H1 2019 IR Presentation Final by AFI Development

H1 2019 IR Presentation FINANCIAL & BUSINESS RESULTS August 2019

Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. The information contained in this document is provided as at the date of this document and is subject to change without notice.

Company Overview SECTION 1

AFI Development at a glance Market Cap, as of 26 August 2019 Mkt price GDR, as of 26 August 2019 Mkt price B share, as of 26 August 2019 NAV (Equity), as of 30 June 2019 NAV per share, as of 30 June 2019 Portfolio Value*

US$218 mln US$0.199 US$0.218 US$836 mln US$0.80 US$ 1.25 bn

BUSINESS

PORTFOLIO VALUE*

HISTORY

*Gross Asset Value of Portfolio based on JLL’s confirmation of their Valuations as of 30 June 2019 and BSV of Land Bank projects, Trading Properties and Hotels

•Full cycle real estate developer •Focus on unique large scale commercial and residential projects •Primary market: Moscow, Russia

•18 years on the market •Admitted to LSE in 2007 •Premium listing from 2010 •Free float – 35.12%

FINANCIAL STABILITY

• Liquidity position: US$99.1 million as at 30 June 2019 • 32% Debt to Total Assets ratio**

TRACK RECORD

•14 completed projects with total c. 0.6 mln sqm of space •Market reputation for high quality and professional property management

• Substantial income generating portfolio. Major project AFIMALL City BRAND

•Strong local and international brand

PORTFOLIO

• Four residential projects in active construction and marketing stage

• 8 Development Projects & land bank 4 ** Bank loans only to the value of portfolio of properties

Key Projects in Moscow Yielding Projects (retail, offices and hotels) Value, US$ mil**

BOTANIC GARDEN

Plaza Ib

Riverside Station Berezhkovskaya

AFIMALL

Plaza Spa Kisl*

Plaza Spa Zhel*

Paveletskaya I

Aquamarine Htl

H2O

755.0

(JLL and book value, as of 30 June 2019):

GLA (excl. hotels), sqm:

151.2K

* Outside of Moscow * * Hotels presented at cost value

Projects Under Development PLAZA IV PLAZA II PLAZA IC AFIMALL BEREZHKOVSKAYA

FOUR WINDS

BOLSHAYA POCHTOVAYA

Value, US$ mil**

AQUAMARINE

PAVELETSKAYA I H2O PAVELETSKAYA II

KOSSINSKAYA

Odinburg**

Paveletskaya II

Kossinskaya

Plaza Ic

Plaza IV

ODINBURG

Botanic Garden

B. Pochtovaya

451.7

(JLL and book value, as of 30 June 2019):

GLA, sqm:

218.7K

GSA, sqm:

743.2K

** Odinburg, Paveletskaya, Bolshaya Pochtovaya and Botanic Garden presented at cost value

Land Bank Yielding Projects

Value (BSV), US$ mil:

Projects under Development Completed Assets

Other

Project Update. Yielding Projects SECTION 2

AFIMALL City Update

(as of June 2019) Total GBA, sqm

274.9K

Total GLA (shops, offices, storage), sqm

107.0K

Occupancy

(as part of GLA total)

Parking lots

90%

 The occupancy was at 90% at the end of June 2019, unchanged compared to the end of March 2019  The AFIMALL’s revenue for the 6 months was US$44.2 million, while the NOI was US$34.3 million

2,022 US$ 78.9 m

ITEM, US$ million

MV (JLL est.)

US$ 653.7 m

Loan balance as at 30 June, 2019

US$ 398.0 m

(1) Revenue (2) Operating expenses (3) Net Operating Income (NOI)

Terminal NOI (JLL est.)

Q1 2019 Q2 2019 6M 2019 6M 2018 Actual Actual Actual Actual 21.7 22.5 44.2 43.6 (5.0) (4.9) (10.0) (10.8) 16.6 17.6 34.3 32.8

Note: the NOI projections are “forward looking statements” based on JLL valuation assumptions and Company estimations and they can be realized or not realized due to factors beyond the Company's control including, among others, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions

Yielding Properties Building

AFIMALL

Berezhkovskaya

Moscow

Moscow City

Moscow

Retail

Office B

GBA, sqm

274 877

7 910

GLA, sqm

107 036 2 022

Location Class

Parking lots (total), # Ocupancy rate (30.06.2019), % NOI term., (JLL est.), US$ mn MV*, US$ mn

