Autumn 2021 Реклама TADZIO SCHILLING

REAL ESTATE MONITOR CAPITAL · OFFICE · RETAIL · WAREHOUSE · HOSPITALITY · HOUSING

AEB Chief Executive Officer

DEAR READERS,

It is my pleasure to welcome you at the start of the new busi- increase, compared to those of 2020 (obviously, due to the ness season, which, as always, is expected to be eventful for low base effect). In the second quarter of this year, two ho- AEB. I gladly present you this year’s third issue of the Real tels were opened in Moscow, and seven more are expected Estate Monitor, which provides data analysis on the real es- to be commissioned by the end of the year. tate markets of Moscow and St. Petersburg. The demand for prime rental apartments in the downtown Investment volume in real estate for the first six months area of Moscow has gone up one-and-a-half times since the surpassed USD 1.8 billion and reached its peak in the last start of the pandemic. The majority of renters are Russian 4 years. The lion’s share of transactions was accounted for families from other regions of the country. Foreign tenants by residential sector (63%). International retailer activity re- make up less than 40% in 2021. mains low. However, several transactions are expected to be completed by the end of this year. As for the hot topics, one of the articles is dedicated to HR policy issues in the premium real estate market. Another The supply on the office market from January to June 2021 article examines legislation amendments regarding real es- was almost twice the supply volume for the entire last year. tate registration in Russia, which came into force in the second quarter of this year. The warehouse market continues to grow. For the first time in 5 years, more than 1 million square meters of storage are Dear friends, please allow me to express my heartfelt grati- expected to be commissioned by the end of the year. Key tude to everyone who contributed to the magazine. I will retailers are preparing to open new warehouse properties also take this opportunity to thank the members of the AEB while searching for new supply chain solutions. Real Estate Committee for their continued active role.

In hospitality sector, pre-COVID indicators have not yet I wish you a pleasant read and a successful 2021-2022 busi- been reached; however, occupancy and average daily rates ness season!

AEBRUS.RU 1 TATJANA KOVALENKO

Chairperson of the AEB Real Estate Committee, Deputy General Director, SENDLER & COMPANY

Even though the capital market in Russia was barely active Tourism was among the first industries affected by COVID- at the start of the year, an eased lockdown, more vaccina- 19 and one of the most severely affected. The initial re- tions, and a gradual return to pre-pandemic life have been sponse to the pandemic was to close borders and limit the encouraging expectations that the market will soon resume mobility of the population. business as usual, and that the asset value will recuperate. On the other hand, individual industries are taking up new In 2020, due to the pandemic and the nearly total border directions and trends. shutdown, Russia received a powerful incentive for the development of domestic tourism. The office market remains strong as corporates must adapt their location strategies to the new reality, facilitating trans- The development of domestic and inbound tourism is a actional activity. Rents are slightly up, net absorption is pos- complex strategic task that includes creating, over the next itive, and vacancies are down. ten years, a series of fascinating and convenient travel itin- eraries across unique areas. Such tours will have no ana- The warehouse market is hot with growing demand from on- logues anywhere in the world. Moreover, the development line retail, resulting in rising rents and decreasing vacancy. of tourism will impact a number of economic and social fac- tors: it will not only create millions of jobs but also stimulate Retail is weak. Declining disposable income, stagnating the development of the infrastructure and urban projects in sales, and chaotic regulation result in the constant rene- the regions, make travel around Russia more comfortable gotiations between landlords and retailers on their rental and affordable, and open up new business opportunities. terms. On the other hand, retailers and landlords are experi- menting with re-profiling of their assets, which is becoming We believe that the overall positive trend in real estate the investment option in the greatest demand. and construction will continue throughout 2021, while the economy is recovering from recession. The growing demand for real estate, especially strong in the countryside and in the industrial segment, combined with an The Real Estate Committee is looking forward to the year’s avalanche-like increase in prices for building materials, has challenges and opportunities with optimism. Enjoy the greatly destabilized the construction industry this summer. reading!

2 AEB REAL ESTATE MONITOR | 3/2021 Russia real estate investment market Q1 2019 Russia real estate investment market MOSCOW MARKET OVERVIEW Capital market

In Q2 2021, Russian real estate investment volumes amounted The global downward trend in international investment activity to USD 1.22 billion, which is 140% higher YoY. The three-digit is also observed in Russia. In H1 2021, all investment transactions growth rate was influenced by the low base effect, but invest- were made with the use of the local capital. However, the inter- ment activity in April-June 2021 peaked in the last 4 years. As a est of foreign investors remains and we expect several deals to result, the volume of transactions amounted to USD 1.84 billion be closed till the end of 2021. (1–9 ) in H1 2021, which is 38% higher YoY. This is the maximum for the first half-year since 2017 (USD 2.1 billion in H1 2017). R1 ussian RUSSIA re REALal GDP GDP gr oGROWTHwth

9% According to JLL forecasts, by the end of 2021, the volume of 6% investment transactions will reach USD 4.2-4.7 billion. 6%

3% 4% In H1 2021, there was a stable demand of investors for land for 0%

the residential project development – the share of investments -3% 2% in the residential real estate sector accounted for most of the -6% transactions in this period (63%). The warehouse real estate sec- -9% tor took the second place (14%). 0% 2019 2012 2013 2014 2015 2016 2017 2018 2010 2011 2020 2007 2008 2009 Jul–19 2021F Jul–18 Jan–21 Jan–18 Jan–19 Jan–19 Jul–20 Apr–21 Apr–18 Apr–19 Oct–18 Oct–19 Apr–20 The share of St. Petersburg in Russian real estate investment Oct–20 Russia 23 10 year U.S. Treasury volumes remains high, amounting to 46% in H1 2021. Source:Source: Rosstat, Rosstat, Oxford Oxford Economics Economics

Source: Bloomberg

2 REAL ESTATE AND GOVERNMENT BOND YIELDS Exchange rate dynamics, USD/RUB

16% 3,00

14% 2,00 90 12% 1,00

80 10% 0,00

8% 70 -1,00

6% -2,00 60 4% -3,00

2% 50 -4,00

0% Jul–17 -5,00 Jul–19 Jul–18 Jan–17 Apr–17 Jan–21 Jan–19 Jan–18 Apr–21 Jul–20 Oct–17 Apr–19 Apr–18 Oct–19 Oct–18 Jan–20 1 Apr–20 Oct–20 7 4 9 8 6 5 0 Jul–17 Jul–21 Jul–14 Jul–19 Jul–18 Jul–16 Jul–15 Jan–17 Apr–1 Jan–21 Jan–14 Jan–19 Jan–18 Jan–16 Apr–2 Jul–20 Jan–15 Oct–17 Apr–1 Apr–1 Apr–1 Apr–1 Apr–1 Oct–14 Oct–19 Oct–18 Oct–16 Oct–15 Jan–20 Apr–2 Oct–20 Spread Moscow, offices yield min 10 year government bond yield

Source: Central Bank of Russia Source: JLL, Bloomberg

AEBRUS.RU 3 MOSCOW MARKET OVERVIEW | CAPITAL MARKET

3 EXCHANGE RATE DYNAMICS, USD/RUB

50 1 7 8 9 0 % &%"$ &%&% Jul–17 Jul–21 Jul–18 Jul–19 Jan–1 Apr–17 Jan–2 Jan–1 Jan–1 Apr–21 Jul–20 Oct–17 Apr–18 Apr–19 Oct–18 Oct–19 Jan–2 Apr–20 Oct–20

Source: Central Bank of Russia Investors by source of capital Russia investment volume dynamics 4 RUSSIA INVESTMENT VOLUME DYNAMICS 1% 1% 1% USD m 13% 38% 5% 4 700 1 844 4 159 1 335 H1 2020 H1 2021

92% 100% 2020 2021F H1 2020 H1 2021 % &%"$ &%&% Source: JLL Investment deals excluding deals with land plots, joint ventures, sales Russia UAE Azerbaijan Switzerland Finland of residential real estate to end-users. Inv5e s INVESTORStors by so BYur SOURCEce of ca OFpi tCAPITALal Russia investment volume dynamics Prime yields, Q1 201 9 Investm1%ent vo1%lume breakdown by sector 1% Moscow USD m 13% 38% 24% Oﬃce H1 2020 5% 8.50% 10.00% 4 700 1 844 Office 12% min max

4 159 H1 2021 1 335 Shopping H17 2020% H1 2021 centre H1 2020 9.25% 10.50%

Retail 9% min max H1 2021

92% 100% Warehouse 2020 2021F H1 2020 H1 2021 3% 9.75% 11.00% H1 2020 min max 1%

Mixed-use Azerbaijan Switzerland Investment deals excluding deals with land plots, joint ventures, sales H1 2021 Russia UAE Finland of residential real estate to end-users. Source: JLL St. Petersburg 1% H1 2020

PrimHotel e yields, Q1 201 9 Investment volume breakdown by sector 1%

4 H1 2021 AEB REAL ESTATE MONITOR | 3/2021 Moscow 9.00% Oﬃce 11.00% 55% min max 24% H1 2020 Oﬃce H1 2020 8.50% 10.00% 63% Office % Shopping 12 Residential min max H1 2021 H1 2021 9.75% centre 11.50% Shopping min max 10% 7% H1 2020 centre H1 2020 9.25% 10.50% Warehouse

Retail 9% min 14% max Industrial % % H1 2021 10.00 11.50 H1 2021 min max Warehouse 3% 9.75% 11.00%

H1 2020 Investment volume breakdown by region min max Investments by deal size (volume, USD m) 1% Mixed-use H1 2021 42% 82% St. Petersburg 35% 1% 31% H1 2020 27% Hotel 1% 22% 51% 19% 46% H1 2021 14% 9.00% Oﬃce 11.00% 9% 18% 55% min max 3% H1 2020 0% H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 63% H1 2020 H1 2021 H1 2020ShoppingH1 2021 H1 2020 H1 2021 Residential 20 21-50 51-100 101-300 H1 2021 9.7Moscow5% St. Petersburgcentre 11Regions.50% min max 10%

H1 2020 Contacts: Warehouse 14% Industrial Olesya Dzuba % Ksenia Zenkina % +7 (495) 737 8000 H1 2021 o10.0lesya.dzubae0u.jll.com ksenia.zenkina11eu.j.ll.5com0 www.jll.ru min max Investment volume breakdown by region Investments by deal size (volume, USD m)

42% 82% 35% 31% 27% 22% 51% 19% 46% 14% 9% 18% 3% 0% H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 20 21-50 51-100 101-300 Moscow St. Petersburg Regions Contacts: Olesya Dzuba Ksenia Zenkina +7 (495) 737 8000 olesya.dzubaeu.jll.com ksenia.zenkinaeu.jll.com www.jll.ru % &%"$ &%&%

% Investors by source of capital % &%"$ &%&% Russia inves&%"tm$ ent volume dyna&%&mi%cs 1% 1% InvesIntovress tboyr s1o %buyr cseo uorfccea opfitacal pital USD m Rus13si%a investment volume 38dy%namics Russia investment volume dynamics 1% 1% 51%% 1% 1% 4 700 1 844 1% USD m 4USD 159 m 13% 38% 13% 38% 1 335 5% 4 700 H15 2020% H1 2021 4 700 1 8441 844 4 1594 159 1 335 1 335 H1 2020 H1 2021 92H1% 2020 100H1 2021% 2020 2021F H1 2020 H1 2021 MOSCOW MARKET OVERVIEW | CAPITAL MARKET

Investment deals excluding deals with land plots, joint ventures, sales Russia UAE Azerbaijan Switzerland Finland of residential real estate to end-users. 92% 100% 2020 2021F H1 2020 H1 2021 92% 100% 2020 2021F H1 2020 H1 2021 6 INVESTMENT VOLUME BREAKDOWN BY SECTOR 7 PRIME YIELDS IN MOSCOW Investment deals excluding deals with land plots, joint ventures, sales Prime yields, Q1Russia 201 9 UAE Azerbaijan Switzerland Finland Investmentof residential deals excluding real estate deals to with end-users. land plots, joint ventures, sales Russia UAE Azerbaijan Switzerland Finland Inveofs residentialtmen realt estatevol tou end-users.me breakdown by sector Moscow 24% H1 2020 PrimPer iymieeld ysi,e Qld1s ,2 Q0119 201 9 InvOffice estment vo1224l%u%me breakdown by sector Oﬃce InH1 2020 vestment volume breakdown by sector % % H1 2021 8.5Moscow0 10.00 Office 12% Moscowmin max H1 2021

l 7% 24% Oﬃce H1 2020 H1 2020 24% Oﬃce H1 2020 8.50%Shopping 10.00% etai 8.50% 10.00% Office 7% % % centre H1 2020 9 12 %min max% Office 12% 9.2min5 10.5max0 H1 2021 H1 2021 H1 2021 Retail 9% min max H1 2021

eR Shopping Shopping % 7% centre H1 2020 %3 % % H1 2020 7 9.25 Warehousecentre 10.50 H1 2020 9.25%% 10.50%% 3Retail % 9.75 min 11.00max 9% H1 2020 Retail 1%9% min max Mixed-us H1 2021 min max H1 2021 1H1 2021 % Mixed-use

H1 2021 Warehouse Warehouse % % % l 3 9.75 11.00 H1 2020 3% 1% 9.75% 11.00% H1 2020 H1 2020 St. Petersburgmin max 1% 1% min max Hote H1 2020 1% 1% Mixed-use H1 2021 Mixed-use Hotel H1 2021 1% H1 2021 H1 2021

l St. Petersburg 1% St. Petersburg Oﬃce 1%H1 2020 % %

H1 2020 9.00 11.00 55% H1 2020 Hotel 1% min max Hotel 1% 55% H1 2020

H1 2021 63% H1 2021

Residentia Oﬃce H1 2021 63% %ShoppingOﬃce % Residential 9.00 11.00 H1 2021 % % 9.00 centre 11.00 55% 9.75%min 11.50%max H1 2020 55% min max H1 2020 10% min max

H1 2020 10% 63% 63% Shopping H1 2020 Residential

H1 2021 Shopping Residential

H1 2021 14% centre Industrial 9.75%Warehousecentre 11.50% 14% % % H1 2021 Industrial 9.75 % 11.50%

