The share of foreign investments into Russian real estate increased from 4.6% in the H1 2016 to 34% in the same period of 2017, according to the latest data from global real estate advisor, CBRE. At the same time, the share of Asian companies was 11% in the structure of the total volume of investments that is historically the highest for Russian market.
In the H1 2017 €1.35bn ($1.6bn) was invested into Russian real estate, which is 36% lower compared to the same period last year €2.12bn ($2.5bn) and 15% higher than the amount invested in the first six months 2015 €1.18bn ($1.4bn). However, excluding the largest Q1 2017 purchase transaction with governmental company which bought an office building in MIBC Moscow-City, that has formed 40% of H1 2017 transaction volume, H1 2017 increase on previous year is only 6%.
The most attractive for investors in H1 2017 were office and retail real estate segments, which accounted for 34% and 32% respectively. The retail real estate segment significantly increased its share in the investment structure in the H1 2017, increasing by 30 ppts. compared with the value of the H2 2016 (2.5%) and for 15 ppts. compared with the value for the entire 2016. The key deals were the sale of Vozdvizhenka Center and Legion II, as well as the two shopping centres: Leto (Saint-Petersburg) and Gorbushkin Dvior in Moscow.
Irina Ushakova, Senior Director, Head of Capital Markets Department, CBRE in Russia, said: “The most important event in H1 2017 is the decline in capitalization rates in all segments of commercial real estate. This is the first time since 2014. We expect that this compression will be a positive signal for investors and potential buyers’ interest will be converted into deals by the end of the year. Thus, large transactions with foreign capital were closed in the first half of this year, and further stabilization of the market will at least maintain the share of foreign investments in the total volume of transactions."