Tvesrkaya Plaza Ib Moscow CBD Office & Street Retail

Paveletskaya I Moscow

H2O Moscow

Crown Plaza Tretyakovskaya Moscow

Plaza SPA Plaza SPA Kislovodsk Zheleznovodsk

CBD

Caucasus region

TOTAL

Office B

Hotel

2 338

16 082

9 002

8 848

25 000

11 701

356K

6 928

2 050

13 506

8 012

134 keys

138K

105

102

159 keys

275 keys

70%

90%

87%

83%

68%

74%

68%

78.9

1.8

0.6

2.4

1.4

653.7

11.1

3.8

10.6

7.9

14.2

43.1

10.7

755

* MV based on JLL’s confirmation of their valuations as of 30.06.2019. Hotels presented at cost value ** The hotel occupancy is presented as average for Q2 2019

Project Update. Development Projects SECTION 3

Odinburg Residential OVERVIEW

 The ODINBURG residential district is located in the town of Odintsovo, a modern area considered to be one of the best and most environmentally friendly towns in the Moscow region (11 km from MKAD). A new toll highway to Moscow is in close proximity to the complex

Ownership:50%

 The entire residential district takes up an area of 33 hectares, which will host eight 8-to-25 story buildings. The residential component will offer 9,419 apartments and a total sellable area of 461K sq.m (Including city share) As of June 2019 Type Residential GBA, sqm 828.6K GSA, sqm/GSA commercial total: 461.0/19.6K GSA resi (Phase I), sqm: 153.8K GSA resi (Phase II), sqm: 307.2K GSA commercial, sqm: 19.6K Apartments, total : 9,419 Phase I: 2,846 • Building 1 723 • Building 2 706 • Building 3 923 Phase II: 6,573 • Building 6 224 • Building 3 1329 Parking units: 4,563 Book value, US$ m (including value 100.6 of unsold apartments):

CONSTRUCTION STATUS AND SALES

 Construction and pre-sales of apartments are ongoing in Buildings 3 (Phase I) and Building 3 (Phase II)  Builging 6 was delivered in May 2019, transfer of apartments to customers is ongoing  As of 16 August 2019, in Building 3 (Phase I) 766 out of 923 contracts have been signed; for Building 3 (Phase II) 93 out of 1329 contracts have been signed and for Building 6 215 out of 224 contracts for sales of apartments have been signed  Parking lots sold: Building 2: 75 units out of 81. Building 3 (Phase I): 55 units out of 86. Building 3 (Phase II): 4 units out of 416.

AFI Residence Paveletskaya

As of June 2019

GBA (total), sqm:

140.5K

GBA (phase I), sqm

52.9K

GBA (phase II), sqm

54.3K

GBA (phase III), sqm

31,1K

GBA (kintergarten), sqm

2,2K

GSA (total), sqm:

78,3K

Apartments (total), amnt

549

Apartments (phase I), amnt

175

Apartments (phase II), amnt

270

Apartments (phase III), amnt

104

“Special units” (total), sqm

15,7K

“Special units“ (Phase I), amnt

187

“Special units“ (Phase III), amnt

Commercial space, sqm

11.3K

Commercial space (phase I), sqm

5.9K

Commercial space (phase II), sqm

1.3K

Commercial space (phase III), sqm

4.1K

Book value, US$ m (including value of unsold apartments):

54.1

According to common market practice in Russia and to applicable Russian laws, preliminary sales of apartments during construction are done in the form of “contracts of participation in construction”, which are executed between the developer and purchaser of an apartment. These contracts are registered with state authorities and enter into legal force after this state registration. However the Company considers that signed contracts have high probability of registration and entering into legal force and reports “units sold” as the number of contracts signed with the apartments purchasers. “Special units” are premises legally not zoned for housing, but are widely sold for residence (a person cannot register in this address, but the premises can be used for housing). The prices of ‘special units’ are normally lower than that of similar apartments (properly zoned housing units).

