His property company,
Mr Leviev - ranked in 2007 by Forbes magazine as the 210th richest person with a net worth of $4.1bn - has been downgraded to 468th this year, with his net worth falling by almost two-thirds.
In August, Mr Leviev rocked Israel's capital markets when he warned that the company might not be able to repay some $2bn in bond notes. Last week he agreed the country's largest debt restructuring yet.
Aggravation of the crisis in 2009 revealed the weaknesses of the market and its players as well as the mistakes made in project development during the years of extensive development. The most attractive properties of the highest quality managed to avoid an increase in vacancy rates as well as a decrease in rental prices.
In 2009, the total supply in the retail real estate market has increased by almost 900,000 square meters. As of the end of the year, the total supply amounts to 4,857,000 square meters (GLA — 2,538,000 square meters). In early December, the average vacancy rate in Moscow was approximately 5%. We do not expect it to change drastically until the year’s end.
By the end of Q3 2009, it became possible to speak of stabilization of rental rates in Moscow shopping centers. The situation with rents in properties offered for lease is often the following: The owner intends to reach a certain rent level in 2-3 years and, therefore, negotiates discounted rent for the first and second lease years. Formerly, if the rental rate was determined as a fixed rate plus percentage of turnover, the fixed part used to be very low, whereas today it is increasing. Annual indexation ranges from 3 percent to 7 percent. Moreover, by the end of 2009, owners of successfully operating shopping centers have stopped offering discounts, and it has become possible to say rental rates are likely to increase. Nevertheless, it is noteworthy that there are still many properties on the market that have difficulties with occupancy of their premises and continue to offer considerable discounts to tenants.
Ronald Lauder, a scion of the Estée Lauder cosmetics empire, is to forge a $2bn venture with the Moscow city government to manage and revamp the capital’s hotel business in time for Russia’s hosting of the Winter Olympics in 2014.
The deal, expected to be announced on Wednesday, will see Mr Lauder’s recently created Russia Real Estate Fund take a 51 per cent stake in the venture to manage the city government’s stakes in dozens of hotels across the city, including the Rossiya and Moskva hotels on Red Square, in return for investing 31.7bn roubles ($1.1bn) into the company. The Moscow city government is to take a 49 per cent stake.
As Russia and the US aim to “reset” political ties after years of chilly relations, Mr Lauder said he hoped the deal would pave the way for greater US direct investment in the country. “There have been times when it has been very difficult for US companies to do business in Russia. I want this project to be an example of what can be done,” Mr Lauder told the Financial Times.
HELSINKI,
The companies will focus on commercial real estate projects in Moscow and the surrounding region, notably in the retail and office segments, YIT said in a statement.
The partnership agreement carries no pre-agreed financial commitments, it said.
