RS Brief news Investments in Russian real property may total USD 8.5 billion in 2011

Investments in Russian real property may total USD 8.5 billion in 2011

December 2011

According to the data provided by Jones Lang LaSalle, investments in Russia were up 80% in the first nine months of 2011, reaching USD 5.25 billion. If all the deals currently under negotiation close before the end of the year, total sales for the year may reach a record high of USD 8.5 billion. Approximately half of this amount should be invested by foreign investment funds that have come back to Russia after the 2008-2009 crises. Their main focus is business real property; strategic investors are still steering clear of residential real property because of its poor liquidity.

Experts believe this enhanced activity in the real property market has to do with Russia being removed from the stop-list of leading investment funds after the country successfully pulled out of the 2008-2009 crisis. This resulted from a number of factors, such as the relative stability of the economic and political situation in Russia as well as the undervaluation of the country’s real property. Experts also believe that the activity in the market is bound to increase even further after the presidential elections.

Moscow still remains the focal point of investments in real property in Russia; 74% of all real property deals are made there. Saint Petersburg accounts for 20% of all deals, and the rest of the money went into the provinces. This trend is little different from the trends seen all around the world with the bulk of investments being attracted to the administrative and financial centres.

However, before the crisis of 2008 investors were actively buying assets in Yekaterinburg, Krasnodar, Nizhny Novgorod and Novosibirsk. Experts believe that as the market regains its pace, capital will once again start flowing to those places as well.