Banks are active
A new trend in investments is a more active integration of banks into managing loan projects. Together with Sberbank, VTB and Alfa-Bank, in November last year Trust set up a management company Trust real estate, which is to manage over 1.5 billion sq. m of commercial real estate, including a few shopping centers. “This management is not a primary function for banks, and it is easy to understand that it is difficult to manage what is not your primary business. One needs good resources. I think this trend will survive next year too. Banks will reanimate projects and then sell them,” says Sofia Marlen, managing MARi Shopping and Entertainment Mall.
There are also banks, which are willing to work more with commercial real estate and to develop this function together with their main one. Commercial Real Estate of Financial and Industrial Corporation Garant-Invest owns and manages a portfolio of commercial real estate and deals with good quality development projects, mostly in commercial real estate and mixed-use real estate. Its portfolio consists of a chain of district shopping centers under the brand of Small, as well as the shopping centers Aeroport, Moskvorechie, Retail Park, Tulsky, Kolomensky, Prazhsky Grad, Perovo Mall. In November 2019, Garant-Invest bought a small shopping center on Kashirskoe highway. To finance the deal, the company used funds received from open market bonds. The building will be modernized and transformed into a shopping center of the chain Small. It will become the 14th retail property object of Garant-Invest and the 8th carrying the brand name Small. The renovation is to take 4–6 months and the mall will still be open for the visitors. The company says, the pool of tenants will change after the renovation, which will allow to increase the people flow and profits. The utility lines together with the internal layout and the facade are to be freshened up. Diners with summer terraces might be added.
“It is obvious that with the increased payback terms of construction, minimal added value and lack of good locations for new construction, redevelopment and modernization of retail property in the near future are to become the major driver of this segment of commercial real estate,” comments Aleksey Panfilov, President of Garant-Invest. In under two years, our company has renovated nine of our objects. “Only last summer we replaced 12 key tenants. And we set up a chain of shopping centers called Small. It’s all within the framework of a complex investment program of redevelopment, which we called Programme RE,” explains Aleksei Panfilov.
Investing together
When discussing world trends in the area of investments, we can single out lowering capitalization rates in key developed markets by means of high investment activity and the fall of base rates, a growing interest to alternative sectors as well as decrease in investments into retail segment with replacement of traditional shopping centers with new formats.
In the West, one of a very common way to save and increase your capital is pooled investment, for example, REITs (Real Estate Investment Trusts), a public real estate trusts giving nearly all their income to the shareholders in the form of stable dividends. Such funds can provide high yield. Russian yield makes up 8–10%, while in the European Union it is 4–5%, according to ITD Properties. “Both in Russia and in western countries strategies of investment funds are rather conservative. Higher yield in Russia can be mostly explained by the necessity to level out the inflation,” suggests Inessa Samokhvalova, managing partner, ITD Properties.