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. Last Updated: 07/27/2016

Britain Signs Contract to Build New Embassy

In its biggest overseas investment ever, the British Foreign Office has signed a ?55 million ($87 million) contract to build a new embassy on Smolenskaya Naberezhnaya.

"We've wanted to move for a long time because the embassy staff has grown and the building is no longer suitable for our purposes," press attach? Ian Hay-Campbell said. "At long last the project is underway."

But the yellow mansion on Sofiiskaya Naberezhnaya, which has served as the British Embassy since 1931, will remain in British hands.

"At the moment the ambassador lives over the shop, as it were," Hay-Campbell said. "He'll keep on living here and the rest will also serve as accommodation for embassy people."

Construction -- exclusively by British workers -- will begin next month, although Queen Elizabeth II laid a commemorative stone on the site during her visit to Moscow two years ago. The project is due for completion in May 1999 and the move is expected by the end of that year.

The deal was signed Oct. 24 between the Foreign Office and the Taylor Woodrow/Skanska construction group -- a British-Finnish joint venture. Despite the large sum stated in the contract, officials said the project will save money for the government.

"Given that we had to move, we had a choice between renting space and building our own building," a Foreign Office spokesman said. "Under this plan we expect to be saving more than ?30 million over 60 years."

On the east bank of the Moskva River, about 2 kilometers west of the Kremlin, the building will provide office space and apartments for embassy staff and an underground parking lot, covering a total area of 21,200 square meters.

Centered around a seven-story office building, the site includes three apartment buildings of approximately the same height, which will provide a total of 30 apartments. All four buildings are linked at podium level where there will be a garden and courtyard.

It is a far cry from the stately mansion on Sofiiskaya Naberezhnaya.

Completed in 1893 for Pavel Kharitonenko, a wealthy sugar beet merchant, the house was later used as a guest house by the Soviet Commissariat for Foreign Affairs, with visitors including H.G. Wells and Isadora Duncan. In 1931, it was taken over by the British Embassy, with much of the furniture left in place and few major changes made to the building's interior, Hay-Campbell said.

Although Stalin tried to make the British leave the mansion shortly after World War II, little was done to heed his orders until the late 1980s, when lack of embassy space was already becoming a problem. In 1990, however, British Prime Minister Margaret Thatcher and Soviet leader Mikhail Gorbachev agreed that their ambassadors in Moscow and London should retain their current residences.

With the activity following the Soviet Union's collapse, the mansion now fails to meet the embassy's needs. It has had to virtually quadruple the number of employees in the visa department, and its commercial section has also grown.

In addition to the mansion on Sofiiskaya Naberezhnaya, the embassy currently rents space on Kutuzovsky Prospekt for its commercial section, although it will give up this space following the move, Hay-Campbell said.

, with more than 300 British companies now operating in Russia