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News Release

Moscow

2015 Russian real estate investment volumes the weakest in a decade


Moscow, 25 December, 2015 – In 4Q 2015 Russian real estate investment volumes decreased by 47% compared to the same period in 2014, with total, preliminary investment volumes at USD600m, according to JLL analysts’ calculations. For the full year, investment volumes stand at USD2.3bn, which is 38% below the volumes seen in 2014. These figures reflect the worst year for Russian real estate investment volumes since 2005.

Saydam Salaheddin, Regional Director, Head of Capital Markets, JLL, Russia & CIS, commented: “The investment market in 2015 recorded extremely disappointing dynamics as a result of falling investor demand driven by a weakening economy and tight credit market conditions. We believe the situation will improve in 2016 from this very low base to $4bn, however given the volatility in the oil price which remains the main driver for the Russian economy, there are downside risks to our forecast.”

Russian Real Estate Investment Volume Dynamics, USD bn*

Russian Real Estate Investment Volume Dynamics, USD bn_25122015.png

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

Source: JLL

Investors continued to be focused on assets which are located in Moscow, accounting for 92% of total investment volume in 2015. Investments in St. Petersburg real estate market reached USD61m in 2015 compared to USD364m in the same period of previous year, as a result its share decreased to 3% from 10% in 2014. The share of foreign capital came to 20% for 2015 vs. 24% in 2014.

Evgeniy Semenov, Regional Director, Capital Markets, JLL, Russia & CIS, noted: “Following the policy tension and the market volatility foreign investors have not been active on the market during 2015. Overall, investment volumes both for the fourth quarter and the whole year were weak; however, we do see a reasonable pipeline of deals across all the sectors of real estate market through 2016. Today the Russian market could offer good investment opportunities to the foreign investors with strategic vision. As has been the case through 2015 much will depend on ruble and oil prices stability to support investment volumes and yield compression.”

Though overall volumes are weak, yields remain unchanged against the previous quarter. In Q4 2015, JLL experts estimate that prime yields in Moscow remained at 10.5% and 10.75% for offices and shopping centres respectively, at 12% for warehouses.  Due to the limited number of transactions, these yields are indicative and are defined by understanding of the market by JLL experts.

Prime Yield Dynamics in Moscow

Prime Yield Dynamics in Moscow_25122015.png

Source: JLL


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. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316.0 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $57.2 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, 2014  and 2015 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015, and The Best Real Estate Consultancy in Ukraine at the Ukrainian Property Awards in 2013.