In 2010 Russian investment market grew 128% above the level reached in 2009 to 2,169 mln according to the latest research by CB Richard Ellis.
The stabilization of the Russian economy in 2010, with growth of 4%, saw a level of confidence return to the real estate investment market. Domestic investors continued to pre-dominate. The volume of transactions was still low in 2010 compared with the pre-crisis years 2008. There were 27 investment deals in 2010, compared with 50 in 2008.The average deal size was approximately 80 mln. This compares with an average deal size of 71 mln. in 2008.
The largest deal in 2010, as in 2009, was a portfolio investment involving the sale of 5 office properties in Moscow by HorusCapital, a Russian developer, to Lenmar Capital (controlled by Otkrytie, a Russian financial corporation), for an estimated 691 mln.
According to CB Richard Ellis, office and retail will remain the most attractive sub-sectors in Russian investment market in 2011.
Foreign investors are still less confident in Russia than their domestic counterparts. The most notable large-scale deal with foreign investment was the purchase of Greenwood Business Park, totaling 130,000 m² by the Chinese Centre for the Development of Trade and Management of Investment into Europe for 285 mln. It was the first transaction by Chinese investors in Russian real estate.
Compared with other markets in Central and Eastern Europe, Russia attracted the largest amount of real estate investment. The Czech Republic attracted 613 mln., Hungary attracted 177 mln., and Poland attracted 1,849 mln. However Moscow remains extremely undersupplied with international investment grade objects, a situation made worse by the economic crisis which forced a freeze on new developments, thus reducing the amount of new stock which will come online in 2011 - 2012. Nevertheless, we expect that the investment volume will continue to rise in 2011, though domestic investors will once again predominate.
Christopher Peters, Director of Research, CB Richard Ellis in Russia, said: "The results of 2010 show a significant return of confidence in the Russian real estate investment market almost to pre-crisis levels. However, the vast majority of this came from domestic investors, while before the crisis, the reverse was true.
"Although Russia saw just three investment deals in Q1 2011, we believe that 2011 will see a similar or slightly higher level of activity than 2010. As in previous years, the majority of this will happen in the second half of the year. The majority will come from domestic investors: international investors will return on masse only when confidence has demonstrably returned not just to the Russian market but internationally."
Source: CB Richard Ellis