News

The new 2010 year has all the premises to be more successful for retail, than the one before. For several years Moscow’s trading real estate market has been saturated, and from 2003, trading areas were very much in demand.

The previous year had shifted consumer choice, towards the cheaper items.
Some chain retailers had shut down, others have stalled their development, which led to a fall in demand for trading real estate.
About half the renters in shopping malls in central Moscow are cloths shops.
The decline in demand in this particular sector had become the reason for the free trading area in shopping malls.
Mostly the difficulties had affected the mini-anchors, medium and small size renters in shopping galleries.
This was pushed along by the larger operators taking to smaller outlets. By the end of 2009 free space had reached 12-15% dependent on particular sites.

According to the NAI Becar source, this parameter for trading areas in Moscow is floating between the 5% and 10% mark.
Least free space is on Arbat and Tverskaya streets.
Other streets are not expected to change much, but the tendency for decline, which had begun last year, continues.
On average, according to Penny Lane Realty, Moscow has 252 sqr m per 1000 people in shopping malls and amusement centers.
Although it was initially predicted to be 293 sqr m, due to delays in many case for new shopping areas construction schedules, this number had proved to be unreachable.
The forecast, by many experts, is that new trading areas opening will happen explicitly due to those which were delayed in 2009, or those that were initially planned for 2010.
In addition to that, if all those planned for 2010 will be opened on time, then 2011 may become notorious for a real fall in new shopping and amusement areas, because in 2009 not a single such large project had been announced in this segment.
Amongst those shopping and amusement centers, which opening ceremonies had been carried over, experts highlight projects such as, Vegas (developer Crocus Group, 400 000 sqr m), Mall of Russia (developer AFI Development, 179 000 sqr m) and «Gagarinskiy» (developer Auchan, 200 000 sqr m), and also Gudzon (developer Immoeast/«Phoenix development », 145 000 sqr m).
Also forecasted that reconstruction will be complete for the following sites in central Moscow: (например, универмагов «Детский мир», «Военторг», «Лотте Плаза», «Шереметьевский», «Новинский пассаж» and several others).
Thus, new offering is expected to be not more than 1 mln sqr m overall.

One obvious tendency is a change of concept, especially for unfinished projects, towards maximum simplicity in its branding policy.
It is highly likely that newly openned shopping malls’ anchor renters and shopping gallery will only take up 40-60% of available space, as was the case during the end of 2008 and during 2009.
At the same time, NAI Becar experts note, that rental allocation is slower than before and newly opened malls may be 25-30% vacant.
Free space in operational malls, at best, will flatter somewhat around the 5-10% mark in successful ventures, and 10-15% in less so.

The forecast for Russian retail in 2010-2011 suggests market consolidation, through bankruptcy of small and medium players, and through promotion of different trade marks names of bigger chains, and an increase in cheaper products in the lineup, and a decrease of 15-30% for the average purchase, dependent on trading format.

It is interesting to note, that for foreign chains the Russian market situation is now more favorable.
Given the opportunity for foreign retailers to get better credit APR (annual percentage rate), it is expected that the Russian market will see new foreign players in 2010-2011.