A slow start to 2013 in the Russian economy is now widely recog-nized. Jan-May GDP growth is recorded at 1.8%, about twice lower than the previous year. Government‟s forecast for 2013 is still at 2.4% and acceleration in the second half of the year is still a very likely scenario. IMF is a bit more optimistic and sticks to a 2.5% projection.
But this slowdown is an important marker of change. Russia is no longer part of the emerging markets world. It is in the more developed group not because of the slower growth but because of its higher economic base. Russian GDP per capita is 40% higher than the world average. With estimated 2.5% it is still in line with the global outlook of 3.1% and almost 3 times higher than 1.2% outlook for advanced economies. At the same time, with over $14,000 USD GDP per capita Russia is now closer to developed countries than to B(R)ICS.
Consumer market remains strong. Retail trade turnover in Jan-May increased by 11.4% in nominal terms in comparison to same period the previous year. Even after adjusting for inflation it shows strong growth of 4%.
Inflation is accelerating from 6.6% last year to a very likely 7% and higher for the current year. However, soft commodity prices may put pressure on food prices.
For real estate community this means that the sentiment remains negative without any material evidence and without new bearish fundamentals. All the existing factors are already priced in. Real estate market is in the green zone but risks are increasing. There is strong doubt that demand for real estate will grow. However, Rus-sia in general and Moscow specifically is still undersupplied with quality product.
That is why even during a weak second quarter, there was a signifi-cant increase in transactions in the warehouse sector. Supported by solid demand, construction rate had increased and warehouse sec-tor showed record levels of activity in Q2.