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Moscow

Jones Lang LaSalle shared Insider’s View during webinar “Moscow 2020”

Volume of investment Russian real estate in 2011 is estimated at around $8.5 bln


Moscow, 12 October 2011 – International consulting company Jones Lang LaSalle held a webinar – interactive internet-conference – «Moscow 2020. Numbers, forecasts, development models». Within the webinar top-managers of Jones Lang LaSalle told about the current situation on the real estate market in Moscow and the whole Russia and gave the development forecasts on each of the main sectors – office, retail, warehouse and investment markets.

Charles Boudet, Managing Director, Jones Lang LaSalle, Russia & CIS, commented on the event’s format: «In the situation of ongoing market volatility we feel increased responsibility for our consulting services: we aim at providing our clients – developers, tenants, investors - with complete information necessary for making right decisions. The crisis of 2008-2009 revealed that world problems spread over Russia as well, nevertheless this country is restoring quickly, and now Russian real estate market remains stable. It will be confirmed by the record volume of Russian real estate market investments of this year».

Valentin Stobetskiy, Head of Office Group, Jones Lang LaSalle Russia & CIS, made a review of current situation on office property market: «Today Moscow office sector definitely lacks for the vacant premises. The reducing of new construction projects combined with increasing space absorption leads to reduction of vacant office area especially of class A premises in Moscow centre. Now investors are actively buying offices for their own needs – by end of the year the companies will purchase up to 150, 000 sq m for their employees’ placement. While the office absorption volume shown in 2010 has reached the pre-crisis level, we expect that in 2011 this index will increase by 25%. The high demand affects the rates: current average leasing rate of Moscow class A offices amounts to $750-800 per sq m a year; the rates of the objects located in the very centre – in the Kremlin district – reach $1, 200».

Maxim Karbasnikoff, Head of Retail, Lang LaSalle Russia and CIS, continued: «Moscow retail market is characterized by a very limited supply due to a small amount of new projects. We expect that in 2012 only 100, 000 sq. m. of new shopping centres will appear on Moscow real estate market. As a result the level of vacant space will reduce from 4% in this year to about 1% in 2012. Several projects of shopping complexes with total area 3. 5 million sq. m. are now at the stage of preparation and construction, including 40% that will be built in Moscow and Moscow region and the rest – in Russian regions. One of the main trends of current retail property market is the orientation toward regions – both toward cities with several million population and smaller ones”.

Charles Boudet, Managing Director, Jones Lang LaSalle, Russia & CIS, told about the warehouse and industrial market: «Tenant activity was high even during the crisis – the annual absorption remained at the level of 1 million sq. m. At the same time there was almost no new supply on the market and volume of vacant space reduced from the almost record level of 12% in 2009 to about 1.5% in 2011. The new construction projects in warehouse sector are still not numerous due to limited financing. We see the high investment potential of warehouse and industrial real estate sector and we can confirm it with numbers: the warehouse supply in Moscow amounts to 0.6 sq m per person while in Paris it reaches 4. 5 sq m – the difference is clear».

Tom Devonshire-Griffin, Head of Capital Markets, Jones Lang LaSalle Russia & CIS, continued speaking about investment attractiveness of Russian real estate market: «2011 will be the record year for Russian real estate investment volume. Observing increased investors activity we revise our former forecast of $7 billion and raise it to $8.5 billion. The deals with total value of more than 3 billion dollars are now at the active stage. We expect that they will be concluded by the end of the year. To our estimate Russian real estate investment volume will amount to about $6 billion in 2012».

Andrey Postnikov, Executive Board Member, Jones Lang LaSalle Russia & CIS, told about the Moscow expansion plan: «Russian capital is one of the 10 most densely populated cities in the world occupying the 6th position – after Delhi, Mumbai, Seul, Jakarta and New York. In the second half of XX century many cities chose the strategy of expanding their territories and moving the centres of attraction outside the city borders. For example, in the end of 50s in XX century the main administrative and office buildings were moved from Paris to a newly formed district La Defance. Another example – Kuala Lumpur where the new district with the area of millions sq m was built from nothing in 25 km distance from the city.
As for Russian capital, according to the public information about the amount of population of “New Moscow” we estimate that added areas will require 60 million sq m of accommodation area, 5-10 million sq m of offices, 1.2 – 1.5 million of retail space or 20-25 shopping centres. This project will take at least 20-30 years to be fullfilled».

Jones Lang LaSalle would like to thank all webinar’s participants and is planning to continue organizing such events regularly.


About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of $2.9 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 158 million square meters worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $41 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg and Kiev. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009, 2010 and 2011 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg.For further information, please visit our web site www.joneslanglasalle.ru