MARKETBEATREAL ESTATE MARKET UPDATE2012 - 2013                            JANUARY 2013
INFORMATION RESOURCES                                                                 MARKETBEAT                          ...
INTERACTIVE MAPSClick to open in browserOFFICES                                 SHOPPING CENTERS                          ...
MARKETBEAT                           2012 - 2013AGENDAMACROECONOMYRETAILOFFICEWAREHOUSELANDCAPITAL MARKETS                ...
MARKETBEAT                        2012 - 2013MACROECONOMY               CUSHMAN & WAKEFIELD    4
RUSSIA‘S MACROECONOMIC                                                                                  MARKETBEAT        ...
MACRO PERFORMANCE AND FORECASTS                                                                                           ...
OIL PRICE AND BUDGET PERFORMANCE                                                                                          ...
CAPITAL OUTFLOW                                                                                              MARKETBEAT   ...
INFLATION INDEXES AND CONSUMER SPENDINGS                                                                                  ...
RETAIL MARKET VOLUME                                                                                                      ...
RETAIL SALES                                                                                                              ...
RETAIL SPENDING                                                                                                           ...
CONSUMER CREDITS                       MARKETBEAT                                        2012 - 2013                   CLI...
MARKETBEAT                         2012 - 2013RETAIL MARKET                CUSHMAN & WAKEFIELD    14
NEW RETAILERS                                                                                                      MARKETB...
HYPERMARKETS                                                                                                        MARKET...
NON-FOOD RETAILERS                                                                                                 MARKETB...
RETAIL FORMATS                                                                         MARKETBEAT                         ...
SHOPPING CENTERS                                                                   MARKETBEAT                             ...
SHOPPING CENTERS, RUSSIA                                                                                                  ...
SHOPPING CENTERS – MOSCOW                                                                                                 ...
SHOPPING CENTERS                                                                                                          ...
RETAIL IN REGIONS                                                 MARKETBEAT                                              ...
SHOPPING CENTERS : RENTAL RATES                                                                                           ...
RETAIL STREETS : RENTAL RATES                                                        MARKETBEAT                           ...
LEASE TERMS                                                                                               MARKETBEAT      ...
MARKETBEAT                         2012 - 2013OFFICE MARKET                CUSHMAN & WAKEFIELD    27
MOSCOW OFFICE INDICATORS 2012*                                                                                           M...
DEMAND                                                                                                                    ...
NET ABSORPTION AND TAKE UP                                                                                                ...
MOSCOW OFFICE MARKET NET ABSORPTION                                  MARKETBEAT                                           ...
RENTAL RATES                                                                                                              ...
MARKETBEAT                                  2012 - 2013WAREHOUSE & INDUSTRIAL                         CUSHMAN & WAKEFIELD ...
MOSCOW SUPPLY                                                                                         MARKETBEAT          ...
RENTAL RATES                                                                                                      MARKETBE...
SUPPLY MAP                                                                                                                ...
DEMAND                                                                               MARKETBEAT                           ...
REGIONS                                                                                         MARKETBEAT                ...
MARKETBEAT                       2012 - 2013LAND MARKET              CUSHMAN & WAKEFIELD    39
MOSCOW REGION                                                                                MARKETBEAT                   ...
MOSCOW REGION                              MARKETBEAT                                            2012 - 2013Land prices   ...
MARKETBEAT                           2012 - 2013CAPITAL MARKETS                  CUSHMAN & WAKEFIELD    42
COMMERCIAL REAL ESTATE INVESTMENTS                                                                                        ...
RUSSIAN INVESTMENT MARKET                                                                                          MARKETB...
INVESTMENT MARKET IN NUMBERS                                                                             MARKETBEAT       ...
CAPITALIZATION RATES                                                                                                      ...
MARKETBEAT                    2012 - 2013FORECAST           CUSHMAN & WAKEFIELD    47
COMMERCIAL PROPERTY MARKET 2013-2015             MARKETBEAT                                                  2012 - 2013Fo...
2012-2013 Marketbeat presentation [ENG]
2012-2013 Marketbeat presentation [ENG]
2012-2013 Marketbeat presentation [ENG]
2012-2013 Marketbeat presentation [ENG]
2012-2013 Marketbeat presentation [ENG]
2012-2013 Marketbeat presentation [ENG]
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2012-2013 Marketbeat presentation [ENG]

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Russian commercial real estate market 2012 results and 2013-2015 forecast. Offices, retail, warehouse, land, investment.

