Сommercial real estate market overview

At the end of H1 2013 the aggregate volume of high-quality supply in the office property market of the Moscow Region amounted to about 12.24 mln. sq.m. Furthermore, taking into account the increase of new supply, the vacancy level did not go through tangible changes. Thus, by the results of Q1 2013 the share of class A vacant premises accounted for 9% and of class B premises – 11%.

  The total volume of office premises uptake for half 2013 exceeded 0.5 mln. sq.m, which surpassed the analogous index of the past year. In 2013 the following trends are forecasted: the intensification of demand decentralization trend; the ascending character of business activity of the market players; the increase of a number of transactions under preliminary agreements; the growth of a number of investment transactions, including, with participation of foreign companies; the increase of a number of investment transactions for consecutive redevelopment of commercial properties.

At the end of H1 2013 the rental rates vary from $500 to $1,650 per sq.m per year for class A office premises, from $300 to $1, 100 per sq.m per year in class B+ and B- (all the rates are indicated exclusive of VAT and OPEX). The average rental rate equaled $1, 000 in class A, $740 in class B+, $630 per sq.m per year in class B-. In the sale and purchase segment of office premises the purchase price varied from $5, 500 to $20, 000 per sq.m for class A offices, from $3, 500 to $16, 500 per sq.m for class B. On the whole, the price indices for office premises in 2013 will remain rather stable due to the growth of new supply in the city.

During Q2 2013, 3 professional retail centers were opened in Moscow. As a result, the aggregate supply of high-quality retail real estate increased by 125 thous. sq.m and amounted to 6.67 mln sq.m of the total area by the results of H1 2013 (the rentable area – 3.36 mln. sq.m). The provision of the Moscow population with professional retail centers equaled 322 sq.m per 1, 000 residents.

The commissioned properties included two outlet centers (a rather new for the Russian market format): Vnukovo Outlet Village and Fashion House. There is no strongly marked dynamics of the new supply increase in regional cities: during Q2 2013 no large professional property was opened. And a large number of new projects were announced: 8 retail centers with the total area of more than 100, 000 sq.m were launched in regions by the results of H1. The summary total area of announced during Q1-2 2013 regional projects amounted to 1.7 mln.sq.m.

During H1 the following international brands entered the Moscow market: the chains of restaurants Marugame, Johnny Rockets, Buddha Bar, the chain of jewelry shops Trollbeads; the chain of clothing shops Takko Fashion; the chain of furniture and interior design shops Missoni Home; the chain of acoustic systems shops Harman. As far as the large Russian retail operators are concerned, they also preserved high market activity, which found reflection both in the geographical presence expansion of shops and in the development of new formats of retail units. Thus, in Q2 the opening of the first in the Moscow Region supermarket of St.-Petersburg chain Lenta took place and the group O’key announced its plans on the development of discounters chain Da! in the Moscow Region.    

By the results of H1 2013 the growth of rental rates was moderate and constituted 5-7% on average. The activity of international and Russian retail chains against the slowdown of the new supply increase paces will bolster the further growth of rates in successful retail centers, as well as active development of the street retail segment.

By the results of Q2 2013 the supply increase in the hotel market of Moscow amounted to 211 rooms due to the opening of the luxe class Nikolskaya Kempinski Moscow hotel. Therefore, during H1 2013 three large hotels were opened in Moscow, two of them – under international companies’ management. The summary increase of hotel rooms supply accounted for 621 rooms since the beginning of the year. New properties were launched in different segments of the market that was why the general supply structure remained intact: the prevalence of the hotels under international chains’ management in the upper segment of the market; the deficit of high-quality supply was preserved in the middle and lower segments. during Q2 2013 one hotel property planned for commissioning in the Moscow Region was announced: the hotel under Hilton group management near Borodino field.

During H1 2013 the supply of hotel rooms under international operators’ management increased by 791 rooms in regional cities due to the opening of the Radisson and Mercure hotels in Sochi, the Hilton hotel in Krasnodar, the Ramada hotel in Kazan and the Park Inn in Nizhny Tagil. The commissioning of the Marriott Novy Arbat (234 rooms) is expected till the end of 2013. The considerable increase of supply is anticipated in the segment of business and affordable price hotels: DoubleTree by Hilton in Vnukovo (432 rooms), DoubleTree by Hilton Moscow Leningradsky Riverside (270 rooms), Hilton Garden Inn Moscow New Riga (162 rooms). Therefore, if the mentioned hotels are put into operation in time, the aggregate increase of new supply is expected at the level of more than 1, 500 rooms by the results of the year.