H1 2021 min max 10.0min0 11.5max0 10% min max

H1 2020 10% H1 2020 Warehouse Source: JLL 14% Source: JLL Warehouse InvestmIndustrial ent volu14m%e breakdown by region % % Industrial H1 2021 Investm10.0ents by %d0eal size (volume, USD11 m).5%0 H1 2021 10.00 11.50 min max min max 9 INVESTMENTS BY DEAL SIZE (VOLUME, USD M) In8 ve INVESTMENTstment vol uVOLUMEme bre BREAKDOWNakdown by r BYeg REGIONion 42% I82n%vestment volume breakdown by region Investments by deal size (volume, USD m) Investmen35ts% by deal size (volume, USD m) 31% 27% 22% 42% 51% 42% 82% 19% 46% 14% 82% 35% 35% 9% 31% 31% 18% 27% 22% 27% 51% 3% 19% 22% 51% % 46%0% 1419% 46% 14% H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 20219% H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 9% 18% 20 21-50 51-100 101-300 Moscow St. 18Petersburg% Regions 3% 3% 0% 0% H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 ConH1t 2020acts:H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 20 21-50 51-100 101-300 Moscow St. Petersburg Regions 20 21-50 51-100 101-300 Moscow St. Petersburg Regions Olesya Dzuba Ksenia Zenkina +7 (495) 737 8000 olesya.dzubaeu.jll.com ksenia.zenkinaeu.jll.com www.jll.ru CoCnSource:otanct tJLLasc:ts: Source: JLL Olesya Dzuba Ksenia Zenkina +7 (495) 737 8000 Olesya Dzuba Ksenia Zenkina +7 (495) 737 8000 olesya.dzubaeu.jll.com ksenia.zenkinaeu.jll.com www.jll.ru olesya.dzubaeu.jll.com ksenia.zenkinaeu.jll.com www.jll.ru

AEBRUS.RU 5 Moscow shopping centre market | Q1 2019 Moscow shopping cRetailen markettre market • NoTwo n eneww s schemeschemes withhav ethe b eentotal d GLAeliv eofr e43,500d in Q 1sq 20 m 1entered9. the tral street retail locations where the vacancy rate has started to Moscow market in H1 2021. The H1 2021 completions level is 69% go down. On the fashion streets the indicator went up by 3.9 ppt • Thlowere va thancanc they ra H1te 2020in M ofigure.scow Bysh othepp end-2021,ing centr esomes de c264,000lined to 4.3to% 17.2%, in Q which1 201 is9 ,the wh historicalich is th emaximum lowest lsinceevel s2016.ince Thethe vacancy middle of 2014. This was a result osqf l mow are co expectedmple o ntos enterin 20 the17- market.2018, w hen only eight new schemratees on (278,0 the mixed00 sq streets m) en amountedtered the to m 16.4%.arket; the ﬁgure is half the level of new shopping centre deliveries in 2015-2016.

• AmTheo nvacancyg new srateche mine Moscows for 20 1shopping9 are Salar centresis SEC amounted (105,000 stoq m)The, O sinternationaltrov Mecht retailery SC (6 activity5,000 remainssq m), N low.ova Nevertheless,ya Riga Out somelet Vill age (38,000 sq m) and s5.9%ever ainl nH1e i2021,ghbo u0.5rh oopptd higher shopp thaning c inen thetre end-2020.s of ADG G Therou pva. -As tinternationalhe result, to brandstal ne whave su pannouncedply of 201 their9 wi developmentll account fo plansr 315,0 in 00 sq m. • Thecancy nu ratemb einr theof nnewew schemesintern thatona werel reta openedilers d einc 2020lined andsign H1iﬁ canRussia,tly in Q for1 example,2019, w itheth oH&Mnly f Groupour br brandands eArketnter anding tah Japanesee Russia n market versus ten in Q1 20120218 .accounted The num bforer 16.7%. of br ands that have le the Russian markeretailert duri nKenkoh.g the ﬁ (r10–18st thr ee) months of 2019 equals the number of new ones.

• RTheent svacancy for a r eratetai lon ga theller mainy un iMoscowt of 100 restaurant sq m loca streetsted on has a gdero-und ﬂoor in shopping centres remained stable in Q1 2019. Prime rent was at RclinedUB195,0 by 1.200 ppt pe tor s 12.4%q m p ine rH1 y e2021.ar, a Thisvera isg ethe re onlynt a ttype RU Bof74,0 cen-00 per sq m per year.

10Sh oSHOPPINGpping c CENTREentre SUPPLY supply Shopping centre comple ons

5 objects 145k sq m 000 sq m shopping 307 13 objects 141 centres 263k sq m +19% 5.64 m sq m 32 objects 259 287k sq m +58% 38 objects 107 862k sq m 164 45 10 37 objects 1 880k sq m 14 77 16 objects 2 199k sq m 105 65 25 19 Super regional, Regional, Community, GLA from 75k sq m GLA 35-75k sq m GLA 15-35k sq m 2019 2020 2021F

Speciality, Neighbourhood, Outlet 7.5-25k sq m 5-15k sq m Q1 Q2 Q3 Q4 Forecast

Source: JLL

Shopping centre density in Russian c es Prime rent: European comparison

sq m/per 1,000 inhabitants USD/sq m/year

Krasnodar 728 London 3 208 Samara 693 Moscow 2 532 6Yekaterinburg 540AEB REAL ESTATEParis MONITOR | 3/2021 2 371 Barnaul 527 Birmingham 2 319 Rostov-on-Don 487 Prague 2 134 Nizhny Novgorod 470 Dublin 2 055 Tyumen 468 Munich 1 707 Orenburg 456 Lisbon 1 636 Moscow 445 Frankfurt/M 1 565 Voronezh 441 Hamburg 1 565 Yaroslavl 434 Luxembourg 1 565 Ryazan 409 Warsaw 1 536 St. Petersburg 399 Oslo 1 452 Ufa 370 Helsinki 1 423 Kazan 365 Athens 1 423 Moscow shopping centre market | Q1 2019 Moscow shopping centre market | Q1 2019 Moscow shopping Moscow shopping centre market centre market • No new schemes have been delivered in Q1 2019. • The vacancy rate in Moscow shopping centres declined to 4.3% in Q1 2019, which is the lowest level since the middle of 2014. This was a result • No new schemes have been delivered in Q1 2019. of low comple ons in 2017-2018, when only eight new schemes (278,000 sq m) entered the market; the figure is half the level of new shopping centre deliveries in 2015-2016. • The vacancy rate in Moscow shopping centres declined to 4.3% in Q1 2019, which is the lowest level since the middle of 2014. This was a result of low comple ons in 2017-2018, when only eight new schemes (278,000 sq m) entered• t hAme monargk neet;w th sec hfiegumres i sf ohra l20f th1e9 laervee lSalar of neisw S EshCo (105,0pping 00 sq m), Ostrov Mechty SC (65,000 sq m), Novaya Riga Outlet Village (38,000 sq m) and centre deliveries in 2015-2016. several neighbourhood shopping centres of ADG Group. As the result, total new supply of 2019 will account for 315,000 sq m. • Among new schemes for 2019 are Salaris SEC (105,000 sq m), Ostrov Mechty SC (65,000• s qThe m) ,n Nuomvabeyar oRfig nae Owu itnletet rVnillagoen (38,0al reta00il esqrs m d)e aclninde d significantly in Q1 2019, with only four brands entering the Russian market versus ten in Q1 several neighbourhood shopping centres of ADG Group. As the result, total new supply of 20201198 .wi Thell a ccnumounbte fro or f315,0 brand00s tshqa mt h. ave le the Russian market during the first three months of 2019 equals the number of new ones. • The number of new intern onal retailers declined significantly in Q1 2019, with only fou•r Rberanntsd fso ern at erreintagi lt gahel lReuryss uiannit m oaf r1k0e0t vseqr msu slo tceant iend Q o1n a ground floor in shopping centres remained stable in Q1 2019. Prime rent was at 2018. The number of brands that have le the Russian market during the first three monthRsU oBf 195,02019 0e0q upaelsr tshqe m n upmerb yeer aorf, naevwer oagne sr.ent at RUB74,000 per sq m per year. • Rents for a retail gallery unit of 100 sq m located on a ground floor in shopping centres remained stable in Q1 2019. Prime rent was at RUB195,000 per sq m per year, average rent at RUB74,000 per sq m per year. Shopping centre supplyMOSCOW MARKET OVERVIEW | RETAIL MARKETShopping centre comple ons

Shopping centre supply Shoppi5n objectsg centre comple ons 11 SHOPPING145k sq m CENTRE COMPLETIONS 000 sq m 307 5 objects shopping 13 objects 145k sq m 000 sq m 141 centres shopping 263k sq m 307 +19% 13 objects 141 centres 5.64 m sq m 263k sq m 32 objects +19% 259 5.64 m sq m 287k sq m 32 objects 259 +58% 287k sq m 38 objects 107 +58% 862k sq m 164 38 objects 107 45 10 862k sq m 164 37 objects 45 10 1 880k sq m 14 37 objects 77 1 880k sq m 14 16 objects 77 2 199k sq m 105 16 objects 65 25 2 199k sq m 105 19 Super regional, Regional, Community, 65 25 2019 2020 2021F GLA from 75k sq m GLA 35-75k19 sq m GLA 15-35k sq m Super regional, Regional, Community, 2019 2020 2021F GLA from 75k sq m GLA 35-75k sq m GLA 15-35k sq m Speciality, Neighbourhood, Outlet 7.5-25k sq m 5-15k sq m Q1 Q2 Q3 Q4 Forecast Speciality, Neighbourhood, Outlet 7.5-25k sq m 5-15k sq m Q1 Q2 Q3 Q4 Forecast

Source: JLL

12S h SHOPPINGopping CENTRE centr DENSITYe den INsi RUSSIANty in R uCITIESssian c es Prime rent: European comparison Shopping centre density in Russian c es Prime rent: European comparison sq m/per 1,000 inhabitants USD/sq m/year sq m/per 1,000 inhabitants USD/sq m/year Krasnodar 728 London 3 208 Krasnodar 728 London Samara 3 208 693 Moscow 2 532 Samara 693 MoscowYekaterinburg 2 532 540 Paris 2 371 Yekaterinburg 540 Paris Barnaul 2 371 527 Birmingham 2 319 Barnaul 527 BirminghamRostov-on-Don 2 319 487 Prague 2 134 Rostov-on-Don 487 PragueNizhny Novgorod 2 134 470 Dublin 2 055 Nizhny Novgorod 470 Dublin Tyumen 2 055 468 Munich 1 707 Tyumen 468 Munich Orenburg 1 707 456 Lisbon 1 636 Orenburg 456 Lisbon Moscow 1 636 445 Frankfurt/M 1 565 Moscow 445 Frankfurt/M Voronezh 1 565 441 Hamburg 1 565 Voronezh 441 Hamburg 1 565 Yaroslavl 434 Luxembourg 1 565 Yaroslavl 434 Luxembourg 1 565 Ryazan 409 Warsaw 1 536 Ryazan 409 Warsaw 1 536 St. Petersburg 399 Oslo 1 452 St. Petersburg 399 Oslo 1 452 Ufa 370 Helsinki 1 423 Ufa 370 Helsinki 1 423 Kazan 365 Athens 1 423 Kazan 365 Athens 1 423 Source: JLL

AEBRUS.RU 7 Moscow shopping centre market | Q1 2019 Moscow shopping centre market • No new schemes have been delivered in Q1 2019. • The vacancy rate in Moscow shopping centres declined to 4.3% in Q1 2019, which is the lowest level since the middle of 2014. This was a result of low comple ons in 2017-2018, when only eight new schemes (278,000 sq m) entered the market; the figure is half the level of new shopping centre deliveries in 2015-2016. • Among new schemes for 2019 are Salaris SEC (105,000 sq m), Ostrov Mechty SC (65,000 sq m), Novaya Riga Outlet Village (38,000 sq m) and several neighbourhood shopping centres of ADG Group. As the result, total new supply of 2019 will account for 315,000 sq m. • The number of new intern onal retailers declined significantly in Q1 2019, with only four brands entering the Russian market versus ten in Q1 2018. The number of brands that have le the Russian market during the first three months of 2019 equals the number of new ones. • Rents for a retail gallery unit of 100 sq m located on a ground floor in shopping centres remained stable in Q1 2019. Prime rent was at RUB195,000 per sq m per year, average rent at RUB74,000 per sq m per year.