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  1. 1. MARKETBEATREAL ESTATE MARKET UPDATE2012 - 2013 JANUARY 2013
  2. 2. INFORMATION RESOURCES MARKETBEAT 2012 - 2013 WEB SOCIAL NETWORKS iCushmanCWRUSSIA.RUMarket information, contacts news Mobile application for Commercial realMARKETBEAT.RU estate professionals, available at iTunesLatest Marketbeat report, reportsarchive, interactive maps CUSHMAN & WAKEFIELD 1
  3. 3. INTERACTIVE MAPSClick to open in browserOFFICES SHOPPING CENTERS WAREHOUSES http://goo.gl/Zcqct http://goo.gl/x0gsO http://goo.gl/iL0Mr You need Flash player installed and internet connection for the interactive map to run
  4. 4. MARKETBEAT 2012 - 2013AGENDAMACROECONOMYRETAILOFFICEWAREHOUSELANDCAPITAL MARKETS CUSHMAN & WAKEFIELD 3
  5. 5. MARKETBEAT 2012 - 2013MACROECONOMY CUSHMAN & WAKEFIELD 4
  6. 6. RUSSIA‘S MACROECONOMIC MARKETBEAT 2012 - 2013Russia‘s economy is competitive UK INTERNATIONAL COMPARISONS France • Russia‘s economic growth shows a competitive 3.9% YoY in Q1-Q3 2012. Germany Brazil • According to Rosstat estimations, Russia‘s GDP showed 2.9% YoY growth in Q3 2012 – the slowest pace since 2009.The US QoQ growth accounted for 9.5% Russia • The economy has reached the lowest growth level in Q3 and India will show ~3.5% growth in 2012 and stable growth at 3% - 4% YoY in 2013, backed by the global economic recovery and China increased internal demand. -2% 0% 2% 4% 6% 8% 10%Source: ROSSTAT, IMF CUSHMAN & WAKEFIELD 5
  7. 7. MACRO PERFORMANCE AND FORECASTS MARKETBEAT 2012 - 2013 ACTUAL MINECON URALSIB CAPITAL RENAISSANCE CAPITAL 2012 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015GDP, % 3.9* 3.5 3.6 4.3 4.5 3.5 3.1 3.2 3.2 3.5 4 4 -CPI 6.6 6.5 5-6 4-5 4-5 7 6.9 6.7 6.5 6.70 6 5.5 -Industrial production, % 2.7* 3.2 3.7 3.7 3.7 3 2.8 2.9 2.9 3.7 4 4 -Fixed Investments, % 8.4* 7.8 6.5 7.3 7.9 5.6 5.2 5.8 5.8 5.2 9.7 8.1 -Retail trade turnover, % 6* 5.7 5.4 5.8 5.8 5.5 5.3 5.7 5.7 5.5 4.5 4.3 -USD / RUR rate, avg. 31.1 31.1 32.4 33 33.7 31.21 31.6 31.3 31.4 31.2 32.8 33.9 -* January - November • The modest growth of the economy is expected for the next years. Source: Ministry for Economic Development, URALSIB Capital, Renaissance capital CUSHMAN & WAKEFIELD 6
  8. 8. OIL PRICE AND BUDGET PERFORMANCE MARKETBEAT 2012 - 2013 500 120 • The budget was met with a small 1.4% GDP surplus during January- 400 100 November 2012. 300 80 • However, Minfin still expects a -0.25% deficit in 2012 mainly due US$ / bbl to the oil sector and taxesbn US$ 200 60 underperformance . 100 40 • Average URALS price in 2012 was $110.7 / bbl whereas the budgeted price was $109 0 20 2007 2008 2009 2010 2011 JAN-NOV 2012 -100 0 Budget revenue (left) Budget expenditure (left) Deficit / Surplus (left) Urals actual average (right) Source: Ministry for Economic Development CUSHMAN & WAKEFIELD 7
  9. 9. CAPITAL OUTFLOW MARKETBEAT 2012 - 2013 100 • Net capital outflow from private sector increased by US$ 13.6 bn in 50 Q3 (compared to US$ 9.7 bn in Q2 2012). 0 • However,USD bn the outflow decelerated significantly relative to the beginning -50 of 2012. -100 • The 5% GDP rate of today‘s capital outflow is much better compared to 15% GDP of 2009/10 -150 2006 2007 2008 2009 2010 2011 Q1-Q3 2012 Total outflow Banks Other sectors Source: Ministry for Economic Development CUSHMAN & WAKEFIELD 8
