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    Q4 2013 Real Estate Market presentation ENG Q4 2013 Real Estate Market presentation ENG Presentation Transcript

    • MARKETBEAT RUSSIA’S REAL ESTATE MARKET UPDATE Q4 2013
    • MACRO ECONOMY 2013 FORECAST GDP 1.4-1.5% CPI 7% INDUSTRIAL PRODUCTION 0.7% FIXED INVESTMENTS -1.4%
    • RUSSIA’S GDP IN 2013 MARKETBEAT Q4 2013 2013 slowdown GDP AND CPI GDP GROWTH AND MAIN DRIVERS 8% 15% 10% 4% 5% 2% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 F2014 F2015 ENERGY, GAS AND WATER -5% PROCESSING CARGO TRANSPORTATIONS FIXED INVESTMENTS MINING AND EXTRACTION PAID SERVICES RETAIL SALES AGRICULTURAL PRODUCTION INDUSTRIAL PRODUCTION -2% CONSUMER GOODS AND OTHER SERVICES 2004 0% TOTAL GDP YoY change 6% -10% GDP growth, % CPI YoY, % • Economy was slowing down from Q2 to Q4 2013 • Ministry of Economic Development has reduced the forecast of Russia’s economy growth in 2013 from 3.4% to 1.8% in 2013 • The industrial production index is decreasing from the beginning of 2013 • The growth rate of mining and extraction was growing but at the same time the processing was falling down • Retail sales remained the main driver of the economic recovery CUSHMAN & WAKEFIELD 2
    • MACRO PERFORMANCE AND FORECASTS ROSSTAT’S ACTUAL 2012 2013 MARKETBEAT Q4 2013 MINISTRY OF ECONOMIC DEVELOPMENT 2013 2014 2015 URALSIB CAPITAL 2013 2014 2015 RENAISSANCE CAPITAL 2013 2014 2015 GDP, % 3.4 1.2* 1.8 2.5 2.8 1.7 2.4 3.5 1.6 3.3 - CPI, % 6.6 7.0 6.0 6.2 4.9 6.5 4.2 4.7 6.8 5.5 - Industrial production, % 2.6 0.1 0.7 2.2 2.3 0.4 2.3 2.6 0.0 4.2 - Retail Trade turnover, % 5.4 3.9 4.2 3.5 4.4 3.6 3.9 4.3 6.4 6.2 - Fixed investments, % 6.6 -1.4 2.5 3.9 5.6 0.2 4.0 5.8 -0.2 3.8 - Disposable income, % 4.2 3.6* 3.4 3.1 3.0 3.9 4.0 4.1 - - - * January-September • We expect 2014 to bring some optimism to the real estate market • The retail sector will remain stable, fuelled by consumer growth Source: Ministry for Economic Development, URALSIB Capital, Renaissance capital CUSHMAN & WAKEFIELD 3
    • CAPITAL MARKETS 2013 US$ 7.45 bn 2014 FORECAST US$ 7.50 bn
    • RUSSIAN INVESTMENT MARKET MARKETBEAT Q4 2013 INVESTMENT VOLUME IN 2010-2013 INVESTMENTS VOLUME 2013 Total investments into commercial real estate in 2013 was about $7.45 billion which is similar to the volume of investments in 2012. 8,0 0,36 1,10 1,34 6,0 1,08 0,66 0,17 0,08 0,46 2,04 2,59 2,64 3,27 3,32 2,85 3,06 2010 billion USD 7,0 2011 2012 2013 Industrial Other 5,0 4,0 3,0 2,0 1,0 1,40 Traditionally, the deals were closed in the biggest cities. Moscow is an absolute leader by the amount of investments and remains the investment center of Russia. In 2013 about 70% of all investments were attracted to Moscow. 0,0 Office Retail INVESTMENTS YOY % CHANGE AND SHARE OF OFFICE AND RETAIL SEGMENTS 4,0 90% 3,5 80% 3,0 70% 2,5 60% 2,0 50% 40% 1,5 30% 1,0 20% 0,5 10% 2005 2006 Total investments 2007 2008 Office % of total 2009 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 0% Q2 0,0 Q1 billion USD 100% 2010 Retail % of total CUSHMAN & WAKEFIELD 5
