Time to Sell Penthouse. The Russians Have Cash.

More than 200 real estate brokers and lawyers, many of them among the most ambitious in the Manhattan real estate world, filed into an Off Broadway theater last month for three hours.

The subject of the gathering was not art, but money: specifically, how to sell multimillion-dollar properties to clients from Russia and other parts of Eastern Europe.

While the brokers sipped wine and nibbled cheese, a panel of lawyers and a banker reviewed some of the biggest sales made to Russians, including the $188 million spent on properties inFlorida and New York by trusts linked to Dmitry Rybolovlev, who made billions from potash fertilizer; the $48 million that a composer, Igor Krutoy, paid for an apartment at the Plaza Hotel; and the $37 million spent by Andrei Vavilov, a former deputy finance minister, on a penthouse at the Time Warner Center.

The real estate market in the United States may still be slumping, but its high end is enjoying a remarkable updraft, propelled by money flowing in from all corners of the globe, including from developing countries like Brazil, China and India. But no group is consistently writing bigger checks than the Russians

Russia's Alfa Capital buys 10.7 percent of Open developer

Alfa Capital Holdings, part of Mikhail Fridman's Alfa-Group, has acquired a 10.7 percent stake in Russian property developer Open Investments , a statement issued by the real estate group said.

Open Investments said on Friday the stake was acquired by NKB Investments, which is an affiliate of Moscow's Uralsib bank, documents seen by Reuters indicated.

According to Reuters data, a 10.7 percent stake is worth $29 million.

Alfa Bank confirmed it had purchased the stake but declined further comment.

Open Investments, controlled by Russian business and political figure Mikhail Prokhorov, is a commercial real estate developer in the Moscow region.

As Russian Real Estate Money Floods in, Could New York Go the Way of London?

LONDON — “The real estate market in the United States may still be slumping, but its high end is enjoying a remarkable updraft, propelled by money flowing in from all corners of the globe, including from developing countries like Brazil, China and India,” writes our colleague Alexei Barrionuevo in his latest real estate piece . “But no group is consistently writing bigger checks than the Russians.

“Over the past four years, Russians and other citizens of the former Soviet Union have signed contracts to buy more than $1 billion worth of residential real estate in the United States, according to estimates from lawyers and brokers.”

Alexei reports about Dmitry Rybolovlev, who made billions from potash fertilizer, Igor Krutoy, a composer, and Andrei Vavilov, a former deputy finance minister, among others.

Tsunamis of cash from extremely well-off Russians, as well as billions from Gulf oilmen and their families, have had a tangible impact on the real estate market in London, probably more than in any other city in the world.

The influx over the past years and decades helped to send the average price of a home in the central London borough of Kensington and Chelsea over £2 million, or more than $3 million, for the first time — while Britain is battling austerity, a downturn and falling wages and benefits.

Russia's Etalon sees long real estate market recovery

MOSCOW, March 19 (Reuters) - Russian housebuilder Etalon said on Monday the country's real estate market was still some way off pre-crisis levels and would continue to grow at least into 2013, prompting it to seek several new projects.

The company, which builds houses mainly in Moscow and St. Petersburg, said it contracted 270,000 square metres of property across both cities in 2011, compared to an adjusted 440,000 square metres for St. Petersburg alone in 2008.

"2012 is off to a strong start and we believe that the recovery will develop further, supporting our cash collections and new contract sales. We have every reason to look towards 2012 and 2013 with confidence," Etalon president Viacheslav Zarenkov said in a statement.

His comments came after Etalon posted 2011 net income up 64 percent to $253 million, on the back of a 16 percent growth in revenue to $774 million.

Moscow Commercial Real Estate Rebounding

The size of investments in the domestic real estate market grew 128 percent last year to reach almost 2.2 billion euros ($3.1 billion), as economic stabilization after the crisis encouraged foreign and local investors, a survey said Monday.

Although the overall transaction volume remained low compared with the pre-crisis level, Russia outperformed other countries in Central and Eastern Europe and mainstream investors are expected to return to the market in the future, CB Richard Ellis said in the report.

Russia saw a total of 27 deals last year, compared with 22 in 2009, with an average transaction volume accounting for 80 million euros, almost twice as much as in 2009.

According to the report, the stabilizing of the domestic economy, which grew 4 percent last year, resulted in increasing investors' confidence.

"The results of 2010 showed a significant increase in the investors' confidence of the stability of Russia's real estate market," said Christopher Peters, head of research at CBRE.

Blackstone eyes Moscow Real Estate

Plain-vanilla leveraged buyout deals in the United States are "pricey," Blackstone's chief operating officer Tony James told analysts on a conference call. He is instead searching for opportunities in energy, emerging markets and in providing growth capital to small companies.

