Russia’s Sberbank eyes growth in real estate

Russia’s Sberbank is targeting expansion into the real estate sector outside its home country, particularly in Turkey and Central and Eastern Europe.

While many Western European property lenders are retreating to their domestic markets or withdrawing from real estate lending altogether, Russia’s Sberbank is targeting expansion outside its home base. The Moscow-based bank now has a foothold in Turkey thanks to the acquisition of DenizBank in September last year - the largest takeover in Sberbank's 170-year history.

In recent years, Sberbank has also substantially extended its international presence beyond the Commonwealth of Independent States (Kazakhstan, Ukraine and Belarus) to nine countries of Central and Eastern Europe including Austria. In addition, it has representative offices in Germany and China, a branch in India and operates Sberbank Switzerland AG.

Expansion will focus initially on Eastern Europe and Switzerland, Alexey Novikov, director of real estate funds at Sberbank Asset Management, told PropertyEU at the Mipim real estate fair in Cannes. The Russian bank is aiming to create new lines of business and services in these countries, he added. ‘We see potential for growth and high returns in corporate investment banking.’

Sberbank had a stand at Mipim this year for the first time ever.

Sberbank is also seeking to grow in Turkey over the next five to 10 years, Novikov said. He described Europe’s largest emerging market as a natural ally for Russia thanks to their mutual historic and logistics connections. Moreover, Sberbank already has links with Turkish developers and construction companies that are active in the Russian market, he pointed out.

While most western institutional investors are still wary of entering the Turkish market due to a perception of high risk, as far as Novikov is concerned Turkey is ‘exactly the kind of market’ that fits Sberbank’s profile. ‘We operate in Russia. We know how to handle risk. And without risk, there are no high returns.’

Sberbank is the third-largest bank in Europe in terms of market capitalisation and claims to be among the most profitable in the world with a return on average equity (ROAE) of 28%.