    • RUSSIAN INVESTMENT MARKET MARKETBEAT Q4 2013 INVESTMENTS VOLUME 2013 8,00 Other 0,36 BY SEGMENT 7,00 INVESTMENT SHARE IN 2013 5% 19% Office segment registered most of the deals in 2013 and its share was more than 41%. The volume of investments in offices was $3.06 billion. 41% Industrial 1,40 35% 6,00 Office Retail Industrial Other 4,00 22% 3,00 6% Moscow S. Peterburg Other INVESTMENT SHARE IN 2013 2,00 Office 3,06 2013 was a record year by investment volumes in retail segment. Compared to the previous year the growth was about 2%. Industrial and warehouse segment hit the record last year by the volume of investments. In 2013 total investments were about $1.4 billion, doubled since 2012. 72% BY ORIGIN billion USD Retail 2,64 BY REGION INVESTMENT SHARE IN 2013 5,00 The total volume of investments in 2013 was $7.45 billion. Moscow office and retail capitalization rates are stable: OFFICE 69% 1,00 domestic 8.5% RETAIL 31% 9.0% W&I 11.0% foregin 0,00 2013 CUSHMAN & WAKEFIELD 6
    • RETAIL MARKET 2013 NEW CONSTRUCTION IN MOSCOW 0.23 mn sq m NEW CONSTRUCTION IN REGIONS 1.4 mn sq m (63 shopping malls) PRIME RENTAL RATE INDICATOR 4,000 USD per sq m per annum, triple net 2014 FORECAST NEW CONSTRUCTION IN MOSCOW 0.5 mn sq m NEW CONSTRUCTION IN REGIONS 1.4 mn sq m
    • MOSCOW RETAIL MARKET MARKETBEAT Q4 2013 MOSCOW RETAIL SALES ACCOUNT FOR USD 112 bn. THAT IS: •More than ¼ of all retail sales in France •1/3 of all retail sales in UK •More than in Belgium, Netherlands and Poland Moscow •Twice as much as in Austria •4 times as much as in Portugal United Kingdom •Almost 6 times as much as in Hungary Netherlands Poland Belgium France Austria Hungary Portugal CUSHMAN & WAKEFIELD 8
    • RETAIL MARKET VOLUME MARKETBEAT Q4 2013 Consumer spending RUSSIA RETAIL TURNOVER CONSUMER CONFIDENCE INDEX, % 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% 20% 15% 10% 5% 0% 2006 2007 2008 2009 2010 2011 2012 2013 Retail trade turnover growth, % 2014F 2013 2012 2011 2010 2009 2008 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 -10% 2007 -5% Real personal disposable income growth, % Consumer confidence index, % Source: ROSSTAT • According to Rosstat, real income of the Russian population in November 2013 grew up by 1.5%, comparing to November 2012. Moreover, it increased by 3.6% in January-November 2013 relatively to the same period of time last year. • The average monthly salary was 30,670 rubles in August 2013 and increased by 11.6% comparing to the past year. • Total retail trade growth for January-November was 3.9%. CUSHMAN & WAKEFIELD 9
    • RETAILERS MARKETBEAT Q4 2013 Regional expansion REGION Cental CITY Moscow Balashiha Ivanovo Bryansk Lenta Media Markt Serpukhuv Tver Maloyatoslavets Istra Yaroslavl Media Markt Leroy Merlin Lenta NorthSaint-Petersburg West Privolshsky Kazan Beloretsk Nishny Novgorod Nabereshny Chelny Orenburg Penza Izhevsk Ylyanovsk Perm Saratov Ufa Consumer COMING SOON Max Brenner electronics Montcler Disney Store 1 7-Eleven Wetzel’s Pretzel Footwear 2 NEWCOMERS 2013 Marukame, Bata, Harman, Takko Fashion, Nautika, The North Face, Chicco, Trollbeads, Krispy