q3 2012 marketbeat presentation eng main
DESCRIPTION
A presentation on the Russian economy and real estate market.TRANSCRIPT
OCTOBER 2012
MARKETBEAT
REAL ESTATE MARKET UPDATE
Q3 2012
CUSHMAN & WAKEFIELD 1
MARKETBEATQ3 2012
INFORMATION RESOURCES
CWRUSSIA.RU
Market information, contacts news
MARKETBEAT.RU Latest Marketbeat report, reports archive, interactive maps
iCushman
Mobile application for Commercial real estate professionals, available at iTunes
SOCIAL NETWORKSWEB
CUSHMAN & WAKEFIELD 2
MARKETBEATQ3 2012
INTERACTIVE MAPS Click to open in browser
You need Flash player installed and internet connection for interactive map to run
Для работы интерактивной карты необходимFlash Player и соединение с интернет
OFFICES SHOPPING CENTERS
WAREHOUSES
CUSHMAN & WAKEFIELD 3
MARKETBEATQ3 2012
AGENDA
MACROECONOMY
RETAIL
OFFICE
WAREHOUSE
LAND
CAPITAL MARKETS
CUSHMAN & WAKEFIELD 4
MARKETBEATQ3 2012
MACROECONOMY
CUSHMAN & WAKEFIELD 5
MARKETBEATQ3 2012
MACROECONOMIC INDICATORS Russia’s economy is competitive
2011 Q3 2012 2012F 2012F
REAL ECONOMY
GDP 4.3% 4.0% 3.4% 3%
INDUSTRIAL PRODUCTION 4.7% 3.1% 3.1% 5%
CONSUMER SECTOR
RETAIL TRADE TURNOVER 7.0% 6.6% 6.3% 4%
REAL WAGES 4.2% 10% 6.3% 8.8%
REAL DISPOSABLE INCOME 0.8% 3.6% 5.0%
CPI 6.1% 5.2% 5 - 6% 6%
RUR/USD ANNUAL AVERAGE 29.39 30.99 27.9 30.7
– Ministry for Economic development has left its forecast for 2012 unchanged despite of recent deceleration
INTERNATIONAL COMPARISONS
LOCAL INDICATORS
– IMF has decreased the GDP forecast to 3.4%, but Russia still looks competitive
-2% 0% 2% 4% 6% 8% 10%
China
India
Russia
US
Brazil
Germany
France
UK
CUSHMAN & WAKEFIELD 6
MARKETBEATQ3 2012
OIL PRICE AND BUDGET PERFORMANCE
• The budget is performing with small 1.4% GDP surplus
• One year ago the surplus was 2.3% GDP
• Average URALS price in Q1-Q3 2012 was $111 / bbl
0
20
40
60
80
100
120
-100
0
100
200
300
400
500
2007 2008 2009 2010 2011 2012 YTD
US
$ /
bb
l
bn
US
$
Budget revenue (left) Budget expenditure (left)
Deficit / Surplus (left) Urals actual average (right)
CUSHMAN & WAKEFIELD 7
MARKETBEATQ3 2012
CAPITAL OUTFLOW
-150
-100
-50
0
50
100
2006 2007 2008 2009 2010 2011 2012 YTD
USD
bn
Total outflow Banks Other sectors
• The capital outflow is comparable to 2011, but the pattern has changed.
• The outflow is mainly generated by non-banking sector increasing and is comparable to the one in 2008, whereas the banking sector provided small inflow.
CUSHMAN & WAKEFIELD 8
MARKETBEATQ3 2012
CONSUMERS
• Consumer confidence is decreasing on the negative short-term expectations
• According to CBR statistics, consumers withdraw money from banks, loans growth is decelerating. The role of saving pattern isincreasing, with less trust to banks as to saving instruments.
