The Real Estate/Financial Complex in Russia
As the 2007 global financial crisis clearly showed, the dimensions of real estate and finance are closely intertwined. Furthermore, this real estate-finance interaction unfolds differentially across spaces. Yet, to this date these two aspects remain under-researched and under-theorized.
This paper seeks to remedy these shortcomings by mapping the ‘Real Estate/Financial Complex’ in Russia. In so doing, it explicitly addresses the relationship between real estate and modern financial practices as well as their differential construction in post-Soviet societies. The study is based on extensive qualitative research – undertaken in Moscow in early 2014 – which investigated the structure of Russian real estate markets, its dominant actors, assets and links to global financial markets. More specifically, the research assessed the relevance of the key organisational parameters driving the financialisation of real estate markets such as: 1) the automation of origination, servicing, managing and underwriting practices in real estate; 2) the adherence to international real estate standards, financing and appraisal mechanisms; 3) state support for institutional mechanisms underpinning the conversion of real estate into financial assets (REITs, securitization, etc.).
The research suggests that Russia is taking clear steps towards the financialisation of real estate. However, this does not reflect a convergence towards the Anglo-American model. Instead, the ‘Real Estate/Financial Complex’ represents one key dimension through which specific interests within the Russian political economy are pursued and power struggles are carried out. For instance, real estate-financial tools – such as REITs – are used in the Russian context to conceal property ownership, prevent hostile takeovers and government raids. These artifices therefore divert from their original purpose of making real estate transparent and relatively risk free and instead mediate the specific power struggles of the Russian political economy.