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RETAIL SPACE
ACROSS RUSSIA

A Cushman & Wakefield Research Publication   2012-2013
INTRODUCTION                                                    CONTENTS:
The present report has been prepared by Cushman ...
RETAIL SPACE
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RETAIL SPACE
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        2012-2013




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Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
Retail Space across Russia 2012 - 2013
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Retail Space across Russia 2012 - 2013 Slide 1 Retail Space across Russia 2012 - 2013 Slide 2 Retail Space across Russia 2012 - 2013 Slide 3 Retail Space across Russia 2012 - 2013 Slide 4 Retail Space across Russia 2012 - 2013 Slide 5 Retail Space across Russia 2012 - 2013 Slide 6 Retail Space across Russia 2012 - 2013 Slide 7 Retail Space across Russia 2012 - 2013 Slide 8 Retail Space across Russia 2012 - 2013 Slide 9 Retail Space across Russia 2012 - 2013 Slide 10 Retail Space across Russia 2012 - 2013 Slide 11 Retail Space across Russia 2012 - 2013 Slide 12 Retail Space across Russia 2012 - 2013 Slide 13 Retail Space across Russia 2012 - 2013 Slide 14 Retail Space across Russia 2012 - 2013 Slide 15 Retail Space across Russia 2012 - 2013 Slide 16 Retail Space across Russia 2012 - 2013 Slide 17 Retail Space across Russia 2012 - 2013 Slide 18 Retail Space across Russia 2012 - 2013 Slide 19 Retail Space across Russia 2012 - 2013 Slide 20 Retail Space across Russia 2012 - 2013 Slide 21 Retail Space across Russia 2012 - 2013 Slide 22 Retail Space across Russia 2012 - 2013 Slide 23 Retail Space across Russia 2012 - 2013 Slide 24 Retail Space across Russia 2012 - 2013 Slide 25 Retail Space across Russia 2012 - 2013 Slide 26 Retail Space across Russia 2012 - 2013 Slide 27 Retail Space across Russia 2012 - 2013 Slide 28 Retail Space across Russia 2012 - 2013 Slide 29 Retail Space across Russia 2012 - 2013 Slide 30 Retail Space across Russia 2012 - 2013 Slide 31 Retail Space across Russia 2012 - 2013 Slide 32 Retail Space across Russia 2012 - 2013 Slide 33 Retail Space across Russia 2012 - 2013 Slide 34 Retail Space across Russia 2012 - 2013 Slide 35 Retail Space across Russia 2012 - 2013 Slide 36 Retail Space across Russia 2012 - 2013 Slide 37 Retail Space across Russia 2012 - 2013 Slide 38 Retail Space across Russia 2012 - 2013 Slide 39 Retail Space across Russia 2012 - 2013 Slide 40 Retail Space across Russia 2012 - 2013 Slide 41 Retail Space across Russia 2012 - 2013 Slide 42 Retail Space across Russia 2012 - 2013 Slide 43 Retail Space across Russia 2012 - 2013 Slide 44
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Retail Space across Russia 2012 - 2013

Report covers retail real estate development in major Russian cities.

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Retail Space across Russia 2012 - 2013

  1. 1. RETAIL SPACE ACROSS RUSSIA A Cushman & Wakefield Research Publication 2012-2013
  2. 2. INTRODUCTION CONTENTS: The present report has been prepared by Cushman & RETAIL IN RUSSIA 3 Wakefield in order to provide a retail real estate market PEOPLE 4 overview of various Russian cities. RETAILERS 4 By now, the country has reached the stage of post-crisis CITIES 5 recovery. Traditionally, retail is considered a key driver of CITY INDEX economic growth. The country is huge, spreading through ASTRAKHAN 33 several time zones, and each city has its own unique char- acter and real estate market dynamics. Consumer behav- BARNAUL 34 ior varies across the country with many factors influencing CHELYABINSK 18 a specific location: the level of economic development, EKATERINBURG 11 welfare of the population, income level, purchasing habits, IRKUTSK 26 etc. We trust that this report will serve as an introduction IZHEVSK 27 to the retail real estate market in the present changing KAZAN 16 environment. KEMEROVO 23 The information used here is based on regular monitoring of cities, on Cushman & Wakefield‘s databases, on national KHABAROVSK 32 and regional statistics, as well as on our own analysis. KRASNODAR 21 KRASNOYARSK 35 LIPETSK 36 MOSCOW 6 MOSOW REGION 10 NIZHNIY NOVGOROD 12 NOVOKUZNETSK 22 NOVOSIBIRSK 15 OMSK 14 ORENBURG 30 PERM 24 ROSTOV-ON-DON 17 RYAZAN 28 SAINT PETERSBURG 8 SAMARA 13 TOGLIATTI 25 TULA 29 TYUMEN 31 UFA 19 VLADIVOSTOK 37 VOLGOGRAD 20 TABLES 38