CONSUMER CONFIDENCE AND INDUSTRIAL OPTIMISM
CONSUMER LOANS AND DEPOSITS GROWTH
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2006 2007 2008 2009 2010 2011 2012
Consumer confidence index, % Industrial optimism index, %
-30%
-20%
-10%
0%
10%
20%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2007 2008 2009 2010 2011 2012
Deposits growth, % Loans growth, %
CUSHMAN & WAKEFIELD 9
MARKETBEATQ3 2012
RETAIL MARKET VOLUMERussia is No.4 Retail Market in Europe
RETAIL TURNOVER IN EUROPE* RUSSIA RETAIL TURNOVER **
France 530.3Germany 528.3
United Kingdom 455.7
Russia 433.7
Italy 329.7Spain 264.3
Turkey 181.6
Netherlands 123.1
Poland 108.7
Belgium 93.6
Switzerland 90.9
Sweden 88.5
Austria 64.9
Greece 59.6
Denmark 57.6
Norway 55.6
Portugal 55.2Finland 50.3
Czech Republic 39.7Ireland 36.6Romania 31.9
Hungary 30.1Croatia 15.7Slovakia 15.3
Others** 56.1
*Data of 2010, bn USD , GFK GeoMarketing**Source: ROSSTAT
RUSSIA RETAIL TURNOVER GROWTH IS DECELERATING BUT STILL ONE OF THE LARGEST
IN EUROPE AND IS ONE OF THE DRIVERS OF GDP GROWTH IN 2012
-10%
-5%
0%
5%
10%
15%
20%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2006 2007 2008 2009 2010 2011 2012
CUSHMAN & WAKEFIELD 10
MARKETBEATQ3 2012
2,699
3,215
4,457
4,852
5,501
5,850
6,297
7,715
7,829
7,874
8,947
9,435
9,628
10,161
11,840
0 2,000 4,000 6,000 8,000 10,000 12,000
Hungary
Spain
Russia
Portugal
Germany
Italy
Great Britain
Belgium
France
Moscow
Austria
Denmark
Norway
Switzerland
Luxembourg
RETAIL SALES
RETAIL SALES PER CAPITA FOR EUROPEAN COUNTRIES
Source: ROSSTAT, RegioData Research
Russian consumers are important players
CUSHMAN & WAKEFIELD 11
MARKETBEATQ3 2012
RETAIL SPENDINGRussians are the most active consumers in Europe
RETAIL SPENDING IN EUROPE* RUSSIA CONSUMER PATTERN
AVERAGE RUSSIAN CITIZEN SPENDS 78% OF HIS/HER INCOME FOR RETAIL
AVERAGE SALARY IN RUSSIA – 25 704 RUR
Source: ROSSTAT, GFK GeoMarketing
CountryShare of retail spending in total
private spending
Russia 77%Czech Republic 40%
Poland 38%
France 35%
Germany 28%
United Kingdom 31%-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
2006 2007 2008 2009 2010 2011 2012 YTD
Goods and services Obligatory payments SavingsCurrency purchase Money on hand growth
CUSHMAN & WAKEFIELD 12
MARKETBEATQ3 2012
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Czech
Bulgaria
Germany
Spain
France
Italy
Russia
UK
CONSUMERS
–Russian consumer credit market was not growing fast enough in comparison with other countries
–Average Russian citizen owes $1091 in loans
CONSUMER CREDIT/GDP RATIO
Source: EUROSTAT
Russian consumer market has strong upside
CUSHMAN & WAKEFIELD 13
MARKETBEATQ3 2012
RETAIL MARKET
CUSHMAN & WAKEFIELD 14
MARKETBEATQ3 2012
RETAILERS
NEW RETAILERS 2012 COMING SOON
CUSHMAN & WAKEFIELD 15
MARKETBEATQ3 2012
`NEW RETAILERS
NEW RETAILERS 2012
COMING SOON
New reasons to visit shopping center
–The most notable opening in 2012 is Debenhams store.
– In 2012 all new international brands are coming to Russia with Russian partners
–New brands are coming to Moscow initially with expansion plants for Russian regions (mostly “millionniki” cities)
–New Russian brands:
»Cosmopolitan Fine Jewellery, CookHouse, Kari, Sabotage
– Closed
»Peacocks, Saturn (Metro Group)
CUSHMAN & WAKEFIELD 16
MARKETBEATQ3 2012
HYPERMARKETSHistoric expansion of hypermarkets and impressive development plans
0
20
40
60
80
100
120
140
160
1992 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Auchan O’KEY Lenta REAL
Tota
l uni
ts t
radi
ng
CUSHMAN & WAKEFIELD 17
MARKETBEATQ3 2012
NON-FOOD RETAILERSHistoric expansion of non-food big boxes and impressive development plans
0
10
20
30
40
50
60
70
80
1992 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Leroy Merlin OBI Castorama Media Markt
Tota
l uni
ts t
radi
ng
CUSHMAN & WAKEFIELD 18
MARKETBEATQ3 2012
SHOPPING CENTERSEurope 2011, sq.m of quality retail per ‘000 inhabitant
Source: Cushman&Wakefield Research
0 100 200 300 400 500 600 700
Bosnia Herz.Serbia
GreeceUkraine
Moscow regionBulgariaTurkeyRussia
BelgiumRomaniaHungary
GermanyMalta
Czech Rep.SlovakiaPoland
ItalySpain
CroatiaSwitzerland
EU-27 AverageFrance
United KingdomPortugal
LatviaLithuaniaDenmarkMoscowAustriaFinland
NetherlandsSlovenia
IrelandEstonia
LuxembourgSwedenNorway
RETAIL FORMATS:
1.SHOPPING CENTER
2. STREET RETAIL
3. DEPARTMENT STORE
4. RETAIL OUTLET – to come soon
5. RETAIL PARK – not in Russia yet
6. RETAIL WAREHOUSE – not in Russia yet
CUSHMAN & WAKEFIELD 19
MARKETBEATQ3 2012
FOOTFALL, Q1 2010=100%
SHOPPING CENTERSQuarterly monitoring
VACANCY RATE, %
* Cushman&Wakefield Research quarterly monitoring of 9 quality shopping centers (total GLA - 0.5 mn sq m).
