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. Last Updated: 07/27/2016

Town to Lure Millionaires by Faking History

John Thompson And PartnersThe developers' diagram of the planned Rublyovo-Arkhangelskoye town.
MUNICH -- A $3 billion town, twice the size of Monaco, is set to rise on a bend in the Moscow River just west of the city limits, with a citadel, an "old town" and elite suburbs of its own, according to a plan approved by the Moscow region government.

Work on Rublyovo-Arkhangelskoye, population 30,000, is due to begin in late spring 2006, once construction permits for the first phase have been secured, Michael Belton, CEO of the project's developer, CMI Development, said during a presentation in Munich last week.

Financed by billionaire State Duma Deputy Suleiman Kerimov's Nafta-Moskva holding, the project calls for 2.7 square kilometers of mixed-use development on a 430-hectare site three kilometers beyond the Moscow Ring Road on Novorizhskoye Shosse.

"It's an attempt to create a more European city, which is what Moscow used to look like in the early 20th century," said Fred London, a director at British architects John Thompson & Partners, master planners on the development, after the presentation at the Expo-Real real estate conference.

A citadel at the north of the development is to be surrounded by narrow streets and canals with apartments, town houses, shops and restaurants, said London. The so-called old town is to be encircled by more spread-out suburban developments and mansions, as well as schools, a major sports center and a 100,000-square-meter business park, he said.

"We will have plenty of people who work in the park and live here and will not have to get involved with a lot of traffic, which is one of Moscow's biggest problems," London said. However, a majority of residents would likely work off-site, he said.

Depending on the sales of approximately 1,000 townhouses, apartments and detached houses in the initial phase, a decision will be made on the exact make-up of subsequent stages to be brought to the market over seven to 10 years, Belton said.

Public buildings are also planned for the administration of the future town, he said, although the question of exactly who will run the settlement -- its garbage collection, security and fire service -- is a moot point.

"In the initial phase of 220,000 square meters, there will most likely be 100 percent management by our development," Belton said, adding that later some rights were likely to be transferred the regional government. "As for a mayor, there will be something like that, but as for what [the position] will be called, we are not quite sure yet."

Initially, a panel of representatives of the investor, developer and architects is to act as a town council of sorts, passing all building designs to make sure the town retains a unified feel.

One problem the fledgling administration may encounter is visitors from less elite parts of Moscow hoping to take advantage of the pathways, riding trails and landscaped parkland by the river. A decision has not yet been made as to how access to the development will be controlled.

A marina on the Moscow River is expected to attract wealthy visitors in their yachts, who would be welcome to take advantage of the town's shops, restaurants and hotel.

As for social control, the developer is planning subsidized accommodation for those working for some of the development's facilities. There is unlikely to be much class tension between those buying into the town, with the developer estimating the price of a 200-square-meter apartment as likely to start at around $600,000.

One of the advantages of such stand-alone projects is an absence of the tension between the haves and the have-nots living in close proximity at smaller cottage developments, said Vladimir Yakhontov, deputy director of Miel Realty's suburban real estate department.

Those developments often fail to offer even the most rudimentary infrastructure, such as shops and schools, he said, leading to growing demand for larger developments that have the resources to supply them.

While Nafta-Moskva has the resources to find cheap financing for the project and secure permission to build, the bigger problem will be in finding 10,000 buyers with several hundred thousand dollars to spare, Yakhuntov said. That could take well over 20 years, he added.

"Every buyer would have to be a millionaire," he said. "And [according to government statistics] there are only 30,000 millionaires in Moscow."

Konstantin Kovalyov, managing partner at residential specialists Blackwood, agreed that poor sales would pose the biggest threat to the project, although the marketing potential of the location in the elite western suburbs would minimize such risks.