Skip Ribbon Commands
Skip to main content

News Release


10 Years of the Real Estate Investment Market in Russia

JLL presents market analysis for 2004-2013

Moscow, 13 March 2014 – Especially for MIPIM 2014, taking place now in Cannes, JLL have prepared a new report, “Russia’s Real Estate Investment Market: Main Drivers, Trends and Implications”. In this report we have analyzed the investment market during 10 previous years, dividing them into two periods: before the Global Financial Crisis [GFC] – from 2004 to 2008, and after – from 2009 to 2013. 

We took 2004 as a starting point of the analysis, as it was the first year of significant commercial real estate investment volume in Russia, exceeding USD300m for the first time. The last decade was clearly split into two halves by the global financial crisis: the two parts of this period are different in terms of the share of Russian and foreign capital in the real estate market, and in terms of the investor interest by sector.

Investors Geography 

“Initially, before the analyzed period, the market was formed by investors from Russia and CIS countries, as they were originally the major holders of real estate assets in Moscow, St. Petersburg and the regions, and then more often became sellers. This has resulted in negative net position of Russian (and indeed CIS, which shares close cultural and economic ties with Russia) investors over the last ten years, whereas the foreign investors net position is positive, as since 2000s they were buying Russian real estate to build their portfolios from scratch,” - Olesya Dzuba, Deputy Head of Research Department in JLL, explained.

Net Buying (on the right) and Selling (on the left), 2004-2013, USD million

Source: JLL

Before the crisis, from 2004-2008, the share of foreign investor was about 62%. The variety of capital entering Russian real estate market was wide, with key players from Western and Eastern Europe, the Nordic, and global funds. During 2008-2009 with Russian risk levels reappraised, many foreign investors began focusing on their own domestic markets. Aversion to elevated risk levels, foreign markets and non-core assets provoked many interested parties to stall their strategies for Russia.

Аfter the GFC, Russians became more active than before the crisis. Russian unlisted developers and property companies (including Tashir Group, O1 Properties, FORTGROUP, and others) were more active than their foreign colleagues. The share of Russian capital increased to almost 70% in 2009-2013.

Investment Volume by Type in Russia: All Universe, USD million

Source: JLL

“The large share of Russian capital after the GFC helped maintain and contribute to the liquidity of the real estate market. Russians were often quicker in their decision-making and more interested in secondary product, resulting in larger volumes total volumes transacted,” – Olesya Dzuba said. – “The downgrading effect of the crisis on the volume of foreign investments was significant in 2009-2010. At the same time, the annual volume of foreign investment during last three years (2011-2013), with an average of USD2.9bn, was higher than an average of USD0.9bn recorded in 2009-2010.”

Average Annual Investment Volume in Russia, USD million

Source: JLL

Overall, the share of purchases transacted by domestic investors during last ten years was 59%, whilst inward foreign investment was 39%. The remaining 2% are confidential transactions. Recorded high volume of the foreign investments during the analysed period demonstrates the attractiveness of Russian real estate market.

Top Picks

Historically investor interest was concentrated in Moscow office market. This is especially true for Russian investors, where the office market represented some 50% of investor distribution during 2004-2013. Foreigners almost equally allocated their money into offices and retail. Indeed, in recent years, foreign investors have been focused on large retail schemes.

Russian Investment Sector Wise Distribution in 2004-2013: Locals (a) vs. Foreign (b)

Source: JLL

Logistics and retail started to become strong competitors during last 2-3 years. The retail sector share has increased, and it was almost on par to offices in Russia in 2011-2013, at 34% vs. 40% respectively. Conversely, investment into office sector globally gained momentum, in particular in Europe and the Americas.

Total Investment Volumes Sector Wise Distribution in 2011-2013: Russia (a) vs. Global (b)

Source: JLL

“In today’s low yield environment in equities and fixed income instruments, as well as in banking deposits, real estate has become an attractive asset class. Russia has enjoyed significant interest from investors, both local and foreign over the last several years, resulting in the closure of a number of USD1 bn deals in 2011-2013. This may prove difficult to repeat in the near future, but the market has clearly entered a new phase of development and growth. In our view, over the longer term, we are likely to see large deals as more and more developments are completed and more product comes to the market.” – Olesya Dzuba concluded.


Given the ongoing situation in Ukraine, we caveat our forward looking view heavily with the understanding that sentiment towards the investment market is likely remain uncertain for some time. As is evident, our views were formulated before the crisis in Ukraine escalated, and as such we base our assumptions on a stabilized situation and a downward re-rating of risk.

About JLL
JLL (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $4.0 billion, JLL operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 279 million square meters and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management.
In Russia and CIS JLL has offices in Moscow, St. Petersburg and Kiev. JLL, Russia & CIS was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013. For further information, visit