Hines and GlavUpDK have marked the 10th anniversary of Park Place, the first project of several real-estate properties developed and managed by the two companies since 1992.
The ceremony, which took place on Dec. 10 at Park Place, a 40,000-sq.-meter towering residential and office complex on Leninsky Prosp., drew high-level executives from Hines' offices in the United States and top functionaries from GlavUpDK, an agency affiliated with Russia's Foreign Affairs Ministry that serves the diplomatic corps, as well as some representatives of Moscow's expat community.
Hines is a U.S.-based privately held real-estate development, investment, and management company with more than 6.5 million sq. meters of real estate and other assets valued at more than $13 billion under its management in the United States and 11 other countries, including Russia.
Speaking at the ceremony, GlavUpDK director Ivan Sergeyev said Park Place which won a federal award for excellence in 1996 for its combination of the latest construction technology with top-scale marketing techniques and professional property-management expertise was one of Moscow's most modern projects in the early 90s.
"This 10th anniversary is our answer to all the sceptics as the project's sterling performance on the city's real-estate market has shown the effectiveness of the property and justified the professional expertise and $72 million investment, as we've so far received $103 million in lease revenues, " he said.
Sergeyev said the partners have done everything to make tenants comfortable at Park Place. "And the lessees have also shown their appreciation, as most have signed or renewed their lease agreements up to 10 years ahead, instead of the traditional short-term lease contracts," he said.
Boris Chaplin, a former Soviet deputy foreign-affairs minister who oversaw the project in the twilight days of communism, said it took some courage to make the decision to launch the project in late 80s when GlavUpDK as a state-financed organization was at a crossroads either to be reformed, given to Moscow City Hall or liquidated.
"However, we were able to find a unique way out of the dilemma by gaining financial independence and retaining a central-management scheme, which has helped us to move GlavUpDK into the free-market economy with little or no problems," he added.
Speaking on behalf of the home office, Staman Ogilvie, Hines' executive vice president at the Houston office, attributed the success to a unique combination of top real-estate professionals and an effective business partnership that has gradually developed into a genuine personal friendship between Hines and GlavUpDK's top executives.
"The joint-venture relationship between Hines and GlavUpDK has been very effective and fruitful, and it will not be an exaggeration to say this is one shining example worthy of emulation in other U.S.-Russian joint ventures," he added.
Alexander Zinoviev, chairman of GlavUpDK-Hines, the joint-venture firm overseeing the two companies' real-estate projects, said the board of directors has approved the budget for 2003, giving the management a clear vision for next year's activities, including launching two new projects a 40,000-sq.-meter office complex with 28,000 sq. meters of leasable space and a 50,000-sq.-meter warehousing facility both in Moscow.
Lee Timmins, a Moscow-based Hines senior vice president and general director for Eastern and Central Europe, said the decade has been more than successful, as Hines has invested about $100 million in Russia's real estate, making it one of the top three investment destinations on the international markets.
"We've always believed in Russia, and even during the 1998 economic crisis which was one of the worst financial disasters in my professional experience we still remained committed to Russia, though there was a strong temptation for us to pull out of the market for good," he said. "But we stayed behind, and one lesson we've learned from the experience is that, if a company is committed to a country, the country will reward that company. That is exactly what has happened to Hines in Russia."
Timmins said he was surprised at the rapid rate of the Russian economy's transformation. "The dramatic, rapid change from the communist system to a capitalist economy and the tremendous mindset changes, which have fundamentally influenced our employees and our partners' behavior, have been unparalleled on other emerging markets," he noted. "And most experts had projected that such changes would only probably be possible in 20-30 years' time, but it took Russia just one decade to get there."
Meanwhile, lessees highlighted the self-contained nature of the complex with almost all social amenities needed for urban dwelling in one location as one of the property's most attractive features.
"The towers have wonderful infrastructure, and the proximity of the residential tower to the office complex only about four minutes' walk makes life a lot easier, especially in terms of traffic jams in Moscow," said Albert Neirynck, head of the Moscow office of Hamburg-based Helm, a chemical giant.
"I live and work here, and my child's kindergarten is also located within the premises," he added.
Riekie van den Brink, the third administrative secretary at the South African Embassy and a tenant at Park Place, said she is satisfied with the property. "In short, I had a choice to move somewhere, but I chose to stay behind because of the amenities and quality of services," she added.