Kreme, Marukame Udon, Jamie's Italian, Smoothie Factory Jack Wolfskin Quiznos, Reima Leroy Merlin Gloria Jeans Telemax Sbarro H&M Lenta, Finn Flare O'Key REGION CITY NEWCOMERS 2013 COMING SOON Southern Volgograd Armavir Sochi Taganrog Krasnodar Rostov-on-Don Ekaterinburg Tymen Magnitogorsk Leroy Merlin Lenta Bata, Louis Vuitton Lenta Barker , Hamleys Starbucks Uralsky OBI, O'Key, Media Markt Lenta Media Markt Sibirsky Disney Store Leroy Merlin Far East Lenta Miass Chelaybinsk Surgut Nishny Tagil Angarsk Irkutsk Krasnoyarsk Novosibirsk Nyagan Novokuznetsk Omsk Tomsk Vladivostok Lentа, Joop!, O'Key Decathlon Decathlon, Media Markt Children goods 4 Bata, Starbucks Starbucks Fashion 20 Decathlon, Nespesso, Happylon Auchan, Familia, Henderson,Leroy Merlin Lego Karusel Lego OBI Lenta Detsky Mir Henderson Lego Karusel, Tomas Munz New Yorker Lenta Lenta Hamleys,Mamas&Pap as O'Key Decathlon Sport goods 7 Metro Cash & Carry PlanetaGotepriimstva (Sbarro, Yamkee, Vostochny bazar) Variety store 3 MAIN TRENDS OF THE MARKET • Growing interest for smaller regional cities Opening single mono-brand stores Increasing Internet sales DATA: Open sources CUSHMAN & WAKEFIELD 10
    • RETAILERS MARKETBEAT Q4 2013 Regional expansion Consumer electronics 1 Footwear 2 Children goods 4 Fashion 20 Sport goods 7 Variety store 3 MAIN TRENDS OF THE MARKET • Growing interest for smaller regional cities Opening single mono-brand stores Increasing Internet sales DATA: Open sources CUSHMAN & WAKEFIELD 11
    • RETAIL FORMATS MARKETBEAT Q4 2013 Shopping centers dominate the market QUALITY RETAIL FORMATS in RUSSIA, 2013 (BY SQ M) Shopping Centre 88.0% FAHSION OUTLET Mixed Use complex 11.9% 2013 2012 Outlet centre 0.2% Total GLA - 14.7 mn sq m in 506 retail stores Outlet Village Belaya Dacha (Phase 1), GLA 38, 000 sq m, Moscow, Hines Vnukovo Outlet Village Phase 1, 16, 584 sq m, Moscow, Diona 2013 Fashion House OutletMall, 28,760 sq m, Moscow, Fashion House Development RETAIL PARK RUSSIA RETAIL FORMATS SHOPPING CENTRE MIX-USE BUILDING / COMPLEX DEPARTMENT STORE RETAIL WAREHOUSE STREET RETAIL RETAIL PARK FASHION OUTLET 2011 Solnechny, GLA 37,000 sq m Saratov, Midland Development 2014 UNDER CONSTRUCTION : BellaVita, GLA 35,000 sq m Noginsk / Electrostal / Pavlovsky Posad, Service Management & Consulting CUSHMAN & WAKEFIELD 12
    • SHOPPING CENTERS: RUSSIA MARKETBEAT Q4 2013 Expansion QUALITY RETIAL SPACE ‘000 SQ M, RUSSIA (including Moscow) NEW SHOPPING CENTERS, 2013 LOCATION PROPERTY NAME RETAIL GLA, SQ M DELIVERY THE LARGEST QUALITY PROJECTS IN RUSSIA, GLA 15,000+ sq m 1 296 1 828 1 895 1 620 1 872 1 561 1 635 1 667 1 426 1 944 2006 2007 2008 New construction 2009 2010 CW Forecast 2011 2012 2013 2014 forecast Announced developers plans • 63 new retail centers with a total area of more than 1.6 mn sq m were delivered in Russia in 2013.The new construction volume in Russia is stable at the level of 1.4-.8 mn sq m annually. • Average area of newly constructed shopping centers is decreasing, in 2013 it averaged 24,000 sq m and this is 30% lower than it was in 2011. • According to developers’ plans 3.2 bn sq m of new quality retail space might be delivered the next year in Russia, most likely around 60-70% will be opened. Volgograd Bryansk Tumen Ufa Yaroslavl St. Petersburg St. Petersburg Belgorod St. Petersburg Armavir Krasnoyarsk Nizhnyi Novgorod Taganrog St. Petersburg Syktyvkar Magnitogorsk Surgut Ekaterinburg St. Petersburg Krasnodar Groznyi Tobolsk Irkutsk Korolev Kostroma Kaliningrad Kursk Tumen Tumen Tambov Orel Belgorod Novosibirsk Sochi 92,100 91,000 75,000 63,440 62,550 61,300 56,000 53,000 48,000 45,000 45,000 39,700 38,500 31,500 30,000 30,000 29,400 28,500 28,200 26,000 25,000 25,000 23,000 22,500 22,000 20,700 20,400 20,000 19,000 18,000 17,500 15,000 15,000 15,000 Aquarel' Aero Park City Kristall Planeta Aura London mall Kontinent Mega Grinn Zhemchuzhnaya Plaza Krasnaya Ploschad Komsomall Indigo Life Marmelad Avenue June (phase II) Kontinent Agora Globus (phase I) Kontinent na Zvezdnoy (phase II) Galerea Krasnodar (phase II) Grand Park Zhemchuzhina Sibiri Modniy Kvartal Gelios RIO Europa Center (phase II) Evropa 2 Voyazh Magellan Evropa MegaGrinn (retail part) City Mall Belgorodskiy (phase II) Malinka Mandarin TOTAL GLA RUSSIA Q1 Q4 Q4 Q4 Q4 Q4 Q1 Q1 Q3 Q4 Q4 Q2 Q4 Q2 Q3 Q4 Q3 Q4 Q1 Q4 Q4 Q4 Q3 Q3 Q4 Q2 Q2 Q4 Q3 Q3 Q1 Q2 Q3 Q3 1,435,513 * Moscow projects are on the next slide CUSHMAN & WAKEFIELD 13
    • SHOPPING CENTERS: MOSCOW MARKETBEAT Q4 2013 Structural changes QUALITY RETAIL, ‘000 SQ M, MOSCOW NEW SHOPPING CENTERS, 2013 LOCATION PROPERTY NAME MOSCOW RIO-Leninskiy Roomer Fashion House Outlet-Mall Otrada (phase II) SportEX Raikin Plaza Vnukovo Outlet Village (phase 1) VDNKh SC 329 567 Total GLA Moscow 400 379 337 2006 2007 197 2008 New construction 2009 2010 CW Forecast 2011 152 2012 231 LOCATION MOSCOW PROPERTY NAME 57,000 34,100 28,760 22,000 18,000 17,000 16,580 15,000 Q2 Q4 Q2 Q2 Q1 Q3 Q2 Q4 231,850 2014 forecast Announced developers plans Goodzone Detsky Mir Vodniy Smolensky Passage (phase II) Vesna! Brateevo Mall Vegas Crocus City Mozaika Total GLA Moscow RETAIL GLA, SQ M DELIVERY 235,000 94,975 67,000 58,900 56,000 56,000 50,530 40,300 33,000 19,780 16,000 15,000 15,000 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q4 Q4 Projects with GLA > 15,000 sq m Moskvorechye Kuntsevo Plaza RIO-Kievskoe highway Redevelopment of Industrial zone # 56 (TEN Development) Aviapark 2013 • Five quality retail centers opened in Moscow in 2013.The largest of them was Rio on Leninsky (GLA 57,000 sq m). • Moscow region construction level was also moderate (comparing with several previous years) – just 4 new shopping malls with total GLA less than 100,000 sq m have been opened in 2013. • DELIVERY PLANNED FOR DELIVERY IN 2014 493 219 RETAIL GLA, SQ M Projects with GLA 15,000 + sq m 822,968 There are 1.2 mn sq m of quality retail space which is under construction in Moscow at the moment planned for delivery in 2014-2015: Aviapark, that is going to become the largest shopping mall in Europe (GLA 235,000 sq m), Columbus (GLA 140,000 sq m), Vegas Crocus City (GLA 95,000 sq m), River Mall (GLA 91,200 sq m), Mosaika (GLA 67,000 sq m). CUSHMAN & WAKEFIELD 14
