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News Release

Moscow

Shopping centres outperformed offices in Russia real estate investments

​JLL presents Q1 2017 investment market results


Moscow, 04 April, 2017 – In Q1 2017, Russia’s real estate investments reached USD830m, down 18% YoY, according to JLL calculations. Despite the decline, investment activity is improving, with a higher number of deals and a more even breakdown across sectors and regions.

Vladimir Pantyushin, Head of Research, JLL, Russia & CIS, comments: “Stable exchange rate together with the economy climbing out of recession supported the rise of investments. Rental market stabilization across all segments became the key factor stimulating investor interest in real estate assets. Moreover, the volume of deals at the negotiations stage and under due diligence shows a sizeable pipeline of future transactions and further improvement of the investment market.”

JLL analysts expect investments to grow in the near future. According to their forecast for 2017, investment volume will reach USD4.5bn vs USD4.2bn in 2016.

Russia real estate investment volume dynamics, USD bn*
Russia real estate investment volume dynamics, USD bn_04042017.png
* Investment deals, excluding land acquisitions, JVs, direct residential sales to end-users.

Source: JLL

In Q1 2017, the retail sector attracted the bulk of investments, with the purchase of the Leto SEC in St. Petersburg by MallTech as the main transaction. The share of retail investments exceeded 50% of the total volume, outperforming offices, a traditional leader.

“Retail market stabilization led to rising shopping centre occupancy and improved their financial performance. Market players adjusted to the current conditions. This stimulates owners and investors to come to common terms on asset values, with a number of deals reaching advanced stages and likely to be completed in the near terms. Although Russian investors continued to dominate in Q1 2017, we expect foreign investor activity to rebound after hitting the historical low of 3.5% last year.” – Evgeniy Semenov, Regional Director, Head of Capital Markets, JLL, Russia & CIS, notes.

Russia real estate investment breakdown by sector
Russia real estate investment breakdown by sector_04042017.png

Source: JLL

The distribution of investment activity across regions became more even. The share of Moscow deals declined to 50% from 81% in Q1 2016. The highest investment growth was observed in St. Petersburg, which share increasing from 9% to 20% due to the several large transactions. In absolute terms, the St. Petersburg investment volume doubled.

Prime yields remain unchanged from the previous quarter. As benchmarks for the market players, JLL analysts take Moscow prime yields between 9.0-10.5% for offices and shopping centres and 11.0-12.5% for warehouses; St. Petersburg prime yields at 9.5-11.5% for offices and shopping centres and 11.5-13.5% for warehouses.


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and on behalf of its clients managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset 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, 2006-2016 at the Commercial Real Estate Awards, Moscow; Consultant of the Year at the Commercial Real Estate Awards 2009, 2016, St. Petersburg; Consultant of the Year at the RCSC Awards in 2015.