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Market rumours that Morgan Stanley is seeking to acquire one of Moscow's largest shopping centres fits the pattern of cross-border investors chasing big ticket real estate assets in the buoyant Russian market.

According to press agency Reuters, Morgan Stanley's real estate business was in exclusive talks in mid-September to acquire Metropolis mall for between $1.1 bn and $1.2 bn (EUR 850 mln to EUR 927 mln) from Russian private equity group Capital Partners.

While both parties declined to comment on the report it seems to fit a pattern. Morgan Stanley is said to have acquired Galeria in St. Petersburg in the first quarter of this year for $1.1 bn.

Property advisers say that cross-border investors accounted for just 30% of the Russian real estate volumes in the first half of 2012 but those who are active are seasoned investors.

'The major pool of cross-border investors now consists of very experienced players, who are familiar with the Russian market. They are in a better position to benefit from local high, economic activity and yields, especially compared to Europe. Other players are waiting for positive signals from Europe despite the current presence of a number of the high quality assets for sale,' says Valentin Gavrilov, director of the research department at CBRE Russia.

Investors are keen to tap into the country's economic performance. The economy grew by 4.5% in January-May 2012, up from 3.7% in the same period last year, while most other European countries struggled to stay out of negative territory. Jones Lang LaSalle noted that the consumer sector is the lynchpin of Russia's growth. Employment is forecast to dip to 5.8% for this year from above 6% in 2011. Wages are also growing and the combination translated into retail sales up 7.2% year-on-year in the January-May period.

That said, brokers expect real estate investment will be lower for full-year 2012, with Moscow and large prime assets claiming the bulk of the deals. CBRE forecasts the total volume to reach $4.5 bn (EUR 3.6 bn), a drop of nearly 30% compared to the $6.4 bn recorded in 2011.

Lot sizes are rising in Russia, according to Jos Tromp, head of CEE research and consultancy, CBRE. This is in stark contrast to the situation in the rest of Central and Eastern Europe where lot sizes have halved to EUR 30 mln compared to the peak of the market and are back at 2003 levels. CBRE's data shows average lot sizes in Russia were below EUR 25 mln in 2003 and now stand at EUR 100 mln-plus.

The largest transactions recorded by PropertyEU Research in Russia recently have been carried out by local investors. In August Moscow-based investor O1 Properties bought Silver City business centre from Evans Randall for EUR 271 mln. In the second quarter Russian real estate company BIN Group bought a portfolio of project developments from Georgian entrepreneur Bidzina Ivanishvili for EUR 770 mln.