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Opportunity knocks in Moscow for firms willing to commit to long term

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The collapse of the ambitious plan to double the size of the Russian capital has given rise to a flood of more manageable projects, writes Greg Pitcher

Last September an Anglo-American team including John Thompson & Partners was announced with fanfare as winner in the contest to expand Moscow by 155km² and create homes for 1.7 million people.

The competition was an attempt by the Russian Federation Council to re-order the sprawling city and solve chronic congestion and environmental problems.

But politics have stymied the scheme and the Russian Federation’s headline-grabbing project to double the size of Moscow has hit the buffers. Vladimir Putin, re-elected as president in March 2012 after an enforced four-year spell as prime minister, is not thought to favour a contest which was launched in his absence. 

Fred London, partner at John Thompson & Partners, reckons the expansion plan, which included proposals to shift the seat of power, has been ‘overruled’ by Putin. He says: ‘I don’t think he liked the idea of putting the equivalent of Westminster into the equivalent of Croydon. No work is going on at the moment on this scheme.’

There is a pent-up demand for development in Moscow

While this may be bad news for Muscovites, it is not necessarily so for British architects. The programme would have taken many years to finance and push through planning. In its absence a multitude of smaller, more manageable schemes could herald fresh opportunities for UK architects. There is certainly a pent-up demand for development in Moscow, a city whose drive to redefine itself in the post-Soviet era was cut short by the global economic crash in 2008.

‘Before the downturn, a lot of money was coming into Moscow from the West,’ says Michael Graham, director for London and Moscow at PRP. ‘When the Western banks stopped lending, the development market collapsed.’

Aidan Potter, director at John McAslan + Partners, remembers this collapse vividly. He says: ‘We had 15 projects one week, and three the next.’

Fred London recalls going on holiday in August 2008 ahead of a busy autumn. ‘When I got back in September I had nothing to do,’ he says. ‘I would pick up the phone and clients had gone out of business; or, if they were still around, they were putting all new work on ice.’

Worse still, in 2011 Moscow’s mayor, Sergei Sobyanin, began cancelling construction permits for 11.5 million m² of projects in a bid to stamp out high-rise development lacking infrastructure. 

But the city reviewed and simplified its planning, lease signing and building inspections processes and went on to approve 30 million m²-worth of construction contracts.

And the market is moving again. In 2012, the equivalent of almost £2 billion was ploughed into the city by international investors and developers – landing the Russian capital joint eighth place with Washington DC in Jones Lang LaSalle’s league table of top destinations for commercial real estate.

As well as regaining relative economic and political stability, Moscow is also preparing to host a G8 summit next year and football World Cup matches in 2018.

‘Now we have state banks investing and money from the Far East,’ says Graham. ‘PRP is involved in the commercial sector; particularly the growing market for retail. There is also growth in hotels work, owing to a lack of stock, particularly quality mid-range stock.’

AECOM bought a local practice in 2009 to establish a presence in Moscow and now has 250 staff in the city.Managing director for Russia David Whitehouse says: ‘We are starting to see decent upturn since the fourth quarter of 2012. Clients are revamping suspended schemes, particularly ahead of the World Cup.

‘There is a lot of infrastructure and hotels work. I think it is a logical place to look for work; there will be steady growth.’

Aukett Fitzroy Robinson, which has offices in Moscow, expects to see an upturn both in the city centre and in selected pockets to the west of the city.

Chief executive Nicholas Thompson reckons the plan to develop the south-west of the city strangled development in the centre.

He says: ‘The masterplan is a good idea but it is driven by the federal government. If they are not going to, who will fund it?

‘Other areas that will benefit are Skolkovo, which is the Russian Silicon Valley and will host the G8 in 2014, and Rublyovo-Arkhangelsk. These are business-led programmes, but big areas with a whole range of buildings.’ Scott Brownrigg won a 104,00m² business park in Skolkovo.

British practices are well positioned to win work on such new developments, analysts say.

There is an appetite for British architects but local firms are expected to compete more in future

‘There is an appetite for British architects,’ says Potter. ‘I see a lot of French, Swiss and Germans here but there is a high regard for British consultants.’

London adds: ‘The communist era did not value creativity – it was about applying Building System 6843.10. So they import creativity from the West.’

The coming wave of work may be among the last for Brits, however, with local architects expected to compete more strongly in future.

‘The youngsters are growing in experience,’ says London. ‘The days of looking for Western expertise are numbered.’

Despite – or maybe because of – this, British practices looking to cash in on the Moscow market need to make long-term plans.

If you want to dip in and out, it won’t work. You have to commit for the long term.

‘If you want to dip in and out, it won’t work,’ says Whitehouse. ‘You have to commit for the long term. You also have to team up with someone.’

Potter agrees with the need for a long-term view and stresses the need for a relationship with a Russian firm. ‘You need a good local partner both in terms of language and negotiating approach,’ he says.

As well as planning complexities, contracts can be structured differently than in the UK. ‘There is not a culture of being paid for variations,’ says Potter. ‘You should not go into a contract expecting to put in a big bill for a client’s changes.’

McAslan + Partners, which carries out much of its Moscow work in London, makes almost weekly visits to the city. PRP believes having a presence in the city is critical.

‘We were advised that we needed to have an office here to be taken seriously and it proved true,’ says Graham. ‘Working remotely can be very hard in a very bureaucratic country.’

Perhaps because of these challenges, the Moscow market is seen by some as relatively untapped by British architects.

‘The size of the Moscow market is attractive and there are fewer architects per capita than in the UK,’ says Thompson.

‘You rarely compete against other firms from the UK. The British brand and knowledge of buildings is a competitive advantage, yet we recruit locally and the skills are high.’

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