Judging by the fervor which surrounded Moscow's Victory Day celebrations and the growing anticipation as the capital's 850th birthday approaches, it will come as no surprise to Muscovites that the buzzword of choice among Moscow City officials is "renovation."


With only 19 short months to go, Mayor Yury Luzhkov plans to celebrate in style. Central to his plans is the city's transformation from a model of Soviet-era dilapidation into one of Europe's most effective and dynamic real estate markets.


Having set for itself the task of completing 6 million square meters of new and renovated space, the questions of time and money are being keenly felt by Moscow's city government.


Alexander Mussikansky, a Moscow government deputy minister, told the Third International Real Estate Conference that Moscow's real estate potential was only first realized in 1991, when officials conceived the legal framework for wide-scale renovation of the city that included offices, lodgings, retail and new construction.


Moscow soon proved its worth, and in only 2 1/2 years it attracted an estimated $4 billion of investment into 3 million square meters of development. Popular opinion that the majority of investment would come from abroad has been swiftly thwarted, with 60 to 65 percent of investments drawn from Russian pockets.


Yet foreign players have not been idle. Among those most firmly entrenched in Russian soil are the Turks, the Italians and the Germans. Another sect of foreign investor has invaded from the former Soviet republics, favoring their former capital's investment climate over their own.


Although interest has run high in Moscow real estate, many hurdles remain, according to the man in charge of preparing Moscow for its 850th anniversary.


Igor Ponamaryov maintains that Russian investment alone will not take the city to the finish line. But while the answer lies in foreign capital, he says part of the solution must include serious revisions in the city's 50-50 procedure for awarding contracts, whereby investors retain only half of the completed building.


"The documentation procedure is admittedly a complicated one -- a hangover from a centrally planned economy," he admitted recently. "It seems that relations here have changed faster than the bureaucratic infrastructure."


Efforts to bring the Russian bureaucracy into the 1990s include the replacement of a multitier procedure with one or two stages, which has dramatically accelerated renovation and construction in the heart of the capital.


But despite this, old fears linger in the minds of both investors and the government. Ponamaryov confirms that there are many complications and misunderstandings, some fueled by internal problems within the city government.


But solid contracts, particularly with the city, will go a long way in removing the doubt and fears that investments will be lost.


At the same time, firms interested in investing in the city will undergo stringent checks of their solvency in an effort to weed out undesirables and reinforce the belief that Moscow real estate is serious business with serious returns.


A quick tour through the heart of the city proves Moscow role as a player on the world's real estate stage, a position evidenced by such projects as The Hotel National, Church of Christ the Savior and Manezh Square. The city's birthday celebration may prove an opportune moment for Moscow officials to flout what they have and hope the foreign audience takes notice.





Joanna Finburgh is the former Moscow representative of the monthly magazine Estates News.