Morgan Stanley Real Estate Investing is understood to be buying the Galeria shopping and entertainment centre - the largest retail scheme in St. Petersburg - for a price in the region of $1.1 bn (EUR 0.8 bn), well-informed market sources told PropertyEU.

The vendor is a co-owner of Kazakh development and investment group Capital Partners. Sources say the deal reflects a cap rate of around 9% and that it is being carried out by MSREI together with an unnamed Middle Eastern investor.

Morgan Stanley Real Estate Investing has been rumoured to be in discussions on the 191,000-m2 retail centre since May. The scheme - officially launched in late November 2009 - offers 209 shops, a Formula Kino multiplex cinema, a 27-lane bowling facility, and 1,200 covered car-parking spaces. Jones Lang LaSalle is advising the vendor.

Morgan Stanley declined to comment.

The company is the latest investor to turn to Russia in search of higher yields. While US privately held investor Hines is increasingly active in the market, Heitman entered the Russian market earlier this year with the purchase of an office building in Moscow's Voykovsky district.