Although foreign investors in Russia may have stated their willingness to evacuate the Russian market and moved foreign employees out of the country, Russian real estate agents are not reporting a glut of available properties coming back onto the market. This means that despite the hype, most Foreign investors in Russia are in fact waiting to see what an outcome to the Ukraine situation will be before making final exit decisions.

Russia’s R&B Property Consulting, as well as Colliers International have stated that there is little development in the amount of commercial retail space arriving on the market. Foreign tenants appear both reluctant to give up prime commercial rental space as well as incurring expensive penalty clauses for early termination.

A major driver in recent years in terms of renting commercial property has been the IT sector, responsible for about 30% of all commercial rentals, although only about half of these have been foreign investors. However, there has again been little apparent appetite for leaving the market. Ivan Pochinshchikov, managing partner of IPG.Estate, has been quoted as saying in Investia that “we hear emotional statements about leaving the Russia market from IT specialists less often than from companies from other sectors.”

Available commercial rental prices have also remained steady, again suggesting there is little real demand in leaving the Russian market. Pochinshchikov says that the rental per sqm for Class A property at the end of 2021 was Rubles 2,103, and as of this Tuesday, March 22 was the same, although he did forecast a relative decline of about 7% to be expected by the year end. There is also a shortage of Class A real estate rental in primary commercial cities such as Moscow and St.Petersburg, meaning if tenants do leave, there are adequate numbers of alternative tenants wanting to move into that space.

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