2023 could be the last record period for the commercial real estate market

This year, by the end of which the volume of investment in commercial real estate will amount to 750 billion rubles, seems to be the last record period for the market. Next year the figure will drop to 400 billion rubles, consultants predict. Currently, it is mainly foreign companies that are selling their properties; many of them have already left Russia, so market participants cannot count on a large volume of such transactions in 2024. In addition, bank financing, which has become more expensive due to the high key rate of the Central Bank, will restrain the activity of investors.

In 2024, the volume of investment in Russian commercial real estate will decrease to 400 billion rubles, according to the IBC Real Estate report. NF Group expects the amount to be 300–400 billion rubles. This is noticeably lower than the figures for 2023, at the end of which consultants predict the total amount of transactions in the segment to be 750 billion rubles. According to IBC Real Estate estimates, by November of this year the total volume of annual transactions had already reached 722 billion rubles.

The figures predicted for next year will also be lower in 2022, when the volume of investments in commercial real estate, according to consultants, amounted to 497 billion rubles. The reduction in transactions next year will be associated with a decrease in the number of sales by foreign owners of their Russian assets, which at the beginning of 2023 accounted for almost a third of all transactions, explains member of the board of directors of IBC Real Estate Mikael Kazaryan. Most of the foreign companies that planned to leave the Russian market have already left, and in 2024 there will be a “residual effect of the trend of foreign companies leaving,” agrees the partner of Ricci | Consulting and assessment” Yana Kuzin.

This year, among the largest transactions were the purchase by Gazprombank of 14 Mega shopping centers from the Swedish IKEA (see Kommersant on September 14), Krasnodar Ramo-M – seven Park House shopping centers from the European Atrium European Real Estate (see . “Kommersant” dated March 29). And Balchug Capital acquired the Metropolis shopping center in Moscow from the American Hines. In particular, due to these transactions, investments in retail real estate in the Russian Federation in 2023 increased 6.1 times year-on-year, to 282 billion rubles, IBC Real Estate calculated.

Investment volumes in the hotel and office segments also increased. Thus, in 2023, investors invested 2.7 times more year-on-year in hotel complexes – 48 billion rubles, analysts note. The largest transaction was the sale of ten hotels to Cosmos Hotel Group, a member of AFK Sistema, to the Norwegian Wenaas Hotel Russia. In the office segment, investment volumes, according to consultants, increased 1.2 times, to 118 billion rubles.

However, not all commercial real estate sectors are seeing an increase in investment. Since the beginning of 2023, half as much money has been invested in warehouse complexes – 41 billion rubles, and 12% less – 73 billion rubles – in plots for construction, IBC Real Estate calculated. Parametr Managing Partner Alexander Manunin says that there are now more investors in the warehouse real estate market than there are ready-made properties. The decrease in the activity of developers in purchasing sites may be due to the high cost of borrowed funds, explains a Kommersant source in the real estate market.

The high level of the Central Bank key rate, which will remain at the beginning of 2024, will also be a deterrent for investors, says Mikael Kazaryan. Currently this rate is 15%, and judging by the regulator’s statements, it may be increased again. Investment Director of Tethys Capital Management Company Vladimir Stolnikov believes that collective investment funds, which can do without bank financing, will become active participants in transactions.

As the geopolitical situation normalizes and foreign investors from “friendly” countries return to the market, part of the assets sold in the last two years will re-enter the market, hopes NF Group partner Stanislav Bibik. According to him, the Russian commercial real estate market in its entire history has not experienced such a powerful influence of geopolitical and economic factors as it is happening now.

Daria Andrianova