Real Estate & Construction Practice Newsletter (December, 2013)
major new projects
Renaissance Construction to build a shopping mall near the Slavyanskiy Boulevard metro station
TPS Nedvizhimost has signed a general contract with Renaissance Construction for the construction of shopping center. The mall will be located on one of the main roads of the capital, Kutuzovskiy prospect. The total area of the project will be about 140,000 sq.m, with an available rental area of about 60,000 sq.m. Commissioning of the complex is planned for the 4th quarter of 2015.
A new city center to be constructed in Bryansk
The Aero Park City commercial and business cluster will become the new center of business activity in Bryansk. This ambitious project plans for a comprehensive development of an area of about 75 hectares. Within the framework of the trade and business cluster, more than 300 thousand sq.m. of commercial real estate will be built, with another 2 million sq.m. of housing to be built in its neighborhood in the coming years. The project will also include comprehensive work on road construction, as well as the reconstruction of major highways and road junctions. The project is designed not only to benefit the residents of Bryansk, but also to attract businesses and residents from the neighboring Orel, Smolensk, Gomel, and Kaluga regions.
Radius Group to build a distribution center in Moscow
The Radius Group has signed a long-term lease with the Svyaznoi Group, under which Radius will build a distribution center with a total area of 21 thousand sq.m. The project will be commissioned by the end of 2014.
German company to develop a racetrack in Vnukovo
Tilke GmbH, which has developed most of the Formula 1 racetracks in the world, will design a world-class Formula 1 race track in Vnukovo, as part of the Aeropolis complex.
Transport and logistics cluster to be constructed in Ufa
A transport and logistics cluster is planned as part of the Sigma Logopark warehouse complex, which is the first and largest such project in Ufa. The first stage of the project (involving 36,000 sq. m.) was commissioned in 2010. The second stage (45,000 sq. m.) is now being completed.
PNK Group to build a warehouse for Vernyi
PNK Group, a leader in the Russian market for warehouse and industrial real estate development, will build a multi-temperature warehouse on Rogachevskoye highway for Vernyi. This facility will be the first warehouse owned by Vernyi, which is built by the built-to-suit scheme. The total area of the center, including ancillary facilities, will exceed 43,000 sq.m. Vernyi is scheduled to begin to operate the warehouse in August 2014.
Wood conversion plant to be built in the Moscow region
The German company Rettenmeier plans to build a wood conversion factory in the suburbs of the Moscow region. WIHA Beteiligungs GmbH will be the principal investor in this project. Due to the current shortage of such facilities in the Moscow region, foreign investors have expressed great interest in the creation of such production facilities for building materials.
Over 11 billion rubles to be spent for shopping center construction in St. Petersburg
The Finnish company SRV announced the start of construction of Okhta Mall, which will be one of the largest shopping centers of the central part of St. Petersburg. The project is implemented jointly by SRV and the Finnish investment fund Russia Invest. The total investment in the project will be 11 billion rubles. The shopping mall is the first stage of a multifunctional complex, Septem City, which will have a total area of 400 thousand sq.m. Construction of Okhta Mall will be completed by spring 2016.
investment activity
Domodedovo airport may be sold for $4.7 billion
The co-owner of Domodedovo, Russia's largest airport, Dmitry Kamenshik continues to negotiate the sale of the airport business for US$ 4.5 to US$ 4.7 billion. Novaport is acting as the buyer of the passenger service and structures of Rosneft, as the buyer of the fueling complex.
Government to sell shares of OJSC Sports Complex Olympic on tender
According to the Department of Competition Policy of the city of Moscow, a total of 65,109 ordinary uncertificated shares will be auctioned. These consist of 49,849 ordinary registered shares owned by Moscow, which is 49% of the share capital of the company, and 15,260 ordinary registered shares owned by OJSC Interbranch Fund, representing 15% of the share capital of the company. The nominal value of one share is 1 ruble. The initial stock price is set at 4.45 billion rubles. The application campaign ended on 9 December 2013, and the auction is scheduled for 25 December 2013.