  10. 10. INFLATION INDEXES AND CONSUMER SPENDINGS MARKETBEAT 2012 - 2013 CPI Goods 12% 60% 10% 50% 8% 40% 6% 4% Money on hand growth 30% Services Telecom services PI Industrial PPI 2% 20% 0% 10% -2% -4% 0% -6% -10%Cargo transportation PI Agricultural PPI Currency purchase Obligatory payments Construction PI Savings 2011 Jan - Nov 2012 November 2011 November 2012 • Retail sales growth decelerated to 3.8% YoY in October, compared to 7% YoY in 2011, however consumer spending patterns remain robust • Real disposable income growth decelerated to 2.4% YoY. • The CPI level is stable, Source: Rosstat CUSHMAN & WAKEFIELD 9
  11. 11. RETAIL MARKET VOLUME MARKETBEAT 2012 - 2013Russia is No.4 Retail Market in Europe RETAIL TURNOVER IN EUROPE* RUSSIA RETAIL TURNOVER ** 20% Croatia 16.605 Slovakia 18.36 Hungary 31.86 France 556.875 15% Romania 32.535 Ireland 36.45 Czech Republic 42.12 Greece 50.895 Germany 548.1 Portugal 53.595 10% Finland 54.675 Denmark 60.21 Others** 60.615 5% Norway 61.155 Russia 534.6 Austria 66.15 0% Sweden 94.5 Belgium 97.875 -5% United Switzerland 108.27 Kingdom Poland 110.025 459.54 -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Netherlands Spain 264.195 Italy 332.505 130.275 2006 2007 2008 2009 2010 2011 2012 Turkey 170.1RUSSIAN RETAIL TURNOVER GROWTH IS DECELERATING BUT STILL ONE OF THELARGEST IN EUROPE AND IS ONE OF THE DRIVERS OF GDP GROWTH IN 2012*Data of 2010, bn USD , GFK GeoMarketing**Source: ROSSTAT CUSHMAN & WAKEFIELD 10
  12. 12. RETAIL SALES MARKETBEAT 2012 - 2013Russian consumers are important players RETAIL SALES PER CAPITA FOR EUROPEAN COUNTRIES Luxembourg 11,840 Switzerland 10,161 Norway 9,628 Denmark 9,435 Austria 8,947 Moscow 7,874 France 7,829 Belgium 7,715 Great Britain 6,297 Italy 5,850 Germany 5,501 Portugal 4,852 Russia 4,457 Spain 3,215 Hungary 2,699 0 2,000 4,000 6,000 8,000 10,000 12,000Source: ROSSTAT, RegioData Research CUSHMAN & WAKEFIELD 11
  13. 13. RETAIL SPENDING MARKETBEAT 2012 - 2013Russians are the most active consumers in Europe RETAL SPENDING IN EUROPE* RUSSIA CONSUMER PATTERN 110% Share of retail spending in total 100% Country 90% private spending 80% 70%Russia 77% 60%Czech Republic 40% 50% 40%Poland 38% 30%France 35% 20% 10%Germany 28% 0%United Kingdom 31% -10% 2006 2007 2008 2009 2010 2011 01 - 11 2012 Goods and services Obligatory payments Savings Currency purchase Money on hand growth• AVERAGE RUSSIAN CITIZEN SPENDS 78% OF HIS/HER INCOME FOR RETAIL• AVERAGE SALARY IN RUSSIA – 25 704 RURSource: ROSSTAT, GFK GeoMarketing CUSHMAN & WAKEFIELD 12
  14. 14. CONSUMER CREDITS MARKETBEAT 2012 - 2013 CLICK TO OPEN INTERACTIVE CHART http://goo.gl/kp1wM CUSHMAN & WAKEFIELD 13
  15. 15. MARKETBEAT 2012 - 2013RETAIL MARKET CUSHMAN & WAKEFIELD 14
  16. 16. NEW RETAILERS MARKETBEAT 2012 - 2013New Reasons to visit Shopping Centers• The most notable opening in 2012 is Debenhams store.• In 2012 all the major new international brands came to Russia only with Russian retail partners• New brands come to Moscow initially with expansion plans for the Russian Regions (mostly in the ―millionniki‖ cities)• New Russian brands: »Cosmopolitan Fine Jewellery, CookHouse, Kari, Sabotage•Closed »Peacocks, Saturn (Metro Group) NEW RETAILERS 2012 COMING SOON CUSHMAN & WAKEFIELD 15
