Calpers' acquisition last year of a stake in Moscow’s Metropolis mall is a sign that conservative money is back in Russia, according to market experts.
Calpers' acquisition last year of a stake in Moscow’s Metropolis mall is a sign that conservative money is back in Russia, according to market experts.
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.
The deal highlights a trend towards larger transactions and safer money in the Russian market, participants at PropertyEU’s Russia investment briefing held in London in early February heard. ‘The players are becoming much more professional,’ Nikolay Kazanskiy, managing partner for Russia at Colliers International and a member of the panel, said. ‘When such conservative money is coming in [to the market], it is a great sign,’ he noted, referring to MSREI’s partial sale of the Metropolis mall to Calpers.
Of the big three investors in Russia last year (O1 Properties, MSREI and Austria’s CA Immo), only O1 is a domestic company. Seventeen foreign firms were among the top 20 investors, according to Colliers data, underscoring the seemingly strong international confidence in the market.
At the same time, chairman Nigel Wright of Mirland Development Corporation warned of the emerging predominance of domestic Russian investors. This, he said, means that in some cases ‘you either will not see the best deals because they’ve already gone, or you will see them but you won’t be able to move quickly enough; local investors understand the deal inside and out, and with less due diligence required’.
Russia’s share of the investment pie in Central and Eastern Europe grew to 40% in 2013 from 16% before the financial crisis, indicating that the country is becoming increasingly dominant in the region.
