AAA Financing In Real Estate http://aaa-finance.net Guide to Commercial Real Estate in Russia Tue, 22 Apr 2008 18:46:52 +0000 http://wordpress.org/?v=2.3.3 en Tangled in Providers’ Wires http://aaa-finance.net/tangled-in-providers%e2%80%99-wires.htm http://aaa-finance.net/tangled-in-providers%e2%80%99-wires.htm#comments Sat, 22 Mar 2008 12:42:19 +0000 admin http://aaa-finance.net/?p=36 Given the stable shortage of quality office space, construction of large business centers in the Urals is accelerating. Fault-finding tenants do not only lay claims on the location and comfort of office facilities; they also seek quality telecommunications. At the stage of building design large developers face a dilemma: creating an in-house provider service versus signing a contract with one of the prominent communication operators. (more…)

]]> http://aaa-finance.net/tangled-in-providers%e2%80%99-wires.htm/feed Business Center on the Line http://aaa-finance.net/business-center-on-the-line.htm http://aaa-finance.net/business-center-on-the-line.htm#comments Sat, 22 Mar 2008 12:41:15 +0000 admin http://aaa-finance.net/?p=35 The conference IT Telecommunications in Real Estate Development and Management was organized by IM Events and took place in St. Petersburg in mid-October. Its main theme was interaction between building owners, management companies, and telecom market operators. The participants came to the conclusion that, no matter which way of dealing with an operator the owner may choose, flexibility and promptness in solving the tenants’ everyday problems are the key competitive advantages for any facility. (more…)

]]> http://aaa-finance.net/business-center-on-the-line.htm/feed Telecommunication in Retail Centers http://aaa-finance.net/telecommunication-in-retail-centers.htm http://aaa-finance.net/telecommunication-in-retail-centers.htm#comments Sat, 22 Mar 2008 12:40:16 +0000 admin http://aaa-finance.net/?p=34 Retail centers are one of the biggest users of telecommunications services. Thanks to a diversity of tenants and current market dynamics, the needs of retail properties for high-quality telecommunication systems are no less than those of business centers. (more…)

]]> http://aaa-finance.net/telecommunication-in-retail-centers.htm/feed E-Speak – Connecting up Offices in the Digital Age http://aaa-finance.net/e-speak-%e2%80%93-connecting-up-offices-in-the-digital-age.htm http://aaa-finance.net/e-speak-%e2%80%93-connecting-up-offices-in-the-digital-age.htm#comments Sat, 22 Mar 2008 12:39:06 +0000 admin http://aaa-finance.net/?p=33 In the dim and distant past, company offices exchanged messages by employing couriers on horseback making their way across treacherous terrain. In the twenty first century the pace of business has changed beyond recognition. Nowadays vital information is exchanged securely in seconds between offices located on different continents. VPNs (virtual private networks) are what is making all this possible. However today in Russia there is a shortage of suitably qualified IT experts, reliable networks and affordable prices. (more…)

]]> http://aaa-finance.net/e-speak-%e2%80%93-connecting-up-offices-in-the-digital-age.htm/feed Otherworldly Connections http://aaa-finance.net/otherworldly-connections.htm http://aaa-finance.net/otherworldly-connections.htm#comments Sat, 22 Mar 2008 12:38:01 +0000 admin http://aaa-finance.net/?p=32 The Russian IToutsourcing market is growing by 60%70% per year, and according to experts, the monetary volume on the IToutsourcing market will reach one billion dollars by 2009. However, according to specialists, the majority of players in this market segment offer lowquality services. Moreover, Russia’s traditional distrust of outsiders affects the market, inasmuch as businesses today are not willing to trust their valuable information to the management of a third party. (more…)

]]> http://aaa-finance.net/otherworldly-connections.htm/feed Pocket-Sized Telecoms http://aaa-finance.net/pocket-sized-telecoms.htm http://aaa-finance.net/pocket-sized-telecoms.htm#comments Sat, 22 Mar 2008 12:36:38 +0000 admin http://aaa-finance.net/?p=31 According to specialists, the share of the local telecommunications provider market in Russia is not more than one to two percent and is shrinking each year. Nevertheless, several building owners and developers continue to set up their own “pocket” operators, as they do not wish to miss out on the profits from this niche and they are confident in its success. Furthermore, primary and local providers accuse each other of the same faults – low quality of communications and high rates. (more…)

