What Sanctions? US Companies Can’t Get Enough of Russian Real Estate

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Over the past 10 years US companies have invested $5.8 billion in commercial real estate in Russia, the biggest among other foreign investors, according to consulting company Knight Frank.

Overall foreign investments to Russian commercial real estate over the past 10 years have reached $15.9 billion. US companies account for 36.5 percent of the total sum.

Among other leaders are Britain ($2 billion), Austria ($1.7 billion), Switzerland ($1 billion), and Finland ($970 million). The biggest players in the Russian market of commercial real estate are the American investment fund Morgan Stanley, company Hines, Swiss fund Eastern Property Holdings, and Austrian investment company Immofinanz.

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According to estimates, this year foreign investments to Russian commercial real estate are expected to drop six percentage points against the previous year. They are estimated to account for 14 percent ($370 million) of the total sum of investments in the market ($2.6 billion).

Foreign investments in Russian commercial real estate had steadily increased since the early-2000s. During the crisis in 2009, investments hit a record low of $480 million but soon recovered.

However, since 2014, outlooks for the market have been downgraded to due political and economic difficulties, an article in the Russian daily newspaper Kommersant read.

Nevertheless, analysts are optimistic about 2016. According to CBRE, overall investments in Russian commercial real estate would rise to $4.5 billion in 2016.

Despite tensions between Russia and the West, analysts do not expect major changes in the geography of investors.

"Traditional investors will continue play key roles in the Russian market. There is also interest from Asian companies," Alan Baloev, investment department head at Knight Frank, told Kommersant.

"American companies are still interested in completed pieces of commercial real estate in Russia, to receive rental income. There is also interest from Asian and Middle Eastern companies," CBRE market analyst Olesya Dzyuba said.

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