The Russian real estate market for years has shown double-figure rates of return, dynamic and large scale development. 2009 was undoubtedly a hard year, as the global financial crisis took its toll leaving few sectors untouched.

However, if we look beyond the current contingency and observe the major underlying trend, we cannot but argue that Russia holds immense potential for further growth, which will be realized as more and more people and parts of its vast territory are brought in to participate in the economy, and the progressive evolution of businesses and institutions will fully uncover the potential of Russia’s human capital, and intellectual and natural resources.

Possibly this crisis, like the last, will leave Russia more competitive than it previously was.

In terms of market risk, the Moscow real estate market provides for a safer investment, as financial resources are concentrated in Moscow and the city attracts investors prioritarily. However, even the levels of investment seen in this city in the last 10 years have all but saturated the market. A random drive through Moscow’s streets will reveal yes, that there are many projects under construction but also that there is so much still to be done.

The regions have suffered the most as a result of the crisis, but as the crisis is reabsorbed, they too will continue to show their true potential. Regions like Samara, with its solid manufacturing base and rising middle class, will probably continue on their development path and strengthen their position among the “millioniki”.

Now, experienced investors know that market forecasts and business models are worthless without practical solutions. Opportunities, even the most evident, may not be easy to seize, especially in a country like Russia. In the same way it may not be easy to mitigate risks, even those foreseeable.

Ever-evolving regulations matched with often deficient property records are among the complexities making investing in real estate quite challenging, necessitating both thorough buyer’s due diligence and follow-up defence strategies. When investing in Russia it is therefore  fundamental to  work with the right partners and employ the right professionals; ones both experienced and with an ethical profile fitting the investor’s need; and who are committed to the client’s interests.

- Pierfederico Lossa – Managing Director (March 2010) -