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News Release

Moscow

Only one shopping centre opened in Moscow in Q1 2012

Lack of supply and decrease in vacancy rate on Moscow retail real estate market


Moscow, 13 April 2012 – According to Jones Lang LaSalle research, only VITTE Mall shopping centre (23,000 sq m of GLA) opened in Moscow in Q1 2012. Volume of completions was one of the lowest for a first quarter over the last 6 years. Moscow total shopping centre stock reached 3.18 million sq m at the end of Q1 2012.

Olesya Dzuba, Head of Retail and Capital Markets Research, Russia and CIS, added: “Low volume of completions, limited current supply and stable high retailer demand resulted in a vacancy rate downturn from 4% at the end of 2011 to 3% in Q1 2012. We expect the vacancy rate to remain stable at 3% in 2012 and decrease to 2% in 2013”.

A number of projects are currently being developed in Moscow. While some are already built and waiting to open (Kaleidoscope, Parus, Otrada), many are under active construction (Tashir Group projects in Maryina Roscha and Leninskiy Prospect, GoodZone, Gorod on Ryazanskiy Prospect phase II). According to our preliminary forecast, total completions should reach approximately 215,000 sq m for 2012 which is 70% higher than in 2011. However it is important to note delays for several malls and the impact this may have on completions.

Olesya Dzuba added: “Large schemes expected to open in Moscow will likely reach the market no earlier than 2013-2014. Many projects are under construction in regional cities and developers continue to announce construction plans. Retail development influences consumer behavior in Russia, which is to say “high quality” retail is gradually driving out “poor quality” retail in regional cities. Positive demographics and income levels suggest the Russian market is still very much an untapped resource for many retailers, developers and investors. Importantly, this holds true not only for large cities but cities with modest populations from 300,000 inhabitants upward. The tendency of developers’ interest shifting to regional cities will continue in 2012”.

Prime rent remained stable at USD4,000 per sq m per year in Moscow shopping centres in Q1 2012 while prime street retail rent increased by over 11% to USD 5,000 per sq m per year
in Q1 2012 (compared to Q4 2011).

Svetlana Yarova, Head of High street retail department, Russia and CIS, added: “Limited supply of shopping centres is also raising demand for high street retail locations in Moscow. Demand on central streets originated from banks, luxury and premium retailers and cafés and restaurants. Vacancy rate is no higher than 5% in the city centre, for street retail premises. Growth of rents for these locations reached 5-7% in 2011 and we expect a further 5% rental growth in 2012”.


About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 195 million square meters worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 `billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010 and 2011 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg.
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