• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Q3 2011 marketbeat presentation eng
 

Q3 2011 marketbeat presentation eng

on

  • 616 views

Quarterly presentation

Quarterly presentation

Statistics

Views

Total Views
616
Views on SlideShare
615
Embed Views
1

Actions

Likes
0
Downloads
1
Comments
0

1 Embed 1

http://marketbeat.ru 1

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Q3 2011 marketbeat presentation eng Q3 2011 marketbeat presentation eng Presentation Transcript

    • January-October 2011 Russian Real Estate Market Outlook October 20111
    • ECONOMY AT A GLANCE GDP GROWTH 2011 Estimate 2012 Forecast Ministry of Economics 4.2% 3.1% Otkrytie 4.1% 4.8% INFLATION CPI (Ministry of Economics) 6.7% 6% CPI (VTB Capital) 9% 8.5% CPI (Otkrytie) 8.8% 7.2% GDP Deflator (VTB Capital) 11.6% 7.9%2
    • Q3 2011 MACRO INDEXES Consumer confidence Retail Trade turnover growth Q-on-Q and Industrial optimism indices 30% 20% 20% 15% 10% 10% 0% -10% 5% -20% 0% -30% -5% -40% Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 09 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 -10% Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 2005 2006 2007 2008 2009 2010 2011 Consumer confidence index, % Industrial optimism index, % 2005 2006 2007 2008 2009 2010 2011 Industrial optimism is in green zone Consumer confidence is rising Retail trade turnover shows positive trend but it is still 3 times below pre-crisis levels3 Source: Rosstat
    • INFLATION AND CURRENCY CPI YTD Currency Exchange Rate 114% 45 112% 40 110% 35 RUR 108% 30 106% 25 104% 102% 20 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 100% SEP JUL DEC FEB OCT APR JAN JUN AUG NOV MAR MAY 2005 2006 2007 2008 2009 2010 2011 RUR/US$ RUR/EUR RUR/Central Bank Basket 2008 2009 2010 2011 Source: Central Bank Source: Rosstat, C&W estimate In 2011 inflation is still low, but will catch up in the last quarter, driven by RUR devaluation and government spending Exchange rate volatility is back, however exchange rate is still under control of Central Bank4
    • GDP GROWTH. RUSSIA, EU, USA 8.5% 8.2% 5.2% 4.2% 4.0% 3.2% 3.1% 3.0% 3.0% 2.7% 1.9% 1.8% 1.8% 1.6% 1.5% 1.1% 0.4% -0.3% Russia -3.5% Euro area -4.3% USA -7.8% 2006 2007 2008 2009 2010 F2011 F2012 Source: IMF, Russian Ministry of Economics While GDP growth outlook in Russia is significantly lower than in pre-crisis years it is still 3 times above EU. Current Russian GDP outlook is similar to what EU was facing in 2006-20075
    • 6 $100 $120 $140 $0 $20 $40 $60 $80 Q1 Q2 Q3 2000 Q4 Q1 Q2 Q3 2001 Q4Source: eia.gov Q1 Q2 Q3 2002 Q4 Q1 Q2 Q3 2003 Q4 Q1 Q2 Q3 2004 Q4 Q1 Q2 OIL PRICE AND BUDGET Q3 2005 Q4 Q1 Q2 Q3 2006 Q4 Q1 Q2 Q3 2007 Q4 Q1 Q2 Q3 2008 Q4 Q1 Q2 Q3 2009 Q4 Q1 Q2 Q3 2010 Q4 Q1 Q2 2011 Q3 60% duty $25 applied Cut off 2011 planned budget break even $75 2012 planned deficit budget 2012 $93 $120 Budget surplus (Kudrin)
    • CAPITAL FLOW Fixed investments and Capital outflow 400 354 bn USD 301 300 263 250 200 174 128 126 99 100 82 41 0 0 -9 -34 -56 -49 -100 -134 -200 2004 2005 2006 2007 2008 2009 2010 Q1-Q3 Capital outflow Fixed investments 2011 Despite official forecasts capital outflow continues for fourth consecutive year. It is expected that this year the outflow will even exceed the 2009 level. Dollar and Euro cash flowing real estate objects are attractive investment opportunities.7 Source: Rosstat, Central bank of Russia
    • INVESTMENT MARKET
