High Demand for Real Estate in Russia (JPM)
High demand for real estate in Russia creates need for property managers
by Darnell Little
The following is an excerpt from the Jul/Aug 2008 issue (Volume 73, Number 4) of JPM�, Journal of Property Management.����
Thanks to a burgeoning economy, Russia�s real estate market has been experiencing a steady growth for eight years. The amount of investment has nearly tripled in the last two years alone and the demand for property managers is on the rise.�
"The market is incredibly active," said Dmitry Kunitsa, head of global law firm Squire, Sanders & Dempsey�s Moscow-based real estate group. "A lot of international investors are here and a lot of Russian investors now look at the real estate market as a viable alternative to the stock market.��
Moscow and St. Petersburg were the first cities in Russia to attract attention from investors, but other regions have developed quickly over the last five years, especially in "citiesmillioniki"� those with a population of more than a million people.�
There are 13 such cities in Russia, concentrated mostly along the Volga River in the Urals and in the southern region. The land in these cities is cheaper than Moscow, creating market opportunities and higher yields attractive to investors.�
Property Managers Apply Here
The Russian real estate market is still relatively in its infancy. The first Class A office building was developed in Moscow in 1990. A High demand for real estate in Russia creates need for property managers by Darnell Little dozen other structures followed in the early 1990s, but this did not satisfy the demand for high-quality office space by Western companies working in Russia and by fast developing Russian businesses.
Lack of product and huge demand stimulated quick development of the real estate market. This created a big demand for property managers throughout Russia, particularly for office, retail and industrial space. The field of property management is new to most Russian professionals and many foreign managers are flocking to the country to lend their expertise to the developing industry.�
Shannon Alter, CPM�, who teaches classes in Russia on leasing and human resources, noted that most of her students have no prior experience in any area of real estate, much less property management.�
"It is a whole new opportunity for them," she said.�
The inexperience of Russian property managers has created a tremendous opportunity for American property managers willing to make the move; however, there are many challenges as well, one of which is adjusting to the Russian way of doing business. Alter stressed that American property managers must learn to be far more flexible because many aspects of Russian business aren�t as developed as they are in America or Europe.�
"Vendors will tell you with absolute certainty that something is going to happen, right up until it doesn't," Alter said. "The computers are going to come, the air conditioning is going to come� and then it just doesn�t happen. And they also don�t think things are going to break; they think things are going to last forever."�
For American managers, frustrations may mount as Russian businesses learn their way around the new field of real estate development and management.
"If you�re the type of person who likes to have everything in place, all neatly wrapped up and tied in a bow, this might not be the place for you," Alter said. "It's a very dynamic environment; it's changing day by day."
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