Swiss Kick off New Chamber with Real Estate Discussion
Geoffrey Cox, OBE, chairman of Astera, reviewed the situation in the Moscow property market at a business breakfast in July, sponsored by Passport and the Hellevig, Klein & Usov law firm which also saw the launch of the Swiss Russian Chamber of Commerce. The event was a joint one between the Swiss Club and Swiss Russian Chamber of Commerce and was held at the Cafe Des Artistes restaurant. Cerba members were invited as well.
Michael Schneider, the driving force behind the Swiss Chamber said he founded the chamber because he “realized that while the Canadians, Americans and many Europeans had their own organizations, the Swiss did not.”
Geoffrey Cox, one of Moscow’s celebrated real estate gurus gave his assessment of the housing market and an overview of commercial real estate trends for Moscow. He was cautiously optimistic about housing price levels “what has gone up must come down – at least a little.” While rents may still continue to rise just because there is a lot of demand for living space in the capital, he predicted the rate of increase would be less. “There is not as much residential property available right now as you would think, but there is plenty in the pipeline”, he told his audience.
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L-R: Michael Schneider, Geoffrey Cox, Artem Usov, Nathan Hunt,
Till Frey & Dr Gezahgn Wordofa | |
He also emphasized that when leasing office space it is crucially important to have a broker represent the tenant during the negotiation process. He emphasized that in leasing, key points to consider were the differentials between rentable and useable space, the costs of physically finishing the property for occupation, security, parking and telecommunications providers.
Artem Usov from Hellevig, Klein & Usov raised the eye-opening point that owners of apartments share the burdens of major repairs to the building. While this is well accepted in the West, in Russia most apartments were "gifted" to tenants after communism and many of these owners are restrained in their ability to pay their pro-rata share of major repairs such as a new roof that could easily run to hundreds of thousands of dollars. While this new law is now in force, it does not appear to have yet been applied. It may cast a large cloud over the business case for owning a second hand apartment especially for speculative purchasers or those purchasing apartments to generate rental income. One other potential issue for the future is that perhaps landlords who are faced with large bills to subsidize repairs, may try to pass these costs onto their tenants. One of the breakfast delegates raised the issue that according to the law, there would be designated one owner that would be responsible to collect the monies on behalf of all the owners. The delegate pointed out that there may be some problems if the designated party does not respect his obligations to properly transfer all the sums which are collected.
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