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News Release

Moscow

Russia real estate investment volume reached USD4.6bn

St. Petersburg share increased to 16%


​Moscow, January 9, 2018 – Russia’s real estate investments reached USD1.9bn in Q4 2017, up 88% YoY (USD1.0bn in Q4 2016), according to JLL calculations. This brought the full year volume to USD4.6bn, up 9% from USD4.3 bn in 2016.

Olesya Dzuba, Head of Research, JLL, Russia & CIS, comments: “In 2017, the market underwent both positive and negative changes. The Russian economy has been recovering. The rouble traded within a narrow range. Inflation declined below the Central Bank target. Despite the raising concerns about the banking sector stability, a number of large deals closed at the year end. These included the sale of Immofinanz shopping centre portfolio and the part of Sever-2 warehouse complex. We expect the investment volume to climb to USD5bn in 2018, up 9% YoY.”

​Russia real estate investment deals volume dynamics*
Russia real estate investment deals volume dynamics_09012018.png
* Investment deals, excluding land acquisitions, JVs, direct residential sales to end-users.

Source: JLL 

In 2017, the retail sector accounted for 40% of the total volume. Offices followed, with 34% of all deals. The retail sector dominated over the whole year, with the sale of the Immofinanz shopping centre portfolio to Fort Group supporting this in Q4.

Moscow remains the main investment destination in Russia. In 2017, its share was close to the level in the previous year, at 79%. Higher investment activity was recorded in St. Petersburg, which share had increased from 9% in 2016 to 16% in 2017. In absolute terms, the St. Petersburg investment volume grew by 96% YoY, from USD380m to USD744m. Investors considered St. Petersburg assets as an alternative to those in Moscow, increasing their activity in the Northern capital.

St. Petersburg real estate investment deals volume dynamics*
St. Petersburg real estate investment deals volume dynamics_09012018.png
* Investment deals, excluding land acquisitions, JVs, direct residential sales to end-users.

Source: JLL

The share of foreign investments increased from 6% in 2016 to 17% in 2017.

“In 2017, new foreign investors entered the market. At the same time, those who have already been present there became more active. The newcomers included the Chinese company Fosun Group, which purchased the Vozdvizhenka Centre office building in Moscow. Raven Russia, the British investment fund, which acquired assets both in Moscow and in St. Petersburg, led the ‘old timer’ list. – Evgeniy Semenov, Regional Director, Head of Capital Markets, JLL, Russia & CIS, notes. – The investment market recovers gradually, with the share of restructuring deals dropping from 48% to 2% in 2017.” 

Prime yields remained flat last year. As benchmarks for the market players, JLL analysts consider 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. Following key rate cuts by the Central Bank, the cost of bank financing will continue declining and will likely lead to yield compression next year.


​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 $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 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, 2006-2017 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.