Commercial real estate (Russian market)

2023: The share of foreign brands in Moscow shopping centers in 2 years decreased from 44.2% to 28%

From the end of 2021 to the end of 2023, the share of foreign brands in Moscow shopping centers decreased from 44.2% to 28%. This is due to the departure from Russia of many foreign suppliers in the current geopolitical situation. Such data are given in a study by the international consulting company Nikoliers, the results of which were published on March 15, 2024.

The published indicators are based on an analysis of 10 key shopping centers in the capital: they include Aviapark, Columbus, Metropolis, Afimall City, Paveletskaya Plaza, Kashirskaya Plaza, Vegas Kuntsevo, Vegas Crocus City, Riviera and Oceania. It is said that the situation in the retail real estate market is stabilizing: the vacancy rate decreased from a record 15.6% in the first quarter of 2023 to 10% at the end of the same year.

The study showed that due to the formed geopolitical situation, the structure of foreign brands has significantly changed. So, in 2021, the largest share among foreign brands was occupied by Spain (Inditex, Mango and others), whose share was 16.3% of all leased space in shopping centers. The top three also included France and Germany - 15.9% and 13.7%, respectively. However, by the end of 2023, French brands became the leader in terms of presence in the capital's shopping centers: in total, they accounted for 17.2% of all tenants. On the second line of the rating is Germany with a share of 13.6%, on the third - Lebanon with 12.7%.

The report also said that during 2023, the Russian market was replenished with 27 new foreign brands, while eight stopped working. New players are represented primarily by brands from Turkey, Lebanon and Belarus. About 51.9% of the departed brands belong to the middle price segment, 33.3% - to the "above average" segment, 11.1% - to the premium, approximately 3.7% - to the "below average" segment^[1]

2022

The commissioning of new retail space has tripled to 305 thousand square meters

In 2022 Russia , 305 thousand square meters were operational. m of retail space against 913 thousand square meters. m a year earlier (a decrease of almost three times). This is evidenced by data from IBC Real Estate, released at the end of January 2023.

According to the study, in 2022, 11 new shopping centers were commissioned in Moscow, with a total area of ​ ​ 126 thousand square meters. m. Relative to 2021, volumes fell 2.8 times. In the regions of Russia, 12 shopping centers appeared, the total area of ​ ​ which amounted to 179 thousand square meters. m - this is three times less than in 2021.

The volume of input of high-quality shopping centers turned out to be the minimum in the entire history of observations both in the capital and in the regions, says Ekaterina Nogai, head of the research and analytics department at IBC Real Estate. This is due to the postponement of the delivery of facilities due to changes in external conditions, as well as stabilization after the peak construction volumes in 2021.

The largest of the objects built in Moscow in 2022 and taken into account by the authors of the study was the multifunctional complex (IFC) "Moscow Sun," part of which is the largest Ferris wheel in Europe. The area of ​ ​ IFC is 21 thousand square meters. m. Basically, the commissioning in Moscow was provided with small shopping centers of the regional format, some of them are reconstructed former Soviet cinemas, RBC reports with reference to the IBC Real Estate report.

The number of built shopping and entertainment centers in Russia collapsed to a record low - 186 thousand square meters of total area compared to 818 thousand square meters in 2021.

In 2022, shopping and entertainment centers were built 10 times less than in the period from 2012 to 2016

Firstly, the oversaturation of shopping centers (primarily in large cities where there is effective demand).

Secondly, the partial transfer of traffic to online (clothing and equipment) and supermarkets (products), where a visible shift occurred in 2020 after lockdowns during the COVID-19 epidemic.

Thirdly, sanctions after the outbreak of the conflict in Ukraine (the main reason). The departure of Western brands led to the devastation of 20-40% of retail space depending on the shopping center and the region, namely they were anchor brands that attracted traffic to the shopping center.

Plus, the departure of Hollywood films has reduced the audience of cinemas, and they make up an important part of the shopping center.

The marginality of shopping centers and developers has significantly sagged.

