H1 2016

Research & Forecast Report Retail market Supply

Key market indicators in H1 2016

The total stock of quality shopping centre space in Moscow and satellites amounted 6,275 thousand sq m by the end of H1 2016, 87% of which is located in classic shopping centres. Retail stock per 1,000 capita in the Moscow region was 452 sq m, which is 2.7 times higher than the country average, but still leaves a potential for the development of new professional shopping centres in the region. The completion of SEC Riviera was a key event in the Moscow retail market in H1 2016. During the first month of operation, the number of stores opened by tenants was quite low – 36 stores or 31% of retail space, including anchors, which, however, is comparable to the average occupancy of shopping centres opened in 2015. In the first two quarters of 2016, four shopping centres with a total GLA of 129.6 thousand sq m opened in Moscow. Also a new unusual retail format entered the Moscow market in the first half of the year – Box City, implemented by Crocus Group. It is a shopping centre made of shipping containers, the tenants of which will be designer fashion stores and catering companies. It is planned that the project will be of a seasonal nature.

INDEX

VALUE

Total stock, including specialized SC, thousand sq m (GLA)

6,275

Total stock, thousand sq m (GLA)

5,452

Completions in H1 2016, thousand sq m (GLA)

129.6

Number of shopping centres opened in H1 2016

4

Vacancy rate, %

8.5

Retail stock per 1,000 capita, sq m (GLA)

452

Source: Colliers International

Completion dynamics in Moscow region in halfyear periods 1000 900 800

Shopping centres, completed in H1 2016

Riviera

ADDRESS 18 Avtozavodskaya st.

GLA, SQ M

DEVELOPER

100,000

Riviera

st

Vostochniy Veter

Micro-district of the 1 May, Balashikha

Akvarel Yuzhnaya

9 bldg 1 Kirovogradskaya st.

7,600

Imagine Estate

Noviy

57 Yubileyniy Ave, Reutov

7,000

Centrstroy

15,000

Morton Group of companies

thousand, sq m of GLA

PROPERTY

700 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F Completions in H1 Completions in H2

Source: Colliers International

Completions in H2 2016 (forecast)

Source: Colliers International

New Moscow* In 2016, it has been five years since the expansion of the Moscow city administrative boundaries through the inclusion of territories located in the south-west of Moscow region. Besides the fact that Moscow's territories increased almost 2.4 times, the retail real estate market of the city formally raised by more than 900,000 sq m of retail space. Along with this more than a half of total retail stock in New Moscow is formed by not classic but rather market type shopping centres, the largest of which are Slavyanskiy Stan and the cash&carry agrarian cluster Food City. According to our estimates, the share of classic high-quality shopping centres in New Moscow does not exceed 26% of total retail stock, and 62% of it is made up by the shopping centre MEGA Tepliy Stan. A feature of the joined territories is their low urbanisation level (at least 250,000 people live on 148 million "new" hectares), which hinders developers’ plans for new largescale retail development. As a result, most existing retail facilities are concentrated near the MKAD along the Kievskoye and Kaluzhskoye highways, which allows them also to attract Moscow residents. The retail real estate market of New Moscow is formed mainly by small local shopping centres located in towns, or by free-standing hypermarkets along the highways. In addition, there are several specialised shopping centres on the territory of New Moscow – Vnukovo Outlet Village, a furniture centre in Business Park Rumyantsevo and the agrarian cluster Food City. Currently, the market of high-quality retail real estate in New Moscow is at its initial growth stage. However, these territories are one of the priorities of Moscow's development, including residential construction. According to data from the New Moscow Development Department, the completion of about 2 million sq m of residential space is planned by the end of 2016, which will increase the permanent population by 110,000 people and will require a parallel development of quality infrastructure, including retail. Besides the local shopping centres and street retail premises on the ground floors of under-construction housing estates, New Moscow, according to our estimates, has the potential to implement several new high-quality shopping centres, which will allow residents to make daily purchases and to spend leisure time without needing regular trips to Moscow. Several shopping centres with a total area of about 370,000 sq m have already been announced in New Moscow, including large-scale projects such as SkyMall and Salaryevo Mall. In our opinion, the most successful will be the project that enters the market first, and thus offers a concept quality comparable to the best malls within the borders of the MKAD.

The biggest shopping centres in New Moscow, excluding free-standing hypermarkets PROPERTY

ADDRESS

GLA, SQ M

DEVELOPER

300,000

Slavyanskiy Mir Group of companies

Slavyanskiy Stan

Micro-district Slavyanskiy Mir, Mosrentgen

Food City

22 Kaluzhskoye Hwy, 242,500 Mamiry, Sosenskoye

Kievskaya Ploschad’

Mega Tepliy Stan

21 Kaluzhskoye Hwy, 155,000 Sosenskoye

IKEA

Rumyantsevo

4 Kievskoye Hwy, 22 km, Moskovskiy

50,000

Rumyantsevo

RIO Rumyantsevo

8 bldg 1 Kievskoye Hwy, 23 km

45,300

Tashir

Vnukovo Outlet Village

Bldg 8 Lapshinka village, Moskovskiy

26,900

Diona

Akvarel

44 Zheleznodorozh10,000 naya st., Shcherbinka

IM Company

Source: Colliers International

Structure of existing retail areas in New Moscow, %

5% 74%

26% 16%

5%

Non-professional SC Professional** SC Super-regional SC (GLA >75,000 sq m) Community SC (GLA 20,000 ‒ 50,000 sq m) Neighborhood SC (GLA