 Phase I has been fully delivered and apartments have been transferred to customers, while sales of completed apartments continue Phase II was delivered in May 2019, transfer of apartments to customers is ongoing Phase III is under construction and presales As of 16 August 2019, contracts for 588 apartments and “special units” out of 632 total units have been signed. Parking lots sold: 463 units 11

Bolshaya Pochtovaya As of June 2019 GBA (total), sqm:

138.8K

GBA (phase I), sqm

43.5K

GBA (phase II)

36.9K

GSA (total), sqm

84.8K

Apartments (total), amnt

626

Apartments (phase I), amnt

187

Apartments (phase II), amnt

219

Apartments (phase III), amnt

220

“Special units” (total), sqm

16K

“Special units“ (total), amnt

280

Commercial space, sqm

16K

Commercial space (phase I), sqm

8.4K

Book value, US$ m:

83.9

 The development is located in Bolshaya Pochtovaya Street, in the Central Administrative District of Moscow  The project is constructed in four phases. Phases I, II and III are currently under construction. Marketing and sales at Phase III started in Q1 2019.  As of 16 August 2019, contracts for 313 apartments out of 626 (Phase I and II, III) have been signed.  Parking lots sold: 171 units

Botanic Garden As of June 2019 GBA (total), sqm:

206.8K

GBA (phase 1), sqm

138.7K

GSA (total), sqm:

118.0K

GSA (phase 1), sqm

71.8K

Apartments (total), amnt

1384

Apartments (phase 1), amnt

805

Commercial space, sqm

6.9K

Commercial space (phase 1), sqm

6.2K

Book value, US$ m:

85.4

The development is located in Proezd Serebryakova, in the Northern Administrative District of Moscow

The project is developed in two phases. Phase I is currently under construction and presales. As of 16 August 2019, 426 (32.5 K sqm) out of 1 384 contracts for sales of apartments have been signed.

Parking lots sold: 159 units out of 542

Revenue recognition in residential projects The revenue from sales of trading properties was calculated in accordance with IFRS 15. The revenue was recognised from pre-sales in the Odinburg, AFI Residence Paveletskaya, AFI Residence Pochtovaya and Botanic Garden projects, taking into account the degree of construction:

REVENUE FROM RESIDENTIAL SALES

6m 2019 Sqm, as per registered contracts Revenue recognised, US$ '000 Cost recognised, US$ '000 Gross profit, US$ '000

31 955 116 631 (59 316) 57 314

Deferred tax liability, US$ '000

(11 463)

Net profit, US$ '000

45 851

Net profit margin, %

39% 14

Development Projects - Commercial PLAZA IC

KOSSINSKAYA

(as of June 2019) Type GBA, sqm GLA, sqm Parking

Office A 50.2K 40.0K 216 pp

Status

Construction started in Q1 2019 62.3 mil

MV, US$

(as of June 2019) Type GBA, sqm GLA, sqm Parking MV, US$

Plaza II Plaza IV Plaza IC

Mixed use 108.5K 70.0K 1,200 pp 25.3 mil

Kossinskaya

PLAZA IV

PLAZA II

(as of June 2019) Type

Retail

GBA, sqm GLA, sqm Parking MV, US$

22K 12.4K 44 pp 18.1 mil

Other

(as of June 2019) Type Office A GBA, sqm 90.5K GLA/GSA, sqm 75.3K Parking 391 pp Status Construction started in Q2 2019 MV, US$ 57.1 mil

Financial update SECTION 4

Consolidated P&L Unaudited

ITEM, US$ million (1) (2) (3)

Construction consulting/management services Rental income Sale of residential and trading property

Reviewed

Q1 2019 Q2 2019 6M 2019 Actual Actual Actual

6M 2018 Actual

0.4 31.1 62.5

1.2 32.7 54.1

1.5 63.8 116.6

0.0 63.3 78.7

(4) TOTAL REVENUE

94.0

87.9

182.0

142.0

(5) (6) (7) (8) (9)

0.8 (14.6) (0.7) (43.9) (0.3)

0.4 (14.0) (1.3) (15.4) (0.2)

1.2 (28.6) (2.0) (59.3) (0.4)

0.8 (30.4) (2.6) (50.4) (3.6)

(10) TOTAL EXPENSES (11) GROSS PROFIT

(59.6) 35.2

(30.8) 57.6

(90.4) 92.8

(87.0) 55.8

(12)

(34.6)

(30.4)

42.6

Other income Operating expenses Administrative expenses Cost of sales of residential and trading property Other expenses

Valuation gain (loss) on investment property

(13) RESULTS FROM OPERATING ACTIVITIES

4.2

0.6

61.8

62.4

98.3

2.0 (6.9) 10.0

10.2 2.4 (13.3) (1.3)

