EUROPE - The Blagosotoyanie railway workers' pension fund has invested in a RUB2bn (€500m) retail REIT created by Russian residential developer PIK.
The Moscow-dominated programme represents a tangent from PIK's core large-scale residential business to target what the firm described in a statement as "lifestyle quality improvement" - effectively, ground floor retail units of residential assets and neighbourhood shopping centres near existing projects.
Although PIK did not confirm that it had struggled to attract a cornerstone investor to its PIK Retail programme, the phase-one RUB310m investment announced this week from the "well-known and prestigious" non-governmental pension fund is relatively modest.
Meanwhile, investors are looking to Russian retail to diversify risk associated with unstable currency and bond markets, according to a report this week from Cushman & Wakefield.
Retail accounted for 50% of total investment in the real estate market in the first half of this year.
In a note, analyst Alexander Zinkovski pointed to stable retail rents and low vacancies backed by strong consumer spending.
"Obviously," he said, "the experience gained by investors during the market slowdown in 2008-09, when only quality shopping centres had both large and stable footfall and cash flows, has informed their decisions to invest in the retail segment."
Overall, second-quarter transaction volumes increased by 15% compared with the first quarter to $2.8bn (€2.3bn), with equal numbers of domestic and overseas investors, although volumes for H1 2012 were down by 7% compared with the same period last year.