These shopping centers have been opened more than one year ago and have the clear catchment area.
– Share of "successful shoppers" in visitors is 43.9% (Q3 2012) and at the highest level since Q4 2009
–Footfall in shopping centers is in line with seasonable trend
–Vacancy rate in established shopping malls with stabilized catchment area is extremely low
60%
70%
80%
90%
100%
110%
120%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2009 2010 2011 2012
1.65% 3.05% 1.58% 0.80% 0.95% 1.00% 1.05% 0.97% 0.41% 0.65% 0.80% 0.41%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2009 2010 2011 2012
CUSHMAN & WAKEFIELD 20
MARKETBEATQ3 2012
SHOPPING CENTERS – RUSSIA*
– There are 355 quality shopping malls in Russia (excluding Moscow and Moscow
agglomeration) total GLA 9 ,962, 317 sq m
– 17 new quality shopping malls were delivered in Q1-Q3 2012
QUALITY RETAIL SPACE UNDER CONSTRUCTION (IN SHOPPING CENTERS), ‘000 SQ M
PIPELINE OF QUALITY SHOPPING CENTERS, GLA 50,000+, 2012
* Without Moscow and Moscow region Source: Cushman&Wakefield Research
City Property Name Retail GLA, sq.m DeliveryVolgograd KomsoMall (Slava) 68,000 Q1
Krasnodar Krasnaya Plozhad
50,000 Q1
St. Petersburg RIO 52,500 Q2
Krasnodar Oz Mall 169,000 Q2
Ryazan Premier 50,000 Q2
Nizhnyi Novgorod Sedmoe Nebo 60,800 Q3
Ekaterinburg Prizma (E k )
70,400 Q4
Nizhnyi Novgorod RIO 68,000 Q4
Surgut Surgut City Mall 69,600 Q4
Sochi Moremall 80,000 Q4
Ekaterinburg Raduga Park 56,000 Q4
Belgorod Megagreen 53,000 Q4
Surgut Aura 65,000 Q4
912,300
1,918,464
Total GLA of shopping centers > 50,000 sq
Total GLA
1558
1143 1149 1189
866
1912
2008 2009 2010 2011 2012 (forecast)
Announced developers plans CW Forecast New construction
CUSHMAN & WAKEFIELD 21
MARKETBEATQ3 2012
SHOPPING CENTERS – MOSCOW AND MOSCOW REGIONConstruction of shopping centers in Moscow is down
Source: Cushman&Wakefield Research
– There are 115 quality shopping malls in Moscow, total GLA 3,449 ,610 SQM
– 6 new quality shopping malls and the first Russia outlet were delivered in Q1-Q3 2012
– Less new projects are announced and pipeline is drying out
515599
443
266
114
412
2008 2009 2010 2011 2012 (forecast)
Announced developers plans CW Forecast New construction
Property Name Retail GLA, sq.m DeliveryMoscow
Hotel Moskva 21,000 Q1
Sombrero 6,000 Q2Outlet Village Belaya Dacha
24,000 Q3
Sviblovo (former Friz) 15,000 Q3
Otrada (2 phase) 28,000 Q4
Kaleidoskop 41,000 Q4
Favorit 21,900 Q4
Moskvorechye 19,800 Q4
Parus 17,280 Q4
Perovo 5,000 Q4
Total GLA 198,980
Moscow RegionDomodedovo Torgovy Kvartal 22,500 Q1
Krasnogorsk Solnechniy Ray 8,000 Q3
Krasnogorsk June 17,500 Q3
Mytischi June 75,000 Q4
Mytischi Krasny Kit (2 phase) 35,000 Q4
Korolev SC on Kosmonavtov 22,500 Q4