  3. 3. RETAIL SPACE ACROSS RUSSIA 2012-2013 RUSSIA RETAIL SCENE RETAIL TURNOVER IN EUROPE (BN USD, 2011) While modern retail only appeared in Russia 10 years ago, shopping soon became a cultural activity Croatia 16.605 Slovakia 18.36 Hungary 31.86 France 556.875 for many. Over the last two decades, the country has Romania 32.535 Ireland 36.45 Czech Republic 42.12 Greece 50.895 Germany 548.1 gone through a major cultural change, leaving be- Portugal 53.595 Finland 54.675 hind many old habits and traditions. As a result, con- Denmark 60.21 Others** 60.615 sumer behavior is still forming, thus retailers do not Norway 61.155 Austria 66.15 Russia 534.6 only enjoy a rise in income but also face structural Sweden 94.5 changes in consumer habits. The market is still very Belgium 97.875 United Switzerland 108.27 Kingdom much in its infancy. Poland 110.025 459.54 Netherlands At the moment Russia is the largest market in 130.275 Spain 264.195 Italy 332.505 Turkey 170.1 Europe with the third (after France and Germany) retail turnover in EMEA. Russia is still enjoying Source: GFK GeoMarketing positive dynamics of GDP growth which is more than RUSSIAN RETAIL TURNOVER, % 5% per year. Aviapark, Moscow 20% 15% 10% 5% 0% -5% -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 2006 2007 2008 2009 2010 2011 2012 Source: Rosstat RUSSIAN RETAIL FORMATS Shopping centres: Street Retail: Total existing quality stock in Russia totaled over 13.6 million sq Lack of buildings constructed for modern day retail (usually un- m GLA as at 1 April 2012 or 95 sq m per 1000 inhabitants, well der residential, poor shop depth, utility issues) and a limited below the European average of 247 sq m. number of streets suitable for international brands. New ―world class‖ malls emerging. Most successful shopping Unsophisticated and opaque market – although signs of improve- malls have 100% occupancy with retailer waiting lists. ment being seen. The majority of quality projects are located in large cities, Climate restricts footfall. Though in many cities with populations though during recent years the activity of developers has also less than 500.000 people street retail still dominates due to lack grown in cities with populations less than 500,000 people. of alternative opportunities. New retail formats: Big box: actively developing format, mainly in the hypermarket and DIY segments. Retail parks: the market is yet to see this format however de- velopers are considering due to the strong demand from the big box operators. Factory outlets: the first outlet project in Russia opened in 2012 with two more scheduled in Moscow for 2013. Developers are planning more due to retailer demand in this new format. E-commerce is actively developing – in 2011 nearly 6,1 million people purchased via the Internet (16.5% growth in comparison with previous year). According to experts, forecast retail turn- over in this segment will grow in 2012 by 36% in comparison with 2011. 3
  4. 4. RETAIL SPACE ACROSS RUSSIA 2012-2013 PEOPLE RETAILERS Russians are very heavy spenders. About 80% of all earnings end Russia has 58% of the key international brands, 51% of these are up in the shops. found in Moscow, placing it 11-th in European annual brand rep- Salaries are growing and currently the average salary in Russia resentation (CACI). reached $830 per month. Average personal debt is $1100. It is possible to enter the Russian market directly, though the In cities like Moscow or St. Petersburg, over half of the population most common route is via franchise. One challenge faced by can be considered as middle class while the average salary in Mos- brands, other than real estate, is finding and selecting local part- cow is over $1250 per month. ner. There are numerous groups with multiple international Recently growth of salaries in the public sector exceeded the brands and varying experience and capability to choose from. commercial sector resulting in a change of income structure and Big box retailers such as IKEA, OBI, and Auchan entered directly. an increasing number of people visiting shopping centers. Large quality retailers such as H&M, Inditex, Uniqlo, Mango gen- Russian people in general do not have a strong belief in savings erally have direct operations. A recent trend shows that brands, instruments and prefer material goods/ As the result decrease of especially in the luxury market, are breaking away from their consumer confidence in Russia often lead to increases in sales. local partners, examples include Chanel, Prada, Hermes and the Swatch Group. Future growth of the consumer credit sector offers upside to consumer spending in Russia. Banks are actively offering credit The majority of retailers entering the Russian property market cards in the region, which is affecting consumer habits. will lease property. Occupational leases are transparent and pro- Apart from economic factors, shopping in Russia has a cultural vide retailers with secure tenure, however are considered to be aspect to it: people in big cities do not have many options for more oriented toward the landlord. spending leisure time and shopping centers offer a very attractive environment. As a result, footfalls have remained rather solid even  Major Russian Food Retailers: during an economic downturn. Х5 Retail Group, Sedmoy Kontinent, Dixi, O‘key, Lenta, Mag- nit, Monetka, Vester  Major Russian Non-Food Retailers: O‘stin, Oggi, Carlo Pazolini, Zolla, Lady & Gentelman, Snezhnaya Koroleva, Eldorado, M‘Video, Tekhnosila, Svyaznoy, Sportmas- ter, Metrika, Superstroy, Domocenter  International Retailers in Russia (a selection): Prada, Gucci, Chanel, CK, Hermes, Zara, GAP, Next, Banana Republic, American Eagle, Marks & Spencer, Mango, Uniqlo, RUSSIA CONSUMER PATTERN New Yorker, Bestseller, Reiss, H&M, Calzedonia, Adidas, Nike, Puma, Auchan, Stockman, Metro Group, MediaMarkt, Ikea, Cas- 110% 100% torama, OBI, Leroy Merlen, Kesko 90% 80%  Food & Beverage Operators: 70% McDonald's, Burger King, KFC, Starbucks, TGI Fridays, Wendy‘s, 60% Dunkin' Donuts, Subway, Costa Coffee, Il Patio, Planeta Sushi, 50% Sbarro, Coffe House, Shokoladnitsa 40% 30% 20% 10% Since 2010 Tenant demand in Russia remains at a healthy level, 0% and is focused on established retail space offering high footfall -10% 2006 2007 2008 2009 2010 2011 2012 YTD and revenues. Large international and domestic retail chains Goods and services Obligatory payments Savings continued to expand and new entrants are expected. Currency purchase Money on hand growth Source:: Rosstat CONSUMER CREDIT/GDP RATIO 120.0% 100.0% 80.0% Czech Bulgaria Germany 60.0% Spain France Italy 40.0% Russia UK 20.0% 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source:: EUROSTAT 4
