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Knights of the Vine RUSSIA


Moscow City: A City Within a City
By Valeria Cheshko
Moscow is famous the world over for three landmarks: the Kremlin, Red Square and St Basils Cathedral. Be prepared to add to this list a new landmark: Moscow City the symbol of Russia in the 21st Century. It is an ambitious project; it is costing billions of dollars; but where is it exactly? Moscow City is a building project as important and significant as the original construction of the Kremlin. The Kremlin, however, as we know it today, was built and re-built over many centuries. Click here to open the architectural drawing courtesy of Mosprojekt-2: The City of Capitals and Wedding Palace Tower

The Terminal, Moscow City.
Architectural Drawing Courtesy of Mosprojekt-2

Moscow City will cover an area of land twice as large as the Kremlin, and it will all be built within the next four years. Moscow City is the evidence of Moscows determination to stand alongside the worlds leading international business centres New York, London and Tokyo. Not only is it one of the most important socio-economic programmes in Moscow itself and all of Russia, but it also represents one of the biggest investment and building projects in Europe.

This new business, residential, shopping and entertainment metropolis is situated only 4 km from the Kremlin, on Krasnopresnenskaya Naberezhnaya, on the bank of the Moscow River in the Presnenskiy municipal area. Before the 1917 revolution, and during the Soviet period, this area was a working class district of the city, known most of all for the Trekhgornaya Manufaktura, a textiles factory founded by the Prokhorov family in 1799.

Currently, about 60 hectares of land are under development. This district is the only development site in Moscow where a business centre of such a scale could be created. The total area of all buildings planned to be opened by 2011 will amount to about 3 million square metres, and it is estimated that some 350,000-500,000 people will work, live in, and visit the complex every day.

Moscow City, if everything goes according to plan, will not be a typical financial district, such as Wall Street, which sleeps at night (except for the investment bankers, that is), but will be a small city, alive day and night. The plan is for it to become the heart of Moscows business activity. It will have an excellent direct transport connection to Sheremetevo Airport and feeder roads into the main roads of Moscow, as well as its own mini-metro line. Some experts in city planning perceive it as the next stage in the development of contemporary life in big cities all over the world a mini-metropolis planned so that its citizens (note the idea that they will somehow be living apart from the rest of Moscow) will be living, working and relaxing in optimal conditions. There are questions, of course. For example, will Moscow City perhaps become not a city within a city, but, rather, an up-market ghetto in which a small, rich and highlypaid elite, will live and work in luxury, cut off from the surrounding Muscovites? Or will it act as the catalyst for the regeneration of surrounding areas of the old city, in which everybody benefi ts? The jury is still out.

Federation Tower.
Photo by Jason Platt

The project was first initiated at the beginning of the 1990s by the City Government of Moscow, and this active support and participation has been crucial to the progress of the development. In order to manage the project a public company CITY was created in 1992 specifi cally for this purpose. Its function is best described as that of a general management company which is responsible for overseeing the initial creation and development of Moscow City as well as its subsequent exploitation. CITY is also a general contractor and both landlord and lessor.

Overall responsibility for the architectural planning and design of Moscow City belongs to the architectural studio No. 6, which is a part of the large Moscow practice Mosproject-2 named after M. B. Posohin. This group, headed by Gennadiy Lvovich Sirota (who is offi cially the Chief Architect of Moscow City) is in charge of overseeing the design of the complex as a whole and agreeing the details of individual projects. Each and every building lot (there are 20 in total at present, with more planned) has its own discrete investor and architect.

As outlined by Mosproject-2 Moscow City will comprise a cluster of offi ce towers in which tenants will include leading Russian and international companies, fi nancial institutions and governmental bodies. In keeping with the idea that this is a city within a city, it will have everything one can possibly need: restaurants, shops, fitness centres, parking lots, parks, hotels, residential apartments, offi ces, governmental authorities, etc.

