RUSSIA - Investors should avoid Russia as a potential area of growth as its property markets will be the hardest hit if the world's largest country is drawn to the impending global recession, JP Morgan Chase has claimed.
The warning comes as several property companies across Moscow and Russia saw their share values sink to record lows recently, and experts are predicting there could be worse to come.
JP Morgan said property development companies in Russia could see their already stretched finances suffer if global economic contracts dry up, causing the Russian economy - as one the world's most rapidly expanding developing nations - to slow to 4.5%.
The once red-hot real estate sector is fast becoming the first major sector of Russia's economy to feel the pinch of the global financial crisis, analysts and economists have been predicting for some weeks now.
Banks in Russia are seemingly now far more reluctant to lend at the same levels which means developers are suspending work on new projects and many are now holding back from seeking listings on international stock exchanges.
The problems may lie in the fact that Russia - in particular Moscow - is coming out of a period of intense expansion which it may not be able to sustain while fierce competition has seen property values reach incredible heights and match those of major developed markets such as Tokyo, New York and London.