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  1. 1. RESEARCH H2 2008 MOSCOW Office market report Highlights • Demand for offices in Moscow has reduced greatly in the wake of the global economic crisis. Those companies who are looking for space are seeking much lower rents and greater incentives than were previously available. • Office rents have been falling since the end of Q3 2008. Rents for class A offices are now generally in the range of $750-1,100 per sq m per annum (excluding VAT and operating expenses) and between $500-800 per sq m per annum for class B space. • Vacancy rates have risen steeply. The class A vacancy rate, which had been 3.2% at mid-2008, ended the year at 13.1%. • An increasing number of developers have been forced to put projects on hold, in light of uncertain future demand and difficulties raising finance. The total volume of space which has been put on hold comes to about 730,000 sq m.
  2. 2. H2 2008 MOSCOW Office market report Moscow City (Moscow International Business Center) 19 18 19 Complete 18 17 1st Krasnogvarde ysky proezd Partially 16a 16b 1 Complete 20 21 13 14 15 12 2009 11 Expocenter 8a 8b 7 6 2010 2 Under design 10 9 4 3 Kras Suspended nopr esnens kaya naberezhnaya Mosc ow River 0 Moscow City – developments Site Development Total size (sq m) Office component (sq m) Status Completion - Expocenter 85,000 - partially complete 2009 0 Tower 2000 61,067 50,000 complete 2002 1 Parking 170,101 - under construction 2010 2 Public Square and Moscow City Museum 19,000 - under construction 2010 3 City Palace Tower 169,000 80,000 under construction 2010 4 Imperia Tower 287,724 98,247 under construction 2009 6 Central Core Parking & Metro Terminal (Underground) 278,000 - under construction 2010 6 Central Core Public Complex 22,000 - under construction 2010 7-8b Mall of Russia 179,930 - under construction 2010 8a Multifunctional Recreation Complex 50,190 - under design n/a 9 Capital City Complex 288,680 72,315 partially complete 2009 10 Naberezhnaya Tower 254,000 150,000 complete 2007 11 Transport Terminal 228,000 122,450 suspended 12 Eurasia Tower 203,104 82,817 under construction 2010 13 Federation Complex 423,000 181,800 partially complete 2010 14 Mercury City Tower 158,528 86,000 under construction 2010 15 Moscow Government Administrative Complex 636,330 n/a suspended 16a Multifunctional Office-Administrative Complex 249,600 122,500 suspended 16b Parking 180,000 - under design 2011 17-18 Russia Tower 565,000 140,000 suspended 19 Northern Tower 136,580 78,000 complete 2008 20 Multifunctional Business-Expo Complex 180,000 70,936 under design 2011 21 Yuri Dolgoruky n/a n/a under design 2011 Source: Knight Frank 2
  3. 3. www.KnightFrank.com www.KnightFrank.ru Moscow Fourth Transpo rt Ring Key projects due to open in 2009 Class A 14 Class B+ Knight Frank is project consultant ay Highw 10 oye rovsk Greenwood Dmit (130,500 sq m) ra Prospekt Mi MirLand (75,000 sq m) 16 Le ni ng ra Ring ds ky Third Transport ya S tr Av ka en vs 8 Str ue ko sa ya Monarch 8.1 Ru nue ka (192,800 sq m) Tv ds er Mira Ave sk bo ay r Diamond Hall 8.2 St slo aS tr (61,500 sq m) ya na Novo rud nop 12 White Square as Garden Ring Domnikov Kr (74,000 sq m) (132,000 sq m) Nordstar Tower 4 (147,000 sq m) 7 9.1 13 7.1 5 WTC, phase III 7.2 (70,000 sq m) Novy Arbat Str 1 ue Capital City en (288,700 sq m) ky Av 3 Entuziastov Highway