Invest in Russia!
Show hosts: Oksana Teplinskaya
Despite the current troubled economic times, sports still thrive globally, with its major events appearing to become more popular than ever. Russia is no exception here. With the Olympic and Paralympic Winter Games in Sochi in 2014 and the FIFA World Cup in 2018 ahead, Russia is one of those economies, which are going to considerably increase their sports revenue over the next few years.
Russia's young but growing contemporary art market is the place where private collectors and financial institutions have flocked, seeing it as a major investment opportunity. Global investors are becoming considerably more aware of national artists and a whole host of Russian painters from the 19th and 20th centuries are undergoing rapid price appreciation. Also in recent years, international auction houses such as Sotheby’s and Phillips de Pury have sold many Russian contemporary artworks at good prices.
Things have changed dramatically in Russia’s banking and life has got tougher for commercial banks ever since the outbreak of global financial crisis. Since 2008, the sector’s growth has slowed to half its previous rate, while the big state-owned lenders have got their act together and are proving stiff competition for the smaller ones.
Russia’s location at the heart of Eurasia makes it a go-to nation for the global logistics and transport industry. Spanning nine time zones and some of the most extreme climates anywhere on the globe, Russia really needs solid logistical infrastructure, but the logistics market in Russia is historically under-developed.
Venture capital is new territory for Russia, with the government being the main strategic investor in tech, life sciences and innovation. The country still has plenty of scientific education and human potential. Take this and combine it with unique research projects, new technologies, entrepreneurial spirit, and you get a fine breeding ground for potentially profitable companies.
Russia’s media sector was among those that recovered the fastest from the 2008 crisis. Back in 2010 it even outperformed the most optimistic growth predictions, and it’s now one of the fastest-growing in the world.
Between 2009 and 2012, Russia sold 224 new jets for around $9 billion, first in terms of volume and second only to the United States in value. The Moscow-based Center for the Analysis of the Global Arms Trade just placed Russia at the top spot worldwide for sales of multi-role fighter jets. The good news is that the country is likely to keep this position through 2016, thanks to potential sales to countries like China and Vietnam.
Is talent key to any type of business? Any HR firm will surely say it is. The world-famous ManpowerGroup goes further, saying that today finding a proper workforce is even a harder task than attracting funds.
The warehouse market was one of the first in Russia to feel the impact of the global financial crisis, with regional markets beaten the most. However, they started showing some signs of recovery from mid-2010, when key players resumed negotiating warehouse lease transactions, and rent rates began growing in major Russian cities.
Several years ago Russia was on course to overtake Germany as Europe's biggest car market. However, a collapse in demand, quite logical after the 2008 crisis, caused sales to halve in 2009. Now analysts are increasingly becoming optimistic, with some seeing Russia overcome its current slump and eventually overtake Germany to become the largest in Europe – and the fifth biggest globally – within the next seven years.
Russia is quite a substantial part of the global luxury market. Love of posh cars, jewelry, watches and clothes, was only a little shaken by the financial crisis. In 2012 sales of luxury goods grew by 7%, according to the Fashion Consulting Group.
Until only a couple of years ago Russia had been neglected by international investors in online retail, which makes it the youngest market in Europe. Industry watchers claim that now is the most exciting time for startups in the field, as they’re witnessing ‘not-seen-before’ interest from investors all over the world.
Consumer behavior has totally changed in Russia since the world’s financial crisis broke out five years ago. People have become more price-sensitive and rational but they’re still keen to spend. What is the current market landscape and what is changing? Russia’s retail market grew by around 50% per year from 2007 to 2012, while it is expected to grow at 6% annually in the next five years, says a recently released study by Fast Market Research.
International hotels are enhancing their operations in Russia, and their activities have expanded in the last three years. From 2006 to 2011 Russia’s hotel room capacity tripled, according to Knight Frank. On average, international operators are announcing more than 15 new projects annually.
The Russian Ministry of Natural Resources estimates that an average Russian family based on four persons produces 400 kilos of waste per year. Until a few years ago, people in Russia thought it really did not matter how it was processed. But over the past decade, the way we look at waste, and its disposal has changed fundamentally.
The stormy 1990s brought big changes to Russia’s healthcare sphere, driving a radical swing within the system itself. The initial reforms liberalized economic relationships and placed the sector in a market environment. On the negative side, Russia’s medical system still retains many of its Soviet-era characteristics, being sometimes bureaucratic and inefficient. On the positive side, the present situation surely provides many more opportunities than 20 years ago.
Russia’s real estate sector is now seeing significant evidence of improving investor sentiment, some market watchers claim. But what is this positive sentiment based on?
The huge territory of the Russian Federation buzzes with economic ambition that primarily manifests itself as a hunger for infrastructure development. Taking roads by way of example, during the years of economic boom, the number of cars soared in Russia, but the transport infrastructure was not prepared to digest it.
With Russia pegged as one of the world's fastest-growing markets, drug makers have been angling to build up their businesses here. For free access to the market, the Russian government now requires foreign companies to team up with local players – and to share technology with them.
The concept of developing green future has gained popularity in most Western countries over the last three decades. Though analysts say there is a very quick uptake on new ideas in Russia, here the trend is still in its infancy. But the potential is huge, Jones Lang LaSalle says less than 2.5% of the total high-quality office stock in Moscow is fully BREEAM or LEED certified.