  5. 5. RETAIL SPACE ACROSS RUSSIA 2012-2013 CITIES QUALITY RETAIL STOCK PER ‘000 INHABITANTS While the total population of Russia is 147 million people, over 97 million people live in cities of various sizes. Salaries, spending 0 200 400 600 800 and retail trade turnover are significantly higher in larger cities. There is a huge gap in the economy, social life and behavior of Moscow citizens of cities with populations over 1 million and, for exam- St. Petersburg ple, those with less than 500,000. Novosibirsk When comparing cities, we group them according to their size: Ekaterinburg MOSCOW Nizhny Novgorod By far the biggest, and in terms of consumer behavior it is com- parable to Western European. There are more similarities be- Samara tween Moscow and, say London than between Moscow and Omsk Novosibirsk. Kazan' MOSCOW REGION Chelyabinsk Moscow Region is a conglomerate of smaller cities of roughly Rostov-on-Don 100,000 people greatly influenced by Moscow. Many Moscow citizens have a summer house and spend a lot of time here. Also, Ufa most of the settlements have strong transit traffic, thus these can Volgograd not be considered as closed communities. Perm ST.PETERSBURG Krasnoyarsk Often referred as the ―Northern capital‖. Its consumers are Voronezh more conservative than those of Moscow, however this city is Saratov the major tourist attraction in Russia due to its history and fine architecture. Ranked second in terms of market size. Krasnodar “Millionic” Cities (population over 1 million) Tolyatti These are regional administrative centers with influential local Barnaul administrations. These cities are more or less prosperous de- Ulyanovsk pendent on the industry specializations of their regions. Izhevsk Cities 500,000 + Vladivostok These cities have to rely on their own resources, and thus are Yaroslavl highly dependent on their industry focus. Those which are spe- cialized on mining and exports generally do significantly better Irkutsk than the ones focusing on processing. Economic drivers are the Tyumen most important to look at when evaluating. Khabarovsk Cities 300,000 - 500,000 Orenburg These can range from rapidly developing markets to so-called Novokuznetsk mono-cities, relying on one industry. Some cities are attractive Kemerovo for retail expansion while others have to develop first for several years. The latter group cannot be compared to similarly sized Ryazan cities in Western Europe. Astrakhan' Cities 100,000 - 300,000 Penza Very similar to the previous group but these cities are even less Naberegnie Chelni attractive due to their small market size, and inability to support Lipetsk major developments. When looking at such cities it is important to consider their surroundings and the transit traffic. Tula Cities 50,000 - 100,000 “Millionic” Cities Cities 500,000 + In most cases such cities are either located close to bigger ones or are based on a single production facility. In both cases they are too risky for any sort of modern retail development except The indicator is used as one of the tools for cities comparison in terms of the market saturation, level of competition for supermarkets. and market development. Estimation is based on the quality retail supply in each city. Projects with the following characteristics are considered: · recently constructed or reconstructed · total area of more than 20,000 sq m · professional concept · effective floor plans · anchor tenants · international and federal brands among retail gallery tenants Expert opinion of the Cushman and Wakefield specialists is to be mentioned among other parameters of the category defining which is applicable in some cases. Source: Cushman & Wakefield 5
  6. 6. RETAIL SPACE ACROSS RUSSIA 2012-2013 MOSCOW MOSCOW After the collapse of the USSR, the whole new industry of modern retail was built from scratch with a major focus 2011 % Ref* on shopping malls. POPULATION, ‗000 inhabitants 11,514 832.3% RETAIL TRADE TURNOVER, mn USD 94,910 3147.5%  GUM is the oldest shopping centre in Moscow, opened in 1893 and located in front of the Kremlin AVERAGE MONTHLY SALARY, USD 1,265 147.1% on the opposite side of the Red Square. It is an RETAIL STOCK, sq m/ 1,000 citizens 303 90.4% iconic place for any retailer. The exceptional his- *co mpared to Ekaterinburg (reference city fo r regio nal co mpariso ns) torical interiors and unique location attract luxury brands, such as Emporio Armani, Partizia Pepe, Moscow is the biggest consumer market in Russia. Ac- Alberta