CBRE Hotels and Maris| part of the CBRE affiliate network experts continue to analyze the readiness of the Russian cities to host visitors of World Cup 2018
According to CBRE research, there were 38 branded hotels with about 10,500 rooms in total in St. Petersburg in 2017.
In 2017 two branded hotels were opened in St. Petersburg. In December 2017, the hybrid-hotel NETIZEN Saint Petersburg Center for 128 beds had its soft opening. In 2018 two new branded hotels are planned to be opened with 402 rooms in total.
At the end of 2018, the increase in RevPAR in St. Petersburg will be comparable to 2017 and will amount to about 7% of the market as a whole.
Tatiana Belova Associate Director, Head of Hospitality & Tourism group CBRE in Russia said: “St. Petersburg is ready to offer its guests an extensive hotel offer in all segments – from luxury to economy. The World Cup will also contribute to the growing tourist flow into the city. We expect an increase in the number of guests from Europe and Latin America, especially considering that the group stage will include matches with Brazil and Argentina."
Boris Moshensky, CEO of Maris| part of the CBRE affiliate network, said: “We should not wait for any records in the hotel real estate segment in the connection with the World Cup. According to forecasts, the tourist flow may increase to 8.2 million people. At the same time, the regular St. Petersburg tourists who are not interested in sports events are likely to postpone their trip to a later date. The World Cup, in general, can create a delayed effect of tourist flow growth when football fans who come to St. Petersburg to watch World Cup in 2018 and will plan a visit the city as regular tourists in the future."
In Q1 2018, the volume of growth in new supply showed an extremely low value and amounted to 37,100 sq m. In January-March 2018, four Class B office buildings were commissioned, the largest of which was the business centre "La-5" near Vnukovo airport.
The limited completions volume will also be common for the following quarters of 2018.
Overall vacancy rate continues to decline for the tenth consecutive quarter, beginning in the second half of 2015. According to Q1 results, this indicator decreased by another 1.3 ppts compared with the value at the end of 2017 and amounted to 12.4%.
In Q1 2018, take-up amounted to 365,000 sq m of office space. This is a record value of the new transactions volume executed for the first three months of the year since Q1 2010 (375,200 sq m).
Users demand was still mainly focus on the lease of office premises. This type of transactions is accounted for 83% of take-up in Q1 2018.
In Q1 2018 the average level of rental rates remained in the ranges of the end of last year.
•According to Q1 2018 preliminary results real estate investment volume in Russia has totaled $150 mln, 4.7 times lower than Q1 2017. For year-beginning low transactions conversion is typical, especially after high conversion level of Q4 2017. Furthermore, investors sentiment was moderate in terms of decision making before March President elections typically resulting to markets volatility.
•Q1 2018 investment volume by 95% is formed by overseas capital, compared to Q1 2017 with overseas investments share of 22%
•Residential real estate investment has totaled $71,5 mln (47% in Q1 2018 investment volume). Office segment share according to preliminary results is 34%, retail sector – 12% and industrial real estate – 7%. A total of c. 80 mln was invested in commercial real estate segments in Q1 2018.
•Prime office yields in Moscow in Q1 2018 were 9.00-9.75%, prime shopping centres – 9.00-9.75% and logistics centres – 11.50-12.00%. In Q1 2018 prime yields range was revised by compressing the lower boundary. Based on further real estate markets recovery and key rate decrease, in 2018 we expect further prime yields compression, started in the 2017 year-beginning.
Despite zero new delivery of shopping centers in regional cities in Q1 2018, construction activity remains high: 10 shopping centers with total leasable area of 298,655 sq m are announced for delivery by the end of the year.
58% or 173,855 sq m of 2018 forecasted new delivery of shopping centers accounts for major cities: Novosibirsk, Yekaterinburg, Ufa, Samara and Rostov-on-Don.
Average vacancy rate in large shopping centers in major cities fell to 6-8% as of the end of Q1 2018. Key trigger of this decrease was low supply volumes over the last two years.
In Q1 2018 a new project of shopping center Mall of Baltia was announced in Kaliningrad (GLA: 42,000 sq m) with opening in 2019.