UrBC, Yekaterinburg, October 11, 2010. ‘The commercial estate developers have now realized that the ante-recession boom was actually a result of a market bubble. There are a lot of business center owners out there who had to reduce the rent rates: the supply is already overabundant and exceeds the demand greatly. At the same time, a number of newly built business centers that were started before the recession set in and are just about to be launched now can make things even worse,’ the General Director of IFC YAVA Finance Management Konstantin Selyanin said to UrBC.
In the meantime, AVS-Group’s new class B business center is expected to open at the intersection of Mamin-Sibiryak St, Pervomayskaya St, Shartashskaya St, and Lunacharskiy St in Yekaterinburg at the end of the year. The area of the new center comes to 6,500 sq m and includes lofts (the smallest ones starting at 200 sq m) on the upper floors.
‘The demand has gone up a bit but stopped at a certain point lately, which prevents the owners from raising the rent. Obviously, the developers who borrowed money to build their offices are now willing to sell the space. Yet not many customers are prepared to buy it at the moment: the recession is not over yet, and many surprises might be in store. Besides, the commercial estate market is very uncertain in terms of investment. For one, it’s not even clear when Antey Business Center is going to open and to introduce new offices available for rent,’ Konstantin Selyanin added.
‘There is, of course, one predictable way to increase demand, that is, to reduce prices. However, even this is not a guarantee of success. I’m positive AVS-Group will have a difficult time selling its office space,’ he said.
‘As for the lofts, which are new to the area, their potential is even less obvious. This is a truly new type of estate for Yekaterinburg. These days, people are going to think twice before buying such a piece of property: the show-off times are over and no one is going to buy into the ‘coolness’ argument any more. People want their investment to yield profit. So the difficulty of selling these lofts is sure to be keenly felt,’ the expert insisted.