]]> http://aaa-finance.net/pocket-sized-telecoms.htm/feed The Web in Warehouses http://aaa-finance.net/the-web-in-warehouses.htm http://aaa-finance.net/the-web-in-warehouses.htm#comments Sat, 22 Mar 2008 12:35:30 +0000 admin http://aaa-finance.net/?p=30 A modern logistics center is comprised of two sections – a warehouse and offices. For the majority of companies, a warehouse is a remote object; therefore, the high-speed transmission of data between the head office and the warehouse is important. However, the high cost of installing telecommunications on the warehouse premises and, correspondingly, the high tariffs for telecommunications for the tenants remains a concern. (more…)

]]> http://aaa-finance.net/the-web-in-warehouses.htm/feed Silence on the Office Airwaves http://aaa-finance.net/silence-on-the-office-airwaves.htm http://aaa-finance.net/silence-on-the-office-airwaves.htm#comments Sat, 22 Mar 2008 12:34:13 +0000 admin http://aaa-finance.net/?p=29 Extensive IT implementation in the commercial real estate market has led office tenants to become evermore demanding. The standard telecoms services package moves with the times and adds new services. However, given the deficit of highquality premises developers and owners are prepared to lose tenants in order to maintain their existing business models in working with the building’s communications operator. Few take into account the fact that the telecom infrastructure can increase their building’s competitiveness. (more…)

]]> http://aaa-finance.net/silence-on-the-office-airwaves.htm/feed Hardware Games http://aaa-finance.net/hardware-games.htm http://aaa-finance.net/hardware-games.htm#comments Sat, 22 Mar 2008 12:33:08 +0000 admin http://aaa-finance.net/?p=28 At the moment IT communications systems are increasingly influential on the business of office building tenants. This means that tenants are making ever more stringent demands on the telecommunications aspect of business centers, which is becoming one of the main competitive advantages when choosing a business center. The telecommunications equipment, which guarantees that the tenant has a highquality connection, now plays a key role. (more…)

]]> http://aaa-finance.net/hardware-games.htm/feed Good Connections http://aaa-finance.net/good-connections.htm http://aaa-finance.net/good-connections.htm#comments Sat, 22 Mar 2008 12:31:53 +0000 admin http://aaa-finance.net/?p=27 In the Moscow market for telecommunications services for commercial real estate competition is steep. In today’s market with a sharp shortfall in high quality office areas it is generally tenants who are losing out in the balance between developers, operators and tenants. However, market experts are convinced that the key future trend will be an improvement in the situation for tenants. (more…)

]]> http://aaa-finance.net/good-connections.htm/feed Battle of Wireless Telephony Begins http://aaa-finance.net/battle-of-wireless-telephony-begins.htm http://aaa-finance.net/battle-of-wireless-telephony-begins.htm#comments Sat, 22 Mar 2008 12:30:37 +0000 admin http://aaa-finance.net/?p=26 For the fourth year now the Wi-Fi race has been unfolding in the economically developed countries of North America, Europe and South East Asia. New wireless Internet zones are appearing in these regions on an almost daily basis. Since these zones are based on technology of the local wireless network standard Wi-Fi (IEEE 802.11), they are usually referred to as “Wi-Fi zones”. (more…)

]]> http://aaa-finance.net/battle-of-wireless-telephony-begins.htm/feed Three Paying Letters http://aaa-finance.net/three-paying-letters.htm http://aaa-finance.net/three-paying-letters.htm#comments Sat, 22 Mar 2008 12:24:43 +0000 admin http://aaa-finance.net/?p=25 Mutual investment funds are gaining popularity as a financial instrument on the commercial real estate market. Developers point out that of closed real estate MIFs they may save up to 25% on investment outlay by using the mechanism. In turn, regular mutual fund shareholders can count on a yield of 25-30%, which is comparable to the yield on the most successful development projects. (more…)

