Investment in Russian commercial real estate is expected to reach $4.5 bn (EUR 3.6 bn) in 2012, a drop of nearly 30% compared to the $6.4 bn recorded in 2011.
Investment in Russian commercial real estate is expected to reach $4.5 bn (EUR 3.6 bn) in 2012, a drop of nearly 30% compared to the $6.4 bn recorded in 2011.
According to new research from CBRE, the global real estate advisor, the decline is mainly attributable to wider regional economic uncertainty and a tighter lending market year on year as well as the absence of a significant single asset transaction like the Galeria sale in St. Petersburg, which was bought for $1.1 bn in late 2011 by Morgan Stanley.
Despite a difficult global economic backdrop, the Russian economy has so far exhibited an ability to resist the short-term volatility in financial and commodities markets, CBRE said. Russia’s relative economic stability and the lack of investment grade stock is likely to support asset prices. International investors are increasingly forming long-term investment strategies for Russia.
Immofinanz Group and Raven Russia are established investors with large portfolios in the country while Hines is set to invest around 80% of the EUR 900 mln Russia & Poland Fund it recently closed in Russia.
In H1, CBRE tracked 13 major investment deals in Russia totalling $1.5 bn, 81% of which took place in the Moscow region.
Retail and offices remain the most popular asset classes. In H1 2012, retail deals amounted for a greater proportion of transactions, but taking into account deals in the pipeline, CBRE expects the balance between the two sectors to be restored by the year end.
