE OF THE MAIN CHALLENGES OF 2013 WILL BE THE INTERNAL DEMAND.
  9. 9. CUSHMAN & WAKEFIELD 8MARKETBEATQ1 2013RETAIL MARKET2013 FORECASTNEW CONSTRUCTION IN MOSCOW 180,000 sq mNEW CONSTRUCTION IN REGIONS 1,600,000 sq mPRIME RENTAL RATE INDICATOR 3,800 USD per sq m per annum, triple netFORECAST UNCHANGED
  10. 10. CUSHMAN & WAKEFIELD 9MARKETBEATQ1 2013RETAIL MARKET VOLUMERussia is No.3 Retail Market in EuropeRETAIL TURNOVER IN EUROPE* RUSSIA RETAIL TURNOVER ***Data of 2011, bn USD , GFK GeoMarketing**Source: ROSSTATRUSSIAN RETAIL TURNOVER GROWTH CONTINUES TO DECELERATE BUT STILL ONE OF THE LARGEST IN EUROPEAND IS ONE OF THE DRIVERS OF GDP GROWTHFrance 556.875Germany 548.1Russia 534.6UnitedKingdom459.54Italy 332.505Spain 264.195Turkey 170.1Netherlands130.275Poland 110.025Switzerland 108.27Belgium 97.875Sweden 94.5Austria 66.15Norway 61.155Others** 60.615Denmark 60.21Finland 54.675Portugal53.595Greece 50.895Czech Republic 42.12Ireland 36.45Romania 32.535Hungary 31.86Slovakia 18.36Croatia 16.605-10%-5%0%5%10%15%20%Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q12007 2008 2009 2010 2011 2012 2013Retail trade turnover growthYoY,% Real personal disposable income growth,%YoY
  11. 11. CUSHMAN & WAKEFIELD 10MARKETBEATQ1 2013RETAILERSDevelopment plansFashion20Children goods4Consumerelectronics1Sportgoods7Footwear2Varietystore3•At the beginning of the year, retailers announced their growth strategies.•Below is the summary of official announcements (either company’s press-releases or other open sources).DATA: Open sourcesDEVELOPMENT PLANS NUMBER OFPLANNED NEWWHEN WHEREFAHSION, FOOTWARE, SPORTSWAREKari 330 2013 Russia, CIS,Melon Fashion Group 100 2013 Russia,Obuv Rossii 60 2013 RussiaMango (Mango Kids , Mango 55 2013 RussiaInditex Group 50 2013 RussiaJeans Lab, Select 25, Kids Garden,(Tashir 50 2013 RussiaDeseo 50 2013 RussiaUniqlo 10 2013-2017 RussiaNike/ Inventive Retail Group 10 2013 RussiaCHILDREN GOODSELC (Detskiy Mir) 57 2013 RussiaGuliver 13 2013 Russia, CISRESTAURANTSMcDonald’s 150 2013-2015 RussiaKFC 60-70 2013 Russia, CISENTERTAINMENTDreamWorks Animation/Regions 3 by 2015 RussiaDEVELOPMENT PLANS NUMBER OFPLANNED NEWWHEN WHEREFOOD RETAILERSX5 Retail Group 900 2013 RussiaMagnit 600 - 800 2013 RussiaDixy 80 2013 North-WestVictoria (Dixy Group) 16 2013 MoscowSPAR 40 - 50 2013 - 2016 MoscowMiratorg 40 2013 North-WestOkey 35 2013 - 2016 RussiaLenta 30 2013 - 2017 MoscowAzbuka Vkusa 15 2013 - 2016 North-WestAuchan 10 2013 RussiaPrisma 10 2013 North-WestDIYLeroy Merlin 15 2013-2018 CentralMetrika 10 2013 TatarstanELECTRONICM.Video 35 2013 RussiaEldorado 14 2013 RussiaCash&CarryMetro 7 2013 Russia
