With many world real estate markets stagnant or worse, news of Ernst & Young coming out with a report showing Russia property being more attractive for investors than Europe proper, this is news long overdue in some ways. Outdistancing the stigma of a cold and mysterious place on Earth, Russia's potential may finally be shining through.
The survey, entitled Real Estate: Asset Investment Trend Indicator, was taken across 15 countries in Europe, asked hundreds of companies to give data on real estate related transactions etc. According to the surveys, REOCs or REITs are focused on affordable Russian properties. Of course much of the focus is on Moscow, but other cities and regions were indicated as well. The chart below from the report (PDF) reveals more about just who is buying Russia property.
As for the types of properties that will be popular for investment, the gambit is fairly well covered between office, retail, and residential space. However, for Russia's big cities, retail clearly shines as the preferred conduit for profit. Along with the prospectus for 2013 investment trends, the Ernst & Young document also speaks of increasing property prices as the demand rises, and supplies get smaller. Outside Moscow, cities with populations over one million are also clear targets for retail and other investments according to the report.
In Europe, clearly the sovereign debt crisis and the euro's difficulties diminish confidence there, but still residential properties in Germany, Austria, Switzerland, and the UK are stable commodities.
While some impediments exist for buying real estate in Russia, clearly the country was bound to emerge as a real estate boom economy at some point. After all, the country with the biggest land mass in the world has to gain influence for an ever growing population worldwide. While this is a sort of simple logic, the fact cannot be overlooked as important investment wise. Notwithstanding the Sochi Olympics, and other crucial Russian Federation high profile events, the country does show resilience when compared to most others economically.
For more information about this report readers should contact Olga Arkhangelskaya, Partner and Head of Real Estate Advisory Services in the CIS at: +7 (495) 755-9854.