Open up for investors
SCRussia goes on telling about investments into commercial real estate. In our January issue #15, we talked about major trends in investments and mentioned pooled investments as the most common way in the west to save and multiply your money, such as REITs (Real Estate Investment Trust). These are realty public funds, which divide nearly all their profits among the shareholders. Unlike in other countries, Russian market does not have much to offer and there is a lot of work to be done. Why the difference? This is what we are going to talk about with our experts.
What hinders development of investment funds in Russia
Pooled investments
Pooled investments allow developers and private investors to jointly invest into construction or buy a real estate. Such investments are especially important, as realty is a capital-intensive industry, which used to make it unavailable for private investors with tight liquidity.
The number of private investors with limited funds, who are giving up deposits and entering the stock market, is slowly increasing. The key interest rate went down
to 6% in February 2020 and the Central Bank of Russia announced its plans to bring it down even further. Basically, with the best rate at 5.5% for top 10 banks, deposits have ceased to be effective in making money, and for those who have not saved enough to start their own business or buy an investment real estate, the stock exchange is the only way to go. Deposits on average store about 200 000 rubles. Russians have started transferring their money from deposits to saving accounts, where the terms are more flexible. Taking into account the low deposit rates, deposits are a dead end. A logical step forward for investors would be securities. Total ruble amount in Russian banks is currently estimated at 24.56 trillion rubles, and some of it may enter the stock market. This is unlikely to happen soon, considering the recent market crash of many different companies.
Meanwhile, those who want to multiply their money realize they must invest into realty as the most reliable asset. Pooled investments are a recent development in Russia and they are mostly presented by various closed-end real estate unit investment funds. Yet there are only a few.
“These funds provide their shareholders with an opportunity to invest their money into the fund’s shares to buy a real estate