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RESEARCH AND CONSULTING COMMERCIAL REAL ESTATE MARKET OVERVIEW
2012
The trend of office premises absorption volumes excess over
the new supply volumes remained relevant in the Moscow Region
in 2012. The aggregate volume of introduced office areas
reached approx 600 thous. sq.m in 2012, which was 3% less
than the analogous index of the past year.
Therefore, the aggregate volume of high-quality office premises
amounted to about 11.9 mln. sq.m at the end of 2012.
Business activity in the market of office rent and purchase
was rather high during 2012, which, against serious reduction of
delivery volumes, caused the decline of vacant premises level.
At the end of 2012 the share of vacant premises constituted 8%
in “A” class and 9-10% in “B” class.
All the incoming requests to Blackwood Company comprised
of 56% requests for premises rent and 44% - for premises purchase.
A high level of business activity during the whole 2012 together
with the trend of new supply delivery volumes decline
made it possible to state considerable growth of rental rates: by
the results of 2012 the rental rates were 10-12% up.
At the end of 2012 the rental rates varied from $550 to $1,
500 per sq.m. per year for “A” class office premises, from $300
to $1, 200 per sq.m. per year for “B+”, from $250 to $1, 000 per
sq.m. per year in “B-” class (all the rates are indicated exclusive
of VAT and OPEX).
During 2012 the professional retail real estate supply of the
Moscow Region increased by 258, 100 sq.m of the total area
(133, 300 sq.m. of them were rentable area). This annual increase
pace was minimal since 2004. The aggregate retail real
estate supply volume amounted to 6.3 mln. sq.m of the total
area at the end of 2012, the rentable area constituted 3.2 mln.
sq.m. The provision of Moscow population with high-quality retail
areas was at the level of 307 sq.m per 1, 000 residents.
The delivered to the market retail centers included the first in
Russia professional outlet center Outlet Village Belaya Dacha.
The opening of a number of outlet centers, including the ones
near Sheremetievo airport and near Vnukovo airport, was announced
for 2013-2014. 19 large RECs with the aggregate area
of more than 1.5 mln. sq.m were opened in 2012 in regions.
Therefore, the concentration growth continued in the segment
of household goods and appliances in 2012. Operating in
the Russian market retail chains were actively struggling for buyers,
offering new formats. The preservation of retail operators’
high activity made it possible to anticipate the retention of a minimal
level of vacant areas of 1.5% for the most in-demand retail
centers and retail streets.
Summary
During 2012 the rental rates both for premises in retail centers
and in the street retail segment displayed a stable growth, which
by the results of the year constituted 10-15% for successful properties
and premises of key retail corridors.
The preservation of rather low new supply increase paces is
expected in 2013. And against the background of retail operators’
announced high activity (both in terms of international chains’ entry
to the Russian market and in terms of the chains’ presence
expansion in regional cities) a further growth of rental rates and
the retention of minimal indices of vacant areas may be forecasted.
During 2012 two new hotels were opened in Moscow: the increase
of new supply since the beginning of the year constituted
253 rooms. The opening of such projects as “Aquamarin III” and
the hotel in “Moscow-City” MIBC was shifted for 2013. As the result,
the new supply increase paces was minimal in 2012 since
2000, which was the consequence of developers’ and hotel operators’
activity decline in the crisis period of 2008-2009.
The Moscow Government’s shares in a number of the hotels
(“Budapest”, “Metropol”, “Swissotel”, “Radisson SAS Slavyanskaya”)
were sold in 2012. The reconstruction aiming the increase
of a class will in most likelihood be carried out in a number of hotels.
Therefore, the supply increase will continue in the upper segment
of the Moscow market in the short term.
During 2012 the increase of new supply under international
hotel operators’ management surpassed 1, 000 rooms in regional
cities: the opening of Tulip Inn Rosa Khutor, Park Inn by Radisson
and the Radisson Blu Resort & Congress Center took place in
Sochi and the opening of Ibis took place in Samara.
The main trend of the hotel market of Moscow in 2012 was
considerable decline of new supply increase paces conditioned by
developers’ activity decrease in the crisis period of 2008-2009. As
the demand for accommodation was recovering and stabilizing, it
caused double indices of RevPAR increase: by the results of the
year the index increased by 11%.
International players preserve high activity, the largest international
companies continue aggressive regional expansion. As the
hotel markets of million-plus cities are saturating, operators’ interest
is shifting towards smaller cities: taking into account limited
capacity of the market, those operators will be on velvet, whose
properties will open earlier.