  12. 12. CUSHMAN & WAKEFIELD 11MARKETBEATQ1 2013•In 2012 all the major new internationalbrands came to Russia mostly withRussian retail partners. The directopining were rare.•The typical new entrant is a retailchain with an average size of the shopfrom 30 to 300 sq m.•80% of all brands are coming fromEurope. There are a few Americanbrands looking for Russian market(such as Crate&Barrel, Forever 21 andsome other).• New brands come to Moscow (orSt.Petersburg) initially with expansionplans for the Russian Regions (mostly inthe “millionniki” cities)•For most of other Russian cities thepotential is in the existing brands,which are interested in regionalexpansion.NEW RETAILERSFashion, children good and some othersFashion20Children goods4Consumerelectronics1Multi-Media1Restaurants,cafes4Sportgoods7Homewear2Footwear2Varietystore3** Accessories – 2 stores* Total area 42,035 sq m
  13. 13. CUSHMAN & WAKEFIELD 12MARKETBEATQ1 2013NEW RETAILERSNew reasons for shoppingEXISTINGOPERATORS201322 3 71 3 22 8SOONSupermarketConsumerelectronicsDIY Fashion Footwear Children Sport Homewear Restaurants,cafesAccessories Cosmetics
  14. 14. CUSHMAN & WAKEFIELD 13MARKETBEATQ1 2013QUALITY RETAIL FORMATS in RUSSIA,Q1 2013 (BY SQ M)RETAIL FORMATSShopping centers dominate the marketRUSSIA RETAIL FORMATSSHOPPING CENTREMIX-USE BUILDING / COMPLEXDEPARTMENT STORERETAILWAREHOUSESTREET RETAILRETAIL PARKFASHION OUTLETMixedUsecomplex11.9%Outletcentre0.2%ShoppingCentre88.0%UNDER CONSTRUCTION : BellaVita,GLA 35,000 sq mNoginsk / Electrostal / Pavlovsky Posad,Service Management & ConsultingSolnechny, GLA 37,000 sq mSaratov, Midland DevelopmentFAHSION OUTLET2011 20132012RETAIL PARKOutletVillage Belaya Dacha(Phase 1), GLA 38, 000 sq m,Moscow, HinesUNDERCONSTRUCTION:Vnukovo OutletVillagePhase 1, 16, 584 sq m,Moscow, Diona2013UNDERCONSTRUCTION:Fashion House Outlet-Mall, 28,760 sq m, Moscow,Fashion HouseDevelopment2013Total GLA - 14.7 mn sq m in 506 retail stores
  15. 15. CUSHMAN & WAKEFIELD 14MARKETBEATQ1 2013Moscow24.0%St.Petersburg14%Krasnodar4.3%Ekaterinburg4%Samara3.5%Moscowregion3%NizhnyiNovgorod3.0%Omsk2.6%Kazan2.6%Rostov-On-Don2.5%Other36.4%SHOPPING CENTERS, RUSSIAConstruction of shopping centers in Russia is booming* Outlets are included, retail warehouses are excludedQUALITY RETAIL STOCK SQ PER ‘000 INHABITANTS,EOY 2012QUALITY SHOPPING CENTERS BYREGIONS, EOY 2012 (BY SQ M)0 200 400 600 800MoscowSt.PetersburgNovosibirskEkaterinburgNizhnyNovgorodSamaraOmskKazanChelyabinskRostov-on-DonUfaVolgogradPermKrasnoyarskVoronezhSaratovKrasnodarTolyattiBarnaulUlyanovskIzhevskVladivostokYaroslavlIrkutskTyumenKhabarovskOrenburgNovokuznetskKemerovoRyazanAstrakhanPenzaNaberegnieChelniLipetskTula “Millionic” Cities Cities 500,000 +
  16. 16. CUSHMAN & WAKEFIELD 15MARKETBEATQ1 2013SHOPPING CENTERS, RUSSIAExpansionQUALITY RETIAL SPACE ‘000 SQ M, RUSSIA (including Moscow)• 5 shopping malls have been delivered in Q1 inVolgograd, Belgorod,Murmansk,Orel, St. Petersburg.