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. Last Updated: 07/27/2016

5 Firms Try to Make Market Less Murky

For potential customers, the often murky Moscow real estate sector represents a minefield of costly risk and confusion.

Among the biggest problems facing companies looking to rent office space, for instance, is the bewildering discrepancy between the statistics and classifications offered by various consultancy firms.

Now, however, some of Moscow's leading real estate consultants, clubbed together in the Moscow Research Forum, are moving to standardize classifications and data for the office and retail sectors, making it easier for potential customers to negotiate the market and allowing analysts to pool their information and resources.

The forum, which has been around for a while, comprises CB Richard Ellis, Colliers International, Cushman & Wakefield Stiles & Riabokobylko, Jones Lang LaSalle and Knight Frank. It aims to emulate more developed markets worldwide by driving up standards.

"The primary goal for the forum is to make the market more understandable, and the second is to allow for a greater exchange of information," said Olga Yasko, head of the analytics department at Colliers International.

As the capital's real estate market booms, the rate of construction can often outstrip the speed at which consultancy firms can collate their data, analysts said.

"Clients who come to us sometimes check which company they want to work with, and they see that all companies have different figures and, naturally, they ask the question, why?" said Irina Florova, head of research at CB Richard Ellis.

"The scale of the market and the nontransparency of the Moscow market make our task more difficult," Florova said.

The market is still largely nontransparent due to a combination of developer secrecy, confidentiality agreements and the absence of any unified register of office owners and tenants, said Yulia Nikulicheva, associate director of the strategic consulting department at Jones Lang LaSalle.

Although a standardized system does not necessarily lead to greater transparency, it would improve the situation, Nikulicheva said.

"It helps improve the quality of construction in the city as tenants, who now have a clear benchmark, start demanding international-standard offices from developers," she said.

Late last year, the forum's most noticeable achievement came when the members agreed on a new set of standards for classifying office buildings in the city.

According to the new classification system, for an office building to be categorized as class A, it must fulfill certain criteria ranging from air conditioning systems and ceiling height to transportation accessibility and parking space.

Florova estimated that standard figures for rental rates would not be available until the beginning of next year at the earliest, with the sensitive subject of rental prices proving difficult to coordinate.

Some analysts argued, however, that although the new guidelines offered clarity to consulting firms, with no one policing the system, developers and construction companies often ignored them in an attempt to boost the value of their properties.

"Many owners and builders rely on the classifications unless they are trying to lease or sell their properties, and then they may try and upgrade their status," said Regina Lotchmele, head of research at DTZ, which is not a member of the forum.

Lotchmele said DTZ would be keen to join any group covering the retail sector, but she said some residual animosity and an atmosphere of exclusivity among existing members was hampering the process.

"It is true that to some extent there is a not very logical bias against potential new members of the Moscow research forum," she said.

Christopher Peters, head of research at Cushman & Wakefield Stiles & Riabokobylko, defended the current makeup of the forum, saying there was not much point in including smaller players "who can't contribute much."

He downplayed the notion that the forum acted as a sort of information cartel. "That would be the cynical way of looking at it. But we just call it a meeting of the top five companies basically," he said.