The company's analysts expect that in 2023 the volume of construction of retail real estate will begin to grow. This is due to plans to introduce single large projects, which are now at the final stage of construction. In Moscow, the area of ​ ​ new commissioning facilities may double. In 2023, 12 new shopping centers with an area of ​ ​ 250 thousand "squares" are going to be built in the capital^[2]

Reduction in shopping center construction by 75% in the 1st half of the year

The construction of shopping centers in Russia fell to a minimum since 2004. The total area of ​ ​ retail real estate built in Russia in the first half of 2022 amounted to 94 thousand square meters. m. This is 75% less than in January - June 2021, and the lowest value since 2004 (then 72 thousand square meters were introduced). The decline is recorded against the background of EU and US sanctions imposed against Russia after the start of a special operation in Ukraine, and the forced exodus of many trading companies from the Russian market.

2021: Commissioning of 901,800 sq. m of retail space (+ 49.3 %)

In Russia, in 2021, a record number of retail space in 5 years was commissioned - about 901,800 square meters. m (+ 49.3% by 2020). The previous maximum was dated 2016, when 1.95 million square meters. m. This is evidenced by the data of the consulting company Knight Frank, released in early February 2022.

Evgenia Khakberdieva, regional director of the retail real estate department at Knight Frank, explained the record figures for the commissioning of new objects in a conversation with Vedomosti by the deferred demand that arose during the COVID-19 coronavirus pandemic. According to her, due to restrictive measures, the owners postponed the opening of a number of objects from 2020 to 2021.

At the moment, many regional cities of Russia are in conditions of severe restrictions: lockdown, QR codes when entering stores, suspension of the business of leisure operators, which significantly affects the work of shopping centers. The decrease in tenant traffic and the loss of trade affects the pace of new discoveries, the demand of market players for shopping centers. Therefore, today the imposed restrictive measures are one of the key restraining factors for the development of regional markets in shopping centers, she said.

In the regions (with the exception of Moscow, the Moscow region and St. Petersburg) in 2021, more than half of the shopping centers declared for opening were sold - 18 objects with a total rentable area of ​ ​ 515.8 thousand square meters. m (+ 126.2% and + 7.8% compared to 2020 and 2019, respectively).

The average area of ​ ​ the new shopping center in 2021 increased by 13% compared to 2020 and amounted to 25.8 thousand square meters. m, but still remains in the range of areas characteristic of a regional-scale shopping center.^[3]

2020

The commissioning of retail space in the Russian Federation has become the minimum in 10 years, 192 thousand square meters. m - CBRE

The volume of retail space in Russia at the end of 2020 turned out to be the minimum in 10 years and amounted to 192 thousand square meters. m of 600 thousand square meters declared by developers at the beginning of the year. m Such data are provided by the consulting company CBRE.

The volume of new commissioning of retail space in the Russian Federation was three times lower than the expectations of developers due to the COVID-19 coronavirus pandemic, to combat which restrictions were introduced in the regions.

The adjustment by developers of the annual input volume is due not only to the impact of the pandemic and the risks associated with it. A large-scale postponement of the opening dates was expected, since 8 out of 14 shopping centers at the beginning of this year planned to launch in the fourth quarter, - explained earlier Mikhail Rogozhin, director of the CBRE regional trading premises department.

According to him, the attendance of regional shopping centers after their reopening is restored in different ways - depending on the current restrictions, the level of income of the population and the availability of a high-quality supply of retail space. Higher rates of traffic and sales after reopening are characteristic of modern shopping centers located in large and wealthier cities.

According to Cushman & Wakefield estimates, more than 55% of the new retail space that was introduced in 2020 was in Moscow. 232,000 square meters were commissioned in the capital. m of retail space (55%), in the regions - 191,000 (45%).

For comparison: in 2018, the area of ​ ​ built shopping centers amounted to 558,000 square meters. m: 81% - in the regions, 19% - in Moscow. In 2019, 570,000 square meters were introduced in Russia. m of retail space: 73% - in the regions, 27% - in the capital.

According to Tatyana Divina, Deputy Head of Research and Analytics at Cushman & Wakefield, the change in ratios in 2020 was due to the coronavirus pandemic: most of the postponements of the opening dates of the shopping center fell on the regions, less on Moscow.^[4][5][6][7]

Russian shopping centers began to be massively put up for sale at Avito

On May 22, 2020, it became known that Russian shopping centers began to be massively put up for sale at Avito. The owners of such real estate objects are forced to sell it due to the COVID-19 coronavirus pandemic, which led to a collapse in the revenue of the shopping center, low income from rent and the need to pay taxes when the premises are idle.

