Home / Business / Currency Crisis Reduced the Cost of the Rental Properties in Shopping Streets by 10%
Currency Crisis Reduced the Cost of the Rental Properties in Shopping Streets by 10%

Currency Crisis Reduced the Cost of the Rental Properties in Shopping Streets by 10%

An interview with Director of Cushman & Wakefield | Veritas Brown Nino Kipiani

In recent months, many shopping streets of Tbilisi have suffered losses – in particular, due to the crisis, stores are closing, the number of objects which can’t be rented out  is increasing,  branded stores are leaving the market. What are the trends in this market?

The old players still remained in the  traditional shopping streets, especially major international brands. The only thing that has changed is the cost of rent, which decreased by 10%. This applies both to  shops and restaurants.

Those brands that left the market, have taken a strategic decision and it was not associated with the current economic problems.

In addition, many brands have closed stores in one place, and opened in another – for example, “Mango”.

In general, stores designed for the middle segment  such as  “Cotton”, “Baldi,” “LC Waikiki” and many others are operating  more successfully. Therefore, many of them even in the current situation are going  to expand.

That is, the rental price fell by only 10% while  for example, in Moscow it decreased by 50%?

Inflation has not had a major impact on shopping centers, as they signed  contracts on long term rentals. With regard to individual stores, everything is solved at the level of negotiations.

In general, we expected  a more serious decline in prices, but many property owners made concessions, so a decline in the cost of  rent was lower than it could be.

A lot of  large shopping centers are opening in Tbilisi, such as the recently opened “East Point”. What impact do they have on the market and on consumers?

The main thing is that consumers are gradually getting used to the high standard of consumption, which is now much higher than at least 3 years ago. Therefore, the owners of shopping centers are interested in a variety of tenants and high quality services.

On April 6, 2012 a shopping center “Tbilisi Mall” opened in Tbilisi and  brought to the Georgian market a new tradition of shopping. There were serious problems as a mall was something new  for Georgia  and  many retailers were skeptical. However, the problem was overcome, and  today Carrefour, Zara, Massimo Dutti, Bershka, Stradivarius, Pull & Bear,  OYSHO and many other major brands are operating in “Tbilisi Mall”.

The number of large shopping centers will continue to grow that will inevitably lead to an increased competition and the closure of the least popular.