•85 other are to be delivered in 49 Russian cities by the end of 2013.NEW SHOPPING CENTERS, 2013* Moscow projects are on the next slideAquarel’,Volgograd Kontinent, St Petersburgc MegaGrinn, Belgorod1,8281,6201,8951,561 1,6351,4261,8722291,6002,8732006 2007 2008 2009 2010 2011 2012 2013Announced developers plans CW Forecast New construction UTDLOCATION PROPERTY NAMERETAILGLA, SQ MDELIVERYTHE LARGEST PROJECTS IN RUSSIA, GLA 30,000+Volgograd Aquarel 92,140 Q1 2013Belgorod Megagreen 53,000 Q1 2013Murmansk Volna 10,030 Q1 2013Orel MegaGrinn (2 phase retail) 17,500 Q1 2013St. Petersburg Kontinent 56,000 Q1 2013Ufa Planeta 90,000 Q3 2013Perm SC on Speshilova 75,000 Q4 2013Ekaterinburg Evropeyskiy (former Prizma) 70,397 Q2 2013Nizhnyi Novgorod Nebo 69,650 Q4 2013Bryansk Sayani Park 68,000 Q4 2013Novokuznetsk City Mall 63,000 Q4 2013Yaroslavl Aura 62,550 Q4 2013Irkutsk KomsoMall (formerKontinental)57,700 Q4 2013Ufa M7 Mall 53,355 Q4 2013St. Petersburg Londom mall (Felicita-Kollontay (phase 2,3))47,000 Q4 2013Krasnoyarsk Ogni 45,000 Q2 2013St. Petersburg Baltiyskaya zhemchuzhina 45,100 Q2 2013Ekaterinburg Magnit 44,321 Q3 2013Sterlitamak Fabri (2 phase) 42,000 Q4 2013Saratov June 40,600 Q4 2013Nizhnyi Novgorod Indigo 39,750 Q2 2013St. Petersburg Mandarin 38,250 Q2 2013Pavlovsky Posad Bella Vita power center 36,000 Q4 2013Taganrog Eurasia (Grand city) 35,543 Q3 2013Kostroma RIO 35,000 Q2 2013Mytischi Krasny Kit (2 phase) 35,000 Q4 2013Ufa UfaPlaza / exhibition centerBashkortostan (1 phase)31,000 Q4 2013Novi Urengoi Solnechniy 31,000 Q4 2013Syktyvkar June (Phase 1) 30,000 Q2 2013St. Petersburg Monpasie (Industia Groupprojects)30,000 Q4 2013TOTAL GLA OF SHOPPING CENTERS > 30,000 SQ M1,1.927,216
  17. 17. CUSHMAN & WAKEFIELD 16MARKETBEATQ1 2013SHOPPING CENTERS – MOSCOWStructural changesQUALITY RETAIL, ‘000 SQ M, MOSCOW NEW SHOPPING CENTERS, 2013•In Q1 there were no newshopping malls•The most valuable retailspace delivered in Moscowin Q1 2013 is thesupporting retail area(GLA 2,700 sq m) of WhiteGardens office complex.LOCATION PROPERTY NAMERETAILGLA, SQ MDELIVERYMOSCOW Projects GLA 10,000 + sq mRIO (Leninskiy) 57,000 Q3 2013Shaiba 35,000 Q4 2013Fashion House Outlet-Mall 28,760 Q2 2013Otrada (phase 2) 22,020 Q2 2013Favorit 21,900 Q4 2013Moskvorechye 19,780 Q2 2013Raikin Park (Raikin centre of 17,000 Q2 2013Vnukovo Outlet Village( h 1)16,584 Q2 2013VDNKh SC 15,000 Q2 2013Brateevo Mall 15,000 Q2 2013Vostochiy veter 14,000 Q4 2013295,915MOSCOW REGION Projects GLA 10,000 + sq mReutov Family Mall (Reutov Park) 36,375 Q3 2013Pavlovsky Posad Bella Vita power center 36,000 Q4 2013Mytischi Krasny Kit (2 phase) 35,000 Q4 2013Korolev Gelios 22,500 Q2 2013Odintsovo Dubki 20,000 Q2 2013Krasnogorsk Komsomolec 19,160 Q4 2013Solnechnogorsk Solnechniy 14,200 Q2 2013Scherbinka Aquarel 11,250 Q2 2013Lyubertsy Orbita 10,000 Q2 2013204,485Total GLATotal GLA1803603372193795674001971522006 2007 2008 2009 2010 2011 2012 2013New construction UTD Announced developers plans CW Forecast
