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In H1 2016 one new shopping centre, Riviera, of 91,200 sq m GLA was delivered in Moscow.
6 new shopping centers are announced to be delivered by the end of the year. Five of them have a high probability of opening in Q3.
By the end of the year, shopping centre completion in Moscow may reach about 400,000 sq m.
In H1 2016, the vacancy rate in shopping centres remained flat at 9.3%. Minor growth of vacancy rate in new projects occurred due to completion of Riviera shopping centre.
In existing shopping centers delivered before 2014 the vacancy rate has been stable, at 7% for the last six months.
Several types of rental scheme are currently used in the market. They include various combinations of base rental rates and/or % of turnover as well as different contract currency options: US dollars, rubles, US dollars with a fixed exchange rate or corridor for a defined period.
In Q2 2016 111,800 sq m of new office space was commissioned. Thus, 174,900 sq m were introduced in H1 2016, which is 22% lower than in H1 2015.
Take-up volume in H1 2016 increased by 69% YoY and amounted to 557,100 sq m, 208,600 sq m (37%) of which are two business centers – Eurasia Tower (93,900 sq m) and President Plaza (114,700 sq m), which were withdrawn by VTB and Sberbank, respectively.
In the first half of the year lack of new class A business centers in the rental market and intensified demand from the companies relocating to St. Petersburg after Gazprom has led to a decrease in the vacancy rate to a record low level (8.7%). The vacancy rate in class B business centers decreased (11%) due to a large number of transactions with IT companies. Rental rates in USD increased marginally due to the ruble strengthening, +16% in class A business centers and +14.5% in class B business centers.
During the first half of 2016 only two hypermarkets were opened and no new shopping center. Decline in purchasing power of the population and decrease in shopping center attendance led to a fall in retail trade turnover. Low-cost food retail chains, low-budget catering and stores for children’s products are actively developing.
Deficit of newly constructed speculative warehouses. 83% of warehouses commissioned in 1st half of 2016 are built-to-suit projects. The majority of lease transactions accounted for trading companies. The demand from small manufactures for leasing and purchasing of industrial property is growing.
Increase of the tourists due to the domestic tourism development and substitution of a significant part of Western tourist flow by Chinese travelers led to a positive dynamic in the operating indicators for hotels in 1st half of the year. Active preparation for the World Cup in 2018 is still ongoing. The mandatory hotel classifications in the city has been completed.
2016 in the office real estate segment began with a record-high number of the development completions. Most part of them is not offered for lease but built for own needs or leased out at the construction phase. The volume of vacant space continues to balance at the same level and amounts to ca. 300,000 sq m, the asking average rental rates on the market are stable.
2015-2016 is one of the most challenging periods for the retail real estate market of
St. Petersburg. It is confirmed by the minimum volume of new shopping centers and hypermarkets under construction, vacancy rate growth, reduction of retail turnover and drop in purchasing power.
In 2016 developers do not plan to start working on new speculative projects. Activity in the built-to-suit segment also slowed down. Rents have reached the "bottom" and are comparable to the level of 2011. Further decline is not expected, otherwise business will fail to post a profit. The vacancy rate is 6.3% (150,000 sq m), the offer on the sublease market grows.
Completions in Q1 2016 was the lowest quarterly value over the last 10 years and amounted to 63,100 sq m of new office space, which is 30% less than in Q1 2015.
The take-up volume in Q1 2016 increased by 17% in comparison to Q1 2015 and amounted to 167,600 sq m, 57,900 sq m of which are class A offices.
Despite the increase in the overall vacancy rate of 0.3 ppts, in absolute terms the increase amounts to 50,000 sq m and does not exceed the volume of the new delivery. All new delivery was of class B, which increased class B vacancy by 0.6 ppts.
Rental rates remained stable in Q1 2016, at RUB19,000–25,000 per sq m per year for Class A, RUB13,000–23,000 per sq m per year for Class B, net of operating expenses and VAT.
During 2013-2015, the most active year for new entries was 2014 when 54 new brands entered the market. In 2015, despite negative economic conditions, such factors as the activity of international retail chains and the interest to Russian retail market are saved. 52 new brands have entered the market during the year. Nearly 60% of new players are retail chains of middle and budget price segments. Consumer goods of these segments are in high demand in Russia. The decrease in real disposable income causes an increased demand for new budget brands. With high probability, new retail chains continue to enter the market and develop as the stabilization of consumer demand both in Moscow and in regional markets. It can be expected that in 2016–2017 not less than 30 new brands will enter the Russian market. In fact, this number may be higher