10.2 4.4 (20.1) 8.7

0.8 (19.2) 16.6

(18) Net finance income/(costs) (19) PROFIT BEFORE INCOME TAX

5.1 5.7

(12.2) 59.9

(7.1) 65.6

(1.8) 96.5

(20) (21)

(1.6) 2.0

(9.5) (18.9)

(11.1) (16.9)

(4.1) (15.7)

6.1

31.5

37.6

76.7

(14) (15) (16) (17)

Profit on sale/disposal of properties/investment Finance income Finance expense FX Gain/( Loss)

Current income tax Deferred income tax

(22) PROFIT (LOSS) FOR THE PERIOD

Balance Sheet as of 30 June 2019 Reviewed #

(1) (2) (3) (4) (5) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35) (36) (37) (38)

Investment property Investment property under development Property, plant and equipment Long-term loans receivable Long-term Trade and other receivables VAT recoverable Intangible assets Investments Right-of-use assets Total non-current assets Trading property Trading properties under construction Inventory Short-term loans receivable Trade and other receivables Current tax assets Cash, cash equivalents and tradable securities Non-financial assets Total current assets TOTAL ASSETS Equity Share capital Share premium Translation reserve Capital reserve Retained earnings TOTAL EQUITY Minority interest Long-term loans and borrowings Deferred tax liabilities Deferred income Long-term lease liabilities Total non-current liabilities Short-term loans and borrowings Trade and other payables Advances receivable Income tax payable Short-term lease liabilities Total current liabilities

(39) TOTAL LIABILITIES (40) TOTAL EQUITY AND LIABILITIES

Unaudited

Audited

30.06.2019 31.03.2019 31.12.2018 US$ mn US$ mn US$ mn 705.1 746.4 742.6 145.8 147.5 141.9 73.0 71.5 67.9 0.0 2.3 2.8 1.2 0.0 0.0 0.1 0.1 0.1 0.8 0.3 0.2 5.3 5.2 5.2 0.0 7.8 0.0 931.4 981.1 960.7 17.2 18.6 19.1 307.0 285.9 278.8 1.2 1.0 1.1 0.7 0.6 0.6 63.4 54.5 54.6 3.8 3.6 4.4 99.1 137.5 100.2 14.4 0.0 0.0 506.7 501.9 458.8 1 438.1 1 482.9 1 419.4

Change to year-end US$ mn % (37.4) (5%) 4.0 3% 5.1 8% (2.8) (99%) 1.2 100% 0.0 55% 0.6 250% 0.1 2% 0.0 (29.3) (3%) (1.9) (10%) 28.2 10% 0.1 8% 0.1 13% 8.8 16% (0.7) (15%) (1.1) (1%) 0.0 100% 48.0 10% 18.7 1%

1.0 1763.4 (318.9) (19.3) (589.8) 836.4 (0.0) 384.0 71.6 11.6 0.0 467.3 16.7 62.6 52.0 3.2 0.0 134.5

1.0 1763.4 (340.3) (19.3) (624.3) 780.6 (0.0) 487.6 51.5 13.0 17.5 569.6 17.1 46.6 64.2 0.3 4.7 132.8

1.0 1763.4 (371.7) (19.3) (627.3) 746.1 (0.1) 487.3 54.8 12.0 0.0 554.1 16.4 37.4 65.4 0.0 0.0 119.3

(0.0) 0.0 52.7 0.0 37.5 90.2 0.0 (103.3) 16.9 (0.3) 0.0 (86.8) 0.3 25.2 (13.4) 3.2 0.0 15.2

(0%) (14%) (0%) (6%) 12% (76%) (21%) 31% (3%) (16%) 2% 67% (21%) 7061% 13%

601.8

702.4

673.3

(71.6)

(11%)

1 438.1

1 482.9

1 419.4

18.7

1% 18

Loans and cash position as of 30 June 2019  Gross balance of the bank loan portfolio (as of 30 June 2019) – US$400.4 million  Total cash balance and deposits (as of 30 June 2019) – US$99.1 million (including marketable securities)

Project

Bank

Historical debt limit

VTB AFIMALL

Balance as of 30 June 2019, (US$ mn)

Available (US$ mn)

Nominal Interest rate

Currency

147.7

CB Key Rate + 0,75% (8,25%)

