Real Estate Monitor 4/2019

4/2019 REAL ESTATE MONITOR Magazine of the Association of European Businesses

CAPITAL · OFFICE · RETAIL · WAREHOUSE · HOSPITALITY · HOUSING 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 27 Retail market 27 Street retail market 28 Warehouse market 29

Publication name/ Published by/Учредитель: Chief Editor/ Release date/Дата выхода: Publisher’s address/ Наименование издания: Non-profit making partner- Главный редактор: 15 December 2019/ Адрес издателя, редакции: AEB Real Estate Monitor ship “Association of Y.S. Melnikova/Мельникова Ю.С. 15 декабря 2019 года 16, bld. 3, Krasnoproletars- (“АССОЦИАЦИЯ European Businesses”/ Publication volume and Cost/Цена: Distributed free kaya str., 127473, Moscow, ЕВРОПЕЙСКОГО БИЗНЕСА: Некоммерческое партнерство number/Номер выпуска: of charge/Бесплатно Russia/ Россия, 127473, Обозрение рынка “АССОЦИАЦИЯ 04, 2019 г. Москва, ул. Краснопроле- недвижимости”) ЕВРОПЕЙСКОГО БИЗНЕСА” тарская, д. 16, стр. 3

The “AEB Real Estate Monitor” is registered with The Federal Service for The information in this publication is not exhaustive. While all reasonable care Supervision of Legislation in Mass Communications and Protection of Cultural has been taken to prepare it, the Association of European Businesses accepts Heritage, Certificate registration ПИ № ФС77-24458/ СМИ “АССОЦИАЦИЯ no responsibility for any errors it may contain, whether caused by negligence ЕВРОПЕЙСКОГО БИЗНЕСА: Обозрение рынка недвижимости” or otherwise, or for any loss, however caused, sustained by any person that зарегистрировано в Федеральной службе по надзору за соблюдением relies on it/ Информация в данном издании не является исчерпывающей. законодательства в сфере массовых коммуникаций и охране культурного Несмотря на то, что были предприняты все меры предосторожности при ее наследия. Свидетельство о регистрации ПИ № ФС77-24458 от 23 мая 2006 подготовке, Ассоциация европейского бизнеса не несет ответственности за The opinions and comments expressed here are those of the authors and do наличие возможных ошибок, допущенных по невнимательности или другим not necessarily reflect those of the Non-profit making partnership “Association причинам, а также за любой вред, понесенный любым лицом, которое будет of European Businesses”/Мнения/комментарии авторов могут не совпадать руководствоваться данной информацией. с мнениями/комментариями учредителя публикации, Некоммерческого партнерства «АССОЦИАЦИЯ ЕВРОПЕЙСКОГО БИЗНЕСА» Introduction AEB Real Estate Monitor | 4/2019

Dear readers,

Let me kindly present the fourth issue of the “Real Estate Monitor” in 2019. It contains data on the Moscow and St. Petersburg real estate markets for the third quarter of the current year.

At the capital market we see a dramatic growth of investment volume, with the Moscow share drastically increased and the St. Petersburg share sharply declined.

Frank Schauff Among major trends in retail sector is the rise in the number of international brands Chief Executive Officer, which entered the Russian market. Association of European Businesses As for the office part, it traditionally reviews office take-up, asking rents and key new projects.

The warehouse market is marked by low share of speculative construction, and a high rate of take-up in regions.

Comparison of average daily rates and occupancy dynamics at the Moscow hotels for the period of 2018-2019 is provided in the hospitality part.

Finally, the housing market section comprises data on supply, demand, budget rates, and tenants’ profile.

As usual, the St. Petersburg part traditionally covers average rents in the office market, vacancy rate in shopping centres, and volume of the warehouse market completions.

I express genuine gratitude to members of the AEB Real Estate Committee for their activities. Valuable inputs provided for “Real Estate Monitors” on a quarterly basis are so much appreciated.

Dear readers, as we are embracing 2020, I would like to wish everyone a Happy New Year! The coming year is remarkable for us, as the AEB will celebrate its 25th anniversary. Various tasks have already been accomplished due to enormous efforts and ongoing support rendered by member companies, and I hope that a myriad of other fruitful outcomes will be delivered in the future.

AEB Real Estate Monitor | 4/2019 1 AEB Real Estate Monitor | 4/2019 Introduction

Dear readers,

The proportion of Generation Z in the market is growing. They are also technology- savvy, which means they will demand the increased use of high tech solutions in all real estate process, whether related to buying or selling an asset, or investing.

Generation Z’s digital-native expectations are driving companies to innovate faster and compete on a digital rather than a physical landscape.

Tatjana Kovalenko The biggest trends of last year were AI, IoT and big data. Smart homes and smart Chairperson of the AEB offices are now a reality, and only becoming more advanced in their capabilities. This Real Estate Committee, leads to changes in urban development as well. Deputy General Director, SENDLER & COMPANY In 2019, transformation to the new era of stagnation 2.0 is finished in Russia. Slow growth, redundant regulation, permanent lawmaking and campaigns to stimulate development manually are the main characteristics of the new cycle.

The investment market is showing its first signs of revival. In addition, the Russian market is now more focused on internal investments. The net outflow of foreign capital is low, with only EUR 67 million leaving Russia in 9 months. Construction and real estate are still in the credit compression stage.

Generation Z cares about their health, especially mental health, and is more stress- sensitive than previous generations. This emotional fragility affects their patterns.

This stimulates developers to show an increasing interest in rethinking concepts and extending existing properties in all real estate sectors. For example, lower consumer activity stimulates retailers to search for new sales channels, diversify formats, introduce new technologies and collaborate with other market players.

Since 1995, when Amazon shipped its first book out of a garage in Seattle, consumers have grown to embrace the “e-tail” lifestyle. In particular, millennials and generation Z are driving demand for goods and services to be delivered to their doorstep.

This trend is not expected to stop, and e-retailers are quickly snapping up industrial-use buildings and land to be as close as possible to the consumer base they need to serve.

To stay as close to their target markets as possible, e-retailers are also opening warehouses in urban locations and taking advantage of these densely populated areas’ built-in employee bases. We see such trends in Russia as well, where OZON, Wildberries, Lamoda and many other are continuing to develop their warehouses throughout Russia to be closer to their consumers.

Please enjoy the following, and we’re looking forward to welcoming you at our Committee meetings and events!

2 AEB Real Estate Monitor | 4/2019 Moscow market overview | Capital market AEB Real Estate Monitor | 4/2019 Russia real estate investment market | Q1 2019

Russia real Russiaestate real investment estate investment market |market Q1 2019 | Q1 2019 RMoscowussia r marketeal es overviewtate RussiRinussivae sratmeal reale net se tmsatataertkeet iCapitalnves market,tme nQ3t 2019market inve• In Qs1 2019,tm the investmeent nvolumet inc remased by 32a% YroY tok USD979emt, the indicator reached its highest level for the last three years. • In Q1-Q3 2019, the investment volume increased by deals closed in other regions (outside Moscow and St. Pe- 36%• The sigYoYnifi ctoan tUSD inves tme2.5n billion,t volume Q3incr e2019ase at volumethe beginn reacheding of the yUSDear c an btersburg)e explained baccountedy a few large tforransa 9%.ctio ns which were postponed from • In Q1 2019,• I2018n t heQ1 i2019,tnov 2019.estme the nintv veosltmeument ivncolrumeeased inc breyas 32ed% b YyoY 32 %to Y USD979oY to USD979m, them ,i tndhei catindoicatr roera rcheeached itds ihtsig hheighests lte lveevel lf oforr t thhee lalast thrreeee y yeeaars.rs. 873 million, up 60% from Q3 2018 figure. • Prime yields compressed by 25 bps in all sectors in Q3 2019. • The signifi••c TheaThent sigionffivneceifistmec saecnttn ointr v voccupeosltmeumeinedt i ncv tohelrumee laseadie inc antgr e tpohasesitie be aont gith nnien beQing1gi 2019, nnof ingthe a o cyfc etouhearn yctieanarng fbcoaern 39e bxpe% laie oxpfned tlaihened btoyt albay fv eaow lfumee wla rlag. reRge etsir tansaderansantialcctiti o(laonsnsnd ww phloichts fworee rree sip pdeoostpnstptialono edned fr omfrom 2018 to 2019.• 2018dTheev e lt opmeooffice 2019.nt) asectornd retail occupiedfollowed, wit theh 27 leading% and 22 %position respecti vinely . Q1-Q3 As benchmarks for the market we consider Moscow prime • The office•2019,• s TheTheect o osrffih accountingoccupacere soecf St.itedor P occuptehete r forlsbeiadiedu r32%g tn hergem poleai adiofsitine ndontheg hpo igin hsititotal ,Q aon1t 232019, involume.% Q o1f 2019,athcecou c o Residentialanucntictnourgyn’ sfti ovnro glu39 fmeo%r 39 oinf% yieldsQt heo1f 2019 ttheo tbetween alt ov tevalors lvuumeos l22ume 8.5-10.0%.% R .fe oRsire dethsideen ftialnutialll for y(la e(laar ndofficesnd 2018 ppllo.ts The ffoandr r Mos rre esishoppingsidecdeonwntial stialh ar ecentres, in and development) and retail followed, with 27% and 22% respectively. developme(landntut)r na,n iplotsncd reastail fored f ot oresidentialll o77w%e d,in witQ1 h2019 development)27% fr anomd 66 22%% in r e2018. sandpec tiNoretailve plyu.b lifollowed,cly announ ced 10.5-12.0%deals closed in forothe warehouses;r regions (outsi St.de MPetersburgoscow and St.prime Pete ryieldssburg). at 9.0- • The share of St. Petersburg remained high, at 23% of the country’s volume in Q1 2019 versus 22% for the full year 2018. The Moscow share, in • The sharewith• o Thef St. s30% Ptreentegr thsbandeunirng 21%g r emof taihe respectively.ne roubd hlige han, da tr educ23%ti oonf th ofe i ncfloautinotnary’rsy vporluessumere isn m Qa1y 2019po11.0%ten tiallyve rsforu alls o22officesw% the fo Br ank thande offu Rullshopping yssiaear t2018o cu tcentres .t heThe ke Mosy ratandceo t whis10.75-12.5% s yheaarre. ,Th ina t for turn, increastwuedronul, tdionc dec 77reas%reed asine tQ oth 177e 2019 c%o sint o Qffr1 omb 2019an k66 fi fn%raom ncin i2018.66ng.% in No2018. pu bNolic plyu banlicnouly annnoucedn dcedeals de calslos cedlos edin oint heother rre rgieongions s(ou (outsitsidede MMooscow aandnd St. St. P Peteetresrbusburg)r.g). • The share of Moscow increased to 74% in Q1-Q3 2019 warehouses. Following the key rate cuts by the Central Bank of • The stren•g• th TheWeeni sfontrrgene cogafths tthe ethnie rn oub2019g of lte hei nav nreoubdst rmeeduclen atn vtidoon lureducme of aitinton flUa SotiD3fo inan.5flbnaryti. opnarerssuy pressus mreasy mpoayte pontiallytentially allo allwo twhe the Bank Bank of of Ru Russiassia t too cucutt the keeyy r ratatee t histhis y eyaera. Thr. That at would deccomparedrweasouled th dece cre otoasste o63% thf bea cno kins tfi onQ1-Q3f abncanikn gfi .n2018.ancing .The share of St. Peters- Russia, the cost of bank financing will continue to decline. • We foreca•burgs Wt teh fe o decreasedr2019ecast itnhvee 2019st meto inn18%tv evsotlume meofnt thevaot luU meScountry’sD3 a.t5 UbnSD3. . 5volumebn. in Q1-Q3 • We forecast the 2019 investment volume at USD 3.5 bil- 2019 from 28% in the same period of 2018. The share of lion. (1–9 ) Russian real GDP growth Sovereign bond yields RussianR russianeal GDP real g rGoDPwt ghrowth SoSvoevrerigneign bon bondd yi yieeldldss 19% RUSSIA REAL GDP GROWTH 2 6%SOVEREIGN BOND YIELDS 6% 9% 9% 6% 6% 3% 4% 6% 6% 0% 3% 3% 4% 4% -3% 2% 0% 0% -6% -3% -3% -9% 2% 2% -6% -6% 0%

-9% -9% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F Dec–18 Dec–16 Dec–17 Jun–18 Jun–17 Mar–17 0% Mar–18 Mar–19 Jun–19 Sep–19 0% Sep–16 Sep–17 Sep–18 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009 Source:2010 Rosstat,2011 Oxford2012 Economics2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2019F 2020F 2021F 2022F Russia 23 10 year U.S. Treasury Dec–18 Dec–16 Dec–17 Jun–18 Jun–17 Mar–17 Mar–18 Mar–19 Jun–19 Sep–19 Sep–16 Sep–17 Sep–18 Dec–18 Dec–16 Dec–17 Jun–18 Jun–17 Mar–17 Mar–18 Mar–19 Jun–19 Sep–19 Sep–16 Sep–17 Sep–18 Source: Rosstat, Oxford Economics Source: Bloomberg Source: Rosstat,Source: Oxford Rosstat, Economics Oxford Economics RussiRussia 23a 23 101 0y eyearar U U.S.S.. TTrreasurryy Exchange rate dynamics, USD/RUB Source:Source:Source: Bloomberg Bloomberg Bloomberg

3 EXCHANGE RATE DYNAMICS, USD/RUB ExchangEexch rataneg dey rnataem diycns,a mUSDics,/R USDUB/RUB

80 80

70 70

60 60 50 Jul–19 Jul–16 Jul–17 Apr–16 Apr–17 Apr–18 Jul–18 Apr–19 Oct–19 Oct–18 Oct–16 Oct–17 Jan–19 Jan–18 50 50 Jan–16 Jan–17

Source: Central Bank of Russia Jul–19 Jul–16 Jul–17 Jul–19 Apr–16 Apr–17 Apr–18 Jul–18 Jul–16 Jul–17 Apr–16 Apr–17 Apr–18 Jul–18 Apr–19 Oct–19 Apr–19 Oct–19 Oct–18 Oct–16 Oct–17 Jan–19 Jan–18 Jan–16 Jan–17 Oct–18 Oct–16 Oct–17 Jan–19 Jan–18 Source:Jan–16 Central Bank of Russia Jan–17

AEB Real Estate Monitor | 3/2019 3 Source: CentralSource: Bank Centralof Russia Bank of Russia AEB Real Estate Monitor | 4/2019 Moscow market overview | Capital market Investors by source of capital Russia investment volume dynamics* 4 RUSSIA INVESTMENT VOLUME DYNAMICS* 2% 1% USD m 36% 7% 3% 2 526 8% 1 875 60% 8% 873 Q1-Q3 2018 Q1-Q3 2019 547 15%

74% % Q3 2018 Q3 2019 Q1-Q3 2018 Q1-Q3 2019 87

*Investment deals excluding deals with land plots, joint ventures, sales Russia France Kyrgystan USA/Czech Republic of residential real estate to end-users. Czech Republic Austria Azerbaijan

Source: JLL Prime yields, Q1 2019 InvesItnmvesntto vros lbuym seo ubrrceea kodfocwapni tbayl sector Russia investment volume dynamics* 5 INVESTORS BY SOURCE OF CAPITAL Moscow

2018 % Q1-Q3 2 e 27% Oﬃce c 1% USD m 36% 7% 3% % 31% min max 2019 8

2 526 Q1-Q3 1 875 Shopping 2018 60% Q1-Q3 8% 26% centre ail t

873 e

R min max Q1-Q3 2018 21% Q1-Q3 2019 2019 547 15Q1-Q3 % Warehouse 2018 Q1-Q3 3% min max ed-use 74% % Q3 2018 Q3 2019 Q1-Q3 2018 Q1-Q3 2019 1% 87 Mi x 2019 Q1-Q3