Blackstone's international push saw it expand into Istanbul and establish a "small beachhead out of Moscow" during the first quarter, James said. Blackstone has one person operating in Russia, he said.

"We've been flirting with Russia for three years," said James. "I don't know how many times I've sat through traffic in Moscow to try to figure the place out."

James said the country is "a bit inscrutable ... but we're open-minded about opportunities there".

Still, James said it was important to be "very careful" in the country despite Russia benefiting right now from high energy prices.

"It is a market that is capital-constrained," James said. "Done right, it has potential to have some interesting returns, but we all have the obvious questions about the transparency."

Swedish investment firm closing its Russia real estate fund

Stockholm-based investment company East Capital Explorer has decided to close its real estate fund for Russia as the unit has received no investments since it opened in July 2008.

When the global financial crisis broke out, the company, whose area of operations is Eastern Europe, decided to keep its Russian Property Fund in place “until the price fall would stabilise” yet it has proved impossible to “realise our initial investment strategy within a reasonable timeframe,” an East Capital Explorer press release cited Kestutis Sasnauskas, chief executive of East Capital Private Equity, was saying.

“We still consider real estate an attractive sector for investments and… will pursue alternative ways to get exposure to the sector,” said the chief executive of East Capital Explorer, Gert Tiivas.

Key Executive Appointed to Moscow/ Russia Real Estate Fund Hotel JV

January 11, 2010, 12:41, (Property Xpress) - The new investor in Moscow hotels, billionaire Ronald Lauder has made his first appointment in the United Hote ...


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More international visitors this season

If you’ve been hearing foreign languages spoken on the slopes or around town recently, two advertisements that most recently ran in Tuesday’s Aspen Times might help you hone in on what kind of international visitors are here these days.

Ski Brasil, a Brazilian ski tour operator with a winter presence in Aspen, ran an ad on page A4 in Portuguese, reminding its Brazilian clients that it is always available to help with any details of their vacations. And a full-page ad by Joshua and Co. real estate on page A13 tells Russian visitors in their own language, “Let us show you around during your stay.”

The ads show the increasing significance of international business, particularly this ski season when several countries’ currencies are strong compared to the American dollar and many domestic markets are still recession weary.

Recently released market study: Russia Real Estate Report Q4 2009

This is the first edition in BMI's new series of reports on real-estate sectors around the world. We have sought to incorporate data and insights from our reports on infrastructure and commercial banking - as well as our own forecasts for the economies of the various countries that we survey. Key issues - Russia We suggest that the following are
the key issues to monitor for the real estate sector in the coming year or so: The absolute level of construction in Russia is a major positive factor for the real-estate sector. Any substantial weakening in activity would be a major negative factor. Growth in bank lending; one reason is an anticipation of continued strong growth. Any sign of b

ussian Group to Build Cottage Village near St. Petersburg

January 08, 2010, 12:36, (Property Xpress) - A Russian holding group plans to start building an elite class cottage settlement in Lomonosov County, Leningr ...


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Positive economic indicators for Russian real estate market in 2010, experts say

Property prices have dropped 25% in Moscow in the downturn and rents are down by up to 50% but the real estate market is now poised for a recovery, it is claimed.
Industry commentators are also pointing out that credit crisis has weeded out the poorer operators and with GDP expected to grow by 3% in 2010; buyers are at least showing signs of returning to the property market with real estate players seeing signs of activity.

Before the global downturn the real estate market was booming in Russia with luxury apartments in the capital city selling for between $15,000 and $40,000 per square meter depending on location. The average price per square meter was $6,500 per month but at the top end $20,000 per month was possible.
Prices were driven upwards by a lack of quality accommodation but the credit crunch has had a profound effect. Unemployment affected the low and middle end and those who would normally buy at the luxury end of the market just seemed to disappear.
Real estate agents report that the market started slowing at the end of 2008 and accelerated through to March. ‘Demand was very, very low, especially on the sales side and across all budgets,’ said Maxim Mokeyev, executive director of Evans Real Estate.

Moscow Real Estate looks for rebound

The Moscow residential real estate market has been lucrative, with an accommodation deficit driving sales and rental prices over the last decade. But it too felt the impact of the 2009 economic downturn.

With Moscow being not only the capital of Russia, but also the capital of the region, in terms of opportunities and level of living, it is no wonder that the residential real estate market has grown exponentially over the years.

Pre-crisis, a square meter in a luxury apartment cost between $15 thousand and a whopping $40 thousand dollars. To rent the same square meter would go for anywhere between $7-20 thousand. The overall average sale price per square meter was roughly $6,500 and rising monthly.

