The boom comes amid an exodus of foreign firms, according to research

The volume of investment in Russian real estate surged 76% from January to May in annual terms to reach 274 billion rubles ($3.4 billion), an industry study has shown.

Research conducted by IBC Real Estate evaluated investment transactions in residential, retail, hotel and industrial properties, excluding the purchase of plots without a project, joint ventures and the sale of housing to end users.

According to the report, 2022 saw a record $6.2 billion of investment, of which $3.7 billion was recorded in the second half of the year.

Deals so far in 2023 have mostly been done in retail and hotel real estate, with investments totaling $1.05 billion and $525 million in these areas respectively - 1.8 and 2.4 times more than in the whole of 2022.

Activity has been driven by the mass withdrawal from Russia of foreign investors, who have sold their assets at a discount, IBC Real Estate experts said. According to the company's estimates, such transactions accounted for 44% of all investments, or $1.5 billion in January-May, which is also higher than the total for last year.

IBC analysts project that overall investment in real estate in Russia could exceed $6 billion this year.

"We expect that the activity on the part of Russian buyers to acquire high-quality properties offered by foreign holders at a significant discount will continue throughout 2023, but in 2024 the number of such transactions will begin to decline," said Mikael Kazaryan, head of capital markets and investments at IBC Real Estate.

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(RT.com)