Zelenograd Panfilovskiy 13,300 Q4
Lytkarino Vesna 12,500 Q4
Odintsovo Westore 7,600 Q4
Total GLA 213,900
* Outlets are included, retail part of mix-use complexes are not included
QUALITY RETIAL SPACE UNDER CONSTRUCTION (IN SHOPPING CENTERS), ‘000 SQ M
PIPELINE OF QUALITY SHOPPING CENTERS *, 2012
CUSHMAN & WAKEFIELD 22
MARKETBEATQ3 2012
Q3 2012 prime retail indicator** is
3,800 USDper sq.m per annum, base rate
SHOPPING CENTERS : RENTAL RATESMoscow rental rates are stable
QUALITY SHOPPING CENTERS RETAIL GALLERY
<100 100 - 300 300 - 800 800 - 1,500
Kiosks $2,000
Cellphones $3,500
Drugstore $1,200-$1,500
Banks $1,200-$1,500
Restaurant $1,200 $600-$1000
Textiles $1,200 $800
Books $1,000 $500-$600 $400 $300
Clothing and Footwear $1,200 $800 $600 $400
White and Brown $500
Supermarket $750
Gross leasable area,sq mRetail Gallery Mini Anchors
Business type
Source: Cushman&Wakefield Research
CUSHMAN & WAKEFIELD 23
MARKETBEATQ3 2012
RETAIL STREETS : RENTAL RATESMoscow rental rates are stable
STREET USD/sq. m/annum 2012 trend
1st Tverskaya Yamskaya $1,500 - $2 ,500 up
Arbat $1,500 - $2,500 up
Garden Ring $1,000 - $2,500 stable
Kutuzovsky Prospekt $1,000 - $2,500 stable
Kuznetsky Most $2,000 - $2,500 stable
Leningradsky Prospekt $1,000 - $2,000 stable
Leninsky prospect $1,000 - $2,000 stable
Prospect Mira $1,200 - $2,000 stable
Novy Arbat $1,500 - $2,500 up
Petrovka $3,000 - $4,000 up
Pyatnitskaya $1,500 - $2,000 stable
Tverskaya $3,500 - $4,500 up
Stoleshnikov per. $3,500 - $4,500 up
Source: Cushman&Wakefield Research
CUSHMAN & WAKEFIELD 24
MARKETBEATQ3 2012
LEASE TERMSBehind the rent
ITEM COMMENT
Lease Terms Standard lease terms are between 3-5 years with some up to 10 -15 for anchors. Break options are not common in the market.
Rental Payment Rents are typically payable monthly in advance.Turnover / percentage rents are increasingly seen in shopping centres. Rental rates are generally calculated in USD, Euro or commercial units are used. In less quality shopping centres rental rates are calculated in RUR.
Rent Deposit The rent deposit required in quality shopping centres is typically between 1 – 3 months rent equitant.
Indexation Annual indexation is typical between 3-10% or at a level of USD / EU CPI. The practice of premium / key money payments is seldom seen in Russia. Rent reviews are rare on the market.
Service Charges Service charge is payable by tenants at either an “open book” basis or more common as a fixed cost. Utilities payments are charged on consumption. Building insurance is normally charged back to tenant via service charge.
Other costs VAT 18% Local property taxes are not paid separately, they are generally included in the service charges.
