CBRE, global real estate advisor, summarized 2013 year–end results. The key feature of the Moscow retail market in 2013 was decreasing consumer activity in the end of the year. Worsened expectations and existing credit activity constraints may lead consumers to switch to lower price segment goods.
33 new brands opened their stores in Moscow in 2013. 24 new retail chains that entered Moscow market in 2013 opened their stores in shopping malls. This trend was taken mostly by fashion retailers. The majority of new international brands opened their stores in such shopping and entertainment centers as: Afimall City, Mega Belaya Dacha, and Atrium. According to CBRE, 60% of international chains that entered Moscow market were European by origin, 35% - from the USA, and 5% were the two Japanese brands: Marukame and Miki House. Several Russian chains had also introduced their first stores in Q4 2013. Fashion retailers Lexmer, Funday, and Bella Potemkina are among them. 17 international brands have already announced their plans to enter Moscow market by the end of 2014.
Source: CBRE Global Research and Consulting" src="http://europe-re.com/wp-content/uploads/2014/02/CBRE-Retailers-Rusiia.jpg" width="269" height="574" /> Brands to enter Moscow market in 2014
Source: CBRE Global Research and Consulting
Average vacancy rate in Moscow modern shopping malls in 2013 accounted to 2.6%, according to the latest data from CBRE.
4 new quality shopping centers were delivered in Q4 2013. Two of them were the specialized ones (furniture centers). The total volume of commissioned retail space resulted in 262,000 m² of new supply in 2013. Thereby by the end of year 2013 the total volume of quality retail space in Moscow shopping centers amounted to 4.1 mln m².
900,000 m² of quality retail space is announced to be delivered in 2014 year. But not all projects are expected to be commissioned in announced time period, and completions volumes may amount to 600,000 m² According to CBRE, new delivery of retail premises in 2014 may reach its maximum from 2009 and modern retail space penetration rate may reach the level of 430 m² per 1,000 inhabitants that is close to the levels of Berlin and Vienna. The most anticipated 2014’s projects are SEC Avia Park, Vegas Crocus City, Vesna, Mozaika.
In the street retail market there is a trend of low interest to this segment from fashion brands. During H2 2013 market share of the fashion sector declined from 18,5% to 16,9%, accessories - from 9,5% by 9%, respectively. On the contrary, public catering and banks are actively developing, and the share of such retailers increased during H2 2013, on average by 8%. The vacancy rate is 6,5% on average.
Pedestrian streets are not being used in full capacity yet. The premises of less than 100 m² are in great demand. They comprise nearly 40% of all market offerings.
Rental rates in street retail are stable and have not significantly changed compared to Q3 2013 except for Novy Arbat, Petrovka, Pokrovka, and Pyatnitskaya where rental rates grew by the end of the year.
Michael Rogozhin, Managing director of Retail Department, CBRE in Russia comments:
“In 2014 high developers’ activity may face weakening consumption. Russia enters into a stage of relatively low growth of real disposable income and retail sales. Retailers already felt weakening demand during Christmas / New Year sales period. Nonetheless, low growth is not a decline, and Moscow will still remain in retailers’ focus. 17 international brands already announced their plans to enter the market. Increase in competition combined with low growth in retail sales will stimulate landlords to make re-concepts of their properties.”