Page 102 - RUSRptApr17

The retail sector attracted the bulk of investments in the first quarter, with the purchase of the Leto SEC in St. Petersburg by MallTech as the main transaction. The share of retail investments exceeded 50% of the total volume, outperforming offices, a traditional leader.
Retail market stabilization led to rising shopping centre occupancy and improved their financial performance. Market players adjusted to the current conditions. This stimulates owners and investors to come to common terms on asset values, with a number of deals reaching advanced stages and likely to be completed in the near terms, JLL reports.
“Although Russian investors continued to dominate in Q1 2017, we expect foreign investor activity to rebound after hitting the historical low of 3.5% last year,” Evgeniy Semenov, Regional Director, Head of Capital Markets, JLL, Russia & CIS, notes.
The distribution of investment activity across regions became more even. The share of Moscow deals declined to 50% from 81% in the first quarter of 2016. The highest investment growth was observed in St. Petersburg, where the share increasing from 9% to 20% due to the several large transactions. In absolute terms, the St. Petersburg investment volume doubled.
Prime yields remain unchanged from the previous quarter. As benchmarks for the market players, JLL analysts take Moscow prime yields between 9.0-10.5% for offices and shopping centres and 11.0-12.5% for warehouses; St. Petersburg prime yields at 9.5-11.5% for offices and shopping centres and 11.5-13.5% for warehouses.
9.1.5 Retail sector news
Last year was a litmus test for the business models and strategies of Russian retailers , although not all players passed muster successfully.
Gazprombank updated its valuations and recommendations on Russia’s listed food retailers after they released operating and some financial results for 4Q16 and 2016, including the management’s guidance for 2017, revised strategies and business expansion priorities.
102 RUSSIA Country Report April 2017 www.intellinews.com