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- Strong foundation: why foreign businesses are in no hurry to sell real estate in Russia
Strong foundation: why foreign businesses are in no hurry to sell real estate in Russia
Foreign companies continue to be the owners of 6.3 million sq. m. of commercial space on the Russian real estate market, which is about 5% of the total runoff. It is profitable to hold properties in the Russian Federation today, as they demonstrate high profitability. At the same time, it is not so easy to sell real estate in Russia - the transaction is usually carried out with a large discount and requires approval from the government, experts say. Why foreigners are in no hurry to get rid of Russian assets - in the material "Izvestia".
A place under the sun
Foreign owners continue to own commercial real estate in Russia. Foreign companies own 6.3 million square meters of space in the market, which is approximately equal to 5% of the total runoff. Such data are given in the research of the consulting company IBC Real Estate (available at the disposal of Izvestia).
The largest volume of areas owned by foreign players is concentrated in the segments of retail and warehouse real estate - 40% each. Office real estate objects account for 16%. Hotels account for only 3% of space.
International owners started active sale of Russian assets in the commercial real estate segment in 2022. The reason was the change in the geopolitical situation. Over the last three years, 60 transactions were closed for a total amount of about 465 billion rubles (including discount), or 6.6 million square meters. m. Sales peaked in 2023 with 23 transactions totaling RUB 259 billion, of which three were portfolio transactions.
It is expected that in 2025 the real estate sales figures will be much lower, as the strategy of the majority of players remaining in the Russian market does not envisage the reduction of business in Russia. According to IBC Real Estate, only 1.3-1.4 million square meters will potentially be sold in the near future. The total volume of transactions will amount to about 50 billion rubles. Most of the sales will be for retail and warehouse real estate.
This year investment activity in Russia is expected to stabilize at the level of 550-600 billion rubles. The share of transactions with foreign sellers will not exceed 8-9% in the total volume of transactions.
Profitable asset
The mass withdrawal of foreign companies and sale of their real estate, observed in 2022-2023, was not a voluntary decision of business, notes Vyacheslav Kraus, an expert in commercial real estate investments at KS Capital agency. Business is always based on the market and its prospects, and the real estate market has a huge potential for growth.
- Now the world is watching the negotiation processes on the conflict settlement, which means that, at least in the understanding of foreign companies, political risks may change after some time. This gives them reason to believe that in the perspective of 3-5 years there will be an opportunity to return their presence in the Russian market step by step, - says the expert.
In this regard, foreign companies are in no hurry to get rid of their assets in Russia.
Ownership of commercial real estate in Russia remains a profitable business in itself, says Elena Zemtsova, managing partner of Delta estate. Today's market has adapted to the new conditions: retail, warehouse and office facilities demonstrate record high occupancy rates, and the growth of rental rates compensates for devaluation risks.
However, there are still objective difficulties faced by the companies remaining in Russia. Among them, Izvestia's interlocutor singles out restrictions on capital withdrawal abroad, which reduces the investment attractiveness of Russian assets for foreign companies, difficulties in international settlements caused by sanctions, which creates additional barriers to receiving payments, and an increase in operating costs, especially for maintenance and management of facilities.
And in general, the situation on the commercial real estate market is not easy - the demand is high, but there is not enough quality supply to meet it, says Ksenia Pleshkova, Commercial Director of the developer "Praktika". For example, the total vacancy rate in the warehouse real estate market in Moscow amounted to less than 1% in 2024, she specifies.
In 2025, investments in commercial real estate may decrease by 30-60% due to the shortage of supply, the expert predicts.
- Therefore, when intending to return to the Russian market, the availability of own assets becomes strategically important - the rate of introduction of new space is clearly insufficient, competition for commercial premises will remain at a high level, - she explains.
Besides, it is not so easy to sell a Russian asset at the moment, Zemtsova points out. One of the problems is that transactions require approval from the government commission, which can delay the process for months.
Another reason is the substantial discount that almost always accompanies the sale of a foreign asset in Russia, the specialist adds. In some cases it reaches 50% of the market value of the object.
In this regard, many foreign companies assess the potential of Russian assets in the long term, waiting for a more favorable moment to exit the market, explains Zemtsova.
Increased interest
One of the most stable segments, especially during economic crises, is traditionally considered to be retail and warehouse real estate, recalls Evgeny Goltsov, Director of Commercial Real Estate Department of Delta estate. Demand for retail space is maintained due to stable consumer behavior, says the expert.
- Despite the departure of Western brands, retail is actively changing, new Russian and Asian players are entering the market. Large retail areas remain in demand, as large shopping centers continue to attract the flow of buyers, - he explains.
The warehouse segment, in its turn, has received an impetus to development due to the growth of e-commerce and increase in the share of local production, the Izvestia interlocutor is convinced. Large logistics complexes, in his opinion, remain in demand among marketplaces, distributors and manufacturers, which ensures high profitability and minimizes downtime.
- Thus, these segments remain the most liquid both in terms of long-term ownership and possible sale in the future," Goltsov believes.
One of the least popular segments is offices, adds Anastasia Strelnikova. Decrease in demand for such premises is due to the transition of many companies to remote work.
New partners
In terms of the geography of owners, the situation on the commercial real estate market in Russia has changed significantly over the last three years. Previously, the main foreign owners of Russian assets were companies from Europe and the USA, recalls Evgeny Goltsov. However, now a small percentage of European organizations remain on the domestic market. Mostly among them, Germany, France and Italy hold assets in Russia, points out Anastasia Strelnikova. But preservation of presence in this case is explained by difficulties with sale.
According to Goltsov, investors from Asia, the Middle East and the CIS are now most active on the market. In particular, the largest developers and logistics operators from China are considering warehouse and retail projects. Turkey is also showing interest in the latter. The United Arab Emirates, in turn, are studying investments in logistics and premium real estate. And India is showing interest in warehouses and production facilities.
- Now these are the most active buyers and tenants of commercial real estate. These countries see the Russian market as a promising one and are ready to invest," explains Strelnikova.
New companies, mostly coming to the Russian market from the East, make the main contribution to maintaining demand for commercial real estate, Elena Malinovskaya, Chairman of the Association of Commercial Real Estate Market Participants, Director of Leasing of the Skolkovo Park business district, is sure.
- The key factor in the choice is the presence of future expansion prospects, which indicates long-term plans and confidence in the development of business in Russia, - emphasizes the expert.
Meanwhile, the demand for commercial real estate in the CIS countries has increased mainly in Kazakhstan and Armenia, adds Ksenia Pleshkova. The rapid departure of major Western players has opened up an opportunity for these countries to profitably acquire quality space in favorable locations.
Decline of the trend
In the coming years, the foreign share of commercial real estate in Russia is likely to continue to decline, believes Anastasia Strelnikova. Western companies, according to her, will sell their assets as far as possible.
- The real estate market in Russia will increasingly come under the control of local players and new foreign partners who are not afraid to work in the changed conditions, - the expert is convinced.
Preservation of property will be noted in foreign players from friendly countries, Elena Zemtsova is sure. New investors can replace European and American owners while retaining control over liquid assets.
- Key assets will continue to bring income to their foreign owners until market conditions create a favorable environment for a profitable exit, if they want or have to do so," believes the Izvestia interlocutor.
Ksenia Pleshkova predicts that withtime the trend of selling commercial real estate by Western players will go down, as all the companies that wanted to sell their assets, most likely, have already done it in previous years.
- In the meantime, it will be increasingly difficult to acquire quality commercial real estate due to a large shortage of space. Therefore, in the foreseeable future the share of foreigners will remain at approximately the same level, - summarizes the expert.
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