GUIDING LINES: Moscow Is No Cannes


Everyone is happy, and they all meet again at the same place twelve months later. This is the reason international trade fairs are growing increasingly popular. In fact, a skillfully organized trade show can make its venue popular all year round, not just in spring.

Take Cannes in France, a small obscure town on the C?te d'Azur that in the low season is not so different from the towns of Mytishchi or Korolyov outside Moscow. However, Cannes changes dramatically in the months when it hosts the MIPIM and MAPIC annual international property and investment fairs.

The local hotels and restaurants, travel agencies and shopping malls flourish, as well as the organizers of the afore-mentioned shows. Next year they will spend even more generously on the events and again the situation will be repeated.

Perhaps Russia’s harsh climate takes its toll on the development of the trade show business across the country. Take Realtex-2005, the real estate exhibition that marked its 10th anniversary in late May. The 10,000-square-meter fair with 240 exhibiting companies from 16 countries attracted as many as 6,400 visitors, according to the organizers; however, some participants admitted that the event had failed to meet their expectations.

Despondent visitors wandered aimlessly among the stands of the no less despondent participants. Both parties had a feeling that they had been tricked and tricked for their own cash. As of today, a square meter of a fully equipped stand costs 285 euros while the registration fee for an exhibiting company is 500 euros. Thus, the total runs to at least 785 euros which is expensive even in terms of the average European prices. Visitors were charged 100 rubles per ticket.

The failure can be put down to changes in the traditional venue by Realtex’s organizers. For the past two years after Moscow’s landmark Manezh exhibition hall at Okhotny Ryad was destroyed by fire the fair has been changing venues. Last year it was held at the Olimpiisky stadium; this year, it opened on the premises of the prime exhibition center, Expotsentr.

Despite the celebrated venue, wide publicity and support from Moscow City Hall the fair failed to attract many visitors even on the opening day when the top executives of the exhibiting companies and senior city officials usually honor Realtex with their presence, albeit at the official news conference.

The exhibition and the conferences held on the sidelines were organized with great skill by the Austrian firm MSI known for its expertise in this sphere. However, the firm lacks an understanding of the market, being unable to offer content that is of interest to both exhibitors and visitors.

Observers were just as nonplussed by the so-called exhibition held on the sidelines of the 8th National Real Estate Congress. Only two, albeit major, realty firms were present, Miel-Nedvizhimost and Best-Nedvizhimost, in addition to several stands of media outlets who were sponsoring the event.

The fair occupied a cramped space not unlike that of a small hotel lobby. Perhaps this was down to a lack of funds, as the Russian Guild of Realtors – just like other self-regulating public organizations – gets by on quite a small budget.

This is the reason why the congress held by the Guild of Realtors can hardly compete in terms of scale with the annual congress held by the U.S. National Association of Realtors.

When comparing Realtex with MAPIC, another specialized retail real estate show that also recently marked its 10th anniversary, one will see that despite the smaller exhibition space of 8,152 sq.m. MAPIC-2004 had 798 exhibiting companies from 67 countries, which is 3.3 times more than at Realtex. The total number of participants is comparable to that at Realtex-2005, but the target audience is much wider, with 3,299 companies, including 102 Russian firms, attending the exhibition.

But then, such a comparison is not really fair, as MAPIC focuses solely on retail real estate while Realtex claims to be targeting a much wider range of participants at the exhibition entitled “Development and Real Estate Investments”.

Therefore, it appears more reasonable to compare Realtex with MIPIM, the annual investment fair that has been held for over 15 years. Taking part in MIPIM-2005 were 17,641 people from 74 countries. The total exhibition space was 18,251 sq.m. 2,051 exhibiting companies and 3,890 investors were present. Senior executives accounted for about 70 percent of all the participants.

Remarkably, last year Russian companies took an active part in both fairs. 102 Russian firms attended MAPIC-2004 while MIPIM-2005 attracted 95 companies. Russia was actually 5th in terms of its companies’ presence at MIPIM.

The registration fee at MAPIC is 1,076 euros and 1,411 euros at MIPIM; unregistered participants are simply not allowed in. The cost of a square meter of exhibition space at MAPIC ranges – depending on the location – from 801-848 euros, which includes the free registration of 10 people. At MIPIM one square meter is available at 775-860 euros which includes free registration for four people.

So why then do Russian realtors and developers spare no expenses when attending international fairs, paying a registration fee of 1,411 euros, plus an air ticket, hotel accommodation and travel allowances, but ignore domestic exhibitions?

The answer is simple. The Russian firms who take part in international shows rightly believe their attendance to be an inseparable part of their business.

Good attendance by top executives and high-ranking officials of all levels, too, plays an important role as such fairs give Russian entrepreneurs a chance to meet not only foreign partners and representatives but also senior Russian officials from federal and Moscow-based agencies. In Moscow the businessmen have to wait for months for a chance to meet such figures, while in Cannes the chances of having a word with them are much higher.

So, what about the domestic exhibitions? The money pumped in by exhibitors hardly ever pays back. Taking part in such events only makes sense for a limited circle of companies, mostly those where the government has a share. Those firms receive budget financing for participating in fairs, therefore, if they do not gain anything at least they don’t lose anything either.

This is a vicious circle of sorts. On the one hand, Russian realtors and investors do not believe their participation in domestic fairs to be an effective means of development. On the other, they gladly take part in shows that bring tangible results, which they find outside Russia.

Russian organizers of trade shows clearly need to develop and competently promote their services. Russia’s real estate market has the potential; all that is needed is to realize that potential.

Then, Russia will also start attracting numerous foreign players and exhibiting companies will expand their client base. Subsequently, trade shows will be viewed more as a necessary component of the real estate and development business, not as waste of money on creating an obscure company image.