"Room for a View" is a new twice-monthly guest column on the Russian real estate market.
Moscow's residential real estate firms currently face a complex and potentially overwhelming licensing procedure that has given preference to competitors owned by Russian banks.
It is a system that may well reflect licensing requirements expected to descend in the next six months upon commercial real estate firms as well. The types of residential activities requiring a license and the procedure for obtaining licenses are outlined by Regulation No. 885, issued Oct. 4, 1994, by the Moscow Government. This licensing procedure raises several considerable obstacles.
First, one or more employees of the firm wishing to be licensed must pass an education program given by the Center for the Support of Residential Property Reforms. The course licenses agents to conduct certain activities for a licensed real estate company, costs $680 in rubles, is given in Russian, takes two weeks, and requires passage of an exam.
Residential real estate firms must also obtain a guarantee from a bank or an insurance company in the amount of 50,000 ecus (about $64,000) for reimbursing clients who might suffer losses due to the firm's actions. Only one insurance company, Votek, offers the coverage, and most commercial banks require that the equivalent of 50,000 ecus be kept on deposit with them if they are to give the guarantee. Many of the 175 licenses issued to date by the Moscow Licensing Chamber have gone to bank subsidiaries.
Five types of activities require licenses, with fees for each running about $900. If the firm plans to market its services for hard currency, Central Bank permission is required -- a feat not easily accomplished.
Another hurdle facing many firms is a requirement that they occupy the premises given as the jurisdictional address in their company's charter. If the space they occupy is not privatized, they must produce a registered rent agreement with the organization that holds the property on its balance, and this agreement must be registered with the city or state property committee.
Additionally, the Municipal Property Department requires either two references from licensed companies or a letter of recommendation from The Moscow Real Estate Guild before it will issue one of the documents needed to obtain a license.
At present, the Moscow government has yet to issue to the Moscow Licensing Chamber the requirements for licensing commercial real estate activities, but it expects to receive these shortly. By autumn, commercial brokers could find themselves caught in a procedural web similar to that entangling their residential counterparts.
Jamison Firestone is a partner at Firestone Duncan & Associates.
?The International Real Estate Federation, known by its French acronym FIABCI, extended membership to Russia last month, a move expected to boost the domestic industry's international recognition.
?Turkish developer Enka last month awarded an 11,000 square-meter, five-building contract to the brokerage firm Noble Gibbons to market the first project it has undertaken independent of the city of Moscow.
The contract includes residential and office units for lease on Sretinka Pereulok and luxury apartments for sale on Tsvetnoi Bulvar. Completion of the project is set for this December.
?Swiss-funded KREST Development broke ground April 16 on a 10,000 square-meter office project located on Gogolevsky Bulvar across from Kropotkinskaya Metro.
Marketing for the eight-story Gogolevsky 11, scheduled for completion in the first half of next year, is being handled by Spectrum Properties.
1-room; Russian: $900
Russian Ren: $1,150
Western: $1,433
2-room; Russian: $1,565
Russian Ren: $1,892
Western: $2,417
3-room; Russian: $2,733
Russian Ren: $3,233
Western: $4,083
4-room; Russian: $3,417
Russian Ren: $4,525
Western: $5,750
5-room; Russian: $4,500
Russian Ren: $5,917
Western: $8,417
1-room; Russian: $617
Russian Ren: $792
Western: $1,017
2-room; Russian: $1,067
Russian Ren: $1,550
Western: $1,883
3-room; Russian: $1,717
Russian Ren: $2,267
Western: $3,250
4-room; Russian: $2,817
Russian Ren: $3,750
Western: $4,633
5-room; Russian: $3,383
Russian Ren: $3,833
Western: $5,500
1-room; Russian: $408
Russian Ren: $525
Western: $750
2-room; Russian: $502
Russian Ren: $673
Western: $925
3-room; Russian: $933
Russian Ren: $1,383
Western: $2,183
4-room; Russian: $1,800
Russian Ren: $2,633
Western: $3,283
5-room; Russian: $2,433
Russian Ren: $3,317
Western: $4,250
Moscow's residential real estate firms currently face a complex and potentially overwhelming licensing procedure that has given preference to competitors owned by Russian banks.
