Major investors expressing growing interest in Russian office and corporate real estate

According to figures compiled by CBRE, commercial and corporate real estate is gradually attracting more and more interest on the part of investors. Estimates suggest that the volume of transactions at the agreement stage exceeds the USD 2.5 bln mark this month. The high level of investor interest is being supported by an increase in activity on the real-estate rental market. Moreover, according to experts, this trend is being buoyed by the increase in confidence among market players that rental rates are unlikely to continue sliding.

Analysts note that Q3 2015 was marked by a rather low volume of new investments in the real estate sector at just over USD 900 mln, which represents a 24% drop compared to the same period last year. The share of foreign investments in the first 9 months of 2015 stood at 27% or just under the equivalent of USD 550 mln. That said, according to specialists, almost all investments were aimed at office real estate. The volume of regional investments was just shy of USD 30 mln, accounting for less than 2% of the total volume of investments for the first nine months of 2015.

In summary, CBRE analysts note that the domestic market continues to be characterised by a high degree of uncertainty, suggesting that another wave of rental-rate reductions cannot be entirely excluded. However, despite the fact that elevated risk persists, commercial real estate is gradually beginning to pique the interest of investors over the long haul, as is reflected in the significant number of transactions currently at the negotiating stage.