ovs tuz Mirax Plaza Ku Legion III, stage II (46,000 sq m) 9.2 17 (368,000 sq m) Nizh 7.3 egorod skaya S Vo tr 2 lg og ra ds Tricolor 7.4 e nu e ky Av 9 (116,400 sq m) Av en ue y Vivaldi Plaza sk (100,600 sq m) 9.3 Mytn ol om ue os aya S 6.1 en m 6 Av Ko ky tr ns ni 6.2 Le 11 Nagatino i-Land (216,900 sq m) 15 1. Central Business Districts 6. TTR South 8. TTR North 10. FTR North 2. GR South 6.1 Leninsky 8.1 Tverskoy-Novoslobodsky 11. FTR South 3. GR West 6.2 Tulsky 8.2 Prospekt Mira 12. FTR West 7. TTR West 9. TTR East 13. FTR East 4. GR North 7.1 Presnensky 9.1 Basmanny 14. MKAD North 5. GR East 15. MKAD South 7.2 City 9.2 Tagansky Borders of business districts 16. MKAD West 7.3 Kievsky 9.3 Volgogradsky Borders of subdistricts 17. MKAD East 7.4 Khamovniki GR = Garden Ring TTR = Third Transport Ring FTR = Fourth Transport Ring 3
  4. 4. Table 1 Moscow submarket data Transport Direction Sub Max prime Average Average Transport ring Stock Vacancy Transport ring district rent ($ per class A rent class B+ rent average rent (class A and rate ring vacancy sq m pa) ($ per sq m pa) ($ per sq m pa) ($ per sq m pa) B+) (sq m) rate 1 Boulevard Ring Center CBD 1,300 1,100 900 1,000 509,700 11.9% 11.9% 2 Garden Ring South GRS 1,000 950 850 900 771,200 17.2% 14.0% 3 West GRW 1,050 1,000 800 566,000 15.9% 4 North GRN 1,150 1,050 800 584,200 16.4% 5 East GRE 1,100 1,000 750 211,300 14.7% 6.1 Third Transport Ring South LEN 950 850 700 750 134,200 11.0% 15.5% 6.2 South TUL 900 800 650 511,700 21.4% 7.1 West PRES 1,000 850 800 171,500 19.4% 7.2 West CITY 1,100 900 850 434,200 15.8% 7.3 West KIEV 950 900 800 95,200 10.0% 7.4 West KHAM 1,000 950 850 111,000 16.2% 8.1 North TV-NOV 1,000 950 850 502,000 11.3% 8.2 North PRM 950 900 800 286,600 15.5% 9.1 East BASM 750 – 650 351,800 16.0% 9.2 East TAG 800 – 600 245,200 10.0% 9.3 East VOLG 700 – 600 135,900 15.0% 10 Fourth Transport Ring North FTRN 750 – 650 650 339,600 19.1% 15.0% 11 South FTRS 850 800 600 662,300 13.0% 12 West FTRW 850 800 650 302,300 14.0% 13 East FTRE 700 – 550 313,500 12.0% 14 MKAD North MKADN 550 – 500 500 320,900 12.0% 14.5% 15 South MKADS 600 – 500 384,200 18.6% 16 West MKADW 650 600 550 640,500 10.0% 17 East MKADE 550 – 500 173,300 11.0% Total 800 8,758,100 14.5% Source: Knight Frank Table 2 Key leasing transactions, 2008 Company Acquired space (sq m) Address Property Class Quarter Lease Sberbank 55,000 12A, 2nd Yuzhnoportovyi passage South Port B+ Q4 TNK-BP 37,000 22, Belovezhskaya st. West Gate A Q1 Video International* 20,700 7 km off the MKAD, Novorizhskoe hw. Riga Land B+ Q2 Schlumberger 13,030 16, Leningradskoe hw. Metropolis A Q2 TNK-BP 11,597 22, Belovezhskaya st. West Gate A Q2 Bayer* 10,700 18, 3rd Rybinskaya st. Burevestnik B+ Q2 Svyaznoy 10,457 19, Leninskaya Sloboda st. Omega Plaza B+ Q4 Rolf 9,897 8, Ivana Franko st. Kutuzoff Tower B+ Q1 ROSNO* 8,800 25, Varshavskoe hw. Chaika Plaza B+ Q3 Olympic Committee 7,813 40/3, Bolshaya Ordynka st. Legion I B+ Q2 Purchase (owner occupation) Confidential client* 27,900 1-6, Nagatinskaya poima st. Nagatino i-Land B+ Q2 LBBW* 23,000 1-6, Nagatinskaya poima st. Nagatino i-Land B+ Q3 * Knight Frank acted as a consultant of the deal Source: Knight Frank 4