A lack of accommodation – not to mention quality – was the main driver behind this growth; but even this growth slowed during the crisis says Maxim Mokeyev, Executive Director for Evans Real Estate.

TIMELINE-Russian banks struggle with bad loans

OSCOW, Dec 31 (Reuters) - Russian banks have yet to see a
peak in bad loans which have forced them to channel $28 billion
into provisions this year, wiping out profits across the banking
sector.

Following is a chronology of recent key events in the
sector:



MAY

May 19 - Problem loans could soar to 35 percent to 50
percent of total lending in Russia, Ukraine and Kazakhstan,
Standard & Poor's says. [ID:nLJ957879]



JUNE

June 1 - Russian banks may need to be recapitalised with
around 1.3 trillion roubles ($43.10 billion) in 2009, Moody's
says. [ID:nL1554029]

June 5 - President Dmitry Medvedev rules out creating a "bad
bank" to clean up bad loans. [ID:nL534983]

June 19 - VTB says bad debts could rise to $9 billion by
June 2010. [ID:nLJ543168]

June 29 - VTB says will likely make a loss this year.
[ID:nLT624294] [ID:nLT718543] [ID:nLT16910]

June 30 - Alfa Bank President Pyotr Aven says defaults may
hit $130 billion in the next 12 months. [ID:nLU501949]

- Russian banks require $20 billion to $80 billion in
additional capital within a year as non-performing loans will
reach 15 percent to 40 percent of banks' loan portfolios by
year-end, Fitch says. [ID:nLU368648]

Property mogul Leviev takes slide in rich list

Lev Leviev, the property and diamond magnate who two years ago was ranked as Israel's richest man, has become the country's most high profile casualty of the global financial crisis.

His property company, Africa Israel Investments, which was worth some $7bn at its peak in May 2007, has lost 91 per cent of its stock value since the onset of the real estate slump in its key markets of the US, Russia and eastern Europe.

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.

Russia sale signals possible real estate revival

ST PETERSBURG, Russia, Dec 30 (Reuters) - Private investors on Wednesday paid $13 million for 900 hectares (2,224 acres) of land from Russia's second largest city, in a sign that the recession-hit real estate market may be starting to recover.

The auction was won by SPB-Renovation, whose owners include Alexander Abramov, co-owner of steel miner Evraz, for 391.2 millions rouble ($12.97 million).

The buyers plan to knock down the outdated blocks of flats currently standing on the land in St Petersburg's outskirts, and replace them with over 7 million square metres (75.35 million sq ft) of modern, economy-level accommodation.


Oleg Barkov, the head of Knight Frank's office in St Petersburg, said the new flats will be in demand as the area is popular, but added that the project will not be easy to carry out, as St Petersburg has no experience in such renovations.

Sistema-Hals Recommends Shareholders To Accept VTB Bank's "mandatory" Offer For 4.56 Mln Shares - Update

Russian real estate company Sistema-Hals JSC (HALS.L: News ), Tuesday, said it has received a mandatory offer from JSC VTB Bank (VTBR.L: News ) for purchase of 4.56 million ordinary registered shares in Open Joint-Stock Company, or OJSC, Sistema-Hals of RUB 50 nominal value each, for RUB 736.69 per share.

The company noted that the purchase price offered in the mandatory offer is a fair price and meets the requirements of the Federal Law. Thus, the company recommended the shareholders to accept the offer.

Sistema-Hals added that no information is disclosed in the offer about the plans of VTB Bank with regard to OJSC Sistema-Hals and/or its employees. The mandatory offer acceptance period is 70 days starting from December 28, 2009.

Commercial Real Estate Market: 2009

Retail Property Market

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.

Russian Billionaire Moves a Step Closer to Buying the Nets

The Russian billionaire Mikhail D. Prokhorov moved closer to taking control of the Nets on Tuesday night when he signed formal contracts to buy a controlling stake in the team and to invest in its new home, a billion-dollar arena planned as part of a development in Brooklyn.Under the terms of the deal, Prokhorov would become the principal owner of the Nets and the first overseas owner of an N.B.A. team.

Russia to buy real estate in Jeddah to house its mission to OIC

Moscow, December 23, Interfax - Russia will buy a 3,500 square meter compound in Jeddah, Saudi Arabia, to house its permanent mission to the Organization of the Islamic Conference.

A relevant government decree was available on the databank of the government regulations on Wednesday.

The decree instructs the Foreign Ministry to purchase the compound and a plot of land of 0.54 hectares for $15 million and submit documents to the Federal Property Management Agency (Rosimushchestvo) for the plot of land to be handed over to the ministry to hold and dispose of.