    • MOSCOW SHOPPING CENTERS MARKETBEAT Q4 2013 Quarterly monitoring FOOTFALL, Q1 2010=100% VACANCY RATE, % 120% 110% 100% 90% 80% 70% 1,7% 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% 0,6% 1,2% 1,1% 60% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 Q4 Q1 Q2 Q3 2009 2010 Shopping mall retail gallery structure Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 Q3 Q4 Q1 Q2 Q3 2012 Q4 2013 “SUCCESSFUL SHOPPERS”, % Other Farmacy 44,3% 40,3% 40,3% 39,0%38,2% 39,3% 38,5% 37,1% 34,8% Sportware Homeware 30,8%30,6% 28,1% Fashion Children goods 44,0% 41,2% 40,9% 39,1% 36,9% Electronics, mobile Cosmetics Footware Accessories Q4 Q1 Q2 Q3 2009 2010 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 Q3 Q4 Q1 Q2 Q3 2012 Q4 2013 * 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. CUSHMAN & WAKEFIELD 15
    • MOSCOW SHOPPING CENTERS : RENTAL RATES MARKETBEAT Q4 2013 Rental rates are stable PRIME RETAIL INDICATOR**, MOSCOW QUALITY SHOPPING CENTERS RETAIL GALLERY RENTAL RATES* BUSINESS GLA, SQ M RETAIL GALLERY <100 Food court 100 - 300 300 - 1,200 1,200 - 3,500 ANCHORS 3 600 3 125 $5,000-$8,000 Restaurant 3 750 3,500-7,000 $1,800-$2,000 Kiosks MINI ANCHORS 4 000 3 800 3 000 2 600 $600-$1000 2 500 $700 Clothing $1 600 $1 200 $700 $400 Shoes $2 200 $1 700 $1 200 $800 White and Brown Supermarket 2006 2007 2008 2009 2010 2011 2012 2013 $500 $500-$600 Hypermarket $250-$450 Cinema $250-$320 Q4 2013 prime retail indicator** is 4,000 USD • A tendency towards rate increases was observed in Q2 and near future growth may be even higher than 5% * US$ 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 CUSHMAN & WAKEFIELD 16
    • MOSCOW HIGH STREETS : RENTAL RATES High streets are becoming more important • The most important event for the high streets became the development of pedestrian zones in Moscow, which is actively supported by the city government. MARKETBEAT Q4 2013 HIGH STREETS — PEDESTRIAN AREA • There is a change of visitor flows (from passengers to pedestrians) on those streets, where the driving was cancelled (it concerns Bolshaya Dmitrovka street first of all). • There is a huge potential for retail activity talking about pedestrian streets and retailers show great interest in developing of those areas. • The expansion of pedestrian zones will significantly increase the supply of the quality retail premises in Moscow. CUSHMAN & WAKEFIELD 17
    • MOSCOW HIGH STREETS MARKETBEAT Q4 2013 High streets are becoming more important • Nearly 5% of the existing premises are freely available (are offered for lease or being prepared for delivery) in the central high streets. • Rental rates in the trade corridors are stable. • There is a tendency for increasing lease terms in the last few years. As an example, three years ago contracts used to be short-term mostly (11 months) and now agreements for the 3 and 5 years period become more and more widespread. CATEGORY Total % Food / Restaurants / Cafes Fashion and footware 20% 30% 40% Food / Restaurants / Cafes Services Accessories / Optics / Watches Cosmetics / Pharmacy / Perfumery 50% 60% 70% 80% 90% 100% 13% Vacant or non-operationable 10% 5% Other 0% 5% Cosmetics / Pharmacy / Perfumery Petrovka-Kusnetsky Most 5% Jewelry Nikol'skaya 7% Accessories / Optics / Watches Tverskaya 14% Bank / Exchange Pyatnitskaya 19% Services Pokrovka-Maroseyka 32% 4% GRAND TOTAL 100% Fashion and footware Bank / Exchange Jewelry Other CUSHMAN & WAKEFIELD 18