  18. 18. CUSHMAN & WAKEFIELD 17MARKETBEATQ1 2013FOOTFALL, Q1 2010=100%MOSCOW SHOPPING CENTERSQuarterly monitoringVACANCY RATE, %* Cushman&Wakefield Research quarterly monitoring of 9 quality shopping centers (total GLA - 0.5 mn sq m).These shopping centers have been opened more than one year ago and have the established catchment area.•In Q1 footfall* of Moscow shopping malls decreased. Althoughthis is in accordance with seasonal trends (Q1 footfall is alwayslower than in Q4) the decrease was more than expected (byabout 10%).•The shopper conversion rate is close to the average level (whichis around 40% for monitored shopping centers) and in Q1 it was46.9%.•The vacancy rate for quality shopping centers* in Moscow remainslow as in Q1 was 1.2%. The increase in vacancy rate (from 0.4% inQ4 2012 to 1.2 in Q1 2013) is because of typical for the beginningof the year tenants rotation.“SUCCESSFUL SHOPPERS”, %60%70%80%90%100%110%120%Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12009 2010 2011 2012 201340.3% 39.0%38.2%37.1%44.3%40.3%39.3%38.5%34.8%28.1%41.2%44.0%40.9%36.9%Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12009 2010 2011 2012 20131.7% 3.0% 1.6% 0.8% 1.0% 1.0% 1.0% 1.0% 0.4% 0.7% 0.8% 0.4% 0.4% 1.2%Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12009 2010 2011 2012 2013
  19. 19. CUSHMAN & WAKEFIELD 18MARKETBEATQ1 2013MOSCOW SHOPPING CENTERS : RENTAL RATESRental rates are stableQ1 20132 prime retail indicator** is 3,800 USDQUALITY SHOPPING CENTERS RETAIL GALLERY RENTAL RATES*ANCHORS<100 100 - 300 300 - 1,200 1,200 - 3,500 3,500-7,000Food court $1,800-$2,000Kiosks $5,000-$8,000Restaurant $600-$1000 $700Clothing $1,600 $1,200 $700 $400Shoes $2,200 $1,700 $1,200 $800White and Brown $500Supermarket $500-$600Hypermarket $250-$450Cinema $250-$320GLA, SQ MBUSINESSRETAIL GALLERY MINI ANCHORS* US$ per sq m per annum, triple net** Prime retail indicator—base asking rental rate for the 100-200 sq m gallery unit at the ground floor of the prime shopping centers, US$ per sq m per annum, triple net
  20. 20. CUSHMAN & WAKEFIELD 19MARKETBEATQ1 2013MOSCOW HIGH STREETS : RENTAL RATESHigh streets are becoming more importantHIGH STREET USD / sq m / annum 2013 TREND1st Tverskaya Yamskaya $1,500 - $3,000 upArbat $2,000 - $4,000 upGarden Ring $1,500 - $3,000 upKutuzovsky Prospekt $1,500 - $3,500 upKuznetsky Most $2,000 - $4,000 upLeningradsky Prospekt $1,200 - $2,200 upLeninsky prospect $1,500 - $2,500 upProspect Mira $1,200 - $2,500 upNovy Arbat $1,200 - $3,000 upPetrovka $2,500 - $4,500 upPyatnitskaya $1,200 - $2,800 upTverskaya $3,000 - $6,000 upStoleshnikov per. $4,000 - $6,000 up•In Q1 footfall* of Moscow shopping malls decreased.Although this is inaccordance with seasonal trends (Q1 footfall is always lower than in Q4)the decrease was more than expected (by about 10%).•The shopper conversion rate is close to the average level (which isaround 40% for monitored shopping centers) and in Q1 it was 46.9%.•The vacancy rate for quality shopping centers* in Moscow remains lowas in Q1 was 1.2%.The increase in vacancy rate (from 0.4% in Q4 2012to 1.2 in Q1 2013) is because of typical for the beginning of the yeartenants rotation.
