Qatar, Oman Sovereign Funds Plan Large Investments in Russian Commercial Real Estate Projects

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The state investment fund of Qatar is planning to make large investments in Moscow commercial real estate properties due to the recent drop in values caused by the recession.

According to Russian media reports, the deployment of foreign Arabic investment in Moscow's property markets will take place through the establishment of a joint investment fund with Qatar and Gazprombank, Russia's largest non-state owned bank in October 2010.

It is reported that both sides have already invested $150 million each in a joint commercial real estate project, which is expected to generate annual investment returns of 20% per annum.

Qatar investors are increasingly paying attention to the rapidly growing markets around the globe, and in particular Moscow. Because of a tough economic environment over the last 3 years, Russia has seen significant reduction of property prices. It is unclear if Russian real estate prices will continue to fall in the near term, but some market experts see significant long-term market growth.

Amid fears of a weaker U.S. dollar, Russian analysts believe the weakening U.S. dollar concern is driving Qatar's desire to seek suitable assets in other markets around the globe to invest their money.

According to some experts, current business conditions in Russia are suitable for Arabian investors because many assets currently are valued at a very low basis. Their recent investment in Moscow is an example of this. Taking into account that the payback period of the project is rather long, these investors are not looking for short-term profits.

In addition to Qatar's real estate investments in Russia, is has also recently been announced that state reserve fund of Oman is also to invest up to $300 million soon in Russia's commercial real estate markets as well.

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