    • LEASE TERMS MARKETBEAT Q4 2013 Behind the rent ITEM COMMENT Lease Terms Standard lease terms for gallery tenants are between 3-5 years, break options are rare. For anchor tenants (including fashion anchors) lease terms are up to 20 -25 years and break option is becoming popular. Rental Payment Rents are typically payable monthly in advance. Turnover / percentage rents are increasingly seen in shopping centres. Rental rates are generally calculated in USD, Euro or commercial units are used. In less 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 tenant via service charge. Other costs VAT 18% Local property taxes are not payed separately, they are generally included in the service charges. CUSHMAN & WAKEFIELD 19
    • OFFICE MARKET 2013 MOSCOW RESULTS TOTAL STOCK 13.85 mn sq m NEW DELIVERY 2013 0.89 mn sq m TAKE-UP 2013 1.58 mn sq m VACANCY RATE 11.93% CLASS A AVERAGE RENTAL RATE 870 USD per sq m per year, triple net MARKET TRENDS: • Overall demand level is decreasing. • Absorption is below the construction level. • Even a moderate growth of new office space affects the vacancy rate. • Rental rates growth (if any) is below inflation.
    • DEMAND MARKETBEAT Q4 2013 High tenant activity but with some weakening signs TAKE-UP (’000 sq m) 2500 80% 83% 2006 2007 2000 75% 86% 86% 2009 2010 79% 80% 2011 2012 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 86% 1500 1000 500 0 2008 Class A Forecast, Class A 2013 F2014 Class B (B+ and B-) Forecast, Class B (B+ and B-) • Overall, 1.58 million sq m of quality office space was leased or bought during 2013. • Real estate budgets are limited and tenants tend to primarily consider their current location as a viable alternative to a new office. • Tenants continue to be interested primarily in existing buildings, the proportion of pre-lease agreements* in 2013 was 2.3% of the total rented space in 2013. * Pre-lease deal — the deal for a space to be delivered 60 days or more after the deal date CUSHMAN & WAKEFIELD 21
    • DEMAND MARKETBEAT Q4 2013 Absorption is behind new construction ABSORPTION vs. NEW CONSTRUCTION (mn sq m) 2,14 1,81 1,49 1,38 1,35 0,90 1,08 0,89 0,65 0,76 0,57 0,68 0,49 0,30 2007 2008 2009 2010 New construction 2011 Absorption 2012 2013 • In 2013 absorption was larger than in the previous year and was 680,000 sq m. Class B offices made the largest input to the absorption growth. New construction continues to exceed absorption. • According to Cushman & Wakefield Research, 1% growth of GDP creates an additional demand for 100,000 – 200,000 sq m of office space. Ministry of Economic Development forecasts GDP growth below 2% in 2013 and less than 3% in 20142015. * Net absorption represents the change in the occupied stock within a market during the period. Calculation: X – Y = Net Absorption. X = Current stock – current vacancy Y = Previous stock (same quarter, previous year) – previous vacancy (same quarter, previous year) CUSHMAN & WAKEFIELD 22
