Retail in Russia The Initial Questions November 2013 Murat Gursey - - PowerPoint PPT Presentation

Print: December 5, 2013 - 09:42

Retail in Russia The Initial Questions

November 2013 Murat Gursey – COO Atrium Russia

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Atrium Snapshot

Owner, Manager and Developer of supermarket anchored shopping centers

Numbers as reported in FY2012 Annual Report

• Leading owner, operator and developer of shopping centers in Central & Eastern Europe
• Listed on the Vienna and NYSE Euronext Amsterdam Stock Exchanges (ATRS)
• Owns a €2.2 billion portfolio of 156 food-anchored retail properties and shopping centers
• Properties located predominantly in Poland,

Russia, the Czech Republic and Slovakia

• Gross leasable area 1.2 million m2
• 2012 NRI: €181 million
• Development and land portfolio: €0.6 billion

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Atrium in Russia

AERE-owned GLA and vacancy as per September 30, 2013

• Atrium assets are located in the European part of Russia:

MOSCOW MALL GALLERY BRATEEVO GLA: 11,395 m² Vacancy: 0.0% Catchment: 1.18 mln 2012 Annual traffic: 4.6 mln MALL GALLERY SIGNALNY GLA: 5,697 m² Vacancy: 2.4% Catchment: 1.99 mln 2012 Annual traffic: 4.1 mln

• ST. PETERSBURG

BUGRI / SEVERNIY MALL GLA: 29,712 m² Vacancy: 2.1% Catchment: 0.2 mln 2012 Annual traffic: 2.8 mln VOLGOGRAD PARKHOUSE GLA: 48,278 m² Vacancy: 0.1% Catchment: 0.2 mln 2012 Annual traffic: 4.9 mln KAZAN PARKHOUSE GLA: 50,882 m² Vacancy: 0.1% Catchment: 0.7 mln 2012 Annual traffic: 7.3 mln TOGLIATTI PARKHOUSE GLA: 52,927 m² Vacancy: 0.1% Catchment: 0.3 mln 2012 Annual traffic: 6.7 mln YEKATERINBURG PARKHOUSE GLA: 39,390 m² Vacancy: 0.8% Catchment: 0.2 mln 2012 Annual traffic: 6.5 mln POPULATION STATISTICS MOSCOW: 11.61 mln ST.PETERSBURG: 4.95 mln YEKATERINBURG: 1.38 mln KAZAN: 1.16 mln VOLGOGRAD: 1.02 mln TOGLIATTI: 0.73 mln

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Russian Portfolio Examples

Volgograd, Park House Year of opening: 2003 GLA (sqm): 48,479 *

• No. of units / retail units:

170 / 106 Occupancy: 99.9% Food anchor: Karusel Parking spaces: 1,148 * including stand-alone OBI DIY box Yekaterinburg, Park House Year of opening: 2005 GLA (sqm): 39,390

• No. of units / retail units:

188 / 113 Occupancy: 99.2% Food anchor: Karusel Parking spaces: 1,308 Moscow, Signalny Year of opening: 2006 GLA (sqm): 18,952 *

• No. of units / retail units:

50 / 43 Occupancy: 97.6% Food anchor: Auchan Parking spaces: 1,073 * of which Atrium owns 5,697 sqm Moscow, Brateevo Year of opening: 2006 GLA (sqm): 26,953 *

• No. of units / retail units:

66 / 64 Occupancy: 100.0% Food anchor: Auchan Parking spaces: 1,664 * of which Atrium owns 11,395 sqm Kazan, Park House Year of opening: 2006 GLA (sqm): 51,205

• No. of units / retail units:

181 / 109 Occupancy: 99.9% Food anchor: Auchan Parking spaces: 1,850 Togliatti, Park House Year of opening: 2006 GLA (sqm): 65,283 *

• No. of units / retail units:

189 / 139 Occupancy: 99.9% Food anchor: Auchan Parking spaces: 1,674 * of which Atrium owns 54,975 sqm; GLA including stand-alone Castorama and Media Markt stores

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Russian Economy

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Retail Turnover

– Retail turnover growth will provide support for the expansion of the retail real estate market in Russia – Regardless of the slowdown in economic growth, according to Oxford Economics, Russia leads Europe with annual retail turnover growth reaching 5.1% through to the end of 2015

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– Retail Partner

• Who is the lease holder?
• Controlling the end prices and positioning of the Brand
• Buy back option

– Buying an existing chain – Own team

• Logistics
• Taxes, VAT return
• Local authorities
• Long term targets, no short term perspective

– Own team for logistics, shops opened by partners – Using agency services

How to Enter the Market?

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– Moscow –

• St. Petersburg

– “Million” cities: (18)

• Moscow 11 619 943
• St. Petersburg 4 953 219
• Novosibirsk 1 498 921
• Yekaterinburg 1 377 738
• Nijny Novgorod 1 254 592
• Samara 1 169 184
• Omsk 1 156 583
• Kazan 1 161 308
• Chelyabinsk 1 156 583
• Rostov on Don 1 096 448
• Ufa 1 072 291
• Volgograd 1 018 739
• Perm 1 000 672
• Krasnoyarsk, Voronej, Saratov, Krasnodar, Togliatty
• “Saturated” Cities

From Where to Start?

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– For FY2013 Russian market will receive 1.3m sq m of new quality retail premises, with more than 1.5m sq m in 2014 – Krasnodar and Yekaterinburg are the cities with highest retail area supply.

From Where to Start?

Sources: Jones Lang LaSalle, Rosstat

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Moscow Shopping Center Supply

– While record completions are expected in Moscow in 2014, saturation levels will remain low versus Europe – The 2014 completions include Aviapark (235,000 m2), Columbus(136,000m2), Vegas City(113,000 m2), Mozaika (68,000 m2)

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Moscow Rental Rates

– International Retailers keep targeting the Russian Market – Moscow is traditionally the starting point – No significant change in the rental rates in Moscow: The slowdown of the economy is compensated by the high demand from the retailers and stable retail turnover growth (5,1%) – The prime rent for 100 m2 space in quality premises remains at the level of USD 3000- 4500/m2/year. – Average rental rate in shopping centers is USD 500-1800/m2/year

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• Consultants (tenant reps)
• Footfall
• Competition
• Positioning of the Center
• Package deals
• Present Occupancy in Moscow shopping centers: 98.8%, Atrium Russian Portfolio: 99.2%
• No decrease in Rental rates despite the decrease in GDP

How to Choose the Shopping Center?

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• Price-Quality awareness is rising
• Becoming more sensitive to discounts/special offers
• Increasing brand orientation
• The Center is a place for leisure & shopping for the whole family
• The weather conditions motivate the people to spend more time in the malls
• The customers are shifting from the traditional open markets to shopping malls for more comfort, more

choice of brands as the middle class is growing

• Still, the food anchor is the dominant player. (around 40% of Atrium’s mall visitors visit the hypermarket)

Consumer Behavior in the Shopping Center

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• Existing
• Absent

Some of the brands in the Russian Market