The publication "Лента.ру" drew attention to the sale of shopping centers on the website of free ads. In particular, it writes that a shopping center on the Arbat in Moscow with an area of ​ ​ 8500 square meters. m are sold for 11 billion rubles. The announcement states that the property "generates income," will pay off in eight years, and all retail space is rented out.

A shopping and entertainment complex in Moscow is for sale. The cost of 93 billion rubles, - quotes Forbes announcement on the Avito website. The author of the publication in an interview with the publication explained the reason for the sale simply: "We need money."

As stated in the article, the collection of rent in Moscow shopping centers fell to 10-15% of the norm, and space owners still need to pay property taxes and pay off loans. The announcement on Avito given in the material is no longer there, and what kind of shopping center it was is not indicated.

Shopping center "Prague" in the residential area of ​ ​ Moscow are ready to sell for 334.5 million rubles. The owner is urgently looking for a structure that will buy a building with an area of ​ ​ 9754 square meters. m. The announcement claims that almost all pavilions are rented out.

In other regions of Russia, the same trend is observed, mainly ads for the sale of shopping centers were published in May 2020, the publication says.

Most of the rentiers surveyed by Forbes said that during months of downtime, money is either not taken from tenants at all, or they only take operating costs. But most high-quality shopping and office centers received rent for April in advance, many in the first half of March.^[8]

2012

• In 2012, the construction of 17 shopping centers in Moscow was announced. If the announced plans are fulfilled, the increase in retail space may come close to the 2010 indicator and triple the 2011 result, amounting to about 960 thousand m2 (GLA - 440 thousand m2);

• In 2012, the opening of the first outlet centers previously not presented on the Russian market (Fashion House, Outlet Village White Cottage, Vnukovo Outlet Village) is expected. In America, the first outlets were opened back in the first half of the 20th century, at the moment their number is approaching 200;

• In 2012, the decentralization of the Moscow retail real estate market, which took place in 2011, will continue. Soon, according to the plans of the capital's authorities, each microdistrict will have its own shopping center;

2011

Revision of 1,300 existing contracts in Moscow, cancellation of large projects in the center of Moscow

In 2011, the Moscow Government continued to audit 1,300 existing investment contracts. The decision was announced to "limit, but actually ban construction in the center of Moscow." By the end of the year, about 70% of all contracts were considered, as a result, the implementation of several significant projects with a trading function was canceled, in particular, the construction of large underground complexes on the central squares of the city (Paveletsky railway station, Pushkinskaya and Tverskaya outposts).

Decision on the renovation of VDNKh

In the fall of 2011, it was decided to renovate the territory of the All-Russian Exhibition Center with the preservation of the historical complex and the creation of park, sports and exhibition areas. The co-investors of the project will be the God Nisanov and Zarakh Iliev. Within the framework of the "Revival of the All-Russian Exhibition Center" concept, a dolphinarium, a water park and a 5D cinema should appear on the territory of the center.

Announcements of the construction of large shopping parks

In 2011, several new projects of shopping centers were announced for implementation. Trinity Russian Retail Partners (the merger of the Canadian Trinity Development Group Inc. and Shenkman Corporation with Russian Retail Partners) announced its plans to build four retail parks: on the Kaluga and Kashirskoye highways, as well as two facilities on the Moscow Ring Road. GVA Sawyer also plans to build two retail parks in Volokolamsk and in the Dmitrovsky district of the Moscow region.

Retail property investment boom

In 2011, an extremely high level of investment activity was recorded in the retail real estate market: the total volume of investments in retail facilities in Russia increased by 10 times compared to 2010. Among the largest transactions in the Moscow market, the following can be noted:

• • Purchase by the structures of Mikhail Gutseriev and Mikail Shishkhanov of the Kaluzhsky shopping and entertainment center.
  • Acquisition by Yuri and Alexei Khotin of the Gorbushkin Dvor and Filion shopping centers from MTZ Rubin.
  • The purchase by the IMMOFINANZ group of the remaining 25% of the Goodzone shopping and entertainment center (the company became the sole owner of the complex).
  • Acquisition by Romanov Property Holdings of Dream House shopping center.
  • Conclusion of a transaction by the UFG Real Estate fund with Capital Group to acquire the company's assets: Pushkin House Business Center, as well as Concord Business Center and Metromarket shopping complex located in the same building. The three remaining Metromarket complexes were bought by the RMB Invest investment fund.
  • The announcement of Tashir Group of Companies on the purchase of the A.I. Raikin. In addition, the company entered the project for the construction of a new shopping center at the intersection of Vernadsky Avenue and Pokryshkin Street together with Petro Estate.