CUSHMAN & WAKEFIELD 25
MARKETBEATQ3 2012
OFFICE MARKET
CUSHMAN & WAKEFIELD 26
MARKETBEATQ3 2012
MOSCOW OFFICE INDICATORSNew construction, Take up and Vacancy rate
High demand
–450,000 sq m (take up)
Fair net absorption
–31.8 % from take-up
Low new construction
–176,500 sq m
Decreasing Vacancy
–11.3%
Stable Rental Rates
–Prime $1,200
–Class A $790
–Class B $450
0%
2%
4%
6%
8%
10%
12%
14%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2006 2007 2008 2009 2010 2011 F2012 F2013 F2014 F2015
'000 sq m
New construction (2012: Q1-Q3) New construction Forecast (2012: Q4)
Take-up (2012: Q1-Q3) Take-up Forecast (2012: Q4)
Vacancy rate
CUSHMAN & WAKEFIELD 27
MARKETBEATQ3 2012
OFFICE STOCK AND VACANCY
SUPPLYShortage in Downtown, excessive in outskirts
OFFICE STOCK AND VACANCY
0%
5%
10%
15%
20%
25%
0
3
6
9
12
15
2006 2007 2008 2009 2010 2011 2012 F2013 F2014 F2015
mn sq m
Stock, Class B, (2012: Q1-Q3) Stock, Class A, (2012: Q1-Q3)
Vacancy rate, Class A Vacancy rate, Class B
Class A occupied
2.06Class A vacant 0.41
Class B occupied
9.46
Class B vacant 1.06
• The volume of space under construction is growing. There is 3.24 mn sq m of quality office space under construction, which is 0.64 mn sq m more than at the beginning of the year.
• Most new constructions of class A are concentrated in the Central business district, with most class B in the CBD and Other Trading Areas (OTA).
CUSHMAN & WAKEFIELD 28
MARKETBEATQ3 2012
VACANCY RATE AND AVAILABLE SPACE BY BUSINESS AREAS, Q3 2012
AVAILABILITYHigh vacancy but limited number of options
• The average vacancy rate is stable (and has contracted from 11.6% in Q2 down to 11.3% in Q3).
• Some submarkets are experiencing extremely low availability, for example in the Belorussky and Frunzensky submarkets the vacancy rate is less than 5%, which indicates a strong deficit of quality space in these areas.
6.0%
9.4%
12.8%
12.6%
22.4%
10.6%
`
140
343
576
Class B
133
239
39
Class A
`
Downtown
Central
OTA
CUSHMAN & WAKEFIELD 29
MARKETBEATQ3 2012
TAKE-UP (’000 SQ M)
DEMAND
• Office take up levels were positive over the quarter with over 450,000 sq.m transacted.
• Occupier demand is steady as tenants look to consolidate or renegotiate leases.
• This year the Moscow office market may overcome the historic high of 2 mn sq m in office transactions.
• At the same time, Net Absorption is lower than in previous years and is about 31,1% of Gross Absorption (or take-up).
High turnover, low net absorption
80%83%
75%86% 86% 79% 84%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0200400600800
1,0001,2001,4001,6001,8002,0002,2002,4002,600
2006 2007 2008 2009 2010 2011 F2012 F2013 F2014 F2015
'000 sq m
Forecast Class B (B+ and B-) Class B (B+ and B-)
Forecast Class A Class A
Share of lease deals
CUSHMAN & WAKEFIELD 30
MARKETBEATQ3 2012
ABSORPTION VS. TAKE-UP ABSORPTION VS. NEW CONSTRUCTION
NET ABSORPTION AND TAKE UPIn balance
Net absorption—represents the change in the occupied stock within a market during the period. Calculation: Net Absorption =X-YWhere:
X = Current stock – current vacancy Y = Previous stock (same quarter, previous year) – previous vacancy (same quarter, previous year)
• Originally Take up was close to net absorption, because companies were moving to newly constructed buildings from old stock
• In 2008 Net absorption was higher than Take up because of high number of pre-lease contracts in 2007. As the result of massive preleases, fully let buildings were delivered to the market
• Low net absorption and high take up indicates maturity of Moscow market
1.51
1.75
0.74
1.27
1.97
1.481.35
1.81
0.630.74 0.76
0.46
2007 2008 2009 2010 2011 Q 1-3 2012
Take-up Absorption
1.49
2.17
1.39
0.88
0.65
0.45
1.35
1.81
0.630.74 0.76
0.46
2007 2008 2009 2010 2011 Q 1-3 2012
New construction Absorption
CUSHMAN & WAKEFIELD 31
MARKETBEATQ3 2012
MOSCOW OFFICE MARKET NET ABSORPTIONInteractive chart
Flash player is required for interactive content
CUSHMAN & WAKEFIELD 32
MARKETBEATQ3 2012
RENTAL RATES BY CLASSES
RENTAL RATESStability is the key
• Prime $1,200
• Class A $ 790
• Class B $ 450
* Rental rates – base asking rates for deals closed within the period per sq m per annum, triple net
$717.4
$938.4
$1,090.0
$710.0
$640.0 $760.0 $743.0 $750.0$800.0
$850.0
$521.4
$627.9
$810.0
$510.0$420.0
$490.0$437.0 $450.0
$550.0$600.0
$790.0
$450.0
2006 2007 2008 2009 2010 2011 F2012 F2013 F2014 F2015
Class A Class B (B+ and B-)Class A Q3 Class A Q3
• High activity by tenants has had little impact on rents, which remain flat for all classes and all submarkets. In the vast majority of office buildings in Moscow, asking rents are stable.