Shopping centre supply Shopping centre comple ons

Speciality, Neighbourhood, Outlet 7.5-25k sq m 5-15k sq m Q1 Q2 Q3 Q4 Forecast

MOSCOW MARKET OVERVIEW | RETAIL MARKET

Shopping centre density in Russian c es 13 P PRIMErime RENT: ren EUROPEANt: Europ COMPARISONean comparison Moscow shopping centre market | Q1 2019 sq m/per 1,000 inhabitants USD/sq m/year

Krasnodar 728 New retailers on the Russian market: London 3 208 entries and exits Availability Samara 693 Moscow 2 532 Yekaterinburg 540 Paris 2 371 Moscow shopping centre market | Q1 2019 Overall SC vacancy rate 61 Barnaul 527 Birmingham 2 319 MoscowNumber of shopping centre market | Q1 2019 interna al 57 1 Rostov-on-Don 487 3 Prague 2 134New retailers on the Rusbsrainadsn market: 3 which 5 Nizhny Novgorod 470 Dublin 2 055entries and exits Nenteerewd th eretailers o3 n the Russian market: Availability 20 bps % market 4 5.2% 5.4 . Tyumen 468 Munich 1 707 47 48 Availability entries and exits Q3 2020 Q4 2020 Orenburg 456 Lisbon 14 3 5 Overall SC vacancy rate 1 636 61 Number of 40 3 Moscow 445 57 1 OverallPrime SC SC vacancy vacancy rate* rate Frankfurt/M 1 565 interna al 1 5 Number of 16 61 1 brands 3 1 1 Voronezh 441 3 interna al 57 1 Hamburg 1 565 which 2 3 5 3 8 entered the 3 brands 3 2 Yaroslavl 434 which 3 2 20 bps Luxembourg 1 565 market 4 5 31 % % entered the 47 48 13 5 4 5.2 5.4 0 bps bps. Ryazan 409 mark28et 2 Q32 2020 Q4 2020% 20 %% Warsaw 1 536 4 3 1 1.6 5.41.6 . 8 5.2 14 3 5 47 485 1 St. Petersburg 399 3 Q3 2020 Q4Q4 20202020 Oslo 1 452 3 3 40 5 14 13 53 Prime SC vacancy rate* 16 118 5 3 27 Ufa 370 Helsinki 1 423 1 1 40 3 1 3 1 1 Prime SC vacancy rate* 5 4 . 3 2 1 3 16 1 1 1 Kazan 365 8 1 2 3 19 AthensMoscow shopping centre market Q11 4232019 2 4 32 1 3 2 28 2 31 3 3 4 4 1 1 262 8 5 4 3 bps 28 2 2 2 22 221 % 2 0 % Source: JLL 3 17 1 1.631 4 2 Pricing* 1 5 4 1.6 8 3 5 1 15 1 0 bps New retailers on the Russian market: 28 2 Q32 2020 2 Q4 2020% % 3 3 1 1.6 1 1.6 8 5 Av3 aila1b9ility 3 5 1 entries and exits 3 13 Prime rent,Q3 2020 RUB/sq m/year Q4 2020 14 NEW RETAILERS ON THE RUSSIAN MARKET: ENTRIES AND 18EXITS 27 3 8 3 5 1 3 1 4 1 3 . 1 18 1 1 1 1 1 2 271 1 32 Numb3er of 2 3 2 19 2 1 1 1 4 Overall SC 1vacancy rate 4 4 1 1 . 61 28 interna al 1 1 4 1 4 81 1 Number of 4 6 2 3 19 57 1 1 b26rands 4 32 1 interna al 2 22 21 28 7 6 2 1 3 which l e 4 1 Pricing* 4 4 % brands 3 17 1 26 2 , 0 , th e market 15 1 22 2 185 000 185 000 which 2 2 21 5 4 Pricing* entered the 3 17 1 2 Q3 2020 Q4 2020 9 % 50 bps 5.9% 15 1 5.4 2 market 4 2011 2012 2013 2014 132015 2016 2017Prime rent,2018 RUB/sq. 2019 m/year2020 48 8 1 47 Q4 20209 Q2 2021 13 1 1 1 1 2 1 1 8 AveragePrime rent, rent, RUB/sq RUB/sq m/year m/year 14 3 5 Number of 2 2 1 1 1 4 1 interna al 1 Fashion, Footwear, Accessories4 Jewelry & Watches 40 3 Prime SC1 vacancy rate1 8 1 1 1 1 2 1 1 brands Number of 6 4 2 2 1 1 1 1 5 1 1 16 1 7 in6ternRestaurantsa al & Cafes 1 1 Household1 & Furnishings 4 8 1 1 1 which l e 1 6 0% brands 1 , , 2 th e market 185 000 185 000 3 6 3 8 which le 7 1 2 Cosmetics & Perfume Goods for Children1 Q3 2020 Q4 2020 00%% 3 2 , , th e market 178450,000 178450,00000 312011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 5 4 Q3 2020 Q4 2020 2 1.6Electronics% 90 bps Other % Q3 2020 Q4 2020 2 2.5 28 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 3 8 1 Average rent, RUB/sq m/year 3 5 1 Q4 2020 Q2 2021 **Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail JewelryInternational & Watches retailer N Total 3 Fashion, Footwear, Accessories Averagegallery. rent,Rents RUB/sqexclude VATm/year and OPEX. Higher level rents that exceed the market level 5 1 3 activity trend 18 3 27 BasedFashion, on aFootwear, selection ofAccessories the most successfulJewelry shopping & Watches are registered occasionally. 3 Restaurants & Cafes Household & Furnishings 1 4 1 centers with high footfall and conversion rates. 1 1 201 2 3 19 Restaurants & Cafes Household & Furnishings 4 32 Cosmetics & Perfume Goods for Children 0% 28 74,000 74,000 4 4 1 26 Cosmetics & Perfume Goods for Children Shopping centre density0 in% Moscow 22 21 2 Other Q3 2020 , Q4 2020 , 2 74 000 74 000 Electronics 17 4 2 VPacriacnincgy rate in Moscow districts 15 1 Other districts (sqQ3 m 2020 per 1,000 inhabitants) Q4 2020 International retailer2 N TotalElectronics **Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail 9 1 4 gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level activity13 trend 1 Prime rent, RUB/sq m/year **Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail 8 International retailer N Total are registered occasionally. 3 activity trend gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 1 1 1 1 2 1 1 1 201 are registered occasionally. Number of 2 2 1 1 1 4 1 2 interna al 1 1 4 6 8 1 201 brands 1 5.2% Shopping centre density in Moscow which le 7 6 1 686 1 185,000 0% North-185,000 sq m th e market Vacancy rate in Moscow districts Northern Eastern districts (sq m per 1,000 iSnhhoabpiptainngts c)entre density in Moscow Q4 2020 Q2 2021 7.3% North- V5.4aca%ncy rate in Moscow districts Northern Eastern 340 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 d540istricts (sq m per 1,000 inhabitants) sq m sq m Average rent, RUB/sq m/yearNorth- Eastern Western 5.6% Fashion, Footwear, Accessories Jewelry & Watches 4.3% North- Eastern 152 Source: JLL 572 Western sq m 5.2% sq m Restaurants & Cafes Household & Furnishings Central 686 North-5.2% sq m 5.7% Central 448 Cosmetics & Perfume Northern Eastern6.3 686 Goods for Children 74,0007.30% % 74,000North- North-sq472 m sq m 5.4% Western Northern Easternsq m 340 Northern Eastern South-540 North- Electronics Other Q4 2020 Q2 2021 7.3% sq m 8 AEB REAL ESTATE5.44.5% MONITOR | 3/2021 Easternsq m % WesternNorthern Eastern 340 North- Eastern 5.6 403540 South- 562sq m International retailer N Total Western Rents are given for a single unit5.6 of 100% sq m GLA located on a ground floor of a retail sq m Eastern 4.3% North- Eastern North- Eastern 152 sq m activity trend gallery. Rents exclude VAT and OPEX.South Higher- level rents that exceed572 the market5.6 level% Western sq m 3.0% Western sq m North- Eastern 152 Centralare4.3 registered% occasionally. Western 477 South- 5.7% Southern sq572 m Western sq m 6.3% Central Centralsq m 448Western Southern Troitsky and 472 5.7% sq m Western 6.3% sq m Central 448 Shopping ceSouth-ntre dNovomoskovskyensity in Moscow 472 Troitsky and sq m 4.5% Western Western sq m Novomoskovsky Vacancy rate in Moscow districts Eastern 5.6% South-403 South- districts (%sq m per 1 ,000 inhabitants) sq m Western562 4.5 Eastern 5.6% Eastern sq m South- South- 403 562 3.0% sq m Eastern sq m Western 477 South- Southern South- sq m 3.0% Western Western Southern477 South- Troitsky and Southern sq m 5.5% Western Novomoskovsky687 Troitsky and Southern North- sq m Troitsky and Novomoskovsky Novomoskovsky Northern Eastern 6.7% North- Troitsky and 5.5% Northern Eastern 340 Novomoskovsky 541 sq m sq m Contacts: North- Eastern Western 3.4% 5.8% Olesya DzubaNorth- OksaEasternna Kopylova 153 Polina Britskaya +7 (495) 737 8000 575 Western sq m sq m [email protected] [email protected] [email protected] www.jll.ru Central % 6.5% 5.4 Central 449 473 sq m Western sq m South- 5.6% Contacts: Western Eastern 7.5% 420 South- 559 sq m Contacts: Eastern sq m 2.4 % South- Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 Western [email protected] 476oksa [email protected] - [email protected] www.jll.ru Southern sq m Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 [email protected] [email protected] [email protected] www.jll.ru Troitsky and Novomoskovsky Troitsky and Novomoskovsky

Contacts:

Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 olesya.dzubaeu.jll.com oksana.kopylovaeu.jll.com polina.britskayaeu.jll.com www.jll.ru MoscowMoscow shopping centre centre market market Q1 Q1 2019 2019 Moscow shopping centre market Q1 2019 New retailers on the Russian market: New retailers on the Russian market: Availability eenntries aanNndde ewexx irtietsstailers on the Russian market: Availability Availability entries and exits Overall SC vacancy rate Number of 61 Overall SC vacancy rate 57 161 Niunmtebrnear of al Overall SC vacancy rate brands 57 3 1 interna al 3 61 which Number of bran ds 53 57 1 entered the interna 3a3l which 3 % 50 bps 5.9% 5 5.4 m arket brands 4 3 . entered the 3 48 bps which 5 47 Q4 2020 % 50 Q2 20215.9% 5.4 market 4 3 . entered the 14 3 48 % 50 bps % 47 5 5.4 5.9 market 4 Q4 2020 Q2 2021 . 40 3 47 48 Prime SC vacancy rate 14 3 5 Q4 2020 Q2 2021 1 5 16 1 14 1 40 1 3 3 5 Prime SC vacancy rate 2 16 3 1 403 5 3 Prime SC vacancy rate 2 1 8 1 3 1 16 1 2 1 5 2 3 1 31 1 3 5 8 1 4 2 2 2 1.6% 90 bps % 2 3 2.5 28 3 3 2 8 3 8 2 1 3 5 1 31 2 3 1 5 4 31 Q4 2020 % 90 bpsQ2 2021 % 3 2 1.6 2 2.5 28 1 1 5 4 5 3 8 3 1 2 1.6% 90 bps % 2 3 2.5 Moscow shopping centre market Q1 2019 28 5 1 MOSCOW MARKET OVERVIEW | RETAIL MARKET 3 18 3 27 1 Based on Q4a selection 2020 of the most successful shopping Q2 2021 3 8 5 1 3 4 3 1 1 centers with high footfallQ4 and 2020 conversion rates. Q2 2021 5 1 1 3 1 2 3 3 319 184 5 32 1 3 27 Based on a selection of the most successful shopping 28 3 3 1 18 4 1 4 27 Based on a selection of the most successful shopping New retailers on the Russian market: 1 26 4 1 centers with high footfall and conversion rates. 1 3 1 2 1 22 21 2 3 42 19 centers with high footfall and conversion rates. 4 15Av a 1AVAILABILITYila32bility 4 1 16 P PRICING**ricing entries and exits 17 28 22 3 19 4 32 15 1 4 4 1 28 26 2 1 4 4 29 1 22 26 21 2 4 22 13 4 1 17 Overall2 SC vacancy rate 21 8 2 2Prime rent,P RUB/sqricing m/year 17 15 1 43 2 Pricing Number of 61 2 1 1 1 1 1 151 11 57 1 9 2 1 2 interna al Number of 4 2 2 1 1 1 2 4 3 9 13 1 1 1 Prime4 rent, RUB/sq m/year brands 3 interna al 1 1 4 8 1 8 6 13 3 1 Prime rent, RUB/sq m/year which 5 brands 1 8 3 6 1 3 entered the which l e 1 7 1 1 1 1 2 1 1 1 Number of %1 502 1bps1 1 1 %1 1 1 1 1 0% 2 5.9 2 5.44 2 185,000 185,000 market 4 th e market 1 . Number of 2 2 1 1 1 47 48 interna al 1 4 1 4 8 1 1 2 interna al Q4 2020 1 6 1 Q2 2021 4 Q4 2020 Q2 2021 brands 1 8 1 2011 2012brands 2013 2014 20156 2016 2017 2018 20196 2020 2021 14 3 5 which l e 7 1 1 7 6 1 1 0% which l e 1 185,000 185,000% 40 3 th e market Prime SC vacancy rate Average rent, RUB/sq185,000 m/year 0 185,000 th e market 16 1 1 5 Jewelry & Watches Q4 2020 Q2 2021 1 1 2011Fashion,2012 Footwear,2013 Accessories2014 2015 2016 2017 2018 2019 2020 2021 Q4 2020 Q2 2021 3 2 3 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2 8 Household & Furnishings 3 2 Restaurants & Cafes Average rent, RUB/sq m/year 31 Average rent, RUB/sq m/year 1 5 4 Jewelry & Watches 2 Fashion,Cosmetics Footwear, & Perfume Accessories1.6% Goods90 for Children bps % 74,000 % 74,000 2 Jewelry &2.5 Watches 0 28 Fashion, Footwear, Accessories 3 1 8 5 3 1 Restaurants & Cafes Q4 2020 OtherHousehold & Furnishings Q2 2021 Q4 2020 Q2 2021 3 Electronics Restaurants & Cafes Household & Furnishings 5 1 3 3 27 Based on a selectionN Total of the most successful shopping Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail 18 CosmeticsInternational & PerfumeretailerCosmetics & Perfume Goods for Children 74,000 0% 74,000 3 1 1 Goods for Children 74,000 0% 74,000 4 activity trend centers with high footfall and conversion rates. gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 1 1 2 3 19 4 32 Electronics Other are registered occasionally.Q4 2020 Q2 2021 Q2 2021 28 Electronics Other Q4 2020 4 4 1 26 Total 2 22 21 2 International retailerInternational retailer N N Total Rents are givenRents for a are single given unit for of a single100 sq unit m GLA of 100 located sq m GLA on a locatedground onfloor a ground of a retail floor of a retail 17 4 2 Pricing gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 15 1 activity trend activitySource: trend JLL ShopSource:ping JLL centre gallery.den sRentsity excludein M VATosc andow OPEX. Higher level rents that exceed the market level 2 are registered occasionally. 9 1 V4acancy rate in Moscow districts are registered occasionally. 13 1 districts (sq m per 1 ,000 inhabitants) 8 Prime rent, RUB/sq m/year 3 1 1 1 1 2 1 1 1 Number of 2 2 1 1 1 4 1 2 Shopping centre density in Moscow interna al 1 1 4 Shopping centre density in Moscow 6 8 1 brands 1 Vacancy Vr17aa tce aVACANCY ninc yM roatsec RATE oinw M d INoisst MOSCOWcriocwts distr DISTRICTSicts 18 SHOPPING CENTRE DENSITY IN MOSCOW which le 7 6 1 districtsd (issqtr mict ps e(srq 1 m,00 p0e rin 1h,a0b0i0t ainhtsa)bitants) 1 5.5% 185,000 0% 185,000 th e market 687DISTRICTS (SQ M PER 1,000 INHABITANTS) Q4 2020 North- Q2 2021 sq m 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Northern Eastern 6.7% North- 5.5% Northern Eastern 340 Average rent, RUB/sq m/year 541 sq m % % sq m Fashion, Footwear, Accessories Jewelry & Watches 5.5 5.5 North- Eastern 3.4% 687 687 5.8% Western North- North- sq m sqNorth- m Eastern 153 Restaurants & Cafes Household & Furnishings Eastern Eastern 575 Western sq m Northern Northern sq m North- North- % % Central 6.7% 6.7% Cosmetics & Perfume Goods for Children 5.5 5.5 % Northern EasternNorthern Eastern 340 340 % 74,000 0% 74,0005.4 541 541 Central 449 sq m sq m 6.5 473sq m sq m sq m North- North- Eastern Eastern Electronics Other Q4Western 2020 Q2 20213.4% 3.4% sq m Western Western South- North- North- Eastern153 153 5.85.6% 5.8% Western Eastern sq m International retailer N Total Rents are given for a single unit of 100 sq mEastern GLA located 7.5on a ground% floor of a retail 420575 575 Western WesternSouth- sq m sq m sq m 559 activity trend gallery. Rents exclude VAT and CentralOPEX. Higher levelCentral rents that exceed% the market5.4 level% sq m Eastern sq m % are6.5 registered% occasionally.South- 5.4 Central Central 449 449 6.52.4 476473 473 sq m sq m Western Southern sq m South- Western Western sq m sq m South- South- Western Southern Troitsky% and Western 5.6Sh%opp5.6ing centre density in Moscow Eastern % Western South- Novomoskovsky Eastern 7.5% 7.5 420 420 South- 559 Troitskysq m and Eastern559 Vacancy rate in Moscow districts districts (sq m per 1 ,000 inhabitants) sq m Novomoskovsky Eastern sq m sq m 2.4 % South- South- 2.4 % Western 476 South- Western Southern Southern 476 sq m South- sq m Western Western Southern Southern Troitsky and Troitsky and Novomoskovsky 5.5% Novomoskovsky Troitsky andTroitsky and 687 Novomoskovsky North- sq m Novomoskovsky Northern Eastern 6.7% North- 5.5% Northern Eastern 340 541 sq m sq m North- Eastern 3.4% Contacts: 5.8% Western North- Eastern 153 Olesya575 Dzuba Oksana Kopylova sqP molina Britskaya +7 (495) 737 8000 sq m Western Central % olesya.dzubaeu.jll.com oksana.kopylovaeu.jll.com polina.britskayaeu.jll.com www.jll.ru 6.5% 5.4 Central 449 473 Source: JLL sq m Source: JLL Western sq m South- Contacts: 5.6% Contacts: Western Eastern 7.5% 420 South- 559 sq m Olesya Dzuba OkEasternsana Kopylova sq m Polina Britskaya +7 (495) 737 8000 Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 2.4 % South- olesya.dzubaeu.jll.com oksana.kopylovaeu.jll.com polina.britskayaeu.jll.com www.jll.ru Western olesya.476dzuba eu.jll.com Southoksa-na.kopylovaeu.jll.com polina.britskayaeu.jll.com www.jll.ru Southern sq m Western Southern Troitsky and Novomoskovsky Troitsky and Novomoskovsky

