In a bad start to the year, Russia's commercial real estate investments have failed to climb. At the end of 2018, Russia had commercial real estate investments around the $2.8 billion mark. According to World Property Journal, this paled in comparison t0 2017 values where the investments reached up to twice that amount or more. It represented a 39% year-on-year decline.
These volumes reciprocated the low values of 2015, a time when the recession was rampant in the country. Russia suffers from sanctions imposed by some countries, which had triggered investors to become moderately cautious. Some large transactions that were supposed to happen this year never got signed; those, among others, also figure largely into why last year's rating was so low.
Some territories, like St. Petersburg, managed to keep away from the decline. The aforementioned territory posted a growth of 23% compared to 17% in 2017. Moscow, in comparison, dropped to 66%, from a previous high of 78% in 2017.
Other parts of the world have also shown a decline towards interest in real estate, whether commercial or residential. News from Fintech stated that international investors were understandably cautious as well. High-risk commercial property investments slipped by 42% in the past 12 months as interest shifted towards moderate- and low-risk strategies.
The German and British property investment market are good contrasting examples. Investors were largely cautious of German commercial real estate, which had fallen down to 36%, level with the values for the US property market. Britain, in contrast, has shown resiliency; despite Brexit, the market has remained a popular choice of international investors, according to a survey.
In the case of Russia, if the figures studied came back to "executed transactions," it tells of an improved story. Values increased from 18% a year earlier (2017) to 28% in 2018. That failed to raise the absolute figures, however, as it remained largely similar at $793 million and $823 million.
Foreign transactions were led by Riviera SEC being acquired by KLS Eurasia Venture Fund. At a close second was a chain of K-Rauta stores being bought by French retailer Leroy Merlin. Finally, the third largest was a transaction that involved the acquisition of a Metropolis office. Hines and PPF Real Estate became the proud new owner of the property.
Unless Russia finally deals with the sanctions and the 'uncertainty and volatility' bought about by it, it will remain to have a bad year upon bad year as time moved on.
