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. Last Updated: 07/27/2016

Russia Creates Buzz at International Fair

MIPIMThe Sakhalin stand at the MIPIM exhibition. A plan was unveiled last week to link the island to the Russian mainland.
Usually, the only Russian real estate associated with the Cote D'Azur is the host of billionaires' mansions that stud France's Mediterranean shore.

Last week, however, it was real estate in Russia that created a buzz in Cannes at the annual MIPIM exhibition, attended by a record 25,000 real estate professionals from around the globe and featuring projects from 74 countries worldwide.

With Economic Development and Trade Minister German Gref leading the delegation after a personal briefing with President Vladimir Putin, and projects from almost thirty regions on show, interest in Russia is booming.

"Investor confidence in Russia has never been as high as it is today," said Michael Lange, chairman of Jones Lang LaSalle in Russia and the CIS, in an interview from Cannes.

As the overall interest and confidence in the Russian market increases, so the scale of potential deals has increased with larger investors becoming interested.

"The big investment banks or institutional investors ... wouldn't want to have just a $100 million investment. They want an alliance with a developer or several developers, allowing them to buy $1 billion or $1.5 billion of investments, " Lange said.

One such investor is Rutley Russia Property Fund, which is set to put around $1 billion into commercial Russian real estate over the next two years, said Haiko Davids, director for capital markets at Knight Frank, RIA-Novosti reported Wednesday.

With a separate pavilion this year dedicated for the first time specifically to the more than 70 exhibition stands from Russia, it was difficult to pick out the most eye-catching projects.

Among the highlights were the plans presented by the firm of internationally renowned British architect Norman Foster, Foster & Partners, for a 314,000-square-meter development on the site of the former Hotel Rossiya. The multipurpose hotel, residential and retail development is intended to "heal the scars of the Rossiya Hotel," the architects said.

Following the trend of the past few years, many regions from around Russia have been looking to MIPIM to attract investment.

"The rates of growth of Russian exhibition stands, regions, cities and companies at the investment trade show confirmed that this is an important economic event necessary for Russia," said Kirill Androsov, deputy economic development and trade minister.

"We are seeing clear interest in Moscow, of course, and in the regions. St. Petersburg is on the rise in a big way and we are seeing more interest in Ukraine," Lange said.

The number of projects on display this year was twice that of last year, Gref said, RIA-Novosti reported.

Interesting projects for St. Petersburg included the $1.5 billion Baltic Pearl residential and office development, a tunnel for high-speed trains under the Neva River, a $225 million football stadium funded by the tax payments from Gazprom Neft, and the controversial Gazprom-City development.

The projects from around the Russian regions that drew the most attention were the $600 million project to develop a new luxury resort on the Azov coast in the southern Krasnodar Region, the Altai Region's 4.8 billion ruble ($184 million) plan to develop a special economic zone for recreation, and plans for a bridge linking Sakhalin Island to the mainland.