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. Last Updated: 07/27/2016

Deutsche Buys Plots Outside Moscow

Deutsche Bank and two other companies bought a logistics park and other commercial real estate near Moscow to tap an increase in demand for warehouses in Russia, the companies said in a joint statement Tuesday.

Deutsche Bank, AIG Global Real Estate and Redwood Group bought the land with space of more than 1 million square meters from Capital Partners, according to a statement last week. It comprises more than 200,000 square meters of existing space and 800,000 square meters in potential development, the statement said.

A spokeswoman for the group declined to provide a value for the deal -- the second Russian property joint venture between Deutsche and AIG -- but said prime distribution space in Russia was trading at over $1,200 per built square meter.

Economic growth has led to investment in commercial real estate rising 35-fold in the past five years to about $4.5 billion in 2006, real estate adviser Jones Lang LaSalle said in February.

Deutsche Bank's RREEF Real Estate unit said last week that it had stepped up investments in emerging markets to boost returns for its $1.6 billion Global Opportunities Fund II.

The fund has increased its asset allocation to the emerging markets to 30 percent from 20 percent in the smaller predecessor fund, said Pierre Cherki and Chris Papachristophorou, RREEF's co-chief executives for Europe.

In emerging markets, RREEF favors residential and retail developments because they're most likely to benefit from higher consumer spending as these economies grow, Papachristophorou said in an interview last week.

"We've targeted markets where there's a structural undersupply of middle-class housing or a modern retail offering," Papachristophorou said. He declined to say whether the fund was meeting its annual target of 20 percent returns.

RREEF has ventures in Eastern Europe with Bulgaria's Winslow Developments and Warsaw-based Globe Trade Centre to build 6,000 homes in Russia, the Czech Republic, Hungary, Romania and Bulgaria.

RREEF also is involved in projects with St. Petersburg developer RBI, which has about $500 million of projects planned in the country to increase its presence in regional markets over the next three years.

Cherki said the fund planned to increase investments in China, Russia, Turkey and Ukraine.

The fund also is considering its first purchase in India, either in office developments or residential construction, he said.

The emerging markets offer "an important diversification from what we have done in the past and create nice balance with the returns from opportunistic investments in mature markets," Cherki said.

Bloomberg, Reuters