Contacts: AEBRUS.RU Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 9 olesya.dzubaeu.jll.com oksana.kopylovaeu.jll.com polina.britskayaeu.jll.com www.jll.ru Moscow office marketMoscow | Q1office 2019 market | Q1 2019 MoscowMoscow Office market officeofficeMoscow officemarke market | Q1 2019market t Moscow office market | Q1 2019 InMoscow H1 2021, office the market new | Q1 supply 2019 in Moscow office market amounted Considering that most of the new business centers are already • In 2019, the v•toolume In 446,000 2019, of theoffices sq v olumem, announced exceeding of offices f theor announced compl annuale volume for compl ofco theew previousamounts toco aboutwfilled, amou 400,000asnt wells to asabout sq the m, 400,000mogrowingre than sq demand, thm,r more the than growth thr than of vacancylast than last year, when theyearye indiar ,(224,000cat whenor w theas sqat indi am). cat 10-y Theor wear newas reat cordsupply a 10-y low inear (125,000 the re firstcord sixsq low m).months (125,000 There of were sq turnedm). 27,500 There out sq were to m be delivered 27,500 much smoothersq in mQ1 delivered 2019, than 26% itin was Q1YoY expected 2019,decline. 26% at Yo theY de becline.- •2021 MoscowThe volumeis the maximum of Q1 2019 semi-annual take-up declined value since by 8.6% 2014. YoY In andQ2 2021,amounted ginning to 285,000 of the sq crisis. m due The to first the time shor sincetage ofthe available end of 2019, space positive in the mark et • The volume ofMoscow Q1Moscow 2019 take-up declined by 8.6% YoY and amounted to 285,000 sq m due to the shortage of available space in the market • The bulk of ta•Sberk Thee-up Citybulk was andof in taClass Imperialke-up B w +as Plazawith in Class 59% business Bover + allwith centers ta k59%e-up were over amount. allcompleted, tak Non-centre-up amount. dynamicsal offices Non-centr beywasond observedal offices the TTR beyin we Classondre in theA, the in T TRApril-Julyhigh we demre inand 2021 the with high the 41% vacandem inand- with 41% in take-up structubothofficetarek.officee-up objects structu enteredre. marke themarke market alreadyt filled.t cy rates decreased by 1.3 ppt to 11.5%. In Class B+ and B-, the va- • Banking and •finance officeBanking companies and finance wemarke recompanies the leade wers inre demandthet leade srstructur in demande, 33% s oftructur takecancy-up.e, 33% Therate of second continued take-up. place The to wgrow secondas ta token 10.6%place by manu w(+0.4as tafa ppt)kcturinen byandg manu companies, 18.4%fa (+1.5cturin g companies, •The 26%.In 2019, total the take-up volume volume of offices in announced Q2 2021 finor thecompl Moscowe officecow mar amounts ppt),to about respectively. 400,000 sq m, The mo totalre than vacancy thr rates in Q2 than 2021 last increased 26%. • In 2019, the volume of offices announced for comple cow amounts to about 400,000 sq m, more than thr than last •ket yeIn ar 2019,increased, when the the volume byindi 1.3cat of ortimes offices was atYoY announced a and10-year amounted f orre cordcompl lowe to (125,000 364,000 sqco wm). sq amou Therem. nt swere byto about 0.6 27,500 ppt 400,000 sq to m 12.5%. delivered sq m, mo rein Q1than 2019, thr 26% YoY decline. than last • Low comple • Lowyearye, complwhenar, stwhenable thee theindi demand indicatorcat wstor assable w atas a at demand at 10-yaed 10-y earvacancy earres cord record ra lowatteed low (125,000decline va (125,000cancy sqin ram).all sqte officem).There decline There weresegments. werein 27,500 all 27,500 office Averagesq m sqsegments. delivered m delivered indicator in Average Q1 in 2019,reachedQ1 2019, indicator26% 26%10-year YoY Yode Yreachedcline. de recordcline. 10-year low – 10.0% record low – 10.0% •In (-0.3The general, volume ppt in for of Q1 Q1the 2019), 2019 first ta sixaske-up themonths declined indicat of orby2021, 8.6%we rethe Y oYdown total and amountedin take-up all submar tovol 285,000-kets and sq mclasses due to ofthe the shor citytage. Theof available vacancy space rate in declined the market in Class A by 0.5 ppt, to (-0.3 ppt in Q1• The2019),• The volume volumeas the of Q1 ofindi 2019Q1cat 2019 taork e-up wetake-upre declined down declined inby all8.6% by submar8.6% YoY YandoYke and amountedts andamounted classes to 285,000 to 285,000of the sq mcity sq due m. The due to the vato cancytheshor shorta gerata teofge availabledeclined of available space in space Class in th in eA thmark bye mark0.5et ppt,et to • The bulk of take-up was in Class B + with 59% overall take-up amount. Non-central offices beyond the TTR were in the high demand with 41% in 10.5%; in Classume10.5%; B+• The byreached 0.2bulkin Class ppt, of 644,000ta ktoB+e-up 10.6%,by w 0.2as sq in ppt,in m,Class Class which to B 10.6%, B-+ withisby 36% 0.4 59%in Classppt,higher over toallB- ta 8.4%thanbyke-up 0.4 in amount. ppt,2020 to Non-centr8.4%Askingal primeoffices beyrentalond therates TTR inwe reQ2 in the2021 high were dem andat RUBwith 41% 35,000- in • taTheke-up bulk s tructuof take-upre. was in Class B + with 59% overall take-up amount. Non-central offices beyond the TTR were in the high demand with 41% in • Prime office re•and Primentstake-up ta12%weke-up office res tructuhigher USD600-750 structu rerents. thanre .we rein sq USD600-750the m. pre-crisisClass A office sq 2019. m. re Class ntsAccording ra Anged office fr toreom ntsthe RUB24,000 ra nged55,000sq from to RUB42,000RUB24,000 m/year, Class sqto RUB42,000m/ Aye rentalar, while sqrates Classm/ yewere arB+, while reatnts RUB raClassnged 20,000- B+ fr reomnts ranged from • Banking and finance companies were the leaders in demand structure, 33% of take-up. The second place was taken by manufacturing companies, RUB12,000• Banking and to RUB25,000finance companies sq m/ weyerear the. leaders in demand structure, 33% of take-up. The second place was taken by manufacturing companies, RUB12,000 to•results RUB25,000 26%.Banking of and Q2 financesq 2021 m/ye c andompaniesar. H1 2021, were thethe leade indicatorrs in demand was the structur higheste, 33% of 40,000/sqtake-up. The secondm/year, place Class was B+ ta krentsen by weremanu atfacturin RUBg 10,000-25,000/ companies, 26%.26%. •among Low compl comparablee stperiodsable demand since s 2013.ated vacancy rate decline in all officesq segments. m/year. Average(19–27 indicator) reached 10-year record low – 10.0% • Low comple stable demand s ated vacancy rate decline in all office segments. Average indicator reached 10-year record low – 10.0% • (-0.3Low complppt ine Q1 2019), stasable the demandindicator s were atdowned va incancy all submar rate declinekets and in classesall office of segments. the city. The Average vacancy indicator rate declined reached in 10-year Class A byrecord 0.5 ppt,low to– 10.0% (-0.3 ppt in Q1 2019), as the indicator were down in all submarkets and classes of the city. The vacancy rate declined in Class A by 0.5 ppt, to 10.5%;(-0.3 ppt in in Class Q1 2019),B+ by 0.2 as theppt, indi to cat10.6%,or we inre Class down B- inby all 0.4 submar ppt, toke 8.4%ts and classes of the city. The vacancy rate declined in Class A by 0.5 ppt, to 1910.5%; 10.5%;VOLUME in Class in Class B+ OF byB+ 0.2 NEWby 0.2ppt, ppt, SUPPLYto 10.6%, to 10.6%, in Class in Class B- by B- 0.4 by 0.4ppt, ppt, to 8.4% to 8.4% 20 VOLUME OF TRANSACTED SPACE • Prime office rents were USD600-750 sq m. Class A office rents ranged from RUB24,000 to RUB42,000 sq m/year, while Class B+ rents ranged from • Prime office rents were USD600-750 sq m. Class A office rents ranged from RUB24,000 to RUB42,000 sq m/year, while Class B+ rents ranged from • RUB12,000Prime office to re RUB25,000nts were USD600-750 sq m/year. sq m. Class A office rents ranged from RUB24,000 to RUB42,000 sq m/year, while Class B+ rents ranged from RUB12,000RUB12,000 to RUB25,000 to RUB25,000 sq m/ sqye m/arye. ar. '000 sq m '000 sq m '000 sq m '000 sq m 658 658

446 +193% 446 +193% '000 sq m 1 000 1 000 '000 sq m '000 sq m +30% +30% '000 sq m 658 '000 sq+36% m +36% '000 sq m 658658 224 224 644 644768 768 +633% +633% 474 474 446 +193% 1 000 446446 +193%+193% +30% 1 000 +36% +30%1 000 +36% +30% 61 61 224 +36% 644 768 +633% 224224 474 644644 768768 +633%+633% 474474 H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F H1 2020 H1 202161 2020 2021F H1 2020 H1 2021 2020 2021F 61 61 Fact ForecastFact Forecast Fact ForecastFact Forecast H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F Source: JLL Fact Forecast Source: JLL Fact Forecast Fact Forecast Fact Forecast Fact Forecast Fact Forecast Vacancy ratesVacancy by class rates by class 21Vacancy VACANCY rates RATES by class BY CLASS VacancyVacancy rates rates by by class class 10.6% 10.6% 10.0% 10.0% 12.2% 12.2% 10.7% 10.7% 10.6% 10.0% 12.2% 10.7% 11.5% 11.510.6%10.6% % 10.6% 10.010.610.0% % 18.4%12.212.2% 18.4% % 12.810.7%10.7% % 12.8% 11.5% 10.6% 18.4% 12.8% Q2 2020 Q2 2020 11.511.5% % 10.610.6% % 18.418.4% % 12.812.8% % Q2 2020 Q2 Q22020 2020 Class A Class B+ Class B- Overall Class A Class A Class B+ Class B+ Class BClass- B- OverallOverall Class A Class B+ Class B- Overall Class A Class B+ Class B- Overall Q2 2021Q2 2021 Q2 2021 Q2 Q22021 2021

Source: JLL 19.119.199 19.119.1m sq9 m 919.19 m sqm sqm m m sq m Class АClass В+ Class В- m sq m 10 ClassCl assАC АClassla В+ss В+ AEB REAL ESTATECl MONITORassCl assВ- В- | 3/2021 Class АCClass АClass В+ lass В+ Class В- Class В- +7.2 %* -3.1 %* 0.0%* 4.8 +7.2 %* 9. 5 -3.1 %* 4.9 0.0%* 4.84.8+7.2 %* 9. 59. 5 -3.1 %* 4.94.9 0.0%* 4.8 +7.2 %4.* 8 +7.2 %* 9. 5 9. 5 -3.1 %* -3.1 %* 4.9 0.4.0%9* 0.0%* 0 214 6 8 012141618 0 214 6 8 012141618 0 214 6 8 012141618 *Growth YoY *Growth YoY 0 0*Growth21 YoY 214 46 68 801012121414161618 8

*Growth YoY *Growth YoY Moscow oﬃce market | Q1 2019 Moscow oﬃce market

• In 2019, the volume of offices announced for comple cow amounts to about 400,000 sq m, more than thr than last year, when the indicator was at a 10-year record low (125,000 sq m). There were 27,500 sq m delivered in Q1 2019, 26% YoY decline. • The volume of Q1 2019 take-up declined by 8.6% YoY and amounted to 285,000 sq m due to the shortage of available space in the market • The bulk of take-up was in Class B + with 59% overall take-up amount. Non-central offices beyond the TTR were in the high demand with 41% in take-up structure. • Banking and finance companies were the leaders in demand structure, 33% of take-up. The second place was taken by manufacturing companies, 26%. • Low comple stable demand s ated vacancy rate decline in all office segments. Average indicator reached 10-year record low – 10.0% (-0.3 ppt in Q1 2019), as the indicator were down in all submarkets and classes of the city. The vacancy rate declined in Class A by 0.5 ppt, to 10.5%; in Class B+ by 0.2 ppt, to 10.6%, in Class B- by 0.4 ppt, to 8.4% • Prime office rents were USD600-750 sq m. Class A office rents ranged from RUB24,000 to RUB42,000 sq m/year, while Class B+ rents ranged from RUB12,000 to RUB25,000 sq m/year.

