CEOs’ Opinions & Prognoses

The negative changes in the Russian economy in the second half of 2008 have clearly shown the level of Russia’s dependence on the global economy. The huge volume of capital flight from the stock market and the collapse in oil prices became an unpleasant surprise not only for the Russian government, but also for the overwhelming majority of analysts. It became clear that Russia had not become the promised ‘island of stability’ capable of sheltering investors and companies from the raging financial storm. Quite the contrary, some key sectors of the economy, such as the construction sector, have found themselves at the epicenter of this crisis due to their enormous dependence on cheap foreign loans. Indeed, nobody could have even imagined that a considerable number of construction projects would be frozen in Moscow. These and other negative trends showed that Russia has clearly not correctly assessed its own economic position with respect to the global economy and that it was obviously not ready for this crisis. 

Company’s achievements in 2008 and plans for 2009

"These and other negative trends showed that Russia has clearly not correctly assessed its own economic position with respect to the global economy and that it was obviously not ready for this crisis."

Despite the liquidity shortage and the subsequent acute crisis in the construction sector, our company was able to win more projects, and thus more than doubled its turnover in 2008, thanks to long-term contracts and its reputation in the industry. One of our most outstanding achievements is the successful completion of the design of the engineering systems for the Mirax Plaza. For our company, the experience obtained in the productive cooperation with one of the most demanding clients in Russia is a source of pride. In May 2008, we adopted an anti-crisis strategy, which has enabled us not only to avoid personnel reduction, but also to grow by as much as 50% in some departments. Though the planned targets for 2009 have yet to be confirmed, the company’s board, however, is confident that 2009 will, in any case, still be a year of growth and development. For instance, we plan to considerably increase our market share of the construction design services markets in Moscow and other regions and continue to realize our expansion strategy to include more industrial projects and all types of commercial objects. 

Forecasts on Russian economy in 2009 

The ‘crisis spring’ has only now started to unwind. Therefore, we could in the near future see even larger drops in oil prices caused by recessions in the United States and EU, subsequent decreases in the purchase of mass-produced products in the East and reductions in oil consumption by China and India. Next year, we predict a considerable number of real-estate developers will minimize their operations. However, we shall see another tendency, where large companies, which own land plots, will actively begin higher specification designs of real-estate projects with the end goal of developing properties on these plots. Such design works do not demand substantial investments, and as a rule, are carried out at the expense of the land owners or developers and do not need bank financing. Besides, in crisis conditions, government officials will become more compliant both in the approval process and financing of infrastructure projects. Of course, every crisis eventually comes to an end, and when this will happen, companies, which will have survived the crisis and come to the new growth cycle with the highest quality real-estate projects, will be in a better position to apply for and receive priority financing for their projects. We expect the situation will gradually start to return to normalcy by the end of 2009.