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Park of Legends multifunctional complex or part of the Faces residential complex near the CSKA metro station.
JLL expects another 213,000sqm to come online in the rest of this year which would mean the overall supply of new offices will be down 39% in 2018 y/y to a new record low, which will also support prices and drive vacancy rates down even further.
Sector recovering
The trends in Moscow’s office market are mirrored by similar recoveries in other sectors of the real estate business. Russia’s economic recovery is reach-
ing into the regions, where a number of new shopping mall projects have started – mostly in the 11 cities with more than one million inhabitants. Almost half (48%, or 225,000 sq m)
of the new shopping mall commission- ing is happening in the Russian regions in 2018, real estate consultancy
CBRE said.
High end residential property prices have also been climbing as wealthy Russians return home in fear of sanc- tions or arrest. Wealthy Russians living abroad increased the bids for premium class real estate by 21% in the first quar- ter of 2018.
At the same time Russians exported just over $1bn for buying real estate abroad in 2017, up a quarter y/y as the middle classes and moderate well off look
for a safe haven for their life savings. Germany has been an especially popular destination.
But the most spectacular change has been in the warehousing subsector where sales and rentals of warehouses soared by 300% in the first quarter
of this year. In addition to the general economic recovery, warehousing
has received an extra boost from
the explosive growth of e-commerce in Russia.
The Russian Central Bank has been publishing data on cross-border property purchases since 2009. Russian investment into overseas property grew by a quarter (25%) each year between 2009 and 2013. But the amount spent on international real estate rose 30% in the fourth quarter of last year, compared to the same period in 2016, up from $249mn to $324mn, the bank said.
The Cypriot banking crisis of 2012-2013 showed that most of the capital flight from Russia is not oligarch cash looking for a safe haven, but largely made up by Russia’s middle class looking for a safe home for their life savings as they still don’t trust the domestic banking sector. Since the Cypriot banking sector blew up in those years, this money – many billions of dollars – has been looking for a new home and many Russians have decided to park their spare cash in real estate rather than bank deposits. The wall of cash has been so large that many international real estate markets have been affected: a large part of the rise
in Germany’s property market has been ascribed to Russian purchases of apartments and commercial property in recent years.
The total amount of money sent abroad by Russian nationals in 2017 was $31.3bn, which exceeds the 2016 figure ($24.8bn) by 26%. The most popular destinations to send funds to were Switzerland, the UK,
Russian foreign property investments
grow for the first time in four years
George Kachmazov managing partner of Tranio
BRICKS & MORTAR:
Russians spent €1.1bn on inter- national real estate in 2017, up by a quarter (26%) y/y, and the volume of cross-border transfers topped $870mn, according to the Central Bank of Russia (CBR), reports international real estate agency Tranio.
“This means the volume of Russian investment in foreign real estate grew for the first time in four years, though it is still half the total of its peak in 2013 ($2.2bn),” says Svetlana Larionova, who heads up the Russian real estate division at Tranio.
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