Russia real estate investment paused following sanctions

The volume of real estate investment in Russia was down to $1.3bn in January-June 2018, falling by 39% year-on-year, according to a July 3 report by JLL. In the second quarter alone the investment volume dropped by 63% y/y. “Despite healthy macro fundamentals, Russia’s real estate investment market was beset by geopolitical factors in Q2," JLL's head of Research in Russia and CIS Olesya Dzuba commented, adding that "new US sanctions against Russia announced in April resulted in ruble devaluation by 7-10% and raised currency and market volatility. This, in turn, has delayed the closing of some investment deals. In January-June 2018, the residential sector attracted the most investor attention, with 35% of the total volume of investment. Office spaces and the retail sector followed with a 32% and 22% shares, respectively. The office segment also saw two large deals on the market in the second quarter: the sales of the second building of Metropolis business centre and Phase III of Romanov Dvor business centre in Moscow. "Moscow reclaimed the title of the most popular investment destination in H1 2018, with 56% of all deals," according to JLL. Moscow was followed by St. Petersburg with a share declined of 38%. While in Moscow most deals were in the office sector (44% of the total), half of St. Petersburg deals were closed in the residential sector.