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Real estate is the bellwether of any economy: it's the first to collapse when times get tough and the last to recover when crises pass. Comatose for the last six years, Russia's real estate sector seems to be finally coming out of intensive care.

Russian investment banks have started issuing research again on the sector, putting 'Buy' recommendations on what they call "the Russian troika" of real estate companies. "The recent results and corporate developments have led us to revisit our view on the Russian real estate sector. The strong cash flow generation in 2013 and robust outlook on 2014 financials tended to be overlooked in times of political turmoil, so have not, therefore, been fully recognized," VTB Capital's real estate analyst Maria Kolbina said in a report released at the start of June.

Despite the slow pace of economic growth, demand for new housing remains extremely high in Russia – and so are the margins. One of the oddities of the crisis is that it didn't depress residential real estate prices; people with attractive apartments just took them off the market to wait for better times. With over 80% home ownership, Russia is in a unique position in Europe. As homeowners are not exposed to mortgage payments, they can simply sit in their apartments and wait until prices recover, which makes the market extremely robust. 

VTB highlights the stocks of three of Russia's leading real estate companies as offering investors the most attractive exposure to the sector: LSR Group, PIK and Etalon – all specialists in residential development. "In 2013, we saw record high deliveries of 69.4mn [square metres] and the number of registered housing rights hit 11.6mn," Kolbina writes in her report. "The political uncertainties and ruble devaluation skewed the annual demand to first quarter of this year and is likely to cool activity in the coming quarters, capping the price inflation behind the CPI in the Moscow and St Petersburg metropolitan areas."

The sector's recovery is also been driven by the switch amongst Russian banks from consumer lending to the more profitable mortgage lending business; mortgage lending has more-or-less been doubling in volume every 18 months or so since 2008. "Mortgage origination topped RUB1.35 trillion ($38.5bn) in 2013, as banks switched their focus to more secure lending and the investment attractiveness of housing over deposits grew in times of declining interest rates," says Kolbina.

LSR is also a top pick of Swedish-based investment firm East Capital. Managing partner of the Russian fund Jacob Grapengiesser said during the company's recent investment conference in Belgrade that: "LSR is our top pick from the real estate sector. Income is growing at 50% and the dividend yields are an attractive 7%. But most exciting is a huge new project to convert the last big factory in Moscow, a 13-hectare site that is equivalent in size to all the company's other projects put together."

Etalon also had a good year in 2013 when all its construction plans were met in full and volumes grew 29% on year. "We now see [Etalon's] 2014-18F compound annual growth rate (CAGR) for sales volumes and earnings per share at 15% and 23%, respectively," Kolbina said.

PIK is the weakest of the three with weak pre-sales launches, modest land acquisitions and a modest CAGR compared with its peers of 5%, according to VTB Capital.