Attractive Real Estate Market

In the early 1990s the attractions of the Russian market for foreign construction companies were obvious. The competition was relatively negligibleand the rewards for entertainingthe risks inherent in working in the Russian capital were huge.

"Profit marginsat the start of the decade were three times what they are now," said Pietro Giello of Codest, which has been operating throughout Russia since 1984 and has been involved in some of the capital's most prestigious projects including the Ducat buildings.

"Marginswere huge and it's only recently that they have come down towards a more realistic level," agreed Konstantin Gusakov of the Stolny Grad, formed originally to manage thedevelopment of flagshipproject, like the Penta Hotel in the mid 1980s.

Standards of construction(quality) also sometimes left a lot to be desired."The competition was so scarce(small) that international companies were sometimes paying pre-lease(advance) payments for 4-5 years for accommodation that was not of the best quality simply because they had no other option," said Gusakov.

"Originally, you could build anything and put it on the market at that time," confirmed Calvac O'Carrol of Murray O'Laire, one of Moscow's longest serving architectural firms having first entered the market in 1991.

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