Stockholm firm launches Russia real estate fund

East Capital, the asset manager specialising in financial markets in Eastern Europe, is the latest to join the Russian real estate gold rush.

Swedish firm East Capital is aiming to raise an initial €200 million ($311 million) for the East Capital Russian Property Fund.

The Stockholm-based firm said the vehicle would aim for 15 percent returns by targeting shopping centers and other retail investments in regional cities not just in Russia but in Ukraine and Kazakhstan as well.

In a statement, the firm said investment in cash flow generating assets would gain from strong domestic demand and continued growth in the retail market. The fund’s geographical focus is fast-growing regional cities with more than 500,000 inhabitants.

“Our local presence and expertise and the extensive network that we have built up investing in these markets over the past ten years will be of great value as we primarily seek to invest in attractive properties unavailable to mainstream investors”, said Kestutis Sasnauskas, chief executive of East Capital Private Equity and co-founder of East Capital.

Biljana Bozic, head of real estate, said the firm would invest in properties that could be improved through “commercial concepts”, tenant mix, customer flows, and efficiency.

The new vehicle is being structured as a closed ended Swedish limited liability company. The firm has real estate professionals in Moscow and Stockholm and it has so far invested €135 million in 29 direct property investments and 14 companies in the real estate sector.