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Crisis-hit capitals in position for extended price recovery

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Moscow and Kiev's office markets are set to bottom out at the end of this year, according to a property expert specialising in Russia and Ukraine.

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Nick Cotton, regional director of DTZ Zadelhoff Tie Leung, said real estate in the capitals - Moscow and Kiev - had suffered due to the 1998 economic crisis.

DTZ Zadelhoff Tie Leung is the central and eastern European arm of DTZ Debenham Tie Leung, in which the Executive Council convenor Leung Chun-yin is one of the major shareholders.

Mr Cotton said development returns on offices in both cities were up to 40 per cent before the crisis but had since fallen to about 20 per cent. Office rents in Kiev had reached US$600 per square metre a year and were now stabilised at $300.

Mr Cotton expected the market to return to a balance at the end of this year and rents to improve to $400 over the next two years.

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Returns on office development could also rise to 30 per cent within two to three years.

Mr Cotton predicted the Moscow office market would return to a balance of demand and supply at the year-end.

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