The crisis years in Russia’s real estate sector seem to have ended, as investment surged in 2019, bne Intellinews writes citing a report by real estate group CBRE.
The value of commercial real estate investment in the country increased by 34% to a total of 243 billion rubles ($3.8 billion) in 2019, the report says. It was only the fourth annual increase in the volume of transactions recorded in the last decade.
“Purchasing activity was supported by the steady macroeconomic environment, with key indicators either improving or meeting expectations. The Bank of Russia’s key interest rates cuts to the lowest level since early 2014 improved conditions for debt financing, which also fuelled investment demand,” CBRE said.
The collapse of oil prices and the subsequent deep devaluation of the ruble wounded the sector, which has been struggling ever since. However, after the economy started growing again in 2016 and more recently as real incomes started to recover in 2019 the conditions for real estate development have considerably improved, CBRE writes.
Companies and entrepreneurs are increasingly judging the time is right to start investing again. The completion of several major deals in 2019 helped push up the average transaction size up to 1.6 billion rubles, from 1.4 billion the year before.
The retail sector accounted for around a third of all transaction volume in 2019, ensuring it retained its spot as the most popular sector for the third consecutive year, according to the report. Several landmark shopping center deals were closed during the period, pushing up transaction volume in the sector to 71 billion rubles ($1.1 billion), compared to 55 billion ($850 million) rubles a year earlier.