    • INVESTMENT MARKET IN 2011 Transaction volume split by sector Prime Moscow Cap Rates $9 000 16% mn USD 15% $8 000 14% $7 000 13% 12% $6 000 11% 10% $5 000 9% $4 000 8% 7% $3 000 6% $2 000 5% 4% 2011 (Year end $1 000 2004 2005 2006 2007 2008 2009 2010 2011YTD forecast) $0 2004 2005 2006 2007 2008 2009 2010 2011 Hospitality W&I Retail Office Forecast Retail W&I Office In 2011 historical record in real estate investments is registered By the end of Q3 2011 total investment volume accounted for more than 6.5 bn USD – outpacing the results of the most successful 2011 (5.8 bn) a quarter before the end of year. More 1 – 1.5 bn USD are expected in Q4. The retail investments are on top of the list with 42% share.9 Source: Cushman & Wakefield
    • INVESTMENT STRUCTURE INVESTMENT VOLUME BY REGION INVESTOR ORIGIN 9 000 100% mn USD 8 000 90% 7 000 80% 70% 6 000 60% 5 000 50% 4 000 40% 3 000 30% 2 000 20% 1 000 10% 0 0% 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Moscow St. Petersburg Regions Forecast Domestic investors Foreign investors YTD St-Petersburg becomes significant market for real estate investments. Regions are still out of investor‟s radar. Foreign investors are coming back after 2 years of absence.10
    • OFFICE MARKET
    • MOSCOW OFFICE STOCK AND AVAILABILITY STRUCTURE OF MOSCOW OFFICE STOCK AND AVAILABLE SPACE Class A 2.4 mn sq m  Vacant class A and B premises comprise 1.57 mn sq m;  Vacant class A share constitutes 3,6% of total quality Vacant office stock; 13.3%  Number of existing office buildings with vacancies in Class B downtown submarkets : 10.0 mn sq m - Class A: 22 - Class B+: 56 Source: CW Research12
    • PAST AND FUTURE SUPPLY NEW CONSTRUCTION IN MOSCOW. ACTUAL AND All new office developments FORECAST stopped in Q3 2008. Developers started to construct new projects ‘000 sq.m. only in Q3 2010. This formed the 2 100 possible luck of new deliveries in 1 800 the end of 2011 – 2012. The pipeline structure has changed 1 500 in favor of class A projects. In 2011- 2014 the deliveries of class B 1 200 projects are expected to continually 900 decrease; Construction rate is approaching 600 European indicators of 600,000- 300 800,000 sq m per annum. 0 2006 2007 2008 2009 2010 Q1-Q3 F2012 F2013 F2014 F2015 F2011 Class B (B+ and B-) Class A Future supply is decreasing. The pipeline structure is expected to shift towards class A projects.13 Source: CW Research
    • DEMAND Take up in Q3 2011 was as high as in OFFICE TAKE UP IN MOSCOW H1 2011 and amounted to 465,000 sq m. 2 000 The share of Class A deals in the ‘ 000 sq m take-up is about 45% that is much above the normal share which was 1 500 about 25%-30% in 2006-2009. Pre-lease activity is still low. New buildings are coming to the market 1 000 without tenants; Future take up is forecasted to 500 decrease in 2011 and start increasing in line with the GDP dynamics after 2011. the decrease in 2011 explained 0 by contraction of deferred demand, 2006 2007 2008 2009 2010 Q1-Q3 F2012 F2013 F2014 F2015 which is currently influence the market F2011 demand. Class B (B+ and B-) Class A High tenant activity in 2011 comparable with the “boom” years14 Source: CW Research
    • TAKE UP VS. NET ABSORPTION  When market was immature OFFICE TAKE UP AND NET ABSORPTION IN MOSCOW Take up was close to net absorption, because companies „ 000 000 sq m were moving to newly constructed 1.77 buildings from old stock. 1.52 1.91 In 2008 Net absorption was 1.26 1.33 higher than Take up because of high number of pre-lease contracts in 2007. As the result of 1.19 0.74 massive preleases, fully let 0.97 buildings were delivered to the market. 0.67 Low net absorption and high 0.37 take up indicates maturity of Moscow market. Now, when companies rent a 2007 2008 2009 2010 Q1-Q3 new office, they free up office of 2011 the same class. Take-up Absorption Vacancy rate will remain relatively high in the following years. Vacant area will degenerate in terms of quality, as tenants will tend to move to the better buildings of the same grade.15 Source: CW Research
