Moscow gets another mega-shopping centre

Lotte Plaza, a new giant shopping centre, has been opened in the centre of Moscow by the South Korean Lotte Group. The project is worth $US 400 MLN and serves as another reminder of Moscow's attractiveness to foreign investors.

This is the first step taken by leading South Korean retailer Lotte Shopping towards foreign expansion. The location for the centre was chosen not at random.

Dong-Bin Shin, Vice-Chairman of Lotte Group, says “we picked Moscow because we think this market is very promising and in Moscow I think there are more millionaires compared to any other cities in the world.”

Moscow has been at the top of the global retail development index for two years. Earlier this year it yielded top position to New Dehli, nevertheless consumer demand is constantly growing – currently around 20% per year.

Experts say that what makes Moscow so attractive is the limited supply of the things that makes a big city a true world centre, namely an infrastructure of offices and retail outlets.

On the other hand, for the second year in a row the city has been ranked the world's most expensive, which plays into the hands of the investors already here but also encourages new ones to enter of the capital.

“The human aspect of doing business in Moscow is very disadvantageous relative to the other cities. Some retailers are scared by the high real estate and land prices (primarily the low-cost suppliers),” Anton Poriadine, Retail Analyst at A.T. Kearney remarks.

However, at some stage Moscow is the place to come to – no matter where the majority of your operations are.

According to Poriadine, “you've got to have your flagship store in Moscow for it to be recognized as a national retailer.”

Several major investments already made by the global real estate players are considered to be just the beginning of a big future.

Andrey Zakrewsky, Vice-President of Knight Frank believes that “in the near future 10 more transnational players such as G Capital, Morgan Stanley, ImmoTeat and Flemming Family and Partners will definitely come to the Moscow market to raise its level and stabilize it.”

The growth is evident: while about five years ago a $US100 MLN project was considered large-scale in Moscow, today a large project is the one worth $US1 BLN.

Moscow is often compared to world cities like London and New York. Some say it now offers as many possibilities as the booming Chinese cities of Beijing and Shanghai, but all agree that Moscow is one of the best locations for investment throughout the world.