Archive for May, 2008
Moscow`s Retail Sector (Part II)
Tuesday, May 20th, 2008 | University | No Comments
Eventually I found time to continue my post about the Transition of Moscow and the outstanding position of the retail sector.
A
number of Russian online-newspapers report, that in 2006 Moscow’s estate market and the supply of areas for retail experienced an accelerated growth. About 2.5 Mio. m² area for retail and just 4-6% vacancy are a quite good starting position for further expansion of the young retail market. As measured by other European metropolises, e.g. Berlin (360m²), Prague or Warsaw (620m²), Moscow (110m²) ranks last, comparing the retail area per 1000 inhabitants. Because of that fact, the expansion to Russian markets is one of the strategies many leading international companies like Tesco, Carrefour, Real or Marks & Spencer pursue. The growth forecasts sound quite auspicious. In the years 2007 and 2008 the retail area has increased at 958m² and 707m².
At present time the development of Shopping Centers is one of the big businesses with more than 35% annual rate of return and only 6-8 years Pay-off period. The high rents of 600-4000$ per m² (for comparison only, in Prague 120$ in 1A location!) in popular shopping centers like the “Evropejskij TZ” and 500-2000$ inside the “Garden Ring” underline this high level of demand. This impressing comparison reflects the high potential of demand in Moscow`s retail sector.
The current Europe-wide trend to develop not simple shopping centers to shop there basic goods but to make people stay there for longer time hence to entertain them inside those palaces of Glass and Mirrors. Multiplex Cinemas, bowling, fitness and casinos supplement the new strategies of the center developers. Those new build multifunctional centers are bigger then ever with up to 200 000m² for retail, offices and parking space. To name some of the most popular ones in Moscow: “Oruzhejnyj” , “Zwenigorodskij”, “Chuka” or as mentioned before “Evropejskij” (see picture). But by now there about 100 shopping centers in Moscow.
The wealth of the Muscovite’s is growing steadily, that is one important factor for the developing of the retail sector. Moscow as a high-price shopping destination like there`s London, Paris or Milan, that is probably the future trend in city tourism which will certainly be a magnet for people from all around the world.