Russia, too, should merit high marks as an investment destination, with its massive oil reserves and increasingly wealthy consumers. Mark Weiss, president of JER Investors Trust, which has private equity funds in Russia and Georgia, noted that real estate development in Russia has not caught up with its growing middle class. He spoke about an "Ikea-like" store he visited outside of Moscow that had "100 registers, [all with lines] 10-people deep." With that kind of opportunity, you would think there's tremendous potential for retail development. The problem, he said, is funding. "We do development projects ... and the first thing to go [during a financial crisis] is funding for development deals.... There is no lending going on in Russia."
But the fundamental issue preventing many investors from going to Russia and many other markets, Zell said, is rampant corruption. "In Russia, they just steal [your company]," he noted, relating a story about one firm that was taken over by the Russian tax authorities, leaving its foreign owner with no legal recourse. "It's one thing to trade growth for rule of law, but another thing to trade growth for kleptomania."