'000 sq m '000 sq m 658

446 +193% +30% 1 000 +36% 224 644 768 +633% 474

H1 2020 H1 2021 2020 2021F H1 2020 H1 2021 2020 2021F

Fact Forecast Fact Forecast

Vacancy rates by class

10.6% 10.0% 12.2% 10.7% 11.5% 10.6% 18.4% 12.8% Q2 2020 MOSCOW MARKET OVERVIEW | OFFICE MARKET Class A Class B+ Class B- Overall Q2 2021

22 MOSCOW OFFICE STOCK BY CLASS, Q2 2021 19.19 m sq m Class АClass В+ Class В-

4.8 +7.2 %* 9. 5 -3.1 %* 4.9 0.0%*

0 214 6 8 012141618

*Growth YoY

Source: JLL Moscow office market | Q1 2019 Moscow office market | Q1 2019 23 TRANSACTED SPACE BY CLASS, SECTOR AND LOCATION, H1 2021 Moscow office market | Q1 2019

By class By business sector By submarket By class By business sector By submarket Class А ClassBy Аclass By business sector By submarket Mining& Wholesale Mining& % Wholesale % ExplorationExploration5% % 4 4&% Retail& Retail 2424% % Class39 А 39% 5 Mining& Wholesale 1313%% Public Public CBD Class В+Class В+ Exploration % 4% Business& RetailBusiness Services Services CBD24% 39%AdministrationAdministration6% 6% 5 29%29% MoscowMoscow City City 13% Public Class45 В+ % 45% Business Services CBD Administration 6% 29% Manufacturing 2727% % Moscow City ConstructionConstruction% 9% 19%19Manufacturing% Class В-Class В- 45% 9 36% From GR27 to TTR% 36% % ServiceConstruction Industries9 %9% 13% Banking 19 &% FinanceManufacturing From GR to TTR 15% Class15 В- Service Industries 9% 13% Banking & Finance Outside36 TTR% From GR to TTROutside TTR 15% Service Industries 9% 13% Banking & Finance Source: JLL Outside TTR Office property cycle in Moscow Asking rents Office property cycle in Moscow Asking rents 24Office OFFICE property PROPERTY cycle CYCLE in IN Moscow MOSCOW 25 ASKINGAsking RENTS* rents Rental growth 35-55 Rental growthslowing 35-55'000 RUB / sq m / year slowingRental growth '000 RUB / sq 35-55m / year 20-40 '000 RUB / sq m / year slowing '000 RUB / sq20-40 m / year '000 RUB / sq m / year Rents 20-40 10-25 Rental growth '000 RUB / sq m'000 / year RUB / sq m / year Rental growth Rentsfalling 10-25 Rental growth Rents Prime** '000 RUB / sq10-25 m / year 8-12 falling Class A '000 RUB / sq m'000 / year RUB / sq m / year falling Prime** 8-12 Prime** Class B+ 8-12 Q2 2021 Class A '000 RUB / sq m / year Class A '000 Class RUB B- / sq m / year Class B+ Q2 2021 Class B+ Q2 2021 Class B- Class B- Rents *Asking rents (including pre-lets) exclude VAT. **Prime rents refer to rents in high quality buildings in the Central Business Rents District (CBD). Rents *Asking rents*Asking (including rents (including pre-lets) pre-lets)exclude excludeVAT. VAT. **Prime rents**Prime refer rents to rents refer in to high rents quality in high buildings quality buildings in the Central in the Central Business Business District (CBD). District (CBD).

MoscowSource: JLL office submarkets, Q1 2019 Source: JLL MoscowMoscow office submarkets office submarkets, Q1 2019, Q1 2019 CBD* Moscow City GR to TTR ** Outside TTR ***

Stock, sq m 3,733,660 1,244,902 4,433,899 9,777,357 AEBRUS.RUCBD* Moscow City GR to TTR ** Outside TTR *** 11 Rostekh-City CBD* Moscow City GR to TTR ** Outside TTR *** 173,582 sq m А Availability,Stock, sq sq m m 365,4733,733,660 97,1361,244,902 618,3714,433,899 1,380,3379,777,357 Stock, sq m 3,733,660 1,244,902 4,433,899 9,777,357 Rostekh-City А Rostekh-CitySber173,582 City sq m 128,370 sq m АА VacancyAvailability, rate, % sq m 9,8365,473 7,897,136 13,9618,371 14,11,380,337 173,582 sq m Availability, sq m 365,473 97,136 618,371 1,380,337 Sber City А Transacted space, Two Captains128,370 sq m Vacancy rate, %153,3059,8 86,6497,8 170,73013,9 232,94414,1 79,800Sber City sq m B sq m 128,370 sq m А Vacancy rate, % 9,8 7,8 13,9 14,1 Transacted space, Two Captains 153,305 86,649 170,730 232,944 79,800 sq m B * Thesq Central m Business District submarket comprises the area within and in close Transacted space, Two Captains proximity153,305 to the Garden86,649 Ring and Tverskaya-Yamskaya170,730 Street.232,944 79,800 sq m B + sq m ** Excludes * The Central Moscow Business City. District submarket comprises the area within and in close proximity to the Garden Ring and Tverskaya-Yamskaya Street. + * The Central*** Business Including District Outside submarket MKAD projects. comprises the area within and in close proximity to the** Garden Excludes Ring Moscow and City.Tverskaya-Yamskaya Street. +

*** Including Outside MKAD projects. ** Excludes Moscow City.

*** Including Outside MKAD projects. Contacts:

Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 olesyaContacts:[email protected] alexander.bazhenoveu.jll.com polina.bobrovaeu.jll.com www.jll.ru Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 Contacts:[email protected] alexander.bazhenoveu.jll.com polina.bobrovaeu.jll.com www.jll.ru

Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 [email protected] alexander.bazhenoveu.jll.com polina.bobrovaeu.jll.com www.jll.ru Moscow oﬃce market | Q1 2019

By class By business sector By submarket

Class А Mining& Wholesale 39% Exploration 5% 4% & Retail 24% 13% Public Class В+ Business Services CBD Administration 6% 29% Moscow City 45% 27% Construction % 19% Manufacturing Class В- 9 % From GR to TTR 36 15% Service Industries 9% 13% Banking & Finance Outside TTR

Oﬃce property cycle in Moscow Asking rents

Rental growth 35-55 slowing '000 RUB / sq m / year Moscow oﬃce market | Q1 2019 20-40 '000 RUB / sq m / year

Rental growth Rents 10-25 falling '000 RUB / sq m / year By class By business sector By submarket Prime** 8-12 Class A '000 RUB / sq m / year Class А Class B+ Mining& Wholesale Q2 2021 Class B- 39% Exploration 5% 4% & Retail 24% 13% Public Class В+ Business Services CBD Administration 6% 29% Rents *Asking rents (including pre-lets) exclude VAT. Moscow City **Prime rents refer to rents in high quality buildings in the Central Business 45% District (CBD). 27% Construction % 19% Manufacturing Class В- 9 MOSCOW MARKET OVERVIEW | OFFICE MARKET % From GR to TTR 36 15% Service Industries 9% 13% Banking & Finance Moscow oﬃce submarkets, Q1 2019Outside TTR 26 MOSCOW OFFICE SUBMARKETS, H1 2021

Oﬃce property cycle in Moscow Asking CBD*rentsMoscow City GR to TTR ** Outside TTR ***

Stock, sq m 3,733,660 1,244,902 4,433,899 9,777,357 Rostekh-City А Rental growth 35-55 173,582 sq m slowing Availability,'000 RUB sq /m sq m365,473 / year 97,136 618,371 1,380,337 20-40 Sber City 128,370 sq m А Vacancy rate, % 9,8'000 RUB / sq7,8 m / year 13,9 14,1 10-25 Rental growth Rents Transacted space, Two Captains 153,305 86,649 '000 RUB170,730 / sq m / year 232,944 79,800 sq m B falling sq m Prime** 8-12 Class A '000 RUB / sq m / year * The Central Business District submarket comprises the area within and in close proximity to the Garden Ring and Tverskaya-YamskayaClass B+Street. + Q2 2021 Class B- ** Excludes Moscow City.

*** Including Outside MKAD projects. Rents *Asking rents (including pre-lets) exclude VAT. Source: JLL **Prime rents refer to rents in high quality buildings in the Central Business District (CBD). 27Contacts: KEY NEW SUPPLY IN H1 2021

Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 Moscow oﬃce submarkets, Q1 2019 [email protected] alexander.bazhenoveu.jll.com polina.bobrovaeu.jll.com www.jll.ru

CBD* Moscow City GR to TTR ** Outside TTR ***

Stock, sq m 3,733,660 1,244,902 4,433,899 9,777,357 Rostekh-City 173,582 sq m А Availability, sq m 365,473 97,136 618,371 1,380,337 Sber City 128,370 sq m А Vacancy rate, % 9,8 7,8 13,9 14,1

Transacted space, Two Captains 153,305 86,649 170,730 232,944 79,800 sq m B sq m

* The Central Business District submarket comprises the area within and in close proximity to the Garden Ring and Tverskaya-Yamskaya Street. +

** Excludes Moscow City.

*** Including Outside MKAD projects.

Source: JLL Contacts: 12 AEB REAL ESTATE MONITOR | 3/2021 Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 [email protected] alexander.bazhenoveu.jll.com polina.bobrovaeu.jll.com www.jll.ru Warehouse market

By the end of the year, new deliveries are projected to reach market new deal: OZON signed for built-to-suit fulfillment cent- 1 mln sq m for the first time in 5 years. The indicator will exceed er in PNK Park Pushkino 2 (270,000 sq m), which is 30% of the the level of 2020 by 16%. The driver for construction activity is total take-up. peak demand last year. By the end of the year, the take-up will reach 2 mln sq m, which The share of speculative construction reached 63% in H1 2021. will be second high indicator in history. In the mid-term, we can 85% of newly delivered speculative supply was pre-leased. This expect new large deals with key marketplaces. (29 ) fact kept the vacancy rate at the low level. THE VACANCY RATE REMAINS LOW We anticipate a slow rebalancing with an uptick in built-to-suit commissioning by year-end 2021. The pipeline for built-to-suit The consumer market recovery, strong online sales growth and schemes amounts to 552,000 sq m. (28 ) rising construction costs will keep the vacancy rate low in short- and mid-term. THE DEMAND IS IN LINE WITH 2020 PEAK The vacancy in the Moscow region correlates to the volume of After the traditional activity decline in the beginning of the year, the total retail trade. Decrease in sales leads to decrease in an in Q2 2021 we registered a return to peak quarterly levels of H2 occupied warehouse area. However, new drivers support the 2020. warehouse segment even on the weak consumer market.

The H1 2021 take-up growth reached 142% in comparison to H1 In 2020, despite the decrease in retail trade turnover, we re- 2020. In the beginning of the year, the market experienced leas- corded a decrease in the vacancy for the first time. The accel- ing activity stabilization with 393,000 sq m, in the meantime the erated build-out of e-commerce is the main factor of support. indicator exceeded average Q1 take-up value (241,000 sq m). In short-term, the trend will also be supported by the gradual The Q2 2021 take-up (892,000 sq m) is the third peak of pan- consumer market recovery and the demand growth for ex- demic-driven demand, which is comparable with record high isting warehouses due to an increase in construction costs. Q3 and Q4 2020. The growth is coming from the largest on the (30 )

28 NEW CONSTRUCTION, CLASSES A & B, 2021

793 156 1006 350 297 518 198

Built-to-suit 454 587 Speculative 496 547 552 267 312 Built-to-suit (forecast) 117 118 Speculative (forecast) 2015 2016 2017 2018 2019 2020 2021

Source: Cushman & Wakefield

AEBRUS.RU 13 2500

2000

1500 m

Forecast

‘000 sq 1000 Take-up by year

Take-up by quarter 500

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

4 Vacancy rate, the Moscow region, % Total retail trade, Russia, %

-1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F

-6

-11 793 156 1006 156 793 350 297 1006 518 198 350 297 518 198 Built-to-suit 454 547 587 Speculative 496 Built-to-suit 552 Built-to-suit (forecast) 267 454 312 587 Speculative 496 117 547 552 118 Speculative (forecast) 267 312 Built-to-suit (forecast) 2015 2016 117 2017 2018 2019 2020 1182021 MOSCOW MARKET OVERVIEW | WAREHOUSE MARKET Speculative (forecast) 2015 2016 2017 2018 2019 2020 2021

29 TAKE-UP, CLASSES A&B

2500

2500 2000

2000 1500 m

1500

m Forecast

‘000 sq 1000 Take-up by year Forecast

‘000 sq 1000 Take-up by quarter Take-up by year 500 Take-up by quarter 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0 Source:2010 Cushman2011 & Wakefield2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

30 VACANCY RATE AND TOTAL RETAIL TRADE 14

14 9

9 4 Vacancy rate, the Moscow region, % Total retail trade, Russia, % 4 Vacancy rate, the Moscow region, % -1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F Total retail trade, Russia, % -1 2010-6 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2022F

-6 -11

-11

Source: Cushman & Wakefield

OUTRUNNING GROWTH OF RENTAL RATES

Almost all European markets reviewed forecasts towards a In the Moscow region, the forecast for the average net asking faster rental growth. Russia is no exception. rental rate was increased by 2.4 p.p. The indicator will reach 4,300 RUB/sq m/year by year-end 2021. In 2020, the popularity of the segment was reinforced among tenants and investors around the world. As a result, rental rates The outrunning growth of the indicator is supported by high showed a rapid growth. In 2021, the market conditions were demand, an increase in PPI and construction costs and a lack expected to stabilize and maintain a moderate rental growth. of warehouse area that meets the requirements of tenants in However, by the end of H1 2021, the forecasts were reviewed terms of size and transport accessibility. (31 ) towards a more significant growth. The only exception is Nor- dic countries, where the rental growth will be restrained.

