MOSCOW, (RIA Novosti political commentator Alexander Yurov) - U.S.-based NAI Global, a major player on the international property market, is coming to Russia.
It recently signed an agreement with Russia's Vesco Consulting to set up a new international brand in Russia: NAI Vesco. The new company will be NAI Global's exclusive representative in Russia.
NAI Global (short for New American International) struck a series of deals worth $30.5 billion in 2004. Experts say it is the world's biggest consultancy chain with clients including such as Alcoa, BP Amoco, Conoco, Pepsi-Cola, General Electric, BMW, Rolls-Royce, Toyota, Sony, Hewlett Packard, Electrolux, United States Postal Service, Gillette, Wal-Mart, Carrefour, IKEA, Siemens, Nokia, Alcatel, Adidas, Nike, Caterpillar, Pfizer, Deutsche Telekom, Deutsche Bank, DHL, HSBC, Citibank, ABN & AMRO, Procter & Gamble, Henkel, Colgate & Palmolive, Hertz and others. Although the company is based in Princeton, New Jersey, it has more than 300 offices all over the world.
NAI Vesco will sell and lease offices, warehouses, and commercial estate, and also offer consulting services on Russia's property market in Moscow, St. Petersburg, and Sochi (a Russian Black Sea resort). NAI Vesco will, however, only be able to start work in six months. But it is already clear that the company will target 20% of Russia's property market in the next two years.
However, the company's arrival on the Russian property market is not a unique event for this country. Four major international companies are already operating in Russia and control more than 80% of the commercial estate market. All these companies (Colliers International, Noble Gibbons / CB Richard Ellis, Jones Lang LaSalle, Cushman & Wakefield / Stiles & Ryabokobylko) work in partnership with Russian businesses.
"We have long known about NAI Global," said Alexei Averyanov, the head of Vesco Consulting. "We have heard about its achievements both in the U.S. and all over the world. Therefore, it is hardly surprising that NAI Global is joining the Russian market now that Moscow, St. Petersburg and many other regions are witnessing a genuine boom in commercial estate."
Only two years ago, nobody even considered seriously investing in Russian property. And now $100-million real estate projects have been and continue to be constructed in Russian cities with over a million residents. Today, commercial estate projects record profits of over 30%. This economic sector is successfully developing not only in Moscow and St. Petersburg but also in Kazan (Eastern European Russia, on the Volga), Novosibirsk (Western Siberia), Voronezh (southern Russia), Perm and Chelyabinsk (the Urals).
There are other reasons for the foreign companies' interest. Russian economic growth and swelling direct investment revealed an unexpected problem: Russia is short of decent office space for foreign companies. This encouraged the development of companies specializing in building and leasing office and business centers.
Quality offices have been in high demand for a few years now. In 2004, only 5-6% of offices were not leased. Interestingly, the situation is expected to remain the same, although nearly 80% more quality offices will be commissioned than in 2004.
The situation is the same on the warehouse market. The demand in this segment will be 11-13% up, to total no fewer than 1,650,000 sq.m, but the supply of decent warehouses remains limited. Vacant warehouses are distributed before they are commissioned, even though 18% more warehouses will become available in 2005 in comparison with 2004.
All this means the Russian commercial estate market is a sector where companies can develop long-term business projects.