The dominant element of the City will be the 430-metre tall Federation complex located on lot number 13. It will house offi ces, a fi ve-star Hyatt hotel, and top-fl oor restaurants with panoramic views. The tallest building, however, will be the 118-fl oor offi ce-hotel-residential Russia Tower designed by Norman Foster that will reach 600 metres in height. Both the City Government of Moscow administration and the Moscow City Duma are moving to Moscow City. They will be located on two lots numbers 1 and 15. As of January 2007, the last of the three buildings that will form a business centre belonging to Enka (on lot number 10) is near completion.

Wedding Palace Tower, Moscow City. Architectural Drawing Courtesy of Mosprojekt-2

Of the 20 lots that are to be developed in the area, only one is predominantly residential the City of Capitals. We look at City of Capitals in more detail later on but it seems clear that the success of Moscow City is dependent on the success of the City of Capitals, and vice versa. Are there enough people willing to pay the very high prices being talked about for apartments in the City of Capitals? No matter how impressive the apartments or the views will be (and they do look good in the drawings), potential buyers will be looking at what else is on offer in the surrounding area. If it really will be like Tverskaya or Patriarchy Ponds, bustling with restaurants, caf s and shops, then people will come. But if it looks too much like a fi nancial district, or the infrastructure is not what the advertising says it will be, then the City of Capitals could look a little empty.

There will be apartments offered in other buildings as well, including those earmarked for hotels and business centres. This is something new for the Moscow real estate market, and represents a new type of investment for potential private investors looking for a healthy return on capital. It is expected that these apartments will be competing for customers with the five-star hotels as well as the realtors offering apartments in elite residential complexes. It is too early to say which apartments will be the most popular.

Naturally, a project on such a scale as Moscow City is not free from a number of challenges. There are any numbers of critics who question if Moscow is yet ready for a city within a city. Will there be enough tenants and buyers to fill so many office towers and residential units? Or will Moscow City be a repeat of Canary Wharf in the London Docklands, which all but bankrupted the Reichmann Brothers in the 1980s, but who hung on grimly until they were saved by the later upswing in the world economy. If the Russian economy is so dependent on the price of oil, and this is what is fuelling the development of Moscow City, what happens if a decline in oil prices leads to a decline in the value of Moscow real estate? Is Moscow City a wise investment, or is it the most visible froth on top of a speculative bubble?

In fact, at the moment, the biggest problem facing Moscow City is a more prosaic one, namely the very big challenge of coordinating a large development site where every lot has its own architect and investor. The multitude of architects, each one of them with a different design and vision, means the task of making Moscow City an harmonious ensemble is a very diffi cult one. The trick they have to pull off they being Mosproject-2 and CITY is to allow for the individuality of each architect, create a cohesive ensemble of buildings, and blend in with the rest of Moscow.

It is generally agreed that the ultra-modern Moscow City has to somehow integrate well with the rest of Moscow its red Kremlin, its golden and multi-coloured onionshaped domes. In order to achieve this, a number of measures have been adopted. There is a company which specialises in the colouring of buildings, Moscow Centre for City Colours, which has a unique database on the colours of buildings in the capital. This company is in charge of designing a colour scheme, including surface textures, for all of the buildings in Moscow City. A further step in the essential harmonisation of the overall project is the careful use of landscape design (GlavApu is the company doing this), which includes the planning of pedestrian roads, green areas, sculptures, fountains, and all the other myriad of details which could make or break the success of the project. Finally, there is also a need to determine a lighting solution for the Moscow City complex, which is being done by Svetoservis a leading Russian company in this field. The extent to which people think Moscow City is a stylish place to live and work will determine whether or not they want to go there.