*Investment deals excluding deals with land plots, joint ventures, sales Russia France Kyrgystan USA/Czech Republic of residential real estate to end-users. 2018 St. Petersburg Q1-Q3 2%

el Czech Republic Austria Azerbaijan t

H o 8% Source: JLL Oﬃce 2019 Q1-Q3 Prime yields, Q1 2019 Investment volume breakdown by sector min max 2018 Q1-Q3 Moscow 29% Shopping 30% esidential 2018

Q1-Q3 centre e 2019 27% R

Q1-Q3 Oﬃce c min max 314 % min max AEB Real Estate Monitor | 3/2019 2019 Q1-Q3 2018

Q1-Q3 14% Warehouse

trial Shopping 2018 Q1-Q3 26% centre ail 8% min max t Indu s 2019 e Q1-Q3 R 21% min max 2019 Q1-Q3 Warehouse 2018 Q1-Q3 3% Investment volume breakdown by region Investments by deal size (volume, USD m) min max ed-use 1% Mi x

2019 73% Q1-Q3 32.8%

63% 27.5% 27.3% % 2018 St. Petersburg 26.0 Q1-Q3 2% 24.9% el 22.7% t 28%

H o 8% Oﬃce 12.4% 12.3% 14.2% 2019 Q1-Q3 18% min 9% 9%max 2018 Q1-Q3 29% 0% Shopping Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 30% Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 esidential centre 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2019 R Q1-Q3 Moscow min St. Petersburg Regions max < 20 21-50 51-100 101-300 > 300 2018

Q1-Q3 14% Contacts: Warehouse trial

8% Olesya Dzuba min Ksenia Zenkina max +7 (495) 737 8000 Indu s 2019

Q1-Q3 [email protected] [email protected] www.jll.ru

Investment volume breakdown by region Investments by deal size (volume, USD m)

73% 32.8%

63% 27.5% 27.3% 26.0% 24.9% 22.7% 28% 12.4% 12.3% 14.2% 18% 9% 9%

0% Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Moscow St. Petersburg Regions < 20 21-50 51-100 101-300 > 300 Contacts:

Olesya Dzuba Ksenia Zenkina +7 (495) 737 8000 [email protected] [email protected] www.jll.ru Investors by source of capital Investors by source of capital Russia investment volume dynamics* InveInstvoersst obrys sboyu sroceu rocfec oafp citaaplital RRuussssiiaa iinnvvestment volume dynammiiccss** 2% Russia investment volume dynamics* 1% USD m 36% % 2% 3% 7 1% 2% 2% USD m 36% 1% 3% 8% USD m 36% 2 526 7% 1% 3% USD m 362 %526 7% 7% 8% 3% 1 8752 5262 526 8% 8% 60% 1 875 8% 60% 873 1 875 % 60% 88% 60873% 8% Q1-Q3 2018 Q1-Q3 2019 547 873 15% Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 547547 15% Q1-Q3 2018 Q1-Q3 2019 547 15%15% 74% % Q3 2018 Q3 2019 Q1-Q3 2018 Q1-Q3 2019 87 Moscow market overview | Capital market 74% AEB Real Estate Monitor | 4/2019% Q3 2018 Q3 2019 Q1-Q3 2018 Q1-Q3 2019 74% 87 % Q3 2018 Q3 2019 Q1-Q3 2018 Q1-Q3 2019 74% 87 87% *InvestmentQ3 2018 deals excludingQ3 deals 2019 with land plots, joint ventures,Q1-Q3 sales 2018 Q1-Q3 2019 Russia France Kyrgystan USA/Czech Republic of residential real estate to end-users. *Investment deals excluding deals with land plots, joint ventures, sales Russia FranceCzech RepublicKyrgystan AustriaUSA/CzechAzerbaijan Republic *Investment deals excluding deals with land plots, joint ventures, sales Russia France Kyrgystan USA/Czech Republic of residential*Investment real estate deals toexcluding end-users. deals with land plots, joint ventures, sales Russia France Kyrgystan USA/Czech Republic of residential real estate to end-users. Czech Republic Austria Azerbaijan of residential real estate to end-users. Czech Republic Austria Azerbaijan Prime yieldsCzech, Q1 Republic 2019 Austria Azerbaijan Investment volume breakdown by sector 6 INVESTMENT VOLUME BREAKDOWN BY SECTOR 7P rim PRIMEe yie lYIELDS,ds, Q1 2Q30 120199 Investment volume breakdown by sector PrimPrei myie lydise,l dQs1, Q2011 29019 InveInstvmesetnmt evnotl uvmoleu mbree bakredaokwdno wbyn sbeyc tsoerctor Moscow MoscowMoscow 2018

Q1-Q3 Moscow e 27% Oﬃce c 2018 Q1-Q3 e 2018 27% Oﬃce Q1-Q3 c

e % 2018 27% 31

Q1-Q3 Oﬃce c min max e 27% 2019 Oﬃce c Q1-Q3 31% 31% min max 2019

Q1-Q3 31% min max 2019 min max Q1-Q3 Shopping 2019 Q1-Q3 2018 Q1-Q3 26% centre ail Shopping t e

2018 Shopping

Q1-Q3 % R 26 Shopping 2018 min max

Q1-Q3 % centre ail 21 % 2018 26 t

Q1-Q3 centre ail 26% e 2019 t centre ail Q1-Q3 e R t 21% min max e R 21% min max R min max 2019 21% Q1-Q3 Warehouse 2019 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 3% min WWaraehourehousese max 2018

ed-use Warehouse Q1-Q3

2018 3%

Q1-Q3 1% 2018 3% min max Q1-Q3 Mi x 3%

2019 min max ed-use Q1-Q3 min max ed-use 1% ed-use 1% Mi x

2019 1% Mi x Q1-Q3 2019 Mi x Q1-Q3 2019 Q1-Q3 2018 St. Petersburg Q1-Q3 2% el t

2018 St. Petersburg Q1-Q3 2% H o 2018

el St. Petersburg Q1-Q3 2% 8% 2018 t

el St. Petersburg Q1-Q3 2% Oﬃce t 2019 el Q1-Q3 t H o 8% H o 8% Oﬃce H o

2019 8% Oﬃce

Q1-Q3 min max

2019 Oﬃce Q1-Q3 2019 2018 Q1-Q3 Q1-Q3 29% max minmin max

2018 min Shopping max Q1-Q3

2018 29% Q1-Q3 30% 2018 29% esidential Q1-Q3 29% centre 2019 R

Q1-Q3 Shopping 30% Shopping esidential 30% min centrShoppe ing max esidential 2019 R 30% Q1-Q3 centre esidential 2019 R

Q1-Q3 centre 2019 R

Q1-Q3 min max min min max max 2018

Q1-Q3 14% Warehouse trial 2018

Q1-Q3 14% Warehouse 2018

Q1-Q3 14% Warehouse

2018 % trial 8 min max Q1-Q3 14% Warehouse Indu s trial 2019 Q1-Q3 trial 8% min max

Indu s 8% min max 2019 Q1-Q3 Indu s 8%

2019 min max Q1-Q3 Indu s 2019 Source:Q1-Q3 JLL Source: JLL Investment volume breakdown by region Investments by deal size (volume, USD m) IInnvveessttmmeent volume breakdown bbyy rreeggiioonn IInnvveessttmmeennttss b byy d deeaal ls sizieze ( v(voolulummee, ,U USDSD m m) ) Investmen73t %volume breakdown by region Investments by deal size (volume, USD m) 8 INVESTMENT VOLUME BREAKDOWN BY REGION 9 INVESTMENTS32.8 BY% DEAL SIZE (VOLUME, USD M) 73% 63% 73% 32.8% 27.5% 27.3% 73% 32.8% 26.0% 32.8% 24.9% 63% 27.5% 27.3% 22.7% 63% 28% 26.0% 27.5% 27.3% 63% 26.0% 24.927.5%% 27.3% 12.4% 26.0% 24.9% 22.7% 28% 12.3% 24.9% 22.7% 14.2% 28% 22.7% 28% 18% 12.4% 12.3% 14.2% 12.4% 12.3% 14.2% 18% 9% 9% 12.4% 12.3% % 18% 14.2 18% 9% 9% 0% 9% 9% 9% 9% Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 0% 2018 2019 2018 2019 2018 2019 2018 20190% 2018 2019 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q30% Q1-Q3 2018 Q1-Q3Mosc o2019w Q1-Q3 2018 SQ1-Q3t. Pete 2019rsburg Q1-Q3 2018 Q1-Q3Reg i2019ons Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 2018 Q1-Q3< 2Q1-Q30 2018 Q1-Q321-50Q1-Q3 2018 Q1-Q351-100Q1-Q3 2018 Q1-Q3101-300Q1-Q3 2018 Q1-Q3> 300Q1-Q3 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2018 Q1-Q3 2019 2018 2019 2019 2018 2019 2019 2018 2019 2019 2018 2019 2019 2018 2019 2019 Moscow St. Petersburg Regions 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Moscow St. Petersburg Regions << 2 200 21-5021-50 51-10051-100 101-300101-300 > 300> 300 ConMtoascocwts: St. Petersburg Regions < 20 21-50 51-100 101-300 > 300 Contacts: ConCOlesyaSource:toanct tDzuba aJLLs:ct s: Ksenia Zenkina Source: JLL +7 (495) 737 8000 [email protected] [email protected] www.jll.ru OlesyaOlesya DzubaDzuba Ksenia Zenkina +7+ 7(4 (9459)5 7) 3773 78 0800000 olesyaOlesya.dzuba@e Dzubau.jl l.com kseniaKsenia.zenkin [email protected]. com +w7w (4w9.5jll). r7u37 8000 [email protected]@eu.jll.comu.jll.com [email protected]@ll.ceoum.jll.com www.wjllw.ruw.jll.ru

AEB Real Estate Monitor | 3/2019 5 Moscow shopping centre market | Q1 2019

AEB Real Estate Monitor | 4/2019 Moscow market overview | Retail market Moscow shopping Retail market, Q3 2019

c• Onee shoppingnt centrere Galeon m (14,000a sq mr GLA*)ke enteredt the Russian market which equals the H1 2019 number and the Moscow market in Q3 2019. exceeds the Q3 2018 figure by 38%. • No new schemes have been delivered in Q1 2019. • Some 170,000 sq m of retail space is expected in Q4 • Vacancy rate in Moscow shopping centres in Q3 2019 • The2019. va caOstrovncy ra teMechty in Mo scSCow (65,000shoppin gsq ce nm)tre sis d etheclined largest to 4. 3%amounted in Q1 2019 to, w 4.4%,hich is t0.3he lopptwe shighert level sithannce tinhe the mid previousdle of 2014 . This was a result oamongf low com announcedple ons iprojects.n 2017-2018 In addition,, when o twonly e outletight n ecentresw schem equarter.s (278,00 In0 sgeographicalq m) entered ttermshe mar theket ; highestthe figu rvacancye is half twashe le vel of new shopping candent rseverale delive rcommunityies in 2015 -201and6 neighbourhood. schemes are observed in North-Eastern district (7.1%) due to large • Amoexpectedng ne wto senterchem ethes f omarket.r 2019 are Salaris SEC (105,000 sq m), Oamountstrov M eofc hvacantty SC (6 space5,000 sinq Europolism), Novay SECa Rig (12%)a Outle tand Villa RIOge (38,00 0 sq m) and s•e Ifve allral plannedneighbo uprojectsrhood s hareop pcompleteding centre ins o Q4f A DtheG G 2019roup .new As t he Dmitrovkaresult, tota l SEC new (9%). suppl y Theof 201 next9 wil districtl accou isnt South-Easternfor 315,000 sq m. • Thesupply num willbe rreach of ne w289,000 intern sqo nmal randetai lmoreers d ethanclined two sig ntimesificantl ywith in Q 15.3% 2019 vacancy, with on rate.ly fo uTher br alowestnds en vacancytering th ise Robservedussian m inar ket versus ten in Q1 2018exceed. The the n umb2018e rfigure. of brands that have le the Russian market dtheuri nCentralg the fi rspartt th ofree the m ocitynth (2.3%).s of 2019 equals the number of new ones. • Re• nInternationalts for a retai l retailergallery uactivitynit of 10 has0 sq increased m located in o ncompari a groun-d flo•o Vacancyr in shopp rateing ceis nexpectedtres rem atoin erised st abto le4.9% in Q 1by 201 the9. endPrime of r ent was at RsonUB 195,00 to the0 firstper s q mhalf pe rof ye ar 2019., avera geIn r e nQ3,t a t R11UB 74,00 brands0 p entered er 2019.sq m p (e10–18r year. )

10Sh o SHOPPINGpping ce nCENTREtre su SUPPLYpply** Shopping centre comple ons

3 objects 84k sq m '000 sq m shopping 289 25 objects 127 centres 235k sq m 5.30m sq m 13 objects 263k sq m

36 objects +135% -20% 821k sq m 155 objects 123 34 41 1 711k sq m 25 14 16 objects 2 200k sq m 113 79 105 19 Superregional, Regional, 35–75k sq m GLA Community, above 75k sq m GLA 15–35k sq m GLA 2017 2018 2019F

Speciality, Neighbourhood, Outlet 7.5–25k sq m GLA 5–15k sq m GLA 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

Samara 655 London 3 449 Barnaul 561 Moscow 3 005 Yekaterinburg 542 Paris 2 507 * Hereinafter we refer to gross leasable area (GLA). Krasnodar 519 Birmingham 2 242 Rostov-on-Don 490 Dublin 2 159 Manchester 1 724 6 Orenburg 474 AEB Real Estate Monitor | 4/2019 Tyumen 468 Prague 1 962 Nizhny Novgorod 468 Leeds 1 655 Voronezh 461 Munich 1 832 Moscow 420 Warsaw 1 701 Yaroslavl 414 Lisbon 1 635 Ryazan 410 Hamburg 1 570 St. Petersburg 398 Frankfurt 1 570 Novokuznetsk 382 Brussels 1 472 Ufa 357 Antwerp 1 472 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. • 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 • The vacancy rate in Moscow shopping centres declined to 4.3% in Q1 2019, which is the lowofe lsotw le comvel sipnleceo tnhse i nm 201iddl7e- 2018of 2014, w.h Tenhi so wanlys e aig rhets nueltw schemes (278,000 sq m) entered the market; the figure is half the level of new shopping of low comple ons in 2017-2018, when only eight new schemes (278,000 sq m) entered thece ntmrare kdeetli;v tehreie fis guin r201e is 5h-al201f the6. 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 • Among new schemes for 2019 are Salaris SEC (105,000 sq m), Ostrov Mechty SC (65,000 sqs emve),ra Nlo nvayeigah boRiguar hOoodutle sth Voillappgineg (38,00 centre0s soqf mAD) Gan Gdr oup. As the result, total new supply of 2019 will account for 315,000 sq m. several neighbourhood shopping centres of ADG Group. As the result, total new supply o•f The201 9n uwilmlb aeccor ofu nnetw fo irn 315,00tern o0n saql rmetai. lers declined significantly in Q1 2019, with only four brands entering the Russian market versus ten in Q1 • The number of new intern onal retailers declined significantly in Q1 2019, with only four 2018brand. Thes en tneumbring etrh oe fR burssianadns tmharat kheatv vee lrseu st hten R iunssi Qa1n market during the first three months of 2019 equals the number of new ones. 2018. The number of brands that have le the Russian market during the first three mon•t hRes onft s201 for9 a erqeutaialls gal thlee rnyu umnbite orf o 10f n0e swq omn elosc.ated on a ground floor in shopping centres remained stable in Q1 2019. Prime rent was at • Rents for a retail gallery unit of 100 sq m located on a ground floor in shopping centres remRaUinBe195,00d stab0le p iner Q s1q 201m pe9r. Pryeiarme, a rveenrat gwae rse antt at RUB74,000 per sq m per year. RUB195,000 per sq m per year, average rent at RUB74,000 per sq m per year. Moscow market overview | Retail market AEB Real Estate Monitor | 4/2019 Shopping centre supply** Shopping centre comple ons Shopping centre supply** Shopping centre comple ons 11 SHOPPING3 objects CENTRE COMPLETIONS 84k sq m '000 sq m 3 objects shopping 289 84k sq m '000 sq m shopping 25 objects 289 127 centres 235k sq m 25 objects 127 centres 235k sq m 5.30m sq m 13 objects 5.30m sq m 263k sq m 13 objects 263k sq m 36 objects +135% -20% 821k sq m 36 objects +135% -20% 155 821k sq m 155 34 objects 123 1 711k sq m 41 34 objects 123 25 14 1 711k sq m 41 25 14 16 objects 2 200k sq m 113 79 105 16 objects 2 200k sq m 113 79 105 19 Superregional, Regional, 35–75k sq m GLA Community, above 75k sq m GLA 19 15–35k sq m GLA 2017 2018 2019F Superregional, Regional, 35–75k sq m GLA Community, above 75k sq m GLA 15–35k sq m GLA Sp2017eciality, 2018 Neighbourhoo2019Fd, Outlet 7.5–25k sq m GLA 5–15k sq m GLA Q1 Q2 Q3 Q4 Forecast Speciality, Neighbourhood, Outlet 7.5–25k sq m GLA 5–15k sq m GLA Q1 Q2 Q3 Q4 Forecast

