Real Estate News
Director of Savant, talked to Passport about his real estate company’s list of ongoing projects for fall. “We are delighted to have won the tender for the new Volvo truck factory in Kaluga which solidifi es our position in the region,” he said. Savant’s biggest project in the works is the opening of a hotel in Lotte Plaza, a new luxury goods department store in the center of Moscow. Another recent achievement is the beginning of site works in Tula on a papermill factory for SCA. Like the Kaluga factory, the Tula mill is further evidence that “longer term investors see the benefi ts of switching from distribution to in-country manufacturing,” commented Whitehouse.
Island of Russia
At September’s International Investment Forum 2007, developer M-Industria unveiled ambitious plans for Federation Island, a 250-hectare artificial island in the shape of Russia. “A consortium of Russian and foreign companies – with a number of years of successfully creating complexes on drained territory in Russia, UAE, Holland, Singapore and other countries – has been set up to complete the project,” says M-Industry deputy general director Alexei Topolnitsky. The cost of the project is estimated at 155 billion rubles, part of which will be supplied by foreign investors. Construction of the island, which will be located off the coast of Sochi in the Black Sea, will take place from 2008-2013. Chief architect Erick van Egeraat assured President Putin that the project would be completed according to schedule.
$2 Billion Across Russia
Belgravia CEO Duncan Hickman announced his investment group’s $2 billion joint venture to develop business parks across Russia with Belgium’s Immo Industry Group and Moscow’s Rostik Group. Financial Times cites Hickman as saying that the venture is a response to “increasing demand for industrial space in Russia given the growth of the economy and the arrival of many multinationals.” Oleg Barkov, general director of Knight Frank St. Petersburg, commented that the joint venture has a high chance of success, because it circumvents local partners in developing its own projects. The group will invest in over two million sqm of building on 15 sites, which will ultimately house, among things, fast food chains owned by Rostik.
Russians go to London
Russian private property groups with assets totaling $50 billion will go to IPO next year, reported Financial Times. Real estate advisors Jones Lang LaSalle JLL and Cushman & Wakefield are currently conducting pre-IPO evaluations of at least eight companies, including Don-Stroi, Stroyinkom-K, ST Group Region, DVI Group, LenSpetsSmu Holding and RosEvroDevelopment, who will list in both Moscow and London. According to Felix Evtushenkov, president of Sistema Hals, which attracted $432 million on the London Stock Exchange in 2006, some of the IPOs will fail: “These companies are not ready for open book-keeping, the rules and regulations. And conditions have become harder in terms of leverage.” However, others believe that emerging markets are attractive to foreign investors, as they have little debt.
Casinos Moving Out
By law, gambling barons have until 2009 to relocate casinos outside of the city, but few will wait that long. Vedomosti reported that in late August, Asia, one of Moscow’s biggest and most posh casinos, located on Olympiisky Prospekt, quietly shut its doors. Real estate analysts estimate that large casinos within the Third Ring occupy 10-20 hectares of prime real estate will soon go up for sale. “Around 20% of the casinos can be converted to commercial area and 30% into cultural and entertainment sites,” says analyst Ilya Shershnev. “The fate of the rest is still unclear.” Many casinos can be redeveloped as hotels; however, one challenge is that most casinos have dark interiors, which are not easily convertible.