Ahead Of the World Cup, Russia’s Real Estate Market plunging
For a long time, Russia’s real estate market was struggling as badly as its national football team. Political sanctions and a sluggish domestic economy caused by low oil prices combined to create a challenging environment for Russian real estate these past few years, with Moscow office rents dropping by 33% between 2011 and 2017 while the rest of Europe saw a recovery. For the past three years Moscow has come dead last in the list of investor city preferences in the Urban Land Institute and PwC’s Emerging Trends report. At the same time Russia has seen its national football team fall from relevance. A side led by Andre Arshavin reached the semi-finals of Euro 2008, but even with home advantage they are 40/1 outsiders for the 2018 World Cup, which starts on 14 June.
But while the World Cup is likely to provide little succour to Russian football fans, the real estate market is starting to see the first tentative shoots of recovery. The tournament itself is likely to provide only minimal benefit, but the first signs are there that, if Russia can find a modicum of political stability, the Russian winter for real estate could begin to thaw.
Moscow is the second largest office market in Europe after Paris, and take-up in the first quarter was 3.4M SF, up 87% on the same period in 2017, according to JLL.
On the field, in the World Cup, Russia is not heavily favoured to make it out of one of the easiest groups in recent memory. The real estate market has a lot of hurdles to overcome, but looks in a better shape to progress, if politics can stay off the front pages.