Top Real Estate Deals of 2012

Top Real Estate Deals of 2012

Gazprom-affiliated companies were very active on the office real estate market this year, according to a Jones Lang LaSalle analyst.

Published: December 12, 2012 (Issue # 1739)

As Russia’s second capital, St. Petersburg followed the pace set by Moscow in 2012 on the real estate market.

Both the Moscow and St. Petersburg markets have caught the attention of major investors. According to data from real estate consultants Colliers International, these investors can be divided into two groups. The first consists of companies that are acquiring real estate for their own activities, whereas the second group consists of professional investors, large experienced companies that aim to purchase good investment assets.

“The professionalism of the second group allows them to purchase premises at prime cost or even lower,” said Nikolai Kazansky, general director of Colliers International Russia.

“For example, Jensen Group bought the SuperSiva hypermarket with the aim of redeveloping it at a profit,” he said.

According to Colliers International specialists, Jensen Group has been the most successful company in 2012 among real estate investors. Among companies that intend to occupy premises themselves, Kazansky named Imperia, Rurik, Teorema, Fort Group and Adamant.

“In terms of the number of projects and deadlines for their completion, the most successful company is Fort Group,” said Kazansky. Together with Adamant, it owns half of all retail premises currently under construction in St. Petersburg.

Other large deals on the retail real estate market in 2012 include, according to experts from Penny Lane Realty St. Petersburg, the purchases of the Leto retail and entertainment complex (116,000 square meters), Galeria mall (192,000 square meters) and the Smile shopping center (11,000 square meters).

Adamant also launched the biggest quantity of office real estate on the St. Petersburg market in 2012, according to specialists at Jones Lang LaSalle in St. Petersburg, which specializes in investment and real estate management.

“The Gazprom-affiliated companies were highly active on the office real estate market this year,” said Veronika Lezhneva, head of research in St. Petersburg at Jones Lang LaSalle Russia CIS. “In 2012, the company — with all its branches — became one of the main tenants of the [local] office real estate market,” she said.

The largest transactions in the rental of office premises include the rental by GazpromInvestZapad of 8,500 square meters in the Jupiter business center, the rental by JetBrains of 5,200 square meters in the Universe business center, and Gazprom’s occupation of premises covering more than 3,000 square meters in the Renaissance Forum business center. The St. Petersburg Plaza business center let large office premises of 3,000 square meters each to Nord and QB Finance respectively, according to Penny Lane Realty data.

The Universe business center is one of the most successful projects on the office real estate market. It was launched in 2012 by Bierre Lumiere Holding, the leader among office real estate developers, according to Colliers International.

In the residential real estate segment, Colliers International experts name LenSpetsSmu, YIT, LSR, NCC, RBI and TSDS as companies that have completed major projects.

“This year could be considered a preparation for 2013. There was a lack of quality premises for investors in all segments of commercial real estate; there were hardly any premises for sale,” said Kazansky.

“During the next one to three years, some of the world’s leading players — the companies Hochtief, NCC, British investment fund Fleming Family Partners, and Renaissance Construction — will launch a number of interesting high-quality projects on the market,” he added.

One of the peculiarities of the St. Petersburg real estate market is that interest rates on specialized loans such as project financing are higher than in Europe. In St. Petersburg, interest rates can range from 12 to 15 percent annually, which ultimately leads to high rental rates.

The pace of property development in St. Petersburg is sluggish due to bureaucratic factors that influence and limit its growth, according to experts from real estate consulting companies.

“There are deals involving premises on the local market, but the purchase prices are small, as they are bought by experienced investors picking up quality assets at low cost, or the purchases are made for the buyer to occupy the premises themselves,” said Kazansky.

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