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The Russia route
"As an investor one of the first things you have to establish is a local office, without local knowledge you could end up with a bad investment", it is therefore always best to co-invest with a local company or investor, one who puts up his own money" added Mr Geovanis.
London & Regional (L&R) is one of the largest private property companies in Europe with investments, developments and business interests exceeding €US$11.3 billion in over 10 countries, including the UK, Russia, Scandinavia, Germany, South Africa and Panama. L&R has invested over US$630 million in the Russian commercial property investment market since 2005. Their investment portfolio includes prime office buildings, retail centres, hotels, logistics facilities and pipeline development schemes.
"Historically (pre 1991) real estate consisted predominantly of old style soviet buildings. High density/high-rise buildings for the middle class. Not modern, no AC, so the market pretty much opened up in recent years to establish this demand which has presented a great growth market". Returns/yields are currently 10-12% for downtown class A developments as compared to 6% in EU and USA.
The Russian capital, Moscow, is now internationally considered a Mecca for buying and selling the highest of the high-end. According to a study by PriceWaterhouseCoopers, Russia is home to the world's third largest concentration of billionaires (after the United States and Germany) and over 100,000 multimillionaires who have a combined US$300 billion of cash on hand. According to Associated Press, "Moscow is home to more rich people than New York."
The growing spending power, combined with the significant numbers of the very wealthy, has created a lucrative luxury export market sector for top quality products and services.
Russia is the ideal market for companies in such industries as:
Watches and jewelry Art and antiques Marine: yachts, speed boats, marinas and submarines Luxury automobiles, auto accessories and amphibious vehicles Air travel: private jets and helicopters High-end real estate properties, interior design and luxury furniture Exclusive spirits and gourmet food Luxury cosmetics, beauty and health products Fashion designers and fashion brands Luxury travel and leisure.
Russian art is a rising star for foreign investors throughout the globe, and already attracted the interest of the world's most renewed auction houses. Last year Sotheby's modern and contemporary Russian art sale surpassed expectations and broke several records, with total sales of over US$50 million.
Permanent wealth
Russia's top businessmen began amassing art works in the late 1990s following in the tradition of pre-revolutionary businessmen-collectors such as Pavel Tretyakov, a cloth merchant, whose collection now forms the core of the Tretyakov gallery, Moscow's most famous art museum.
Viktor Vekselberg, an oil and metals mogul, has built a diverse art collection, but is best known for his purchase from the Forbes family of a rare set of bejewelled Fabergé eggs originally fashioned for the last Russian tsar.
The passion for art collecting has spread rapidly in recent years as the swelling ranks of Russia's rich become blasé about the more obvious trappings of wealth such as luxurious automobiles, furs and jewelry.
Marianna Sardarova, the owner of RuArts, Moscow's biggest private art gallery, says: "It has become glamorous and fashionable to collect art in Russia. Art collecting signals that you are not just rich, but clever enough to build something permanent with your wealth and make something of yourself."
Many of the world's leading auction houses have launched specialised sales to cater for Russian collectors' love of Russian art. Collectors who began by favouring paintings are branching out into other art forms, with icons and old Russian manuscripts rapidly gaining popularity.
Yachting on Russia's waterways has skyrocketed in the past five years although it barely existed five years ago. Russian customers can buy luxury yachts and speed boats from several posh showrooms around Moscow and can even have super-yachts built to their specifications in the center of town. Few yacht manufactures gambled on Russia becoming a market for luxury boats - it paid off, with production booked until 2009.
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