JLL: H1 2012 Russian real estate investment volume exceeded US $2.4 bln (RU)

In Q2 2012 investor activity on the Russian real estate investment market increased, with total investment volumes up by 177% compared to the first quarter (US $643 mln) at US $1,780 mln in Q2 2012. Commercial real estate investment volumes reached US $1,774 mln in Q2 2012 vs. US $608 mln in the first quarter (192% growth).

In H1 2012 Russian real estate investment volumes amounted to US $2,400 mln.

Daria Bugaeva, Head of Capital Markets Research, Jones Lang LaSalle, Russia & CIS, added: "H1 2012 real estate investment volumes are below record high level of H1 2011 (US $4.04 bln). At the same time, when comparing growth in volumes with H1 2010, we observe a 21% rise in volumes for H1 2012. Although European debt concerns remain, we continue to see both international and domestic investors' strong demand for high quality assets in Russia, that is evidenced by recently closed transactions and the deals that will be closed soon.

"For example, Finnish investment company Sponda Plc has acquired Bakhrushina Business Center in downtown Moscow from UFG Real Estate. Moreover, we are aware of several large deals in progress that are expected to be closed soon. Those include BIN Group's purchase of the US $983 mln real estate portfolio, consisting of Summit business center, Garden Quarters residential neighborhood, the Lux Hotel project and the 8.8 ha site of the former RTI Kauchuck in Ochakovo. Consequently we expect total real estate investment volumes to reach about US $6.5 bln in 2012."

Sector wise, investments were bilaterally diversified in H1 2012. Retail and office segments attracted the vast majority of investment capital – 42% of H1 2012 total investment volume each. At the same time, investment volumes into warehouse segment increased to 11% in H1 2012, compared to 6% in H1 2011.

Daria Bugaeva added: "The current shortage of high quality supply on the Russian industrial market will further spur investor interest in the warehouse sector, evidenced by several warehouse deals in the pipeline. Among recently closed deals is the Raven Russia's acquisition of class-A Pushkino Logistics Park in Q2 2012."

In H1 2012 investors' interest was mainly focused on high quality core assets in Moscow (91% of the total real estate investment volume), while investment volumes into St. Petersburg and other regional cities' real estate markets comprised 4% and 5% respectively.

Local investors continue to dominate on the Russian real estate investment market, accounting for 63% of the total investment volumes in H1 2012. The share of deals that included foreign capital amounted for 37% of the total H1 2012 investment volume, mainly due to several large transactions, closed in Q2 2012. We expect foreign investors' activity to remain high this year, at least at the same level as in 2011-H1 2012 (in 2011 foreign investors' deals accounted for 40% of the total investment volume).

Source: Jones Lang LaSalle

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