Russian investment volumes jump 116% in Q1

Total investment in Russian commercial real estate reached $2.1 bn (€1.6 bn) in the first quarter of 2013, up 116% on the year-earlier period, according to Jones Lang LaSalle.

The spike in volumes for the first three months of 2013 was mainly due to the closure of Morgan Stanley Real Estate's acquisition of the Metropolis shopping centre in Moscow for an estimated $1 bn.

In March, Russian investor 01 Properties announced the acquisition of the White Square business centre in Moscow for a reported $1 bn (€774 mln). However this deal was actually closed in 2012.

The sale of Metropolis shopping centre breaks with the traditional pattern which has historically seen the market dominated by office investment. In the first quarter of 2013, retail investments accounted for 60% of the total, compared to 37% in Q1 2012. Office investment accounted for 35% compared to 43% in Q1 2012, JLL said.

More big deals are on the way. Olesya Dzuba, JLL's head of capital markets research for Russia & CIS, said: 'The closure of some more large deals is expected this year. Diversification among sectors is still the rule and every sector has deals under active marketing or negotiation.

Thanks largely to the Metropolis deal, investment was largely focused on Moscow in Q1 2013, with the Russian capital accounting for 96% of the total deal volume versus 87% in the same period last year. Big deals such as the Metropolis acquisition also helped challenge the traditional dominance of domestic capital; the cross-border share of the volumes leapt from 6% in Q1 2012 to 82% in the first three months of this year.