Shortage of shopping space boosts prices in Russia
Shopping centres in Russia are multiplying at massive speed, pushing beyond Moscow's borders in search of more space and new customers. That's driving up the price of retail space to Europe's highest levels.Millions of new shopping centres are about to open in the country within the next two years.All of Europe is building new retail space, with more than 17 million square metres to open by 2008, according to Cushman & Wakefield, but in Russia things are different.“Retail malls are being developed. This is generally the place where the retailer will go first, which is rather unusual in relation to other markets, because clearly if you are a retailer you want to have a downtown flagship store,” Charles Slater, Stiles & Ryabokobylko's director said.Experts say multinational retailers, including Sweden's IKEA and Germany's Metro, are behind the expansion. But while Moscow, Europe's most populous city, may soon be reaching retail-space saturation, Russia's regions still offer plenty of opportunity:“Almost all Russian regions are very attractive from the retail point of view,” Evgeny Aleshin, vice president of Storm Properties, believes.“In this connection I would mention Kazan, Krasnodar, Samara, Rostov-on-Don and Novosibirsk. But that does not mean that only in these five cities retail will be developing. I think, all over Russia each year we will have more retail's bases.”Despite growing consumer spending, Russia's overall retail construction rate is still far behind other European capitals, with just over 11 million sq feet of space to open by the end of next year. To compare, in Spain this amounts to almost 21 million sq feet, almost 18 million sq feet in Turkey, more than 14 and 13 million sq feet in the U.K. and France respectively.Experts say that while strong economic growth entices retailers and developers alike, Russia's undersupply of shopping space is driving the prices to some of the highest levels in Europe.