Guiding Lines: Spare Alms for the “Needy” Hong Kong

Even more so as sufficient funds are, indeed, available in Russia nowadays. The volume of investment to be poured into the projects already approved and announced, to be launched within the next 12 to 24 months alone, far exceeds one or even two billion of dollars.

“Russia has plenty of brilliant architects,” Moscow’s chief architect Alexander Kuzmin told an international conference on high-rise development organized by Vedomosti recently. “I believe that foreign stars should by all means be given a chance to develop their “stellar” projects here, in our colossal megalopolis, but responsibility for most projects should be entrusted to Russian designers. They can do the job just as well.” Or, perhaps, even better, the man with a rich experience in examining urban projects designed both by Russian and foreign architects, seemed to imply.

Besides, Kuzmin went on to say, “I don’t have any instruments of pressure on foreign builders and investors so as to make sure they meet deadlines.” The similar approach is exercised by Russian government officials towards investors.

In principle, such an idea of the balance of interests is, indeed, an example of reasonable and well-thought policy. But it appears that Russia, reveling in euphoria caused by the inflow of oil dollars and soaring demand on housing and commercial properties, has begun to forget that we live in a small world, after all.

It is possible to argue on advantages and disadvantages of globalization. But the distance from Moscow to New York is only 7,500 kilometers and the length of Earth’s equator length is 40,000 km. If the plans of designers of supersonic aircraft are to materialize a flight from Moscow to New York will only take 90 minutes. One should not think that money moves slower.

Since the late 1980s it has become a tradition in Russia to talk of the need to raise foreign investment. In those days, though, such statements sounded rather as a beggar’s whimpering though instead of playing an accordion that beggar was rattling its rusty ballistic missiles.

But private investments are made by individuals and to that end they need communication. Where else can thousands of people seeking new opportunities meet each other, if not at professional exhibitions and conferences?

MIPIM 2006, the world’s largest real estate event held in Cannes, has brought together over 21,000 market operators. As soon as in September of this year, another show – MIPIM Asia – is to be held in Hong Kong. The objectives pursued by those events differ. While Cannes is a venue for all property market professionals, MIPIM Asia focuses on raising investment for Southeast Asia.

“Hong Kong lies at the very heart of the region. If you take a map and a compass, you will see that Hong Kong is only four hours flight away from each of the major commercial Asian cities; you can go to Tokyo, Osaka, Seoul, Beijing, Shanghai, Taipei, Bangkok, Kuala-Lumpur, Singapore or Manila,” says Mike Rowse, former journalist who joined the Hong Kong government in 1980. Rowse is director-general of investment – a post introduced at his own initiative.

MIPIM Asia director Gilles Saint Georges Chaumet promises a hearty welcome to Russian investors willing to invest in Asian markets. Russia’s participation will be “less appealing”, though, if its delegates chose to present their projects in Tyumen, Yekaterinburg or Tver there, while Vladivostok-based projects, of course, will be welcome.

Considering that over one-half of the region in focus is occupied by China, seen as a highly lucrative property market, such ideas are indeed worth admiration. “We hope that the show will strengthen the ever growing tendency of Southeast Asian real estate companies to expand their operations beyond national borders,” Chaumet says.

The choice of Hong Kong as a venue is more than just correct. Cannes – a small town on the Cote d’Azure in France hosts annual MIPIM fairs and several other similar shows on the premises of the Palais des Festivals built especially for the purpose and has already learned to prosper at the expense of such events.

The town is hardly notable for breathtaking scenery or lack of unsafe places. Hong Kong is different. Some 40% of its territory is occupied by national parks placed under government protection. Hong Kong is one of the most beautiful cities in the world, with skyscrapers looming against the mountains, and one of the safest places in the world, even by night.

Every city is interested in attracting investment. The line-up of Russia’s delegation to MIPIM Asia was impressive indeed, including such high ranking officials of the Moscow city hall, as Vladimir Resin, chairman of the Moscow city construction industry department, Moscow’s chief architect Alexander Kuzmin, president of GAO Moskva Andrei Krivoshein, accompanied by several top executives of leading development firms. However, Moscow Mayor Yuri Luzhkov ignored the event that was not shunned even by the mayors of London and Paris.

But then, such an approach is understandable. Moscow attracts enough investment to ensure round-the-clock building works without interruptions. But do Russian provinces really bathe in cash? Are they much better off than, say, the oil-rich United Arab Emirates whose delegation went all out promoting Dubai projects to raise foreign investment?

Do not Russian regional governors rack their brains about how to raise investment for their territories? They do. But so far Krasnodar was the only Russian region to present its projects at MIPIM 2006. Yekaterinburg and Novosibirsk may take pride in their central locations being 4 hours’ flight away from all other parts of Russia, but the climate in Sochi is better, to put it mildly.

Russian regions need international property shows, be it MIPIM Tyumen or MIPIM Adler. Unless, of course those events are held merely for the record, as is the case with many exhibitions held in Moscow regularly and attended by crowds of people looking for new apartments. Do not organizers see the difference between an investment exhibition and a consumer-oriented event?

An alternative would mean resumption of capital flight and developers’ loss of interest in Russia. The St. Petersburg-based Stroimontazh development company has already launched operations near Paris while a considerable share of investment poured into Dubai projects comes from Russia or other post-Soviet states, according to local analysts.