• Nevertheless, there are positive dynamics in Class A average rental rates. In Q3 class A average rents have grown from USD 750 to USD 790 due to the respectively high proportion of transactions in the Central area (46% in Q3 compared with a traditional 30%). The higher share of more expensive deals pushed average rents up.
• Tenants’ incentives are as low as possible, discounts from asking rental rates are not often granted or are low (about 5% on average).
• We expect stable rents until the end of this year and possibly well into 2013.
CUSHMAN & WAKEFIELD 33
MARKETBEATQ3 2012
Rental rates by submarket
Flash player required for interactive content
CUSHMAN & WAKEFIELD 34
MARKETBEATQ3 2012
WAREHOUSE & INDUSTRIAL
CUSHMAN & WAKEFIELD 35
MARKETBEATQ3 2012
MOSCOW SUPPLYNew construction of quality warehouses (A and B classes)
2012–New construction (Q1-Q3 2012)
531,000 sq. m
–Total pipeline 840,000 sq. m
2013
–Total pipeline 1.700,000 sq m
0
200
400
600
800
1,000
1,200
1,400
2006 2007 2008 2009 2010 2011 2012F 2013F
'000
sq
m
New construction Planned
CUSHMAN & WAKEFIELD 36
MARKETBEATQ3 2012
RENTAL RATESRental rates and lease terms
$127
$132
$130
$140
$105$109
$135
$135
$80
$90
$100
$110
$120
$130
$140
$150
2005 2006 2007 2008 2009 2010 2011 2012F
CLASS A CLASS B CLASS CCOLD
STORAGES
Net Rent Rates,$/sq m/year
130 -140 120-130** 170** 251
Operating Expenses,$/sq m/year
30-40 20-30 - -
Utility Charges, $/sq m/year
10-15 10 - -
Yearly rent indexation CPI-3% 8-10% n/d n/d
Minimum Lease Term, years
5-10 1-5 - -
Contract security, months
3-6 1-3 - -
Advance Payment, months
1-3 1-3 1 -
Contract currency USD/EUR RUB RUB RUB
Minimal lease area,sq m
3 500 - -
CUSHMAN & WAKEFIELD 37
MARKETBEATQ3 2012
VACANCY RATEVacancy rate in Class A, Moscow region
–The vacancy rate remained stable since Q3 2011;
–In the short-term vacancy rate will not change.
11.2% 9.1% 8.1% 3.9% 2.8% 1.5% 1% 1% 1% 1% 1.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012
CUSHMAN & WAKEFIELD 38
MARKETBEATQ3 2012
SUPPLY MAPDistribution of W&I space in Moscow region
0
100
200
300
400
500
600
700
800
900
1,000
Dmitrovskoeshosse (A104)
Yaroslavskoeshosse (M8)
Shelkovskoeshosse (A103)
Gorkovskoeshosse (M7)
Novoryazanskoeshosse (M5)
Kashirskoeshosse (M4)
Simferopolskoeshosse (M2)
Kaluzhskoeshosse (A101)
Kievskoeshosse (MЗ)
Minskoeshosse (M1)
Novorizhskoeshosse (M9)
Leningradskoeshosse (M10)
30+ km 10-30 km 0-10 km Moscow
0
100
200
300
400
500
600
Dmitrovskoeshosse (A104)
Yaroslavskoeshosse (M8)
Shelkovskoeshosse (A103)
Gorkovskoeshosse (M7)
Novoryazanskoeshosse (M5)
Kashirskoeshosse (M4)
Simferopolskoeshosse (M2)
Kaluzhskoeshosse (A101)
Kievskoeshosse (MЗ)
Minskoeshosse (M1)
Novorizhskoeshosse (M9)
Leningradskoeshosse (M10)
30+ km 10-30 km 0-10 km Moscow
EXISTING 2012-2013 PIPELINE
CUSHMAN & WAKEFIELD 39
MARKETBEATQ3 2012
DEMAND STRUCTUREMarket share and deal size
• During Q1-Q3 2012 the demand was generated by retail and industrial companies.
• The requests for the biggest rentable areas came from retail (18,000 sq m in average) and industrial(11,000 sq m)companies.
