Crisis freezes Russian malls
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Russian property developers had planned construction of 990,000 sqm of new mall space in 2015.
But property specialist Jones Lang LaSalle predicts the brakes will be put on as much as 400,000sqm of new Russian malls space, in the wake of the rouble’s collapse and the nation’s worsening economic plight.
The nation’s growing economic crisis is seeing consumers cut spending and restricting access to finance.
“Everything depends on how many planned projects have already received financing,” said Olesya Dzyuba, deputy head of research at JLL, in the report.
Russia’s Central Bank has raised the base interest rate to 15 per cent in a bid to prop up the rouble, leaving real estate developers facing borrowing rates as high as 20 per cent, severely impacting on the viability of retail or commercial developments, especially when consumers are cutting back on spending.
Compounding the problem, foreign retailers are finding Russia a far less attractive market given the rouble’s value has slumped 50 per cent in around six months, reducing demand for space.
Finnish department store Stockmann closed 16 fashion outlets in Russia last year and international brands like Adidas and Zara have slowed store roll-outs.
According to JLL, Russian mall rental rates slumped 20 per cent last year, to reach an average range of between US$400 and $1450 per sqm.
Questions & Answers
Q.What impact has the economic crisis had on consumers in Russia?
What impact has the economic crisis had on consumers in Russia?
The nation's growing economic crisis means consumers are cutting spending. This reduction in consumer expenditure is severely impacting the viability of retail developments in the country.
Q.How has the rouble's collapse affected foreign retailers operating in Russia?
How has the rouble's collapse affected foreign retailers operating in Russia?
The rouble's value has slumped by 50 per cent in approximately six months, making Russia a far less attractive market for foreign retailers. This has reduced demand for retail space.
Q.What were the average rental rates for Russian malls last year?
What were the average rental rates for Russian malls last year?
According to JLL, Russian mall rental rates slumped 20 per cent last year. They reached an average range of between US$400 and US$1450 per square metre.
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