Being a Chelsea FC season ticket holder, Russian money is something that I have been very well aware of for some years now. Roman Abramovich has believe it or not been involved with Chelsea FC for ten years, as the British press widely reported earlier this year. Russian money and the increased spending power of the country is something that investors, developers and retailers are increasingly looking to harness.
As an example, take the shopping centre pipeline; of the 11.9 million sq m of new shopping centre space across Europe to be completed during H2 2013 and 2014, nearly 30% will open in Russia. The result? Russia will have the largest share of shopping centre space in Europe by the end of 2014, surpassing the UK and France.
15 new shopping centres opened during the first half of this year in Russia, totalling 522,000 sq m, a further 900,000 sq m is scheduled to open in H2 2013 and an additional 2.5 million sq m is in the pipeline for 2014 (including the very impressive, Jones Lang LaSalle leased, Avia Park which exceeds 230,000 sq m GLA).
Turkey is Europe’s other active powerhouse market; during H1 2013, a total of 581,000 sq m of new shopping centre space opened in the Turkish market. For H2 2013 and 2014 total completions are expected to reach 1.1 million sq m and 1.3 million sq m respectively. Zorlu Center, a $2.5bn high-end multi-use development in Istanbul, is the most anticipated opening later this year.
The healthy pipeline in Russia and Turkey is driving growth in total completions at a European level; in H2 2013, this will hit 4.3 million sq m, almost 50% more than increase on H2 2012. And in 2014, a further 2.5 sq m of space will come on-stream in Russia alone. What is driving this growth? Contemporary Russia and Turkey are home to huge populations, and to a sharply growing and dynamic middle class. It is these demographics, together with an undersupply of modern retail stock, which should ensure the success of the new shopping centre empires.
So, whilst we are used to hearing stories of Russian spending in Mayfair clubs and buying houses in West London, (Jones Lang LaSalle Residential team in fact have a dedicated Russia desk), we can be confident that there are enough rubles left in the mother country to satisfy this impressive level of retail development.