It is a system that may well reflect licensing requirements expected to descend in the next six months upon commercial real estate firms as well. The types of residential activities requiring a license and the procedure for obtaining licenses are outlined by Regulation No. 885, issued Oct. 4, 1994, by the Moscow Government. This licensing procedure raises several considerable obstacles.
First, one or more employees of the firm wishing to be licensed must pass an education program given by the Center for the Support of Residential Property Reforms. The course licenses agents to conduct certain activities for a licensed real estate company, costs $680 in rubles, is given in Russian, takes two weeks, and requires passage of an exam.
Residential real estate firms must also obtain a guarantee from a bank or an insurance company in the amount of 50,000 ecus (about $64,000) for reimbursing clients who might suffer losses due to the firm's actions. Only one insurance company, Votek, offers the coverage, and most commercial banks require that the equivalent of 50,000 ecus be kept on deposit with them if they are to give the guarantee. Many of the 175 licenses issued to date by the Moscow Licensing Chamber have gone to bank subsidiaries.
Five types of activities require licenses, with fees for each running about $900. If the firm plans to market its services for hard currency, Central Bank permission is required -- a feat not easily accomplished.
Another hurdle facing many firms is a requirement that they occupy the premises given as the jurisdictional address in their company's charter. If the space they occupy is not privatized, they must produce a registered rent agreement with the organization that holds the property on its balance, and this agreement must be registered with the city or state property committee.
Additionally, the Municipal Property Department requires either two references from licensed companies or a letter of recommendation from The Moscow Real Estate Guild before it will issue one of the documents needed to obtain a license.
At present, the Moscow government has yet to issue to the Moscow Licensing Chamber the requirements for licensing commercial real estate activities, but it expects to receive these shortly. By autumn, commercial brokers could find themselves caught in a procedural web similar to that entangling their residential counterparts.
Jamison Firestone is a partner at Firestone Duncan & Associates.
?The International Real Estate Federation, known by its French acronym FIABCI, extended membership to Russia last month, a move expected to boost the domestic industry's international recognition.
?Turkish developer Enka last month awarded an 11,000 square-meter, five-building contract to the brokerage firm Noble Gibbons to market the first project it has undertaken independent of the city of Moscow.
The contract includes residential and office units for lease on Sretinka Pereulok and luxury apartments for sale on Tsvetnoi Bulvar. Completion of the project is set for this December.
?Swiss-funded KREST Development broke ground April 16 on a 10,000 square-meter office project located on Gogolevsky Bulvar across from Kropotkinskaya Metro.
Marketing for the eight-story Gogolevsky 11, scheduled for completion in the first half of next year, is being handled by Spectrum Properties.
1-room; Russian: $900
Russian Ren: $1,150
Western: $1,433
2-room; Russian: $1,565
Russian Ren: $1,892
Western: $2,417
3-room; Russian: $2,733
Russian Ren: $3,233
Western: $4,083
4-room; Russian: $3,417
Russian Ren: $4,525
Western: $5,750
5-room; Russian: $4,500
Russian Ren: $5,917
Western: $8,417
1-room; Russian: $617
Russian Ren: $792
Western: $1,017
2-room; Russian: $1,067
Russian Ren: $1,550
Western: $1,883
3-room; Russian: $1,717
Russian Ren: $2,267
Western: $3,250
4-room; Russian: $2,817
Russian Ren: $3,750
Western: $4,633
5-room; Russian: $3,383
Russian Ren: $3,833
Western: $5,500
1-room; Russian: $408
Russian Ren: $525
Western: $750
2-room; Russian: $502
Russian Ren: $673
Western: $925
3-room; Russian: $933
Russian Ren: $1,383
Western: $2,183
4-room; Russian: $1,800
Russian Ren: $2,633
Western: $3,283
5-room; Russian: $2,433
Russian Ren: $3,317
Western: $4,250
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