by In last week’s Wall Street Journal, there was an article on Developers Diversified Realty Corp.’s plan to expand into Russia: Mall Developer Targets Russia.
I found the statistic on retail space to be really interesting.
In Russia, the volume of shopping space per 1,000 inhabitants makes up about 420 square feet, according to Maxim Karbasnikoff, European Director, Russia, at brokerage Jones Lang LaSalle. In contrast, there is 25,758 square feet of shopping space available for every 1,000 people in the U.S.
It makes me want to head out to the Chestnut Hill Mall and mark off my own 5 feet square of space in the courtyard.
Yes, I agree that Russian Real Estate market is underdeveloped, but there are still many risks for investors from outside. All Russian developers use their connection to State authorities to get free land resources, what makes them stronger in competitive market. Any foreign investor has to go to an “open” auction according to new Land Code in order to get land. The price of the land gets down project outcome from 2 (Small towns) up to 6 (big Cities) percent for projects of $ 100 M
Another risks connected to obligation to reestablish or build brand new infrastructure around project field, what gets down project outcome by 2-5 percent.
Corruption is the major risk for investors in Russia!
PS: I do not have an opportunity to read all article, but I think the article probably talks about Wal-Mart?