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News Release

​Moscow

Q3 2014 Russian real estate investment volumes hit $1.4bn


​Moscow, 1 October, 2014 – According to JLL analysts’ calculations, Q3 was the strongest quarter of the year with investment volumes reaching USD1.4bn, down only 10% YoY. Moreover Q3 volumes are equal to the total investment volume over H1 2014. Through Q1-Q3 2014 Russian real estate investment volumes amounted to USD2.8bn, which reflects a decline of 43% YoY.

Russian Real Estate Investment Volume Dynamics, USD bn*

russian-real-estate-investment-volume-dynamics-usd-bn_02102014.png

* Investment deals, excluding land acquisitions, JVs, direct residential sales to end-users

Source: JLL

“A pick up in business activity (compared to the first half of the year) and comparatively large deals (such as the purchase of the Pokrovsky Hills residential complex and the Novinskiy Passage business and retail centre) are encouraging signs for the market”, - Tom Mundy, Head of Research, JLL, Russia and CIS, commented. - “However, tension between Russia and the West, the slowdown in the Russian economy as well as continued exchange rate volatility still reflect considerable risks for investors (especially for foreign ones). So we would be reluctant to say that these results indicate a recovery of the market.”

Capitalization rates have also reacted to the current market situation. In Moscow, for offices and shopping centres rates increased by 50bps to 9.50% and 9.75% respectively. For warehouses rates increased by 25bps to 11.25%.

Prime Yield Dynamics in Moscow

prime-yield-dynamics-in-moscow_02102014.png

Source: JLL

In Q1-Q3 2014 investor interest was focused mainly on offices and mixed-use complexes: these segments attracted 24.2% and 28.9% of total investment volume respectively. The share of the residential sector increased to 16.6% due to the purchase of the Pokrovsky Hills residential complex by Qatar Investment Authority.

Russian Investment Volume Breakdown by Sector

russian-investment-volume-breakdown-by-sector_02102014.png 

Source: JLL

Moscow is still the main target for investors, accounting for 88% of the total real estate investment volume compared to 83% in the same period of previous year, while Saint Petersburg’s share reached 7% and the regions attracted 5%. Local investors continue to dominate the market, Russian players accounted for 70% of deals in Q1-Q3 2014 vs. 54% in Q1-Q3 2013. However such a big share of foreign capital in 2013 was mainly the result of the Metropolis SC deal closure.

Investors by Origin

investors-by-origin_02102014.png 

Source: JLL

Tom Mundy added: “The current political environment, volatile exchange rate and slowdown in Russian growth have had a real impact both on Russian and foreign market players. That’s why we maintain our Russian real estate investment volume forecast for this year at USD3.4bn. We should note that we do see some investment deals with Russian players in the pipeline, however, which gives us some hope that there will be upside risks to our forecast.”


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 fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $50.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.

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 , 2013 and 2014 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 www.jll.ru