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REMIC | Real Estate Management In Corporations

The volume of foreign investments in Russian office space dropped almost in half


In the first three quarters of 2015, foreign companies invested over USD 510 million in Russian commercial real estate. According to Knight Frank estimates, this amount was 50% lower compared to last year when the investment volume was over USD 1 billion.

There was also a reduction in the overall investment level in the first 9 months of 2015, totaling slightly over USD 1.7 billion. This was a more than 40% drop compared to last year when the investments equaled almost USD 3 billion. During the past 3 quarters, the average transaction volume averaged about USD 70 billion, while in 2014 the level was 110 million. The third quarter also showed a 25% decline in office space investments compared to last year, and the investments in this case were about USD 600 million.

Despite this year’s negative statistics, the experts hope that the overall 2015 office space investment results may prove comparable to last year’s of about USD 3.7 billion. This may occur due to several major transactions which are currently in the agreement phase.

The Knight Frank analysts noted that the fear of an exodus of foreign investors from the Russian real estate market was unfounded. Moreover, competent management of Russian corporate real estate stimulates interest from foreign companies in the Russian real estate market due to the long-term potential. Based on the current year’s results, the percentage of foreign investment in commercial real estate may surpass the 50% level due to a number of capital-intensive transactions.