OUR VISION

The growth of the Russian economy during recent years has given many Russians the opportunity to rapidly increase their consumption. Retail spending is increasing at an unprecedented rate. In parallel with the economic growth, the belief in the future has returned.

The economic boom has created a great demand for both retail and office space. At the same time, the Russian real estate market is characterized by a lack of modern retail and office space. Compared to Eastern European markets, the amount of retail space per inhabitant in Russia is significantly lower.

Despite the low level of retail space per capita, the significant investments in commercial property during recent years has caused some concern about market saturation. Our view is that while the market is experiencing an increase in supply and a gradual improvement in the quality of development projects, there is still a significant variation between projects. While the market may seem to approach saturation on paper , reality is quite different. Projects that have the right qualities, basically consisting of premises which excel in serving the fundamental needs of the tenants and being in the right location, will continue to be in very short supply for years to come. So far, successful developers have been able to generate impressive returns – both for themselves and for the long-term investor. Although initial yields have decreased somewhat over the last few years, the yield compression when divesting to medium or long-term investors has more than compensated for this.