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H1 Market Update for Retail Segment: Moscow Leads by Volume of Shopping Centres under Construction in Russia

According to Colliers International, in the first half of 2014 the volume of quality space on the retail real estate market of the Moscow region increased by 307,780 sqm and reached a total of 4,519,800 sqm. By the end of the year Moscow and its surrounding suburbs could see another 750,000 sqm of new space. Even if only half of the space announced is opened on time, 2014 will be a record year for volume of new retail space over the past 10 years.
A total of seven shopping centres opened in Moscow during the first half of 2014, including Vegas Crocus City (GLA – 111,400 sqm), GoodZone (56,000 sqm), Vesna (56,000 sqm), Reutov Park (41,000 sqm), Moskvorechye (16,500 sqm) and others. Meanwhile, Russia’s regions saw the opening of eight new retail properties, including Torgovy Park (55,000 sqm) in Tver, Kaleidoscope (42,000 sqm) in Novosibirsk, the 4th phase of Greenwich (40,000 sqm) in Yekaterinburg and Emerald City (33,000 sqm) in Tomsk, among others.

Colliers International observes a continuing shift in consumer preferences toward retail centres with a strong entertainment component. Visitors increasingly perceive shopping centres as a place for spending leisure time and not just for Sunday shopping. At the recently opened Vegas Crocus City a substantial portion of the space is given over to the entertainment zone as well as cafes and restaurants. The shopping centre will soon be adding a concert venue with a capacity of up to 1000 people and an oceanarium. 

Simultaneously, the children’s entertainment format is also growing in popularity. For example, in the first half of the 2014 an agreement was announced between the children’s educational game zone operator KidZania and Avia Park. KidZania Moscow will occupy 10,000 sqm and be the largest in Europe.

Clothing and footwear brands were the most active in opening new stores at shopping centres, accounting for 43% of new openings. For example, Deichman opened its first two boutiques in Moscow. Retailers in the accessory category accounted for 16% of new stores, while food services and children’s goods stores accounted for 10% and 9%, respectively.

In the first half of 2014 the average lease rates for retail space in Moscow did not change substantially, as a number of shopping centre owners declined to index rates in reaction to currency exchange rate fluctuations. The average vacancy rate for space in quality retail centre at the end of the first half of the year was 2.8%.

A total of 13 professional retail centres have been announced for completion in Moscow in the second half of 2014, including such malls as Avia Park (224,800 sqm), Columbus (140,000 sqm), Mozaika (68,000 sqm) and Kuntsevo Plaza (58,900 sqm), among others. A number of major retail projects are also planned for opening in regional centres as well, including Nebo (75,000 sqm) in Nizhniy Novgorod, Planeta (73,000 sqm) in Novokuznetsk, Lotus Plaza (63,000 sqm) in Petrozavodsk, Europolis (61,000 sqm) in St. Petersburg and others.

Anna Nikandrova, Regional Director, Head of Retail Real Estate Department, Colliers International Russia: “The launch of Avia Park, the largest shopping centre in Europe, as well as Columbus will allow Moscow to climb to the fifth spot (from current 6 th) in the ranking of Russian cities according to retail space per capita. If the ambitious plans of regional developers are brought to life, then St. Petersburg will give up its leading spot on the retail space saturation ranking to Samara and Yekaterinburg, where prime shopping space could reach 630 sqm per 1000 capita by the end of the year. This will be driven by the completion of two major retail complexes in Samara – Ambara and Aurora (3rd phase) – as well as the Globus shopping centre (2nd phase) and several other retail properties in Yekaterinburg.”