COMMERCIAL REAL ESTATE MARKET OVERVIEW Q1 2010

The main trends of the office market are still influenced by the crisis: several developers amended their plans, put their projects on hold or changed characteristics of their office projects in the pipeline. However, the office real estate market saw the first signs of recovery in Q1 2010.

Price indexes in the office real estate market remained stable throughout Q1 2010. There were some minor fluctuations of rental rates and sale prices in some office centers and business areas.

30,000 sq. m. of space came into the retail market in 2010 as the Rechnoy retail center was launched in Festivalnaya Street. Therefore, the aggregate area of professional retail centers in Moscow amounted to 4,93 mln. sq. m., the leasable area being 2,6 mln. sq. m. as of the end of Q1 2010. As of April 2010, there were 249 sq. m. of retail space per 1,000 people in Moscow. By the end of 2010, 10 malls are scheduled to open in Moscow with a total area of approx 1,5 mln. sq. m.

Two four-star hotels, the Garden Ring and the Aquamarine, were commissioned in Moscow in Q1 2010 adding 243 rooms to the hotel market. Therefore, the number of rooms in four-star hotels today exceeds 7,200. Five hotels operated by international companies are expected to open in Moscow in 2010. Therefore, the hotel market, especially its high-budget segment, will acquire 1,500 rooms in 2010.

Demand for accomodation services stabilized in Q1 2010: occupancy rates in the medium and prime market segments showed some growth and stopped falling in the low-budget segment. Still, the occupancy rates in all the segments of the hotel market remain at an extremely low level.