Boston, MA -- (SBWIRE) -- 06/14/2013 -- The Russia real estate report examines the commercial office, retail, industrial and construction segments throughout the country in the context of a construction market that has returned to growth.

With a focus on the principal cities of Moscow, St Petersburg, Ekaterinburg and Samara, the report covers the rental market performance in terms of rates and yields. It also examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of external macroeconomic headwinds. The key growth areas driven by increasing (comparative) attractiveness for investors, as well as the potential offered through the hosting of the Winter Olympics and 2018 FIFA World Cup, are also addressed, alongside the buoyant outlook for the retail sector.

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The Russian economy continues to face enormous challenges of weakening external demand and continued uncertainty over the policy environment, which affects business sentiment. However, we continue to believe that the government will pursue a more business-friendly approach and seek to attract financing for major infrastructure projects, which should help to sustain a solid longer-term growth outlook for Russia's economy. In addition, we believe a number of factors should help ensure Russia's building industry achieves at least modest growth over the medium term, compounding the upside risks to our real estate outlook. Our latest data collection, conducted in December 2012, has compounded this view, with the commercial real estate sector performing well over the year, with the majority of key indicators registering year-on-year (y-o-y) growth.

Key Points

- We expect construction industry value growth in Russia to come in at a relatively strong 4.9% in 2013. Growth is stemming from both resource-related auxiliary infrastructure projects and the broader transport sector, ahead of the Sochi winter Olympics in 2014 and the FIFA World Cup in 2018. The privatisation of state assets in transport and utilities is still officially high on the agenda, with the aim to bring in fresh and necessary capital for infrastructure maintenance and improvements. However, we remain cautious on the prospects of this revived privatisation drive, due to vested interests and the perceived lack of level playing fields that are still dampening any foreign enthusiasm.
- We hold to our view that Russia's economic growth will slow to 3.4% in real GDP terms in 2013 as consumer spending slows and the global oil price falls from 2012 levels. However, we hold a cautiously optimistic view towards Russia's investment outlook ahead of a number of international sporting events and a drive to increase investment into the Far East of the country.

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