  21. 21. CUSHMAN & WAKEFIELD 20MARKETBEATQ1 2013LEASE TERMSBehind the rentITEM COMMENTLeaseTerms Standard lease terms for gallery tenants are between 3-5 years, break options are rare. For anchortenants (including fashion anchors) lease terms are up to 20 -25 years and break option is becomingpopular.Rental Payment Rents are typically payable monthly in advance.Turnover / percentage rents are increasingly seen inshopping centres. Rental rates are generally calculated in USD, Euro or commercial units are used. Inless quality shopping centres rental rates are calculated in RUR.Rent Deposit The rent deposit required in quality shopping centres is typically between 1 – 3 months rent equitant.Indexation Annual indexation is typical between 3-10% or at a level of USD / EU CPI.The practice of premium /key money payments is seldom seen in Russia. Rent reviews are rare on the market.Service Charges Service charge is payable by tenants at either an “open book” basis or more common as a fixed cost.Utilities payments are charged on consumption.Building insurance is normally charged back to tenantvia service charge.Other costs VAT 18%Local property taxes are not payed separately, they are generally included in the service charges.
  22. 22. CUSHMAN & WAKEFIELD 21MARKETBEATQ1 2013QUALITY RETAIL STOCK IN RUSSIA
  23. 23. CUSHMAN & WAKEFIELD 22MARKETBEATQ1 2013OFFICE MARKET2013 MOSCOW FORECASTNEW CONSTRUCTION 700,000 sq mTAKE-UP 1,900,000 sq mVACANCY RATE 15.4%CLASS A AVERAGE RENTAL RATE 820 USD per sq m per year, triple netFORECAST CHANGED: NEW CONSTRUCTION INCREASED from 500,000 sq m to 700,000 sq m
  24. 24. CUSHMAN & WAKEFIELD 23MARKETBEATQ1 2013TAKE-UP (’000 sq m)DEMANDHigh turnover•In total, office take up levels were positive in Q1 with over 450,833 sq m transacted.•Demand is steady as tenants look to consolidate or renegotiate leases.•Tenant demand is concentrated in recently finished offices. In Q1 the proportion of pre-leases stood at 1% of gross take up (thesame situation was observed in 2012 when pre-leases were less than 5% from all deals).80%83% 75% 86% 86% 79% 80%92%50%60%70%80%90%100%05001,0001,5002,0002,5002006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015ClassA Class B (B+and B-)Forecast ClassA Forecast Class B (B+ and B-)Share of lease deals
  25. 25. CUSHMAN & WAKEFIELD 24MARKETBEATQ1 2013TAKE-UP (mn sq m) AND NUMBER OF DEALSDEMANDHigh turnover, decreasing net absorption• The share of big deals (with the rentable area more than 2,000 sq m) was around 50% in the last 6 years.• But the total number of deals is increasing. More and more small tenants (demanding for less than 500 sq moffice) are closing deals in quality office building.• Overall, in Q1 there were 797 transactions conducted in 340 quality office buildings.47% 59% 66% 50% 51% 59% 47% 37%1.141.501.740.731.281.941.990.441,0751,0921,1377511,3361,731 2,57379705001,0001,5002,0002,5003,00000.511.522.52006 2007 2008 2009 2010 2011 2012 Q1 2013Take-up < 2,000 sq m (%) Take-up > 2,000 sq m (%)Number of transactions