  17. 17. HYPERMARKETS MARKETBEAT 2012 - 2013Historic expansion of hypermarkets and impressive development plans 160 140 120 Total units trading 100 80 60 40 20 0 1992 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Auchan O‘KEY Lenta REAL CUSHMAN & WAKEFIELD 16
  18. 18. NON-FOOD RETAILERS MARKETBEAT 2012 - 2013Historic expansion of non-food big boxes and impressive development plans 80 70 60 Total units trading 50 40 30 20 10 0 1992 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Leroy Merlin OBI Castorama Media Markt CUSHMAN & WAKEFIELD 17
  19. 19. RETAIL FORMATS MARKETBEAT 2012 - 2013Shopping center formats dominate the market QUALITY RETAIL FORMATS in RUSSIA, 2012RUSSIA RETAIL FORMATS: MixedSHOPPING CENTER Use ShoppingSTREET RETAIL Building CenterDEPARTMENT STORE 11.9% 88.0%RETAIL OUTLETRETAIL PARK – to come soon Outlet centre 0.2% CUSHMAN & WAKEFIELD 18
  20. 20. SHOPPING CENTERS MARKETBEAT 2012 - 2013 Europe 2011, sq.m of quality retail per ‗000 inhabitant Norway Sweden Luxembourg Estonia Ireland Slovenia Netherlands Finland Austria Moscow Denmark Lithuania Latvia PortugalUnited Kingdom France 27 AverageEU- Switzerland Croatia Spain Italy Poland Slovakia Czech Rep. Malta Germany Hungary Romania Belgium Russia Turkey Bulgaria Moscow region Ukraine Greece Serbia Bosnia Herz. 0 100 200 300 400 500 600 700 Source: Cushman&Wakefield Research CUSHMAN & WAKEFIELD 19
  21. 21. SHOPPING CENTERS, RUSSIA MARKETBEAT 2012 - 2013 Construction of shopping centers in Russia is booming QUALITY RETIAL SPACE UNDER CONSTRUCTION QUALITY SHOPPING CENTERS (IN SHOPPING CENTERS), ‗000 SQ M BY REGIONS, 2012 (BY SQ M) Ekaterinburg Krasnodar 4% 4.3% 2,363 St. Petersburg Samara 1,828 1,895 14% 3.5% 1,797 1,620 1,635 Moscow 1,561 1,600 region 1,426 3% Moscow 24.0% Nizhnyi Novgorod 3.0% Omsk 2.6% Kazan 2.6% Other 2006 2007 2008 2009 2010 2011 2012 2013 Rostov- 36.4% On-Don 2.5% Announced developers plans CW Forecast New construction* The graph above include the new construction in all Russian cities, including Moscow * Outlets are included, retail part of mix-use complexes are excludedSource: Cushman&Wakefield Research CUSHMAN & WAKEFIELD 20
  22. 22. SHOPPING CENTERS – MOSCOW MARKETBEAT 2012 - 2013 QUALITY RETAIL SPACE CONSTRUCTION NEW SHOPPING CENTERS, 2012 (IN SHOPPING CENTERS), ‗000 SQ M Property Name Retail GLA, sq.m Delivery Moscow 567 Hotel Moskva 21,000 Q1 Sombrero 6,000 Q2 Outlet Village Belaya Dacha 24,000 Q3 379 400 Sviblovo 15,000 Q3337 316 Otrada (2 phase) 28,000 Q4 Kaleidoskop 41,000 Q4 219 197 Parus 17,280 Q4 152 180 Total GLA 152,280 Moscow Region Domodedovo Torgovy Kvartal 22,500 Q12006 2007 2008 2009 2010 2011 2012 2013 Krasnogorsk Solnechniy Ray 8,000 Q3 Krasnogorsk June 17,500 Q3 Announced developers plans CW Forecast New construction Zelenograd Panfilovskiy 13,300 Q4 Lytkarino Vesna 12,500 Q4 Odintsovo Westore 7,800 Q4• In 2012 the first outlet center in Russia opened in Moscow suburb. Mytischi June 75,000 Q4 Odintsovo Westore 7,600 Q4• 6 new shopping malls has been delivered in Moscow (and one outlet center) Total GLA 164,200 and 8 new shopping malls in Moscow Region (Moscow Region stock is not included in the graph above). CUSHMAN & WAKEFIELD 21