RUB

250.3

4.2%

EUR

RUB 36.5 bn VTB

TOTAL AFIMALL

Maturity

27.12.2022 398.0

5.7%

Kislovodsk #1*

VTB

EUR 18.6 mn

2.0

11.3

4.2%

EUR

21.02.2022

Kislovodsk #2*

VTB

EUR 10.3 mn

0.3

10.8

4.2%

EUR

20.09.2022

Zheleznovodsk*

VTB

EUR 16.3 mn

0.2

17.4

4.2%

EUR

20.09.2022

TOTAL/AVERAGE RATE

400.4

5.7%

* In May 2019 the Company repaid EUR34.8 million under the three Sanatoria loans, their combined remaining balance is currently EUR 2.16 million. In June 2019 the Company repaid EUR60.0 million under the AFIMALL loan.

Financial covenants Kislovodsk #1, Kislovodsk #2 and Zheleznovodsk: 1) EBITDA/((Interest (LTM) + Debt (last reporting date)): >=0.15X; 2) Projected DSCR: =>1.2x; 3) Positive value of net assets AFIMALL City:

1) Projected DSCR and Actual DSCR: =>1.20x; 2) Positive value of net assets; 3) Total amount of CAPEX should not be higher than EBITDA for the current quarter 19

Gross/Net Asset Value Book Value Book Value

PROJECT

AFI Mall Berezhkovskaya (100%) Paveletskaya I Plaza H20 Ozerkovskaya III Plaza Ib Plaza II TOTAL INVESTMENT PROPERTY: Plaza Ic Plaza IV (100%) Kossinskaya Starokaluzhskoye shosse TOTAL INVESTMENT PROPERTY UNDER DEVELOPMENT: Ozerkovskaya Phase II (26) Odinburg Paveletskaya II TOTAL TRADING PROPERTY: Crowne Plaza Tretyakovskaya Hotel Plaza SPA Zheleznovodsk Pyatigorskaya (Park Plaza Kislovodsk) Plaza Spa Kislovodsk TOTAL PROPERTY PLANT AND EQUIPMENT: Odinburg Botanic Garden Paveletskaya II Bolyshaya Pochtovaya TOTAL TRADING PROPERTY UNDER DEVELOPMENT:

TOTAL PORTFOLIO: CASH AND CASH EQUIVALENTS DEFFERED TAX LIABILITY TOTAL OTHER ASSETS AND LIABILITIES

TOTAL EQUITY:

Valuation

Bank Loan

31.12.2018 30.06.2019 30.06.2019 637 654 654 10 11 11 10 11 11 7 8 8 57 0 0 3 4 4 18 18 18 743 705 705 61 62 62 54 57 57 26 25 25 1 1 1

30.06.2019 (398)

142

146

1 3 15 19 13 10 4 41 67 87 78 38 76

0 2 15 17 14 11 4 43 72 98 85 40 84

279

1 249

146

(398)

0 (0)

Net Company Share 30.06.2019 256 11 11 8 0 4 18 307 62 57 25 1

Loans To Assets Value = 32% (LTV ratio) Loans To Equity (LTE ratio)

= 48%

146 0 2 15 17 14 10 4 41 69 98 85 40 84

(2) (2)

307

1 247

851

(400)

847 99 (72) (38) 836

Market Update SECTION 5

Macro Overview and RE Investment Market RUSSIAN MACROECONIMIC OVERVIEW

RUSSIAN REAL ESTATE INVESTMENT MARKET

• Russian economic growth: The Russian economy is expected to grow at moderate rates. OECD projects the 2019 GDP growth rate at 1.38% and 2020 at 2.07%.

• In H1 2019, US$1.4 billion (CBRE), including investments in land plots for residential development, were invested in Russian real estate (a 36% increase y-o-y in rouble terms).

• Exchange rates: In Q2 2019, the RUR/US$ exchange rate fluctuated between 62.6 and 65.4 roubles for a dollar. The rate at 30.06.2019 was RUR63.08 (vs. RUR64.73 on 31.03.2019).

• According to CBRE, in H1 2019, 36% were invested in the retail segment, 35% in residential projects (land plots and development rights), 18% in offices, 14% in hotels and 11% in warehousing.

• The Central Bank of Russia (“CBR”) has decreased its key lending rate by 25 bps to 7.5% in June and by further 25 bps to 7.25% in July 2019. In its decisions, CBR is quoting lower than expected economic growth along with elevated inflation expectations. • Inflation: The consumer prices inflation in June 2019 was 4.7% (annualised), against the CBR target of 4.0%. CBR expects the inflation to reach this target in “early 2020”.

