5. Financial Transparency – Weak
5.1 Market Stability
5.2 Independent Asset Valuers
5.3 Data Standards
In-Country Assessment Information


5. Financial Transparency – Weak


Goal – A well developed and transparent financial system that includes strong supporting institutions and highly trained and ethical professionals that contribute to effective financial intermediation and deep and broad access to capital and financial services


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5.1 Market Stability


Core Question: Are market risks sufficiently transparent and diversified so that efficient capital allocation can occur? No – Very Weak, there is a low level of financial transparency in the market, which is a barrier to growth in investment and undermines the trust of credit institutions in real estate market participants.


Financial Reporting

5.1.1   What is the strength of the country’s auditing and reporting standards? Very Weak –  123th out of  144; Score 3.8 out of 7, information in financial reports is often inaccurate. The main reasons for this are the use of tax evasion schemes (due to high taxes, including property taxes) and incompetence in preparing financial reports.


Financial Services

5.1.2   Does the financial sector provide a wide variety of financial services to businesses? Very Weak –  117th out of  144; Score 3.7 out of 7

Source: The Global Competitiveness Report  2012-2013, World Economic Forum


Insolvency Process

Strong – Ranking –  53rd out of  185 Trend  

5.1.3   What is the average time to complete bankruptcy proceedings? 2 years

5.1.4   What is the cost of bankruptcy proceedings as a percentage of the estate? 9%

5.1.5   What is the recovery rate of bankruptcy proceedings?   43.3 cents on the dollar

Source: Doing Business  2013 – Closing a Business



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5.2 Independent Asset Valuers


Core Question:  Do trained, independent and ethical asset valuers exist for all types of assets? No – Weak, the value of real estate assets stated in financial reports does not reflect their actual value.


Survey Questions


SQ 17  How easy is it to find a valuer who implements International Valuation Standards? –   Strong – Several Russian valuation organizations belong to the International   Valuation Standards Council.

Civil Society Resources: International Valuation Standards Council  

The Russian Society of Appraisers



SQ 18  What is the level of training of valuers? Weak –while appraisers are required by law to follow various methodologies, there continue to be disputes with different valuers giving significantly different values for the same property.  




SQ 19  Are opinions offered by valuers free of influence from parties to the transaction? No – Weak, tax evasion schemes make it impossible to appraise the true value of a company’s assets.

Source – The Chamber of Commerce and Industry of the Saratov Province



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5.3 Data Standards


Core Question:  Is accurate property information available electronically in formats that are consistent with international standards? No – Weak, there is no single electronic data base containing information on real properties.


Survey Questions

Sales & Operating Data

SQ 20  A multiple listing service is an electronic exchange system where brokers and agents can widely share contracted real estate listings of properties that are for sale. Do multiple listing type services exist? No – Weak

SQ 21  Do resources exist for obtaining building income and expense estimates? No – Weak, although the Russian Guild of Realtors is working closely with international organizations to propose uniform legislation and regulate the market.

Civil Society Resource: Russian Guild of Realtors


Interchange Formats

SQ 22  Do electronic data interchange formats conform to international standards (ebXML – electronic business using extensive markup language)? No – Weak, although the National Settlement Depository has recently launched an EDI service.

Source: National Settlement Depository

Civil Society Resource: Open Standards Consortium for Real Estate International


Technical Standards

SQ 23  Do building codes and office building measurement standards (ANSI/BOMA Z65.1) conform to international standards? Unknown


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In-Country Assessment Information (as of February 2012)

Valuation Profession

FQ19 How many independent valuers exist in the market? Can small businesses obtain fair valuations for property they want to buy or sell?


FQ20 What are the valuation standards and do they conform to international and regional standards?

A rapid transition to international financial reporting standards is currently underway.


FQ21 What valuation methods and techniques are used in the market?

The requirements that appraisers must meet and the manner in which they perform their work are regulated by law. Appraisers are required to follow various methods, the use of which can produce different values for the same property and give rise to disputes. As a result, the value of a property can fluctuate significantly, depending on the appraisal method. This all indicates that there is a low level of financial transparency in the market, which is a barrier to growth in investment and undermines the trust of credit institutions in real estate market participants.


Data Availability

FQ22 How available is information for commercial properties that are for sale or that have been sold?

Databases are currently being created to consolidate information used by appraisers, which in turn will make their work more transparent.


Source: The Chamber of Commerce and Industry of the Saratov Province


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