  23. 23. SHOPPING CENTERS MARKETBEAT 2012 - 2013 Quarterly monitoring, Moscow 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%60% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2009 2010 2011 2012 – Share of "successful shoppers" in visitors is 40.9% (Q4 2012) and this is the average level within 2010-2012. – Footfall in shopping centers is in line with seasonal trend. – Vacancy rate in existing shopping malls with stabilized catchment area is extremely low. * 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 22
  24. 24. RETAIL IN REGIONS MARKETBEAT 2012 - 2013Flash player required for interactive content CLICK TO OPEN INTERACTIVE CHART http://goo.gl/O7Q9J CUSHMAN & WAKEFIELD 23
  25. 25. SHOPPING CENTERS : RENTAL RATES MARKETBEAT 2012 - 2013 Moscow rental rates are stable QUALITY SHOPPING CENTERS RETAIL GALLERY Prime rental rate* in quality shopping Gross leasable area,sq m center retail gallery , Moscow Business type Retail Gallery Mini Anchors 4,000 3,800 <100 100 - 300 300 - 800 800 - 1,500 3,750Kiosks $2,000 3,600 3,125Cellphones $3,500 3,000Drugstore $1,200-$1,500 2,600 2,500Banks $1,200-$1,500Restaurant $1,200 $600-$1000 2006 2007 2008 2009 2010 2011 2012 F2013Textiles $1,200 $800Books $1,000 $500-$600 $400 $300 Q4 2012 prime retail indicator** isClothing and Footwear $1,200 $800 $600 $400 3,800 USDWhite and Brown $500 per sq.m per annum, base rateSupermarket $750 Source: Cushman&Wakefield Research CUSHMAN & WAKEFIELD 24
  26. 26. RETAIL STREETS : RENTAL RATES MARKETBEAT 2012 - 2013Moscow rental rates are stable STREET USD/sq. m/annum 2012 trend 1st Tverskaya Yamskaya $1,500 - $2 ,500 up Arbat $1,500 - $2,500 up Garden Ring $1,000 - $2,500 stable 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 $1,500 - $2,500 up Petrovka $3,000 - $4,000 up Pyatnitskaya $1,500 - $2,000 stable Tverskaya $3,500 - $4,500 up Stoleshnikov per. $3,500 - $4,500 upSource: Cushman&Wakefield Research CUSHMAN & WAKEFIELD 25
  27. 27. LEASE TERMS MARKETBEAT 2012 - 2013Behind the rent ITEM COMMENT Lease Terms Standard lease terms for gallery tenants are between 3-5 years, break options are rare. For anchor tenants (incl. fashion anchors) lease terms are up to 20-25 years with a break option is becoming popular. Rental Payments 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. In less quality shopping centres rental rates are calculated in RUR. Rent Deposit The rent deposit required in quality shopping centres is typically equivalent to 1 – 3 months rent. 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 in the current market. Service Charges Service charge is payable by tenants on either an ―open book‖ basis or more commonly as a fixed cost. Utility payments are charged on consumption. Building insurance is normally charged back to the tenant via a service charge. Other costs VAT 18% Local property taxes are not paid separately, they are generally included in the service charges. CUSHMAN & WAKEFIELD 26
  28. 28. MARKETBEAT 2012 - 2013OFFICE MARKET CUSHMAN & WAKEFIELD 27
  29. 29. MOSCOW OFFICE INDICATORS 2012* MARKETBEAT 2012 - 2013New construction, Take up and Vacancy rate 000 sq m HIGH DEMAND 2,200 14% –2050,000 sq m (take up) 2,000 12% 1,800 FAIR NET ABSORPTION 1,600 10% –30.9 % from take-up 1,400 8% 1,200 FAIR NEW CONSTRUCTION 1,000 800 6% –553,000 sq m 4% 600 DECREASING VACANCY 400 200 2% –11.0% 0 0% STABLE RENTAL RATES 2006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015 New construction New construction Forecast –Prime $1,200 (stable) Take-up Take-up Forecast Vacancy rate –Class A $790 (5% growth within a year ) –Class B $450 (stable)* preliminary data CUSHMAN & WAKEFIELD 28
