What is happening in the capital's commercial real estate investment market?

The current year again turned out to be a record year in terms of investments in commercial real estate of the capital. Investments in the purchase of ready-made objects in Moscow for three quarters of 2023 reached 259 billion rubles, twice exceeding the total result of 2022 and 2.6 times surpassing the average annual investments of 2018-2021. What explains this dynamics and what bends it may show in the near future, will tell the Analytical Center expert Anna Bykova.

What is the reason for the records?

The observed increase in investment is related to the sale of attractive assets of the outgoing companies and repatriation of capital caused by restrictions for domestic investors in foreign markets. Local entrepreneurs, as well as companies with state participation, did not miss the opportunity to buy out premium locations of former foreign owners, which were often provided with high-quality repairs. Previously, many local players only dreamed of such a thing. Dreams have come true - and that was the reason for the boom. Well-established businesses turned out to be particularly favorable for acquisition, and in a number of cases the transactions were accompanied by the transfer of trained personnel to new managers.

The afterburner isn't infinite

However, this year's record is unlikely to be repeated. There will be no more large exodus of foreign players, and the increase in the key rate of the Central Bank will certainly slow down business activity due to the rise in the cost of debt financing.

Besides, the factor of Moscow's competition for investments with other regions will have an impact. The city's share in all-Russian investments in the purchase of ready-made commercial real estate decreased from 82% in 2014-2017 to 65% in 2018-2023 (Nikoliers data). This is partly due to market saturation (shopping centers, for example), partly due to the development of investment potential of other subjects of the Russian Federation.

In the medium term, investors' interest in regional markets will remain high, primarily in warehouse and hotel facilities. The expansion of regional expansion plans of e-commerce companies and the reorientation of logistics "to the East" in general will support the volume of new warehouse construction in the regions. The development of domestic tourism and government support for the tourism industry will create incentives for investment in the purchase of ready-made facilities and renovation of old stock, as well as investment in sites for the creation of resorts.

Are investment opportunities exhausted?

Everyone is familiar with investments in the purchase of ready-made objects, but investments in the construction of commercial real estate objects that create new jobs are of greater importance for the development of the megacity. And here we note a significant growth: according to the data of the digital platform "Investment Projects", at the end of September this year there were 383 projects at the active stage of realization for 1,642 billion rubles (the increase in investment volume - 50% to the level of September 2022). The most funds were attracted by multifunctional complexes and business centers (53% of the total volume) and apartment complexes (34%). The largest projects: a public and business center on Prospekt Mira (127 billion rubles) and a multifunctional complex in Moscow-City (85 billion).

In January-September, 51 construction permits were issued for commercial real estate projects with a total area of 1.1 million m2 - almost half of the future construction projects are offices.

You won't be left without support

Taking into account trends in this area of the economy and, as they call it, keeping its finger on the pulse, the Moscow City Government has developed a wide range of measures to improve the capital's investment climate. Investments in the creation of new production facilities and commercial real estate objects are stimulated by granting tax incentives and privileges on land plot rents. One of the most popular among developers of residential real estate support measures is privileges on payments for changing the type of permitted use of a land plot when creating places of labor application. Beneficial to employees, beneficial to business - beneficial to the city!