Feb. 1 – Moscow remained in the focus of investors’ interest in 2010 with 94 percent of all investments into a commercial property during the last year come up to Moscow, Cushman & Wakefield have calculated. All other Russian regions have got only 6 percent of investments into commercial property.
Year 2010 became a turning point and has demonstrated many changes in market trends: rental rates are rising, vacancies are shrinking and yields are compressing. Most of the investors became very active trying to acquire properties at the right phase of the market cycle, says a new Investment Snapshot by Cushman & Wakefield.
Interestingly, most active investors in the Russian commercial real estate market were local players whose risk appetite allowed them to transact at the attractive levels of pricing.
Foreign investment funds expressed almost no interest (only 14 percent), and focused on their domestic markets and solving internal corporate problems. As a result, there were few investment deals.
The total amount of investment into Russian commercial property made US$3.74 billion (in 2009 – US$2.26 billion), Cushman & Wakefield analysts counted up.
“The major amount of deals (90 percent) took place in Moscow and totaled to US$4 billion,” Evgenie Semenov, head of investment department of Knight Frank, said to the Russian daily Vedomosti.
According to Colliers International data, commercial property investment amounted to US$3.93 billion, which 67.8 percent more then it was in 2009.
Offices became the most interesting segment for investors – more than 72.7 percent of all 2010 transactions by volume, which declined even so in comparison with 85.5 percent in 2009. Only three deals involving warehousing properties were completed and amounted to US$729 million; the total amount of deals in retail real estate was US$185.5 due to the shortage of quality retail spaces.
Experts are expecting the office segment to remain attractive for institutional investors. 200,000 sq.m of space was delivered to the market over the last quarter of 2010, there were no new schemes announced.
Among the most expensive deals Cushman & Wakefield analysts names Chinese state-run corporation ChenTun purchasing of 96,483 sq. meters Grinvud complex for US$350 million, VTB Capital acquisition of 38,000 sq. meters Capital-plaza for US$180 million, and Sogaz US$100 million purchase of Volna business center.
Such mismatch of investments into Moscow and other Russian regions is a crisis consequence, analysts explain. According to Cushman & Wakefield data in 2007, 39 percent of investments in a commercial property were come to regions.
“There were not enough offerings in Moscow in a mid 2000th, as a result capital has moved to the regions,” Semenov explains.
“Investors choose to leave the Russian market as many foreigners does, having addressed to more stable European markets, such as London, or to focus on Moscow where declining is low,” Cushman & Wakefield research department analyst Alexander Zinkovsky said.
London retained its title as the largest global property investment market for the second year running with the city’s 2010 commercial real estate turnover rising 16 percent on 2009.