    • AVAILABILITY A and B CLASS VACANCY RATE IN MOSCOW Vacancy rates remain relatively high because of low net absorption. 25% Two-digit vacancy rates is a new 20% 19,0% 18,8% 18,2% 19,0% reality for Moscow office market. When corporations move from 15% one office to another even within 11,3% 11,2% 11,4% 11,0% the same class, they look for 10% better quality. As the result overall quality of 5% vacant offices is degenerating. 0% It becomes hard to find decent 2006 2007 2008 2009 2010 Q1 Q2 Q3 F Q4 quality space in the right place. 2011 2011 2011 2011 Class A Class B (B+ and B -) While general vacancies will remain high, the actual quality space will again become scarce (and expensive) Source: CW Research16 * The vacancy rate is a share of vacant space in all existing office buildings
    • RENTAL RATE A and B CLASS WEIGHTED AVERAGE NET RENTAL RATE,  Rental rates increased in Q1 USD per sq.m 2011 and then remained stable through 2011. $1 200 We expect stable rents in Q4 $1 000 2011 in A class B class rents are still growing $800 because of the wide spread $600 between A and B class rents. $400 We expect this spread co compress down to USD 100- $200 150 in 2012 $0 Along with degeneration of 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1 Q2 Q3 F Q4 vacant space, quality officers 2011 2011 2011 2011 will again become scarce. Class A Class B (B+ and B) Rental rates will be facing pressure from devaluated RUR. However drying up of the quality space in the market will balance this pressure Source: CW Research17 * Rental rates – base asking rates for deals closed within Q3 2011 per sq m per annum, triple net
    • MARKET IN DETAILS: AVAILABILITY BY SUBMARKETS, OCTOBER 2011 Class A Class B 6% SUB 14% OTR SW 14% 14% NW 9% 68% NE 15% SE 25% 10% KUT 16% 17% SOK 17% TTR 9% SCH 16% 21% BAS 5% 20% NOV 9% 0% FRU 4% 30% TAG 6% 22% CTY 5% 22% ZAM 4% 5% BEL 5% Downtown 17% CBD 5% 100K 75K 50K 25K 0K 0K 25K 50K 75K 100K 125K 150K 175K 200K Source: CW Research18 * The vacancy rate is a share of vacant space in all existing office buildings
    • MARKET IN DETAILS: RENTAL RATE BY SUBMARKETS, Q3 2011 Average rental rate by submarkets and conditions, USD per sq m per annum Class A Class B $465 $446 SUB $134 $387 SW $301 $555 $500 $567 NW $391 $325 $400 NE $345 $251 SE $345 $337 $600 KUT $351 $502 $754 $708 SOK $490 $417 $753 $508 SCH $428 $399 $763 $547 BAS $404 $329 ` $619 NOV $359 $468 $649 $880 FRU $530 $659 $550 TAG $355 $412 $764 $733 CTY $803 $924 $786 $787 ZAM $726 $609 $963 $800 BEL $591 $637 $852 $1 021 CBD $692 $685 fitted-out shell and core shell and core fitted-out Prime Central Business Central Other Trade Areas CBD District FRU Frunzensky NW North-West CTY Moscow City SCH Shabolovka NE North-East BEL Belorussky SOK Sokol SW South-West ZAM Zamoskvorechie TAG Tagansky SE South-East NOV Novoslobodsky SUB Suburbs BAS Basmanny KUT Kutuzovsky  Some submarkets have vacant space in S&C condition more expensive then fitted-out space. This can be explained by higher quality of buildings which offer S&C space (usually more modern buildings).19 Source: CW Research
