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. Last Updated: 07/27/2016

Nafta to Sink $3Bln in 'Private Town'

VedomostiIt is estimated that Nafta has spent at least $215 million on acquisition of 430 hectares of land around Novorizhskoye Shosse.
Nafta-Moskva is planning to invest up to $3 billion in the creation of what could become the country's first "private town."

Having acquired 430 hectares of land around Novorizhskoye Shosse, northwest of Moscow, the company intends to build 2.7 million square meters of elite housing and retail on the site.

Nafta-Moskva, the successor to the Soviet oil trader Soyuznefteexport, is said to be controlled by State Duma Deputy Suleiman Kerimov. Its financial details have not been disclosed.

The company began buying up land around the villages of Arkhangelskoye, Golyevo and Zakharkovo on the banks of the Moskva River 1 1/2 years ago, and it now owns roughly 430 hectares in that area, a high-ranking executive at Nafta-Moskva said.

The source would not say how much the company spent on land acquisition, but Vyacheslav Shiryayev, general director at Vesco Group, estimated that the deal should be worth at least $215 million, as land in that part of the Moscow region goes for between $500,000 and $1.5 million per hectare.

Nafta-Moskva's plan is to build an entire town, consisting of 2.7 million square meters of housing and all the necessary infrastructure, from offices to shops, schools and entertainment.

For comparison, 4.8 million square meters of housing was built in Moscow in 2004. A recently announced project in the eastern suburb of Kozhukhovo will involve the construction of 1.2 million square meters of housing, while the Moscow region's largest Krasnogorye development will have just over 1 million square meters.

The ambitious project is currently in the process of obtaining all the necessary approvals, and construction should begin sometime in 2006 and take five years, the source said.

The company is planning to build low-story housing in the town's center, and villas and cottages in proximity to the river or forest. The $3 billion project is being financed by Nafta-Moskva, but the company is now negotiating with potential co-investors, he added.

Moscow region has not yet seen such large-scale projects, but they were bound to appear sooner or later, experts said.

While Western Europe is characterized by a lack of available land for large-scale construction, in the United States grandiose projects with purpose-built infrastructure are quite common, said Svetlana Skotnikova, foreign real estate consultant at Kirsanova Realty.

In the United States, projects such as the $4-billion Lake Las Vegas Community in Nevada -- 1,000 hectares around an artificial lake with condominiums, hotels, casinos, yacht clubs and a golf course -- are extremely popular, she added.

Market watchers described Nafta-Moskva's project as "interesting" and "doable."

The amount of investment in the development "is not unrealistic," said Vladlen Voloshin, head of the real estate division at Veles Capital.

"If the project is divided into several phases, as Nafta is planning, it will be quite manageable for a pool of investors," he said.

However, Vesco Group's Shiryayev said that the development might suffer stiff competition from the abundance of real estate on offer in the area around Novorizhskoye Shosse.

But the developers disagreed on the grounds that their project would be exclusive. "We are not going to build housing for the masses, but a district which will combine the advantages of country living with international-class infrastructure," said Viktor Novichkov, PR director at Terra Development, the developer of Nafta's private town.