  26. 26. CUSHMAN & WAKEFIELD 25MARKETBEATQ1 2013ABSORPTION vs. NEW CONSTRUCTION (mn sq m)DEMANDAbsorption• Absorption is in line with new construction.* Net absorption—represents the change in the occupied stock within a market during the period.Calculation: X – Y = Net Absorption.X = Current stock – current vacancyY = Previous stock (same quarter, previous year) – previous vacancy (same quarter, previous year)1.492.171.390.880.650.550.231.351.810.630.74 0.760.430.252007 2008 2009 2010 2011 2012 Q1 2013New construction Absorption
  27. 27. CUSHMAN & WAKEFIELD 26MARKETBEATQ1 2013OFFICE STOCKNew construction• In total, 14 office buildings were delivered in Q1 with a total rentable area of 259,544 sq m. 84 % of this new office space iscurrently available for lease.• Most new constructions of class A are concentrated in the Central Business District, with most class B in OtherTrading Areas(OTA).• We increased the volume of new construction forecast for 2013 from to 700,000 sq m from 520,000 sq m expected earlier. Ourestimates remain relatively conservative.NEW CONSTRUCTION (’000 SQ M) (%) NEW CONSTRUCTION 1Q 2013 BY SUBAREAS0 50 100 150 200 250 300 350Q1 2013Downtown Class A Downtown Class B Central Class B OTA Class B05001000150020002006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015New construction, A New construction, B (B+ and B-)Forecast Class A Forecast Class B (B+ and B-)
  28. 28. CUSHMAN & WAKEFIELD 27MARKETBEATQ1 2013AVAILABILITYVACANCY RATE• During Q1 2013, the average vacancy rate in existing quality office buildings in Moscow was stable at average level of 12.14%.Class A availability was stable and was 16.4% (16.6% in Q4 2012), while Сlass B vacancy rate was 11.13% (11.4% in Q4 2012).• At present, vacant space exists throughout a third of Moscow’s quality office buildings (in 552 buildings out of 1,780).4% 4%12%22%21%16%14%18% 18%17%3%4%6%11% 11%9% 10%13%14% 15%Q1: 16.6%Q1: 11.6%2006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015Vacancy rate A Vacancy rate B
  29. 29. CUSHMAN & WAKEFIELD 28MARKETBEATQ1 2013AVERAGE RENTAL RATE BY SUBAREAS 1Q 2013RENTAL RATE7119351088731645734796820840900529646807509414 444 466 470 500 540Q1:$850Q1:$5202006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015Class A Class B (B+and B-)RENTAL RATE755477432579498350Class B fitted outClass B shell & core11048541166839570DowntownCentralOTAClass A fitted outClass A shell & core• After a stable 2012, positive dynamics were observed in average rental rates in the 1st quarter.• In Q1, Class A average rent has grown to $850 per sq m (triple net) per annum (from average $790 in 2012 and $820 in Q4 2012).• Asking rents of more than $1,500 are increasing in occurrence for Class A buildings with internal modifications.• In Q1 2013 the average Class B rental rate also increased from $490 to $520 per sq m.• Prime rents remain at US $1,200 per sq m (triple net) per annum for the best office “trophy” premises in the Moscow market.* Base asking rental rates, USD per sq m per annum, weitghted average for deals closed within the period, triple net