Source: JLL

12Sh o SHOPPINGpping c CENTREentre DENSITY densit INy RUSSIANin Russia CITIESn c es Prime rent: European comparison

Shopping centre density in Russian c es Primesq m/per re n1,000t: E inhabitantsuropean comparison USD/sq m/year sq m/per 1,000 inhabitants USD/sq m/yearSamara 655 London 3 449 Barnaul 561 Moscow 3 005 Samara 655 London 3 449 Yekaterinburg 542 Paris 2 507 Barnaul 561 Moscow 3 005 Krasnodar 519 Birmingham 2 242 Yekaterinburg 542 Paris 2 507 Rostov-on-Don 490 Dublin 2 159 519 Birmingham 2 242 Krasnodar Orenburg 474 Manchester 1 724 Dublin 2 159 Rostov-on-Don 490 Tyumen 468 Prague 1 962 Manchester 1 724 Orenburg 474 Nizhny Novgorod 468 Leeds 1 655 Prague 1 962 Tyumen 468 Voronezh 461 Munich 1 832 468 Leeds 1 655 Nizhny Novgorod Moscow 420 Warsaw 1 701 Munich 1 832 Voronezh 461 Yaroslavl 414 Lisbon 1 635 Warsaw 1 701 Moscow 420 Ryazan 410 Hamburg 1 570 Lisbon 1 635 Yaroslavl 414 St. Petersburg 398 Frankfurt 1 570 Hamburg 1 570 Ryazan 410 Novokuznetsk 382 Brussels 1 472 Frankfurt 1 570 St. Petersburg 398 Ufa 357 Antwerp 1 472 Novokuznetsk 382 Brussels 1 472 Ufa 357 AntwerpSource: JLL 1 472

AEB Real Estate Monitor | 4/2019 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

3 objects 84k sq m '000 sq m shopping 289 25 objects 127 centres 235k sq m 5.30m sq m 13 objects 263k sq m

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

AEB Real Estate Monitor | 4/2019 Moscow market overview | Retail market

Shopping centre density in Russian c es 13P ri mePRIME r eRENT:nt: EEUROPEANuropea COMPARISONn comparison Moscow shopping centre market | Q1 2019 sq m/per 1,000 inhabitants USD/sq m/year

London 3 449 New retailers on the Russian market: Samara 655 entries and exits Availability Barnaul 561 Moscow 3 005 Paris 2 507 Yekaterinburg 542 Moscow shopping centre market | Q1 2019 Overall SC vacancy rate 60 Krasnodar 519 Birmingham 2 242 MoscowNumber of shopping centre market | Q1 2019 interna al 57 1 Dublin 3 Rostov-on-Don 490 New 2r e159tailers on the Russbrainadsn market: 3 which 4 Orenburg 474 Manchester en1 t724ries and exits Nenteerewd th eretailers o3 n the Russian maArkveait:lability -90 bps % market 4 5.2 % 4.3 Tyumen 468 Prague 1 962 47 48 Availability entries and exits Q4 2018 Q1 2019 Nizhny Novgorod 468 Leeds 1 655 14 3 Overall5 SC vacancy rate 60 Number of 40 3 Munich 57 1 OverallPrime SC SC vacancy vacancy rate* rate Voronezh 461 1in t832erna al 5 Number of 16 60 1 1 brands 3 1 1 Warsaw 3 interna al 57 1 1 w701hich 2 3 Moscow 420 4 3 8 entered the 3 brands 3 2 Lisbon 3 2 - bps Yaroslavl 414 1 635market which 4 %31 90 % 4 13 5.2 4.3 entered the 48 5 4 47 2 +0 bps bps 2 -90 Hamburg 1 570 mark28et Q4 2018 Q1 2019%% %% Ryazan 410 4 3 2.2 2.2 1 5.2 4.3 8 48 14 3 5 47 5 1 Frankfurt 1 570 3 Q4 2018 Q1Q1 20192019 St. Petersburg 398 3 3 40 5 14 13 53 Prime SC vacancy3 rate* Brussels 16 1 118 5 Novokuznetsk 382 1 472 1 40 3 1 3 1 Prime SC vacancy rate* 2 16 1 5 4 . Antwerp 1 472 3 1 3 1 1 Ufa 357 2 8 32 1 2 Moscow shopping centre market | Q1 2019 3 4 2 28 2 3 31 3 8 1 5 1 4 262 Source: JLL 3 2 + bps 28 2 2 2 22 21 % 0 % 3 2.2 31 Prici2ng*.2 17 8 1 1 5 4 5 1 + bps New retailers on the Russian marke3 t: 28 2 152 % 0 % 3 3 Q4 2018 2.2Q1 2019 2.2 8 1 4 5 Ava3 ilab1 il9ity 3 5 1 entries and exits 3 1 18 3 PrimeQ4 rent,2018 RUB/sq m/year Q1 2019 14 NEW RETAILERS ON THE RUSSIAN MARKET:3 ENTRIES AND EXITS 5 1 3 3 1 4 3 . 1 18 1 1 1 1 2 1 32 Numb3er of 2 2 1 4 Overall SC vacancy1 rate 4 2 4 3 . 28 interna al 1 1 1 4 Number of 61 6 2 1 b26rands 4 32 1 interna al 57 1 22 28 6 2 which l e 21 7 3 17 1 Prici1ng* 0% brands 3 26 , , th e market 15 22 195 000 195 000 which 2 21 4 17 4 Pricing*Q4 2018 Q1 2019 entered the 3 9 15 2011 2012 2013 30201 4bps12015 2016Prime 2017% rent, RUB/sq2018 m/yearQ1 2019 market 4 4.1% 4.4 4 . 48 9 3 47 1 1 1 Q2 20191 1 2 1 Q3 2019 AveragePrime rent, rent, RUB/sq RUB/sq m/year m/year Number of 3 14 3 5 4 2 2 1 3 Jewelry & Watches interna al 1 Fashion,1 Footwear,1 Accessories4 1 1 1 2 1 40 3 Number of 6 4 2 2 1 brands Prime SC vacancy rate* 1 3 16 1 which le 5 7 int6ernRestaurantsa al & Cafes 1 Furniture1 & Interior 4 1 1 1 6 0% 1 th e market brands 195,1000 195,000 6 3 2 3 whichCosmetics l e & Perfume 7 Goods for Children1 %% 2 8 Q4 2018 , , Q1 2019 00 ,, th e market 74 000 74 000 3 195 000 195 000 2 2011 201231 2013 2014 2015 2016 2017 2018 Q1 2019 1 5 4 Electronics bps Other Q4Q4 2018 2018 Q1Q1 2019 2019 28 2 2 2011 20%12 2013 0 2014 2015 2016Average 2017% rent, RUB/sq2018 Q1m/year 2019 3 1.1 1.1 8 1 **Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail 3 5 1 International retailer N Total Fashion, Footwear, Accessories Q2Jewelry 2019 & Watches Q3 2019 Average rent, RUB/sq m/year 3 activity trend gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 5 1 3 22 3 Fashion, Footwear, Accessories Jewelry & Watches are registered occasionally. 18 Restaurants & Cafes 1 Furniture & Interior 3 2 1 4 . 201 1 Restaurants & Cafes Furniture & Interior Cosmetics & Perfume 4 Goods for Children 0% 32 2 , , 4 74 000 74 000 28 Cosmetics & Perfume Goods for Children Shopping centre dens0ity% in Moscow 1 26 3 Other Q4 2018 74,0Q10 20190 74,000 Electronics 2 22 21 1 Vacancy rate in Moscow districts 17 Pricing* Other **Rents are given for a single unit of 100 sq md GLAist rlocatedictQ4s on( 2018s aq ground m p floorer of1, a0 retail00 inhabitants)Q1 2019 International15 retailer N TotalElectronics gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 9 activity trend 11 N Total **Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail PrimeInternational rent, RUB/sq retailer m/year are registered occasionally. activity trend gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 201 are registered occasionally. 1 1 1 1 2 1 Number of 4 2 2 1 3 201 interna al 1 1 4 6 3.4% Shopping centre density in Moscow brands 1 605 6 1 North- sq m which l e 7 Vaca1ncy rate in Moscow districts Northern0%Eastern districts (sq m per 1,000 iSnhhoabpiptainngts c)entre density in Moscow th e market 195,000 195,04.50%0 North- V4.0aca%ncy rate in Moscow districts Northern Eastern 333 Q2 2019 Q3 2019 d396istricts (sq m per 1,000 inhabitants) sq m 2011 2012 2013 2014 2015 2016 2017 2018 2019 sq m North- Eastern 2.5% 2.8Average% rent, RUB/sq m/yearWestern North- Eastern 154 Source: JLL 500 Western sq m Fashion, Footwear, Accessories Jewelry &3.4 Watches% sq m Central 605 % Restaurants & Cafes Furniture & Interior 3.4North-% sq m 5.6 Central 453 Northern 3.8Eastern 605 4.5% North- North-sq445 m sq m Cosmetics & Perfume Goods for4.0 Children% Western % Northern Easternsq m 333 74,000 Northern0 Eastern 7South-4396,000 sq m North- 8 AEB Real Estate Monitor | 4/2019 sq m 4.5% Western 4.05.5% Eastern % Northern Eastern South- 333 Electronics Other North- EasternQ2 2019 % Q3 20194.7 469396 548sq m Western 2.5 North- sq m Eastern sq m 2.8% **Rents are given for a singleNorth- unit of 100 sq m GLA locatedEastern on a ground floor of a retail Eastern 154 International retailer N Total South- 500 2.5% Western sq m 3.7gallery.% Rents exclude VATWestern and OPEX. Higher level rents thatsq exceed m the market level North- Eastern 154 activity trend Central2.8% Western 246 South- sq m are registered occasionally.5.6% Southern sq500 m Western 3.8% Central Centralsq m 453Western Southern 201Troitsky and 445 5.6% sq m Western 3.8% sq m Central 453 South- Novomoskovsky 445 Troitsky and sq m 5.5% Shopping centreWestern density in Moscow Western sq m Novomoskovsky Eastern 4.7% South-469 South- % sq m Western548 Vacancy rate in Moscow districts 5.5 (sq m per 1,000 inhabitaEasternnts) 4.7% Eastern sq m South- South- districts 469 548 3.7% sq m Eastern sq m Western 246 South- Southern South- sq m 3.7% Western Western Southern246 South- Troitsky and Southern sq m Novomoskovsky Western Southern Troitsky and Troitsky and 3.6% Novomoskovsky 658 Novomoskovsky Troitsky and North- sq m Novomoskovsky Northern Eastern 7.1% North- 3.5% Contacts: Northern Eastern 331 482 sq m sq m North- Eastern 2.8% Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 2.3% Western [email protected] [email protected] 113 [email protected] www.jll.ru 573 Western sq m sq m Central % 3.3% 5.4 Central 449 442 sq m Western Contacts: sq m South- 5.3% Contacts: Western EasternOlesya Dzub4.9a % Oksan403a Kopy lova Polina BritskaySouth-a +7 (495) 737 8000 sq m Eastern 522 [email protected] oksanOal.eksoypay [email protected] polinOksa.nbar [email protected] sq m Polina Britskawyaww.jll.ru +7 (495) 737 8000 South- 3.5% [email protected] [email protected] [email protected] www.jll.ru Western 473 South- Southern sq m Western Southern Troitsky and Novomoskovsky Troitsky and Novomoskovsky

Contacts:

Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 [email protected] [email protected] [email protected] www.jll.ru Moscow shopping centre market | Q1 2019 Moscow shoppingMoscow centre shopping market centre | Q1 market 2019 | Q1 2019 New retailNeersw o rne tahiele Rrsu ossni atnhe m Raurskseiat:n market: entNriews a rnedta ielexritss on the Russian market: Availability entries eanntdr iexsi tasnd exits AvailabilityAvailability Overall SC vacancy rate Number of 61 Overall SC vacancyOverall rate SC vacancy rate 61 61 interna Numalber of Number57 of 1 57 1 57 1 brands interna al interna al 3 3 3 3 which brands brands 3 3 which which 4 entered th e 3 4 4 entered the entered the 3 3 30 bps market % bps % market 4 4.1% 30 304.4 bps % % . market 4 4 47 4848 4.1 4.1% 4.4 4.4 . . 47 47 48 Q2 2019 Q3 2019 Q2 2019 Q2 2019 Q3 2019 Q3 2019 14 14 3 3 5 14 5 3 5 40 3 40 3 40 3 PrimePrime SC SC vacancy vacancy rate* rate* 16 16 1 1 1 5 5 Prime SC vacancy rate* 16 1 1 1 1 5 1 1 1 1 2 2 1 3 3 2 3 3 2 2 3 8 8 3 3 3 2 2 2 8 3 3131 2 1 1 5 5 4 4 31 1 5 4 0 bps bps 28 2 2 22 %% 0 0 bps % % 28 2 3 2 1.1 1.1 28 3 8 1 1.1 % 1.1 % 8 3 5 11 1.1 3 1.1 1 3 5 8 1 5 Moscow3 market overview | Retail market 3 1 Q2Q2 2019 2019 AEB Real EstateQ3 2019Q3 Monitor 2019 | 4/2019 1 3 Q2 2019 Q3 2019 5 1 3 22 3 Moscow shopping centre market | Q1 2019 5 5 3 1 3 3 221 22 18 3 1 3 3 18 1 18 2 1 3 4 2 . 1 1 3 1 4 2 . 1 2 4 4 . 4 1 32 4 28 32 2 2 4 New retailers on the Russian market: 4 4 32 1 28 28 26 3 22 3 entries and exits 1 A2vailabili1ty 26 26 21 1 Pr3icing* 17 2 15 AVAILABILITY 22 21 22 1 161 PRICING** 2 15 21 Pricing* 17 17 Pricing* 9 15 11 15 Overall SC vacancy rate Prime rent, RUB/sq m/year 61 9 9 11 11 Number of Prime rent, RUB/sqPrime m/yearrent, RUB/sq m/year 57 1 1 1 1 1 2 1 interna al Number of 3 4 2 2 1 3 brands 3 interna al 1 1 1 1 1 1 1 1 1 24 1 1 2 1 Number of Number of 2 1 which 4 brand s 4 2 4 2 6 2 1 3 3 3 interna al interna al 1 1 1 1 41 4 entered the which le 7 6 1 brands 30 bps 6 1 6 0% market 4 brands % 1 % 1 , , th e market 4.1 6 6 4.4 1.95 000 195 000 48 7 1 1 47 which l e which l e 7 1 1 0% 0% th e market th e mQ2ark e2019t Q3 2019 195Q2 20191,09050,00019Q3 201951,09050,000 14 3 2011 2012 2013 2014 2015 2016 2017 2018 2019 5 Q2 2019 Q2 2019 Q3 2019 Q3 2019 40 3 2011 2012Prime20121 0SC13 vacancy20122014 rate*20123015 20142016 20 152017 20162018 20172019 2018 2019Average rent, RUB/sq m/year 16 1 1 5 1 1 Fashion, Footwear, Accessories Jewelry & Watches Average rent, RUB/sqAverage m/yearrent, RUB/sq m/year 3 2 3 2 8 Jewelry & Watches 3 2 Fashion,Restaurants Footwear, Fashion,& Cafes Accessories Footwear, AccessoriesJewelryFurniture & Watches & Interior 31 1 5 4 bps 28 2 2 RestaurantsCosmetics & Cafes &Restaurants Perfume% & Cafes 0FurnitureGoods for& Interior ChildrenFurniture & Interior% , 0% , 3 1.1 1.1 74 000 74 000 8 1 5 1 3 Q2Cosmetics 2019 & Perfume GoodsQ3 2019for Children Q2 2019 Q3% 2019 3 CosmeticsElectronics & Perfume GoodsOther for Children , 74,0000% 0 , 74,000 5 1 3 22 74 000 74 000 3 18 1 N Total **Rents are given for a single unitQ2 of 2019 100 sq m GLA located on a ground floor of a retailQ3 2019 3 2 InternationalElectronics retailer Other Other Q2 2019 Q3 2019 1 4 Electronics . gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 1 activity trend 2 4 are registered occasionally.**Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail 4 32 International retailerN Total N Total **Rents are given for a single unit of 100 sq m GLA located on a ground floor of a retail 28 International retailer gallery. Rents exclude VAT and OPEX. Higher level rents that exceed the market level 1 26 3activity trendSource:activity JLL trend gallery. Rents2 exclude01 VAT and OPEX. Higher level rents that exceed the market level 2 22 21 1 are registered occasionally.are registered occasionally. 17 Pricing* Source: JLL 15 Shopping 2ce0n1tre de2n0si1ty in Moscow 9 11Vacancy rate in Moscow districts Prime rent, RUB/sq m/year dSihstoripcptsi n(sgSq h cmeo npptperrien 1 gd,0 ec0en0ns iitntrhyea ibdnie tMannsotists)yc oinw Moscow 1 1 1 1 2 1 Number of Vacancy rate in Moscow districts 4 2 2 1 Vac3 ancy ra17te i nVACANCY Mosco wRATE dis INtri cMOSCOWts DISTRICTS 18 SHOPPINGdistric CENTREts (sq m DENSITY per 1,0 0IN0 iMOSCOWnhabitants) interna al 1 1 4 districts (sq m per 1,000 inhabitants) 6 brands 1 DISTRICTS (SQ M PER 1,000 INHABITANTS) 6 1 which l e 7 1 , 0% , th e market 3.6% 195 000 195 000 658 Q2 2019 North- Q3 2019 sq m 2011 2012 2013 2014 2015 2016 2017 2018 2019 3.6% Northern Eastern 7.1% North- 3.63.5% % 658 Northern Eastern 331 Average rent, RUB/sq m/year North- 482658 sq m sq m North- sqsq m m Fashion, Footwear, Accessories Jewelry & Watches North- NorthernEasternEastern North- Northern Eastern 2.8% 7.1% North- 3.5% Western 7.1% North- NorthernEastern Eastern 113 331 Restaurants & Cafes Furniture & Interior 3.52.3% % 482 Northern Eastern 331 sq m 573482 sq m Western sq m sq m North-Central Eastern sqsq m m Cosmetics & Perfume Goods for Children North- 0Eastern% % 2.8% % 74,000Western 745.4,%000 CentralNorth- 449Eastern 113 3.3 2.3%Western 2.8 North- sq m Other 2.3% Q2 2019 Q3 2019 442 573 Western Eastern sq m113 Electronics Western Central sq573 m sq m Western sq m Central South- % sq m International retailer N Total 5.3% **Rents% are given for a single unit of 100 sq Easternm GLA located on a ground floor5.4 of a retail Western Central 449 3.3gallery. Rents exclude VAT and OPEX. Higher level rents 5.4that4.9 exceed%% the market level 403 Central South- sq m activity trend 3.3% sq m 442 Eastern 522449 are registered occasionally. Western 442 sq m sq m sq m WesternSouth- South- sq m 3.5% 5.3% 201 South- Western Western Southern Eastern 4.9% 473 403 WesternSouth- South- 5.3% Eastern % sq m South- 522 4.9 403 sq m Western Southern Eastern522 sq m ShopTroitskyping andcentre denSouthsity- in Moscow sq m Eastern sq m 3.5%Novomoskovsky Vacancy rate in Moscow districts South- Western Troitsky473 and South- 3.5% districts (sq m per 1,000 inhaSouthernbitants) sq m Western 473 NovomoskovskySouth- Western Southern sq m Southern Troitsky and Western Southern Troitsky and Novomoskovsky Troitsky and Novomoskovsky Troitsky and Novomoskovsky 3.6% 658 Novomoskovsky North- sq m Northern Eastern 7.1% North- 3.5% Northern Eastern 331 482 sq m sq m North- Eastern 2.8% Contacts: Western North- Eastern 113 2.3% sq m Olesya DzubSource:a573 JLL WesternOksana Kopylova Polina Britskaya Source: JLL Central sq m +7 (495) 737 8000 % [email protected] [email protected] [email protected] www.jll.ru 3.3% 5.4 Contacts: Central 449 442 sq m Western Contactssq: m South- Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 5.3% Eastern Western 4.9% Olesya Dzuba o403lesya.d [email protected] [email protected] Britskaypolia [email protected] +7 (495) 737 8000 www.jll.ru sq m Eastern 522 [email protected] [email protected] polinsqa. [email protected] www.jll.ru 3.5% South- Western 473 South- Southern sq m Western Southern Troitsky and Novomoskovsky Troitsky and Novomoskovsky

Contacts: AEB Real Estate Monitor | 4/2019 9

Olesya Dzuba Oksana Kopylova Polina Britskaya +7 (495) 737 8000 [email protected] [email protected] [email protected] www.jll.ru Moscow oﬃce marketMoscow | Q1 2019 oﬃce market | Q1 2019 AEB Real Estate Monitor | 4/2019 Moscow market overview | Office market

MoscOfficeMowo market,scow Q3 2019 officeMoscow•o The mffi officenew market supplyac |e rQ1 on 2019k theme Moscowta officerk marketet in Q3 2019 that provide business services (19%). On the second place reached 107,000 sq m, that is 25% of total completions vol- in total demand for Moscow offices in Q3 2019 were retailers ume expected in 2019. Among all projects, delivered in the and marketplaces (19%). Moscow governmental authorities • In 2019, the volume• In of2019, offices the announced volume of o ffficesor compl announcede for ccomplow amoue nts to aboutcow amou400,000nts sqto m,about mo r400,000e than th sqr m, more than th thanr last than last year, when the indiMlastyceaa quarter,tror,o when wass atherethect a o indi 10werewc-ayeartor buildings wreasco ardt alofo w Class10 (125,000-year A, rsuche csqor dm).as lo a wT hbusi (125,000ere- werweree sq27,500 m). on T thesqhe r methird wdelier evplacee 27,500red in(16%). Q1 sq m2019, deliAt the v26%er edsame Y oYin Q1decline. time, 2019, for 26% the YoY decline. ness centre ‘Academic’ (25,000 sq m) and a business centre period of Q1-Q3 2019 the third place was taken by manu- • The volume of Q1• The2019 v olumetake-up of declined Q1 2019 b tya 8.6%ke-up Y declinedoY and amou by 8.6%nted Y oYto 285,000and amou sqn mted due to 285,000to the shor sq tmag duee of taov ailablethe shor spatagce inof theavailable marke spat ce in the market ‘New Balchug’ (14,000 sq m). facturers (17%). • 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 • The bulk of take-up• The was total in Class volume B + ofwith office 59% otake-upverall t ainke-up Q3 amou2019 increasednt. Non-ce nt•r alThe offices overall be yvacancyond the rateTTR inw eQ3re in2019 the dropped high demand by 0.2 with ppt 41%to in take-up structuroe. taffike-up cstructuer e.market by 15% YoY to 416,000 sq m. During the whole 2019 this 9.8%. The significant decline was recorded in Class A (-2.2 • Banking and finance• In•indicator Banking2019, companies the reached andvolume finance w eof 990,000r eo fficesthe companies leade announced sq m.rs in w demandeforre c omplthe leade estructurs inre, demand c33%ow amou of tsantructuppt),ktse-up. to about tor e,The 9.6%. 33% 400,000 se cof ondMeanwhile, t asq kplae-up. m,c moe wTher eassignificant than tseakc thenondr by pla manugrowthce wfacturingas of t athantheken la vacancycbsompaniesyt manu facturing, companies, 26%. 26%. y•ea Apartr, when from the indithec ahistoricallytor was at a popular 10-year westernrecord low submarket (125,000 sq outm). -Thererate we re was 27,500 spotted sq m deli in ve Classred in B-,Q1 2019, from 26% 8.0% YoY decline. to 9.2% for the • Low comple • The•side Lo vw olumeTTR,s tcableompl ofwhere demand Q1e 2019 Q3 tsatake-upke-upstable adeclinedt edwas demand va c86,000 bancyy 8.6% s r a sqYtoYe declinem, aandted the amou va cremarkinancyn allted o troffice-a t285,000e decline quarter.segme sq mnin ts.It due all was A ovtoeffice rthedueag e shorsegme toindi ttheacgaen t intentionoforts. a rvAeachedailablevera gof espa 10companiesindice-y inceara thetor r e marrceached otokrde improvet low 10 – -10.0%y ear re cord 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 (-0.3 ppt in Q1 •2019), Theable bulk demandas ofthe ta kindie-up wasc wat asorspotted in w Classere dBino wn+the with insouth 59%all submar ooutsideverall tkaek tse-upTTR, and amou where classesnt. Non-ce ofthe then qualitytr cital oyffices. The of b theirveaycondancy offices the r aTtTRe indeclinedwe rordere in the to in high Classattract demand A newby with0.5 personnel. p41%pt, into 10.5%; in Class B+ta k10.5%;be-upy 0.2 structu pinp t,Class rte.o 10.6%, B+ by 0.2in Class ppt, B-to b10.6%,y 0.4 p inpt, Class to 8.4% B- by 0.4 ppt, to 8.4% 43,000 sq m were transacted. • Asking prime rental rates in Q2 2019 remained un- • Prime office ren• tsBanking• wPrimeere andUSD600-750 office finance ren ctsompanies wsqe rm.e USD600-750 Class were theA o leadeffice sq rrse m.inn tsdemand Class rang edA s tructuo ffficeromr e, rRUB24,000e 33%nts rofan tagkede-up. t ofr RUB42,000om The RUB24,000 second pla sqc em/ twoyas RUB42,000ea tark, enwhile by manu Class sq fm/acturing B+yea rern, c tswhileompanies rang Classed, fr omB+ rents ranged from 26%.• The biggest share of total take-up in Q3 2019 was taken changed, at USD 750/sq m/year, Class A rental rates were RUB12,000 to RUB25,000RUB12,000 sq m/ toy RUB25,000ear. sq m/year. • Lbyow bankscomple and financialstable demand companies s a(23%).ted vacancy But r aforte decline the last in all oatffice RUB segme 24,000-40,000/sqnts. Average indicat or m/year, reached Class 10-year B+ re c rentsord low were – 10.0% at (-0.3three pp tquarters in Q1 2019), they as thewere indi csecondator wer e(18%) down in after all submar companieskets and classesRUB of 12,000-25,000/sqthe city. The vacancy rm/year.ate declined (19–27 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 New supplyRUB12,000New supply to RUB25,000 sq m/year. Office take-upOffice take-up 19 VOLUME OF NEW SUPPLY 20 OFFICE TAKE-UP

'000 sq m New'000 sqsupply m '000 Oﬃcesq m take-up'000 sq m 4% 1450 4% 1450 227 441 441 1395 1395 227'000 sq m '000 sq m0% 0% 4% 251% 251% 990 990990 9901450 204% 204% 441 1395 227 0% 251% 990 990 95 20495% 125 125 95 125 Q1-Q3 2018 Q1-Q3Q1-Q3 2019 2018 Q1-Q32018 2019 2019F 2018 2019F Q1-Q3 2018 Q1-Q3Q1-Q3 2019 2018 Q1-Q32018 2019 2019F 2018 2019F

Q1-Q3Fact 2018 Q1-Q3 F2019orecast Fact 2018 Fore2019Fcast Q1-Q3 2018 Q1-Q3Fact 2019 Fo2018recasFactt 2019F Forecast

Source: JLL Fact Forecast Source: JLL Fact Forecast

Vacancy ratesVacancy by class rates by class Vacancy rates by class 21 VACANCY RATES BY CLASS

9.6% 9.69.6% % 10.3% 10.3%10.3% 9.2%9.2% 9.2% 9.89.8%% 9.8% 12.5% 12.512.5% % 11.4% 11.4%11.4% 9.5%9.5% 9.5% 11.111.1%% 11.1% Q3 20Q139 2019 Q3 2019

Class A Class B+ Class B- Overall Class A Class A Class B+ Class B+ Class B- Class B- Overall Overall Q3 2018 Q3 2018 Q3 2018

Source: JLL 18.8 m sq m 10 AEB Real Estate Monitor 18.8| 4/2019 18.8 Class А Class В+ Class В- m sq m m sq m Class А 4.2 Clas+s 3.2А %* Class В+9 .7 Class В+ +1.3%* 4.9Class В-+0%* Class В-

4.20 +3.2 %*24.2 +3.24 %* 6 9 .78 109 .7 +1.31%2 * 14+1.3%* 146 .9 1+8 0%*4.9 +0%* *Growth QoQ

0 2 0 4 2 6 4 8 6 10 8 12 10 14 12 16 14 18 16 18

*Growth QoQ *Growth QoQ 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.

