Meanwhile, this instrument works everywhere more or less the same. Real estate market offers two options to the investors, either to invest directly (lease or redevelopment) or indirectly (via a fund or a crowdfunding platform). The point is a company raises money from investors, invests it into a project, generates and shares the profit. As for funds, the investors give their money away to be managed, while in crowdfunding they chose themselves where to invest their money.
According to the Central Bank of Russia, a net flow to Investment Funds was 4 times higher the previous quarter and the highest in the past 5.5 years. Nearly 90% of netto growth of investments were brought by Closed End Investment Funds. The net asset value of Closed End Investment Funds is still the main share of the market — 89%. However, real estate traditionally takes one of the biggest shares in the structure of Closed End Investment Funds, over 23% in Q3 2019, says James Corrigan, Managing Director of Sberbank Investments.
Olga Shlytchkova believes that in Russia, for pooled investments the best option would be a shopping center fitting the following criteria:
• It should be located close to transportation flow (a metro station, a train station, a bus station, key highways or the city center) or to a dense housing development enough to provide with people flow.
• It should be rented out at least 90% with most tenants representing federal chains taking at least 60% of the rented area.
• It should be a legal and of high quality and must possess a full set of documents.
Analysts are full of optimism and are expecting a further increase in investments. In particular, Knight Frank estimate an annual increase of 6–10% of investments into real estate in the next few years. CBRE believes that the investments into the Russian real estate in 2020 will overcome the figures of 2019 and reach 300 billion rubles by matching the levels of 2016–2017.
Text: Ekaterina Sakharova, Georgiy Beregovoy