    • OFFICE STOCK MARKETBEAT Q4 2013 New construction is drawn towards suburbs NEW CONSTRUCTION (’000 SQ M) Q4 2013 2000 1500 Q3 2013 1000 Q2 2013 500 Q1 2013 0 2006 Class A 2007 2008 Class B (B+ and B-) 2009 2010 2011 Forecast, Class A 2012 2013 F2014 Forecast, Class B (B+ and B-) 0 50 100 Downtown Class A Central Class A OTA Class A 150 200 250 300 350 Downtown Class B Central Class B OTA Class B • By the end of 2013, Moscow had 13.85 mn sq m of quality office space. New construction of 0.89 mn sq m was the highest since 2010. 49 business centers were delivered to the market, among them are Mercury City Tower, White Gardens, 9 Acres, Park Pobedy, Lotte Business Center and Newton Plaza. • Only 25% of new quality office space meet Class A requirement, most office space is classified as Class B. About half of new delivery is located in the suburbs (outside the Third Transport Ring). • The new construction was mostly located outside the historical center – 49.2% of new construction was built outside the Third Transport Ring in 2013. CUSHMAN & WAKEFIELD 23
    • AVAILABILITY MARKETBEAT Q4 2013 Availability is growing in Class A, stable in Class B 21,5% AVAILABILITY 24,3% 20,8% 18,9% 15,7% 12,1% 9,4% 11,1% 4,5% 4,2% 2,7% 4,1% 2006 2007 Q4:21,0% 14,4% 9,6% 10,3% 10,3% mn sq m, office rentable VACANCY RATE 3,0 2,5 1.29 2,0 1,5 1,0 10,9% Q4: 10,25% 6,0% 1.45 0,5 0,0 2008 2009 2010 Vacancy rate Class A 2011 2012 2013 Vacancy rate Class B F2014 2006 2007 2008 2009 2010 2011 2012 2013 Availability in existing buildings (EOP) Available future supply (within 1 year) (EOP) • Altogether there is 1.45 mn sq m of available office premises in 464 existing buildings and 1.8 mn sq m is in buildings under construction. • Class B vacancy rate was stable during the last 6 years, since 2011 it increased by less then 1%. • In 2013 Class A vacancy rate increased from 16.4% (December 2012) to 21.2% (December 2013), and the average is 18.9%. The tendency of on increase in the Class A vacancy rate in Moscow will continue in 2014. CUSHMAN & WAKEFIELD 24
    • RENTAL RATE MARKETBEAT Q4 2013 Rental rates remain unchanged in 2013 AVARAGE RENTAL RATES 1088 935 Q4: $880 731 711 734 645 807 796 850 870 Q4: $570 646 529 2006 509 2007 2008 2009 Class A 414 444 466 2010 2011 2012 530 500 2013 F2014 Class B (B+and B-) • At the end of 2012 and the beginning of 2013 market players were expecting positive dynamics and the result was rental rates growth of 15% growth. But later rents were adjusted, as a result the average rental rate increase fell to 7-12% depending on the class of the building and location. In the centre of Moscow (inside the Garden Ring, Novoslobodskiy district) and in Moscow-City average class A rental rate grew most of all. Average class B+ rental rate grew most of all at the suburbs of Moscow. • In Class A, the average asking rental rate is $870. • In Class B, the average asking rental rate is stable at $530 (Class B+ $560). • Prime rents remain at $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 CUSHMAN & WAKEFIELD 25
