The opening Europe’s largest shopping mall in Moscow comes at an extremely bad time for those funding this project.
The Aviapark mall will open its doors on November 28, in the midst of Russia hurtling toward recession and businesses having to content with international sanctions due to the Ukrainian conflict. The ruble has fallen to new lows, interest rates are increasing and consumers’ finances are looking grim as inflation eats into it.
Once the mall is opened for business, it will surpass the MetroCentre based in northeast England as the glass-roofed mall offers 230000m² of space to house 550 stores. It is three times the size of the Metropolis mall, which is located nearly and was obtained by Morgan Stanley for $1.2bn last year in the largest ever real-estate deal within Russia.
Colliers International estimates that the development could have about $1bn, inclusive of planning permits and land. One of the investors is the son of Arkady Rotenberg, a childhood friend of the President, Vladimir Putin, who has been placed on European Union and US sanctions lists.
Unemployment has risen to its highest level since April and retail sales in Russia are stagnant at 1.7% since last October. The chance of a recession within the next year is 70%, according to economists.
In excess of 85% of the mall has already been rented out to retailers, such as Media Markt-Saturn SA, Hoff, Obi AG, Decathlon and Groupe Auchan SA. Over the past 10 years, developers have constructed malls as replacements for the open markets which were popular during the 1990s.
Although the surrounding area offers the mall about 100000 visitors, the managing partner at Colliers International, Nikolay Kazansky, said it may not be able to retain tenants. He said that malls of this magnitude are always high risk and rents will have to be kept sufficiently low to retain tenants.
According to Aviapark, the domestic tenants on their list include Karo cinemas, Detsky Mir, Sportmaster and M.Video.
Fedyakov said that the timing of the opening of this mall may be inopportune, but bigger malls always attract customers. He added that people may not be able to purchase a new apartment or go on an overseas trip, but they can appease their depression by going shopping.