REAL ESTATE - RREEF, Deutsche Bank’s real estate investment arm, has announced its entry into the Russian real estate market via a joint venture with local firm RBI to develop residential and mixed-use projects in St Petersburg.

The pipeline of deals will combined be worth $500m (€406m) over the next two to three years.

RREEF will be the majority shareholder in a company formed for the partnership. RBI will source, develop, manage and sell the properties.

The initial project focuses on mid-to-high end residential real estate. RREEF has not ruled out investing in commercial projects, although David Brush, RREEF’s European CEO, acknowledged that finding them could be a problem.

"Warehousing – logistics – barely exists in Russia,” he said. “Given that the Russian economy is largely export-driven, there's a lot of unsatisfied demand."

Brush denied that the decision to invest through a joint venture was a reflection of uncertainty in a notoriously complex market. "It's part of our operating strategy to align with good, strong local partners, especially in development,” he said. “Wherever we operate, we wouldn't consider development projects other than as joint ventures."

Earlier this month Israeli firm Fishman Holdings indicated that it would float Industrial Buildings, its Russian real estate subsidiary, on London’s Alternative Investment Market (AIM). Industrial Buildings recently acquired more than 100 acres in St Petersburg for $36.7m. Israeli daily Ha’aretz quoted Eyal Fishman, a manager at the firm and son of its founder, describing Russia as “a power, a country with economic might [and] the most interesting real estate market in the world”.