Every fourth shopping centre in Russia on the verge of bankruptcy – media

Amid soaring costs and increased competition from online platforms in Russia, about a quarter of all shopping centres have reached pre-bankruptcy status and may close in 2025.

Source: Russian online newspaper The Moscow Times

Details: Revenues of shopping centres plummeted in 2024. The key reasons for the financial difficulties, aside from the departure of major foreign tenants following the start of the full-scale war in Ukraine, were the sharp rise in interest rates on commercial loans due to the Russian Central Bank's policy.

"Now, shopping centres are struggling to close existing loan agreements and cannot secure new loans. As a result, they face difficulties with both profitability and the ability to maintain buildings in good condition or carry out renovations," said Oleg Voitsekhovsky, managing director of the Russian Council of Shopping Centres (CSC).

Pavel Lyulin, Vice President of the CSC, also reported a significant increase in the tax burden on shopping centres.

Currently, about half of shopping centres' revenues are spent on taxes, including VAT, social contributions and property tax.

Background: The increased credit burden following the Russian Central Bank's key interest rate hike to 21%, along with difficulties in debt servicing, could result in widespread bankruptcies of shopping centres.

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