Yesterday the newspaper RBC Daily came out with an article titled Office Overdrive, which included commentary from the Head of the Representative Office of RD Group in Russia Roman Tkachenko.
The office market continues to stagnate, the newspaper reports. The trend toward a weaker market first seen in the second quarter continued into the third quarter. The number deals signed decreased by 20%, according to a report by consultancy Cushman & Wakefield. Furthermore, new tax assessment system for commercial premises is not helping to reverse the trend, experts say.
Starting in 2014 property tax will be calculated based on the cadastral value of retail and business centers.
According to the Head of the Representative Office of RD Group Roman Tkachenko, “the coming changes will lead to an increase of at least five-fold in the expenditures of the owners of offices and malls to fulfill their tax obligations. Furthermore, the authorities’ tax initiative will significantly change the investment model for new projects. We shouldn’t forget that practically all real estate projects are implemented with the use of borrowed funds, and this is particularly important for shopping centers. Developers’ need to fulfill their obligations before banks will in essence leave them will only one option: to raise lease rates. According to the most modest projections, lease payments could rise by 10% to 15%.”
The full version of the article can be found here (in Russian).