A place in the sun: fewer shopping centers are opening in Russia
Only 13 shopping and entertainment centers of 254 thousand square meters are to be opened in the regions of Russia in 2025 - it is twice less than a year earlier, according to the report of NF Group. Most of the objects under construction will be realized in the district format, five - in the district format. Izvestia analyzedhow such indicators will affect Russian retail and whether online shopping can further reduce the number of shopping centers.
Market change
Albert Koroev, Head of the Expert Department at BKS World of Investments, noted in his conversation with Izvestia that the long-term trend for the growth of online trade is still in place.
- In 2024, the growth rate is about 40%. On the other hand, the reduction of represented brands, movie rentals of unfriendly countries further reduce the attractiveness of visiting shopping centers. Trends in competition between online shopping and shopping malls will obviously continue. Otherwise, changes are possible in case of improvement of Russia's relations with unfriendly countries, - the expert believes.
First of all, the reduction in commissioning of new shopping mall premises is connected with the increase in the share of online retail, Denis Goldman, an independent PR-consultant, told Izvestia. Existing shopping centers due to the withdrawal of Western brands from the Russian market and domestic companies to online have been under pressure and acute shortage of tenants.
In February, the Union of Shopping Centers (STC) sent invitations to Uniqlo, H&M and Inditex (owns the brands Zara, Massimo Dutti, Bershka, Pull & Bear and others) with a proposal to return to the Russian market, said Pavel Lyulin, vice president of the organization. He noted that these companies have not broken ties with Russia definitively, so they may be the first to return.
After the introduction of anti-Russian sanctions in 2022, many owners of Western brands left the Russian market. For example, Inditex closed more than 500 stores.
- Despite the difficulties, the industry has managed to adapt. The share of space given not for trade but for entertainment is growing (if earlier the share of entertainment in shopping malls was 10-15%, now the norm is 35-40%). These are not only cinemas and catering, but also children's centers, thermal complexes, which are being converted to the malls that are suitable in terms of technical characteristics, etc. Brands that used to trade on large premises are shrinking to small showrooms and retail outlets," said Denis Goldman.
The service sector (for example, hairdressing salons and ateliers) began to occupy large areas, but this is traditional for small centers that have taken over the functions of households.
Meanwhile, the news about the imminent return of foreign brands to Russia and the readiness of shopping centers to provide them with space is contributing to the growth of competition among tenants. In this regard, in 2026 (with further warming of relations with the West and high speed of entry to the Russian market) the volume of commissioned shopping mall space may increase to accommodate all comers, with an inevitable decrease in 2027 due to the closure of some companies that will not be able to compete with the returnees. In any case, the market, introducing new shopping malls, will be late to follow the agenda due to the specifics of the construction sector.
Falling revenues
Revenues of shopping centers continue to fall, Ksenia Balandina, an expert of the Presidential Academy, told Izvestia.
- Some tenants are leaving, the space is empty, and new tenants sign contracts with floating rates depending on turnover. The older generation does visit large shopping centers less often, preferring to shop in small stores and economy chain retailers, which are often located outside large shopping centers. Shopping centers are gradually turning into leisure and entertainment zones," she believes.
Customers are increasingly buying goods through online stores, which reduces the need for frequent visits to physical retail outlets, she said. This is also evidenced by a sharp increase in demand for warehouses of various types, large logistics complexes and first-level warehouses - aggregators for retailers.
- High interest rates make lending for construction and creation of retail real estate virtually impossible - loans for the construction of shopping centers are issued at a rate of at least 25% per annum. This significantly increases the cost of projects and negatively affects the overall economics of construction. Developers note that such business models are becoming unprofitable," the expert noted.
Many shopping centers, in her opinion, are experiencing difficulties in servicing previously taken loans for construction and development. This can lead to bankruptcies and subsequent transfer of assets to banks, which causes a wave of changes in the structure of real estate ownership. According to various estimates, about 10-12% of shopping centers existing today may face the problem of inability to service loans.
Shopping centers in their current form are likely to undergo significant changes and in a few years may cease to exist in their usual format, the expert stressed.
- I think they will be preserved, although they will be transformed.
Most likely, they will become places for recreation, events and holidays, taking into account the general situation, real estate appreciation and reduction of average apartment sizes, which makes it difficult to spend quality leisure time at home, - concluded Ksenia Balandina.
Production cycle
Decrease in commissioning rates of new shopping centers can be explained by the economic situation, agreed Dmitry Sergienko, Senior Director for Corporate Ratings of Expert RA, in his conversation with Izvestia.
- Construction of shopping centers has a long production cycle. For those facilities that were commissioned in 2024, the decision to start the project was made in 2021-2022, when the economic situation was relatively favorable. Further the economic situation became more tense, the cost of financing grew, as a result of which the start of some projects could be postponed to a later period, - the expert noted.
According to him, shopping centers currently play the role of not only a "market" where people go to buy goods, but also perform leisure and entertainment functions. Therefore, shopping centers will remain in demand among the population.
Earlier, the ombudsman in the restaurant business in Moscow, Sergei Mironov, said that restaurants in shopping centers after negotiations between Russia and the United States are waiting for the return of foreign brands in Russia to return attendance. The industry is also expecting the arrival of imported products to compete in the market.
Online format, of course, will continue to increase its share in the total turnover, which undoubtedly negatively affects the investment attractiveness of shopping centers, emphasized Dmitry Sergienko.
The volume of the online sales market in January - October 2024 reached 7 trillion rubles, which is 43% more than in the same period last year, said earlier the president of the Association of Internet Commerce Companies (AKIT) Artem Sokolov. For the full year 2024, the Russian e-commerce market, according to his estimation, will overcome the bar of 9 trillion rubles, which is more than 40% higher than last year's figure.
Natalia Kazantseva, Associate Professor of the Department of Economic Policy and Economic Measurements at the State University of Management, reminded Izvestia that the retail real estate segment has been the leader on the non-commercial real estate market for a long time. The tone was set by large foreign firms, but domestic developers were not lagging behind, building large shopping and entertainment centers similar to Western malls. Customers were attracted by the symbiosis of trade and other services.
- But a number of factors that have emerged in recent years, primarily the development of e-commerce, the introduction of sanctions and the subsequent decline in imports of goods that most often filled the assortment of these shopping centers, as well as the rising cost of construction and land acquisition have played their role in the metropolitan regions," she said.
Shopping centers focused not only on retail trade, but also on entertainment and leisure services may remain an attractive investment object, Elvira Yakubova, senior analyst of the corporate ratings group of ACRA, told Izvestia. The transition to online trade may lead to a reduction in the construction of new facilities, while shopping centers with an outdated concept and tenant structure may face a decrease in attendance and rental income, which may force them to leave the market.
"Izvestia sent inquiries to the Ministry of Construction and the Ministry of Economic Development, but at the time of publication no answers had been received.
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