New supply Oﬃce take-up

'000 sq m '000 sq m 4% 1450 441 1395 227 0% 251% 990 990 204% 95 125

Q1-Q3 2018 Q1-Q3 2019 2018 2019F Q1-Q3 2018 Q1-Q3 2019 2018 2019F

Fact Forecast Fact Forecast

Vacancy rates by class

9.6Moscow% market overview |10.3 Office% market 9.2% 9.8% AEB Real Estate Monitor | 4/2019 12.5% 11.4% 9.5% 11.1% Q3 2019

Class A Class B+ Class B- Overall Q3 2018

22 MOSCOW OFFICE STOCK BY CLASS, Q3 2019 18.8 m sq m Class А Class В+ Class В-

4.2 +3.2%* 9 .7 +1.3%* 4.9 +0%*

0 2 4 6 8 10 12 14 16 18

*Growth QoQ

Source: JLL

Moscow office marketMoscow | officeQ1 2019 market | Q1 2019 23 TRANSACTED SPACE BY CLASS, SECTOR AND LOCATION, Q1-Q3 2019 Moscow office market | Q1 2019

By class By class By busineByss businesectorss sector By submarketBy submarket

Class А ClassBy class А By business sector By submarket Manufacturing Business Services Manufacturing 18% Business19% Services 23% 34%Class А34% 18% 19% 23% Manufacturing Business Services 7% Mining & 18% 19% Banking & CBD23% 7% Class В+ 34% Mining & Explora 8% Banking17% &Finance CBD Class В+ Explora % % Finance Moscow City 8 17 7% Mining & Banking & CBD Moscow City Class В+ 61% Explora 8% 17% Finance 61% Public 22% Moscow City Public 11% 5% Class В- 61% 11% 5% 22% Class В- Public % 47% Wholesale11% Service5% From GR22 to TTR Class6% В- & Retail 13% 7% Industries 47% Wholesale Service From GR to TTR 13% 7% Outside47 TTR% 6% & Retail Wholesale Industries Service From GR to TTR % 13% 7% Industries Source: JLL6 & Retail Outside TTR Outside TTR Office property cycle in Moscow Asking rents* Office property cycle in Moscow Asking rents* 24Office OFFICE property PROPERTY cycle CYCLEin Moscow IN MOSCOW 25 ASKINGAsking RENTS* rents* Rental growth 33-42 slowing '000 RUB / sq m / year Rental growthRental growth slowing 33-4233-42 24-42 slowing '000 RUB / sq'000 m / RUByear / sq m / year' 000 RUB / sq m / year 24-42 ' 000 RUB / ' sq00024 m RUB / year- / 42sq m / year Rental growth Rents ' 00012 RUB /- sq25 m / year falling Prime** Rental growth Rents Class A 12-25 Rental growth Rents ' 00012 RUB' 000/- sq25 RUBm / year / sq m / year 8-12 falling falling ' 000 RUB / sq m / year Prime** Class B+ Prime** Class A 8-12 Q4 2019 Class A 8' 000-12 RUB / sq m / year ' 000 RUB / sqClass m / yearB- Class B+ Q4 2019Q3 2019 Class B+ Q4 2019 Class B- Rents *Asking rents (including pre-lets) exclude VAT. Class B- Q3 2019 Q3 2019 **Prime rents refer to rents in high quality buildings in the Central Business Rents District (CBD). Rents *Asking rents (including pre-lets) exclude VAT. *Asking rents**Prime (including rents pre-lets) refer to rents exclud in ehigh VAT. quality buildings in the Central Business **Prime rents Districtrefer to (CBD). rents in high quality buildings in the Central Business District (CBD). MoscowSource: JLL office submarkets, Q1 2019 Source: JLL Moscow office submarkets, Q1 2019 Moscow officeAEB Real submarkets Estate CBD*Monitor M| ,o4/2019s cQ1ow City 2019Fro m G R to TTR** Outsi de TTR*** Alcon, Phase11 II 25,897 sq m А Stock, sq m 4,031,691 1,131,192Moscow City 4,539,164 9,055,602 CBD* Fro m G R to TTR** Outsi de TTR*** Alcon, Phase II А New25,897 Balchug sq m А Stock,CBD* sq m Mosc4,031,691ow City Fro1,131,192 m G R to TTR** O4u,539,164tsi de TTR* ** 9,055,602 Alcon, Phase24,360 II sq m Availability, sq m 300,175 72,969 388,798 1,097,620 25,897 sq m А New Balchug Stock, sq m 4,031,691 1,131,192 4,539,164 9,055,602 24,360 sq m А Availability, sq m 300,175 72,969 388,798 1,097,620 Vacancy rate, % 7.4 6.5 8.6 12.1 New Balchug 24,360 sq m А Availability, sq m OKO, Phase II Transacted300,175 space, 72,969 388,798 1,097,620 Vacancy r ate, % 147,1667.4 53,0096.5 137,1868.6 308,67212.1 26,749 sq m B+ sq m OKO, Phase II Vacancy rate, % Transacted7.4 space, 6.5 8.6 12.1 Vernadskogo Ave., est. 41 B+ 147,166 53,009 137,186 308,672 26,749 sq mB+ *Thesq Centralm Business District (CBD) submarket comprises the area within and in 27,454 sq m close proximity to the Garden Ring (GR) and Tverskaya-Yamskaya Street. OKO, Phase II Transacted space, Vernadskogo Ave., est. 41+ 147,166 53,009 137,186 308,672 Aminyevskoye26,749 Hwy., sq est.m 15B + B+ sq m ***The Exclud Centrales Mo sBusinesscow City. District (CBD) submarket comprises the area within and in 29,00027,454 sq sq m mB close proximity to the Garden Ring (GR) and Tverskaya-Yamskaya Street. *** Including outside MKAD projects. VernadskogoAminyevskoye Ave., est. Hwy., 41 est. 15 StratosB+ B+ *The Central Business** EDistrictxcludes (CBD)Mosco submarketw City. comprises the area within and in 27,45432,15229,000 sq m sq sq m m А close proximity to the Garden Ring (GR) and Tverskaya-Yamskaya Street. *** Including outside MKAD projects. Aminyevskoye Hwy., est. 15Stratos 32,152 sq m+ А ** Excludes Moscow City. 29,000 sq m B *** Including outsiContacts:de MKAD projects. Stratos 32,152 sq m А Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 olContacts:[email protected] [email protected] [email protected] www.jll.ru Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 Contacts:[email protected] [email protected] [email protected] www.jll.ru

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

By class By business sector By submarket

Class А Manufacturing Business Services 34% 18% 19% 23% 7% Mining & Banking & CBD Class В+ Explora 8% 17% Finance Moscow City 61% Public 11% 5% 22% Class В- 47% Wholesale Service From GR to TTR 6% & Retail 13% 7% Industries Outside TTR

Oﬃce property cycle in Moscow Asking rents*

Rental growth 33-42 slowing '000 RUB / sq m / year Moscow oﬃce market | Q1 2019 ' 00024 RUB- / 42sq m / year

Rental growth Rents ' 00012 RUB /- sq25 m / year falling Prime** By class By business sector By submarket Class A 8-12 ' 000 RUB / sq m / year Class А Class B+ Q4 2019 Manufacturing Business Services 18% 19% 23% Class B- 34% Q3 2019 7% Mining & Banking & Rents CBD Class В+ Explora 8% 17% Finance *Asking rents (including pre-lets) exclude VAT. Moscow City **Prime rents refer to rents in high quality buildings in the Central Business 61% AEB Real Estate Monitor | 4/2019 Moscow market overview | Office District market (CBD). Public 11% 5% 22% Class В- % From GR to TTR 47 Wholesale % % Service 6% & Retail 13 Moscow7 Industries oﬃce submarkets, Q1 2019 Outside TTR 26 MOSCOW OFFICE SUBMARKETS, H1 2019

CBD* Moscow City Fro m G R to TTR** Outsi de TTR*** Alcon, Phase II Oﬃce property cycle in Moscow Asking rents* 25,897 sq m А Stock, sq m 4,031,691 1,131,192 4,539,164 9,055,602 New Balchug А Rental growth 24,360 sq m Availability,33 sq- m42300,175 72,969 388,798 1,097,620 slowing '000 RUB / sq m / year

Vacancy rate, % 7.4' 00024 RUB- / 42sq6.5 m / year 8.6 12.1 OKO, Phase II Transacted space, 147,166 53,009 137,186 308,672 26,749 sq m B+ Rental growth Rents ' 00012 RUB /- sq25 m / year falling sq m Prime** Vernadskogo Ave., est. 41 Class A 8-12 B+ *The Central Business District (CBD) submarket comprises the area within' 000 RUB and / insq m / year 27,454 sq m close proximity to the Garden Ring (GR) and Tverskaya-Yamskaya Street. Class B+ Aminyevskoye Hwy., est. 15 Q4 2019 29,000 sq m B+ ** Excludes Moscow City. Class B- Q3 2019 *** Including outside MKAD projects. Stratos 32,152 sq m А Rents Source: JLL*Asking rents (including pre-lets) exclude VAT. **Prime rents refer to rents in high quality buildings in the Central Business District (CBD). 27Contacts: KEY NEW PROJECTS IN 2019

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

CBD* Moscow City Fro m G R to TTR** Outsi de TTR*** Alcon, Phase II 25,897 sq m А Stock, sq m 4,031,691 1,131,192 4,539,164 9,055,602 New Balchug 24,360 sq m А Availability, sq m 300,175 72,969 388,798 1,097,620

Vacancy rate, % 7.4 6.5 8.6 12.1

OKO, Phase II Transacted space, 147,166 53,009 137,186 308,672 26,749 sq m B+ sq m

Vernadskogo Ave., est. 41 B+ *The Central Business District (CBD) submarket comprises the area within and in 27,454 sq m close proximity to the Garden Ring (GR) and Tverskaya-Yamskaya Street. Aminyevskoye Hwy., est. 15 + ** Excludes Moscow City. 29,000 sq m B

*** Including outside MKAD projects. Stratos 32,152 sq m А

Source: JLL Contacts: 12 AEB Real Estate Monitor | 3/2019

Olesya Dzuba Alexander Bazhenov Polina Bobrova +7 (495) 737 8000 [email protected] [email protected] [email protected] www.jll.ru Moscow market overview | Warehouse market AEB Real Estate Monitor | 4/2019

Warehouse market

TRENDS. MOSCOW AND REGIONS

• The share of speculative construction in the Moscow re- The south of the Moscow region is the most demanded and gion remains low. actively developing direction. During the first 9 months, • Developers are experimenting with new formats of ware- 40% of new construction was concentrated there. houses. • Against the background of low speculative construction In Q3 2019, new project – PNK Park Medvedkovo – was in the Moscow region, vacancy rate continues to decline. announced. This project will be constructed within the city borders and will be the first example of urban logistic pro- DELIVERY OF WAREHOUSE PROJECTS ject delivered by a federal developer. This project will be IS POSTPONED TO THE END OF THE YEAR developed in a new format of multistory building. The first warehouse property of this type was PNK Veshki by PNK The Moscow region: in Q4 2019 the new construction will Group which was leased to Vkusvill. be higher than in the first three quarters in total. In Q3, one of the first light industrial complexes in Russia Within the first 9 months, 389,000 sq m of new space were was constructed in Synkovo logistic park. This project is in added to the total stock in the Moscow region. However, high demand among buyers and tenants as it is one of the in Q4 2019 we expect new construction to increase signifi- first projects of this type in Russia fully developed accord- cantly – 411,000 sq m of warehouse space will be deliv- ing to European standards. (28 ) ered to the market.

As a result, new construction by the end of 2019 will reach the level of 2018: 800,000-850,000 sq m of warehouse space.

28 NEW CONSTRUCTION, CLASSES A AND B, ‘000 SQ M

1 884

1 361 1 255 1 147 411 900 803 498 570 389

2011 2012 2013 2014 2015 2016 2017 2018 2019 New construction Forecast

Source: Cushman & Wakefield

Vacancy rate, class A

12%

10% 8,5% 8,3% AEB Real Estate Monitor | 4/2019 13 8% 7,0% 6,5% 5,5% 5,3% 6% 4,8% 3,9% 4% 3,5%

2% 1,0% 1,0% 1,5% 0% 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2019 2019 2019

4 600 4 500

4 400 4 299 4 200 4 198 4 150 4 000 3 900 3 800 3 800 3 800 3 820 3 700 3 650 3 600 3 600

3 400 3 300 3 200

3 000 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2019 2019 2019

1 896 498

1 454 1 497 1 366 1 345 1 196 1 229 1 302 1 040

2011 2012 2013 2014 2015 2016 2017 2018 2019

Take-up Forecast

15% 3% 11% Production

16% Retail 43% 18% 46% Logistics

Other

Distribution 26% 22%

1 265 1 090 804 806 188 592 548 470 408 312

2011 2012 2013 2014 2015 2016 2017 2018 2019F New construction Forecast

676 607 626 554 535 556 146 504 365 323

2011 2012 2013 2014 2015 2016 2017 2018 2019 Take-up Forecast AEB Real Estate Monitor | 4/2019 Moscow market overview | Warehouse market

VACANCY RATE CONTINUES TO DECLINE

1 884 The Moscow region: due to low share of speculative con- At the end of Q3 2019, the average rental rate for class A 1 361 struction vacancy rate has decreased by 1.4 ppt1 25 since5 the is RUB 3,800 per sq m per year. 1 147 411 beginning of the year. 900 803 In Q3 2019, against the background of continuing decline 498 1 884 570 389 Due to low share of speculative construction – less than 50% in the vacancy rate and high tenant activity we see that 1 361 in 2019 – vacancy rate continued to decline and1 25 5reached some developers are already raising asking rental rates, 2011 2012 2013 2014 1201 1457 2016 2017 2018 2014119 3.9%. The 90largest0 share of vacant space is concentrated which leads to a smooth growth of average rental rates. New construction Forecast 803 in 49the8 south of the Moscow region – 181,000 sq m, which570 We expect the average rental rate to reach RUB 3,900- 389 amounts to 3.5% of the total stock in this direction. The 4,000 per sq m per year at the end of 2019 – beginning lowest2011 vacancy2012 rate 201was3 recorded2014 in the201 north-east.5 2016 2017 of 2012020.8 (29,201 309 ) Vacancy rate, class New A con struction Forecast 29 VACANCY RATE, CLASS A

V12aca% ncy rate, class A 10% 8,5% 8,3% 8% 7,0% 6,5% 12% 5,5% 5,3% 6% 10% 4,8% 8,5% 8,3% 3,9% 4% 3,5% 8% 7,0% 2% 1,0% 6,5% 1,0% 1,5% 5,5% 5,3% 6% 0% 4,8% 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q33,9%2019F 4% 3,5% 2019 2019 2019 2% 1,0% 1,0% 1,5% Source: Cushman & Wakefield 0% 4 600 2011 2012 2013 42014500 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2019 2019 2019 4 30400 RENTAL RATE,4 299 CLASS A, RUB/SQ M/YEAR 4 200 4 198 4 150 4 600000 4 500 3 900 3 800 3 800 34 400800 3 820 4 299 3 700 3 650 34 200600 3 600 4 198 4 150 34 000400 3 900 3 300 3 800 3 800 3 800 3 200 3 820 3 700 3 650 3 000600 3 600 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 3 400 2019 2019 2019 3 300 3 200

3 000 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2019 2019 2019 1 896 498 Source: Cushman & Wakefield

1 454 1 497 1 366 1 345 1 196 1 229 1 302 1 040 1 896 498 14 AEB Real Estate Monitor | 3/2019 1 454 1 497 1 366 1 345 1 196 1 229 1 302 1 040 2011 2012 2013 2014 2015 2016 2017 2018 2019

Take-up Forecast

2011 2012 2013 2014 2015 2016 2017 2018 2019

Take-up Forecast

15% 3% 11% Production

Retail 16% 15% 3% 43% 18% 11% 46% ProductionLogistics

16% RetailOther 43% 18% 46% LogisticsDistribution 26% 22% Other

Distribution 26% 22%

1 265 1 090 804 806 188 592 548 470 408 312 1 265 1 090 2011 2012 2013 2014 2015 2016 2017 2018 2019F 804 806 188 New construction Forecast 592 548 470 408 312