Ramenskoye airfield waits for investors
Transport and Exhibition Complex Russia announced an open tender for the right to participate in the implementation of the investment project to develop airport operations facilities at the Ramenskoye airfield, at a total cost of 7 billion rubles. This multifunctional complex will consist of a passenger terminal for low-cost airlines, a cargo terminal, maintenance facilities, driveways and parking lots, parking, a hotel and a commercial center. Results of the competition were due to be announced on 10 December 2013.
AFI Development to sell Aquamarine III in Moscow
AFI Development has agreed with one of the Russian state corporations on the sale of the first building of Aquamarine III business center in Moscow for US$ 91.5 million. According to terms of transaction, Krown Investments LLC, a part of AFI Development, will transfer to the new owner the first building of the business center, with an underground space of overall 10,985 sq.m, a terrace area of 418.9 sq.m, and approximately 15.8% of shares for rights in 3,729 thousand sq.m. of common areas. The sale is expected to be completely closed in December 2013.
RAH sells ski resort in the Leningrad region
Russian Auction House (RAH) has scheduled an auction for 19 December to sell 100% shares of OJSC TVEL-resort, the largest operator of the Red Lake ski resort, located in the Leningrad region. The auction will take place according to the Dutch scheme for successively lowering the price. The initial selling price will be 700 million rubles, and the cut off price will be 350 million rubles.
Capital Group sells Rechnoy shopping center
Capital Group is negotiating the sale of one of its recent trading centers, Rechnoy, which is situated at metro station Rechnoy vokzal. TVO Europe, which sells, leases and manages commercial real estate, is interested in the shopping center. If the deal goes through, it will be the first asset of TVO Europe in Russia, and could amount to about US$ 170 million.
Mosfilm lands to be transferred for building construction
AB Development, which is owned by the Altera Capital fund, plans to obtain 4.5 hectares of the 34.5 hectares of land owned by FSUE Cinema concern Mosfilm. AB Development plans to use the land for commercial and residential develop, totaling 90 thousand sq.m. AB Development might invest a total of US$ 300 million in the project.
Russian Railways to attract 262 billion rubles to railway stations and transport-interchange hubs (TIH) development
The management of the railway stations of Russian Railways has concluded agreements for attracting more than 262 billion rubles of additional investment in station complexes and transport-interchange hubs (TIH) in Moscow and in the regions. GazEnergoStroy has signed an agreement to modernize infrastructure and energy facilities at station complexes with the introduction of innovative trigeneration technologies and parallel utilization of biological and solid waste. A memorandum of cooperation with Gaztehleasing also has been signed. Trinity Development Group Inc. (Canada) has agreed to invest in TIH development projects with commercial real estate in Moscow and in the regions of Russia.
Moscow authorities to attract foreign companies to manage technology parks
The Moscow City Government is already negotiating with major international companies Technopolis Oyj and Jurong to find investors to create innovative platforms in technology parks. The city authorities plan that the future infrastructure of innovative platforms will be created with private funds and not from the municipal budget. Companies wishing to attract investment will be paid only for the results that they produce, but not for their consulting services.
legal developments
Foreigners to need a permit for office rent
The Ministry of Economic Development is developing new legislation that will require foreigners to obtain special permission to rent office space. The new law will introduce the concept of separate categories of persons. Transactions with representatives of such persons will be governed by separate administrative procedures. The new law will provide for separate administrative procedures for foreign companies, as well as for any Russian company that has more than 50% of its capital contributed by foreign companies or stateless persons. The law is expected to become fully effective on 1 January 2015.
Tax rate for shopping malls in Moscow suburbs to be 1% of the cadastral value in 2014
The regional government of Moscow has approved a bill to tax shopping centers based on the cadastral value of the property. Beginning 1 January 2014, the property tax rate for shopping malls of over 5 thousand sq.m. area in the Moscow region will be 1% of the cadastral value of the property.