Russia's commercial property reaches for the sky
Anyone looking out over Moscow’s skyline can see it being transformed day by day, as elite office blocks spring up to fill the need for commercial real estate.
Mirax Group Corporation, a leading developer, has already invested more than $US 1.5 billion in a range of projects, but is looking to bring an additional 2.5 million square metres onto the market.
The Chairman of the company, Sergey Polonsky, says demand will remain strong, despite the new supply.
“There is still quite a strong need for more commercial real estate in Moscow. Currently, there are 4.5 million metres of class A and B office space. And we need to more than double it,” he said.
The construction boom is being driven further afield by a countrywide need for class A office space.
St Petersburg, Russia’s ‘gateway to the west’, is again rising in prominence as a corporate headquarters location.
To capitalise on demand, international investment funds are moving in, but analysts are saying it will be some time before the demand for commercial real estate is met.
“Demand is growing very quickly. We do not see any correction in the traditional market circles. The west has gone through periods of boom and bust, while here there is still an enormous boom,“ Val Jerdes, Director of Advisory ”Praktis” said.
The boom is taking a slightly different form due to the heritage value of the city centre.
The real action in the city is taking place in its suburbs, where old factories and apartment blocks are making way for a new range of business centres.
But no matter whether it’s in the centre or the suburbs, Moscow or St. Petersburg, analysts still say that demand will continue to outstrip supply for some time to come.