2011 2012 2013 2014 2015 2016 2017 2018 2019F New construction Forecast

676 607 626 554 535 556 146 504 676 365 323 607 626 554 535 556 146 504 365 2011 2012323 2013 2014 2015 2016 2017 2018 2019 Take-up Forecast

2011 2012 2013 2014 2015 2016 2017 2018 2019 Take-up Forecast 1 884 1 884 1 361 1 361 1 255 411 1 255 1 147 1 147 411 900 803 900 803 498 570 498 570 389 389

2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 New construction Forecast New construction Forecast

Vacancy rate, class A Vacancy rate, class A

12% 12% 10% 8,5% 8,3% 10% 8,5% 1 888,3%4 1 884 8% 7,0% 8% 1 361 1 361 6,5% 7,0%1 255 1 255 6,5% 1 147 1 147 415,5%1 411 5,3% 6% 900 900 5,5% 5,3% 803 803 6% 4,8% 498 498 570 570 4,8%389 389 3,9% 4% 3,9% 3,5% 4% 3,5% 2011 2012011 2 2012012 3 2012013 4 2012014 5 2012015 6 2012016 7 2012017 8 2012018 9 2019 2% 2% 1,0% 1,0% New c onN1,5%eswtr uccontiosntructio nForeca Fsot recast 1,0% 1,0% 1,5% 0% 0% Moscow 20market11 20overview12 20 1|3 Warehouse2014 20 market15 2016 2017 2018 Q1 Q2 Q3 2019F AEB Real Estate Monitor | 4/2019 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2020119F9 2019 2019 VacaVnacacy rnacyte ,r caltasse, c lAass A 2019 2019 2019

41 2600% 12% 4 500 4 600 THE SOUTH4 500 OF THE MOSCOW REGION 10% 10% REMAINS THE MOST8,5% ATTRACTIVE8,5%8,3% 8,3% 4 400 4 299 4 400 4 298%9 8% DIRECTION FOR LEASE OR 7,0%PURCHASE7,0% 6,5% 6,5% 4 200 4 155,5%0 5,3%5,5% 5,3% 4 200 6% 6% 4 1948150 4 198 4,8% 4,8% 4 000 3,9% 3,9% The4% Moscow4% region: in Q1-Q3 2019 more than 35% of all Lease transactions 3comprised 900 84% of the total take-up. 4 000 3,5%3 9003,5% 3 800 3 800 3transactions2% 800 2% were made in the south of the Moscow3 80region.0 3 800 The average size of a lease transaction is 13,800 sq m. 3 800 1,0%3 821,0%1,0%0 1,0% 3 700 3 820 1,5% 1,5% 3 700 The share of purchase transactions in3 January-September650 Retailers are the largest players in the leasing market of 30% 600 0% 3 650 3 600 3 600 2011 20201112 20201123 20201413 20142015 202016153 60201620017 20201178 20Q118 Q1Q2 Q3Q2 20Q319F 2019F 2019 amounted to 16% of the total take-up. The2019 average2019 2019 20quality19 warehouse space (46% of transactions). In the 3 400 3 400 transaction size was 19,100 sq m. In the take-up structure,3 300 first 9 months of 2019 the most attractive direction for 3 300 3 200 3 200 manufacturing companies accounted for 45%, and retail- lease or purchase of warehouse space was the south 4 600 4 600 4 500 4 500 3ers 000 – for 27%. The most active consumers were Russian of the Moscow region – more than 35% of transaction 3 000 4 400 4 4002011 4 29209 142299 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2011 2012 companies2013 20 1–4 57%201 5of all2016 transactions,2017 20 1while8 Q1the shareQ2 ofQ3 volume.20 19F (31-33 ) 4 200 4 200 2019 2019 2019 foreign companies4 198 4 19 8amounted4 15 only0 4 15 to0 43%. 2019 2019 2019 4 000 4 000 3 900 3 900 3 800 3 800 3 800 3 800 3 800 3 820 3 820 3 700 3 700 3 650 3 650 3 60031 3 600 TAKE-UP, CLASSES A AND B, 3‘000600 3 60SQ0 M

3 400 3 400 3 300 3 300 3 200 3 200 1 896 1 896 498 498 3 000 3 000 2011 20201112 20201123 20201134 120492011745 20201615 20162017 20172018 20 Q118 Q2Q1 Q3Q2 20Q319F 2019F 1 497 1 454 2019 2019 20201199 2019 1 454 1 366 1 345 1 366 1 345 1 196 1 229 1 302 1 196 1 229 1 302 1 040 1 040

1 896 1 896 498 498

1 454 11454947 1 497 1 366 1 366 1 345 1 345 1 196 11192269 1 229 1 302 1 302 1 040 1 040 2011 2012 201320112014201220152013201620142017201520182016 20192017 2018 2019

Take-up Take-up Forecast Forecast

Source: Cushman & Wakefield 2011 20112012 20122013 20132014 20142015 20152016 20162017 20172018 2018 2019 2019

Take-up Take-up Forecast Forecast 32 TAKE-UP STRUCTURE (SALE), 33 TAKE-UP STRUCTURE (LEASE), CLASSES A AND B CLASSES A AND B

3% 15% 15% 3% 11% 11% 3% 3% 15% 15% Production 11% 11% Production ProductionProduction 16% Retail Retail 16% 16% 16% Retail Retail 43% 43% 43% 18%43%18% 18% 18% 46% 46% LogisticsLogisticsLogistics46% Logistics

Other Other Other Other DistributionDistribution 26% 26% 22% 22% Distribution Distribution 26% 26% 22% 22%

Source: Cushman & Wakefield

1 265 1 265 AEB Real Estate Monitor1 | 090 3/20191 090 15 804 804806 806 188 188 592 592548 548 470 470 408 408 312 312

2011 20120112 20120123 20120134 20120145 20120156 20120167 20120178 20120189F 2019F 1 265 1 265 1 090 New con Nsetrwuc ctiononstructi oFnor1ec a090s Ft orecast 804 806 804 806 188 188 592 548 592 548 470 470 408 408 312 312

2011 2012 2013201120142012201520132016 20142017 20152018 20162019F2017 2018 2019F New construction 676 F No67ere6wc acsont struction Forecast 607 607 626 626 554 554 535 535 556 551466 146 504 504 365 365 323 323

2011 20112012 20122013 20132014 20142015 20152016 20162017 20172018 2018 2019 2019

676 Take-up Take-up67 Forecast6 Forecast 607 626 607 626 556 554 535 554 535 146 556 146 504 504 365 365 323 323

2011 2012 201320112014 20122015 20132016 20142017 20152018 2016 2019 2017 2018 2019 Take-up Forecast Take-up Forecast 1 884 1 884 1 361 1 255 411 1 361 1 147 1 255 900 1 147 803 411 900 498 570 803 389 498 570 389 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 Ne201w c4onstru201ctio5n 201 Fo6recas201t 7 2018 2019 New construction Forecast

Vacancy rate, class A Vacancy rate, class A

12% 12% 10% 8,5% 8,3% 10% 8,5% 8% 8,3% 7,0% 8% 6,5% 7,0% 5,5% 5,3% 6% 6,5% 5,5% 5,3% 4,8% 6% 3,9% 4% 4,8% 3,5% 3,9% 4% 3,5% 2% 1,0% 1,0% 1,5% 2% 1,0% 1,0% 0% 1,5% 0% 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2011 2012 2013 2014 2015 2016 2017 2018 20Q119 20Q219 20Q319 2019F 2019 2019 2019

4 600 4 500 4 600 4 500 4 400 4 299 4 400 4 200 4 299 4 198 4 150 4 200 4 150 4 000 4 198 3 900 4 000 3 800 3 800 3 800 3 900 3 820 3 700 3 800 3 800 3 800 3 650 3 700 3 600 3 820 3 600 3 650 3 600 3 600 3 400 3 400 3 300 3 200 3 300 3 200 3 000 3 000 2011 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 2019F 2011 2012 2013 2014 2015 2016 2017 2018 20Q119 20Q219 20Q319 2019F 2019 2019 2019

1 896 498 1 896 498 1 454 1 497 1 366 1 497 1 345 1 454 1 229 1 366 1 345 1 196 1 302 1 040 1 196 1 229 1 302 1 040

2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 Take-up Forecast Take-up Forecast

AEB Real Estate Monitor | 4/2019 Moscow market overview | Warehouse market

15% 3% 15% 11% 3% TAKE-UP IN REGIONS REMAINS HIGH 11% Production Production Regions:16% in Q1-Q3 2019, the take-up was higher than In Q1-Q3 2019, 504,000 sq m of warehouse space were Retail during16% the same period of 2018 by almost 43%1.5 times. leased18% and purchased, which is almost 1.5 times higher Retail 43% than18% in 2018. Almost 42% of deals were46% closed in the Logistics In January-September 2019, 312,000 sq m of warehouse Leningrad region (213,000 sq m). 46% Logistics space were delivered to the market. 83% of this volume Other was covered by new construction in the Novosibirsk, The main demand in the regions comes from retailers – Other Sverdlovsk and Leningrad regions. 62% of all transactions. The largest deal is still the pur- Distribution 26% chase by Lenta22% in Orientir-South warehouse complex in Distribution 26% 22% In Q4 2019, we expect another 188,000 sq m to be com- St. Petersburg (69,000 sq m). The purchase deal in PNK pleted in the regions. By the end of 2019, the volume of Park Sofiyskaya in St. Petersburg (51,000 sq m) by Marvel new construction will exceed the figure of 2018. was the key event of Q3 2019. (33-36 )

33 NEW CONSTRUCTION, CLASSES A AND B, ‘000 SQ M

1 265 1 265 1 090 804 806 1 090 188 804 806 592 548 188 470 408 592 548 312 470 408 312 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2011 2012 2013 Ne201w c4onstr201uctio5n 201 F6oreca201st 7 2018 2019F New construction Forecast

Source: Cushman & Wakefield

34 TAKE-UP, CLASSES A AND B, ‘000 SQ M

676 676 607 626 554 535 607 626 556 146 554 556 146 535 504 365 504 323 365 323

2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 Take-up2015 Forecast2016 2017 2018 2019 Take-up Forecast Source: Cushman & Wakefield

16 AEB Real Estate Monitor | 4/2019 Moscow market overview | Warehouse market AEB Real Estate Monitor | 4/2019

35 KEY WAREHOUSE PROPERTIES DELIVERED TO THE MARKET IN Q1-Q3 2019

Property Region Total area, sq m

Moscow region

IKEA Esipovo Moscow 90 000

PNK Park Valischevo (Lenta) Moscow 68 519

Vnukovo II (Pochta Rossii) Moscow 50 250

Wildberries DC Moscow 48 900

Regions

SK Sibirsky Novosibirsk 60 000

Logopark Vysota Ekaterinburg 47 285

DC X5 Tolmachevo Novosibirsk 38 500

Osinovaya Roscha St. Petersburg 38 000

Source: Cushman & Wakefield

36 KEY WAREHOUSE PROPERTIES TO BE DELIVERED TO THE MARKET IN Q4 2019

Property Region Total area, sq m

Moscow region

PNK Beliy Rast (Leroy Marlin) Moscow 140 000

PNK Park Veshki Moscow 87 000

Wildberries DC Moscow 53 000

Atlant park Moscow 50 000

Regions

Rolsy Ekaterinburg 50 370

Freight Village Vorsino Kaluga 37 700

Logopark M10 St. Petersburg 28 000

Logopark Arbuz Volgograd 27 000

Source: Cushman & Wakefield

AEB Real Estate Monitor | 4/2019 17 AEB Real Estate Monitor | 4/2019 Moscow market overview | Hospitality market

Hospitality market

The upscale segment continues to demonstrate a negative high occupancy levels across all hotel segments that shows a trend in rouble ADR (average daily rate) compared to Q3 growth comparing to 2018. 2018 and showed a 33% decrease (13,716 roubles). Rouble RevPAR (revenue per available room) showed a decrease as An absolute gap in RevPAR between market segments dem- well – 34% and comprised 10,325 roubles. US dollar figures onstrated the following results: of ADR dropped by 36% and comprised 211 US dollars along • the gap between the upscale and midscale segments with dollar RevPar which decreased by 37% (USD 159). The comprised USD 114/RUB 7,408 compared to USD 188/RUB overall occupancy raised by 4% (76%). 11,671 in the same period of 2018; • the difference in RevPAR between upscale and business Business hotels showed the following results in January-Sep- hotels decreased to USD 88/RUB 5,675 vs. 2018 results (USD tember 2019: US dollar RevPAR decreased by 29% (USD 72) 151/RUB 9,391). which was composed of a 2% occupancy increase (81%) and a 29% decrease of ADR nominated in US dollars (USD 88). Hotels opened in Q1-Q3 2019: The rouble RevPAR decreased by 25% (RUB 4,650) in line • InterContinental Hotels Group opened the second Crowne with a 25% ADR drop (RUB 5,702). Plaza in Moscow. Crowne Plaza Tretyakovskaya hotel for 159 rooms is located in Zamoskvorechye district. The hotel pro- A decrease of indicators was observed in the midscale seg- vides all facilities required for effective work and leisure, in- ment. ADR and RevPAR nominated in roubles dropped by cluding 3 conference halls, a bar, a restaurant, a fully equipped 25% amounting to RUB 3,632 and RUB 2,917. The US dol- gym and a 24/7 wellness centre. Before joining Crowne Plaza lar ADR decreased by 29% (USD 56) so as RevPAR which the hotel was known under Aquamarin name. dropped by 29% (USD 45). Overall occupancy remained un- • InterContinental Hotels Group opened Holiday Inn Express changed (80%). Moscow – Baumanskaya in Moscow. A new hotel for 128 rooms located in Basmanny district (the Central administrative Economy segment of Moscow hotels which is mostly rep- district) at Perevedenovsky Lane, 2A has become the 6th ho- resented by Soviet-era objects showed ADR in the amount tel of Holiday Inn Express brand in Russia. The hotel’s ameni- of RUB 2,164 in Q3 2019 (a 20% decrease as compared to ties include a café and a bar, conference space for 40 people. 2018). Occupancy demonstrated a 2% growth (73%), rouble • Pentahotel Moscow Arbat officially opened in the ‘Book’ RevPAR decreased by 19% comprising RUB 1,571. ADR in US building at Novy Arbat Street, 15. The hotel has become the dollar equivalent decreased by 24% and comprised USD 33. first object in Russia under Penta brand of Rosewood Hotel RevPAR amounted to USD 24 which is 23% lower comparing Group. The hotel offers 228 rooms, its amenities include a to the corresponding period. lounge zone, a restaurant, a 24-hour fitness centre, conference space with areas from 44 to 82 sq m. Average occupancy across all market segments of Moscow • Radisson Hotel Group announced the opening of the Radis- hotels increased by 2% (78%) as compared to the same pe- son Collection Hotel, Moscow. Rebranding has been com- riod of 2018. During Q3 2019, US dollar ADR and rouble ADR pleted and the hotel has become the latest addition to the decreased by 33% (USD 97) and 29% (RUB 6,303) respec- group’s exceptional collection of premium lifestyle properties. tively. US dollar and rouble RevPAR demonstrated decrease – The hotel located at Kutuzovsky Avenue, 2/1, bld. 1 offers 33% and 30% and comprised USD 75 and RUB 4,866. 501 rooms, the hotel’s building is one of the capital’s ‘Seven Sisters’, a family of renowned neoclassical skyscrapers. Comparing the results of 2019 to the previous year we can • Chekhoff Hotel Moscow, Curio Collection by Hilton opened observe a significant decrease of both rouble and US dollars in Moscow in June 2019. The hotel is located in a 7-storey figures, that was somewhat predictable considering the fact building constructed in 1891 at the intersection of Degtyarny that hotel performace of 2018 was strongly affected by the Lane and Malaya Dmitrovka Street. Anton Chekhov lived in FIFA World Cup held in June and July, when operating indi- the building from 1899 to 1900. The hotel for 95 rooms as cies grew abnormally influencing the 2018 year average fig- well as other properties under Curio Collection by Hilton will ures. At the same time the market continues to demonstrate be located in a historical building.