    • WAREHOUSE & INDUSTRIAL 2013 SUMMURY NEW CONSTRUCTION IN MOSCOW 850,000 sq m NEW CONSTRUCTION IN REGIONS 310,000 sq m PRIME RENTAL RATE INDICATOR 135 USD per sq m per annum, triple net
    • MOSCOW SUPPLY MARKETBEAT Q4 2013 New construction of quality warehouses (Classes A and B) 1600 1400 1200 2013 1000 New construction 850,000 sq m Vacancy rate (class A) 1.5% 800 600 400 2014 200 Total pipeline 1,200,000 sq m 0 2007 2008 2009 2010 2011 2012 2013 2014F CUSHMAN & WAKEFIELD 28
    • RUSSIA SUPPLY MARKETBEAT Q4 2013 New construction of quality warehouses (Class A) Other; 1.40% Krasnodar; 0.78% Voronezh; 1.40% Rostov-on-Don;1.40% N. Novgorod; 1.40% Samara; 1.63% Kazan; 2.51% Novosibirsk; 2.88% Ekaterinburg; 4.64% St. Peterburg; 13.73% 10 000 8 000 6 000 2013 New construction 3,100,000 sq m 4 000 Moscow; 67.52% 2 000 0 2012 2013 CUSHMAN & WAKEFIELD 29
    • RUSSIA MARKETBEAT Q4 2013 Rental rates, USD per sq m per annum, triple net $160 City $140 $120 $100 $80 $60 $40 2008 St. Petersburg 2009 2010 Ekaterinburg 2011 Rostov-On-Don 2012 Moscow 2013 2014F Moscow St. Petersburg Ekaterinburg Nizhnyi Novgorod Samara Kazan Rostov-On-Don Krasnodar Novosibirsk Ufa Avg base rental rates, USD / annum 130-140 130-135 130-135 120-125 110-115 90-100 120-125 120-125 110-125 120-125 Avg leased area, sq m 10,000-15,000 2,000-10,000 5,000-10,000 3,000-5,000 3,000-5,000 3,000-5,000 3,000-5,000 3,000-5,000 2,000-5,000 3,000-5,000 Novosibirsk CUSHMAN & WAKEFIELD 30
    • DEMAND MARKETBEAT Q4 2013 Take-up 1 800 1 600 2013 1 400 1 200 Take-up Moscow: 1 000 1,300,000 sq m Take-up Other Regions: 800 410,000 sq m 600 400 200 0 2008 2009 2010 Moscow 2011 2012 2013 Regions CUSHMAN & WAKEFIELD 31
    • DEMAND STRUCTURE MARKETBEAT Q4 2013 DEMAND STRUCTURE, MOSCOW REGION DEMAND STRUCTURE, OTHER REGIONS 13% 19% Distributor 22% 32% 16% Logistic 22% 10% Other 14% 12% Logistic 1% Other 15% Producer 5% 2% 25% Producer 3% Distributor 31% 59% Retailer 39% 2012 30% Retailer 2013 29% 2012 2013 • The majority of transactions in W&I segment in Moscow region are carried out by retail companies, which are also the market leaders in terms of leased sq m. CUSHMAN & WAKEFIELD 32
    • APPENDIX INTERACTIVE CHARTS MARKETBEAT Q4 2013 MOSCOW OFFICE NET ABSORBTION CUSHMAN & WAKEFIELD 33
    • APPENDIX INTERACTIVE CHARTS MARKETBEAT Q4 2013 RUSSIAN PROPERTY INVESTMENT MARKET CUSHMAN & WAKEFIELD 34
    • APPENDIX INTERACTIVE MAPS MARKETBEAT Q4 2013 MOSCOW OFFICE MARKET http://www.cwsr.info/maps/off/officemap.htm CUSHMAN & WAKEFIELD 35
    • APPENDIX INTERACTIVE MAPS MARKETBEAT Q4 2013 MOSCOW RETAIL MARKET http://www.cwsr.info/maps/ret/retailmap.htm CUSHMAN & WAKEFIELD 36
    • APPENDIX INTERACTIVE MAPS MARKETBEAT Q4 2013 MOSCOW WAREHOUSE MARKET http://www.cwsr.info/maps/wh/whmap.htm CUSHMAN & WAKEFIELD 37
    • www.cushmanwakefield.com www.marketbeat.ru RESEARCH DEPARTMENT Moscow Denis.Sokolov@eur.cushwake.com