Rieker
Possible revision of lease agreements
13.08.2014 4902

Possible revision of lease agreements

The wave of sanctions imposed by the US and the EU against Russia, according to JLL experts, will have a significant impact on the Russian commercial real estate market. Of all the sanctions, the most worrisome is the restriction of access by state banks to the US and EU debt markets. While the level of risk in the Russian market is still perceived as high, the closure of European markets for IPOs and SPOs will affect Russian companies, as well as the general deterioration of the country's macroeconomic situation.

The longer the sanctions remain valid, the higher the risks for the commercial real estate market and the economy as a whole. The current macroeconomic situation puts pressure on the level of vacant space in all segments, and also begins to affect rental rates. At the same time, the Russian real estate market continues to maintain strong fundamental indicators due to the size of the country, the volume of trade and the lack of supply of quality space in comparison with Europe. The current sanctions will inevitably cause some destabilization, but, given that they can be short-term, experts expect an increase in investment already in the 2015 year, easing pressure on consumer demand, and, ultimately, as Russia’s risk perception improves, it will again the opening of the European IPO market.

State-owned banks will become more selective with their borrowers. Experts believe that the state cannot completely stop financing existing high-quality commercial real estate or projects at the development stage. To maintain business activity in the market, state-owned banks are likely to continue cooperation on the highest quality commercial real estate projects.

Another component of the sanctions is their effect on demand. The increase in the cost of consumer loans will affect retail sales. Additional pressure on retail sales may be exerted by a sales tax of up to 3%, which may allow regions from 2015 to introduce to cover the budget deficit resulting from the sanctions. As a result, the forecast for retail sales growth in 3,5% for 2015 already looks optimistic now.

In such circumstances, only commercially successful projects will be able to afford the increased cost of risk, and owners of projects that already have debt obligations will raise rates and prices. Analysts do not exclude the possibility that for developers with financial resources, this period will be characterized by replenishment of portfolios of objects.

As the domestic debt market shrinks, consumer lending will inevitably become more expensive, putting additional pressure on the market. The company believes that retail sales will decline, creating an even more competitive environment for retail property owners.

The forecast of vacancy rate in 15% may be revised upwards.

The ruble exchange rate against foreign currencies will also have an impact on the market. The Russian currency may be under the same pressure as in the first quarter of this year, depending on how strong the economy will be and how much the government can rely on gold and foreign exchange reserves. During this period, many tenants tried to revise the terms of lease agreements, fixing a fixed currency corridor, or switching to ruble contracts. This trend weakened in the second quarter, as the ruble stabilized, however, a similar scenario can be repeated in the second half of the year.

The wave of sanctions imposed by the US and the EU against Russia, according to JLL experts, will have a significant impact on the Russian market of commercial ...
5
1
Rating
Euro Shoes Exhibition

Latest News

Expo Riva Schuh & Gardabags took place in Italy

The January exhibition of shoes, bags and accessories Expo Riva Schuh & Gardabags in Italy has ended. The event was attended by 430 exhibitors from more than 30 countries, the exhibition received 3500 visitors from 86…
21.01.2022 191

OR Group made a technical default on bonds

OR Group (former Obuv Rossii Group of Companies) failed to redeem bonds for 0,6 billion rubles on time, allowing a technical default. The holder of the bonds is Promsvyazbank (PSB), with which negotiations are underway. If they fail, the group...
21.01.2022 236

The collaboration between New Balance and artist Joshua Wades has released an updated version of the New Balance 57/40

In the design of the new New Balance 57/40 NB model, created in collaboration with the artist Joshua Vaidsaom, there are flecks - traces of paint that are reminiscent of the artist's youth and his passion ...
20.01.2022 178

MICAM postponed to March

The organizers of Europe's largest international footwear exhibition MICAM have announced the postponement of the date of the event. The exhibition will be held from 13 to 15 March instead of the originally scheduled dates - from 20 to 22…
20.01.2022 258

Detsky Mir recycled about 3 tons of footwear and textile waste

Detsky Mir Group and Dmitrovsky RTI Plant, the largest waste processing plant in Russia, summed up the results of the campaign “New life for unwanted clothes and shoes with benefits for you” for 2021…
20.01.2022 354
When you sign up, you will receive weekly news and articles about the shoe business on your e-mail.

To the beginning