RESULTS OF 2015 PRESS CONFERENCE OF THE LEADERS OF COMMERCIAL REAL ESTATE

The city of Moscow: The Director General of MLP Management Company, Eriskhan Kurazov,  took part in the press conference on the topic of 2015 commercial real estate market results.

The event was organized by the international consulting company Knight Frank, international holding RD Group, investment fund Romanov Property Holdings Fund and MLP Managing Company. In the business quarter Romanov Dvor, more than 50 representatives of the leading mass media got together.

In his speech, Eriskhan Kurazov, the Director General of MLP Management Company, said: “Despite the economic crisis, in 2015 the company took control of another facility - Chekhov Warehousing Complex (337,000 sq.m) and does not plan to rest on its laurels. In 2016, we are planning to increase our presence in the market up to a minimum of 2 million sq.m, and within two to three years - up to 3 million sq.m.” 

Sergey Gipsh, managing partner of Knight Frank, summing up the 2015 results in the commercial real estate market: “Despite the pessimistic forecasts of the market participants at the end of 2014, in 2015 the market indicators in many segments were higher and better than predicted. For instance, this year we observed record deals in the office and warehouse markets. According to our forecasts, in 2016 commissioning of new areas shall decline in all segments, which is good for the market in general, the share of vacant spaces shall not increase, the decline in rental rates shall slow down or just stop. I believe that the market dynamics will remain at the level of 2015. We expect interesting and bright deals”.

Discussing the 2015 warehouse market, the participants arrived at the following conclusions:

1. In 2015, 1.3 million sq.m of quality warehouses were commissioned in Russia. Out of those, about 800, 000 sq.m are located in Moscow Region, which is two times lower than the 2014 figure. In 2016 the increase of warehouse space in Russia shall decrease by 25-30% to about 1 million sq.m.

2. In 2015 deals were closed on 1.7 million sq.m of warehouse space in Russian market, which is the second highest amount throughout the history of the warehouse property market. (2013 was the record year, with deals being closed on 1.83 million sq.m). A record number of high-quality warehouse spaces, 1.3 million sq.m, was rented and purchased in Moscow Region.

3. In 2016, a 30-35% decline in deals is expected falling to 900-1,000 thousand sq.m of rented/purchased warehouse space throughout Russia.

4. In 2015, the average deal amount in the warehouse segment reached a record level of 15.6 thousand sq.m. (by comparison: in 2014 this figure was 13 thousand sq.m). In 2016, the average deal amount will decrease to 10 -11 thousand sq.m.

5. In 2015, the rental rates for Class A warehouses remained at the previous level, i.e. 5,500 to 6,800 roubles per sq.m per year in the Moscow Region. In 2016, the rental rates shall remain at the current level.

6. Throughout 2015, the total vacant space was at a record high: about 1 million sq.m. (9.5%).