STRUCTURE OF DEMAND AVERAGE DEAL SIZE
Distributor17%
Logistic17%
Other2%
Producer24%
Retailer40%
14.83 10.29 8.35 10.66 18.630
4
8
12
16
20
Distributor Logistic Other Producer Retailer
'000
sq
m
CUSHMAN & WAKEFIELD 40
MARKETBEATQ3 2012
DEMANDTake-up
• Q3 2012 was the record-breaker in Moscow region since Q1 2008.
• In the total volume of transactions completed in Q3 2012 the share of warehouse sales comprises 30%.
0
100
200
300
400
500
600
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
'000
SQ
M
Moscow Regions
CUSHMAN & WAKEFIELD 41
MARKETBEATQ3 2012
REGIONSRegional rental rates, USD per sq.m.
CITYAvg base rental
rates, USD / annum
Avg leased area, sq m
Moscow 135-140 10,000-15,000
St. Petersburg 120-130 2,000-10,000
Ekaterinburg 110-115 5,000-10,000
Nizhnyi Novgorod 110-120 3,000-5,000
Samara 110-115 3,000-5,000
Kazan 90-100 3,000-5,000
Rostov-On-Don 115-120 3,000-5,000
Krasnodar 110-120 3,000-5,000
Novosibirsk 110-115 2,000-5,000
Ufa 90-100 3,000-5,000
$0
$20
$40
$60
$80
$100
$120
$140
2008 2009 2010 2011 2012F
St. Petersburg Ekaterinburg Rostov-On-Don
CUSHMAN & WAKEFIELD 42
MARKETBEATQ3 2012
LAND MARKET
CUSHMAN & WAKEFIELD 43
MARKETBEATQ3 2012
MOSCOW REGIONStable, growing market
MOSCOW REGION AVERAGE INDUSTRIAL LAND PRICE, mn USD/ha
PRICE FOR INDUSTRIAL LAND IN MOSCOW REGION by direction
PRICE, mn USD / ha
Dmitrovskoe shosse A104 0.5-1.5Yaroslavskoe shosse M8 0.5 - 1.5Gorkovskoe shosse M7 0.5 - 1.2
Novoryazanskoe shosse M5 0.5-1.2Kashirskoe shosse M4 0.6 - 1.5
Simferopolskoe shosse M2 0.8 - 1
Kaluzhskoeshosse shosse A101 1-1.5Kievskoe shosse M3 1-2
Minskoe shosse M1 1-1.5
Novorizhskoe shosse M9 2-4
Leningradskoe shosse M10 1.5-2.5
ROAD1.941.87
1.07 1.38
1.41.4
2007 2008 2009 2010 2011 2012
CUSHMAN & WAKEFIELD 44
MARKETBEATQ3 2012
MOSCOW REGIONLand prices
DISTANCE
FROM MKAD
PRICE, mn
USD / ha
MKAD 2.5 - 3
5 km 1 – 1.5
15 km 0.6 - 0.8
30 km 0.4 - 0.6
50 km 0.3 - 0.5
CUSHMAN & WAKEFIELD 45
MARKETBEATQ3 2012
CAPITAL MARKETS
CUSHMAN & WAKEFIELD 46
MARKETBEATQ3 2012
COMMERCIAL REAL ESTATE INVESTMENTSGlobal Markets
EUROPEAN MARKET
Moscow is the 3rd investment market in Europe and 14th market worldwide (2 places up compared to 2011 eoy).
Now there are 2 Russian cities in Top 15 of European investment markets. St. Petersburg became reliable investment location.
