JLL: New records for the Russian real estate investment market (RU)
Thursday 17 January 2013
Jones Lang LaSalle announces 2012 results and an outlook for 2013 in Russian real estate investment market. Last year proved to be another stellar year for the Russian real estate investment market, total transaction volume amounted to $8.6 billion, with up by 1.3% compared to 2011. At the same time commercial real estate component of this investment volume reached $7.9 billion in 2012 (down by 4.8%).
Demonstrating significant growth in year-end activity we see that Q4’s investment volume of $3.5 billion was 42% above that of Q4 2011. Preliminary forecasts for 2013 are predicting an annual investment volume of around $7.5 billion.
Olesya Dzuba, Head of Capital Markets Research, Jones Lang LaSalle, Russia & CIS, added: “For the last two years the Russian real estate investment market has demonstrated a positive trend with higher levels of annual investment volumes compared to pre-crisis results. Additionally, stable macroeconomic indicators, an improved overall investment climate, and relatively easy access to financing continue to attract investors to the Russian real estate market. Comparatively higher prime yields in Moscow are clearly offering a significant premium relative to other European markets. Investor interest continues to be focused on high quality core assets. In 2012 notable investment deals included assets such as Ducat Place III and Silver City business centers by O1 Properties.”
Reflecting on 2012’s results, we see that capital flows were more diversified compared to 2011. In 2012 the office segment attracted 40.9% of total investment volume, reaching a historical maximum at $3.5 billion. Additionally, the investment volumes into the warehouse sector were up by 34% compared to 2011, amounting to $607 million.
The preferred market remains to be Moscow, accounting for 88% of the total real estate investment volume compared to 2011 of 69%. In separate segment Moscow’s share is even higher: for example, it gained 97% of total investment into office market.
Russian investors demonstrated a higher share of market activity in 2012, accounting for 78% of the total investment volumes, compared to their 2011 of 59%. Both the level of interest and activity from foreign investors is not falling – but it should be noted that local players are often quicker in their decision making and have easier access to financing, resulting in a higher degree of closed transactions.
Olesya Dzuba added: “Comparing the results of two previous years, from 2013 we expect continued positive investment trends on the Russian real estate market, despite the forecasted chance of slightly lower volumes. An unstable economic situation in Europe and other global issues could have an effect on investment market, but the degree of which is uncertain. While Russian investor activity will gain further momentum, robust economic indicators, higher prime yields and access to financing may attract increasing numbers of foreign investors.”