  30. 30. CUSHMAN & WAKEFIELD 29MARKETBEATQ1 2013RENTAL RATES BYOFFICE SUBMARKETSFlash player is required forinteractive contentMOSCOW OFFICE MARKET NET ABSORPTION
  31. 31. CUSHMAN & WAKEFIELD 30MARKETBEATQ1 2013WAREHOUSE & INDUSTRIAL2013 FORECASTNEW CONSTRUCTION IN MOSCOW 1.2 mn sq mFORECAST UNCHANGED
  32. 32. CUSHMAN & WAKEFIELD 31MARKETBEATQ1 2013MOSCOW SUPPLYNew construction of quality warehouses (Classes A and B)Q1 2013–New construction 138,000 sq m2013–Total pipeline 1,200,000 sq m• The vacancy rate in class A remains stableat 1% since Q3 2011• Vacancy rates in qualityW&I propertieswill remain stable in the short-termoutlook.02004006008001 0001 2001 4001 6001 8002006 2007 2008 2009 2010 2011 2012 2013F
  33. 33. CUSHMAN & WAKEFIELD 32MARKETBEATQ1 2013RENTAL RATESRental rates and lease termsCLASS A CLASS B CLASS CCOLDSTORAGESNet Rent Rates,$/sq m/year130 -140 120-130** 170** 251Operating Expenses,$/sq m/year30-40 20-30 - -Utility Charges,$/sq m/year10-15 10 - -Yearly rent indexation CPI-3% 8-10% n/d n/dMinimum Lease Term,years5-10 1-5 - -Contract security,months3-6 1-3 - -Advance Payment,months1-3 1-3 1 -Contract currency USD/EUR RUB RUB RUBMinimal lease area,sq m3 500 - -$132$130$140$105$110$135$135$135$80$90$100$110$120$130$140$1502006 2007 2008 2009 2010 2011 2012 2013F
  34. 34. CUSHMAN & WAKEFIELD 33MARKETBEATQ1 2013SUPPLY MAPDistribution of W&I space in the Moscow RegionEXISTING 2013 PIPELINE02004006008001 0001 200Dmitrovskoeshosse (A104)Yaroslavskoeshosse (M8)Shelkovskoeshosse (A103)Gorkovskoeshosse (M7)Novoryazanskoeshosse (M5)Kashirskoeshosse (M4)Simferopolskoeshosse (M2)Kaluzhskoeshosse (A101)Kievskoeshosse (MЗ)Minskoeshosse (M1)Novorizhskoeshosse (M9)Leningradskoeshosse (M10)30+ km 10-30 km 0-10 km Moscow050100150200250Dmitrovskoeshosse (A104)Yaroslavskoeshosse (M8)Shelkovskoeshosse (A103)Gorkovskoeshosse (M7)Novoryazanskoeshosse (M5)Kashirskoeshosse (M4)Simferopolskoeshosse (M2)Kaluzhskoeshosse (A101)Kievskoeshosse (MЗ)Minskoeshosse (M1)Novorizhskoeshosse (M9)Leningradskoeshosse (M10)30+ km 10-30 km 0-10 km Moscow
  35. 35. CUSHMAN & WAKEFIELD 34MARKETBEATQ1 2013DEMAND STRUCTUREMoscow regionDEMAND STRUCTURE, MOSCOW REGIONQ2 2012 - Q1 2013• The majority of transactions in W&I segment are carried out by retail companies, which are also the marketleaders in terms of leased sq m.TYPES OF TRANSACTIONS BY SIZE, MOSCOWREGION, ‘000 sq m0510152025Distributor Logistic Other Producer RetailerDistributor27%Logistic16%Other1%Producer15%Retailer41%
  36. 36. CUSHMAN & WAKEFIELD 35MARKETBEATQ1 2013DEMANDTake-upThe amount of leased and purchasedwarehouse space in the Moscow regionin Q1 2013 amounted to 145,000 sq m,volume of transactions in regions amountedto 51,000 sq m.The volume of transactions in Q1 2013 waslower than in 2012, but almost equal to theaverage figures of 2008-2012.According to our forecast the volume oftransactions in Moscow region in 2013 willbe about 1 mn sq m in Moscow region.The expected volume of regionaltransactions is 250,000 - 300,000 sq m.0,00200,00400,00600,00800,001 000,001 200,001 400,002008 2009 2010 2011 2012 2013FMoscow Regions Forecast
