Why Russia Has the Most Exciting Property Market in Europe

According to Tony Horrell who’s the CEO of Jones Lang LaSalle‘s European Capital Markets, Moscow has the most dynamic property market in Europe - and according to many property market analysts in the region, this is at least in part why Russia has the most exciting property market in Europe…

Basically investment commitment is incredibly high in Moscow, demand for retail and residential real estate is intense across many of Russia’s major cities, and in most locations supply is only just starting to sate this almost unquenchable local and international thirst for Russian real estate.  Over at least the short to medium term Russia’s exciting property market is definitely one to continue watching. 

To date, since the start of 2002 the amount of foreign and local investment commitment pouring into Russia’s bleeding edge real estate industry has increased in excess of thirty five fold, and for at least the next five years there will be continued space for significant expansion and many more millions will be made from property in Russia.

Russia’s economy has been positively developing year on year for the last nine years…this has had a dramatically positive effect both on the demand for real estate and also on the affordability of buyers.  Initially only Russian investment commitment was fuelling the development of the real estate market and then as confidence in the Russian government and economy grew, slowly but surely international institutional investment interest entered the market. 

Today the situation has reached the point that Russia’s property market is no longer considered bleeding or even cutting edge, it is simply ‘emerging quite nicely thank you’ – and it is at this point, naturally enough, that the more confident individual international property investor is beginning to look at ways to get in on the rise.

Most investment is going into the creation and development of new commercial and residential stock.  There is a strong rental market in cities like Moscow that an individual investor can certainly tap into…but the big money is ploughing into development projects. 

The development of prime retail space is surging ahead in particular because there is incredible demand for more shopping outlets among local consumers who are becoming increasingly affluent, and Russia has an incredibly long way to go before it has the amount of retail space per capita that most other European nations have.

In addition to retail space, the development of office and also hotel space has been intense.  A number of large hotel chains such as the Ritz, Ritz-Carlton and the Four Seasons have been working to establish their presence in Moscow and St. Petersburg in particular, and now it is the grade A office market where intense attention has turned.

Currently under construction is Moscow City (also known as Moscow International Business Centre) which will be a world class business centre occupying 1.2 million square meters when completed in 2012, and already it is expertly predicted that this vast centre for office space will easily manage to occupy all available units…and yet still demand for space is rising!

As stated, currently (baring unforeseen circumstances of course) there is room for development and price expansion in Russia’s property market for at least the next five years and anyone wanting to get in on the Russian real estate revolution who has left it until now to look for an entry point should move fast to establish their foothold.

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