Knight Frank, PMC Join Forces
International property consultants Knight Frank have entered the Russian market through a merger with local company
Property Marketing Consultants, or PMC, the company announced last week.
"The Russian economy is driving an extremely dynamic property market and the link up with Knight Frank is very
exciting," Kirill Starodubtsev, managing director of PMC, said in a statement. "We will be able to offer
international clients more sophisticated services in the areas of leasing, acquisition, valuation and
investment."
PMC, which will change its name to Knight Frank Russia, will continue to offer realty services from its nine offices
around the country. Founded in 1996, it is established in Moscow, St. Petersburg, Yekaterinburg, Kazan, Krasnodar,
Nizhny Novgorod, Novosibirsk, Rostov-on-Don, and Samara, according to a company statement. Its network of agents cover
60 of the 89 regions, the company said.
London-based Knight Frank, one of the oldest realty consultants in Britain, is best known for its high-end
residential property services. However, through its alliance with U.S. real estate practice Grubb & Ellis, it has
200 offices in 30 countries and employs over 9,000 people worldwide.
In 2002, the company valued $253 billion worth of land and buildings and had under its management properties worth
$33.4 billion. In the same year, the company's total transaction volume for commercial real estate space reached
11.4 million square meters..
In the mid-1990s, Knight Frank was a consultant to Moscow City Hall on the reorganization of the Rossiya Hotel, as
well as the city's ambitious plans to privatize several Soviet-era hotels by 1997.
Christopher Bell, managing director of Knight Frank Europe, said in a telephone interview from London that the merger
came at the right time, as the Russian real estate market was increasingly being recognized by Western investors.
"This is a great opportunity for us to enter the huge domestic market, while offering our international
capabilities to Russian investors," he said.
Bell added that Knight Frank was "aspiring to become the leading service provider in Russia," but did not
cite any further plans for the company's expansion in the country.
However, through a merger with PMC, Knight Frank aims at acquiring a solid stand on Moscow's office market and
the leading role in the warehouse and industrial sectors.
According to Andrei Petrov, director of PMC, the company will be known as PMC/Knight Frank until the end of the year
and will switch to just Knight Frank Russia on Jan. 1 2004.
"The benefits of joining with Knight Frank are very significant," Petrov said. "In addition to a great
expansion in the office and industrial sectors we will get exposed to the promising residential market, where Knight
Frank has been traditionally very strong."
Petrov said the fact that Knight Frank, "one of the most conservative companies in the field," decided to
enter the Russian market, despite the persistent negative stereotypes of the country, signified a definite change of
perception.
"When one looks at the growth dynamics here one cannot fail but be impressed," he said.
Gerald Gaige, head of Ernst & Young's real estate advisory services, said the entry to the market of another
major international real estate consultant in addition to the "big four" already present here -- Colliers
International, Jones Lang LaSalle, Noble Gibbons/CB Richard Ellis, and Stiles & Riabokobylko, the local affiliate of
Cushman & Wakefield Healey & Baker -- signified "another recognition of the Russian market as
attractive."
Natalya Kurashova, manager at the City Estate real estate company, said the arrival of companies like Knight Frank
may "stimulate large international organizations to invest in the Russian market, particularly in office
construction, since demand for them remains high."
But Sergei Riabokobylko, a partner at Stiles & Riabokobylko, called the merger "quite strange."
"Since Knight Frank is renowned as a residential consultant, it seems strange they would pick PMC of all
companies because it has no experience in this sector," he said.
PMC's Petrov said the company was only beginning to work with residential property. Last month PMC and British
real estate developer Galliard Homes organized a three-day presentation of high-end London apartments at the Ararat Park
Hyatt Hotel in Moscow.
Ilya Shershnev, director for development at Swiss Realty Group, also said Knight Frank's decision to team up
with PMC was "not logical," because PMC had really only worked with commercial property.
"If the company wanted to enter the market by acquiring a local player, it would make more sense to acquire a
company that works in all the segments, like Penny Lane or Blackwood."
On the other hand, entering the Russian market was logical because of its rapid growth and buying a "cheap"
company and turning it into the market leader might make more sense than starting from scratch, Shershnev added.
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