14 AEB REAL ESTATE MONITOR | 3/2021 MOSCOW MARKET OVERVIEW | WAREHOUSE MARKET

31 RENTAL GROWTH IN 2021 (Y/Y), %

8.2 p.p. 10

6 4.6 p.p. 2.4 p.p. 4

1.1 p.p. 2 1.0 p.p. 1.7 p.p.

0 The Moscow London CEE Benelux Western Nordics region Europe

Updated forecast as of July 2021 Forecast as of October 2020 Forecast change

Regional data includes markets: Benelux: Brussels, Amsterdam; Nordics: Helsinki, Oslo, Copenhagen; CEE: Prague, Budapest, Warsaw, Bratislava; Western Europe: Paris, Rome, Berlin, Lisbon, Madrid.

Source: Cushman & Wakefield

RENTAL RATE IN THE MOSCOW REGION IS ONE OF THE For Samara, 206,000 sq m of the take-up is the highest on MOST ROBUST record result. The previous record was 55,000 sq m in 2017. Demand leap came from two large deals: OZON signed for Since 2018, a positive dynamics in rental rates has been re- built-to-suit fulfillment center with an area of 135,000 sq m, corded on all European markets. The trend will continue in 2-3 and Yandex leased 26,000 sq m in SamaraTransAvto. (33 ) years. The average European rental growth over the past three years is 4% per year, in Moscow — 7%. (32 ) REGIONAL EXPANSION OF PURE ONLINE RETAIL

RECORD HIGH DEMAND IN REGIONS Online retailers showed the highest leasing activity in the Rus- sian regions. The H1 2021 indicator is higher than the total an- In H1 2021, the highest on record regional take-up was observed. nual value in 2016-2018. Click and mortar retail is on pause af- The driver was pure online retail expansion. We registered the ter a rapid expansion in 2020. growth of the popularity of second-tire regional markets. In 2020, click and mortar retailers were rapidly strengthening their The share of St. Petersburg in regional take-up has been de- logistics both in the Moscow region and other Russian regions, creasing for two years in a row and does not exceed 30%. Pre- while pure online operators were focused on the capital city market. viously, the value averaged 40%. In 2021, the situation changed: online retailers leased the highest Key online retailers strengthen their logistics in second-tire re- amount of warehouse premises in regions, while click and mortar gional markets. retailers have focused on optimization of business processes.

AEBRUS.RU 15 MOSCOW MARKET OVERVIEW | WAREHOUSE MARKET

In short-term, the growth of demand from the key online op- ond-tire markets. This will lead to demand growth from click erators for big-box warehouses can be expected on the sec- and mortar operators in mid-term as well. (34 )

32 RENTAL GROWTH (Y/Y), % 20

0 F 2011 2017 2012 2013 2014 2016 2018 2019 2015 2010 2020 2009 2021 -5 2022F

-10

-15

London CEE Western Europe Nordics Benelux The Moscow region

RENTAL RATES FORECAST, EUR/SQ M/YEAR

Region 2020 2021 2022

London 193 215 226

Nordics 108 110 111

Benelux 75 78 79 Regional data includes markets: Western Europe 58 59 61 Benelux: Brussels, Amsterdam; CEE: Prague, Budapest, Warsaw, Bratislava; CEE 51 54 55 Nordics: Helsinki, Oslo, Copenhagen; Western Europe: Paris, Rome, Berlin, Lisbon, The Moscow region 49 52 54 Madrid.

Source: Cushman & Wakefield

16 AEB REAL ESTATE MONITOR | 3/2021 MOSCOW MARKET OVERVIEW | WAREHOUSE MARKET

33 DEMAND INDICATORS IN REGIONS

Share Share Take-up, in regional change H1 2021 take-up H1 2021 ‘000 sq m % to 2020

St. Petersburg 214 29

Samara 206 28

Rostov-on-Don 136 18

Ekaterinburg 84 11

Novosibirsk 42 6

Krasnodar 35 5

Kazan’ 8 1

Khabarovsk 6 1

Nizhniy Novgorod 6 1

Krasnoyarsk 4 1

Source: Cushman & Wakefield

34 TAKE-UP STRUCTURE, REGIONS, CLASSES A&B, ‘000 SQ M

676

330

158 177

135 470 231 135 Click and mortar retail 173 93 Pure online retail 217 148 Production 105 87 202 31 44 90 103 Distribution 17 97 79 30 Logistics 132 72 121 55 81 81 Other 2016 2017 2018 2019 2020 H1 2021

Source: Cushman & Wakefield

AEBRUS.RU 17 Hospitality market

The upscale segment demonstrated a positive trend in rouble 2021 US dollar ADR unchanged with the corresponding period ADR (average daily rate) compared to Q2 2020 and showed a of 2020 (USD 84). At the same time, ADR nominated in roubles 11% increase (RUB 16,030). Rouble RevPAR (revenue per avail- increased by 6%, and amounted to RUB 6,259. US dollar Rev- able room) also showed a significant growth – 83% and com- PAR and RevPAR nominated in roubles increased by 49% and prised RUB 6,678. US dollar figures of ADR slightly increased 63% respectively amounting to USD 40 and RUB 2,989. by 4% and comprised USD 215, US dollar RevPar increased by 67% (USD 89). The overall occupancy increased by 16% in Q2 Comparing the results of the first half of 2021 to the same 2021 (44%). period of the previous year we can observe an increase in occupancy and average daily rates. However, significant growth Business hotels showed the following results in January – June rates are first of all a consequence of the low base of 2020 re- 2021: US dollar RevPAR increased by 46% (USD 39) which was sults, and pre-COVID indicators have not yet been achieved. composed of a 3% occupancy growth (28%) and a 4% drop of Recovery rate of the Moscow hotel market will mainly depend ADR nominated in US dollars (USD 62). The rouble RevPAR in- on the further development of the COVID-19 situation in Rus- creased by 60% (RUB 2,923) and ADR slightly increased by 3% sia and around the world, including the speed of vaccination (RUB 4,583). and recognition of different vaccines among countries.

An increase of several indicators was observed in the mid- An absolute gap in RevPAR between market segments dem- scale segment. RevPAR nominated in US dollars and roubles onstrated the following results: increased by 20% and 30% respectively amounting to USD ►• The gap between the upscale and midscale segments com- 24 and RUB 1,781. Overall occupancy comprised 61% demon- prised USD 65/RUB 4,797 compared to USD 33/RUB 2,222 strating increase if compared with the corresponding period in the same period of 2020. of 2020 (43%). However the US dollar and roubles ADR de- ►• The difference in RevPAR between upscale and business creased by 9% and 4% respectively amounting to USD 39 and hotels changed to USD 49/RUB 3,655 vs Q2 2020 results RUB 2,896. (USD 26/RUB 1,758).

Economy segment of Moscow hotels which is mostly repre- During the 1st half of 2021 two hotels were opened in Moscow: sented by Soviet-era objects showed ADR in the amount of ►• Hampton by Hilton Rogozhsky Val for 148 rooms located at RUB 1,526 in Q2 2021 (a 10% decrease as compared to 2020). Rogozhsky Val Street, 12. Occupancy demonstrated a 13% growth (36%) resulting in a ►• Vertical BW Signature Collection for 82 rooms located at 25% increase of RevPAR – RUB 676. ADR in US dollar equiv- Malye Kamenschiki Street, 16. alent decreased by 30% and comprised USD 20. RevPAR amounted to USD 9 which is 14% higher comparing to the cor- We expect the following branded hotels to open in 2021: responding period of 2020. (35-41 )

Average occupancy across all market segments of Moscow hotels showed a growth – 19% and comprised 51%. During Q2

18 AEB REAL ESTATE MONITOR | 3/2021 MOSCOW MARKET OVERVIEW | HOSPITALITY MARKET

35 FUTURE BRANDED HOTELS ANNOUNCED FOR OPENING IN MOSCOW IN 2021

Name Number of rooms Address

Crowne Plaza Moscow – Park Huaming 340 Vilgelma Pika Street, 14

DoubleTree by Hilton Moscow 99 Nikitsky Boulevard

Fairmont Moscow Mayakovskaya 159 Tverskaya-Yamskaya 1st Street, 2

Four Points by Sheraton Moscow Vnukovo Airport 250 Bolshaya Vnukovskaya Street, 8

Hilton Garden Inn Moscow Paveletsky 245 Kozhevnicheskaya Street, 2-4

Ibis Moscow Semenovsky 120 Velyaminovskaya Street

Marriott Imperial Plaza Hotel 268 Krasnoprudnaya Street, 12, bldg. 1

Total: 7 hotels 1481 rooms

Sources: EY database, open sources, operators’ data

36 5-STAR HOTELS: ADR (RUB) AND OCCUPANCY DYNAMICS, 2021 VS 2020 5 -star hotels: ADR ( RUB ) and occupancy dynamics , 2018 vs. 201 7

50 000 100%

45 000 90% 40 000 80% 35 000 70% 30 000 60% 25 000 50% 20 000 40% 15 000 30% 10 000 20% 5 000 10% 0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

4 -star hotels: ADR ( RUB ) and occupancy dynamics , 201 8 vs. 2017

100% 18 000 Source: EY analysis 90% 16 000 80% 14 000 70% 12 000 60% 10AEBRUS.RU000 50% 19 8 000 40%

6 000 30%

4 000 20%

2 000 10%

0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

3 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7

14 000 100% 90% 12 000 80% 10 000 70% 60% 8 000 50% 6 000 40%

4 000 30% 20% 2 000 10% 0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

2 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7

14 000 100% 90% 12 000 80%

10 000 70%

60% 8 000 50% 6 000 40%

4 000 30% 20% 2 000 10%

0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

Average market ADR ( RUB ) and occupancy dynamics , 20 1 8 vs. 201 7

22 000 100% 20 000 90% 18 000 80%

16 000 70% 14 000 60% 12 000 50% 10 000 40% 8 000 30% 6 000 20% 4 000 2 000 10% 0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 5 -star hotels: ADR ( RUB ) and occupancy dynamics , 2018 vs. 201 7 5 -star hotels: ADR ( RUB ) and occupancy dynamics , 2018 vs. 201 7 50 000 100%

4550 000 90%100%

4045 000 80%90% 3540 000 70%80% 3035 000 60%70% 2530 000 50%60% 2025 000 40%50% 1520 000 30%40% 1015 000 20%30% 105 000 10%20% 5 0000 10%0% 0 jan feb mar apr may jun jul aug sep oct nov dec 0% MOSCOW MARKETjan feb OVERVIEWmar apr | HOSPITALITYmay jun MARKETjul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

4 -star hotels: ADR ( RUB ) and occupancy dynamics , 201 8 vs. 2017 37 4-STAR HOTELS: ADR (RUB) AND OCCUPANCY DYNAMICS, 2021 VS 2020 4 -star hotels: ADR ( RUB ) and occupancy dynamics , 201 8 vs. 2017 100% 18 000 90%100% 18 000 16 000 90% 80% 16 000 14 000 80% 70% 14 000 12 000 70%60% 12 000 60% 10 000 50% 10 000 8 000 50%40% 8 000 40% 6 000 30% 6 000 30% 4 000 20% 4 000 2 000 20%10% 2 000 10% 0 0% jan feb mar apr may jun jul aug sep oct nov dec 0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 Source: EY analysis

3 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 38 3-STAR HOTELS: ADR (RUB) AND OCCUPANCY DYNAMICS, 2021 VS 2020 3 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 14 000 100% 14 000 100%90% 12 000 80%90% 12 000 10 000 70%80% 10 000 60%70% 8 000 60% 8 000 50% 6 000 40%50% 6 000 4 000 30%40% 4 000 20%30% 2 000 10%20% 2 000 0 0%10% 0 jan feb mar apr may jun jul aug sep oct nov dec 0% jan feb mar apr may jun jul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

Source: EY analysis 2 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 2 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 14 000 100% 14 000 100%90% 12 000 80%90% 12 000 10 000 70%80%

10 000 60%70% 8 000 60% 8 000 50% 20 6 000 AEB REAL ESTATE MONITOR | 3/2021 40%50% 6 000 40% 4 000 30% 4 000 20%30% 2 000 10%20% 2 000 0 0%10% jan feb mar apr may jun jul aug sep oct nov dec 0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

Average market ADR ( RUB ) and occupancy dynamics , 20 1 8 vs. 201 7 Average market ADR ( RUB ) and occupancy dynamics , 20 1 8 vs. 201 7 22 000 100% 2022 000 90%100% 2018 000 90%80%

1816 000 80%70% 1614 000 70%60% 1412 000 60%50% 1012 000 50%40% 108 000 40%30% 86 000 30%20% 64 000 20% 42 000 10% 2 0000 10%0% 0 jan feb mar apr may jun jul aug sep oct nov dec 0% jan feb mar apr may jun jul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 5 -star hotels: ADR ( RUB ) and occupancy dynamics , 2018 vs. 201 7

