The City That Resists Labels

Mark Gay

Russia's government hires some of the world's leading PR companies to push its case as an investment destination. They need to work harder.

In the eyes of international investors, Russia falls between two chairs: It has an established culture, a substantial society and a powerful presence as a global energy supplier. Yet, as Glenn Rufrano, president and chief executive of Cushman & Wakefield says, "it is not truly emerging and it is not truly mature" and because of that investors sometimes overlook it.

"If I were a marketing person here I would be spending time thinking about how I would describe Moscow to the investing world." Read our interview with Glenn Rufrano on page 12.

Moscow gained some lucky publicity when the vagaries of deal timing pushed it into joint eighth place with Washington DC in a global ranking of commercial property deals. This year's deal pipeline is unlikely to offer a repeat performance.

Moscow's mayor ordered a review of construction permits that scrapped projects totaling 30 million square meters. White Gardens may be the last new, Class A-plus business center to open within the central business district for some years.

Yet the law of unintended consequences is in full swing. Despite the cancellations, an equal volume of construction still went ahead. The city already has 15 million square meters of Class A and Class B office space, and 3.5 million square meters of quality retail space. Foreign investment has slowed and in the first quarter of 2013, Russian companies took up 84 percent of new office space. In an economy dominated by energy, one may ask, only slightly tongue in cheek, how many more offices does Gazprom need.

Mayor Sobyanin's enforced pause may have come at the right time. Read our special report on the leasing of Moskva-City business district on page 8.

Construction companies are busy building infrastructure for the Summer Universiades, the Sochi Olympics, the World Aquatics Championships, the 2018 Football World Cup, and Yekaterinburg's World Expo. That city, like Nizhny Novgorod, is busy, building transport infrastructure. Read our sports and infrastructure roundup on page 19.

Public-private partnerships are new to Russia yet they offer huge potential in a country where resources are stretched geographically and financially. Federal legislation is clearing the path for private investment. Moscow's Deputy Mayor for Economic Policy outlines the city's PPP projects on page 28.

Iconic author Nikolai Gogol wrote that Russia has two eternal problems, one of them, the roads. Logistics and supply chain management are a hot topic for producers and distributors in the country and one of the busiest development sectors. French tire maker Michelin has just opened its new logistics center, with one eye on the road at every stage of the production process. See page 22.