  5. 5. H2 2008 MOSCOW Office market report Table 3 Key investment transactions, 2008 Company Acquired asset Price District Class KanAm Grund Purchase of 4 class A office buildings projects n/a Tulsky A Kapitalanlagegesellschaft mbH (101,000 sq m) at Kozhevnicheskaya str., 8/4 KanAm Grund Purchase of the Citydel business n/a Garden Ring East A Kapitalanlagegesellschaft mbH centre (49,100 sq m) at Zemlynoy val st. RP Capital Management Purchase of the Silver City business centre $350 million Garden Ring East A (60,000 sq m) at Serebryannicheskaya emb. Sponda Plc Purchase of the Ducat Place II business centre $185 million Garden Ring North A (19,500 sq m) at Gasheka str. BPT Arista S.A. SICAV-SIF Purchase of the Country Park business centre $90 million MKAD North B+ (19,530 sq m) in Khimki, Moscow region Source: Knight Frank Figure 1 Figure 2 Figure 3 Average Grade A rents Grade A rents by submarket Distribution of total office stock US$ per sq m per annum US$ per sq m per annum sq m (000s) 1,400 1,200 3,000 1,200 1,000 800 2,000 1,000 600 800 400 1,000 600 200 400 0 0 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 BR GR Moscow TTR* FTR MKAD BR GR Moscow TTR* FTR MKAD 2004 2005 2006 2007 2008 -City -City Source: Knight Frank Source: Knight Frank Source: Knight Frank * Excluding Moscow-City * Excluding Moscow-City Figure 4 Figure 5 Vacancy rates** Prime office yields % % 20 15 15 12 10 9 5 0 6 BR GR Moscow TTR* FTR MKAD H1 H2 H1 H2 H1 H2 H1 H2 -City 2005 2006 2007 2008 Source: Knight Frank Nagatino i-Land * Excluding Moscow-City Source: Knight Frank ** Based on Grade A and Grade B properties 5
  6. 6. RESEARCH Americas Moscow London USA Kyrill Starodoubtsev Chris Bell Bermuda Director – Office Head Managing Director, Europe Brazil +7 (495) 981 0000 +44 (0)20 7629 8171 Caribbean kyrill.starodoubtsev@ru.knightfrank.com chris.bell@knightfrank.com Chile Maria Kotova Joe Simpson Australasia Executive Director Partner, International Research Australia +7 (495) 981 0000 +44 (0)20 7629 8171 New Zealand maria.kotova@ru.knightfrank.com joe.simpson@knightfrank.com Europe Natalia Sazonova Matthew Colbourne UK Head of Research Senior Analyst Belgium +7 (495) 981 0000 +44 (0)20 7629 8171 Czech Republic natalia.sazonova@ru.knightfrank.com matthew.colbourne@knightfrank.com France Germany Hungary Ireland Italy Monaco Poland Portugal Russia Spain The Netherlands Ukraine Africa Botswana Kenya Malawi Nigeria South Africa Tanzania Uganda Knight Frank Research provides strategic advice, consultancy services and Zambia forecasting to a wide range of clients worldwide including developers, investors, Zimbabwe funding organisations, corporate institutions and the public sector. All our clients Asia recognise the need for expert independent advice customised to their specific needs. Cambodia China Knight Frank Reports are also available at www.knightfrank.com Hong Kong India Indonesia © Knight Frank LLP 2009 Macau This report is published for general information only. Although high standards have been used in the Malaysia preparation of the information, analysis, views and projections presented in this report, no legal responsibility Singapore can be accepted by Knight Frank Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Thailand Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part Vietnam is allowed with proper reference to Knight Frank Research. The Gulf Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Bahrain Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.

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