50 000 5 -star hotels: ADR ( RUB ) and occupancy dynamics , 2018 vs. 201 7 100%

5045 000000 100%90%

4540 000 000 90%80% 4035 000000 80%70% 3530 000 000 70%60% 3025 000000 60%50% 2520 000 000 50%40% 2015 000000 40%30% 1510 000000 30%20% 105 000 000 20%10% 5 0000 10%0% jan feb mar apr may jun jul aug sep oct nov dec 0 0% jan feb mar apr may jun jul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

4 -star hotels: ADR ( RUB ) and occupancy dynamics , 201 8 vs. 2017 4 -star hotels: ADR ( RUB ) and occupancy dynamics , 201 8 vs. 2017 100% 18 000 100%90% 1816 000000 90%80% 1614 000000 80%70% 1412 000000 70%60% 12 000 10 000 60%50% 10 000 8 000 50%40% 8 000 6 000 40%30% 6 000 4 000 30%20%

42000000 20%10%

2 0000 10%0% jan feb mar apr may jun jul aug sep oct nov dec 0 0% jan feb mar apr may jun jul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

3 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 3 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 14 000 100% 14 000 100%90% 12 000 90%80% 12 000 10 000 80%70% 10 000 70%60% 8 000 60% 8 000 50% 6 000 50%40% 6 000 4 000 40%30% 4 000 30%20% 2 000 20%10% 2 000 0 10%0% jan feb mar apr may jun jul aug sep oct nov dec 0 0% jan feb mar apr may jun jul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 MOSCOW MARKET OVERVIEW | HOSPITALITY MARKET ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

2 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 39 2-STAR HOTELS: ADR (RUB) AND OCCUPANCY DYNAMICS, 2021 VS 2020 2 -star hotels: ADR (RUB) and occupancy dynamics, 201 8 vs. 201 7 14 000 100% 14 000 100%90% 12 000 90%80% 12 000 10 000 80%70%

10 000 70%60% 8 000 60%50% 8 000 6 000 50%40% 6 000 4 000 40%30% 4 000 30%20% 2 000 20%10% 2 000 0 10%0% jan feb mar apr may jun jul aug sep oct nov dec 0 0% jan feb mar apr may jun jul aug sep oct nov dec

ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021

Source: EY analysis

40 AVERAGE MARKET ADR (RUB) AND OCCUPANCY DYNAMICS, 2021 VS 2020 Average market ADR ( RUB ) and occupancy dynamics , 20 1 8 vs. 201 7 Average market ADR ( RUB ) and occupancy dynamics , 20 1 8 vs. 201 7 22 000 100% 2220 000 000 100%90% 2018 000 000 90%80%

1816 000 000 80%70% 14 000 16 000 70%60% 1412 000 000 60%50% 1210 000 000 50%40% 108 000 000 40%30% 86 000 000 30%20% 64 000 000 20% 42 000 000 10% 2 0000 10%0% 0 jan feb mar apr may jun jul aug sep oct nov dec 0% jan feb mar apr may jun jul aug sep oct nov dec ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 ADR RUB, 2020 ADR RUB, 2021 Occupancy, 2020 Occupancy, 2021 Source: EY analysis

AEBRUS.RU 21 MOSCOW MARKET OVERVIEW | HOSPITALITY MARKET

41 OPERATIONAL INDICES DYNAMICS

January – June 2021/ January – June 2021 January – June 2020 2020 January – June 2020, (USD/RUB) (USD/RUB) (USD/RUB) %

5 stars

Occupancy 44% 28% 16% 26%

Average daily rate 215/16,030 206/14,501 4/11 202/14,772 (ADR) Revenue per available 89/6,578 53/3,590 67/83 48/3,453 room (RevPAR)

4 stars

Occupancy 63% 35% 28% 40%

ADR 62/4,583 64/4,466 -4/3 56/4,089

RevPAR 39/2,923 27/1,832 46/60 24/1,747

3 stars

Occupancy 61% 43% 18% 43%

ADR 39/2,896 43/3,003 -9/-4 38/2,773

RevPAR 24/1,781 20/1,368 20/30 17/1,220

2 stars

Occupancy 36% 23% 13% 27%

ADR 20/1,526 29/1,699 -30/-10 23/1,676

RevPAR 9/676 8/536 14/26 7/510

Average

Occupancy 51% 32% 19% 34%

ADR 84/6,259 84/5,917 0/6 80/5,828

RevPAR 40/2,989 27/1,831 49/63 24/1,732

Source: Smith Travel Research, EY analysis and forecast

22 AEB REAL ESTATE MONITOR | 3/2021 Housing market

WHO IS A TENANT 42 PRIME REAL ESTATE TENANTS BY NATIONALITIES

In H1 2020, 60% of all requests from potential tenants were Russia 62% made by Russian citizens, and the other 40% of requests were made by foreigners. France 9%

Italy 5% The largest number of foreign tenant requests came from citizens of France, Italy, Germany, and Great Britain. Germany 4% Japan 4% Today we are observing the trend of an increasing number of Norway 3% families moving from the Russian regions to Moscow as an alternative to living abroad. USA 3%

UK 2% Interest in prime apartments came predominantly from potential tenants in the age range of 35 to 49 years old. (42 ) Source: Intermark Relocation

SUPPLY

High-budget supply volume decreased by 18% since the begin- The highest volume of prime rental apartments on the market ning of the year. The volume of supply decreased by 10% in the this year was observed in January. The last time a higher figure first six months of 2021 and decreased by 32% when compared occurred was in May 2020. (43 ) to the same period a year ago.

43 MOSCOW PRIME RENTAL MARKET SUPPLY

150%

140%

130%

120%

110%

100%

90%

80%

70% I II III IV V VI VII VIII IX X XI XIII II III IV V VI VII VIII IX X XI XIII II III IV V VI 2019 2020 2021

Source: Intermark Relocation

AEBRUS.RU 23 MOSCOW MARKET OVERVIEW | HOUSING MARKET

There has been a decrease in the volume of the most liquid of- June 2021 saw a record level of demand over the past year and fers, including the most popular apartments by number of rooms. 7 months, slightly overtaking April 2021 in the number of re- For example, for the past 2 years the share of apartments with two quests. (46 ) and three bedrooms decreased by 9 p.p. from 59% to 50%. (44 ) BUDGETS & RATES It is worth highlighting offers for renting “suburban type” housing located within Moscow. Such objects are in high demand Rental rates for prime apartments in Moscow increased by 12% especially in the summer months and are a great alternative to compared to the beginning of 2021. The average supply budget moving out of town. in June 2020 was USD 4,400, which means a 13% increase over the past year. Thus, the cost of renting apartments in Moscow Such offers are unique in Moscow, as the share of houses for continues to demonstrate an increase compared to the previ- rent accounts for only 5% of all offers in the high-budget real ous year. estate market in the capital. (45 ) Rental rates for prime apartments in Moscow increased by 9% Tverskaya-Kremlin and Arbat-Kropotkinskaya districts contin- compared to the beginning of 2021. The average supply budget ue to hold leading positions in terms of volume of supply on the in June 2020 was USD 4,760, which means a 9% increase over market. The largest number of exhibited luxury apartments for the past year. There has been a 10% increase in the share of rent- rent in the Moscow market are presented here. ed apartments with a budget over USD 6,800/month in the last 6 months. DEMAND USD 920 (or 22%) is the difference between the proposed rate The number of requests when compared to the start of the lock- from owners and the requested rate from potential tenants. down increased by 1.5 times (or 54% more than in March 2020). The number of requests over the past year increased by 2.6 In H1 2021, the most expensive districts were Arbat-Kropot- times. kinskaya (USD 5,866 per month), Tverskaya-Kremlin and

44 STRUCTURE OF SUPPLY

35% 33% 30% 30% 26% 25% 23% 20% 20% 17%

15% 13%13% 11% 10% 7% 5% 5% 5%

0% Studios 1 bedroom 2 bedrooms3 bedrooms 4 bedrooms5 bedrooms

June 2019 June 2021

Source: Intermark Relocation

24 AEB REAL ESTATE MONITOR | 3/2021 MOSCOW MARKET OVERVIEW | HOUSING MARKET

Patriarshiye Prudy (USD 5,522 and USD 4,558 per month, 96 less than in Patriarshiye Prudy (USD 4,462 per property respectively). The fourth most expensive district in the rank- per month). And the fifth most expensive district is Tsvetnoy ings was Frunzenskaya, where the average rental rate is USD Boulevard with an average budget of USD 4,448 per month.

45 MOST POPULAR AREAS FOR LIVING IN MOSCOW IN TERMS OF SUPPLY

20% Tverskaya-Kremlin 17% 17%

17% Arbat-Kropotkinskaya 18% 20%

10% Krasnopresnenskaya 10% 7%

9% Lubyanka-Kitay-Gorod 8% 8%

8% Leninskiy Prospekt 10% 8%

8% Leningradskiy Prospekt 9% 8%

7% Zamoskvorechye 8% 9%

0% 5% 10% 15% 20% 25%

2021 2020 2019

Source: Intermark Relocation

46 MOST POPULAR AREAS FOR LIVING IN MOSCOW IN TERMS OF DEMAND

22% Arbat-Kropotkinskaya 18% 18%

11% Lubyanka-Kitay-Gorod 9% 11%

10% Tverskaya-Kremlin 11% 14%

9% Leningradskiy Prospekt 10% 7%

8% Leninskiy Prospekt 10% 9%

7% Zamoskvorechye 8% 9%

7% Tsvetnoy Boulevard 5% 6% 0% 5% 10% 15% 20% 25%

2021 2020 2019 Source: Intermark Relocation

AEBRUS.RU 25 ST. PETERSBURG MARKET OVERVIEW Office market

Twelve business centres with leasable area of 94,000 sq m were The completion of Class A business centers led to an increase completed in H1 2021, twice more YoY. Most of the new busi- of vacancy rates up to 4.8% (+0.8 ppt compared to December ness centers are refurbishment projects and located in the cen- 2020). Due to high rental rates and a high amount of supply, de- tral part of the city (87%). More than 100,000 sq m are currently mand shifted to Class B, which led to a vacancy rate decrease at the final stage of construction, which are announced to be in this segment to 9.6% (-1.1 ppt compared to December 2020). completed by the end of the year. Average asking rental rate in Class A office centers has not In the St. Petersburg office market, there is a stable trend to- changed at 1,914 roubles per sq m including VAT and OPEX. In wards a recovery in demand: the take-up is 48% more YoY. Class B office centers, the average asking rental rates increased by 2.1% to 1,338 roubles per sq m, due to new buildings complet- Since the end of 2020, the amount of vacant space in St. Peters- ed in 2021. (47 ) burg business centers has declined by 0.5 ppt to 7.9%.

47 RENTAL RATES AND VACANCY RATE IN THE ST. PETERSBURG OFFICE MARKET

RUB/sq m/month

2 000 40%

1 800 35% 1 600 30% 1 400 25% 1 200

1 000 20%

800 15% 600 10% 400 5% 200

0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 Q2 2021

Average rent, Class A Average rent, Class B Vacancy rate, Class A Vacancy rate, Class B

Source: JLL

8% 6,9% 7%

6% 5,7%

5% 4,6%

4% 3,9% 3% 3,4%

262% AEB REAL ESTATE MONITOR | 3/2021 1%

0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q2 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2021

15,1% 15 % 14,8% 12,0% 12,8% 9,9% 12,9% 11,4% 11,4% 10,8% 11,4% 10,8% 10,4% 12 % 11,6% 10,9% 10,4% 10,4% 8,7% 9% 9,4% 8,1% 8,5% 9,3% 7,8% 8,0% 7,7% 7,5% 7,2%

6% 5,5% 5,4% 5,4% 5,3% 4,9% 4,7% 3,9% 4,0% 3,9% 3,2% 3,3% 3,2% 3%

0% Q2 201 8 Q3 201 8 Q4 201 8 Q1 201 9 Q2 201 9 Q3 201 9 Q4 201 9 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021

Nevsky Ave., main part Average for St. Petersburg Staro-Nevsky Ave.

s m

500

400

300

200

100

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F

Completions Future completions RUB/sq m/month

2 000 40%

1 800 35% 1 600 30% 1 400 25% 1 200

1 000 20%

800 15% 600 10% 400 5% 200

0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 Q2 2021

Average rent, Class A Average rent, Class B Vacancy rate, Class A Vacancy rate, Class B ST. PETERSBURG MARKET OVERVIEW

Street8% retail market 6,9% In 2021,7% positive dynamics was observed on the St. Petersburg The dynamics of rental rates is different. There are no changes

street retail6% market. The vacancy5,7% rate has declined since Q3 on Nevsky Avenue yet, and the maximum rates reach 2020 and the asking rental rates are gradually returning to the RUB 10,000/sq m/month, which is still significantly lower 5% 4,6% pre-crisis level. than one year ago. At the same time, rents continue to de- 4% crease only on Sadovaya Street, and the vacancy rate there 3,9% By the 3%end of the first half of 2021, the vacancy rate amounted has increased to 18.4%, which is the maximum3,4% value for this to 10.8%, 2.1 ppt lower than the peak value of 2020. The choice location. (48 ) of the high-quality2% premises with an area of 100 sq m with show- cases and1% a separate entrance is reduced, as well as the terms of their exposition. 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q2 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2021 48 VACANCY RATE DYNAMICS ON NEVSKY AVE. COMPARED TO THE AVERAGE

15,1% 15 % 14,8% 12,0% 12,8% 9,9% 12,9% 11,4% 11,4% 10,8% 11,4% 10,8% 10,4% 12 % 11,6% 10,9% 10,4% 10,4% 8,7% 9% 9,4% 8,1% 8,5% 9,3% 7,8% 8,0% 7,7% 7,5% 7,2%

6% 5,5% 5,4% 5,4% 5,3% 4,9% 4,7% 3,9% 4,0% 3,9% 3,2% 3,3% 3,2% 3%

0% Q2 201 8 Q3 201 8 Q4 201 8 Q1 201 9 Q2 201 9 Q3 201 9 Q4 201 9 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021

Nevsky Ave., main part Average for St. Petersburg Staro-Nevsky Ave.