Feretti, Kenzo, Hugo Boss as well as such cording to preliminary result of the 2010 census, 11.7 Zara, Moonson, Salamander on the upper floors. million people live in the city. In terms of retail sales, it is about 5 times bigger than St. Petersburg and over 20  TSUM, developed in 1908 is the oldest department times bigger than other ―millionniki‖. store in Moscow. It‘s home to luxury brands, such Muscovites are active consumers. They spend commonly as Yves Saint Laurent, Gucci, DKNY, Lanvin, Marc over 70% of everything they earn on retail. In recent Jacobs, Michael Kors, Alexander McQueen. times, people tend to spend more time in shops and malls  Evropeisky is one the most popular shopping cen- and it has become a cultural element of Moscow life. tres in Moscow. It is located near the Kievsky train Streets (even prime corridors) are not well-suited for station and the busy Kievskaya tube station. It is a shopping, however high foot traffic keeps street retail home for most international retailers in Moscow rents high. Shopping malls are very popular in Moscow. from bridge brands to mass-market brands. The consumption boom and consumer inflation drive and  Metropolis shows the example of an extremely stimulate retail sales growth. Successful retail businesses popular centre in a secondary location. It provides are able to generate over $10,000 per sq m of annual a wide range of international retailers, most inter- sales turnover from each square meter. national brands are to be found there. There are 13 main retail streets in Moscow and 107  MEGA Malls are the developments of IKEA, which quality shopping centres in Moscow. has become the largest retail developer in Russia  Tverskaya Street is Moscow‘s busiest shopping with its MEGA shopping Malls. There are 3 MEGA street and a ―must to visit‖ pedestrian area for all stores located in the Moscow suburbs on the dif- visitors of the city. It enables a high foot flow and is ferent sides of the MKAD (Moscow ring road) – on the target street for ambitious mass-market the north (MEGA Khimki), east (MEGA Belaya Da- brands. Retailers include Zara, Benetton, Colin‘s. cha) and south (MEGA Teply Stan). Along with a retail gallery including the main mass-market and  Stoleshnikov Pereulok and Petrovka Street are the mid-market brands each MEGA store includes an prime locations for luxury retailers (Louis Vuitton, IKEA store, Auchan hypermarket and other an- Chanel , Escada, Hermes). Among the new retailers chors. Most international mass-market brands are on Stoleshnikov are Lancel, Jimmy Choo, Miu Miu, situated in the MEGA stores. Prada. Metropolis GUM Tverskaya street 6
  7. 7. RETAIL SPACE ACROSS RUSSIA 2012-2013 MOSCOW The vacancy rate for quality shopping centers in Moscow RETAIL SPACE. ‘000 SQ M GLA remains less than 1% since late 2010. Rental rates for retail gallery space in Moscow are in the range of $500-$4,000 (per sq Existing 3493 m per year) depending on the size of the retail unit and the type Under Construction 1357 of retailer. Rents for quality retail space are stable in Moscow for all sub-sectors. Demand for high streets and quality shopping Planned 2382 centres should remain strong, with many retailers in expansion mode, While rents are largely expected to remain stable, further TOTAL, GLA, DELIVERY growth is possible in best Moscow shopping centers with a va- sq m sq m cancy rate close to zero in the most sought-after locations. EXISTING SELECTED RETAIL PROPERTIES Okhotny Ryad 68,000 24,500 1997 CLICK FOR MEGA Tyoply Stan 195,000 145,000 2002 INTERACTIVE RETAIL Atrium 112,000 35,610 2002 MAP ON THE WEB MEGA Khimki 238,000 177,000 2004 Erevan-Plaza 50,000 24,735 2006 2006- MEGA Belaya Dacha 146,935 120,913 2008 Evropeysky 180,000 54,000 2006 Golden Babylon 241,000 170,000 2009 Rostokino Metropolis 215,000 80,000 2009 PRIME RENTAL RATE* IN QUALITY SHOPPING CENTER Vegas 398,000 130,000 2010 RETAIL GALLERY , MOSCOW AFIMall City 179,423 114,213 2011 UNDER CONSTRUCTION $3,800 $3,750 Kaleidoskop 119,000 41,000 2012 $3,600 Otrada 100,000 85,000 2012 RIO (Leninskiy) 76,000 57,000 2013 $3,125 Mozaika 134,000 68,000 2013 $3,000 Aviapark / Hodinskoe $2,600 600,000 240,000 2013 Pole Project $2,500 Vesna! (Finstroy on 120,000 57,335 2014 Altufievskoe) 2006 2007 2008 2009 2010 2011 2012 Vegas City 231,253 113,402 2014 Vegas Kuntsevo 283,456 111,398 2014 VTB Arena * Base rental rate for 150-200 sq.m unit in the ground floor of retail gallery of prime Moscow shopping center, USD 169,700 49,000 2016 per sq m per annum, triple net (Petrovskiy park) PLANNED Kapitoliy (Kuntsevo) 235,000 58,900 2013 STREET RETAIL RENTAL RATES*, MOSCOW River Mall 258,155 91,200 2014 (USD PER SQM PER ANNUM, TRIPLE NET) RENTAL RATES IN QUALITY SHOPPING CENTER RETAIL STREET USD/sq. m/annum 2012 TREND GALLERY, MOSCOW (USD PER SQM PER ANN UM, TRIPLE NET ) 1st Tverskaya Yamskaya $1,500 - $2 ,500 up BUSINESS GLA, SQ M Arbat $1,500 - $2,500 up RETAIL GALLERY MINI ANCHORS <100 100 - 300 300 - 800 800 - 1,500 Garden Ring $1,000 - $2,500 stable Kiosks $2,000 Kutuzovsky Prospekt $1,000 - $2,500 stable Cellphones $3,500 Kuznetsky Most $2,000 - $2,500 stable Drugstore $1,200- Leningradsky Prospekt $1,000 - $2,000 stable $1,500 $1,200- Banks Leninsky prospect $1,000 - $2,000 stable Restaurant $1,500 $1,200 $600-$1000 Prospect Mira $1,200 - $2,000 stable Textiles $1,200 $800 Novy Arbat $1,500 - $2,500 up Books $1,000 $500-$600 $400 $300 Petrovka $3,000 - $4,000 up Clothing and Footwear $1,200 $800 $600 $400 Pyatnitskaya $1,500 - $2,000 stable White and Brown $500 Tverskaya $3,500 - $4,500 up Supermarket $750 Stoleshnikov per. $3,500 - $4,500 up Source: Cushman & Wakefield 7
