Uncertain retailers' demand, as well as expensive and scarce financing are forecast to result in a 10-year record low level of completions of new retail space in Russia this year, according to new research published by CBRE.
Uncertain retailers' demand, as well as expensive and scarce financing are forecast to result in a 10-year record low level of completions of new retail space in Russia this year, according to new research published by CBRE.
Completions of modern retail space in 2015 amounted to 1.9 million m2, which is 13% lower than in 2014. In 2016 completions are expected to be almost 30% lower than in 2015, largely as a result of a reduction of new supply in regional cities.
Despite some negative macroeconomic factors, international retailers are still interested in the Russian regional retail property markets, mostly due to lower competition than in Moscow along with sufficiently high purchasing power and favorable leasing terms. 13 out of 53 international brands that came to Russia in 2015 opened their first stores in regional cities.
But only 1.3 million m2 of new space will be delivered over the course of 2016, according to CBRE.
'Retailers in regions are more carefully selecting and evaluating locations for opening their new shopping centres,' commented Michael Rogozhin, managing director of retail department CBRE in Russia. 'With high probability, key trend of business optimization and reduction of unprofitable shopping centres in regions will continue in 2016. However, this will be compensated by high activity of major international and federal retail chains as well as retailers of ‘middle’ and ‘economy’ price segments, that traditionally rent premises in shopping centres as anchor tenants.'
