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Russia continues to dominate the real estate universe in Eastern European as the country with the strongest economy and exposure to a large domestic market, according to Karine Hirn, co-founder of Eastern European fund manager East Capital.

Hirn was commenting at a media briefing in London last week following the announcement that East Capital is to launch a new EUR 78 mln fund targeting investment opportunities that arise in the current market downturn. The Special Opportunities Fund is due to be launched in the second quarter of 2009 and is mandated to invest in Russia and the rest of Eastern Europe.

Hirn said East Capital, which now invests 60% of its assets in Russia, has gradually added to its position in Russia, and increased the weight of companies with low levels of debt, in a strong market position and those set to benefit from sector consolidation.

'In times of economic recession, countries dependent on exports such as Hungary and Czech Republic are more vulnerable. At the other end of the scale, Turkey, Romania and Russia with larger domestic market consumption are in a better position to weather the economic storm.'

Hirn said that since the economic crisis, the level of broker coverage of Eastern European companies has decreased even further, making gathering information more difficult at a time when company-specific risks are higher. 'Bottom-up stock picking and visits to companies in our universe is now more important than ever,' she said.