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COMMERCIAL REAL ESTATE MARKET OVERVIEW
OFFICE REAL ESTATE 2012
RESEARCH AND CONSULTING DEPARTMENT In 2012 the trend of office premises absorption volumes
excess over the new supply delivery was still relevant in the
Moscow Region. The aggregate volume of introduced office
premises in 2012 amounted to approx 600 thous. sq.m., which
was 3% lower than the analogous index of the last year. The
trend of annual decline of new supply volumes of office premises
has been preserved during the whole post-crisis period.
Thus, 11% less office premises were introduced in 2011 versus
2010 (for comparison, the decline constituted 60% in 2010 versus
2009). The descending trend of office supply increase was
first of all conditioned by the all-Russian trend of announced
commissioning terms shift, as well as still relevant practice of
cancellation or reconsideration of investment contracts in Moscow.
Therefore, the aggregate volume of high-quality office
premises constituted 11.9 mln. sq.m. at the end of 2012.
Business activity was rather high in the office rental and
purchase market during the whole 2012, which, against a serious
reduction of delivery volumes caused the decline of vacant
premises level. At the end of 2012 the share of vacant premises
amounted to 8% in “A” class and to 9-10% in “B” class.
Upon the increase of office areas consumption paces in 2013
the vacancy level will keep declining.
Despite the introduction of restrictive policy for the new construction
on the part of Moscow Mayor’s Office, a positive dynamics
in the development market of office real estate together
with a rather stable market situation and a high business activity
served a basis for the further increase of office areas volume,
the construction of which was announced for 2013.
Besides, the resumption/reconstruction of several large
projects was announced:
Supply
Dynamics of supply volumes, mln. sq.m.
Source: Blackwood Company data
▪ “Hals-Development” acquired permission for the redevelopment
of a factory territory in Khamovniki, a MFC is
planned for construction (41 thous. sq.m. of office areas).
▪ “Ferro-stroy” GC unfrozen the construction project of BC
Pallau-RB on the 1st km of the Rublevo-Uspenskoe highway;
▪ BIN Group will construct a MFC with apartments “Lotos”
instead of a MFC with 90% of office premises in 2
Odesskaya street, the office area has been reduced by 59
thous. sq.m. (the total area—150 thous. sq.m.);
▪ BIN Group Project MFC “Oasis” in 5 Korovy Val (58,
557 sq.m.);
▪ Avgur Estate will put into operation “A” class business
center Wall Street in the center of Moscow in Q1 2013.
In addition to the resumption of office properties construction,
the implementation of which was unfrozen, many new projects
were announced in 2012.
The aggregate volume of office premises, the construction
of which was announced in 2012, amounted to more than 1
mln. sq.m., which exceeded the analogous index of the previous
year by 14%.
Developer/investor Name Address Total
O1Properties Lighthouse 28 Valovaya 44,851 sq. m
AFI Development Aquamarine III 22-24 Ozerkovskaya emb. 78,000 sq. m
"Olympic Bowling –Center" MFC “Olympic Hall” 16 Olympiysky pr. 23, 107 sq. m
Quorum Debt Management BC "Kubik" 4 Stroitelny boul., Krasnogorsk 18, 000 sq. m
Hals Development BC SkyLight 39 Leningradsky prosp. 111, 000 sq. m
Alcon Development Alkon 72 Leningradsky prosp. 102, 177 sq. m
Several projects completed in 2012
Source: Blackwood Company data
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COMMERCIAL REAL ESTATE MARKET OVERVIEW
OFFICE REAL ESTATE 2012
RESEARCH AND CONSULTING DEPARTMENT The total absorption volume of high-quality areas accounted
for 1.5 mln. sq.m. for 2012.
Tenants’ and buyers’ activity in the office real estate market
of the Moscow Region was estimated at a high level in 2012.
56% of all the incoming requests to Blackwood Company were
accounted for the rent of premises and 44% - for the purchase.
The leader in the demand structure for rent depending on
the class of property in 2012 was “A” class (54%). 17% of the
requests accounted for “B+”, 31% - for “B-” class.
As far as the sale and purchase segment is concerned, the
requests for the purchase of “A” class premises (41%) prevailed
in 2012.
The structure of demand for high-quality office premises by
metric area went through a number of changes in 2012. If in the
post-crisis period and in Q1 2012 small office premises (up to
200 sq.m.) were of the highest demand, then in 2012 the demand
re-distributed towards office premises of more than 500
sq.m., the aggregate volume of requests for large units
amounted to 58%.
The structure of demand for the purchase of office premises
by metric area had the similar distribution in 2012: the most indemand
were the units of more than 501 sq.m., the aggregate
volume of requests for the purchase - 70% of the total number
of requests.
