MOSCOW, January 30, 2014 – The commercial real estate investment market, in Russia, has for a third year attained record high volumes, with investment transactions totalling $8.2 billion for 2013, reports Colliers International. Since 2012, the average deal size has increased reaching $186 million (up 29.5%), attracting both Russian and foreign institutional investors.
The largest transaction of 2013 was the sale of the Metropolis shopping centre to a Morgan Stanley real estate fund for $1.2 billion. Other notable players on the market in 2013 included: Millhouse Capital, Hines CalPERS, BIN Group and О1 Properties. In particular, Millhouse Capital acquired the White Gardens business centre for a price assumed to be close to $740 million. The warehouse market saw a major investment transaction by Renova, of its MLP warehouse portfolio to BIN Group for an estimated price of $900 million.
Sayan Tsyrenov, Director of the Capital Markets Department, Colliers International Russia, said, “Over the course of 2014, we predict that major institutional investors will continue to increase the size of their investment portfolios in line with their respective strategies. Since the numbers of institutional quality assets are limited, several good acquisitions could significantly improve their positions.”
Capitalization rates in Moscow remain among the most attractive for investors in Eastern Europe. The average rate of return in 2014 will remain at approximately the same level as in 2013: 8.5% for the purchase of high-class office centres, 9% for quality retail properties and 11% for Class A warehouse complexes. The largest volume of investment in 2013 went into quality retail and office assets ($2.93 billion and $2.87 billion, respectively). Smaller investment volumes went into warehouses and hotels ($1.54 billion and $210 million, respectively).
Stanislav Bibik Stanislav, Executive Director and Head of the Capital Markets Department, Colliers International Russia, said: “Russia’s investment market continues to be attractive for institutional investors. Major players continue to build their portfolios with quality properties in all market segments and 2013 saw several landmark acquisitions. At the same time, in the year ahead we do not expect record volumes due to the lack of a substantial number of major investment quality assets.”