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. Last Updated: 07/27/2016

Turkey's Enka Rules Real Estate Roost




Real estate development in Moscow remains very much a Turkish affair.


The Association of Moscow Investors estimates that $2.7 billion was invested in local real estate last year - and firms from the country's neighbor across the Black Sea accounted for some 50 percent, said city officials.


The overwhelming market leader is Turkey's biggest construction company, Enka, which entered the local market in 1988 to work on reconstructing the Smolensky Passazh mall under a Turkish-Soviet natural gas agreement.


Murat Gulmezoglu, president of Enka CIS, speaks about that time with a certain nostalgia.


"During the Soviet regime, it was very comfortable for us to work here, I mean we didn't have any problems. Everything was going according to the laws; when you go according to the laws, there is no problem.


"Of course we had some difficulties in finding particular materials. Those days, life was very different. The police were very strong, the thrust to the police was very strong, there was no such thing as stealing. Today, sadly we have to be more alert. We have to provide our safety by ourselves."


Over the past 11 years working in this country, the company has been involved in many projects, including the reconstruction of the State Duma building and renovations to the White House after it was shelled in 1993.


And while lawlessness in general society here has been on the rise, Enka has built its success through its scrupulous attention to its legal and contractual obligations - and to the demands of its clients, said Gulmezoglu.


"We always follow the rules of the country in which we work. Therefore, we never have problems," he said.


"In Russia, there are some very good rules, such as those that protect the architectural design of the city. For example, here there is a city council, which studies every new project and chooses those that are the most suitable in terms of fulfilling the city plan and protecting the city's architectural integrity."


But still, some of the more bureaucratic rules are hard to deal with.


"I've worked in lots of countries. In every country there are permits we must get and formalities to fulfill before we can start the construction. But in Russia, there is too much bureaucracy. We have to get permits for every single thing," Gulmezoglu said.


Gulmezoglu's colleague, Engin Colpan, sees the biggest problem as being the time spent on project approval.


"It takes nine months for the construction authorities to approve your project."


In addition to more usual requirements such as evidence of good financial standing, other company information, building designs and business plans, the authorities require an astonishing amount of detail regarding the projected work force. As well as providing a breakdown of foreign and local workers and their respective skills, developers are required to provide a chart of planned work-force movements (see box).


According to estimates from Mosgorstroi - which works with the city government on advanced real estate developments - there are currently some 30,000 foreign workers in Moscow.


Around 14 percent of those workers come from CIS countries. Turkey, the former Yugoslavia, Poland and Bulgaria account for the bulk of foreign construction workers, supplying 48 percent between them.


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The documents a developer must file to win approval of a construction project in Moscow include:


1. An application letter addressed to Deputy Mayor Vladimir Resin, who oversees the city's real estate departments. The letter should include information on the planned work force for the project, including a breakdown of local and foreign workers and a list of the workers' skills.


2. An application from the developer's client. This document should include an explanation of the reasons for using a particular work force, tender information, information from the local labor committee branch and information on living conditions provided for any foreign workers or workers that will be living on site.


3. A draft contract for the project. This should include information on the amount of work to be carried out by the winner of the tender, calculations demonstrating numbers of workers needed, a plan showing the workers expected movements and a plan detailing the amount of work to be done.


5. A draft design.


6. Company information, including company background, information about the board of directors and leading management.


7. A reference list. Information on any projects the company has built over the past two to three years, including any undertaken in Moscow. References from clients are welcomed.


8. Draft contracts to cover employment of any foreign workers, detailing the reasons for using foreign labor. The contracts must comply with the rules laid down by the International Labor Organization.


9. Moscow Registration Chamber certificate covering the company's office in the city.


10. A document from the state tax inspection attesting that the company is in good standing with the tax police.


12. Bank information on company's financial status - to be provided by the bank where the company keeps its main accounts.


Source: Mosgorstroi