WORLDWIDE MARKET
Data of Real Capital Analytics based on 12 past month basis
2,077
2,449
2,495
2,686
2,871
2,925
3,733
3,785
3,945
4,691
5,650
6,796
8,625
18,694
32,500
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Copenhagen
Warsaw
Hamburg
Saint Petersburg
Oslo
South Germany
Amsterdam/Randstad
Munich
Frankfurt/Rhine-Main
Rhine-Ruhr
Berlin-Brandenburg
Stockholm
Moscow
Paris
London Metro
$ mn
7,620
7,626
7,667
7,931
8,020
8,595
8,625
10,196
10,781
13,454
16,907
17,409
17,513
17,607
18,298
18,694
20,188
24,610
32,500
35,795
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Wuhan
Dallas
Tianjin
Shenyang
Boston
Seoul
Moscow
Chicago
Chongqing
Beijing
Singapore
DC Metro
SF Metro
Shanghai
LA Metro
Paris
Hong Kong
Tokyo
London Metro
NYC Metro
CUSHMAN & WAKEFIELD 47
MARKETBEATQ3 2012
RUSSIAN INVESTMENT MARKETRussian Investments split
By sector
By origin
By geography
• We increased our forecast for 2012 investments to US$ 7.2 bn
Foreign investorsDomestic investors
2012 forecast
MoscowSt. PetersburgRegions
2012 forecast0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2004 2005 2006 2007 2008 2009 2010 2011 2012
mn
USD
Office Retail Industrial Other Forecast
491.5
1,637.3
4,559.8
5,3545,797.9
2,256
3,994
7,547.47,200
5,524.4
78%
21%
1%
80%
18%
2%
61%
39%
65%
35%
CUSHMAN & WAKEFIELD 48
MARKETBEATQ3 2012
INVESTMENT MARKET IN NUMBERS2012 investments breakdown in $mn
39%
26%
12%
23% Offices
Shopping Centers
W&I
Hospitality and other
95%
5%Offices
Shopping Centers
W&I
Hospitality and other
Moscow is the core market for Office and W&I segments
Offices $1,672.30
Shopping Centers $1,109
W&I $513.60
Hospitality and other $1,014
Offices -
Shopping Centers $1,084.70
W&I -
Hospitality and other $56
MOSCOW $4,308.8
ST. PETERSBURG $1,140.7
REGIONS $74.9
$5,524 bn OF TOTAL YEAR-TO-DATE INVESTMENTS
CUSHMAN & WAKEFIELD 49
MARKETBEATQ3 2012
CAPITALIZATION RATES
3%
5%
7%
9%
Q1
'08
Q2
'08
Q3
'08
Q4
'08
Q1
'09
Q2
'09
Q3
'09
Q4
'09
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Paris Frankfurt Warsaw London
6%
8%
10%
12%
14%
16%
Q1
'08
Q2
'08
Q3
'08
Q4
'08
Q1
'09
Q2
'09
Q3
'09
Q4
'09
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Office prime Shopping centers prime W&I Prime
• Moscow capitalization rates showed small correction for office and W&I market.
• Current rates in Moscow:
• Office 8.75%
• Shopping centers 9.25%
• W&I 11%
• Capitalization rates for St.Petersburg are stable, thus, the gap between two markets is narrowing.
• Capitalization rates in Europe remain stable
CUSHMAN & WAKEFIELD 50
MARKETBEATQ3 2012
FORECAST
CUSHMAN & WAKEFIELD 51
MARKETBEATQ3 2012
2012Stabilization
2013
Acceleration
2014Growth
2015Second stabilization
MARKET OUTLOOK2013-2015 forecast
$461 $478 $499$543
$602
$708
$927
$1 088
$731$645
$731 $743 $750$800
$850
$423 $391 $388$452 $468
$526$631
$808
$510$417
$460 $437 $450$550
$600
$0
$200
$400
$600
$800
$1 000
$1 200
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
F
2013
F
2014
F
2015
F
Class A Class B (B+and B-)
RENTAL RATES, USD/SQ.M
CUSHMAN & WAKEFIELD 52
MARKETBEATQ3 2012
MARKET OUTLOOKSupply and Demand
0
500
1 000
1 500
2 000
2 500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
F
2013
F
2014
F
2015
FClass B(B+and B-) Class A
TAKE UP AND NET ABSORPTION, 000 SQ.MNEW CONSTRUCTION, 000 SQ.M
0
500
1000
1500
2000
2500
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
F
2013
F
2014
F
2015
F
Class A Net Abs. Class B Net Abs.Class A Take Up Class B Take Up
CUSHMAN & WAKEFIELD 53
MARKETBEATQ3 2012
MARKET OUTLOOK
High concentration of business in Moscow
Government spending
Relatively high economy growth rate
Increasing domestic investments in real estate
UPSIDEBusiness activity is slowing
Regulation complications
Investment climate is suffering
Exchange risk
DOWN-SIDE
1,1% 1,5% 0,9%2,4%
2,2%
4,1% 4,1%
11,8%
22,1%20,7%
18,4%
15,7%14,6%14,8%14,7%
1,9%
3,9%
2,8%4,2%
6,0%
10,9%11,5%11,4%10,7%9,5% 9,2%8,3%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
F20
13F
2014
F20
15F
Class A Class B (B+and B-)
Fundamentals
VACANCY RATE