]]> http://aaa-finance.net/three-paying-letters.htm/feed Russian and the Asia-Pacific Region: Developing Markets http://aaa-finance.net/russian-and-the-asia-pacific-region-developing-markets.htm http://aaa-finance.net/russian-and-the-asia-pacific-region-developing-markets.htm#comments Sat, 22 Mar 2008 12:23:27 +0000 admin http://aaa-finance.net/?p=24 Many of the trends that we have observed over the past 20 years on the Asia-Pacific real estate market are now being repeated in Russia. The scenarios for development of real estate in Korea, Singapore, and China have a great deal in common, but there are still constrasts to be drawn. How will the Russian market develop – according to European or Asian models? Jeremy Oates of the international consulting company, Knight Frank, explores this theme in detail. (more…)

]]> http://aaa-finance.net/russian-and-the-asia-pacific-region-developing-markets.htm/feed Money on Interest http://aaa-finance.net/money-on-interest.htm http://aaa-finance.net/money-on-interest.htm#comments Sat, 22 Mar 2008 12:13:08 +0000 admin http://aaa-finance.net/?p=23 When investing in commercial properties in St. Petersburg and the Northwest, Western and Russian companies expect a yield of around 8-10% per annum. In the opinion of financial consultants, the office space market is most dynamic, followed by the industrial and retail segments. (more…)

]]> http://aaa-finance.net/money-on-interest.htm/feed Commerce via IPO http://aaa-finance.net/commerce-via-ipo.htm http://aaa-finance.net/commerce-via-ipo.htm#comments Sat, 22 Mar 2008 12:11:53 +0000 admin http://aaa-finance.net/?p=22 When discussing an IPO, many people mistakenly believe that the value of a company’s shares depends exclusively on said company’s financial indices. Indeed, these same people neglect to consider that each shareholder is first and foremost a person to whom an approach should be found. Moreover, the skill of properly establishing relationships with investors is an entire science without which there could not be a successful IPO. (more…)

]]> http://aaa-finance.net/commerce-via-ipo.htm/feed The Appeal of Russian Cities to Investors: General Criteria http://aaa-finance.net/the-appeal-of-russian-cities-to-investors-general-criteria.htm http://aaa-finance.net/the-appeal-of-russian-cities-to-investors-general-criteria.htm#comments Sat, 22 Mar 2008 12:10:41 +0000 admin http://aaa-finance.net/?p=21 The booming regional markets are causing developers of commercial properties to weigh the attractiveness of a particular place for investors more carefully. This article will recount the initial estimation procedure used to assess the potential of any city in terms of investment attraction and to describe primary development criteria. (more…)

]]> http://aaa-finance.net/the-appeal-of-russian-cities-to-investors-general-criteria.htm/feed Financing Real Estate Development Projects http://aaa-finance.net/financing-real-estate-development-projects-2.htm http://aaa-finance.net/financing-real-estate-development-projects-2.htm#comments Sat, 22 Mar 2008 12:09:25 +0000 admin http://aaa-finance.net/?p=20 It’s a common occurrence for developers to obtain land, receive planning permissions and start on preliminary and even construction work before thinking seriously about financing.
As a result we often come across interesting and once promising projects that have now become long-term endeavors due to the negligence of developers who didn’t pay enough heed to financing at the start of construction. In order to avoid this kind of scenario, experienced and prudent owners first calculate the payback period, create more than one possible financing model, consult specialists and only then switch to planning and construction. (more…)

]]> http://aaa-finance.net/financing-real-estate-development-projects-2.htm/feed Better and better: A year in review and a look ahead http://aaa-finance.net/better-and-better-a-year-in-review-and-a-look-ahead.htm http://aaa-finance.net/better-and-better-a-year-in-review-and-a-look-ahead.htm#comments Sat, 22 Mar 2008 12:08:04 +0000 admin http://aaa-finance.net/?p=19 Ten years ago, few would have imagined that Russia would become the focus of international real estate investment. Today there is little doubt that Russia has made a qualitative leap forward, securing a place among the world’s leading markets.

