Reports said that the bulk of investors were reviewing their plans and development strategies because of the unstable economic situation. Also, the decline in consumption and currency fluctuations negatively influenced company profits, which made investors carefully evaluate their plans in the country, and even close businesses in some cases.
However, most analysts say it would be wrong to state that the exit of certain companies from the Russian market is a trend that will continue over the longer term, while foreign retailers mostly put their development plans on hold. All in all, the investor sentiment picture looks very mixed at present moment of time, says Tom Mundy, Head of Research, JLL, Russia & CIS.
“We’re seeing some evidence of retailers, for example, just putting their expansion plans on hold. We’re also seeing evidence of international retailers still committing to the Russian market, but in general I would say that retailers are in quite cautious mode…” Tom Mundy said.
JLL, one of the world’s leading property consultancies, just claimed that the economic situation on the Russian market has led to a significant increase in Moscow shopping centres’ vacancy rates. Retailers prefer to complete their currently constructed projects but do not start new ones. Experts don’t expect the construction of new shopping centres to be started in the short-term except the projects, which have been financed already or self-financed. In the longer run, though, experts are more optimistic.
“The investment case for Russia is not eroded completely. I think the market understands that there is still significant potential for growth in Russia, just because of the lack of penetration in Russia, compared to … European levels, for example, in almost everything – from mobile phone usage to broadband usage, to the number of cars at families’ own, and to the amount of shopping centre space…” Tom Mundy said.
But for now, amid elevated business uncertainty and very tight credit conditions, most market watchers don’t expect the Russian investment story to recover earlier than by the end of next year.
