Volograd named as emerging city in Russia, BCO delegates hear

Rostov-na-Donu, Saratov and Volograd are the new emerging cities to watch in Russia, according to Simon Marx, head of real estate forecasting at UK-based research firm Experian. Other second-tier cities in Central and Eastern Europe with populations of over a million and good growth prospects are Izmir (Turkey), Adana, Turkey and Kazan, in the Republic of Tatarstan. With a population of over three million, Kiev is also experiencing strong growth, he added. 'Kiev is still seeing yields of 10% compared to 5% in more mature markets in Central and Eastern Europe.'

Marx was speaking at a seminar on the first day of the annual conference of the British Council of Offices (BCO) in Brussels on Wednesday. Ukraine is currently experiencing stronger GDP growth than either Russia or Turkey, he added. 'Inflation is high but the country now has a fragile coalition which is moving in the right direction.'

Moscow and Istanbul remain the two biggest markets in Europe in terms of growth potential with relatively small office stocks and high rental growth. In Moscow, office rents rose 25% in the first quarter of this year after an increase of 50% in 2007. Office rents in Moscow currently stand at EUR 960 per m² a year compared to EUR 230 in Istanbul. The average office rent for the 27 members of the European Union is EUR 300 per m².