  30. 30. DEMAND MARKETBEAT 2012 - 2013High turnover, low net absorption TAKE-UP (‘000 sq m) • Office take up is at the record with over 2 mn sq.m to000 sq m 86% 79% be transacted during the year 2012.2,600 83% 86% 84% 90%2,400 80% 75% • Occupier demand is steady as tenants look to 80%2,200 consolidate or renegotiate leases.2,000 70%1,800 • At the same time, Net Absorption is lower than in 60%1,600 previous years and is about 31,1% of Gross Absorption1,400 50% (or take-up).1,200 40%1,000 • The share of sale deals is at the stable level of 15-20% 800 30% from the total take-up. 600 20% 400 10% 200 0 0% 2006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015 Forecast Class B (B+ and -) B Class B (B+ and B -) Forecast Class A Class A Share of lease deals CUSHMAN & WAKEFIELD 29
  31. 31. NET ABSORPTION AND TAKE UP MARKETBEAT 2012 - 2013 In balance ABSORPTION VS. TAKE-UP ABSORPTION VS. NEW CONSTRUCTION 1.97 2.05 2.17 1.75 1.811.51 1.81 1.35 1.27 1.49 1.39 1.35 0.76 0.88 0.74 0.63 0.74 0.74 0.76 0.63 0.63 0.65 0.55 0.63 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Take-up Absorption New construction Absorption • Originally Take up was close to net absorption, because companies were moving to newly constructed buildings from old stock. NET ABSORPTION —represents the change in the occupied stock within a market during the period. • In 2008 Net absorption was higher than Take up because of high number of Calculation: Net Absorption =X-Y Where: pre-lease contracts in 2007. As the result of massive preleases, fully let X = Current stock – current vacancy buildings were delivered to the market. Y = Previous stock (same quarter, previous year) – previous vacancy (same quarter, previous year) • Low net absorption and high take up indicates the maturity of Moscow market. CUSHMAN & WAKEFIELD 30
  32. 32. MOSCOW OFFICE MARKET NET ABSORPTION MARKETBEAT 2012 - 2013Flash player is required for interactive content CLICK TO OPEN INTERACTIVE CHART http://goo.gl/MyNp0 CUSHMAN & WAKEFIELD 31
  33. 33. RENTAL RATES MARKETBEAT 2012 - 2013Stability is the key RENTAL RATES BY CLASSES $1,088 • High activity by tenants has had little impact on rents, which remain flat for all classes and all submarkets. In $927 $820 $840 $900 the vast majority of office buildings in Moscow, asking $790 $708 $731 734 rents are stable. $645 $808 • Nevertheless, there are positive dynamics in Class A $631 average rental rates. In Q3 class A average rents have $526 $540 $510 $450 $450 $480 $500 grown from USD 750 to USD 790 due to the $417 respectively high proportion of transactions in the Central area (46% in Q3 compared with a traditional 30%). The higher share of more expensive deals 2006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015 pushed average rents up. • Tenants‘ incentives are as low as possible, discounts Class A Class B (B+ and B-) from asking rental rates are not often granted or are low (about 5% on average). • Prime $1,200 • We expect stable rents until the end of this year and possibly well into 2013. • Class A $ 790 • Class B $ 450 * Rental rates – base asking rates for deals closed within the period per sq m per annum, triple net CUSHMAN & WAKEFIELD 32
  34. 34. MARKETBEAT 2012 - 2013WAREHOUSE & INDUSTRIAL CUSHMAN & WAKEFIELD 33
