Tatiana Khoreva commented on the rent rate indexation in the current economic environment for CRE.
For the past several years, lessors and lessees revised the rent rates annually. The indexation depended on several factors including contract currency. Foreign exchange-denominated rates were indexed by 5-7 % on the average, ruble-denominated rates were indexed by 10-12 %.
In the current environment, the owners of commercial areas make concessions in terms of indexation.
Tatiana Khoreva, Deputy Head of the Representative Office of RD Group Holding for Financial and Economic Matters, shared her opinion on the subject.
Tatiana noted that the rent indexation “freezing” caused by the slack market will be temporary and will last for 1-1.5 years. As for currency contracts, step rent may be the compromise approach. Tatiana also highlighted that all long-term rental contracts include the rate indexation clause, as the key stakeholders forecast market growth.