Real Estate


Q4 2007

Editors' View

  • November 01, 2007
Only a few years ago the idea of retail developers looking at smaller provincial cities would have seemed inconceivable. With much of the population living on the breadline, the game just wouldn't have been worth the candle. But now it's hard reality - with the market humming in Moscow, St. Petersburg and all the other major cities, developers and investors are turning their attention to cities with a population under the 500,000 mark. By Russian standards these aren't that big places, by the way.

Belgravia to Invest $2 Billion Across Russia

  • November 01, 2007
New Jersey-based fund manager Belgravia has announced a $2 billion joint venture called ImmoRosIndustry to develop a production and distribution facility in Moscow for a U.S. flooring manufacturer and will build industrial parks in St. Petersburg, Rostov-on-Don and Novosibirsk, followed by Moscow, Yekaterinburg and Samara, Bloomberg reported.

Deutsche Buys Plots Outside Moscow

  • November 01, 2007
Deutsche Bank, together with AIG Global Real Estate and Redwood Group, bought a logistics park and other commercial real estate from Capital Partners to tap an increase in demand for warehouses in Russia, the companies said in a joint statement issued September 11.

East Line Plans Major Expansion of Domodedovo

  • November 01, 2007
President of the board of directors of East Line Dmitry Kamenshchik announced plans for the long-term expansion of Domodedovo international airport to run to 2020 at a press conference held October 3, Vedomosti reported. In addition to completing the enlargement of the existing terminal from the present 115,000 square meters to 250,000 square meters currently in progress, work will start next year on the 66,000-square-meter first phase of a second passenger terminal with a $80-90 million investment, said Kamenshchik.

Moscow Developers Announce Big Projects for Volga Cities

  • November 01, 2007
Sistema-Hals presented plans for a $2.5 billion multi-functional project for the center of Astrakhan at the Sochi Investment Forum in September, Vedomosti reported.

Renova Starts Major Residential Project in Yekaterinburg

  • November 01, 2007
A ceremony attended by Renova group chairman, Viktor Vekselberg, Sverdlovsk region governor Eduard Rossel, deputy presidential envoy to the Urals Federal District Viktor Basargin and other members of the political and business elite was held October 12 to mark the start of work on the Akademichesky project.

Strabag Raises $1.9 Billion in Vienna

  • November 01, 2007
Austrian builder Strabag priced its initial public offering near the top of the range October 18, raising 1.33 billion euros ($1.9 billion) in Austria's biggest stock market debut ever, Reuters reported. While the deal was 10 times oversubscribed, Strabag allotted 28.2 million shares at 47 euros and deliberately shied away from the top end of the IPO's 42 euro to 48 euro price range in order to keep investors happy, it said in a statement.

Moskva Department Store to Be Rebuilt

  • November 01, 2007
Reconstruction of the Moskva department store on Leninsky Prospekt in southwestern Moscow will start next year, announced chairman of the board of directors, Grigory Rabinovich, Vedomosti reported.

Mortgage Market Shrugs Off Turmoil for Now

  • November 01, 2007
The U.S. subprime crisis appears to have made little impact on the Russian mortgage market, but problems may still be lurking around the corner, analysts said.

Cement Weighs Down Housing Boom

  • November 01, 2007
Shortfalls in the country's cement and building materials industry could hold back the rate of real estate development, First Deputy Prime Minister Dmitry Medvedev said during a trip to the Tula region September 26.

What's up?

  • November 01, 2007

Retail in Smaller Cities

  • November 01, 2007
Despite the relatively short period that has elapsed since its inception, the Russian retail real estate market appears to have already entered its third stage of development. This means that developers have started looking beyond Moscow and St. Petersburg and are increasingly setting their sights on doing retail and entertainment projects in regional cities. They shifted their focus first to regional cities with a population of 1 million and upwards, and then in turn to cities with a population of 500,000. Although most of the cities in the latter category are not fully developed yet, let alone saturated, there is increasingly intense discussion of the outlook for their retail real estate markets.