  35. 35. MOSCOW SUPPLY MARKETBEAT 2012 - 2013 New construction of quality warehouses (A and B classes) 1 800 2012 1 600 – New construction 720,000 sq. m 1 400 1 200 2013 1.280,000 sq m000 sq m 1 000 – Total pipeline 800 • The vacancy rate in class A remains 600 stable at 1% since Q3 2011 400 • Vacancy rates in quality W&I properties 200 will remain stable in the short-term outlook. 0 2006 2007 2008 2009 2010 2011 2012 2013F New construction Planned CUSHMAN & WAKEFIELD 34
  36. 36. RENTAL RATES MARKETBEAT 2012 - 2013 Rental rates and lease terms COLD CLASS A CLASS B CLASS C$150 STORAGES Net Rent Rates, $140 $/sq m/year 130 -140 120-130** 170** 251$140 $135 $135 $130 Operating Expenses, 30-40 20-30 - - $/sq m/year$130 $135 $132 Utility Charges, 10-15 10 - - $/sq m/year$120 Yearly rent indexation CPI-3% 8-10% n/d n/d$110 $105 $110 Minimum Lease Term, 5-10 1-5 - - years$100 Contract security, 3-6 1-3 - - months$90 Advance Payment, 1-3 1-3 1 - months$80 2006 2007 2008 2009 2010 2011 2012 2013F Contract currency USD/EUR RUB RUB RUB Minimal lease area, 3 500 - - sq m CUSHMAN & WAKEFIELD 35
  37. 37. SUPPLY MAP MARKETBEAT 2012 - 2013Distribution of W&I space in the Moscow Region EXISTING 2013 PIPELINE Dmitrovskoe Dmitrovskoe shosse (A104) shosse (A104) 1 000 250 Leningradskoe Yaroslavskoe Leningradskoe Yaroslavskoe shosse (M10) shosse (M8) shosse (M10) shosse (M8) 800 200 Novorizhskoe 600 Shelkovskoe Novorizhskoe 150 Shelkovskoe shosse (M9) shosse (A103) shosse (M9) shosse (A103) 400 100 200 50 Minskoe Gorkovskoe Minskoe Gorkovskoe 0 0shosse (M1) shosse (M7) shosse (M1) shosse (M7) Novoryazansko Kievskoe Novoryazanskoe Kievskoe e shosse (MЗ) shosse (M5) shosse (MЗ) shosse (M5) Kaluzhskoe Kashirskoe Kaluzhskoe Kashirskoe shosse (A101) shosse (M4) shosse (A101) shosse (M4) Simferopolskoe Simferopolskoe shosse (M2) shosse (M2) 30+ km 10-30 km 0-10 km Moscow 30+ km 10-30 km 0-10 km Moscow CUSHMAN & WAKEFIELD 36
  38. 38. DEMAND MARKETBEAT 2012 - 2013 Take-up • 2012 set the sale / lease market record in terms of1 600 sq m in the Moscow Region since 20081 400 • Sale transactions accounted for circa 30% of the total market volume.1 200 • The regional market shrank considerably: about -1 000 40% down from 2011 to about 18% of the total market volume of 2012 (in terms of sq m). 800 • The demand for quality warehouses from internet 600 trading companies has grown notably. 400 • About 40% (in terms of sq m) out of sold and leased transactions belong to retail companies 200 0 2008 2009 2010 2011 2012 Moscow Regions CUSHMAN & WAKEFIELD 37
  39. 39. REGIONS MARKETBEAT 2012 - 2013 Regional rental rates, USD per sq.m.$140 Avg base rental Avg leased area, CITY rates,$120 USD / annum sq m Moscow 130-140 10,000-15,000$100 St. Petersburg 120-130 2,000-10,000$80 Ekaterinburg 110-115 5,000-10,000 Nizhnyi Novgorod 110-120 3,000-5,000$60 Samara 110-115 3,000-5,000$40 Kazan 90-100 3,000-5,000 Rostov-On-Don 115-120 3,000-5,000$20 Krasnodar 110-120 3,000-5,000 Novosibirsk 110-115 2,000-5,000 $0 Ufa 90-100 3,000-5,000 2008 2009 2010 2011 2012 St. Petersburg Ekaterinburg Rostov-On-Don CUSHMAN & WAKEFIELD 38
  40. 40. MARKETBEAT 2012 - 2013LAND MARKET CUSHMAN & WAKEFIELD 39
