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CB Richard Ellis
Russian Property Performance
Investment in Russian real estate went through the roof last year; beating records set at the height of the boom in 2008 fuelled by massively increasing confidence in the market according to the latest reports from CB Richard Ellis.
Another day another report from CBRE it seems, not that we're knocking it; investors can never have too much information, especially from reliable sources such as CBRE. The firm's reliability as a source was proven yet again this week when Jones Lang La Salle issued a report on rising rents in the prime office sector, confirming the findings made by CBRE shortly before.
According to the CBRE report 4.55 billion Euros was invested in Russian commercial property last year, which is not only a 200% growth on 2010, but 1.5 times higher than the record set in 2008. The number of transactions almost doubled from 27 in 2010 to 43 in 2011, putting it close to the 50 deal record set in 2008. The average deal size in 2011 was 105.6 million euros, compared to 71 million Euros in 2008. Increasing confidence in real estate as the Russian economy stabilised in 2011 led to the growth in investment according to CBRE. On top of that foreign investors made a comeback, with 59% of investments being made by Russians compared to 70-80 percent in the last few years, whereas before the crisis foreigners dominated with 70-80 percent of investments being made by them.
Breaking it down, the retail sector saw the most investment with 38% only just beating the office sector's 37%. The hotel sector also did well with 13%, which was largely because of the Ritz-Carlton sale according to CBRE. Moscow was unsurprisingly the dominant city with 74% of all investments in the city, followed by St Petersburg with 22%. Kaliningrad, Kaluga, Murmansk, Ulan-Ude and Samara also received noteworthy investment.
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