The volume of investments in commercial real estate for the first half of 2013 amounted to 4, 63 billion US $, according to Cushman & Wakefield.
Thus, the volume of investments in the first half of the year exceeded the volumes of the second half of the 2012 year by 82% and is almost identical to the volumes of the first half of the 2012 year.
Moscow continues to be the main market in Russia, attracting more than 80% of all investments in commercial real estate. Only in the pre-crisis 2007 year, the regions accounted for the maximum 25% of total investment. “Demand for commercial real estate exceeds supply, especially in retail, warehouse and hotel real estate, and we see a gradual shift in investor interest towards the regions,” said Alexander Zinkovsky, senior research analyst at Cushman & Wakefield. The lack of quality supply in the regions hinders further development, and investors are more interested in cities with millionaires in the European part of Russia.
In the first half of 2013, the most attractive object for investment was retail property. It accounted for more than half of the total investment - 2,063 billion dollars. It should be noted that investment in this sector has been constantly growing since 2011. If in 2011, investments in commercial real estate accounted for 2,04 billion US dollars, then in 2012 this figure amounted to 2,59 billion US dollars. “If all the planned transactions are completed, then the 2013 year will be a record year in terms of investment in commercial real estate,” said Alexander Zinkovsky.
Investments in warehouses amounted to 600 million dollars and by the end of the year can reach 1 billion dollars, which will be a repetition of the best result of investments in this sector 2011 of the year (1,08 billion US dollars).
According to Cushman & Wakefield forecasts, by the end of the 2013 year, the volume of investment transactions will reach the level of 8 billion dollars. USA. In 2014, the market expects a slight decrease and the investment will amount to about 7,8 billion US dollars.
The leading role in the market still belongs to Russian investors (71%), a similar distribution of “roles” was observed in the 2012 year, however, in comparison with the 2010 and 2011 year, the share of foreign investors doubled.
The rate of return on prime objects in Moscow is 8,5% for offices, 9,25% for shopping centers and 11,5% for warehouse real estate. This is above the average European level at 250 basis points and at 450 bp above the most developed European markets - London and Paris.
Average rate of return in St. Petersburg at 100-150 bp higher, and in the regions by 200 – 250 bp higher than in Moscow. Risks in developed cities of Russia are not significantly higher than in developed European cities. Moreover, when comparing with the emerging markets of Brazil (where rates cannot be fixed in dollars, and long-term leases are difficult to conclude legally), China (where the economy and the real estate market are overheated), or India with its lack of investment-quality offers, Russia provides an investor the best investment opportunities, both due to better liquidity and return on investment.
“Unfortunately, Russia is still largely underestimated by most investors. As the Russian market becomes more transparent, we expect new investors to enter the coming 2-3 of the year, ”adds Alexander.