Panel, Conference Presentation
Gaining a Foothold in Russia
Milken InstituteSean Glodek, Steven Hellman, Paul Heth, Mark Stiles, Alexander Kovaler, Alex Covalar
- The ease of doing business in Russia is projected to improve from rank 240 to rank 40 within approximately two years.
- Russian cinema ticket sales are expected to reach approximately $2.1 billion within the next four to five years, positioning the country among the world's top five markets with an average ticket price of $11 and average revenue per screen between $1 million and $1.1 million.
- The Russian economy is projected to surpass Germany to become the largest in Europe by 2020, while the general retail sector is forecast to grow at a Compound Annual Growth Rate (CAGR) of 17% over the next five years.
- Over the next decade, the economy is anticipated to shift from a natural resource model to a consumer-driven services economy, accompanied by increased investment in light manufacturing, automotive components, pharmaceuticals, and food processing.
- The healthcare sector is expected to expand from day spas to include significant private hospital infrastructure and cancer treatment facilities, growing at an annual rate of 30% with EBITDA margins near 40% for leading private chains.
- Financial sector growth is driven by asset management, pension fund reforms permitting stock investments, and the development of mutual funds and ETFs over the next ten years.
- The real estate market is expected to transition from a development-heavy phase to a trading-focused phase over the next decade, with value-add investors executing lower-risk deals and a shift from a handful to thousands of international general partners.
- Real estate investment opportunities are projected to persist in big-box retail, home improvement, and office space per capita compared to other nations.
- Infrastructure development regarding traffic and highways is expected to continue but may remain outpaced by the rapid growth of the middle class and vehicle ownership.
- The middle class is expected to maintain upward mobility with increased confidence and talent retention, including the return of expatriates.
- The online Internet economy is anticipated to continue growing as a large, transparent, consumer-driven sector that remains the largest in Europe.
- The automotive sector is forecast to remain a strong market characterized by high sales volumes and significant investment in dealerships, with the global fast-food industry expected to see a rush of opportunity following the 2014 Olympics and the World Cup.
- Government efforts to address regulatory issues, such as beneficial ownership and electricity rate liberalization, are expected to continue, though the processes are described as taking time.