Despite 2014 Politics, Russia Enjoys $3.7 Billion of Property Investment

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According to Cushman & Wakefield, total commercial real estate investment volume in Russia for the first three quarters of 2014 reached $3.7 billion. In Q3, 2014, the total investment volume was $1.3 billion, which is similar to the previous year's number ($1.2 billion).
 
The initial 2014 forecast was unchanged at $5.0 billion by the end of the year.  According to Denis Sokolov, Head of Research at Cushman & Wakefield Russia, "We believe it is achievable given the macroeconomic situation and political risks. We expect that Q4 will not be significantly more active than Q3. With a significant revision of the 2015 economic outlook, we reduce our investment volumes forecast for 2015 downward to US$ 5.7 billion"
 
In July, the CBR increased the key rate 0.5 pp setting it at 8.0%. Following the CBR and overall market trends, Cushman & Wakefield increased the capitalization rates 0.5 pp for offices to 9.25%, 0.25 pp for prime retail to 9.5% and 0.25 pp for warehouse objects to 11.5%.
 
As usual, investments are primarily concentrated in Moscow. The total up-to-date investment volume in capital city real estate increased to 92% at $3.4 billion (including $1.2 billion invested in Q3, 2014). In Q1 -- Q3 2014, the share of offices in the total volume was 63% at $2.3 billion. At the same time, in Q3 2014, comparable volumes were invested in office ($620 million) and residential / hotel ($613 million) real estate.
 
Cushman and Wakefield reports $2.9 billion and $0.8 billion were invested by domestic and foreign companies, respectively.

Foreign and Domestic investments in Russian Property Market