Cobalt news
Hiring restarts in Russia’s bruised real estate market
Gergely Stewart
11/05/2010
The Russian real estate market is gradually rebounding from its implosion last year with property developers and consultancies starting to hire selectively as the outlook for financing and demand picks up.
On the personnel front, the first trend has been with senior figures going off to set up their own ventures, such as Vojkan Brankovic (ex-head of emerging Europe funds, MGPA) and Marjorie Brabet-Friel (ex-head of M&A, Sistema-Hals) with Apex Capital Partners and Maxim Sterlyagov (ex-Morgan Stanley) with Asset Management Group.
Within the developers, some of the major listed players have restructured their senior directors alongside their debt, bringing in new management as they look to implement their post-crisis business plans. Hiring has on the whole been very limited, however, not surprising given that financing is still only just starting to return and overheads are under stricter control.
The major consultancies have started hiring again, albeit for selective roles and on a far less aggressive scale than pre-crisis. One of the key areas for growth perceived within such businesses, in Russia as well as across CEE, has been in property and asset management services. On that front, rival startups have also been springing up, such as Mayak (a joint venture between Morgan Stanley and a Russian private equity firm) and Standard-Service (set up by Pavel Barbashev, ex-Horus Capital).
Finally, on the investment side, Russia remains off radar for most international investors. Those that are scouting the market cite problems with access to the types of deals they are looking for – Class A income producing office or retail assets in Moscow or St Petersburg. But activity is certainly recovering, with one of the most successful international fund managers in Russian property to date, London & Regional, actively searching for deals, having successfully divested prior to the crisis. Employment opportunities will, of course, follow in this sector but only as fast as the investors return, and will likely be relatively stagnant, within international players at least, for the next 12 months.
Those employers that are in the market still have unprecedented access to personnel. Spoilt for choice, comments amongst a number of international businesses have been that the quality of knowledge and professionalism from local professionals is now at the level where teams no longer need necessarily be led by the seasoned ex-pat. Increasingly, we are seeing such businesses hire locally for senior roles. EC Harris, the project management consultancy, for example, hired Pavel Vishnyakov (ex-Glavstroy) in the first quarter of 2009 to replace Mike Pearce and head their Russia operation.
In terms of pay, however, those employers hoping to get a cheap deal on new personnel will generally be disappointed. Apart from at the very top end, the drop in pay for most levels has tended not to go far beyond 20% pre-crisis levels, with many individuals maintaining pre-crisis salaries. Bonuses, however, are mostly still a distant memory, with employees focusing more heavily on long-term career potential within roles than hitting the jackpot on comp.
Overall, I expect the Russian real estate recruitment market to remain cool for the next six months at least, with even the few investors coming in looking on the whole to build teams only once investment deals have been closed rather than in anticipation of. However, with the fundamentals in the sector still strong, and the pool of top candidates remaining small, the current luxury of choice-facing employers will not remain for long.