    • MARKET IN DETAILS: TAKE-UP BY SUBMARKETS, Q1 – Q3 2011 Take-up by submarkets and conditions, sq m Class A Class B SUB SW NW NE SE KUT SOK SCH BAS NOV ` FRU TAG CTY ZAM BEL CBD 100K 75K 50K 25K 0K 0K 25K 50K 75K 100K fitted-out shell and core shell and core fitted-out Prime Central Business Central Other Trade Areas CBD District FRU Frunzensky NW North-West CTY Moscow City SCH Shabolovka NE North-East BEL Belorussky SOK Sokol SW South-West ZAM Zamoskvorechie TAG Tagansky SE South-East NOV Novoslobodsky SUB Suburbs BAS Basmanny KUT Kutuzovsky20 Source: CW Research
    • MARKET IN DETAILS: OCCUPIERS BY ORIGIN OCCUPIERS IN MOSCOW DOWNTOWN OCCUPIERS IN PRIME BUILDINGS Other Other 5% Russian 17% Russian 45% 52% International 78% International Moscow downtown and especially prime buildings remain extremely important for international companies While in prime buildings international companies will always dominate, share of Russian companies in Downtown area will grow.21 Source: CW Research
    • MARKET IN DETAILS:OCCUPIERS BY SECTOR OCCUPIERS IN PRIME BUILDINGS Banking is a major demand Other driver for prime offices. Banking / Finance Consumer Goods 15% IT / Computers / Software Oil and Gas 28% Auditors prefer Prime. Metallurgy Consultancy Real Estate / Property Real estate business itself 7% 23% drives demand for quality Business and Customer Services 10% offices in downtown/ Accountancy / Auditing Legal OCCUPIERS IN MOSCOW DOWNTOWN Other Banking / Finance Legal Oil and Gas Pharmaceuticals / Medical Consultancy Telecoms / Communications IT / Computers / Software Accountancy / Auditing Mining Real Estate / Property Metallurgy22 Source: CW Research
    • RETAIL MARKET
    • CONSUMER SPENDINGS AND SAVINGS CONSUMER SPENDINGS AND SAVINGS Russians prefer spending over savings 100% 80% Average Russian citizen owes $1091 to bank 60% 40% 20% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 2011 Consumer goods Service payment Foreigh currency purchases Savings (deposits and cash)24
    • POPULATION INCOME CHANGE OF INCOME GROUPS SIZE OVER YEARS Over last 5 years income structure in Russia changed significantly. 70% Lowest income group decreased 60% from 65% to slightly over 30% 50% However high inflation make this picture less impressive 40% 30% 20% 10% % 2006 2007 2008 2009 2010 H1 2011 < RUR10 000 RUR10 001-RUR15 000 RUR15 001-RUR25 000 >RUR25 00025
    • MOSCOW SHOPPING CENTERS MONITORING* Shopping centers footfall Vacancy Rate* % Of Successful Shoppers Q1 2010 = 100% (Conversion rate)* 120% 3.05% 44.3% 110% 40.3%39.0% 38.2% 40.3% 39.3%38.5% 37.1% 100% 90% 1.65% 1.58% 80% 0.80% 0.95% 1.00% 1.05% 0.97% 70% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2010 2011 2009 2010 2011 2009 2010 2011 Footfall in shopping centers is growing slightly in comparison to previous year. Vacancy rate in established shopping malls with stabilized catchment area is extremely low  Conversion rate is slightly up from previous year. * Cushman&Wakefield Research quarterly monitoring of 9 quality shopping centers (total GLA - 0.5 mn sq m)26
    • MOSCOW QUALITY SHOPPING CENTERS Quality retail space construction Structure of quality retail stock in in Moscow, sq.m. Moscow* 6% Forecast 11% up to 20,000 sq.m Actuals from 20,000 sq.m to 45,000 sq.m 49% 578 34% from 45,000 sq.m to 100,000 sq.m 379 402 82 145 Up to 100,000 sq.m 2008 2009 2010 2011 * Supply is divided into groups by a number of shopping centers of different size Construction of shopping centers in Moscow is in downturn Less new projects are announced and pipeline is drying out27 Source: C&W Research