  8. 8. RETAIL SPACE ACROSS RUSSIA 2012-2013 ST. PETERSBURG ST. PETERSBURG The development of modern retail real estate in St. Pe- tersburg only started in 2006 and has resulted in the com- 2011 % Ref* pletion of a large amount of shopping centre space though POPULATION, ‗000 inhabitants 4,849 350.5% it varies in quality. Given its large local population and rela- RETAIL TRADE TURNOVER, mn USD 22,557 748.1% tively high salary levels, the city is a target for expansion by a number of international and national Russian retail op- AVERAGE MONTHLY SALARY, USD 895 104.1% erators. As a result St. Petersburg is a city with one of the RETAIL STOCK, sq m/ 1,000 citizens 437 130.2% highest provisions of retail space per citizen in Russia. *compared to Ekaterinburg (reference city for regional comparisons) Shopping centers in the city can be defined by several St. Petersburg is Russia's second-largest city and the most groups: important Russian port on the Baltic Sea. The city centre Mid and large-scale quality projects (GLA >50,000 sq m) is registered as a UNESCO World Heritage site as a re- sult of its beautiful architecture together with its network located closer to city borders (e.g., MEGA Dybenko, of canals and waterways. The consumer market is large MEGA Parnas, Raduga, Leto): and includes significant numbers of tourists to add to  Adjacent to the Moscow railway station, Galeria spending by the local population. St. Petersburg‘s trans- (93,000sq.m GLA) houses high street brands such as To- portation infrastructure is not as well developed as Mos- shop, Levi‘s, Mexx and French Connection, supermarket, cow‘s so consumers prefer to work, go shopping and find food court, movie theatre, bowling alley and restaurants. entertainment close to their homes. People living in the When it opened in 2010 Galeria established a new stan- southern part of the city rarely visit the northern part and dard of quality in the St. Petersburg retail market. vice versa.  At the core of Nevsky Center is Stockmann Group's The main high street retail corridors are Nevsky Prospect, flagship department store in Russia. The Finnish-based Bolshoy Prospect and Zagorodny Prospect. Among others company Stockmann which has been operating in St. Pe- are 6-7 Lanes of Vasilievsky Ostrov, Vladimirsky and tersburg since 1993 opened the Stockmann Nevsky Cen- Moskovsky Prospects, Rubinstein Street, Sadovaya Street ter in 2010, including not only the Stockmann depart- and Malaya Sadovaya Street. ment store but also a multi-level shopping mall of some  Nevsky Prospect is the focus of the city‘s retail, 45,000sq.m GLA behind a historic facade from the early entertainment and night life. The main tourist at- 19th Century. traction routes go through and near the street. It is Smaller shopping centers located in the center developed not only Nevsky Prospect itself, but also the adja- more than 5 years ago (and even earlier). There are only a cent smaller streets and lanes in the area close to it few of them due to the limited supply of development sites which are popular locations for shops, restaurants and to the serious restrictions on development and rede- and coffee shops (Maly and Bolshoy Konyushenny, velopment (such as Sennaya, PIK, Gostinny Dvor). Mikhailovskaya, Griboedova Canal, etc.). Luxury Middle and small-sized quality projects, majority of them brands are mixed with mass-market retailers. The located close to the city‘s center (e.g. June, Atmosphera, highest concentration of luxury brands is at the Rodeo Drive) which can be classified as neighborhood beginning of Nevsky Prospect (Bosco Di Ciliegi, centers targeting mostly their district. Kenzo, etc.) and Bolshaya Konishennaya street (DLT/TSUM, Louis Vuitton and others).  Bolshoy prospect and Moscovsky prospect are strong retailing areas with a large local catchment population. Retailers on these streets include McDonalds, Levi‘s, Villeroy & Boch, Mascotte, Ile De Beaute, Salamander, Toto Group, Yves-Rocher, Carnaby and TJ Collection.  Rubinshteina Street is a ―restaurant street‖ with a great variety of cafes, pubs, night clubs, theatres Stockmann Nevsky Nevsky Prospekt 8
  9. 9. RETAIL SPACE ACROSS RUSSIA 2012-2013 ST. PETERSBURG CLICK FOR INTERACTIVE RETAIL MAP RETAIL SPACE. ‘000 SQ M GLA ON THE WEB Existing 2119 Under Construction 364 Planned 188 SELECTED RETAIL PROPERTIES TOTAL, GLA, DELIVERY sq m sq m EXISTING Grand Canion 150,000 53,000 2005 MEGA Parnas 130,000 84,000 2006 MEGA Dybenko 130,000 85,000 2006 Raduga-Piter 85,000 75,000 2007 Galeria 192,000 93,000 2010 Stockmann Nevsky 97,000 45,000 2010 Centre Leto 116,000 80,000 2011 RIO 70,000 52,500 2012 UNDER CONSTRUCTION Kontinent na AVERAGE RENTAL RATE* IN QUALITY SHOPPING 82,000 20,000 2012 Bukharestskoy CENTER RETAIL GALLERY , MOSCOW Mezhdunarodniy 46,400 37,000 2012 $1,160 $1,170 Balkaniya Nova 74,500 18,600 2012 (phase 2) $1,130 Mandarin 85,000 38,250 2013 $1,090 Zhemchuzhnaya Plaza 140,000 45,100 2013 $1,000 PLANNED Clover Plaza 366,000 27,800 2013 Outlet Village 20,000 20,000 2014 2008 2009 2010 2011 2012 Pulkovo(Hines) Fashion House 37,000 28,000 2014 * Base rental rate for 150-200 sq.m unit of retail gallery of quality St.Petersburg shopping center, USD per sq m per annum, triple net Apraksin Dvor 347,500 80,000 2016 Source: Cushman & Wakefield Leto MEGA Dybenko Galeria Source: Cushman & Wakefield 9
