COMMERCIAL REAL ESTATE MARKET - Knight Frank

2009
Commercial
real estate market
Moscow
Balance of payments and
international reserves
A more than 70% increase in oil prices during 2009 has supported Russia's economy
$/burrel
Positive signals regarding the development
of major economies, which began to appear
towards the end of Q1 2009, provided
significant support for the global oil market.
A steady growth in quotes for oil futures
began already in May 2009. The Brent oil
price for the year increased more than 70%,
reaching nearly $78 a barrel. Similar price
levels were typical for the market about
2 years ago in the second half of 2007.
Favorable energy prices, whose share of
Russia's exports in 2009 amounted to about
63%, provided a favorable balance of trade
for the country up to 2009, amounting to
$110.6 bln (versus $179.7 bln in 2008).
85
75
65
55
45
35
01.01.09 02.03.09 01.05.09 30.06.09 29.08.09 28.10.09 27.12.09
The positive current account balance in 2009
has been estimated by the Bank of Russia
$47.5 bln, which is two times less than the
previous year’s amount of $102.4 bln.
Despite the relative stabilization of the
economy, a tendency towards the outflow of
capital from the country remained in 2009,
which amounted to $52.4 bln. However, these
numbers are not so grim as they were in 2008,
when net capital outflow exceeded $130 bln.
The capital account and financial account
in 2009 recorded a negative balance of
$45.2 bln.
Thus, the favorable development of oil prices
and the decline in net capital outflows from
Russia in 2009 provided a positive balance of
payments for the country, allowing the Bank
of Russia to increase international reserves to
almost $12 bln for the year – up $439 bln.
Moreover, Russia has managed to not only
avoid additional external borrowing, but
also has managed a 2.1% reduction in total
external debt, which the Bank of Russia has
estimated at $469.7 bln as of 1 January 2010,
including $44.3 bln in public external debt
and $425.4 bln in external debt for the private
sector.
Source: ICE, 2010
Stock market
As a result of a stabilized world economy,
which came to be in about March 2009,
investors began to gradually withdraw capital
from risk–free assets, generally creating
resurgence on stock markets and causing stock
quotes of Russian issuers to go up. Following
2009 the RTS index grew 128.6% and the
MICEX index grew 121.1%.
Considering 2009 growth rates, Russia's stock
market took first place in world rankings. This
Rising energy prices have provided an
increase in trade surpluses for Russia
since Q2 2009
$ bln
60
50
40
dynamic, however, should not instill excessive
optimism, considering that results from 2008
were the most significant decreases in quotes
recorded on the Russian stock exchanges (RTS
index fell 72.4% and MICEX fell 67.2%).
Among developed economies, the greatest
increase in 2009 was demonstrated by the
stock markets of Singapore (+64.5%) and
Hong Kong (52.0%). NASDAQ, an index of
high–tech companies in the U.S. took third
place with an index value that increased
43.9%.
The volume of net capital outflows from
Russia in 2009 has more than halved
compared to 2008
$ bln
100
50
0
The “external debt / GDP” ratio for Russia in
2009 amounted to about 38% and “external
debt / exports” amounted to about 136%,
while a dangerous state of external debt
according to international practice is
considered to be in excess of its volume at
50% of GDP or 220% of exports. Thus, Russia’s
debt burden remains at an acceptable level
and no significant concerns are extant.
30
20
10
0
Q1 Q2 Q3 Q4
50
100
150
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
2008
2009
Source: Bank of Russia, 2010
Source: Bank of Russia, 2010
32