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Яндекс цитирования

  Analytics
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21.11.2008

Saint-Petersburg. Commercial Real Estate Market Snapshot. The 3

Office Market

The St. Petersburg office stock is significantly smaller than in other large European cities, reflecting the development stage of the market. Currently, high pace ofeconomic development and active entrance of international companies contribute to office demand
growth. There is an emerging tendency towards larger volumes of office transactions.

Supply

The St. Petersburg office stock remains limited: at the end of H1 2008 it stood at 1,113,090 sq m, including 180,780 sq m of Class A and 932,310 sq m of Class B premises. The average annual supply growth rate in the last three years was 20%. We expect that this will accelerate to 30% over the next three years.




Demand

The general economic growth and expansion of companies in St. Petersburg have been fuelling the office take-up. The office space absorption reached 187,000 sq m in 2007, yet remained significantly lower than in Moscow (2.14 mln sq m). The usual size of a leased office is now 500-1,000 sq m for Class A and 100-500 sq m for Class B.




Rents

At the end of H1 2008 prime base rental rates were USD 1,010/sq m/year triple net. The average base rent in Class A amounted to USD 830/sq m/year. The vacancy rate remained low and amounted to 5.8%. This keeps St. Petersburg office rental rates quite high compared to those in other European cities. We expect the vacancy rate to increase in the medium term to around 12% in 2009-2010, assuming that announced projects are delivered on time.




Market Development Forecast

In 2005-2006 retail market development activity began to spread from Moscow to St. Petersburg and other Russian regions. The market will continue to evolve with the entrance of new international brands and expansion of existing retail operators. In 2009-2010 the local market will be growing strongly and quickly maturing. Quality retail supply will become more diverse, as a new generation of shopping centres will appear, including multifunctional complexes with significant entertainment component and multi-phased projects such as Leto, Graf Orloff, Nevsky Kolizey.





Warehouse Market

Compared to other major European cities, St. Petersburg has one of the lowest levels of quality 
warehousing space per capita. As a result, the vacancy rate in quality warehouses is less than 2% and the rents are among the highest in Europe. Nevertheless, potential
tenants are waiting for possible market changes from an anticipated sharp increase of supply in H2 2008.

Supply

The St. Petersburg quality warehousing supply (Class A and B) is quite limited (988,400 sq m) and accounts for about 16% of the total stock. Of those, 546,032 sq m fully meet international Class A standards. A large share of Class A and B warehouses (around 29%) is owner occupied (built-to-suit) premises. Most of the announced projects are Class A. We expect that completion of some of them will be delayed for various reasons. Nevertheless, according to our estimates, quality warehouse supply in St. Petersburg will increase four times by 2010.




Demand

Demand for warehouse space in St. Petersburg considerably exceeds supply. The vacancy rate remains very low (around 2% for quality warehouse premises). However, high rents have temporarily depressed the demand. Pre-lease deals remain rare. Potential tenants are expecting price stabilization due to large warehouse space delivery in the nearest future. Logistic and retail sector expansion, active development of the port and the influx of international manufacturers drive the demand growth. One of important demand sources is the shift of companies from low quality facilities located inside the city to new high quality warehouse complexes around city borders. Demand for larger warehousing premises (5,000+ sq m) will increase, though the demand for small areas (1,500-2,500 sq m) will remain strong as well. Companies prefer locations close to the city Ring Road (KAD), not more than 3-5 km from the city. South and North of the city are more attractive for tenants because of better accessibility and large share of retail turnover going in these directions.




Rents

Limited warehouse supply in St. Petersburg is the reason for one of the highest industrial rental rates in Europe. In 2008 prime rents reached USD 160/sq m/year (excluding VAT and operating expenses). Base rents for Class B were USD 115-150/sq m/year. However, with a delivery of large volumes of quality space the market will balance off by 2010, which will stabilize the rents.






Hotel Market

Still very much a leisure-oriented market, St. Petersburg currently features limited supply of modern accommodation and highly seasonal demand. Supported by the country’s economic growth, the market development outlook is positive, with an impressive development pipeline and gradual repositioning of the city as a business destination.

Supply

Outdated Soviet-built hotels, non-branded properties and mini-hotels comprise the majority of the officially registered stock in St. Petersburg (21,300 rooms). Modern-quality supply remains limited with approximately 5,300 rooms, offered by mostly upscale, centrally located properties. This year the market is expected to see a significant increase of quality supply: apart from the already opened 221-room Ibis, the 278-room Holiday Club, the 348-room Sokos Hotel Olympic Garden and the 255-room Sokos Hotel

Vasilievsky, over 300 mid-market rooms are anticipated (a Courtyard by Marriott hotel, and a Domina project).



Demand

Profiting from its strategic location and the image of one of the world’s tourist attractions, St. Petersburg has seen an increased inflow of international visitors (reaching 3.6 mln in 2007), as well as booming air-passenger traffic. In 2007 Pulkovo International Airport served 6.1 mln passengers, 20% more than in 2006. H1 2008 posted another 26% YoY growth (to 3.2 mln).



Trading

Trading performance of quality hotels in St. Petersburg has evolved favourably in recent years, with strong growth in room yields. In 2007 the occupancy rate stood at 62.7% and ARR grew by 18.6% YoY, reaching USD 281. During H1 2008, occupancy levels in quality hotels demonstrated a 5.4% growth YoY, and ARR increased by 31% YoY. Although the immediate outlook is positive, projected entry of the new stock is expected to intensify the competition, resulting in flattening of room yields across all market segments.



Trends

The city authorities are trying to reposition St. Petersburg as a business destination. The development of the MICE industry is an essential part of this strategy, which could help balance out hotel trading currently affected by the leisure- driven seasonality. This ought to translate into a greater demand for modern quality affordable accommodation and event facilities.




Retail Market

Stable personal income growth boosts consumer demand and fuels demand for quality shopping space. The St. Petersburg retail market is undergoing an evolution, as the new generation of retail projects appear and new formats are introduced to the market.

Supply

At the end of H1 2008, the number of quality shopping centres reached 34 with the total GLA of 1,106,600 sq m (vs. 1,839,424 sq m in Moscow). The current stock per 1,000 inhabitants (252.7 sq m) is considerably smaller than in other major European capitals, although higher than in Moscow. The recently launched projects include Piter Raduga (the largest project of 2007), Severniy Mall, Atlantic City. About 1.3 mln sq m of shopping centre space is announced to be put into operation by the end of 2010, raising the total stock to 2.4 mln sq m.




Demand

Over the last three years the share of income spent on consumption increased, reaching 77.2% in 2007. Steady personal income growth also translated into improvement of consumption structure, with a shift from food to nonfood goods and services. Growing incomes are stimulating customer demand and lead to the development of new retail formats, which will satisfy a more demanding customer.


 


 




Rents

Prime base rental rates for retail space in St. Petersburg reached USD 3,000 per sq m at the end of H1 2008, which is above most European cities. This is the result of the constantly improving quality of retail space, as well as a low vacancy rate (below 1%). The new retail market trend is the introduction of turnover rental agreements. However, this practice is not yet widely used and is limited to the best shopping centres.





Market Development Forecast

In 2005-2006 retail market development activity began to spread from Moscow to St. Petersburg and other Russian regions. The market will continue to evolve with the entrance of new international brands and expansion of existing retail operators. In 2009-2010 the local market will be growing strongly and quickly maturing. Quality retail supply will become more diverse, as a new generation of shopping centres will appear, including multifunctional complexes with significant entertainment component and multi-phased projects such as Leto, Graf Orloff, Nevsky Kolizey.



 





/ Source: Jones Lang LaSalle



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