The Russia route

by Rajiv Shah Sunday, 23 November 2008

Dubai recently opened its doors to the Russia Investment Roadshow. Rajiv Shah went along to find out if the nation looks set to become the next big arena for property investors.

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With Dubai's increasingly prominent role as a global investment hub, and with ever strengthening commercial links between the UAE and Russia, the timing seems right for the Russia Investment Roadshow to visit Dubai.


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The intensive two-day programme picked up on a variety of themes relating to investment opportunities in Russia and Russian investment around the world, attracting a high profile audience of leading figures from international business, finance and the media.

Over the last 10 years the gdp has grown five times. There was no political stability, no class a buildings, no shopping malls.

The opening plenaries set the stage, with leading names in Russian and international finance talking about Russia's resilience to the worldwide liquidity crunch and key trends to watch going forward. The interactive event focused on investment opportunities in Russia and on the continuing growth of Russian investment abroad.

In the presence of HE Sheikha Lubna Al Qasimi Minister of Foreign Trade of the UAE; and Alexander Saltanov, First Deputy Russian Prime Minister and Russian Deputy Minister of Foreign Affairs, and the participation of more than 200 prominent figures, key speakers included Alexander Shokhin, President, Russian Union of Industrialists & Entrepreneurs; Vladimir Yakunin, President, Russian Railways; Stanislav Voskresensky, Deputy Minister for Economic Development of the Russian Federation;

Alexander Shokhin, President, Russian Union of Industrialists & Entrepreneurs, said: "There is huge potential for this bilateral relationship to grow rapidly to the advantage of both sides."

Key investors and holding companies from the Emirates, including Dubai World and Abu Dhabi Investment Council, met with Russian Railways, PIK Property Group and other leading Russian firms and conglomerates, to discuss cooperation in a variety of areas with sessions on featured discussions on the fallout of the global economic crisis, and a look at opportunities in the energy, real estate, infrastructure and other sectors, as well as a lively roundtable of Russian and Arab businesswomen.

Following a sharp drop in the world stock markets, which was mirrored by a fall in the interest rates paid by Russian banks and accompanied by a sharp increases in the rates of basic currencies, the question of how to look after one's money and particularly to make it grow has become a burning issue.

In the absence of a mature and large-scale stock market in Russia, investors here have two main means of investing their money: foreign currency or property investment.

In the face of global economic changes, property alone is the most predictable, conservative and therefore the most reliable investment product: it is a segment that is characterised by the greatest stability, a huge investment capacity, a steady and solvent demand, and the possibility of flexible diversification in a variety of sectors and regions.

Investment destination

As an investor, there are a lot of reasons to be bullish on Russia. Just like other emerging economies, like China, India and Brazil, it is quite obvious that Russia is hardly perfect. A rudimentary glance at economic and corporate indicators suggest that Russia's investment credentials are robust. It has the third-largest foreign exchange reserve in the world, solid budget and trade surpluses, a growing middle-class and a government stabilization fund of US$150 billion, earmarked for infrastructure projects.

Additionally, about 70% of stock market sales is accounted for by domestic investors who are flush with oil-generated cash and eager to support homegrown corporate talent. When foreign investors bailed out of Russian bellwether stocks in mid-January, domestic investors swooped in and bought on the dip.



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