Over the last five years Russia has made a steady climb upwards. Prime yields in the office market segment have compressed by nearly 1000 bps rendering a Q4 prime office yield of around 9-9.5%. Retail and logistics sectors also experienced impressive compression with prime yields softening 700bps and 900bps respectively. Capital inflows and an improved access to local debt instruments suggest that by the end of 2007 the market will demonstrate further compression.

A year end summary of 2006 finds the weight of demand now supported by international investors from around the globe, with many new entrants from across Western Europe. In 2007 we expect the investor base broadening to include new entrants from such markets as the USA, Australia and South Korea.

Total investment volume for the Russian real estate market in 2006 rounded out at USD4.5 billion, placing it in a similar league to China (USD5 billion). In 2007 conservative estimates see this volume growing to well over USD5 billion. A notable change for 2007 will be the increased weight of foreign capital, expected to top over USD3 billion.

While Russia’s investment market gained important depth in 2006, with increased transaction numbers and scale, it is still capable of attracting a range of investor types. Private investors or corporations favouring more opportunistic ventures are still present, but the trend toward institutional investment is expected to continue through 2007, with the possible entry of pension funds after the presidential election. An ongoing IPO boom in the country is diversifying investment opportunities for local and international investors.

On the back of growing investment volumes and secure economic fundamentals, Russia saw notable increases in consumer spending, placing even greater demand on the retail market. With more than 1.6 million sq m of shopping centre space in Moscow late 2006, we expect retail stock to expand to 2.24 mln sq m by year end 2007 fuelled mainly by an expansion of consumer spending through improved access to personal debt. Despite this growth in supply, market equilibrium is not expected to be met anytime soon.

The 2006 focus for the retail sector was regional development and investment activity. This trend will continue in 2007 with greater attention paid to investment as high quality assets hit the market in select cities. The regional retail investment volume for 2007 is expected to exceed USD1 billion.

On the financial side, Russian banks have prudently managed the challenge of development and investment, though lending rates have not been competitive with foreign banks. Western banks have been more aggressive with better adequacy ratios and capital, allowing them to provide more sophisticated and competitive debt to investors.

Russia’s impending banking sector consolidation, the advent of asset backed securities, and WTO accession all indicate good news for the Russian debt market.

The 2006 demand-supply imbalance on the Russian logistics market should begin to be resolved in 2007, with a number of large-scale schemes hitting the market. Though total market size is expected to grow by more than 30% to 4 million sq m, demand will continue to outpace supply, leaving rental levels stable over the short term.

Prime rents for the Moscow office market reached a new level in 2006 with a designation of a zone around the Kremlin in the city centre. Prime office rents in Moscow are now challenging those of London with rates of USD1200 per sq m per annum positioning the market in second place across Europe. In 2007 we expect these levels to strengthen indicating a clear preference for Moscow as a business location in Europe. This position will be strengthened further with the realization of large scale, high quality schemes in Moscow City, the new financial district.

Russia changed significantly in 2006 and all the evidence is pointing to a strengthening market in 2007. For many international investors Russia’s long term market potential is now comparable to most of the Western European and Asian markets, with opportunities evolving in all sectors and a growing force of international institutions playing an integral role in the future. A growing flexibility of capital and increasingly sophisticated financing and debt instruments (refinancing, mezzanine and joint venturing, to name a few) are becoming more prevalent, allowing investors and developers to pave the way for a more mature and developed investment market.

]]> http://aaa-finance.net/better-and-better-a-year-in-review-and-a-look-ahead.htm/feed Avoiding Loan Rejections http://aaa-finance.net/avoiding-loan-rejections.htm http://aaa-finance.net/avoiding-loan-rejections.htm#comments Sat, 22 Mar 2008 12:07:11 +0000 admin http://aaa-finance.net/?p=18 In our previous column we listed the main types of financing for development projects: direct financing, obtaining funds on the open market and bank loans. This time we will examine one of these options in more detail – bank loans. However, instead of opting for the more conventional approach of simply offering the current standard advice for loanseekers I chose instead to turn the question on its head and explain exactly what you should do in order to make the bank say no. (more…)