  37. 37. CUSHMAN & WAKEFIELD 36MARKETBEATQ1 2013REGIONSRegional rental rates, USD per sq m per annum, triple net$0$20$40$60$80$100$120$1402008 2009 2010 2011 2012 2013St. Petersburg Ekaterinburg Rostov-On-DonCITYAvg base rentalrates,USD / annumAvg leased area,sq mMoscow 130-140 10,000-15,000St. Petersburg 125-135 2,000-10,000Ekaterinburg 110-115 5,000-10,000Nizhnyi Novgorod 115-120 3,000-5,000Samara 110-115 3,000-5,000Kazan 90-100 3,000-5,000Rostov-On-Don 115-120 3,000-5,000Krasnodar 110-120 3,000-5,000Novosibirsk 110-115 2,000-5,000Ufa 90-100 3,000-5,000
  38. 38. CUSHMAN & WAKEFIELD 37MARKETBEATQ1 2013LAND MARKET
  39. 39. CUSHMAN & WAKEFIELD 38MARKETBEATQ1 2013MOSCOW REGIONStable, growing marketMOSCOW REGION AVERAGE INDUSTRIALLAND PRICE, mn USD/haPRICE FOR INDUSTRIAL LAND INMOSCOW REGION by directionPRICE,mn USD / haDmitrovskoe shosse A104 0.5-1.5Yaroslavskoe shosse M8 0.5 - 1.5Gorkovskoe shosse M7 0.5 - 1.2Novoryazanskoe shosse M5 0.5-1.2Kashirskoe shosse M4 0.6 - 1.5Simferopolskoe shosse M2 0.8 - 1Kaluzhskoeshosse shosse A101 1-1.5Kievskoe shosse M3 1-2Minskoe shosse M1 1-1.5Novorizhskoe shosse M9 2-4Leningradskoe shosse M10 1.5-2.5ROAD1,871,071,381,41,41,52008 2009 2010 2011 2012 2013F
  40. 40. CUSHMAN & WAKEFIELD 39MARKETBEATQ1 2013MOSCOW REGIONLand pricesDISTANCE FROM MKADPRICE, mn USD /haMKAD 2.5 - 35 km 1 – 1.515 km 0.6 - 0.830 km 0.4 - 0.650 km 0.3 - 0.5
  41. 41. CUSHMAN & WAKEFIELD 40MARKETBEATQ1 2013CAPITAL MARKETS2013 FORECASTTOTAL VOLUME OF INVESTMENTS US$ 8 bnFORECAST UNCHANGED
  42. 42. CUSHMAN & WAKEFIELD 41MARKETBEATQ1 2013RUSSIAN INVESTMENT MARKET2013 HAS STARTED POLITIVELY FOR THEENTIRE PROPERTY MARKET AND FORINVESTMENT MARKET AS WELLTHE AVERAGE VOLUME OF INVESTMETNS PERQUARTER HAS ALMOST DOUBLED SINCE 2007THE OFFICE AND RETAIL SHARE ACCOUNTSFOR ~40% EACHMOSCOW OFFICE AND RETAILCAPITALIZATION RATES SHOWED SMALLDOWNWARDS CORRECTION:OFFICE 8.50%RETAIL 9.25%W&I 11.5%INVESTMENTSVOLUMES YoY % CHANGE6%8%10%12%14%16%18%200420052006200720082009201020112012Q113CBR refinancing rate Office primeShopping center prime W&I PrimeCAPITALIZATION RATES-40%-20%0%20%40%60%80%100%-200%-100%0%100%200%300%400%500%2008Q12008Q22008Q32008Q42009Q12009Q22009Q32009Q42010Q12010Q22010Q32010Q42011Q12011Q22011Q32011Q42012Q12012Q22012Q32012Q42013Q1YoY % change Office % of total Retail % of total
  43. 43. CUSHMAN & WAKEFIELD 42MARKETBEATQ1 2013RECORD VOLUME OFINVESTMENT IN Q1 2013 (3.4BILLION USD) WAS REACHEDPRIMARILY DUE TO TWOLARGE DEALS NEGOTIATED IN2012.OUR FORECAST FOR 2013 IS8 BN US$THE MARCH CRISIS IN CYPRUSWILL DEPRESS INVESTMENTACTIVITY FOR 1-2 MONTHS.WE LEAVE OUR 2013 FORECASTUNALTEREDRUSSIAN INVESTMENT MARKETRussian Investments split
  44. 44. www.cushmanwakefield.comRESEARCH DEPARTMENTMoscowDenis.Sokolov@eur.cushwake.com

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