If you think that Moscow City is something too big to think about, then you will not want to know about the plans in the pipeline for City Park and Big City. The name City Park has already been designated for the area of land on the bank of the river opposite Moscow City. Modernisation and development plans are under way to upgrade the residential buildings there and create a high-class residential area with a prime view of Moscow City. The name Big City refers to an additional 1,000 hectares adjacent to Moscow City that has already been earmarked for future development. These are situated to the left of Moscow City, alongside the river, and include the planned Olympic Village. The ultimate aim is to remove all of the industrial buildings, and build many new residential buildings, recreation and shopping centres. It is estimated that by 2010-2020, in addition to the some half-a-million people expected to have moved to Moscow City, a further 130,000 people will be living in Big City, in an office and residential area comprising about 20 million square metres of buildings.

The Russia Tower

When it is built (in 2010/11) the Russia Tower will be the tallest naturally-ventilated tower in the world and the tallest tower in Europe. The tower is being built by STT Group, and is being designed by the British architect Norman Foster and his practice Foster and Partners. We spoke with Foster and Partners about the building which we believe is going to become as famous as St Basils Cathedral.

What is so special about the tower?

The Russia Tower taller than any other building in Europe is a striking new addition to the dynamic high-rise skyline of Moscow City. With its unique form, this new landmark will be visible from the heart of Moscow.

What is unusual about it?

The building continues the practices investigation into the nature of the Tower, taking structural, functional, environmental and urban logic to a new dimension.

What can be said about the design?

Based on a highly effi cient geometry derived from the triangular plan, the vertical city is a powerful triumvirate of three arms that meet at a central green spine running the full height of the tower. Wider at the base and tapering towards the top, the pyramidal form is elegant and slender in profi le, and benefi ts from a highly efficient composition to achieve the maximum stability with the minimum structure, as well as the most effective distribution of space.

What will be in the tower?

At ground level, the dramatic and vibrant gateway into the site slopes downward into an inverted pyramid that houses an extensive retail space and a public ice-rink. The site is well-connected to Moscows world renowned underground transport system, and there is also underground parking provided. At ground level, there are three separate addresses, for office, hotel and residential, and rising up the centre of the building, there are a series of green skygardens that draw in natural ventilation and provide key circulation and social space.

There will be apartments?

The higher floors containing residential and hotel accommodation are designed as a series of modular units that can be individually configured. Apartments benefit from fresh air, natural light, double or triple height volumes and access to skygardens, creating a unique lifestyle in the heart of Moscow an opportunity to escape the city within minutes, while benefi ting from a diverse choice of amenities and access to a vibrant community. At the summit, a publicly accessible viewing deck with cafes and bars creates a magnetic new attraction for both visitors and residents of Moscow.

The Russia Tower

Architect. Foster and Partners, London, Norman Foster, Mouzhan Majidi, Andy Bow

Client. STT Group, Moscow

Location. Located in Moscow City, Moscow

Building Type. Mixed-use, super-dense, vertical city for 25,000 people

Uses. Offices, hotel, shopping, leisure and residences with private gardens, Public spaces and observation deck
Site Area: 21,935m2
Total Gross Area: 520,800m2

General Building Data:

Height to top of building 600m
Height to top occupied floor 500m
Width of floor plates 21m
Typical floor to floor height 4.25m
Number of lifts 101
Number of car parking spaces 3680
Number of floors above ground 118

Structural System. Composite steel and concrete fan column superstructure, Reinforced concrete core 21m clear span steel trusses with concrete on steel deck for office floors, Steel beams with intermediate columns with concrete on steel deck for the hotel, serviced apartments and residential floors

Sustainability. Tallest naturally ventilated tower in the world. Shallow 21m floor plates to maximise daylight and natural ventilation potential. Triple glazed high performance low energy facade. High-end comfort levels throughout. Photovoltaic cells feed electricity back into city grid, equivalent to lighting office space all year. Energy recycling within the vertical city reduces heating demand by 20%. Potential for thermopiles and river water cooling.

Architactural Drawing Courtesy of Mosprojekt-2

What the experts think

We spoke with Alexander Shatalov, Partner, Intermark Savills, about Moscow City and in particular the "City of Capitals.

