According to estimations by the CORE.XP consulting company, the total volume of real estate investments across Russia declined by 24% year-on-year to RUB 417 billion ($5.13 billion) in the first half of 2025. This is a consequence of expensive loan-based funding and a high base effect of the previous two years. Residential real estate proves to be the most sensitive segment when it comes to economic turbulence. Investors injected RUB 92 billion ($1.14 billion) into this segment in H1 2025, which is 40% lower year-on-year.
Valery Tumin, Director of Russia and CIS markets at fam Properties, believes this is not a signal of a crisis but rather a stage of structural market recalibration. Investors are not exiting the market; they are reallocating capital into more reliable and profitable assets. While the lion’s share of funds previously went into residential property, the focus has now shifted towards commercial real estate, particularly offices, where yields reach 11–14% per annum, and in some projects, as high as 20%. This is a rational and mature choice in an environment of high interest rates and financial market uncertainty, the expert explained to Invest Foresight.
“It is important to understand that the 40% decline in residential investment is a reaction to the termination of subsidized mortgage programs and a temporary cooling of demand. This does not indicate that the market is dying. On the contrary, it is adjusting,” the expert emphasizes. “Conversely, the office sector is demonstrating resilience: the vacancy rate in Moscow fell to a record low of 5.5% last year while the weighted average prices for under-construction properties has increased by 13–14% over the year. Such a supply shortage and growing demand create a foundation for further asset appreciation.”
Furthermore, capital is not disappearing. It is temporarily moving into deposits, where rates remain attractive, continues Valery Tumin. However, deposits are a short-term instrument, whereas real estate is a long-term investment offering a dual benefit: stable rental income and capital appreciation. Once the Central Bank’s key rate begins to decline — and such expectations are already forming — we will see a reverse flow of funds from banks back into real estate. And offices are most likely to become the primary beneficiary of this trend.
“Thus, the current pause in investment activity is not a retreat, but a preparation for a new phase of growth. The market is becoming more balanced, less speculative, and more focused on fundamental returns. This is a healthy evolution that reinforces confidence in real estate as an asset class, even in a challenging macroeconomic environment,” the expert concludes.