Russian retail sector sparks race for talent

Earlier this week, Jones Lang LaSalle announced it had poached a team of 25 retail experts from Colliers International in Moscow to strengthen its own Russian retail team. The move comes hard on the heels of the news that Cushman & Wakefield has hired a nine-strong retail team in Moscow previously employed with Jones Lang LaSalle.

Now it is Colliers' turn to retaliate: according to well-informed sources, the adviser is poised to announce within the next few weeks that it has hired Cushman & Wakefield's original team in Moscow who handed in their notice following the appointment of the ex-JLL team headed by Maxim Karbasnikoff.

It is not so hard to understand why the race for Russia has intensified. As Robert Bonwell, CEO EMEA Retail Jones Lang LaSalle, pointed out in an interview, Russia is predicted to become Europe’s leading retail market: the country represents 25% of European retail development pipeline, with 3 million m² additional retail space by the end of 2013.

This makes Russia the biggest market in Europe in terms of stock due to be opened by end-2013, followed by Turkey with about 2.2 million m². In fact, together Russia and Turkey account for 45% of all retail stock due to come to the market by the end of next year. This may sound like a lot, but both countries still have a lot of catching up to do. While the European average for density in terms of retail GLA per 1,000 inhabitants comes to 179 m2, in Russia it is a mere 100 m² and in Turkey it is only slightly higher. This contrasts with the mature end of the scale where Luxembourg is the retail champion with more than 650 m² per 1,000 inhabitants, followed by Ireland and the Netherlands with over 500 m². All in all, the average figure for Western Europe to 246 m2, compared to just 109 m² for Eastern Europe.

Russia is also attractive from a consumer spending perspective, Bonwell pointed out. Retail sales in Moscow alone came to $112 bn in 2011, 25% of the figure for the whole of the UK in that year – or $412 bn. And while rental growth is flat-lining in most countries across Europe, Russia is poised for an increase of 5.1% per annum in the five-year period to 2016. ‘Retail is the leading asset class in Russia, not just in Moscow but also in the regions,’ Charles Boudet, Managing Director, Jones Lang LaSalle Russia & CIS, noted. ‘This is a very strategic area for us to invest in.’

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