18 AEB Real Estate Monitor | 4/2019 Moscow market overview | Hospitality market AEB Real Estate Monitor | 4/2019

• Capsule type hostel opened in the apartment complex Sky tional complex Food City. Food City is located in the Moscow Skolkovo, which is located at the intersection of Mozhaisk high- region near Mamyri village and includes a wholesale and re- way and Moscow MKAD Ring Road. The air-conditioned rooms tail food centre, an office centre, a hostel and a warehouse. feature a microwave, fridge, kettle, shower, hairdryer and a desk. The following branded hotels are announced for opening in • A second building of the hotel complex for 591 rooms with the 2nd half of 2019, but we assume that their opening may a total area of 30,000 sq m, opened as part of the multifunc- be postponed till 2020. (37-43 )

37 FUTURE HOTELS ANNOUNCED FOR OPENING IN MOSCOW IN 2019

Name Number of rooms Address

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

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

Hampton by Hilton Rogozhsky Val 147 Rogozhsky Val Street, 12

Novotel Moscow Taganskaya 156 Zemlyanoy Val Street, 70, bld. 1

AC Moscow Bolshaya Sadovaya 240 Bolshaya Sadovaya Street, 8

Total: 5 hotels 1 133

Sources: EY database, open sources, operators’ data

38 5-STAR HOTELS:star otels ADR* AR (RUB) ANDRB OCCUPANCY an oan DYNAMICS, nais 2019 VS.201 2018 s 201

0 000 100 4 000 90 40 000 0 3 000 0 30 000 0 2 000 0 20 000 40 1 000 30 10 000 20 000 10 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

* Average daily rate4star otels AR RB an oan nais 201 s 201Source: EY analysis

20 000 100

1 000 90

1 000 0 AEB Real Estate Monitor | 4/2019 19 14 000 0

12 000 0

10 000 0

000 40

000 30

4 000 20

2 000 10

0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

3star otels AR RB an oan nais 201 s 201

14 000 100 90 12 000 0 10 000 0 0 000 0 000 40

4 000 30 20 2 000 10 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

2star otels AR RB an oan nais 201 s 201

14 000 100 90 12 000 0 10 000 0 0 000 0 000 40

4 000 30 20 2 000 10 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

Aerae aret AR RB an oan nais 201 s 201

22 000 100 20 000 90 1 000 0 1 000 0 14 000 0 12 000 0 10 000 40 000 30 000 4 000 20 2 000 10 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019 star otels AR RB an oan nais 201 s 201

0 000 100 4 000 90 40 000 0 3 000 0 30 000 0 2 000 0 20 000 40 1 000 30 10 000 20 AEB Real Estate Monitor | 4/2019 Moscow market overview | Hospitality market 000 10 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

39 4-STAR 4HOTELS:star otels ADR* AR(RUB) ANDRB OCCUPANCY an oan DYNAMICS, nais 2019 VS. 201 2018 s 201

20 000 100

1 000 90

1 000 0

14 000 0

12 000 0

10 000 0

000 40

000 30

4 000 20

2 000 10

0 0 an e ar ar a n l a se ot no e

* Average daily rate Source: EY analysis AR RB 201 AR RB 2019 an 201 an 2019

40 3-STAR HOTELS: ADR* (RUB) AND OCCUPANCY DYNAMICS, 2019 VS. 2018 3star otels AR RB an oan nais 201 s 201 100 14 000 100 90 12 000 0 10 000 0 0 000 0 000 000 40 30 4 000 30 20 2 000 10 0 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

* Average daily rate Source: EY analysis 2star otels AR RB an oan nais 201 s 201 100 14 000 100 90 12 000 0 10 000 0 0 000 0 000 000 40 20 AEB Real Estate Monitor30 | 4/2019 4 000 30 20 2 000 10 0 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019

Aerae aret AR RB an oan nais 201 s 201

100 22 000 100 20 000 90 1 000 1 000 0 1 000 1 000 0 14 000 14 000 0 12 000 0 10 000 40 000 30 000 20 4 000 20 10 2 000 10 0 0 an e ar ar a n l a se ot no e

AR RB 201 AR RB 2019 an 201 an 2019 starstar otels otels AR ARRBRB an an oan oan nais nais 201 201 s s 201 201

00 000 000 100100 44 000 000 9090 4040 000 000 00 33 000 000 00 3030 000 000 00 22 000 000 00 2020 000 000 4040 11 000 000 3030 1010 000 000 2020 000 000 1010 0 0 00 anan ee arar arar aa nn ll aa sese otot nono ee

ARAR RB RB 201 201 ARAR RB RB 2019 2019 anan 201 201 anan 2019 2019

44starstar otels otels AR ARRBRB an an oan oan nais nais 201 201ss 201 201

2020000000 100100

11000000 9090

11000000 00

1414000000 00

1212000000 00

1010000000 00

000000 4040

000000 3030

4 4000000 2020

2 2000000 1010

0 0 00 anan ee arar arar aa nn ll aa sese otot nono ee

ARAR RB RB 201 201 ARAR RB RB 2019 2019 anan 201 201 anan 2019 2019

33starstar otels otels AR AR RB RB an an oan oan nais nais 201 201 ss 201 201

1414 000 000 100100 9090 1212 000 000 00 1010 000 000 00 00 000 000 00 000 000 4040 30 4 0004 000 30 2020 2 0002 000 1010 0 0 00 Moscow marketanan overviewee | Hospitalityarar ar armarketaa nn ll aa sese otot AEBnono Real eEstatee Monitor | 4/2019

ARAR RB RB 201 201 ARAR RB RB 2019 2019 anan 201 201 anan 2019 2019

41 2-STAR2 HOTELS:2starstar otels otels ADR* AR AR(RUB) RB ANDRB OCCUPANCY an an oan oan DYNAMICS, nais nais 2019 201 201 VS. 2018ss 201 201

1414 000 000 100100 9090 1212 000 000 00 1010 000 000 00 00 000 000 00 000 000 4040 30 4 4000 000 30 2020 2 2000 000 1010 0 0 00 anan ee arar arar aa nn ll aa sese otot nono ee

ARAR RB RB 201 201 ARAR RB RB 2019 2019 anan 201 201 anan 2019 2019

* Average daily rate Source: EY analysis

42 AVERAGE MARKET ADR* (RUB) AND OCCUPANCY DYNAMICS, 2019 VS. 2018 AeraeAerae aret aret AR AR RBRB an an oan oan nais nais 20 2011ss 201 201

2222000000 100100 2020000000 9090 11000000 00 1 000 1 000 00 14 000 14 000 00 1212000000 00 1010000000 4040 000000 3030 000000 20 4 4000000 20 10 2 2000000 10 0 0 00 anan ee arar arar aa nn ll aa sese otot nono ee

ARAR RB RB 201 201 ARAR RB RB 2019 2019 anan 201 201 anan 2019 2019

* Average daily rate Source: EY analysis

AEB Real Estate Monitor | 4/2019 21 AEB Real Estate Monitor | 4/2019 Moscow market overview | Hospitality market

43 OPERATIONAL INDICES DYNAMICS

January- January- January- September 2019/ September September 2018 January-September 2019 2018 (USD/RUB) 2018, (USD/RUB) (USD/RUB) %

5 stars

Occupancy 76% 72% 4% 73%

Average daily rate (ADR) 211/13,716 330/20,357 -36/-33 298/18,649

Revenue per available 159/10,325 251/15,581 -37/-34 225/14,139 room (RevPAR)

4 stars

Occupancy 81% 80% 2% 79%

ADR 88/5,702 124/7,627 -29/-25 115/7,228

RevPAR 72/4,650 101/6,189 -29/-25 93/5,831

3 stars

Occupancy 80% 80% 0% 80%

ADR 56/3,632 78/4,811 -29/-25 73/4,589

RevPAR 45/2,917 64/3,910 -29/-25 59/3,694

2 stars

Occupancy 73% 70% 2% 70%

ADR 33/2,164 44/2,705 -24/-20 42/2,619

RevPAR 24/1,571 31/1,937 -23/-19 30/1,866

Average

Occupancy 78% 76% 2% 75%

ADR 97/6,303 144/8,875 -33/-29 132/8,271

RevPAR 75/4,866 112/6,904 -33/-30 102/6,383

Source: Smith Travel Research, EY analysis and forecast

22 AEB Real Estate Monitor | 4/2019 Moscow market overview | Housing market AEB Real Estate Monitor | 4/2019

Housing market

The rental market is traditionally most active at the peak received in Q3 2019 with the same period last year, then of the business season. Among the most striking trends demand increased less noticeably, by +5% (comparing July- of the past quarter is the growth of supply and demand September 2019 and July-September 2018). by more than +10% and an increase in the number of foreign tenants. In general, over the years the existence The greatest demand for apartments for rent is near Lenin- of the high-budget rental segment has demonstrated sus- gradsky Prospekt (near the Anglo-American school) at 12.5% tainability and developed at a dynamic pace, even taking of all leased residences this year. That means that every 8th into account difficult economic conditions. It is interesting client chose an apartment for rent in this location. to note that since 2010, the average rental rate in Mos- cow in roubles has increased by +62%, and by +81% in Other popular areas are Lubyanka-Kitay-Gorod and Arbat- the Tverskaya-Kremlin district. Kropotkinskaya. About 7% of all potential tenants in Moscow are interested in apartments for rent here. DEMAND Almost half (45%) of all applications received were from Rus- The increase in the number of applications from potential sian citizens. As per the previous quarter’s share of applica- tenants over the past 9 months compared to last year to- tions from Russian citizens, this number decreased slightly taled +13%. If we just compare the number of applications (-6%) from 51% in June 2019. (44 )

44 TENANT PROFILE

Russia 45%

France 13%

Italy 6% 55% Germany 5% 45% Japan 4%

USA 3%

Great Britain 2%

India 2% Russian ci ens Foreign ci ens

Source: Intermark Relocation

13% 17% <100 000 7% 100 000-200 000 200 000-300 000 9% AEB Real Estate Monitor | 4/2019 300 000-400 000 23 35% 400 000-500 000 19% >500 000

Arbat-Kropotkinskaya 21% Tverskaya-Kremlin 17% Leninskiy Prospekt 10% Leningradskiy Prospekt 8% Zamoskvorechye 8% Lubaynka-Kitay-Gorod 7,2% Krasnopresnenskaya 5,7% Tsvetnoy Boulevard 4,7% Patriarshye Ponds 3,9% Prospekt Mira 3,2% Kutuzovskiy Prospekt 2,9% Kuntsevo 2,7% Frunzenskaya 2,3% Taganskaya 1,7% Other 1,7%

350000 325 000 330000 316 042 310000 290000 250 000 270000 250 000 250000 240 000 230000 210000 204 750 190000 I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 2018 2019

Supply Demand

4% 17% <50 19% 50 -80 80 -100 100 -120 19% 12% 120 -150 150- 200 11% >200 18%

6% 1 bedroom 18% 19% 2 bedrooms

3 bedrooms

25% 4 bedrooms

32% 5+ bedrooms AEB Real Estate Monitor | 4/2019 Moscow market overview | Housing market

The highest interest in renting high-budget apartments (35% of tenants). Also, almost 20% of demand falls in Moscow is shown among French citizens, whose share on options in the budget range of RUB 200,000 up to has increased over the last quarter from 10% to 13%, 300,000. (45 ) Italy (10%) and Germany (5% of requests). In each location, demand from citizens from a particular country SUPPLY prevails. For example, apartments located in the area of Leningradsky Prospekt, where the Anglo-American school Since the beginning of 2019, we have seen an increase in is located,Rus aresia more appealing to tenants from45 %the UK and the number of offers on the Moscow high-budget rental USA (in addition to the traditionally increased demand market by +14% over 9 months. If we compare the same from RussianFraRnucsse ianda French 1citizens).3% 45% indicator from a year earlier, the increase was +2%. France 13% RUB 250,000Italy per apartment/month6% is the average current Analysing the market on a territorial basis, it can be noted budget in demand. Thus, we note the trend of a slight in- that almost 2/3 of the supply of luxury apartments for rent Italy 6% 55% creaseGe rinm theany gap between5% rental rates from owners, and (64%) is concentrated in 5 districts of Moscow: Arbat-Kropot- the expectations of potential tenants at the beginning kinskaya, Tverskaya-Kremlin,55% Leningradskiy and Leninskiy Germany 5% 45% of fall 2019.Japa nFor comparison,4% in September of this year,45 %Prospekts, as well as Zamoskvorechye. (46 ) this gap reachedJapan RUB4% 75,000, while in Q4 it amounted to RUB 68,800.USA The3 %minimum lag in demand rates from RUB 325,000 per apartment/month is the average weight- supply wasU recordedSA 3 %in January and July of the current ed budget offers on the high-budget rental market in Gyearrea t(RUB Brit a60,000).in 2% Moscow. (47 ) Great Britain 2% The mostIn dpopularia 2range% of rental rates with clients isR ussian ci ens Foreign ci ens from RUBI n100,000dia 2 %to 200,000 per apartment/monthRu ssian ci ens Foreign ci ens

45 BUDGET STRUCTURE IN TERMS OF DEMAND, RUB

13% 13% 1717% <100<100 000 000 7%7% 100100 000 000-200-200 000 000 200 000-300 000 9% 200 000-300 000 9% 300 000-400 000 300 000-400 000 35% 400 000-500 000 35% 400 000-500 000 19% >500 000 19% >500 000

Source: Intermark Relocation

Arbat-Kropotkinskaya 21% ArbaTt-vKerroskapoyatk-iKnrsekmayalin 17% 21% TvLernsinkaskyaiy- ProspektKremlin 10% 17% LenLienngrinadskskiyiy Prospekt Prospekt 8%10% 24 AEB Real Estate Monitor | 3/2019 LeningrZaadmskoiysk Prospektvorechye 8%8% Lubaynka-Kitay-Gorod 7,2% Zamoskvorechye 8% Krasnopresnenskaya 5,7% Lubaynka-Kitay-Gorod 7,2% Tsvetnoy Boulevard 4,7% Krasnopresnenskaya 5,7% Patriarshye Ponds 3,9% Tsvetnoy Boulevard 4,7% Prospekt Mira 3,2% KutuPatriarshyezovskiy Prospekt Ponds 2,39%,9% ProspektKunt Mseirvoa 23,7,%2% KutuzovsFkriuny Prospektzenskaya 2,23,%9% TaKguntansskeavyao 1,27%,7% FrunzensOkathyaer 12,7,%3% Taganskaya 1,7% Other 1,7%

350000 325 000 330000 316 042 310000 352900000000 250 000325 000 332700000000 316 042 250 000 250000 310000 240 000 230000 290000 210000 250 000 270000 204 750 250 000 190000 250000 I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 240 000 230000 2018 2019 210000 204 750 190000 Supply Demand I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 2018 2019

4% Supply Demand 17% <50 19% 50 -80 80 -100 100 -120 19% 4% 120 -150 12% <50 17% 150- 200 19% 50 -80 11% >200 18% 80 -100 100 -120 19% 12% 120 -150 150- 200 11% >200 18% 6% 1 bedroom 18% 19% 2 bedrooms