  10. 10. RETAIL SPACE ACROSS RUSSIA 2012-2013 MOSCOW REGION MOSCOW REGION RETAIL SPACE. ‘000 SQ M GLA The Moscow Region is one of the largest in Russia with a 180,000 250 Population population of 6.64 million people. It includes 80 towns, 16 160,000 Population, '000 inhabitants of which have over 100,000 inhabitants. About 83% of the 140,000 Under construction 200 GLA population lives in these towns, and 63% are of working Existing GLA 120,000 age. 150 GLA, sq m 100,000 Retail in the Moscow Region is different from Moscow. Average monthly income per capita is lower than in the 80,000 100 capital. However, about 1 million people commute daily to 60,000 Moscow. Also, many Muscovites tend to buy apartments 40,000 50 or townhouses in the Moscow Region due to lower 20,000 prices. 0 0 Sergiev… Solnechno… Orekhovo… Domoded… There is an on-going discussion that Moscow should be Electrostal Reutov Dmitrov Zelenograd Lytkarino Krasnogorsk Odintsovo Chekhov Lyubertsy Noginsk Stupino Zhukovsky Kolomna Podolsk Solntsevo Pushkino Balashikha Mytischi Klimovsk Vidnoe merged with the Moscow Region to ensure proper urban planning, but administrations on both sides resist this sug- gestion. SELECTED RETAIL PROPERTIES Retail market development is mostly within 50 km of the GLA, MKAD (ring road on the boundary of Moscow), due to CITY NAME DELIVERY sq m the high-density population in this area. The retail market of the Moscow Region can be seen from two angles: areas EXISTING of development near the MKAD and distant developments Mytischi XL2 16,000 2003 targeted at the region‘s towns. Shopping centers near the Mytischi XL3 25,000 2005 MKAD that are aimed at Muscovites have larger retail Mytischi Krasny Kit 18,700 2006 spaces and various types of stores. Shopping centers in more distant areas are either small or of low quality. Mytischi Krasny Kit 18,700 2006 Electrostal Elgrad 45,000 2008 Most large-scale projects are concentrated along the main highways; family shopping centers are generally located in Kolomna RIO 31,500 2008 municipal centers with easy access. We expect that the Orekhovo- Orekh 16,000 2008 southern part of the Moscow Region will be more sup- Zuevo plied with retail centers as it has the highest population Reutov Ekvator 15,000 2009 density. Zhukovsky Aviator 18,750 2010 Rental rates for retail gallery space in the Moscow Region Chekhov Karnaval 23,000 2011 mostly correlate to those in Moscow ($500-$3,500 per Sergiev Posad Aprel 24,580 2011 sq m per year) with some exceptions in districts with low Domodedovo Torgovy 22,500 2012 potential. For anchor stores, rental rates on average are Krasnogorsk Kvartal June 15,000 2012 the same as in Moscow. Taking into consideration the growing retail turnover, UNDER CONSTRUCTION personal income and population, there is obviously a po- Mytischi June 75,000 2012 tential for the development of more quality retail space. Mytischi Krasny Kit 2 35,000 2012 Expansion of Moscow at the expense of the Moscow Re- SC on Korolev 22,500 2012 gion will not change the retail scene dramatically as the Kosmonavtov Region is already very integrated with the capital. Krasnogorsk Komsomolec 15,000 2013 Stupino SC by Torgoviy 24,000 2013 Kvartal Source: Cushman & Wakefield XL 3 (Mitishi) Elgrad (Electrostal) RIO (Kolomna) 10
  11. 11. RETAIL SPACE ACROSS RUSSIA 2012-2013 ―MILLIONNIC‖ CITIES EKATERINBURG CITY Ekaterinburg is a large transport and logistics hub of the Trans-Siberian international transport corridor. It is an industrial center (metallurgy, light and heavy machinery, military and chemical industries are the main economy drivers). It is the third business and production center of Russia after Moscow and St. Petersburg, often being re- ferred to as the third capital of Russia. Ekaterinburg is the second in per-capita income and retail trade turnover as well as the most expensive city in Russia after Moscow. SHOPPING CENTERS 2011 The most active development of the retail market took POPULATION, ‗000 inhabitants 1,383 place in 2006 and 2009 when the majority of quality shop- RETAIL TRADE TURNOVER, mn USD 3,015 ping centers have been delivered. Thus, during the last five years, the supply of quality retail space per inhabitant in- AVERAGE MONTHLY SALARY, USD 860 creased 1.8 times. Although about half of quality shopping RETAIL STOCK, sq m/ 1,000 citizens 336 centers were delivered during the crisis and the early re- RETAIL SPACE. ‘000 SQ M GLA covery period (between 2009 and 2010), supply is still limited with further opportunities for development. The shopping center pipeline is healthy with several centers Existing 464 under construction. Under Construction 