What is your opinion about investing overall in Moscow City?

Embankment Tower 2007.
Photo by Jason Platt

The Moscow City district as a whole is one of the most promising from an investment point of view because it will be the new business centre of Moscow.

What do you think about the level of prices per square metre in the City of Capitals at the moment, and what is your prediction for prices at the moment of completion of the building?

Looking at similar foreign developments, for instance the Pan Peninsula project in the Canary Wharf district of London, the current level of prices in the City of Capitals allows for a subsequent growth in prices. This is with the condition that the developers have a wise sales policy allowing a good balance between buyers looking to live in the towers, and investors, whose ultimate aim is the profi table resale of apartments immediately after the completion of the building.

Who do you think will be interested in purchasing apartments in the City of Capitals?
The profile of the potential buyer of such type of real estate is quite broad. Apartments situated in either the Moscow or St Petersburg towers will undoubtedly interest both Moscow and regional Russian businessmen, as well as people purchasing apartments for subsequent letting.

Do you think that foreigners will be interested in investing in the City of Capitals?

The majority of foreign companies still prefer not to buy apartments for a temporary stay of their employees, but to rent them.

Could you comment on the general situation in the Moscow real estate market?

The real estate market for elite residential areas is literally changing in front of one's eyes. Qualitatively, new projects are emerging, and a buyer can choose between an apartment in a skyscraper, an extravagant loft or living in an exclusive club house with a few select apartments. Now there is the City of Capitals. It is an exciting time.

We spoke with Paul Blackman MRICS, Regional Director, Office Department, Colliers International Russia & CIS, about office development in Moscow City.

"Moscow City is the largest investment and development project in Europe and will truly become a city within a city.

It covers approximately 1 square kilometre, and envisages the completion of approximately 2.5 million square m of office, retail, hotel, residential and recreational accommodation. It is a logical step in the evolution of the Moscow office market; as city centres become more congested and landplots for development of large buildings become scarcer, both developers and occupiers look for alternatives. London has Canary Wharf, Paris has La Defense Moscow City is Moscows equivalent.

The first buildings in Moscow City have been successful. The Embankment Tower complex of Enka has been successful in attracting a range of occupiers, including some of the most prominent multinational companies. The first phase of the Federation Tower complex of Mirax was believed to be 100% sold prior to completion.

The North Tower project of SeverstalTrans, that will be completed during the third quater of 2007 is experiencing strong levels of demand from both international and Russian occupiers. We are sure that North Tower will be a success, as in addition to high quality office space it offers the best parking ratio available in Moscow City and a wide range of amenities for tenants, including conference facilities, banking, retail, cafes, restaurants, a fitness centre.

Rental levels for Grade A space in Moscow City are comparable to rental levels for Grade A space within the Garden Ring, with upper fl oors with views of all of Moscow commanding premium rents. However, as with all discussion of rents and occupation costs, there is a tendency to focus too heavily on headline rental rates. Well-advised occupiers will look at other factors such as the efficiency of the building, the costs of fit out, and any rental indexation that might apply, and will compare different buildings to determine the net present cost per employee over lease length. This measure can then be balanced against more subjective factors such as the image of the building and location. When considering rental rates in Moscow city it is important to consider the fact that the costs associated with constructing a tall building are often signifi cantly higher than those of a lower rise building.

The City of Capitals

Architectural Drawing Courtesy of Capital Group

The two residential towers that make up the complex called the City of Capitals are meant to reflect the idea of a united Moscow and St Petersburg. The towers are situated on a prime lot on the bank of the Moscow river, the fi rst line of the building area.

City of Capitals will unite living, business, commercial and recreational areas under its three roofs. It will house offices, shops, a Spa, fitness centres, and luxurious apartments. It will also have the largest underground parking lot in Moscow City 6 levels with enough space for 2,100 cars.

