Market Know-How: 1,000 Russians in Cannes
Russian realtors first attended MIPIM 12 years ago. Some of the results of Russian attendance can already be summed up today. The main result is experience – Russians attend MIPIM not to attract investment but to exchange information.
Perhaps, the most impressive of all the Russian stands this year was that of the Moscow City Hall featuring an exposition of the Russian capital. As in earlier years, the stand was organized by GAO Moskva, the agency in charge of developing the tourist and entertainment infrastructure of Moscow.
The stand presented the city’s most significant projects, including the Moscow International Business Center Moskva-City, the express link between Moskva-City and two of the capital’s major airports, Sheremetievo and Vnukovo, a large-scale project for the reconstruction of the Vnukovo international airport, and the Golden Ring of Moscow project first presented at MIPIM-2004.
“The Moscow delegation goes to MIPIM not to ask for money for the implementation of projects,” noted Iosif Ordzhonikidze, vice mayor in the Moscow government. “If need be, we can get the necessary funds from Sberbank.” Miel-Nedvizhimost CEO Dmitry Lebedev agrees.
“A partnership of many years with Sberbank enables us to attract funds to implement our projects on beneficial terms,” Lebedev says. “MIPIM attracts us, primarily, because of its high concentration of top executives and the opportunity of establishing ties with the maximum possible number of companies.”
The same goal – establishing ties – is pursued by the design engineering company Ekoprog, according to Yulia Maksimova, marketing director of the company.
“Foreign suppliers can find a partner in us and take part in the development and implementation of comprehensive infrastructure projects for real estate projects,” Maksimova notes. “We, for our part, are attracted by their more profound knowledge of the world market and, of course, their reputation.”
Konstantin Aprelev, vice-president of the Russian Guild of Realtors, who consults several banks on real estate investments, believes that at a forum on such a scale as MIPIM Russian companies have to attend the event for four or five years in a row before they can discuss the possibility of participating in real estate projects with foreign investors.
“The first two years the forum participants get to know each other. In the third year they start to recognize each other and find common interests. In the fourth year they will possibly show an interest in building partnerships to participate in projects,” he notes.
The main outcome of Moscow’s participation in the international real estate forums is, undoubtedly, an increase in foreign investments. Moscow’s vice mayor Iosif Ordzhonikidze says that investments in the Moscow economy grew from $300 million in 1993 to more than $15.3 billion in 2004.
The traditional Russian problem of overwhelming size cannot always be avoided. Indeed, the capital can be proud of its high-quality projects that meet international standards such as the reconstruction of the Vnukovo airport, Moskva-City, and the Park-City multifunctional complex currently under construction on the opposite side of the Moscow River.
That project, which is due to be completed by the year 2008, is being implemented on a plot of 400,000sqm. The new complex will feature residential, office and retail areas of 220,000, 85,000 and 15,000sqm respectively. The project is being carried out by the influential international company Hines.
After the overall reconstruction of Vnukovo is completed the airport’s capacity will increase to over 20 million passengers per year; its runways will be able to accommodate the new generation two-floor airbuses.
Vassily Aleksandrov, director general of Vnukovo Airport, says that will become possible as a result of the partnership with German firm Obermeier. The authorities plan to raise a total of $1.3 billion to implement their grandiose project.
Will all those projects be implemented in time? The question remains open. Kontantin Aprelev believes that the failure to meet deadlines slows the inflow of investment to Russia on the whole, and to Moscow in particular. “We should learn from the discipline and assiduity of the Chinese,” he notes.
The reputation of Russian companies at international forums will continue to improve if they learn to comply with international standards for business conduct.
“We would very much like to get rid of idea of ‘Russian developers’ once and for all,” the head of a foreign construction firm, who asked that his name be withheld, told Vedomosti.
“Qualities such as honesty and business reputation are very important for international businesses. A company that gains once by failing to honor its obligations to pay to contractors may forever destroy its image in business circles.”