]]> http://aaa-finance.net/avoiding-loan-rejections.htm/feed Financing Real Estate Development Projects http://aaa-finance.net/financing-real-estate-development-projects.htm http://aaa-finance.net/financing-real-estate-development-projects.htm#comments Sat, 22 Mar 2008 12:06:27 +0000 admin http://aaa-finance.net/?p=17 It’s a common occurrence for developers to obtain land, receive planning permission and start on preliminary and even construction work before thinking seriously about financing. As a result we often come across interesting and formerly promising projects that have now become longterm endeavors due to the negligence of developers who didn’t pay enough attention to financing at the start of construction. In order to avoid this kind of scenario, experienced and prudent owners first calculate the payback period, create more than one possible financing model, consult specialists and only then start on planning and construction. (more…)

]]> http://aaa-finance.net/financing-real-estate-development-projects.htm/feed Brokers Find the Money http://aaa-finance.net/brokers-find-the-money.htm http://aaa-finance.net/brokers-find-the-money.htm#comments Sat, 22 Mar 2008 12:05:07 +0000 admin http://aaa-finance.net/?p=16 Credit consulting, one of commercial real estate’s consulting services, is recently coming to life in Russian under the name “credit brokerage” and is becoming evermore popular. The emergence of a new type of service is determined by the level of development of the financial and commercial real estate markets and, consequently, influences consulting services’ structure. (more…)

]]> http://aaa-finance.net/brokers-find-the-money.htm/feed Refinancing Arrives http://aaa-finance.net/refinancing-arrives.htm http://aaa-finance.net/refinancing-arrives.htm#comments Sat, 22 Mar 2008 12:03:50 +0000 admin http://aaa-finance.net/?p=15 Elsewhere in the world, re-financing is a common practice in commercial real estate, but in Russia it largely remains an alien phenomenon. While their western colleagues have long learned to take full advantage of this instrument, for Russian developers it is still uncommon. However, with the entry of large Western European banks to the market, and the anticipation of even bigger players’ appearance, re-financing is bound to become an acceptable form of saving significantly on construction loans. (more…)

]]> http://aaa-finance.net/refinancing-arrives.htm/feed The analysis of indices http://aaa-finance.net/the-analysis-of-indices.htm http://aaa-finance.net/the-analysis-of-indices.htm#comments Sat, 22 Mar 2008 12:03:00 +0000 admin http://aaa-finance.net/?p=14 There are a range of specific problems which many companies come across when investing in property. In particular, a problem which teachers at the Property Investment Institute in Chicago (CCIM) call ‘informational inaccessibility’ of the market. Fairly often, specialists give contradictory information about the market. So, on what grounds can we base our investment decisions? Various indicators can be helpful. (more…)

]]> http://aaa-finance.net/the-analysis-of-indices.htm/feed Important Investors’ mechanism http://aaa-finance.net/important-investors%e2%80%99-mechanism.htm http://aaa-finance.net/important-investors%e2%80%99-mechanism.htm#comments Sat, 22 Mar 2008 12:00:47 +0000 admin http://aaa-finance.net/?p=13 Diversity of methods of investing into real estate (purchasing completed real estate constructions for various purposes; purchasing of land lots for building and without the purpose of immediate building; purchasing title for real estate; investing into shares of the companies which own and manage real estate; investments into investment funds which allocate assets in real estate) gives birth to a wide range of investment mechanisms. One of them is using services of a specialised investment bank operating in real estate and, although this notion is not specified in Russian legislation, an increasing number of companies are using the word combination investment bank in their titles. (more…)

]]> http://aaa-finance.net/important-investors%e2%80%99-mechanism.htm/feed Melodramatic Gestures http://aaa-finance.net/melodramatic-gestures.htm http://aaa-finance.net/melodramatic-gestures.htm#comments Sat, 22 Mar 2008 11:42:26 +0000 admin http://aaa-finance.net/?p=12 One of the most remarkable trends of the outgoing year has been business addressing the arts. This means not only traditional patronage and the attendance of trendy performances. After a long break, firms are underwriting the building of stages and concert halls in St. Petersburg. Some developers are even including theatres in their commercial projects. (more…)

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