But most importantly, the City of Capitals is unique as it will become the first ever residential skyscraper in the world. Moscow Tower is the tallest one, with 73 floors reaching 274 m above ground level; while St Petersburg Tower has 62 floors and 235m of height. The common base of the towers and the connecting block in between has 18 floors. The podium (floors 1 to 3) will be occupied by boutique shops, restaurants, a fitness centre and administrative rooms; while floors 4 to 17 are reserved for offices. Starting from the 19th floor all the way up will be the residential area apartments, of which there are five types:

  • De Luxe: 101,9 106 sq.m.
  • Superior: 181,3 199 sq.m.
  • Grand Superior: 181,9 208,5 sq.m.
  • Executive: 217 241,7 sq.m.
  • Presidential: 215,5 234,7 sq.m.

The price per square metre depends on the viewing characteristics which are determined by the floor level and location on the floor. Apart from the regular residential apartments, there will also be apartments under hotel administration on the upper floors. Both options will be covered by a 24-hour room service and concierge.

Capital Group is the development company responsible for the City of Capitals, the two primarily residential towers being built in Moscow City. Designed by the US architectural fi rm NBBJ, the two towers are based upon the utopian style of the Russian Constructivists of the 1930s. We interviewed Alexey Belousov, Commercial Director of Capital Group, and asked him about the building of the largest private residential construction project in Russia.

When did the building of the City of Capitals start?

The development of the concept of the project began three years ago. The official laying of the first stone of the Moscow Tower took place in December 2005. From that moment on construction has been taking place.

At what stage is the process at the moment?

At the moment the works to raise the sixlevel underground parking lot are finished, and now we are at the 10th-11th floors.

When will the City of Capitals be finished?

The project is expected to be finished in the first quarter of 2009. What is the cost estimate of the project at the moment? The total amount of investment in the project will total about $450 million.

What is the current selling price per square metre in an apartment in the City of Capitals?

The price for one square metre in the City of Capitals ranges from $10,500 to $15,700 depending on the floor level, type of apartment and the location on the floor, which is directly connected to the view.

Construction of St.Petersburg and Moscow Towers, the City of Capitals.
Photo by Jason Platt

Where do you see the price per square metre going in the future?

Based upon world market levels, we think that one square metre in a completed tower will come in at about $30,000-35,000. We think that by the time we are ready to present the towers for inspection to the city authorities, that the cost per square metre will already have risen to something like $25,000.

How does Capital Group evaluate the demand for apartments in the City of Capitals?

It is important to keep in mind that all Moscow City projects are different, but in particular there is a demand for apartments situated on the first building line, that is on the bank of the Moscow river, which ensures breathtaking views from the windows. If we talk about an investment in an apartment, then it is important to consider the exclusivity of the project, the quality of service, design, reliability, status and the uniqueness of the concept.

Are people buying apartments offplan to live in, or for speculation?

We believe that the majority of apartments are being purchased to live in.

How much on average will an apartment cost in the City of Capitals?

The average cost of an apartment will be about $1,500,000.

And what about the rental market?

We think that apartments with 100 square metres of floor space will be bringing in a monthly income of $15-20,000. Here, we are talking about a minimum guaranteed return on capital of 15-20%. It is essential to take into account also the fact that, as we see it, real estate of this type will be rising in price every year.

The big question

Architectural Drawing Courtesy of Capital Group

Now that you know what is being planned, and what is already being built, should you be thinking about moving your office to Moscow City, booking a room in advance in the 5-star hotel, or buying an apartment off-plan in one of the towers of the City of Capitals? The answer, surely, depends, in the final analysis, on what you think is going to happen in Russia, and to the Russian economy. Is it all blue skies in the future over Russia and Moscow City because of the fundamentals which say that with so many natural resources Russia can only go up? Or is it a more grey-looking sky because of the excessive dependence on oil, and a history of unstable politics?

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