German sportswear maker Adidas has bought a warehouse outside Moscow in a deal which real estate market sources and property consultants estimated at $70 million to $100 million. The move is a gesture of confidence in Russia despite the country's deteriorating economic prospects and the slide in the rouble. It also comes despite Adidas having said in November it would cut the number of net new stores it plans in Russia to about 30 per year in 2014 and 2015, from an already reduced target of 80 per year.
However the German company was likely able to capitalise on low real estate prices in its acquisition of 120,000 square metres in the PNK-Chekhov II warehousing complex some 50 kilometres south of Moscow, where it has been renting more than 65,000 sq metres since late 2012, five sources said. Adidas confirmed the acquisition but declined to give any details. "We believe in the long-term potential of the Russian market and have thus decided to invest into the facility at this point in time," a spokeswoman said by email. A sixth source said the deal had been negotiated since the second half of 2014 and was signed earlier this summer.
"Adidas has paid a relatively low price. It's more profitable to buy than rent at rates at which their long-term lease contract had been made," one of the sources said. The source estimated the deal was worth $70 million, while two other sources put the value of the deal at between $90 million and $100 million.