Landmark trading operator takeover deals

In 2011, several landmark acquisitions of trading operators took place, the largest of which was the purchase of Dixy Group of Companies of the Victoria grocery chain (25.6 billion rubles, including debt). Kh5 Retail Group acquired the Kirov chains Economical Family and World of Products, as well as the Tatar chain Narodny (24 stores). Magnit bought 14 stores of the Tambov chain of discounters Pyatachok. At the end of 2011, the cellular operator Euroset was bought by Sigma Trade CJSC, which operates Alt Telecom communication salons.

Moscow and Moscow Region Market

The full analytical report (rates, map of new objects, forecasts) for the results of 2011 from Knight Frank is here.

• Russians began to buy more in 2011. According to the Ministry of Economic Development for the period from January to November 2011, retail trade turnover increased by 8.6% compared to the same period of the previous year;

• At the beginning of 2012, the total supply of modern retail space in Moscow amounted to 7.83 million m2 (GLA - 4.25 million m2). That is, if all the shopping centers in Moscow are put nearby, they will occupy the entire Monaco Square;

• The Southern Administrative District remained the leader in terms of the supply of shopping centers on the Moscow market - it accounts for more than 14.5% of the total volume of Moscow retail space. For every meter of retail space in the district there is 28 m2 of living space;

• According to the results of 2011, the increase in the supply of retail space in Moscow amounted to about 320 thousand m2, which is a record low indicator over the past ten years (in 2010 the increase in retail space amounted to 961 thousand m2, and in 2009 - 994 thousand m2). This indicator is even less than the area of ​ ​ individual shopping centers in Moscow (Vegas, Mega Belaya Dacha);

• Both in Moscow and in many regional cities, the construction of facilities was resumed, suspended during the crisis, a significant share of which is occupied by network projects. A number of new projects were also announced.

• There was an activity of developers in terms of reconception and redevelopment of retail facilities, which were outdated or initially had serious shortcomings in the concept.

• Many trading operators carried out active expansion both by increasing the number of outlets in the cities of their presence, and by entering new regions. At the same time, one of the main factors determining the development strategy of companies was an increase in the efficiency of the trading network.

• Favorable external conditions at the beginning of 2011 contributed to the growth of the Russian economy. The decrease in interest rates on loans for individuals led to an increase in consumer lending (18% for six months), which, with continued inflationary pressure, stimulated an increase in current household spending. After the "post-crisis" period of savings in 2009-2010, when the savings rate of citizens was 15%, in the first half of 2011 there was a tendency to return the "pre-crisis" structure of spending of the population: this figure decreased to 10.3%.

• As a result, according to the Ministry of Economic Development for the period from January to November 2011, retail trade turnover increased by 8.6% compared to the same period of the previous year. However, starting in the fall, there was a slowdown in the dynamics of the main economic indicators, including retail turnover: in November, the increase in the indicator was only 0.1%. Nevertheless, trading operators are optimistic about 2012, not expecting a significant decrease in consumption, as evidenced by their extensive plans for network expansion.

• In 2011, an extremely high level of investment activity was recorded in the retail real estate market: the total volume of investments in retail facilities in Russia increased by 10 times compared to 2010;

• In 2011, trading operators continued to enter the Moscow market (Banana Republic, Victoria's Secret, Wendy's, Desigual, American Eagle, Imaginarium, etc.). On average, about 10 retailers open their first points in Moscow per year. However, despite this, in Russia the number of trading operators present is 2.2 times less than in Germany, 1.5 times less than in France and the UK;

• The rate on retail premises on the most expensive streets of Moscow is in the range of 2,500-5,000, in some cases reaching $8,000/m2/year. However, we are still far from the leader: rates in New York can exceed $20,000/m2/year.

Notes