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Despite Crisis, Moscow Beats Out Paris as Europe’s Largest Shopping Center Market

Moscow has overtaken Paris to become the European collateral with the most selling core space, even as a recession army Russians to cut behind on consumer spending.

In the initial half of this year Moscow had some-more than 4.53 million block meters of shopping core sell space, compared with 4.5 million block meters in Paris, according to a news by real estate consultancy Jones Lang LaSalle (JLL).

But the boom in Moscow mall building will be followed by a unemployment as Russia’s mercantile downturn catches adult with the sector, experts told The Moscow Times. The new mercantile existence will also approaching finish a trend of building large mega-malls in Moscow and spur the growth of smaller selling centers that are cheaper to build and run, they said.

Large malls have hogged investors’ courtesy for long enough, according to Olesya Dzyuba, conduct of research at real estate organisation Colliers International Russia.

“Small format selling malls have good intensity on the Moscow marketplace given there are not adequate of them,” she said.

Record volumes

Six selling centers have already non-stop in Moscow this year with a total area of 343,000 block meters, according to data from Colliers International.

“It’s an absolute record,” Dzyuba said.

But the new space is entrance online usually as an economic predicament is attack Russians’ spending power. Russia’s economy is approaching to shrink by around 3 percent this year underneath vigour from sanctions imposed by the United States and European Union over the Ukraine predicament and the depressed cost of oil, Russia’s categorical export. With incomes descending sharply, Russians spent 7.7 percent reduction on consumer purchases in the initial 5 months of this year than in the same duration in 2014, according to official information from the Rosstat statistics service.

The mega-malls now opening in Moscow were begun prolonged before the current crisis, when retailers were assured of economic expansion and were building rapidly.

But the recession is causing a shift in attitudes that will rage unrestrained for new mall projects, pronounced Nikolai Kazansky, handling partner of Colliers International Russia.

“Since consumer direct isn’t growing, retailers are no longer eager about building their bondage in Russia,” he said.

Vacancy rates in new selling malls are now around 6-8 percent, compared with 3 percent before the crisis, according to estimates by JLL. Many malls have slashed lease rates, some by up to 50 percent, to keep retailers.

According to Denis Sokolov, conduct of research at real estate organisation Cushman Wakefield Russia, usually one or dual new selling malls will open subsequent year.

Colliers International is some-more optimistic, presaging that 500,000 block meters of new sell space will come online in 2016 — the same as this year — though that 2017 will see a sharp slowdown.

According to JLL data, investment in Moscow sell genuine estate amounted to $2.2 billion in 2013, of which about 60 percent was unfamiliar capital. Last year, usually $350 million was invested, all from Russian sources.

Changing format

The economic predicament will revoke not usually the number of new selling centers in Moscow in the nearby future, though also their size.

Despite being a popular European trend, tiny format selling centers are not common in Russia.

With quick mercantile expansion producing outrageous rises in annual consumer spending, the last decade saw developers build large selling centers with an area of 100,000 block meters or some-more to quickly supply sell space to the market.

Capping that trend, Moscow’s mega-mall Avia Park, that non-stop final year at 228,500 block meters, became Europe’s biggest selling center.

But with Russia’s economy likely to emerge solemnly from the stream crisis, the logic will change.

Smaller selling centers that are closer to residential areas will be easier to fill than outrageous malls, pronounced Tatyana Kluchinskaya, conduct of the sell dialect at real estate consultancy Jones Lang LaSalle Russia.

Cushman Wakefield’s Sokolov combined that developers will find it harder to raise financing during the crisis for large selling centers, that on average need about $500 million.

While Moscow now has Europe’s biggest batch of shopping core sell space, the market still has good expansion potential. At more than 12 million people, Moscow has an official race 5 times incomparable than that of Paris, that has around 2.25 million residents within the city limits.

“In Moscow we have 434 block meters of shopping centre space per 1,000 residents. In big European cities the volume of shopping core sell space per 1,000 residents is 600-700 meters,” Dzyuba said.

Article source: http://www.themoscowtimes.com/article/525567.html