Estimated Forecasted Investment Volume in 2019 (USD billion)

JLL*

CBRE

C&W*

3.5

3.8

2.8

* JLL estimate excludes acquisitions by end-users and joint ventures. C&W excludes residential transactions

Consumer Price Inflation forecasts

Source: OECD, CBR, RBC, C&W 22

Source: CBRE, C&W, JLL

Office and Retail Markets Overview OFFICE MARKET OVERVIEW

RETAIL MARKET OVERVIEW

• New supply in H1 2019 amounted to 120K sqm of new space in classes A and B combined (mostly in Q2), compared to 41K sqm delivered in H1 2018, data by C&W). The largest delivered project was Iskra Park Class A business centre (62K GLA).

• One new shopping centre was opened Moscow in H1 2019 – a 105K GLA Salaris in “New Moscow”. The development activity in the sector remains at historically low levels.

• The take up in H1 2019 was about 962K sqm (C&W), a 1% increase year-on-year. The take up was led by banks and IT. The vacancy rates in class A and B have somewhat stabilised: According to C&W, in Class A the vacancy was recorded at 13.3% as of end Q2 2019 (vs 14.0% in Q2 2018) and in Class B at 10.5% (vs 10.9% in Q2 2018). Overall vacancy was 11.2% (vs 11.6% in Q2 2018).

• Fewer new brands enter the market: 6 in H1 2019. Most of these brands were in the fashion, footwear and cosmetics segments. Retailers and restaurateurs experiment with new formats – food markets, restaurant courts, “dark kitchens”. IKEA has opened a first “in city” 8K sqm unit (about 3 times smaller in size than a regular IKEA).

• The rents in H1 2019 remained stable in dollar terms, but experienced small growth in rouble terms, especially in Class B. Rouble denominated rents continue to prevail. Dollar denominated transactions accounted for 8.5% of all transactions during H1 2019 (C&W). Average rent, US$ and RUR psqmpa

Key indicators (C&W)

Units

Average rent Class A, US$ psqmpa

429

Average rent Class A, ‘000 RUR psqmpa

27.8

Average rent Class B, US$ psqmpa

245

Average rent Class B, ‘000 RUR psqmpa

15.9

Overall vacancy,%

11.2%

Vacancy rate, Class A, %

13.3%

Source: C&W

• The vacancy rate across Moscow shopping centres as of the end of H1 2019 was at 8.2% (C&W). • Turnover rent with a low minimum rent continues to be the most common lease structure. Rouble denominated rents prevail now in retail. According to C&W, a turnover rent for a gallery retailer is in the range of 12%-15% of sales revenues (3-7% for large anchor tenants). C&W Prime rent indicator, US$ psqmpa

Key indicators (C&W)

Units

Prime rent - anchors, ‘000 RUR psqma (prime

8-20

shopping centres)

Prime rent - gallery, ‘000 RUR psqma (prime shopping centres)

20250

Prime rent indicator (100 sqm ground floor space), ‘000 RUR psqma

170

Vacancy rate,% Source: C&W, CBRE

8.2%

Residential Market Overview RESIDENTIAL MARKET MOSCOW AND MOSCOW REGION MOSCOW:

Change in average weighted asking price in primary residential market of “old” Moscow, by districts, end of H1 2019 (% change in RUR psqm)

• At the end of H1 2019, the supply of the “Old Moscow” primary residential market (including “apartments”) was about 3.04 million sqm (about 42 585 residential units in 331 projects), a 1.7% decrease compared to the end of 2018 (data by Metrium). • By the end of H1 2019 the weighted average asking price in the newly built business class residential market in Moscow amounted to RUR235,805 psqm (US$3,627, USD/RUB = 65). Compared with the end of Q1 2019, the average prices increased by 2.3% in roubles. In the mass segment, the weighted average asking price was RUR167,820 psqm, an increase of 1.3% compared to end of Q1 2019 (US$2,582, USD/RUB = 65) (data by Metrium). MOSCOW REGION:

North North-East

East North-West

Central West

• As of end of H1 2019 the weighted average price per sqm in the Moscow region was RUR83,100 (US$1,278, USD/RUB = 65), (data by Azbuka Zhilya).

Source: Metrium, Azbuka Zhilya

South-East

Source: NDV Real Estate 2 4