Moskva-City Phase Two

  • November 01, 2007
Big City, also known as Moskva City-2 and Novy Center, is one of the largest development projects in the world and on completion will be the largest office cluster in Russia, including business centers, residential development, retail premises, administrative buildings and hotels. Together with Moscow City it could well become Moscow's new central business district and, as such, the location of choice for all major corporations. The Moscow city government has thrown its weight behind the project and is boosting it further by restricting the construction of new offices in the historic center.

Mixed-Use With Lodging

  • November 01, 2007
The Moscow real estate market is evolving from basic products like stand-alone lodging, office, and retail properties to more complex mixed-use projects. Strong growth in hotel performance is leading to increased interest in placing hotels in these complexes. With the establishment of mixed-use facilities, developers in Moscow are hoping to modernize and establish lifestyle centers located in the central business district, particularly in upscale and luxury segments. As business activity becomes ever more decentralized, more and more mixed-use projects are being announced for uptown Moscow, with the lodging component represented by middle-range hotels.

Tax on Common Property

  • November 01, 2007
The passing of a large number of normative acts and the constant process of improving tax legislation in Russia is giving rise to the need for government bodies to promulgate documents of an expository nature, which essentially are non-normative, in order to make it easier for tax-payers to apply and observe the federal Tax Code.

Joint Ventures in RE

  • November 01, 2007
Western banks, developers and builders are establishing a record number of joint ventures as a way of breaking into Russia's booming property market. It is a sign of market maturity that these days a joint venture is more of a strategic move than something necessitated by hard circumstances - large international developers and investors are collaborating to draw out more sophisticated strategies and advantages than they had even just a few years ago.

State vs. Private Tenants

  • November 01, 2007
Russia's move toward state capitalism has been hotly debated in the expert community, but it is hard to deny that asset consolidation by state-run companies has been picking up steam of late. Without going into detail on the long-term influence of this process on the country's politics and economy, we would like to evaluate its possible influence on the office market.

The Secret of InterContinental's Success

  • November 01, 2007
The director of operations for Russia and Ukraine at InterContinental Hotels Group has every reason to celebrate. Late September saw not only the opening of Russia's first Crowne Plaza hotel, but also the official launch of the first Holiday Inn outside Moscow within the space of a week. The other three Holiday Inns are the big success story of Moscow's three-star sector, and the company now has its sights set on the top end: work is already under way on constructing the five-star property that the company is going to operate on the site of the late and unlamented Hotel Minsk. And that's not to mention a host of other projects at various stages of development all across the country. But it's been a long road for Markku Wahlberg, who has been in Russia since 1990. Here he talks to Edmund Harris about his own career and his company's path to success.

Novosibirsk Overview

  • November 01, 2007
Novosibirsk is the third largest city in the Russian Federation with a population of around 1.4 million. Founded in 1893 during the construction of the Trans-Siberian railroad, it was officially recognized as a city in 1904 and quickly grew in size to over 1 million people by the 1960s, making it the youngest city in the world of that size. It is located on the Asian side of the Urals on the river Ob and, as Russia's gateway to the east, is a major transportation hub for major companies and suppliers, foreign and domestic alike, as well as the capital of the Siberian Federal District. By rights it should have become a magnet for investors and developers long ago, but compared to other cities of a comparable size, it still has a massive shortage of quality hotels, warehouse, office and retail space.

First W Hotel in Russia Planned for St. Petersburg

  • November 01, 2007
Starwood Hotels & Resorts Worldwide (SH&RW) has announced plans to enter the Russian market with a project to open a boutique hotel under its luxury W Hotel brand in St. Petersburg, Kommersant reported in early October. A 130-room W Hotel is planned for a site in the historic center near the Admiralty and St. Isaac's cathedral, said Anatoly Kondratenko, development director for Russia and the C.I.S. at SH&RW, the newspaper reported.