In Moscow, the volume of investment in street retail premises in 2023 may increase by 55%, to 1.8 trillion rubles.

Rising inflation, a cooling housing market and limited access to foreign assets are contributing to increased investor interest in purchasing street retail premises. In Moscow, the volume of investment in this segment in 2023 could grow by 55%, to 1.8 trillion rubles. But handing over purchased assets is not always easy: the average vacancy rate has not yet shown a pronounced decline, and the growth of rental rates in the city center is noticeably higher than on the outskirts.

The volume of investments in street retail premises in Moscow in 2023 could grow by 55% year-on-year, to 1.8 trillion rubles, as calculated by Magazin Magazin. NF Group talks about an increase in investments by 30% per year, without giving figures in physical terms. The growth in the analytics indicator in both companies is explained by the intensification of transactions for the purchase of premises in new residential areas. Nikita Kornienko, CEO of SimpleEstate, also speaks about the surge in activity of private investors: “They are buying up everything they have, and there is a shortage.”

The value of the supply of assets in street retail, according to Magazin Magazin, in Moscow doubled over the year, to 300 billion rubles. This is due to an increase in construction volumes and prices. According to Nash.dom.RF, 17.2 million square meters are currently being built in Moscow. m of residential real estate, which is 3.4% more than a year earlier. DNA Realty CEO Anton Belykh says that the cost of objects in residential complexes has increased by 25–30% over the year. Prices are raised by developers and buyers aimed at resale, he clarifies.

Investment transactions in the purchase and sale of street retail properties account for about 90%, they say at Magazin Magazin. Premises are purchased for resale and rental. The remaining 10% is for your own business. Nikita Kornienko explains this by the presence of free funds among investors and fears due to high inflation. Previously, according to the expert, investors preferred to buy Western securities and foreign real estate, but now the availability of these assets is limited. Ivan Barinov, street retail consultant at Magazin Magazinov, adds that last year investors often considered the UAE market, but now it is oversaturated.

As Nikita Kornienko notes, the desire to save funds previously caused a boom in investment demand for housing (see Kommersant on November 18). But now the growth in prices for new buildings in the country’s largest regional markets has begun to slow down due to tightening conditions for preferential mortgage lending. Mr. Kornienko estimates the median budget for the purchase of street retail premises at 30 million rubles, which is comparable to the funds that investors invest in housing. According to Avito Real Estate, the average apartment in a new building in Moscow cost 16.3 million rubles at the beginning of December.

Director of street retail at NF Group, Irina Kozina, adds that infrastructure retail is resistant to crisis trends and can provide a profitability of 8–10% per annum. Ivan Barinov gives a more modest estimate – 7–9%. This is comparable to bank deposits: the average rate on individual deposits with a maturity of up to a year in October, according to the Central Bank, was 9.96%. According to Mr. Barinov, although some investors in commercial real estate with large budgets have switched to deposits since the third quarter, the activity of asset buyers in street retail is higher than last year. Irina Kozina adds that the increase in deposit returns due to the high key rate is often perceived as short-term.

However, renting out purchased street retail premises is not always easy. According to NF Group, the average vacancy rate on the central shopping streets of Moscow has remained at 10.1% for the last year. In long-existing residential complexes in residential areas, the figure is estimated at 5–10%, in newly commissioned ones – at 50–60%, adds Anton Belykh. The average rental price for the year, according to the Store Store, inside the Boulevard Ring increased by 17%, to 8.5 thousand rubles. per sq. m, outside the Moscow Ring Road – by 10%, up to 2 thousand rubles. per sq. m. Mr. Belykh notes that in any location there are successful and unsuccessful objects. In the residential complex, he said, premises with access to the rear part of the complex are in reduced demand.

Alexandra Mertsalova