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Q1 2012 Russian real estate investment market overview

Real estate investment volume exceeded USD500m

Moscow, 10 April 2012 – Jones Lang LaSalle announces Q1 2012 results in Russian real estate investment market. Overall real estate investment volumes amounted to USD547m in Q1 2012, with commercial real estate investments accounting for USD512m.

Year on year total real estate investment volumes (including commercial real estate investment volumes) decreased approximately 70% in Q1 2012.

Daria Bugaeva, Consultant, Capital Markets Research, Jones Lang LaSalle, Russia & CIS, added: “The substantial drop in volumes is largely the result of record high volumes in 2011, with a total exceeding USD8bn for the year (2011). However when comparing growth in volumes with Q1 2009, we observe a 14% rise in volumes for Q1 2012. It worth mentioning, that continuing uncertainties in the global economy and a wait-and-see investor attitude on the eve of presidential elections in Russia impacted investment volumes. Nevertheless, we are aware of several large deals in progress that are expected to be closed in 2012. Consequently we expect total real estate investment volumes to reach about USD6.5m in 2012, slightly lower than the record volume in 2011, at the same time higher than pre-crisis levels.”

Sector wise, investments were bilaterally diversified in Q1 2012. Office and retail segments attracted the bulk of investments – 40% and 34% of Q1 2012 total investment volume respectively. The hotel sector’s share of volumes comprised 12%, while warehouses attracted 8% of Q1 2012 total investment volume.

In Q1 2012 investor interest was mainly focused on assets in Moscow and St.Petersburg, accounting for 69% and 27% of Q1 2012 total investment volume respectively.

In Q1 2012 the share of total investment volumes into development projects increased noticeably, reaching approximately 44% of the total investment volume (compared with 17% for full year results 2011). Petr Shura, shareholder of RGI International, for example, acquired 50% stake in Mozaika SC project from Hungarian TriGranit. PRV Group purchased a 33,000 sq. m warehouse terminal in PNK-Vnukovo industrial park, with commissioning planned for Q2 2012.

Russian investors remained strong in Q1 2012, accounting for 90% of the total investment volume. Deals that included foreign capital comprised only 9% of the total investment volume compared with 35% in Q1 2011. For example, Trinity Russian Retail Partnership purchased Klondike DIY hypermarket in Rostov-on-Don.

Daria Bugaeva added: “Nevertheless, we expect foreign investors to be at least as active in 2012 as they were in 2011. That’s confirmed by several deals with the foreign capital, that will be closed in the coming months. Moreover, considering the quality of assets currently under active marketing, we expect growing interest from foreign investors which will likely translate into a growing share of total volumes.”

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 195 million square meters worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010 and 2011 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg.
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