Russia’s real estate investment volume reached $982m in Q1 2016, nearly doubling the volume in the same period in 2015 ($499m), according to JLL.
Taking into account current active negotiations and due diligence activities, JLL projected the annual investment volume to approach $4bn (a 74% rise from 2015). However, high volatility of oil prices, which remain the key factor for the Russian economy, creates downside risks to our forecast.
Vladimir Pantyushin, head of research JLL, Russia & CIS, commented: “Russian assets became more attractive due to the ruble devaluation. Investors still face hurdles from the high exchange rate volatility and uncertainties in different market segments. In this context, an increase in investment volumes in Q1 2016 serves as a sign that the market has likely bottomed out.”
Russia Real Estate Investment Volume Dynamics, $ bn*
* Investment deals, excluding land acquisitions, JVs, direct residential sales to end-users
Source: JLL
Investors continued to focus on assets in Moscow, which accounted for 93% of all investments in Q1 2016 compared to 98% a year ago. Investments in St. Petersburg real estate market reached $61m in Q1 2016, raising its share to 6% versus no deals in Q1 2015.
Saydam Salaheddin, regional director, head of capital markets, JLL, Russia & CIS, noted: “The share of foreign investments came to 12%. I would like to highlight the sale of logistic centres PNK-Chekhov-3 and PNK-Severnoye Sheremetyevo to a consortium including the RDIF and Mubadala, a UAE sovereign wealth fund, which closed its first deal on the Russian real estate market. This illustrates the attractiveness of Russian assets to foreign investors”.
