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Geopolitical issues are unlikely to
have much effect on Russian consumers. Real wages will continue to rise as
will consumer spending – and this
will support the retail and warehouse sectors where supply is already starting to get tight.
Sanctioned business and government entities are not significant in the Rus- sian office market, often being owner- occupiers. With economic growth,
a rising oil price and a falling interest
“Sanctioned business and government entities are not significant in the Russian office market”
rate business activity will also continue to pick up speed. Market conditions are positive for the office sector.
However, investment sentiment is likely to be affected by the noise and this
may reduce capital markets transaction volumes.
Conversely, as Russian investors have fewer alternatives available to them internationally they may buy more at home.
Ignore the noise – play the fundamen- tals. The Russian market remains very good value.
Disclaimer – since writing this there is a real risk of an escalation in the standoff between the US and Russia in Syria – if the situation degenerates into a conflict all bets are off.
Tim Millard has been working in real estate market in Russia since 2003 and is director of Research, Strategic Consulting, Valuations and Hotels & Hospitality Group for JLL.
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