The bloodbath in Kiev over the past few days has totally overshadowed what was intended to be an uplifting piece of news out of nearby Lviv for Europe’s largest retail developer.
The bloodbath in Kiev over the past few days has totally overshadowed what was intended to be an uplifting piece of news out of nearby Lviv for Europe’s largest retail developer.
Earlier this week, Multi Development announced its flagship Forum Lviv shopping centre has been voted ‘Project of the Year’ at the 2013 Ukrainian Property Awards. Forum Lviv won the judges over with the quality of its architecture, its sustainability, and the fact that the shopping centre is set to make a real contribution to the revival of an historical part of the city of Lviv, the company said in a press release.
Amid the violence and chaos in Ukraine, Multi’s new parent company Blackstone will no doubt be questioning the wisdom of further investment in the troubled country. Multi claims that the leasing of retail space in the new centre is well ahead of schedule, but the question is whether construction will remain on track as Ukraine slips further into disarray
The recent developments in Ukraine will no doubt also put further pressure on the western world’s strained relations with Russia. Nevertheless, as the Sochi Winter Olympics draw to a close, the signs are that conservative money is finding its way back to Russia, according to market experts at PropertyEU’s Russia investment briefing in London earlier this month. Calpers’ acquisition last year of a stake in Moscow’s Metropolis mall is a clear sign, Nikolay Kazanskiy, managing partner for Russia at Colliers International and a member of the panel, said. The Californian pension fund giant purchased the Metropolis stake together with US property company Hines from Morgan Stanley for around €1 bn, making it one of the top three single-asset deals recorded for Europe as a whole in 2013 by PropertyEU.
‘When such conservative money is coming in [to the market], it is a great sign,’ Kazanskiy said. The deal highlights a trend towards larger transactions and safer money in the Russian market, he added. ‘The players are becoming much more professional.’
The Russian real estate investment market has seen a sharp increase in the number of big-ticket deals of over $300 mln (€221 mln), resulting in the full volume for 2013 keeping pace with previous years despite sluggish economic conditions. Since 2012, the average deal size has increased, reaching $186 mln (up 29.5%), attracting both Russian and foreign institutional investors, Colliers said. Signs of economic diversity beyond oil and gas resources are also appearing in Russia which should help drive occupational growth in its main office markets.
Growth in the banking, finance, IT and telecommunications industries in particular is helping to fuel demand for office space in Moscow and St Petersburg. Meanwhile, the number of international retail brands targeting the country continues to grow, according to recent research from CBRE. Developers are also ramping up new build of industrial property in the Moscow region, although this will not be enough to offset the near-zero vacancy rate in the market, Colliers International said.
London remains the safe haven in Europe
Elsewhere in Europe, London continues to grab headlines with reports on the strong performance of its office markets and prospects of rising retail spending from the growing numbers of Chinese tourists. According to research published by Cushman & Wakefield, London’s West End is the world’s most expensive office market for the second year in a row. At the same time, peripheral real estate markets in London are gaining favour with investors on the back of a growing technology boom, a new report from IPD revealed. And simplified visa rules could see Chinese tourists spend £500 mln (€600 mln) a year in London by 2020, a rise of more than 140% on current levels, according to Savills. This should cement London’s status as a safe haven in Europe - alas something the Ukrainian authorities can only dream about.
Judi Seebus
Editor in chief PropertyEU
Links to profiled articles:
Multi's Forum Lviv voted project of the year in Ukraine
RUSSIA BRIEFING: Conservative money is back in Russia
RUSSIA BRIEFING: Economic diversity to drive occupational growth
Russian real estate investment hits 3rd record in a row
Big-ticket deals on the rise in Russian real estate
17 international brands to enter Russia in 2014
Developers ramp up industrial property delivery in Moscow to meet high demand
London remains world's most expensive office market: C&W
Peripheral London markets gaining momentum: IPD
Chinese tourists to spend €600m in London by 2020: Savills
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