“The real consolidation of players will start after the market reaches bottom”

15 December the City of Samara (Volga region) hosted the first regional Christmas summit on the real estate market results of 2008. It was organized by the Guild of Property Managers and Developers and Rent &Sale magazine.

The summit success was secured by the level of participants (CEOs of large companies, market leaders from central Russian region and two megapolises) and by its format: first part was held as a traditional panel discussion on the market development, the second reminded of a popular TV talk-show “the Duel”, during which the verbal fights of opponents are judged by the audience. The summit was brilliantly moderated by Alexander Olkhovsky, the GMD President

1) Office property dynamics was discussed by Dmitry Zolin, the Managing Partner of London Consulting & Management Company (St. Petersburg). In his opinion the crisis puts an end to the carefree investment into business centers as a ‘pension savings’. Owners and managers will have to compete for tenants harder and be very alert on the market research data.

The housing market was presented by Vyacheslav Semenenko, Setl Group Member of the Board of Directors (St. Petersburg). He noted that in order to survive regional construction/development companies will have to accept low-profit margins and concentrate on the economy class projects demanded by the market and supported by regional authorities. The retail property market was analyzed by Mark Afraimovich, the ROSS Group Managing Partner (Moscow). According to him Russian regional markets have launched only approx. 1 mln. m2 of 5 mln. m2 retail space originally planned for 2008, 2 mln. m2 is rescheduled for 2009

2) The Duel part included two discussions. The first, titled “Banker – developer: friends or foes, who knows?”, dealt with the controversies of giver-taker relations, risks, which can or should not be taken and other hot issues of Russian investment market. The second discussion “When the bottom is reached who will return to the surface?” followed the main lines of the first one. The opponents, Viacheslav Semenenko and Dmitry Baranov, Head of analytical department, “Mall Management” (Samara) came to the agreement that new real estate projects cannot be started in current conditions, but “the sailboats” are to be prepared. The time of “bottom” is hardly predictable, but if it is not reached in spring 2009, the irreversible processes may destruct economy (Semenenko). All participants agreed that the Russian market is both influenced by the macro economic factors and depends on the authenticity of the Russian government moves and strategies. Spring was repeatedly mentioned as a very indicative period.

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