Foreigners are returning to Russia’s commercial real estate, with foreign investment in 2018 reportedly at six-year highs, RBC reports. Russian analysts see the development as a sign of the once-booming market’s recovery from geopolitical tensions.
Investment sentiment in the real estate sector suffered after 2014 with Western sanctions over Moscow’s role in the Ukraine crisis, the ruble’s volatility and plunging oil prices.
But foreign investment in Russian commercial real estate totaled 59.5 billion rubles ($899 million) in 2018, the RBC news website reported Friday, citing figures from consultancy Knight Frank.
According to the figures, foreign investment in real estate last year came second only to the $1.15 billion invested in 2012.
Foreign transactions made up almost a quarter of all real estate investments (248.1 billion rubles) in Russia last year, the highest share since 2014, when it accounted for 39 percent, according to the reported data.
Knight Frank’s figures differ from other market analysts due to varying methodologies. According to RBC, consultancies, Jones Lang LaSalle (JLL) and CBRE estimate that only $2.8 billion was invested in commercial real estate, while Colliers International places the figure at $2.4 billion.
“Were there no sanctions, there would be many more foreign investors in the market at current prices and trends,” says Sayan Tsyrenov, PwC’s head of mergers and acquisitions advisory.
“Despite the upside, many others are still afraid to come to Russia as they fear increased sanctions pressure,” RBC quotes Tsyrenov as saying.