International studies

Domres takes real estate lessons to Russia

By Janine Anderson

The real estate market knows no bounds.

It’s a fact that David Domres, vice president of asset management for Irgens Development Partners LLC in Wauwatosa, knows from experience. In November, he traveled to Russia to teach modern real estate investing.

It was his second international teaching gig as a national faculty member of the Institute of Real Estate Management. His first teaching role was in Korea.

And while it might seem unusual for a U.S. real estate organization to show such interest in how Russians or Koreans apply investment management techniques, Domres said there’s a solid financial reason behind the commitment.

“Russian resources are untapped,” he said. “They’re still recovering. If their economic energy is something the United States wants to take advantage of, it’s better if there’s a common system than if it’s a whole other system.”

On the Russian trip, Domres said, he taught 62 students from “all walks of real estate.” They came from Moscow, St. Petersburg and the far reaches of Siberia.

The classes he taught helped students learn about real estate investment and property management, topics that are particularly important in the Russian market.

“Individual ownership of property really just started in the late ’90s,” Domres said.

Under communism, the Soviet government — not individuals — owned property. Now, as the government needs money for programs and services, Domres said, it’s selling property and putting it into the public market.

David Domres stands before Lenin's tomb on the Red Square in Moscow. Photo courtesy of David Domres

He said many Russians recognize the potential the newly available property has for them, and they want to learn more about how to make real estate investment work.

Interest rates are high — as much as 25 percent — and have short amortization periods.

“The concept of vacant space is foreign to them,” he said. “They like to find tenants and then build the building. There, you get a tenant, build the building and hope they haven’t gone somewhere else.”

Domres said high-end residential construction is in demand.

“You can buy downtown residential units for $1 million,” he said. “The people who have money have done very well.

The people who haven’t figured that out struggle.”

His students, Domres said, wanted a better understanding of American and global real estate strategies, and they hoped to use that knowledge to their advantage in the new Russian market.

“People tried to sit down and understand what it’s like to own, manage and sell property in a competitive marketplace,” he said. “At this moment, they’ve got the attention of the local market because they’re Russian. But, certainly, foreign investment is coming to Russia.”

And his students wanted preparation for the competition that’s on the way, Domres said. They learned how to choose properties, develop projects, build and manage their investments, and estimate the money needed to make a project a reality.

But the students wanted the knowledge to compete in the Russian market. Domres said they weren’t interested in taking their newfound real estate prowess to the United States.

And, in the long run, no matter where his Russian students choose to apply what they learned, Domres said helping establish a modern real estate investment culture can only help American-Russian real estate relations.

“U.S. companies are going to be going over there,” he said. “It’s a vast, vast country. On the real estate side there will be a lot of opportunity, but you’ll have to team up with someone who knows the culture, who knows the politics.”