Morgan Stanley Real Estate‘s Special Situations Fund III bought new equity in RosEuroDevelopment, which develops shops, offices, warehouses and homes, Morgan Stanley said. Spokesman Carlos Melville declined to comment on how much the firm paid. „Russia’s strong economic growth and its fundamental undersupply of quality real estate provide an attractive opportunity to expand our investment platform,” John Carrafiell, global co-head of Morgan Stanley, said in a statement. RossEuroDevelopment „is a fast-growing and entrepreneurial company with an outstanding track record of organic growth.” Rents for prime Moscow offices rose 4% last year as more space was occupied by companies such as Procter & Gamble, the largest U.S. consumer-products company, than was completed by developers, according to international real estate advisers Knight Frank LLC. The Russian economy expanded 7.1% in the second quarter, compared with 5.5% in the first quarter, the Economy Ministry said. At the same time, yields on prime office have fallen to as low as 11% as prices rise along with rents, according to Knight Frank. Yields on malls, shops and warehouses in the Russian capital dropped to between 12% and 13.5%, said Knight Frank. FF&P Russia Real Estate Development Ltd., a unit of London-based Fleming Family & Partners Ltd., abandoned a $300 million initial public offering this month because of insufficient demand. FF&P focuses on large-scale office, retail and industrial developments that would take place in several phases. RosEuroDevelopment, a unit of RosEuroGroup, plans to develop more than 2 million square meters of real estate over the next five years. It has projects in 10 regional cities with a population of more than 1 million people each. (Bloomberg)