exporeal.net - INTERNATIONAL MARKETS

Record highs in all segments

Thus it is understandable that the local and international real estate industry is growing and wants to grow in Russia as well. In 2006, investments reached record highs in all segments of the market: besides office real estate, investments were made particularly in retail properties, but also in the logistics and hotel segments. This trend is continuing this year, and it will increase even more.

An end of this appetite for real estate investments is not in sight. Russia is proving to be a gigantic playground for project developers as well as investors – and thus for all related industries. Three groups can be identified here: First, local market players themselves mainly determine the market. The second is Russian companies and people acting from outside of Russia – one of the reasons, by the way, why Cyprus is always at the top of foreign investments. The third group is international players who have already entered the Russian market, or those who are planning to. The current market entries from Europe include Eurohypo AG, which has already opened an office in Moscow last year, and Aberdeen Property Investors, who opened an office in Saint Petersburg this year.

Austrians have been in Russia for a long time now and on a large scale. ImmoEast is the trailblazer, who, with the above-mentioned investment in the Moscow retail project GoodZone, has enlarged its Russian portfolio to meanwhile 17 properties with a total of 753,000 square metres of usage space – including the indirect investments through the real estate companies TriGránit, Eastern Property Holdings Ltd., as well as Fleming Family & Partners, of which ImmoEast owns shares.

There are, however, other players from Vienna, such as CA Immo International AG, which purchased the project Maslov Tower in Moscow, and wants to expand its Russian share of its portfolio. Warimpex AG is also another player from Vienna, and is active in Saint Petersburg. One of the youngest in the group is Europolis Real Estate Asset Management, who just recently opened an office in Moscow, but has already made its first investments there.

Strategies and approaches are as numerous as the country itself, with its eleven time zones. Structurally, direct investments are found beside indirect ones. Some concentrate on their well-known and trusted market segments, such as retail or logistics, while particularly opportunistic investors are open to various possibilities. Geographically, most international players are still focused on Moscow and Moscow Region, which, with 46,100 square kilometres, nearly seven million residents and almost 20 cities with more than 100,000 residents, spans a large area, but starts at Moscow’s borders. Others are active in Saint Petersburg or in both cities, and some have long moved on to other locations. For example, the portfolio of Meinl European Land covers retail properties and projects, including Nizhny Novgorod, Ufa, Rostov on Don, Yekaterinburg, Rjazan, Kazan and Volgograd. Developer and investor ECE, which has an office in Moscow, has entered market for shopping centres in Yaroslavl and in Rjazan.

In the future, more large international investors will be active in Russia – this certainly also includes some of those who are still waiting or testing the waters. Next to that, the professionalism and internationality of Russian participants is developing further. Together, this should create a real estate market that is constantly evolving, but will remain unique in its dimensions and opportunities. Furthermore, the opportunities do not just exist for a few large investors, but also for many smaller and mid-sized market players.