265 RETAIL STREETS The main street retail corridors are Lenina Prospect, Planned 241 Vainera Street and 8 Marta Street. Low availability of qual- ity retail spaces both in shopping centers and in retail Source: Cushman & Wakefield streets is a reliable indicator of high retailer‘s interest in Ekaterinburg. RETAILERS Ekaterinburg is the third retail market for any retailer (after Moscow and St. Petersburg). Most of local and in- SELECTED RETAIL PROPERTIES ternational retailers are already in the city. TOTAL, GLA, DELIVERY Greenvich sq m sq m EXISTING Park House 70,000 31,344 2005 MEGA - Ekaterinburg 135,500 100,000 2006 Greenvich (phase III) 70,000 49,000 2009 Alatir' (Sedmoe Nebo) 80,000 37,000 2009 KomsoMall (Rock-n- 67,000 41,000 2010 Mall) UNDER CONSTRUCTION Evropeyskiy (former 104,000 70,397 2012 Prozma) Raduga Park (1 phase) 113,163 56,038 2012 Ekaterininsky 140,000 82,000 2014 Akademichesky (1 6,794,000 50,000 2015 phase) PLANNED Kirovsky district 50,000 30,000 2013 Greenvich (phase IV) 60,000 2014 Akademichesky (2 5,950,000 100,000 2030 phase) CLICK FOR INTERACTIVE RETAIL MAP Source: Cushman & Wakefield 11
  12. 12. RETAIL SPACE ACROSS RUSSIA 2012-2013 ―MILLIONNIC‖ CITIES NIZHNIY NOVGOROD CITY Due to its geographic location, Nizhniy Novgorod repre- sents a bridge between the European and Asian parts of Russia. Traditionally it is an industrial and scientific center with a highly qualified workforce. It is one of the automo- bile production centers in Russia. The city has extensive, densely populated suburbs, the total agglomeration in- cludes about 2 million citizens which takes it to fourth place in Russia by population (after Moscow and St.- Petersburg). SHOPPING CENTERS 2011 % Ref* Quality shopping centers are concentrated in the Nagor- POPULATION, ‗000 inhabitants 1,260 91.1% naya part of the city, whereas Zarechny part and Zaoksky district are lacking quality shopping centers. A number of RETAIL TRADE TURNOVER, mn USD 2,735 90.7% notable projects being frozen during the crisis might come AVERAGE MONTHLY SALARY, USD 719 83.6% to the market soon. RETAIL STOCK, sq m/ 1,000 citizens 297 88.4% RETAIL STREETS *compared to Ekaterinburg (reference city for regional comparisons) The major street retail areas are located along Maksima RETAIL SPACE. ‘000 SQ M GLA Gorkogo Street and Belinskogo Street in the Nizhe- gorodskiy district, and along Sormovskoe shosse in the Sormovskiy district. There is a small pedestrian zone in Existing 374 the city center (Pokrovskaya Street) that has a number of street shops and different cafes and restaurants. The al- Under Construction 140 ready-existing quality centers are fully occupied. Planned 52 RETAILERS The main retail operators, such as Auchan, IKEA, OBI, Source: Cushman & Wakefield Sportmaster, Real, Perekrestok, Detskiy Mir, M.Video, Metro Cash & Carry, Starik Khottabych, Karusel, are al- ready present in the city. SELECTED RETAIL PROPERTIES Shokolad TOTAL, GLA, DELIVERY sq m sq m EXISTING Etazhi 28,200 16,300 2003 Shokolad 25,240 16,831 2003 Respublika 34,000 22,100 2005 Zolotaya milya 32,000 17,500 2006 MEGA - Nizhnyi 130,000 101,000 2006 Novgorod Fantastika 160,000 87,000 2008 NASH (former Sormovskiy (Mosmart 38,400 32,300 2011 Jelmoli)) Sedmoe Nebo 80,000 60,800 2012 UNDER CONSTRUCTION RIO (Ogni Stolizy) 100,000 68,000 2012 Nebo 132,416 72,000 2013 PLANNED Power Center 117,000 52,000 2013 CLICK FOR INTERACTIVE RETAIL MAP Source: Cushman & Wakefield 12
  13. 13. RETAIL SPACE ACROSS RUSSIA 2012-2013 ―MILLIONNIC‖ CITIES SAMARA CITY Samara is the largest city of the Volga region. Its gross regional production includes metal work, machinery, elec- tronic and optical products, and aircrafts. Transport infra- structure includes railroads, river transport (by Volga, which is the main transport river in the central Russia), the international airport Kurumoch, and federal highways (M5, M32). SHOPPING CENTERS There are several clusters where the majority of shopping centers are concentrated – about 15 of them are located 2011 % Ref* along Moskovskoye Shosse and 6 more are on Novo- POPULATION, ‗000 inhabitants 1,165 84.2% Sadovaya Street. The biggest project in the city is Mega Samara. Opening of the shopping center has been delayed RETAIL TRADE TURNOVER, mn USD 2,662 88.3% several times since 2007. It was finally opened in AVERAGE MONTHLY SALARY, USD 681 79.2% 2011.Currently a number of announced large-scale pro- RETAIL STOCK, sq m/ 1,000 citizens 442 131.6% jects are on hold due to different reasons. The pipeline is *compared to Ekaterinburg (reference city for regional comparisons) not noticeably high. RETAIL SPACE. ‘000 SQ M GLA RETAIL STREETS Leningradskaya Street as well as Kyibisheva, Molodog- vardeiskaya, Samarskaya streets are among the most Existing 514 popular retail corridors. Under Construction RETAILERS Main retail chains such as Perekrestok, Pyaterochka, Eldo- Planned 14 rado, M.Video, Sportmaster, METRO Cash&Carry, Auchan, IKEA, Media Markt, Leroy Merlen are currently in Source: Cushman & Wakefield the city. SELECTED RETAIL PROPERTIES TOTAL, GLA, DELIVERY sq m sq m EXISTING Moskovsky (Mega 140,000 79,000 1996 Complex) Park House Phase I 20,600 17,800 2002 Kosmoport KC-92 23,200 15,800 2006 Mega City 52,400 36,000 2006 Bristol 30,360 22,581 2007 Park House Phase II 36,000 27,400 2007 Kosmoport 127,000 101,000 2007 Most 27,200 23,120 2009 Samolet 42,739 32,054 2010 Viva Land 68,000 47,600 2010 MEGA - Samara 130,500 102,000 2011 PLANNED Clover Citycenter 82,800 13,800 2014 CLICK FOR INTERACTIVE RETAIL MAP Source: Cushman & Wakefield 13