Source: JLL s m

500 Retail market 400 In the last 6 months, no new quality shopping centres were By the end of H1 2021, rental rates did not change, and the opened in St.300 Petersburg. Two shopping centers were com- prime rents were RUB 60,000/sq m/year, excluding VAT and pleted but have not yet been opened. OPEX. There is a minimum discount for both current and new

200 tenants in the key shopping centers. (49 ) At the end of June 2021, the vacancy rate reached 4.6%, 1.2

ppt more than100 at the end of December 2020. The main reason of the growth of vacancy in shopping centers was the optimi-

zation by retailers0 of their offline chain stores. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F

Completions Future completions

AEBRUS.RU 27 RUB/sq m/month RUB/sq m/month 2 500 40,0% 2 000 40%

1 800 35,0%35% 2 1000 600 30,0%30% 1 400 25,0%25% 1 5001 200

1 000 20,0%20%

1 000800 15,0%15% 600 10% 400 10,0% 500 5% 200 5,0% 0 0% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 Q2 20210,0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Average rent, Class A Average rent, Class B Vacancy rate, Class A Vacancy rate, Class B Average rent, Class A Average rent, Class B Vacancy rate, Class A Vacancy rate, Class B

7% 49 VACANCY RATE IN ST. PETERSBURG SHOPPING CENTRES 6% 8% 5% 6,9% 7% 4% 6% 5,7% 3% 5% 4,6% 2% 4% 3,9% 1% 3% 3,4%

0% 2% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 1%

0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q2 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 152020,1% 2021 15 % 14,8% 12,0% Source: JLL 12,9% 11 ,4% 11,4% 12 % 15,1% 15 % 14,8% 11 ,6% 121,00%,9% 12,8% 9,9% 12,9% 11,4% 11,4% 10,8% Warehouse market 10,4% 10,4% 11,4% 10,8% 8,7% 10,4% 12 % 9% 9,4% 8,0% 8,1% 8,5% 11,6% 9,3% 7,5% 7,8% 7,7% 10,9% In H1 2021, only 40,000 sq m of warehouses7,2% were completed, all The main demand is represented by companies in the e-com- 10,4% 10,4% 8,7% 9% of6% them were occupied at the stage of construction. Developers merce segment.9,4% By the end of H1 2021, these companies in- 5,5% 8,1% 85,5,4%% 9,35%,4% 5,3% 7,8% 8,0% 7,74%,9% sped7,5 %up the construction7,2 of% new projects and in 20224, 7we% will see creased their share in the take-up to a record 35%. In addition to 3,9% 4,0% 3,9% 6% a significant increase in supply.3,2% 3,3% 3,2% e-commerce, there is a consistently high demand from retailers 3% 5,5% 5,4% 5,4% 5,3% 4,9% 4,7% to open dark stores and from manufacturing companies. 3,9% 4,0% 3,9% By the end of the first3,2% half3, 3of% 32021,,2% the vacancy rate declined 3% to0% 1.7%, reaching the lowest level in the last seven years. At the The growth of construction costs leads to a gradual increase in same time,Q2 20 there18 isQ the3 20 greatest18 Q4 shortage2018 Q of1 20space19 inQ the2 20 north19 Q3 rental2019 rates.Q4 20 For19 six months,Q1 2020 theQ average2 2020 ratesQ3 202 increased0 Q4 202 by0 5% in 0% of the city: only 1.2% of the existingNe vskwarehousesy Ave., main are part vacant,Average and for SClasst. Pet erAs andburg nowS tamountaro - Nevsk toy RUBAve. 4,300/sq m/year (triple net). Q2 201 8 Q3 201 8 Q4 201 8 Q1 201 9 Q2 201 9 Q3 201 9 Q4 201 9 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 more than a half of under construction projects have already (50 ) Nevsky Ave., main part Average for St. Petersburg Staro-Nevsky Ave. been occupied.

50 COMPLETIONS IN THE ST. PETERSBURG WAREHOUSE MARKET s m

000 sq m 500

500 400

400 300

300 200

200 100

100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F

0 Completions Future completions 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F

Completions Future completions Source: JLL

28 AEB REAL ESTATE MONITOR | 3/2021 MEDINA DIETZ

Managing Director, Russia & CIS, Valartis Group

STAFFING OR OUTSOURCING: HOW TO FIND THE RIGHT BALANCE WHEN WORKING IN THE PREMIUM REAL ESTATE MARKET

When starting our business in Russia, we believed that we • purchase and sale of real estate objects (from greenfield- didn’t need many employees — just a manager and an assistant level projects to ready-made properties purchased for to resolve administrative tasks. We outsourced all special reconstruction); matters, except for strategic decision-making. When choosing • external fund raising (bank financing with all types of outside consultants, we put a premium on their reputation and collateral standard for such transactions) and structuring professionalism. However, even a careful choice of consultants of investors´ financing to ensure the agreed priority of did not guarantee great results. repayments to creditors from the project’s revenue; • a full cycle of urban development in relation to commercial Soon we realized that to use external resources in the best way and residential real estate; possible, we needed an in-house expert review at all stages — • business administration from a corporate standpoint from setting a task to evaluating solutions proposed for this task. and building up business processes so that shareholders We have been improving this model for more than 15 years. can effectively oversee the manager, as well as starting, Now we have in-house specialists in all of our and our clients’ improving, and running rental business; core business areas. They can communicate at an adequate • all aspects of management, business, and tax accounting; professional level with our consultants’ partners and outside • current legal support. experts on any special issues that face us or our clients. This allows us to guarantee high-quality management both to During the 25 years that Valartis has been managing its clients’ our long-term partners and clients (EPH European Property portfolios and independently investing in joint projects, we Holdings and ENR Russia Invest funds) as well as to clients who have developed an in-house expert review in the following turn to us when in a desperate situation. areas: • structuring relationships with partners within the framework This, for example, happened to a Swiss manager of an of joint projects; international fund. Early in 2018, the fund’s management

AEBRUS.RU 29 HOT TOPIC

suddenly found out that they needed to come to Russia to tax and operating expenses. I can say with all modesty that the accept premises from a developer in a newly commissioned experience gained by our client and the developer thanks to building in Moscow. The fund had neither an office nor our activity in that project was unique for both of them. This a representative in Russia. Their investment contracts fact alone is worth a lot! (correspondence on execution of the contracts) were attended by a respected international law firm. Quite predictably, the This situation revealed what we consider to be our key skills as firm gave no advice on the possible best tactics for negotiating compared to narrowly focused business management, legal, or with the developer, not least because the client could not set financial consultants. the appropriate task for them. We put ourselves in our clients’ shoes and help them formulate The client turned to us 10 days before the deadline set by the an objective based on a full range of available options, even if developer for acceptance of the premises. We managed both our client is reluctant to believe in them. to move up the date as well as to carry out a full inspection of the premises with a detailed list of identified issues. Thus, I do not consider it a mistake that at one point we stopped strengthening our specialization in legal or financial Knowledge of the developers’ specific activities allowed us consulting. We can always perform any highly specialized task to intelligently justify the client’s position and find arguments in house, especially when there is not enough time to attract which convinced the developer to agree to transfer the outside consultants, but we focus our business so that each premises after closure of all the comments. The steps we customer has an opportunity to evaluate all aspects of each took to conduct negotiations with the developer and arrange solution and we develop a comprehensive recommendation acceptance of the premises saved the client about 100 million based on the experience of all our departments. roubles (property tax and operating expenses since he did not have to pay costs for maintaining premises that failed As a result, having started our business in Russia with the to meet the quality requirements). And to think that initially idea of a representative office, we have worked our way from the client had no idea about such a possibility. Everything he rejecting it by creating separate in-house expert review areas wanted, based on the recommendations of legal consultants, to accepting it updated with a balanced staff of high performers was limited to representation of his interests in Russia when who are on the same wavelength and have solid experience signing transfer acts and opening accounts to pay property with completed projects.

30 AEB REAL ESTATE MONITOR | 3/2021 ILYA LOKHANIN

Lawyer, Rödl & Partner

REGISTRATION OF REAL ESTATE IN RUSSIA: AN OVERVIEW OF THE CHANGES IN Q2 OF 2021

Most of the provisions of Federal Legal Act No. 120-FZ of not establish an easement; heirs of the owner of destroyed real 30 April 2021 (“Act No. 120-FZ”, “Legal Act”) took effect on estate; possessors of land granted to them for inheritable life- 30 April 2021; among other things, this Legal Act amended long or permanent (perpetual) use; and notaries. The Legal Act the legal rules for state registration of immovable property. imposes certain conditions for cadastral registration and state Many novelties concerned the procedure for the rendering registration on the application from each of these categories of electronic services regarding real estate, provision of of persons. information from the Unified State Register of Real Estate (“EGRN”), etc. Moreover, the Legal Act regulates state registration of the transfer of the title to real estate in situations where the selling Firstly, Act No. 120-FZ expanded the list of valid reasons for entity has been liquidated or de-registered from the Unified state cadastral registration and/or state registration of rights. In State Register of Legal Entities (“EGRUL”). Under the new particular, this list now includes decisions of arbitration courts rules, the buyer is required in such situations to submit the under which writs of execution have been issued, together with application for registration together with an EGRUL extract such writs of execution, an approved area layout plan produced confirming de-registration of that legal entity and documents as a deliverable of cadastral survey work, a technical plan and confirming proper discharge by the parties of their obligations an inspection report (in case of discontinuation of real estate to pay the contract price in full and to transfer the real estate. rights or due to discontinuation of the real estate concerned). The Legal Act introduced one more situation where cadastral If real estate is acquired in shared common ownership, all parties registration may take place without state registration: This is the purchasing such real estate must jointly apply for state cadastral situation where the rights holder has chosen a certain permitted registration and state registration of the associated rights. type of use of their real estate. Furthermore, Act No. 120-FZ includes certain provisions Moreover, Act No. 120-FZ has expanded the list of persons who regarding registration of real estate in construction. In may apply for simultaneous cadastral registration and state particular, the Legal Act says that the expired tenancy contract registration of real estate. This list now includes persons using for a land parcel, or the expired term of free use of a land parcel land under an easement or under some other right that does made available for the construction of real estate is not a

AEBRUS.RU 31 HOT TOPIC

valid reason to suspend state cadastral registration and state enabling provision of EGRN information, and on use of such registration of the rights to the real estate created on such land websites, software, and applications by their creators, whether parcel where the construction permit was valid as of the day of individuals, organizations or other, to provide information submission of the documentation package. from the EGRN register to interested parties. Thus, the Legal Act has prohibited resale of the EGRN information, with an Moreover, beginning on 28 October 2021, the Legal Act intent, according to the Service, to protect the public from cancels the requirement to attach the project design margin-business activities of some organizations and spoof documents to the technical plan of a capital structure/ websites. permanent building for the purposes of its state cadastral registration and registration of rights. Beginning on the In addition, the Legal Act expands the possibilities for above day, it will suffice to include in the technical plan the electronic interaction of applicants with Rosreestr. Beginning information about the project design documents to the on 1 January 2023, it will be possible in particular to submit extent required for such technical plans. certain applications directly from the applicant’s personal account on the Service’s website without using the rights Some other amendments concern the authority of the Federal holder’s enhanced qualified electronic signature. Such Service for State Registration, Cadastre and Cartography applications include: (“Rosreestr”, “Service”) and the procedure for provision of • application for state cadastral registration due to a change in EGRN information. In particular, the register data can now be the basic information about the real estate; obtained from a certain agency subordinate to the Service — • application for state cadastral registration and state the Federal State Treasury-Financed Institution called registration of the title to the created or reconstructed Rosreestr Federal Cadastral Chamber (“Rosreestr FKP”). private residential structure or garden cottage; According to Act No. 120-FZ, Rosreestr itself is no longer • application for state cadastral registration and state responsible for provision of such information to applicants. A registration of rights in case of division of a land parcel into similar approach has been employed in respect to the earlier two or more separate land parcels, or in case of emergence authority of the Service to accept applications for registration of a single land parcel resulting from a merger with other of real estate and the accompanying hardcopy documents land parcels; submitted by the applicants in person: Now documents for • other applications. state registration can only be submitted in person to Rosreestr FKP or to a multifunctional service centre (MFC). The hardcopy Act No. 120-FZ also says that documents submitted to documents justifying the registration must be submitted in Rosreestr must be stored as electronic images, and the originals the original, one each, and the decisions of authorities and of these documents must be returned to the applicant with a court decisions – as authenticated copies of the documents, mention that the documents have been scanned for electronic one each. Moreover, the MFCs can now issue EGRN extracts storage. confirming the transfer of the title to real estate. At the same time, Act No. 120-FZ states that the EGRN information is Furthermore, the Legal Act has introduced several other accurate (valid) as of the day on which the EGRN extract is amendments to the Federal Legal Act: On State Registration signed by the registration authority or by the MFC, regardless of Real Estate and to some other Russian regulatory legal acts. of the extract issuance method. Thus, Act No. 120-FZ has introduced a significant number of novelties concerning state registration and cadastral Furthermore, the Legal Act introduced a ban on the creation registration of real estate, which amendments should be taken of any websites (other than the official websites of Rosreestr into account by all those who apply for registration and perform and FKP Rosreestr), software, and mobile applications other registration-related actions with real estate in Russia.

32 AEB REAL ESTATE MONITOR | 3/2021 CONTENTS

Introduction Letter from the Chief Executive Officer 01 Letter from the Chairperson of the AEB Real Estate Committee 02

Moscow market overview Capital market 03 Retail market 06 Office market 10 Warehouse market 13 Hospitality market 18 Housing market 23

St. Petersburg market overview Office market 26 Street retail market 27 Retail market 27 Warehouse market 28

Hot topics Staffing or outsourcing: how to find the right balance when working in the premium real estate market 29 Registration of real estate in Russia: an overview of the changes in Q2 of 2021 32

The opinions and comments expressed here are those of the authors and do not taken to prepare it, the AEB accepts no responsibility for any errors it may contain, necessarily reflect those of the Association of European Businesses. whether caused by negligence or otherwise, or for any loss, however caused, The information in this publication is not exhaustive and does not represent a sustained by any person that relies on it. [The information in this publication professional consultation on related matters. While all reasonable care has been should not be used as a substitute for consultation with professional advisers.]