Yekaterinburg: the dynamically growing centre of the Urals
Situated on the eastern edge of the Ural Mountains, 2,500 km from Moscow, Yekaterinburg is the business, industrial and cultural center of the Ural. It is the capital of both the Sverdlovsk Region and the larger Ural Federal District of Russia, which comprises six other regions for a total population of 14.2 million.
Yekaterinburg is Russia’s third largest city by population, the second by consumer goods expenditures, with the salaries of Yekaterinburg residents rising on average by 23% a year. Yekaterinburg is:
• 1 330 thousand people,
• 110 thousand ha,
• 10 thousand US dollars of regional product per capita,
• 6 thousand US dollars of retail turnover per capita.
Entertainment & Shopping centre location: Akademia City
Akademia City is Yekaterinburg new district, situated 7 km from the city centre. The area of 1267 ha will be built over with 9 Mio. sq.m. of residential estate and 4,2 Mio. sq.m. of commercial estate, public and social establishments.
Preconditions for Entertainment & Shopping Centre
• A large-scale construction project with all types of real estate provides the necessary business and living environment and creates a positive image for the future Entertainment & Shopping centre.
• Good location, proximity to the city centre, perfect view of the site.
• The area of 22, 5 ha allows building a large and inexpensive parking that will be a competitive advantage of the project.
• Low construction costs due to well-balanced urban and architecture design.
• High level of projected consumer demand.
These factors and professional approach to ESC/concept development will allow to maximize the Project`s rental income and increase the interest from investment`s point of view in long term perspective.
Retail market analysis and main trends
Supply
• The market supply of retail stock is represented by the following retail formats:
- Large shopping centers located in the highly populated “neighborhood” area;
- Middle and small size shopping centers located in the city center and adjacent areas;
- Old soviet department stores;
- Street retail (small size units) located on the first levels of residential building on major throughways central thoroughfares and other smaller streets of the city.
• Retail chains are quite developed in Ekaterinburg. Outlets of retail chains occupy 40 percent of city retail stock. About 70 percent of retail chain stores represent self-service format.
• High level of development and construction of shopping centers in period of 2006 and 2007 by market leading and well-established international developers.
• Presence of market leading retail chain operators and well-recognized market brands in accordance with increasing level of consumer demand in the city of Ekaterinburg.
• In 2006 a large quantity of new federal and international retail chain operators - Ramstore, Ikea, Auchan and OBI had emerged on the regional retail market as a consequence of massive regional expansion of chain operators as well as intensive development and construction of shopping centers by well-established market international developers.
• Existing rental rates will continue to differentiate in a short term to decrease for low-quality old shopping centers and to increase for other high-quality projects for instance large scale shopping leisure centers/ street retail located on the main retail city corridors. Exception will take place for these street retail shops located on the main retail city corridors that will be able to maintain its high retail potential in terms of sales.
Market development and demand
• Retail segment is one of the most growing segment in the market that at present time is associated by high level of construction. For past two years, the market has witnessed growing consumer purchasing power of Ekaterinburg citizens caused by the increase of disposable incomes. It is worth being noted that changes in market volume are in direct proportion to changes of consumer purchasing power.
• A change of customer perception in favor of newly constructed shopping centers in accordance to increasing consumer demand and consumer expectations. Potentially there will be a decline of consumer and tenant demands for shopping centers that do not comply with international standards, requirements, quality of interior and level of service.
• Improvement of property management of shopping centers and overall quality of projects that are being developed. The market expects some out-flow of shoppers from the city center to large “sleeping” (neighborhood) areas with high density of population and those that are located in the suburbs of the city.
Main characteristics of retail market in Ekaterinburg
Another trend of Ekaterinburg retail market development is associated with high level of street retail outlets located along central thoroughfares, small streets in the city center, and in de-central areas that is less suitable for other cities with population over one million. The assortment of goods offered by street retail stores varies from: foodstuff to different non-food products and services, e.g. banks, private clinics, beauty salons, restaurants, cafes and etc.
The new generation Entertainment and Shopping Center
• Attracting the most sophisticated urban visitors and residents, it will be Ekaterinburg`s ultimate shopping and entertainment destination. Growing personal incomes coupled with the existing lack of quality shopping space make Ekaterinburg one of the most attractive retail destinations in the Ural region.
• The selection of well-known shops and entertainment facilities, as well as its location – at the main hub of new development area Akademia City, close to airport and advanced road network system – will attract consumers from whole city.
Shopping
Hypermarket, DIY, furniture store, W&B, department store, outlet center.
Entertainment
Family entertainment center, multiplex cinema, bowling lanes, amusement/theme parks, adult entertainment center.
Dining
International cuisine restaurants.
Cafes
Food court of international cuisine operators.
Concept & Advantages
• Shopping and Entertainment Center offers high quality environment, international retail brands, and wide range of entertainment facilities, which essential for attracting various consumers.
• Uniqueness of scale and specifics of the Project.
• High level of projected consumer demand.
• Lack of comparable scale shopping leisure projects in Ural region.
• Attractiveness and brand penetration of the Project for the potential tenants - major international and federal retailers.
• High visibility location – direct access to Moscow, Chelyabinsk, Tyumen, Perm directions, existing bypass road «ÅKAD», «Koltsovo international airport».
• Projected public transport – speed tram, two classic tram-lines, circular trolleybus route that links with municipal public transportation network, bus routes, shuttle buses.
Catchments area and demography
Location and Access
South-western part of Ekaterinburg is one of the most densely populated in the city. Booming in residential real estate and new Akademia City 9 Mio. sq.m. development will result in further population growth. Area demographic situation is extremely attractive for retail development due to the dominance of young and active people in future residents with above city average level of income.
Catchments area
Primary
140,775 residents (0-10 minutes drive).
Total area average disposable income $747,896,930.
Secondary
453,790 residents (10-20 minutes drive).
Total area average disposable income $3,156,950,930.
Tertiary
336,794 residents (20-30 minutes drive).
Total area average disposable income $4,947,702,342.
Total: 931,328 residents.
Investment program
RENOVA-StroyGroup is seeking for strategic partners / investors / developers / operators to jointly develop Entertainment and Shopping Center.
• Investment total: $525 Mio.
• Construction starts: 2008.
• Construction ends: 2015-17.
• Total space: 350 thousand sq.m.
• External financing requirement: $350 Mio.
The 1st phase ESC investment program:
• Investment total: $150 Mio.
• Construction starts: 2008.
• Construction ends: 2010.
• Total space: 100 thousand sq.m.
• Externalfinancingrequirement: $100 Mio.
