If growth is sustained, Russia will become Europe’s largest consumer market by the end of 2013, according to New York-based Cushman & Wakefield.
If retail turnover keeps at current levels of 5% growth every year, Russia will become Europe’s largest consumer market by the end of 2013, according to New York-based Cushman & Wakefield.
Despite the uncertain economic climate, Russia shows positive GDP growth and health consumer spending, which result in positive retail turnover, said Maxim Karbasnikoff, Cushman & Wakefield’s head of retail services, during the 2012 MAPIC conference in held in Cannes, France.
‘What we see now is the growing importance of cities which previously had never been on the developers’ radar.’
According to global estate agent’s research, quality retail developments are steadily replacing low quality retail space, and Russia’s retail property market has ‘a growing number of projects in the pipeline’.
Quality retail stock consists of more than 500 shopping centers, with a total gross leasable area (GLA) of 15.4 million square metres as of 1 October 2012. About 100 projects are under construction in a retail pipeline that total 4.6 million square metres.
During the MAPIC conference, Cushman & Wakefield unveiled a report detailing Russia’s retail real estate. Dubbed ‘Retail Space Across Russia’, the report calls the retail sector ‘one of the key drivers of the Russian economy’.
According to the report, the average supply per 1,000 inhabitants in Russia is 95 square metres, which is way below the European average of 247 square metres. However, it noted that international and domestic retailers present in Russia are seeking new regions with demand for quality space rather than location.
Leading the pack in terms retail stock is the southern city of Krasnodar near the Black Sea, with 763 square metres per 1,000 inhabitants. Moscow, meanwhile, has 13 high streets and 107 shopping centres and boasts 303 square metres of retail stock for 1,000 inhabitants. But in contrast to Krasnodar, the Russian capital will see robust growth over the next few years due to undersupply.
According to Lada Belaychuk, Cushman & Wakefield’s deputy head of research, Russian cities where retail property market was booming for the last two years have reached a saturation point and new developments have slowed down.
[In the next few years] retail growth will move to cities of Sibiria and the East of Russia,’ Belaychuk said. She also noted that Russian retail property market is still emerging, but it’s gradually moving to become a developed market, an observation supported by the introduction of newer formats, such as outlet stores and retail parks.
By Rodel Ambas Jr.
11 December 2012
Source: World Property Channel