Despite the global liquidity crisis, Russia has benefited from new cross-border capital inflow, including money moving into the banking system, during the second quarter of this year.
Standard & Poor’s has found that Russia’s gross domestic product has grown threefold over the past five years. The Moscow office market grew by 770,000 m2 in the first half of 2008, according to CB Richard Ellis. But only 11% of this is class A space.
Take-up during this period was strong, with more than 1m m2 of space being let. CBRE forecasts that total take-up for the year will be more than 2m m2, since the second half of the year is normally more active. Sales prices have risen significantly this year also. Asking prices for CBD offices were between $16,000 to $20,000 per m2 and $5,000 to $10,000 per m2 in decentralised areas of the city.
During the first half of this year property investment totalled €1.97bn, which is over half of last year’s total property investment. This was achieved despite big yield compression in Moscow. The first purchase by a German open-ended fund manager, KanAm Grund, of four Moscow office buildings for $590m accounted for almost 30% of Russian’s entire first-half investment volume. Russian deals accounted for a third of all CEE investment totals in the first half of the year, says CBRE.
CBRE’s CEE chairman Andreas Ridder says: “There is no end in sight to the Russian boom as long as oil, gas and commodity prices remain high.” Market observers are worried about the possible effects of recent differences with Ukraine and western disapproval of Russian political actions and military excursions into Georgia. However, in the past, political instability in the CEE regions has not hindered the countries’ property market development in the medium to long term.
Overseas cash boosts Russia’s markets
