The trend of surpass of office premises uptake volumes over new supply delivery volumes, characteristic of the market of high-quality office premises in the Moscow Region during the past years, may change the development vector in 2013. The increase of new supply in Q1 2013 amounted to approx 200 thous. sq.m, which was higher than the analogous index of Q1 2012 more than by 50%. In the short term a further increase of new supply is expected.
Consequently, at the end of Q1 2013 the aggregate volume of high-quality supply in the office real estate market of the Moscow Region accounted for about 12.03 mln. sq.m. Business activity in the market of purchase and rent of high-quality office premises was rather moderate in Q1. By the results of Q1 2013 the share of vacant premises constituted 9% in “A” class, and 10-12% in “B” class.
In Q1 2013 the growth of rental rates reached 2-3%, up to 7% in the most liquid projects. In general, the growth of rates will be at the level of 1-3% per quarter, the final growth of the average rental rate for office real estate will reach the forecasted 10-12% till the end of the year. At the end of Q1 2013 the average rental rate amounted to $1, 000 in “A” class, $750 in “B+” class, $570 per sq.m in “B-” class per year. OPEX for the period under consideration reached $50-$300 per sq.m per year for “A” class premises; $75-$145—for “B+”, “B-” classes.
During Q1 2013 no large professional retail center was opened in Moscow. Therefore, the supply level of high-quality retail real estate remained unchanged since the end of 2012 and accounted for 6.33 mln. sq.m of the total area (the rentable area—3.2 mln. sq.m). A benchmark event for the Moscow market was the adopted by the Moscow Government decision about the cancellation of an underground retail and entertainment center with the total area of 120, 000 sq.m on the square of Paveletsky station.
During Q1 2013 the Russian market saw two new international brands. Thus, the opening of the first in Russia Japan chain of Noodles restaurants Marugame in one of the most popular retail corridors of a restaurant profile—Pyatnitskaya street took place in February. Moreover, the opening of Dutch Jewelry chain Trollbeads took place in February. The store was opened in REC Atrium, further on the company plans to open flagman stores in St.-Petersburg and regional million-plus cities. Large Russian retail operators also preserve high market activity: it was reported in February about the purchase of a land plot in Solnechnogorsk region of the Moscow Region by Lenta company for the construction of a hypermarket.
No important changes were observed in the levels of rental rates during Q1 2013. The active development of street retail segment may be anticipated due to the slowdown of new supply increase paces, which began in 2012 and were preserved at the beginning of 2013, as well as due to the announced plans for international retail chains delivery to the Russian market.
The main trend in both Moscow and regional retail real estate markets in Q1 2013 was the preservation of high business activity: the construction of suspended during the crisis projects was resumed, new large projects of regional and superregional scale were actively announced. It may be forecasted that many projects will be reconsidered and cancelled as new projects are entering the market, which will in its turn cause the strengthening of the competition, that is why no abrupt explosion of retail real estate supply is expected in the market.
The opening of the Novotel Moscow City hotel in MIBC Moscow-City, as well as the first capsule hotel Sleepbox Hotel Tverskaya took place during Q1 2013. As a result, the hotel fund of the city increased by 410 rooms. Accor group property—Novotel Moscow City—confirms a new trend of the hotel market of Moscow: the opening of business hotels takes place in conjunction with large office centers and business districts of the city, which makes it possible for them to achieve high indices of operational indices.
As far as new projects are concerned, it was reported in Q1 2013 about three new hotels in the Moscow Region. Thus, InterContinental Hotels Group company plans to open a hotel under Holiday Inn brand with the capacity of 250 rooms in Nagatino i-Land business park. Another two new hotels under international operators’ management were announced near Sheremetievo (The Radisson Blu hotel for 379 rooms, the opening will take place in 2014) and Vnukovo (Four Points by Sheraton for 250 rooms, the opening will tale place in 2016) airports.
During Q1 2013 the supply of hotel rooms under international operators’ management increased by 334 rooms in regional cities due to the opening of two hotels in Sochi. It was reported about joint plans of InterContinental Hotels Group and Russian hotel chain company to build a chain of 15 hotels under Holiday Inn Express chain till 2019.
Continuing growth of the main operational indices may be noted as the main trend of the hotel market of Moscow in Q1 2013. The occupancy of upper segment hotels constituted 70-75%, of the market on the whole—about 65%. RevPAR exceeded 4, 000 rub. in the upper segment of the market.
