BMI View: Anaemic growth and international sanctions prevent a solid recovery for the Russian economy.
Consumer and business sentiment is flagging, and potential for capital growth in the commercial propertymarket is restricted. Moscow and St Petersburg will continue to observe some demand for commercialspace. However, scope for rental rate growth will be limited in the mid-term while headwinds remain.
The Russian economy has recently emerged from a deep recession lasting for two years between 2014 and2016, thanks to firmer oil prices and improving private consumption that saw growth perk up to 0.5% inQ117. However, extension of sanctions from Europe and the US, alongside other prominent countries suchas Australia, are causing significant headwinds for the beleaguered economy, preventing a rebound ineconomic activity. The government is currently focusing efforts on maintaining the current account deficitrather than tackling economic challenges, and we therefore see poor long-term growth potential.