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. Last Updated: 07/27/2016

Hotel, Offices for Tverskaya Zastava

VedomostiThe redevelopment of buildings opposite Belorussky Station is to include a luxury hotel, apartments and offices.
New details have emerged of the plan to completely rebuild Tverskaya Zastava, the square overlooked by Belorussky Station.

A 165,000-square-meter, 16-story office and hotel complex is due to be completed by 2010 at the site just off Tverskaya Ulitsa. A five-story underground retail complex and a new traffic intersection will also be built. Market players estimate the hotel may cost the developer up to $280 million.

The complex is to be built on a 1.55-hectare site between 1st Tverskaya-Yamskaya Ulitsa and 2nd Brestskaya Ulitsa, with an archway across 1st Brestskaya Ulitsa, said Alexander Khaldei, general director of Stroiinkom-K, the project's developer.

The details were confirmed by City Hall's architectural council.

The four- to 16-story building is to include 57,000 square meters of office space, 36,000 square meters for a luxury hotel and 17,000 square meters of apartments, said the project's manager, Sergei Rozhdestvensky.

The remaining areas are to be dedicated to service premises and an underground parking lot for 1,300 cars. The plans also call for shops, restaurants, a conference hall, a beauty salon, a fitness center and a spa-salon.

Khaldei did not specify his company's total investment, but Ilya Shershnev, director of development for the Swiss Realty Group, estimated that the construction costs could reach $150 million to $165 million, not including the land price. Maxim Zhulikov, a leading commercial real estate expert with Penny Lane Realty, said project costs could total $180 million to $200 million.

"Truthfully, taking into consideration the city's share, and the cost of obtaining permits, total investment may grow to $280 million," said Zhulikov.

Artyom Tsogoyev, executive director of Blackwood Property Fund, concurred that investment may total about $250 million to $280 million.

"Now the company is selecting the hotel operator and is concluding talks on the creation of the architectural concept of the complex," said Rozhdestvensky. "Experts predict an occupancy rate of more than 75 percent."

Some market participants think it would be logical to build a more affordable hotel at the location.

"Near a train station, it would be far more effective to build an inexpensive hotel," said Dmitry Garkusha, the general director of Dayev Plaza.

"Visitors would provide excellent occupancy rates, which would result in faster recovery of construction costs."

Marina Usenko, senior vice president of Jones Lang LaSalle Hotels, said a business-class hotel would be most appropriate for the location.

Rozhdestvensky disagreed. "Upon completion of construction, Tverskaya Zastava will become a new center of business activity in the city. Therefore, it is simply essential to have a high-class hotel available," he said.

Maria Kotova, director of hotel research at Knight Frank, said the idea of combining offices, a hotel and retail in that area was extremely promising.

"However, it is necessary to be very cautious in the choice of the class of the hotel: There are some five-star hotels under reconstruction that have better locations," she said.

Market watchers noted that in the same area a new traffic intersection was to be built prior to the project's completion, which should improve accessibility to both the office and hotel complex, and the 115,000-square-meter underground retail complex to be located nearby.

Stroiinkom-K, a Russia-based subsidiary of Lev Levayev's Africa Israel Investments, has $2 billion invested in residential and commercial real estate in Russia, including the Central Core development at Moskva-City.