Russia’s real estate market continues to strengthen. The number of commercial real estate transactions in Russia reached $8.1 billion last year, exceeding pre-economic crisis levels. In May, buyers purchased $90 million worth of luxury apartments in Moscow, a twofold increase over May 2011.
“There is a shortage of high-quality real estate in Russia, so the prospects for its development remain good, and growth has returned to the real estate market already,” stated Steven Openshaw, Real Estate Group Leader for Deloitte CIS, in a recent Moscow Times article. Demand is especially robust in the residential segment, due to a combination of factors: strong economic development (Russia’s GDP grew 4.3% in 2011), improving consumer confidence, and a growing Russian middle class.
UNR Holdings, Inc. (OTCBB: UNRH), one of Russia’s oldest and most venerable construction companies, is profiting from the pickup in Russian housing demand. The Company sells units in its properties to middle- and upper-middle-class homebuyers and small or medium-size business operators in the Moscow area. The high demand for its properties helped UNRH achieve a record-breaking 2011. Revenues increased 115% to $231 million year-over-year, and net income grew 65% to $26.5 million.
The Company’s flagship Marshal Rybalko development, a residential and business complex scheduled for completion in 2013, is expected to generate at least $950 million in revenues over the next few years. The Company recently completed 517,000 square feet of residential and commercial floor area at the complex. With this project, UNRH is taking advantage of the pent-up demand for high-quality housing in Moscow.
UNRH is deeply undervalued, trading at less than two times 12-month earnings. It’s extremely rare to see a company with such strong growth trading at such a discount. At current prices, UNRH is a great way for growth and value investors to play the Russian real estate recovery.
To learn more about UNRH, register today for the RedChip Small-Cap Virtual Conference. UNRH is scheduled to present its story on Wednesday, June 13 at 9:45 a.m. Eastern time, followed by a Q&A session with its VP of U.S. Operations, Serguei Melnik. Don’t miss out.
Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.