  14. 14. RETAIL SPACE ACROSS RUSSIA 2012-2013 ―MILLIONNIC‖ CITIES OMSK CITY Omsk is the second largest city in the Asian part of Russia, after Novosibirsk. The importance of the city has been growing with development of the Transsib railroad con- necting central Russia with Siberia, and now it is the main logistic route in the region. Now Omsk is considered a significant industrial center (metal, chemical, petrochemi- cal, space industries). SHOPPING CENTERS Compared to other cities with populations over 1 million, Omsk‘s share of quality shopping centers is not large. The 2011 % Ref* delivery of MEGA SC at the end of 2009 doubled the ex- POPULATION, ‗000 inhabitants 1,154 83.4% isting quality stock and noticeably restructured the retail RETAIL TRADE TURNOVER, mn USD 1,353 44.9% space in the city. Most quality retailers are located there, and some of them even closed other stores in other loca- AVERAGE MONTHLY SALARY, USD 636 74.0% tions in the city. There is a significant list of announced RETAIL STOCK, sq m/ 1,000 citizens 336 100.2% retail projects but most of them are currently on hold. *compared to Ekaterinburg (reference city for regional comparisons) RETAIL STREETS RETAIL SPACE. ‘000 SQ M GLA The main retail streets in the city are Lubinsky Prospect (a part of Lenina Street) in the historic city center, which is Existing 388 planned to become a pedestrian area soon, and Torgovaya Street located near the largest open market of the city. Under Construction 122 RETAILERS Planned 101 Most retailers are concentrated in MEGA and the majority of them are MEGA partners such as IKEA, Auchan, Leroy Source: Cushman & Wakefield Merlin, Media Markt, Sportmaster, Adidas, Mango, Ecco, Zara, Bershka, etc. MEGA - Omsk SELECTED RETAIL PROPERTIES TOTAL, GLA, DELIVERY sq m sq m EXISTING Kontinent 206,200 160,000 2001 Kaskad 32,000 21,000 2005 AT-market 45,000 32,000 2007 MEGA - Omsk 170,000 127,300 2009 Millenium 68,000 23,000 2010 Festival (Astore Plaza) 36,000 25,000 2010 UNDER CONSTRUCTION Mayak (phase III) 28,000 18,750 2012 Arena Mall 135,000 103,000 PLANNED CLICK FOR INTERACTIVE RETAIL MAP Park 300-letia Omska 90,000 34,517 2016 Source: Cushman & Wakefield 14
  15. 15. RETAIL SPACE ACROSS RUSSIA 2012-2013 ―MILLIONNIC‖ CITIES NOVOSIBIRK CITY Novosibirsk is the third city in Russia by population (after Moscow and St.-Petersburg), the cultural, economic and industrial center of Siberia. Novosibirsk is located at the center of important trade corridors (Middle Asia, South- East Asia, Northern Russia, Russia‘s Far East, Europe) and the largest logistics hub in Siberia, with high-quality ware- houses and regional logistics centers. Retail turnover in the city is on the fourth place in Russia. SHOPPING CENTERS There are several large-scale quality shopping centers in 2011 % Ref* the city, including MEGA, Sibirky Mall and Aura retail cen- POPULATION, ‗000 inhabitants 1,474 106.5% ters. Retail stock grew up even in the crisis period - sev- eral quality shopping centers were delivered, such as RETAIL TRADE TURNOVER, mn USD 2,892 95.9% Golden Park, Versal and Aura. The pipeline is healthy - a AVERAGE MONTHLY SALARY, USD 770 89.5% number of shopping centers are in pipeline, but the major- RETAIL STOCK, sq m/ 1,000 citizens 216 64.4% ity of them are on the planning stage. International inves- *compared to Ekaterinburg (reference city for regional comparisons) tors, developers and consultants are involved in new de- velopments in the city. The city is in high demand among RETAIL SPACE. ‘000 SQ M GLA retail operators. RETAIL STREETS Existing 318 The main retail corridors in the city are Vokzalnaya Magis- Under Construction 45 tral, Krasniy Prospect and Karl Marx Square and Prospect. There is a unique retail area on Karl Marks Prospect, Planned 221 where about 50 footwear stores are located in a 500 meter stretch of the street. Source: Cushman & Wakefield RETAILERS SELECTED RETAIL PROPERTIES Many international and well-know Russian retailers are in TOTAL, GLA, DELIVERY the city. MediaMarkt, Home Center, Metro Cash & Carry, sq m sq m Auchan, Okey, Lenta, Bachetle are among them. EXISTING Royal Park Royal Park 70,000 35,000 2007 MEGA - Novosibirsk 140,000 103,000 2007 Kontinent-3 26,600 19,800 2008 Sibirskiy Mall 67,000 40,000 2008 Golden Park 30,000 18,000 2010 Versal 40,000 18,875 2010 Sun City (OMEGA 86,500 23,600 2011 Plaza) Aura 150,574 60,439 2011 UNDER CONSTRUCTION Evropeyskiy 87,000 45,000 2013 PLANNED Plotina 27,400 15,000 2013 Planeta 175,000 71,000 2013 Clover Citycenter, 1st 90,450 36,660 2014 phase Berdskoe SC on 65,000 61,000 2014 Shosse TSUM reconstruction 113,204 37,258 CLICK FOR INTERACTIVE RETAIL MAP Source: Cushman & Wakefield 15
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Report covers retail real estate development in major Russian cities.

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