New Russia


Alex Romanenko sees huge potential in Russia.

Text : Eunice Ng

Since 1992, Russia has undergone wide-ranging reforms, which brings with it many business potentials for foreign investors. Alexander Romanenko, FIABCI World President (2011-2012) believes Russia has what it takes to attract worldwide attention.

Alexander will be speaking on Cross Border Investment in Real Estate: Russia at the Asia Pacific Real Estate Congress (APREC) 2011. He shares his insights with HomeFinder prior to the event.

Can you elaborate on the topic of your presentation?

I think the theme of foreign investment in Russia is very important.

Private investors make decisions about investing, mainly focusing on the bottom of the options: return and risk. Russia is seen by foreign investors as a country with an unfavorable investment climate. For such a point of view there are objective reasons. According to the World Bank in its published analytical report Doing Business in 2011, The Russian Federation took 123rd place among 183 countries in terms of ease of doing business. However, Russia has a huge potential.

I am sure that this theme and the new facts, which I possess, will be interesting for representatives of business circles of the Pacific, with enormous financial and technological capabilities that are now so interested in Russia.

Can you describe the real estate investment situation in Russia?

Russia is the latest big market in Eurasia. It has considerable potential not only in terms of land and natural resources, but also in skilled personnel.

In addition, it can be regarded as a springboard to penetrate other markets and investors in the CIS (Commonwealth of Independent States). Repatriation of Russian capital is being enhanced.

However, these financial assets are not enriched in the production of knowledge and know-how, without which their involvement in the real sector is futile. Foreign direct investments could become a link uniting the Russian monetary assets, new technologies and know-how of foreign companies with long traditions.

Knowing all this, the Russian government is now taking active steps to improve the investment climate in Russia. This is evidenced by Prime Minister Vladimir Putin’s repeated statements: “We need foreign direct investments, and not just capital, but the so-called ‘smart investments’, which are investments, accompanied by technology transfer and creation of new quality jobs. Russia is open to foreign investment … Our task now is to stimulate investment activity, to make it an important factor in national economic recovery. And a big role here, of course, belongs to foreign direct investment. Russia must be really attractive to such long-term, strategic investments.”

Russia sets the goal to reach pre-crisis level of US$60 billion (RM179 billion) to US$70 billion (RM209 billion) of direct foreign investments per year in the near future. It also aims to continue to build on these efforts and raise the bar.

According to preliminary estimates, in 2010, Russia received more than US$40 billion (RM119 billion) in foreign direct investment. In the first half of 2011, the domestic economy has received more than US$27 billion (RM81 billion) of direct investment. The main task now is to support this positive trend, and to focus on quality long-term investment.

With capital technology and innovation that will be coming into our country, the modern production and the new good, high paying, technology-based jobs will be created.

What are the opportunities for real estate investment available there?

In January 2011, at a forum in Davos, President Dmitry Medvedev announced the establishment of a sovereign fund to “share the risk with foreign investors through joint investments in the modernization of our economy.”

In May, the Russian State Duma adopted amendments to the budget, which calls for allocating Russian Rubble 62.2 billion (RM6.3 billion) to create such a fund. On June 1, 2011 Russian private equity fund was created. It is assumed that for five years, the foundation will receive from the government US$10 billion (RM30 billion) to over 10 years to raise US$50 billion (RM149 billion) to US$90 billion (RM268 billion) in associated investments.

All of this gives confidence for further improving the investment climate in Russia and promote the interest of foreign investors.

Asia Pacific Real Estate Congress (APREC) 2011
When? Oct 12 to 14
Where? One World Hotel, Selangor

ALEXANDER ROMANENKO, FIABCI World President 2011-2012, is the president and founder of ADVECS Real Estate Corporation (1993), which operates in four major Russian cities – St. Petersburg, Voronezh, Nizhniy Novgorod and Tumen. It has more than 2000 employees.

He is Past President of FIABCI-Russia (2003-2005), Past President of Russian Guild of Realtors (2006-2008) and FIABCI-International Board Member since 2005.

Alexander Romanenko served as Deputy World President for Europe (2008-2009) and has been a member of Prix d’Excellence Oversight Panel for the last four  years. In 2004 he served as Chairman of the Organizing Committee of FIABCI European Congress in St. Petersburg and was awarded FIABCI Medal of Honor in 2005. He is also an honorary member of the National Association of Realtors in Ukraine and honorary member and medal holder of the Russian Guild of Realtors (RGR).