  41. 41. MOSCOW REGION MARKETBEAT 2012 - 2013Stable, growing marketMOSCOW REGION AVERAGE INDUSTRIAL LAND PRICE FOR INDUSTRIAL LAND IN PRICE, mn USD/ha MOSCOW REGION by direction 1,87 PRICE, ROAD mn USD / ha 1,38 1,4 Dmitrovskoe shosse A104 0.5-1.5 Yaroslavskoe shosse M8 0.5 - 1.5 1,4 1,5 Gorkovskoe shosse M7 0.5 - 1.2 1,07 Novoryazanskoe shosse M5 0.5-1.2 Kashirskoe shosse M4 0.6 - 1.5 Simferopolskoe shosse M2 0.8 - 1 Kaluzhskoeshosse shosse A101 1-1.5 Kievskoe shosse M3 1-2 Minskoe shosse M1 1-1.52008 2009 2010 2011 2012 2013F Novorizhskoe shosse M9 2-4 Leningradskoe shosse M10 1.5-2.5 CUSHMAN & WAKEFIELD 40
  42. 42. MOSCOW REGION MARKETBEAT 2012 - 2013Land prices DISTANCE FROM MKAD PRICE, mn USD / ha MKAD 2.5 - 3 5 km 1 – 1.5 15 km 0.6 - 0.8 30 km 0.4 - 0.6 50 km 0.3 - 0.5 CUSHMAN & WAKEFIELD 41
  43. 43. MARKETBEAT 2012 - 2013CAPITAL MARKETS CUSHMAN & WAKEFIELD 42
  44. 44. COMMERCIAL REAL ESTATE INVESTMENTS MARKETBEAT 2012 - 2013Global Markets EUROPEAN MARKET WORLDWIDE MARKET London Metro 35.42 NYC Metro 41.64 Paris 16.24 London Metro 35.42 LA Metro 26.56 Moscow 8.38 Tokyo 26.18 Berlin-Brandenburg 6.85 Hong Kong 25.32 Stockholm 6.53 SF Metro 21.86 Shanghai 19.60 Frankfurt/Rhine-Main 4.52 DC Metro 19.20 Munich 3.81 Singapore 19.15 Rhine-Ruhr 3.79 Paris 16.24 Amsterdam/Randstad 3.40 Beijing 13.38 Chicago 11.36 Oslo 3.23 Chongqing 10.88 Hamburg 3.20 Seattle 10.33 Saint Petersburg 2.88 Chengdu 9.37 Houston 8.75 South Germany 2.88 Shenyang 8.57 Warsaw 2.70 Wuhan 8.49 Zurich 1.92 Moscow 8.38 Hangzhou 8.24 0 10 20 30 40 0 10 20 30 40 50 US$ bn US$ bnMoscow retained its 3rd rank in Europe and within the Top 20 worldwide presence.Data of Real Capital Analytics based on 12 past month basis CUSHMAN & WAKEFIELD 43
  45. 45. RUSSIAN INVESTMENT MARKET MARKETBEAT 2012 - 2013 Russian Investments split By sector BY ORIGIN 9,000 8,000 8,000 7,547 7,437 32% Foreign investors 7,000 5,798 Domestic investors 6,000 5,354 68% 5,000 4,560mn USD 3,994 4,000 3,000 2,256 BY GEOGRAPHY 2,000 2% 1,000 0 16% 2006 2007 2008 2009 2010 2011 2012 F2013 Moscow St. Petersburg Office Retail Industrial Other Forecast Regions 82% • Total volume of investments in 2012 accounted for US$ 7.44 bn • Our forecast for 2013 investments is US$ 8 bn CUSHMAN & WAKEFIELD 44
  46. 46. INVESTMENT MARKET IN NUMBERS MARKETBEAT 2012 - 2013 2012 investments breakdown in $mn $7,437 bn OF TOTAL YEAR-TO-DATE INVESTMENTS MOSCOW $ 6,113 20% Offices ST. PETERSBURG $ 1,179 Offices $2,824 46% Shopping Centers Shopping Centers $1,392 11% W&I REGIONS $ 145 W&I $660 Hospitality and Hospitality and other $1,238 23% other 5% Offices $ 30 Offices Shopping Centers $ 1,085 Shopping Centers W&I -MOSCOW IS THE CORE MARKET W&IFOR OFFICE AND W&I SEGMENTS Hospitality and other $ 64 Hospitality and 92% other CUSHMAN & WAKEFIELD 45
  47. 47. CAPITALIZATION RATES MARKETBEAT 2012 - 201318% Moscow capitalization rates showed small correction for office and W&I market.16% • Current rates in Moscow:14% • Office 8.75%12% • Shopping centers 9.25%10% • W&I 11.5%8%6% 2004 2005 2006 2007 2008 2009 2010 2011 Q1 12 Q2 12 Q3 12 Q4 12 Office prime Shopping centers prime W&I Prime CUSHMAN & WAKEFIELD 46
  48. 48. MARKETBEAT 2012 - 2013FORECAST CUSHMAN & WAKEFIELD 47
  49. 49. COMMERCIAL PROPERTY MARKET 2013-2015 MARKETBEAT 2012 - 2013ForecastTrends:• Development slowdown• Transformation of Moscow• De-centralization 2.0• New points of growth• Future of «New Moscow»• Change of consumer profile CUSHMAN & WAKEFIELD 48

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