3 bedrooms

25% 4 bedrooms 6% 1 bedroom 18% 32% 5+ bedrooms 19% 2 bedrooms

3 bedrooms

25% 4 bedrooms

32% 5+ bedrooms RuRsussisaia 454%5%

FrFarnacnece 131%3%

ItIatlayly 6%6% 5555%% GGeremrmanayny 5%5% 4545%% JaJpaapnan 4%4%

UUSASA 3%3%

GGreraeta Bt rBirtaitianin 2%2%

InIdnidaia 2%2% RuRsussisaina nc ici enesns FoFroerieging nc ici enesns

13% 13% 1717%% <100<100 000 000 7%7% 100100 000 000-200-200 000 000 200200 000 000-300-300 000 000 9%9% 300300 000 000-400-400 000 000 3535%% 400400 000 000-500-500 000 000 1919%% Moscow market overview | Housing market >500>500 000 000 AEB Real Estate Monitor | 4/2019

46 TERRITORIAL STRUCTURE IN TERMS OF SUPPLY

ArAbrabta-tK-rKorpooptkotkinisnksakyaaya 2121%% TvTevresrkaskayaya-K-rKermemlinlin 1717%% LeLneinnisnksikyi yProspekt Prospekt 1010%% LeLneinnignrgardasdksikyi yProspekt Prospekt 8%8% ZaZmamosoksvkovroercehcyehye 8%8% LubaLubaynkynka-aK-iKtaitya-yG-Goroordod 7,72,%2% KrKarsansonporpersensennesnksakyaaya 5,57,%7% TsvetnoyTsvetnoy Boulevard Boulevard 4,47,%7% PatriarshyePatriarshye Ponds Ponds 3,39,%9% ProspektProspekt M Miriraa 3,32,%2% KutuKutuzozvosvksikyi yProspekt Prospekt 2,29,%9% KuntKuntsesveovo 2,27,%7% FrFunrunzeznesnkaskayaya 2,23,%3% TaTgaagnasnksakyaaya 1,17,%7% OOththerer 1,17,%7%

Source: Intermark Relocation

47 SUPPLY-DEMAND CORRELATION IN TERMS OF BUDGET, RUB

353500000000 325325 000 000 333300000000 316316 042 042 313100000000 290000 290000 250250 000 000 272700000000 250250 000 000 252500000000 240240 000 000 232300000000 212100000000 204204 750 750 191900000000 I I IIII IIIIII IVIV VV VIVI VIVII IVIIVIII I IXIX XX XIXI XIXIII I I IIII IIIIII IVIV VV VIVI VIVII IVIIVIII I IXIX 20120188 20120199

SuppSupplyly DDememanadnd

Source: Intermark Relocation

4%4% 17%17% <50<50 19%19% 5050 -80 -80 8080 -100 -100 AEB Real Estate Monitor | 4/2019 25 100100 -120 -120 19%19% 12%12% 120120 -150 -150 150150- 200- 200 11%11% >200>200 18%18%

6%6% 1 1b ebderdooroomm 18%18% 19%19% 2 2b ebderdooroomms s

3 3b ebderdooroomms s

25%25% 4 4b ebderdooroomms s

32%32% 5+5 +b ebderdooroomms s Russia 45%

France 13%

Italy 6% 55% GermRuasnsiya 5% 45% 45% FJarapnacne 4% 13%

UItSaAly 3%6% 55% Germany 5% Great Britain 2% 45% Japan 4% India 2% Russian ci ens Foreign ci ens USA 3% Russia 45%

Great Britain 2% France 13% India 2% Russian ci ens ItalyForeign6 c%i ens Russia 45% 55% Germany 5% 13% 17% <100 000 France 13% 45% Japan 4% 7% 100 000-200 000 Italy 6% 200 000-300 000 USA 3% 55% 9% Germany 5% 13% 17% 300 000-400 000 <100 000 Great Britain 2% 45% Japan 4% 7% 35% 100400 000 000-200-500 000 000 India 2% 19% 200>500 000 000-300 000 USA 3% Russian ci ens Foreign ci ens 9% 300 000-400 000Great Britain 2% 35% 400 000-500 000 India 2% Russian ci ens Foreign ci ens 19% >500 000

13% 17% <100 000 Arbat-Kropotkinskaya 21% 7% 100 000-200 000 Tverskaya-Kremlin 17% 13% 200 000-300 000 Leninskiy Prospekt 10% 9% 17% <100 000 Arbat-Kropotkinskaya 21% 300 000-400 000 Leningradskiy Prospekt 8% 7% 100 000-200 000 Tverskaya-Kremlin 17% 35% 400 000-500 000 Zamoskvorechye 8% 200 000-300 000 Leninskiy Prospekt 10% 9%19% Lubaynka-Kitay-Gorod 7,2% >500 000 Leningradskiy Prospekt 8% 300 000-400 000 Krasnopresnenskaya 5,7% Zamoskvorechye 8% 35% 400 000-500 000 Tsvetnoy Boulevard 4,7% 19% Lubaynka-Kitay-Gorod 7,2% >500 000 Patriarshye Ponds 3,9% Krasnopresnenskaya 5,7% TsvetnoyProspekt Boulevard Mira 34,2,7%% KutuPatriarshyezovskiy Prospekt Ponds 23,,99%% Arbat-Kropotkinskaya 21% ProspektKunt sMeirvoa 32,,27%% Tverskaya-Kremlin 17% KutuzovFsrkuniyz Prospektenskaya 2,,39% TagKauntnskseavyao 12,,77%% ArbLeatn-iKnrsokpiyo tkProspektinskaya 10% 21% FrunzenOskathyaer 12,73% LeninTgvreardsskakiyay Prospekt-Kremlin 8% 17% Taganskaya 1,7% LZeanminsoksikyv Prospektorechye 810% % Other 1,7% LLubaeninygnkraad-sKkiitya Prospekty-Gorod 78,%2% KrasnZaomproessknveonreskchayeya 5,78%% LubaTsvetnoyynka-K iBoulevardtay-Gorod 4,77%,2% Krasnopresnenskaya 5,7% Patriarshye Ponds 3,9% Tsvetnoy Boulevard 4,7% 350000 Prospekt Mira 3,2%325 000 Patriarshye Ponds 3,9% 330000 316 042 Kutuzovskiy Prospekt 2,9% 313500000000 Prospekt Mira 3325,2% 000 Kuntsevo 2,7% 330000 316 042 290000 Kutuzovskiy Prospekt 2,9250% 000 310000 Frunzenskaya 2,3% 270000 250 000Kuntsevo 2,7% 290000 Taganskaya 1,7% 250000 Frunzenskaya 2502,3% 000 250 000 240 000 232700000000 Other 1,7% 250000 Taganskaya 1,7% 21AEB0000 Real Estate Monitor | 4/2019 Moscow240 000 market overview | Housing market 230000 204 750 Other 1,7% 190000 210000 I 204II 750III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX The190 000most expensive apartments for rent are offered in three apartments have 2 bedrooms (3-bedroom options), apart- areas: Arbat-KropotkinskayaI II III IV (RUBV 406,000VI201VI8I perVII Iapartment/IX X XI mentsXII withI I 3I bedroomsIII IV areV 1/4,VI andVI201I multi-roomVII9 I IX apart- month), and Krasnopresnenskaya and201 Tverskaya-Kremlin,8 ments with 5 or more rooms make2019 up 18%. The share at RUB 360,000 and 350,000, respectively.Supp Thely fourth of 1-bedroomDema napartmentsd and studios is represented the place in the ranking of the most expensiveSupp areasly is the least,350D000 withema justnd 6% of the market. (48 ) 325 000 Tsvetnoy Boulevard area, where the average rental rate is 333500000000 316 042 325 000 RUB 320,000/month, which is slightly ahead of Frunzens- 14031330 0sq000000 m is 316the 042average area of relevant luxury apart- kaya, which closes the 5 most expensive areas for apartments. Options up to 50 sq m are rare and make up only 293100000000 ment rentals in the capital4% (the average rate here was RUB 4% of the total structure. Moreover, approximately every 250 000 17% <50 272900000000 250 000 315,000/month). 4% 5th apartment in each location has an area of 50 to 80 sq 250 000 17% 19% <50 -80 252700000000 250 000 m and 150 to 200 sq m (19% of the market). (49 ) 240 000 19% 5080 -80 -100 232500000000 Starting in 2010, rental rates in roubles increased in the 240 000 most prestigious areas of the city, Tverskaya-Kremlin80 -100 and According230000 to our supply statistics, the minimal area was 100 -120 210000 204 750 Arbat-Kropotkinskaya,19% by +81% and +58%, 100respectively. -120 2921 sq0 000m, and the maximum 990 sq m. 19% 12% 120 -150 190000 204 750 190000 12% 120150 -150- 200 I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX The structure of apartments in the distribution of offers I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 150- 200 shifted towards more spacious11% options, where >about200 1/3 of 2018 2019 18% 11% >200 2018 2019 18% Supply Demand Supply Demand 48 SUPPLY STRUCTURE IN TERMS OF NUMBER 49 SUPPLY STRUCTURE IN TERMS OF BEDROOMS OF AVERAGE AREA, SQ M

6% 4% 6% 1 1b bederdooroomm 17% <<5050 18%18% 17% 19% 19%19% 5050 -80 -80 19% 2 2b bederdooroomms s 8080 -100 -100 3 3b bederdooroomms s 100100 -120 -120 19%19% 12%12% 120120 -150 -150 25%25% 4 bedrooms 4 bedrooms 150150- 200- 200 11% >>200200 32% 55++ b ebderdooroomms s 18%18%

Source: Intermark Relocation Source: Intermark Relocation

6% 1 bedroom 18% 6% 1 bedroom 18% 19% 2 bedrooms 19% 2 bedrooms 3 bedrooms 3 bedrooms 25% 4 bedrooms 25% 4 bedrooms 32% 5+ bedrooms 32% 5+ bedrooms

26 AEB Real Estate Monitor | 4/2019 St. Petersburg market overview | Office market / Retail market AEB Real Estate Monitor | 4/2019

St. Petersburg market overview

Office market The average asking rents increased by 1.5% in Class A and In Q3 2019, the average vacancy rate in the St. Petersburg by 0.2% in Class B. Rental rates continue to grow on the office market declined to 4.9%. In Class A the vacancy rate back of a low vacancy rate and low completions. A signifi- was at 3.0%, in Class B at 5.9%. cant volume of completions in Q4 will suspend growth of rental rates and decline of vacancy rate. The completions for the quarter amounted to 21,200 sq m in 3 Class B and 2 Class A business centres. Some 100,000- The average asking rents in Class A are at RUB 1,906/ 120,000 sq m of office premises are expected to be deliv- sq m/month, Class B rents are at RUB 1,302/sq m/month ered to the market until the end of the year. (including VAT and operating expenses). (50 )

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

RUB/sq m/month

2 500 40,0% 35,0% 2 000 30,0%

1 500 25,0% 20,0% 1 000 15,0% 10,0% 500 5,0% 0 0,0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

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

Source: JLL

8% 6,9% Retail 7%market

In Q3 2019,6% there were no quality shopping centres For the first time since the end of 2018, the number of opened in St.5% Petersburg. Only one new shopping centre opened stores and announced to open exceeded the was announced4% for Q4 – Fashion House Outlet Centre St. number of closures. The largest3,4% increase is observed in Petersburg, Phase 1. clothing and accessories. 3% 3,1% By the end of2% Q3 2019, the vacancy rate decreased by 0.2 In Q3 2019, prime base rents in quality shopping centres ppt and reached1% 3.4%. At the same time, the dynamics of increased to RUB 80,000/sq m/year (excluding VAT and change in the city’s submarket is uneven. While vacancy operating expenses). (51 ) 0% was growing in theQ3 centre, in Q1other districtsQ3 of the cityQ1 it Q3 Q1 Q3 was declining. 2016 2017 2017 2018 2018 2019 2019

'000 sq m AEB Real Estate500 Monitor | 4/2019 27

400

300

200

100

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F Completions Future completions RUB/sq m/month

2 500 40,0% 35,0% 2 000 30,0%

1 500 25,0% 20,0% 1 000 15,0% 10,0% 500 5,0% 0 0,0% 2009AEB Real2010 Estate 2011Monitor |2012 4/2019 2013 2014 2015 St. 2016Petersburg2017 market2018 overviewQ3 2019| Retail market / Street retail market

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

51 VACANCY RATE IN ST. PETERSBURG SHOPPING CENTRES

8% 6,9% 7%

4% 3,4%

3% 3,1% 2%

0% Q3 Q1 Q3 Q1 Q3 Q1 Q3 2016 2017 2017 2018 2018 2019 2019

Source: JLL

'000Street sq m retail market 500 By the end of Q3 2019, the number of vacant premises on The foodservice operators maintain a leading position the400 main St. Petersburg high streets reached maximum since among tenants on the main street retail corridors of the 2015. High vacancy was observed on Nevsky Ave (6.7%). city. Some 34 new café and restaurants were opened during The300 main reason of growth is the traditional seasonal factor Q3 2019. A quarter of them was opened in popular coffee connected with the end of the summer season, as well as house and coffee to go format. the200 cold weather in summer, which led to a decline in the revenue of some tenants. Opening of Uniqlo has led to a popularity and rental rate in- 100 crease of the main streets of the Petrogradskaya side. Prime In Q3 2019, quarterly rotation was equal to 6.2%. This cor- rental rates increased on Kamennoostrovsky pr. in Q3 2019 responds0 to the average long-term values. and reached 6,000/sq m/month (including VAT). (52 ) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 52 VACANCY RATE DYNAMICSCompletions ON NEVSKYFuture AVE. completions COMPARED TO THE AVERAGE

8,7% 9% 8,0% 8,1% 7,8% 7,5% 7,7% 7,2%

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

0% Q2 2018 Q3 2018 Q4 2018 Q1 2019Q2 2019Q3 2019

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

Source: JLL

28 AEB Real Estate Monitor | 4/2019 RUB/sq m/month

2 500 40,0% 35,0% 2 000 30,0%

1 500 25,0% 20,0% 1 000 15,0% 10,0% 500 5,0% 0 0,0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

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

St. Petersburg market overview | Warehouse market AEB Real Estate Monitor | 4/2019

8% 6,9% Warehouse7% market

6% In Q3 2019, the vacancy rate in the St. Petersburg quality construct warehouse complex with total area of 51,000 warehouse5% market decreased by 0.5% and reached 4.0%. sq m for Marvel company. Dieta-18 bought a warehouse We expect a slight increase of vacancy rate by the end of complex with a total area of 21,700 sq m located on Sofiys- 4% 3,4% 2019 due to the new warehouse completion. kaya Street. 3% 3,1% Completions volume in 2019 has already exceeded the an- In Q3 2019, rental rates increased on the back of low com- 2% nual 2018 figure. One warehouse complex (15,000 sq m) pletion and lack of available spaces. In Q3 2019, the prime was1% completed in Q3 2019. rents were at RUB 450-500/sq m/month (including VAT and operating expenses). We expect rental rate growth by 0% Retail companies showed the strongest demand in 2019. 7-10% per year. (53 ) Q3 Q1 Q3 Q1 Q3 Q1 Q3 Two major2016 deals completed2017 in Q3 2019.2017 PNK Group2018 will 2018 2019 2019

53 COMPLETIONS IN THE ST. PETERSBURG WAREHOUSE MARKET

'000 sq m 500

400

300

200

100

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

Source: JLL

AEB Real Estate Monitor | 4/2019 29