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Real Estate

Game Over

On July 1, the Russian federal law against the gaming industry went into effect. Among the federal restrictions passed are that “net assets of a gaming house operator must total no less than 600 million rubles” and that “the floor space of a casino must be no less than 800 square meters.” As a result, many slot machine arcades have been converted into cafeterias and stores. According to Vedomosti, major gaming holding company Ritzio is turning into the retail chain Smak. Regions reserve the right to adopt more stringent rules or to ban gambling altogether. Moscow has held off on kicking out casinos altogether, requiring instead that each have a restaurant, a bar, a concert hall and a money exchange bureau. Deputy Mayor Iosif Ordzhonikidze promised earlier that the number of gaming establishments would be halved by the start of July. By July 1, 2009, all gambling activity will be expelled to four reservation areas in Russia. However, “The timeframe is unrealistic,” says Ritzio co-owner Boris Belotserkovsky.

Deripaska enters Moscow City

Basic Element owner Oleg Deripaska is reportedly in negotiations to purchase an additional 47% stake in City, the joint stock company behind the large-scale business project Moscow City, from Mikhail Prokhorov. Only a month has passed since he became a shareholder in City, buying a 38% stake from Guta company in June. But Deripaska is not content to remain the junior partner in the project. He will now have a majority share (85%) in the Krasnopresnenskaya Naberezhnaya project, investments into which are valued at $10 billion. Oleg Smirnov, the deputy director of financial markets at Jones Lang LaSalle, counts the billionaire’s entry as a shareholder a positive development. He says, “Deripaska is a strong player with a clear strategy for development on the real estate market, as evidenced by his latest acquisitions.” Moscow City is slated for completion in 2020.

Commercial District

Missed your flight? Soon there will be plenty to do around Domodedovo. Torgovy Kvartal (Commercial District) is building the neighborhood’s first shopping and entertainment complex on Kashirskoe Shosse, which will house a supermarket, electronics stores (M.Video, Eldorado and Starik Khottabych are in talks) and a five-screen multiplex. “There are a number of shopping centers in Domodedovo which conceptually belong to a different category, given that they are 5,000 square meters and are for specific shopping trips,” says the company in a press release. Torgovy Kvartal will face competition, however, from Great Domodedovo, an 18,000–hectare project already in the works by developing company Coalco in conjunction with Dubai-based developer Limitless. Great Domodedovo, which includes residential housing, schools and retail facilities, was named “one of the largest projects planned by an international developer anywhere in the world today.”

German Real Estate Loan

Deutsche Bank is loaning STT Group 12 billion rubles ($472 million) to finance real estate and development projects within Russia. Bloomberg reported that they plan to co-invest in a number of projects, including, in Moscow, four office buildings and a hotel at Paveletskaya that the German bank is already financing. However, the first tranche of the loan, 3 billion rubles, will be used to redevelop St. Petersburg’s Passazh Shopping Center on historic Nevsky Prospekt. It will ultimately be operated by Moscow-based department store GUM. According to the bank’s press release, STT is also considering an IPO, and its “strategic partnership with Deutsche Bank will be continued on this front as well.” STT Group is headed by Russian businessman Shalva Chigirinsky; its assets are valued at $10 billion.

Revolving Tower

Moscow is stepping into the future with a revolving skyscraper. In July, Russia’s Mirax Group signed a deal with Italian firm Dynamic Architecture to construct a Rotating Tower in the capital, similar to one already underway in Dubai. According to the firm’s president David Fischer, “Dynamic architecture is a total revolution in the 3,000 year history of man building homes.” Each floor of the skyscraper revolves independently around the central core. In addition to being eye-catching, it is also environmentally friendly, generating its own energy with solar panels and wind turbines. Total investment in the construction of the Rotating Tower project is expected to exceed $400 million. Mirax is eying locations within the Third Transporation Ring for the skyscraper, which is slated to begin construction by the end of 2008.

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