Moscow, Istanbul could see real estate booms

Moscow and Istanbul, Turkey, real estate investment returns are likely to surpass those of Paris and London because of optimism that faster growth in emerging markets will push up rents and fuel demand for property, according to a survey of investors, brokers and analysts.

“There is an increasing appetite for emerging markets,” said John Forbes, the London-based head of real estate at PricewaterhouseCoopers.

London fell to 15th place out of 27 cities for 2008, from second last year, and Paris dropped to fifth from first, the Urban Land Institute and PricewaterhouseCoopers said in a report. It was the first time the annual survey didn’t rank London among the top 10 cities in Europe for investment and development.

Commercial real estate prices in Britain fell in 2007 by the most in 17 years, according to London-based research firm Investment Property Databank Ltd. Property appraisers are lowering valuations as demand for space from banks and securities firms declines amid credit-market losses and write-downs caused by the collapse of the sub-prime market.

The Russian economy is growing more than 7% a year, boosted by its position as the world’s largest energy exporter. That’s created a shortage of warehouses and prompted developers to build more properties.

Istanbul is benefiting from rising consumer demand fueled by Turkey’s 5% economic growth over the last two years.

The country’s rapid growth “will definitely boost demand for commercial assets,” said Levent Bayar, a research analyst at HSBC Holdings in Istanbul.