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REX 2014: Colliers International organizes discussion on financing of development projects during time of unstable market conditions in Russia

In Q1 2014 volatility on currency markets and increased economic risks hampered investment activity in Russia. Nonetheless, key players on the market continue to show interest in quality commercial properties, albeit in lower volumes. In the first three months of 2014 the greatest share of investment was in the retail sector, which saw $350 million in deals. Investment in the office sector totalled $151 million while $142 million was invested in land assets.
According to experts of Colliers International, the total volume of investment in commercial real estate in Russia in the first three months of 2014 amounted to $642 million, which is approximately 35% of the volume seen in the same period last year. The lower level of investment activity can be attributed to volatility on the currency market, which led to the postponement of several major transactions to the second quarter. Most investors are waiting for stabilisation on the currency market before closing out deals now in process and moving on to new ones. The second factor impacting investment activity in the short term has been Russia’s direct involvement in the political crisis in Ukraine and the negative reaction of Western countries.

Colliers International estimates that in Q1 2014 retail real estate accounted for 54% of total investment in commercial properties. The share of the office market stood at 24% while the land market accounted for 22%. Investor interest, as in the previous year, has been focused on assets in or near Moscow. All transactions were carried out exclusively by Russian companies.
Specialists of Colliers International report that capitalisation rates in Q1 2014 in the Moscow region remained unchanged at the level seen in 2013. For the prime class office, retail and warehouse properties they were 8.5%, 9% and 11%, respectively. There have been no recent transactions on the Moscow commercial real estate market which would indicate any changes in capitalisation rates. 

Moscow, 9 April 2014 – As a part of the 11th annual commercial real estate exhibtion REX 2014, on April 24 a panel discussion will be held on the topic 'Financing of Development Projects in Unstable Market Conditions'. Nikolay Kazanskiy, Managing Partner of Colliers International Russia, will moderate the event.  

During the panel discussion Nikolay will be joined by leading players of the Russian commercial real estate market, including: Dmitry Khalenev, Deputy CEO for Corporate Business, Investtorgbank; Alexey Kozak, Co-Head of Real Estate, VTB Capital; Andrei Kolokolnikov, Vice President, Morgan Stanley Russia; Jussi Kuutsa, Country Manager for Russia, SVR; Vitaly Efimkin, Vice President, Tashir Group; Nikolay Artemeko, CEO, RosEvroDevelopment; and other experts. The discussion will focus on such pressing issues as the influence of the unstable economic situation and elevated political risks on the financial results of developers, the rising level of competition among shopping centres, lower turnover for retailers, changes in lease rates and payback periods for properties under construction, bank lending dynamics and more.

Colliers International will also be participating in REX 2014 as an exhibitor, presenting at stand G5 the company’s key projects in the retail, office and warehouse segments. The exhibition runs from April 23 to April 25 at the Expocentre on Kransnaya Presnya (Pavilion 7), and it is expected to receive approximately 8000 visitors from Russia, the CIS and Europe.

Nikolay Kazanskiy, Managing Partner, Colliers International Russia: “Attracting financing in times of instability both in Russia and on international markets is one of the most pressing issues facing developers. In the current environment the search and selection of the right financial instruments is a critical factor for the players on the Russian market, along with the credit accessibility and lending conditions in the real estate sector. So we are very pleased that the business program of REX this year begins with this discussion dedicated to the financing of development projects in Russia.”

REX is one of the most important Russian platforms for professionals of the commercial real estate market. Every year the exhibition is visited by some 7500 specialists from various countries and regions of Russia. They include investors, developers, retailers, government officials, architects, designers, consultants and property managers. REX also presents an intensive business program which includes conferences, roundtables, training seminars and property presentations. The event is organized by MOLL Group with support from the Russian Council of Shopping Centres.