Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

City Hall Fires Island Developer

For MTCity Hall will take over work on the $2.7 billion Golden Island project.
The city government has fired KRT as coordinator of the $2.7 billion Golden Island development on Bolotny Island opposite the Kremlin, and has taken the project into its own hands.

A decree from Mayor Yury Luzhkov has replaced KRT with City Hall's building department, a move market watchers blame on KRT's failure to fulfill its obligations.

The plan for Golden Island, approved in the summer of 2003, envisages the building of 1.2 million square meters of hotel, office, entertainment and residential property on 40 hectares of land on the Sofiiskaya, Bersenevskaya and Bolotnaya Naberezhnayas in the center of the city.

KRT-Megapolis, named the coordinator of the Golden Island development in 2003, estimated the project's worth at $2.7 billion. KRT was formed in 1991 and currently comprises 30 Russian and foreign firms, including KRT-Megapolis, KRT-Invest and IntellCity, among others. The parent company is owned by private investors.

According to the city's development and reconstruction department, Luzhkov signed the decree last week, naming the city's building department the general coordinator. "There is not a word about the former coordinator, KRT-Megapolis, in the new document," said a source at the department.

Relations between KRT and the mayor's office were already frayed this spring. From the start, City Hall refused to take part in two closed real estate mutual funds that KRT wanted to form for the financing of transportation and communication infrastructure and residential building on Bolotny Island. Later, at an open meeting, Luzhkov rebuffed proposals by the Moscow Architectural Committee for several parts of the project, and reprimanded KRT for its inability to unite investors in the project to solve the problem of road and communication infrastructure.

Luzhkov also announced that the coordination of engineering communications would be transferred from KRT to city-owned construction firm Moskapstroi.

An anonymous official in the central district's building administration said, "KRT did not fulfill the task set before it. It had big ideas about many things, but as a result wasted its energy on trifles."

Konstantin Kovalyov, managing partner at Blackwood, one of the investors in Golden Island, agreed. "It is difficult to take into account the interests of dozens of investors," he said.

A source close to KRT acknowledged that the company had expected such a decision. "The city considers that KRT has been developing the project very slowly, and before the upcoming mayoral elections, the authorities are trying to speed up all investment projects," the source said.

"We are not upset or surprised. We will give our own projects more attention," said KRT's marketing director, Valekh Rzayev. He said that KRT still had two office and hotel projects on Bolotny Island.

But as of yet, building on the island has not begun.

Tigran Alekanyan, the general director of Dekra, which has a site on Sofiiskaya Naberezhnaya, is sure that the city will be able to move the project past its current impasse.

"Finally a single authority has appeared that has the desire and power to take up the project," he said.