Real Estate

Real Estate News

	Ritz-Carlton Opens
	On the first day of July, the long-awaited Ritz-Carlton, the newest addition to Moscow’s luxury hotel sector, opened its doors on 3 Tverskaya. Previously, the address belonged to Hotel Intourist, the eyesore Soviet hotel in the vicinity of Red Square. The Ritz’s 334 rooms, which start at $1,000-night, a record high in an already tourist-unfriendly city, does little to ease the city’s worsening accommodation crunch. Bloomberg reported that there are only 60,000 hotel rooms in the city, forcing many travelers to the outskirts. Deputy Mayor Iosif Ordzhonikidze has spoke out on the need for more (and more affordable) hotels, vowing, “Every three days, we are going to open a hotel.” One of these is the Four Seasons, a $700-million project on Manezhnaya Ploshchad, which could well surpass the Ritz in terms of price. For the month of August, the Ritz-Carlton will offer a “Summer Special” rate of $385 per night.
	Procter&Gamble Moving to Metropolis
	Multinational consumer goods manufacturer Procter & Gamble signed a lease on 18,000- sq. meters in Metropolis, a new mixed-use retail and office complex on Leningradskoye Shosse. They are relocating to Metropolis from their current home in Naberezhnaya Tower in order to “meet the increased needs of a larger, more diverse, faster-growing business,” according to Procter & Gamble general manager Matthew Price. Charles Boudet, Head of Office Agency at Jones Lang LaSalle, which acted as market and leasing agent for the landlord, commented, “Not only is it one of the biggest office deals completed in 2007 to date — it is also the first office lease agreement signed at Metropolis.” He expects that other major local and Western companies will follow as tenants. Metropolis, which includes three office buildings and a 330,000-sq. meter retail and entertainment area, will open in the second half of 2008.
	Knight Frank Wins Real Estate Awards
	On June 17, Knight Frank’s St. Petersburg office was named Consultancy of the Year at the 2nd Commercial Real Estate (CRE) Federal Awards in Sochi. “Winning this award reflects our success in all aspects of our work. Our main asset is our pool of talented professionals, each of which possesses extensive experience of real estate development and consulting, together with a faultless understanding of the local market,” says Oleg Barkov, General Manager of Knight Frank St. Petersburg. Their office, which has tripled in staff in the past year, beat out competition such as Colliers International and IB Group. The annual professional awards are designed to promote excellence in the Russian real estate market. Any consultant, developer or commercial property that opened in 2006 in St. Petersburg or the Russian regions (excluding Moscow, which had its own separate awards in April) was eligible for consideration.
	Microsoft Outsources to Cushman Wakefield
	Cushman & Wakefield Stiles & Riabokobylko (C&W/S&R) was hired by Microsoft to handle all of the computer company’s real estate functions within Russia. It is Russia’s first real estate outsourcing deal, which insiders think marks the start of a national trend. “We fully expect [outsourcing] to be embraced by corporate Russia,” Sergey Riabokobylko, Senior Executive Director of C&W/S&R. His company will take care of the logistics of leases, property management and expansion to the regions, so that Microsoft can focus on developing its business. The Russian real estate market will benefit from the attention of such a high-profile company. “This partnership will elevate the Russian real estate market alongside more mature markets in Europe and in the United States,” says Viktoria Manzioukova, Partner & Head of Client Solutions at C&W/S&R.
	Europe’s Largest IPO by Russian Real Estate
	Developer The PIK Group of Companies raised $1.8 billion in an IPO that was the largest ever for a European real estate company. PIK, a subcontractor for the Moscow city government, has 8.8 million sq. meters of property in its portfolio. The placement, however, was “difficult,” according to Kommersant. Share prices were at the bottom range ($25) in the country’s largest real estate listing to date. “We believe that after this IPO, investors’ appetite for real estate investments may be nearly sated, making any further placements in the sector more challenging,” said analyst Rustam Botashev of investment company Aton. Analysts attribute the slowdown of Russia’s IPO trend to investor anxiety over the upcoming parliamentary and presidential elections.