    • QUALITY RETAIL IN RUSSIA OUTSIDE MOSCOW Quality retail space construction in Russia, sq.m Structure of quality retail stock in Russia* 3% Forecast 12% up to 20,000 sq.m Actuals from 20,000 sq.m to 45,000 sq.m 49% 1 445 500 36% 1 166 from 45,000 sq.m to 100,000 sq.m 731 542 More than100,000 sq.m 2008 2009 2010 2011 * Supply is divided into groups by a number of shopping centers of different size In 2011 construction activity in regions started growing again. Major retail development activities are concentrated outside Moscow Construction is going rather well. More than half of announced in the beginning of the year schemes were actually delivered. Although some deliveries will move to 2012, majority will be completed this year.28 Source: CW Research
    • MOSCOW RETAIL INDICATOR NEW CONSTRUCTION AND RENTAL RATE INDICATOR Retail indicator increased in 2011 $3 000 1 000 We expect further slow growth, driven by low construction and 000 sq m $2 400 800 high demand for established retail space. $1 800 600 $1 200 400 $600 200 $0 0 2006 2007 2008 2009 2010 2004 2005 2011F New Construction, 000 sqm Rental rate indicator29
    • STREET RETAIL STREET RETAIL RENTS IN MOSCOW High Street retail rents remain stable USD / sq. m / Q3 2011 annum trend Initiatives of new Moscow 1st Tverskaya Yamskaya $1,500- $2 ,500 up administration did not have any Arbat $1,000- $2,000 stable noticeable effect on high street Garden Ring $1,000- $2,500 stable rents Kutuzovsky Prospekt $1,000- $2,500 stable Kuznetsky Most $2,000- $2,500 stable Leningradsky Prospekt $1,000- $2,000 stable Leninsky prospect $1,000- $2,000 stable Prospect Mira $1,200- $2,000 stable Novy Arbat $2,000- $2,500 up Petrovka $2,500- $3,500 up Pyatnitskaya $1,500- $2,000 stable Tverskaya $3,500- $4,500 up Stoleshnikov per. $3,500- $4,500 up30
    • INDUSTRIAL,WAREHOUSE AND LAND
    • WAREHOUSE STOCK BY LOCATION Dmit rovskoe shosse (A104) Leningradskoe 1000 Yaroslavskoe shosse (M10) 800 shosse (M8) N ovorizhskoe 600 Shelkovskoe shosse (M9) shosse (A103) 400 200 Minskoe Gorkovskoe 0 shosse (M1) shosse (M7) Kievskoe N ovoryazanskoe > 30 km shosse (M З) shosse (M5) 10-30 km Kaluzhskoe Kashirskoe 0-10 km shosse (A101) shosse (M4) Inside Moscow Simferopolskoe shosse (M2)32
    • Russia: Consumer pattern Warehouse construction and pipeline in Moscow Warehouse Take Up, sq.m. Region 500 N ew construction Planned 1 400 Moscow Regions 400 1 200 300 1 000 800 200 600 100 400 0 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F Warehouse take up remains high with regional transactions occupying about 25% of the market. Warehouse construction is in downturn We expect construction volumes to stay around 500-600 thousand sq.m. in the following year33
    • Moscow: Market indicators Moscow Region warehouse rent, USD/sq.m. Warehouse vacancy rate in Moscow Region 11.2% $145 $137 $135 $140 $135 9.1% $132 8.1% $140 $130 $130 $127 3.9% $109 2.8% 1.0% $105 1.0% 1.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 FQ4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2010 2011 Warehouse rents quickly recovered to pre crisis levels Rents are driven by extremely low vacancy rates. With given construction plans it is very unlikely that vacancy rates will increase significantly in the mid- term We expect rents to remain stable.34
    • LAND PRICES Land price range in Moscow Region depending Moscow land price evolution (2007=100%) on distance from MKAD, mn. USD per hectare 110% $3.0 100% 90% $2.5 80% 70% $1.5 60% 50% $1.0 $0.8 $0.6 40% $0.5 $0.6 2007 2008 2009 2010 2011 F $0.4 $0.3 MKAD 5 km 15 km 30 km 50 km Land prices stabilized at 70% of pre-crisis levels Massive residential construction in 30 km zone from MKAD drives demand for land Most of the land transactions in so-called “New Moscow” are postponed due to uncertainty of the regulation and market.35
    • Thank you for your attention!