MAPIC: Russia is driving force behind CEE retail: Colliers

Retail property rents in Central and Eastern Europe (CEE) are highest in the Russian markets, Colliers International has announced in its Eastern Europe retail market snapshot for Q3 2012.

Euro equivalent rents remain highest in the Russian market with prime high-street rents at EUR 510 ($638) m2/month in Moscow and at EUR 258 ($323) m2/month in St Petersburg. At the other end of the scale, Sofia, Bratislava and Zagreb have the lowest rates at €38 m²/month, EUR 40 m²/month and EUR 45 m²/month respectively.

Sean Briggs, managing director of retail agency for Eastern Europe at Colliers said: 'It is clear that the Russian market is one of the pre-eminent retail destinations in Europe. Moscow and St Petersburg together with other regional cities provide many opportunities for western retailers looking for new markets. The strength of the market is also demonstrated by the first wave of Russian retailers moving west into new retail destinations.'

The report notes that there has been a slowdown in project completions across the region. Retail developers, Colliers says, appear to be reacting to weak consumption and retail trade by postponing or re-phasing development plans until overall market conditions improve. Although the active pipeline for the region has fallen from mid-2012 highs to below 2 million m2, this will add extra 13% of space to the market when completed.

Only three retail property investment deals closed in Q3 2012, two of which were in the Czech Republic.

Colliers said this significant proportionate dip in activity will be temporary and retail will comprise a healthy proportion of deals across the region over the year. Yields have remained largely stable, with only Warsaw seeing a hardening of yields down to 6% for prime shopping centres, and 7% for prime high street locations.