The changes in the structure of demand both for rent and
for the purchase of office premises, as well as permanently
increasing market players’ business activity was indicative of
the high-quality office market recovery to the level of pre-crisis
years.
The key trends of demand in the office real estate market in
2012 were the following:
• The market players’ high business activity;
• The further growth of activity in the segment of properties
under construction;
• The further growth of the average rental area and the terms
of agreements conclusion;
• The recovery of investment demand: the market players’
activity increase, involvement of new participants, return of
foreign investors;
• Enhancement of demand decentralization trend.
Demand
Structure of demand for office premises rent by class
Structure of demand for office premises rent by metric
area
Structure of demand for office premises purchase by class
Structure of demand for office premises purchase by metric
area
Source: incoming requests to Blackwood Company
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COMMERCIAL REAL ESTATE MARKET OVERVIEW
OFFICE REAL ESTATE 2012
RESEARCH AND CONSULTING DEPARTMENT Rental rates and selling prices
Dynamics of average weighted by area rental rate of offices,
$/sq.m. per year
Source: Blackwood Company data
High level of business activity during the whole 2012 together
with the trend of new supply delivery paces decline
made it possible to state a considerable growth of rental rates:
by the results of 2012 the average rental rates gained 10-12%.
The highest increase of rental rates were observed in modern
high-quality properties, as well as in business centers within
the Central business area, where the growth of high-quality
supply deficit, facilitated by the restrictive policy of new properties
construction, had an important impact on the price growth
of the most liquid supply. And the differentiation of rental rate in
each class depending on location, quality and occupancy level
of each property has been enhancing.
At the end of 2012, the rental rates varied from $550 to $1,
500 per sq.m per year for “A” class properties, from $300 to $1,
200 per sq.m per year for “B+” class properties, from $250 to
$1, 000 per sq.m per year for “B-” class (all the rates are indicated
exclusive of VAT and OPEX). The average rental rate
amounted to $1, 000 in “A” class, to $720 in “B+” class, to $550
per sq.m. per year in “B-” class. OPEX varied from $50 to $290
per sq.m per year for “A” class properties, from $60 to $150 for
“B+” class and from $50 to $120 for “B-” class.
Landmark events and transactions in 2012
The price situation in the sale and purchase segment of
high-quality premises was the following: the price varied from
$4, 700 to $27, 000 per sq.m for “A” class offices, from $4, 500
to $20, 000 per sq.m for “B+” class and from $2, 000 to $15,
000 per sq.m in “B-” class premises.
On the whole, the price indices for the office premises in
2012 remained rather stable. Despite the up trend of the market
players’ business activity, the growth of price indices was rather
gradual, which was indicative of malleability of demand for the
office real estate by price. And the supply in some segments of
the market has approached the pre-crisis level.
Some transactions concluded in 2012
Tenants’ and buyers’ activity in the office real estate market
was estimated as high in 2012.
The main players of the market were still the companies of
materials and banking sectors, as well as state corporations.
And the players of IT and retail sectors began to appear
among other large players of the market. The largest transaction
of 2012 was the rent of 90 thous. sq.m. by Rostelecom
company in BP “Telecom-City”. Another large transaction was
the rent of 24 thous. sq.m. by Evrazes in BC “Vivaldi Plaza”.
Buyer/tenant Name Sold/leased area Address
Sale
"Stroygasconsulting” BC "Tower 2000" 15 000 sq.m 23A, Tarasa Shevchenko
O1 Properties BC "Ducat Place III" 33 079 sq.m 6, Gasheka
O1 Properties "Bolshevik" (factory) 55 000 sq.m 15, Leningradsky pr.
BIN group MFC "Summit" 63 880 sq.m 22, Tverskaya
MMC Norilsky Nikel BC in B.Tatarskaya 30 000 sq.m 11, B.Tatarskaya
Sofaz Gallery Actor 18 000 sq.m 16, Tverskaya, bld. 1
Rent
GroupM BC "Legenda" 10 000 sq.m 2, Tsvetnoy boul., bld. 1
GC “Novartis” BC "Alcon" 16 0000 sq.m 72, Lelingradsky pr.
“Philip Morris Sales and Marketing” BC "Legenda" 9 000 sq.m 2, Tsvetnoy boul., bld. 1
Household goods distributor BC Kubik 17 000 sq.m MKAD 65-66 km
Evrazes BC Vivaldi Plaza 23 857 sq.m 2, Letnikovskaya str., bld. 1,2,3,4
Rostelecom BC Telecom-City 90 000 sq.m Kievskoe highway, 2 km from
MKAD
Alfa-bank BC Pascal Nagatino i-Land 23 000 sq.m 18 Andropova, bld. 3
Source: Blackwood Company data
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