Mipim 2014 news 2 by RX REAL ESTATE SHOWS

mipim nEWs 速

DAY

Wednesday 12 March 2014

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MIPIM OPENING COCKTAIL

Celebrating 25 years P4

TOWERING VISION

New towers for Paris P8

FAST BUILD

Mebe completes Khimki Plaza in record time P26

www.mipim.com

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CONTENTS

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NEWS 10 Unity creates stronger offer for Vilnius, Riga and Tallinn

14 Retail on the rise in Turkey

20 MIPIM’s RE-Invest Summit

TURKEY Special report inside Open for business MINT fresh

I IV

FEATURES 68 MIPIM Awards 2013 Winner profile The Squaire root of excellence

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73 Countdown to MIPIM UK London calling

The official MIPIM daily newspaper Wednesday 12 March 2014

GENEVIEVE Fioraso, France’s Minister of Higher Education and Research, is visiting MIPIM today. After touring a number of French stands she will speak at the Grand Paris Saclay conference session before holding a press conference.

The MIPIM News team is located in the Palais des Festivals / Level 5 Editorial Contact: mipimeditor@gmail.com

Director of Publications Paul Zilk Director of Communication Mike Williams EDITORIAL DEPARTMENT Editor in Chief Graham Parker News Editor Doug Morrison Reporters Ben Cooper, Mark Faithfull, Steve McCormack, Mark Moore, Liz Morrell, Paul Strohm Sub Editors Clive Bull, Julian Newby, Joanna Stephens Proof Reader Debbie Lincoln Technical Editor in Chief Herve Traisnel Deputy Technical Editor in Chief Frederic Beauseigneur Graphic Designers Muriel Betrancourt, Veronique Duthille, Carole Peres Head of Photographers Yann Coatsaliou / 360 Media Photographers Christian Alminana, Olivier Houeix, Michel Johner, Yohann Mortier Editorial Management Boutique Editions. PRODUCTION DEPARTMENT Publishing Director Martin Screpel Publishing Manager Amrane Lamiri Publishing Co-ordinators Nour Ezzedeen, Emilie Lambert Production Assistant, Cannes Office Eric Laurent Printer Riccobono Imprimeurs, Le Muy (France). Reed MIDEM, a joint stock company (SAS), with a capital of €310.000, 662 003 557 R.C.S. NANTERRE, having offices located at 27-33 Quai Alphonse Le Gallo - 92100 BOULOGNE-BILLANCOURT (FRANCE), VAT number FR91 662 003 557.

IN PICTURES

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MIPIM Opening Cocktail MIPIMâ&#x20AC;&#x2122;s 25th anniversary was celebrated in style at the Carlton hotel. The party, sponsored by Nef, included a spectacular firework display over the Bay of Cannes

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IN PICTURES

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Tatiana Shekhovtsova, deputy director for marketing and sales for DM Development (left); Valentina Nagieva, general director of Greenfield Property International; and Tatiana Talalaeva, director for foreign relations for Proestate

Avi Alkas, chairman of Alkas and Erden Timur, CEO of Nef

Sophie Ava, general council of Tunasco (left); Andrew Papadopoulos, director of City of Marica; Carlo Walker, financial consultant for Grosvenor Butterworth Financial Services; and Nick Turner, sales and marketing director for Rio Hills

Karin Kiviste, business development for the Estonia Centre of Architecture; and Frank Pila, CEO of Frank Pila Immobilier

MIPIM Pioneers: Bernd Heuer, speaker for the advisory board of Agenda 4; Gitta Rometsch, lawyer and managing director of Heuer Dialog; and Dittmar Hagedorn, laywer for Aphaia

THE MIPIM 25th anniversary cocktail hosted a gathering of MIPIM pioneers, who attended the very first event in 1990. Xavier Roy, former CEO of Reed MIDEM, sent a message of congratulations to the pioneers. “First of all, I wish a great success to this 25th edition of MIPIM and personally thank all the pioneers from all horizons,” he said. “It is thanks to you, to the precious advice you gave me, to your support, that I was able to realise the concept of a trade show dedicated to professional and international real estate with the help of a competent team,” he said. “After more than a year of research, meetings, exchanges with stakeholders in the whole value chain of real estate, what was just an idea became a reality. Dear friends, MIPIM was born 25 years ago thanks to your foresight and motivation. I wish to express my warm thanks for it,” he concluded.

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We acquire premium real estate assets. You require a strong partner. Do you have properties in core locations for sale? Then talk to one of Europe‘s leading investors. ‡

Real estate assets under management of EUR 24.6 billion.

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451 buildings in 23 countries worldwide.

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Transaction volume in 2013 of more than EUR 2.8 billion.

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06.03.2014 14:31:49

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NEWS GERMANY’S MARKET REMAINS STRONG, SAYS ZIA REPORT THE GERMAN real estate market remains a “safe haven” for investors and offers the prospect of sustained growth, despite regulatory threats to the residential sector, Andreas Mattner, president of the German Property Federation ZIA, said. ZIA is at MIPIM showcasing its Spring Report on the market, which it has translated into English for an international audience. This estimates the value of the German real estate sector at €434bn, with the investment market up 10.2% last year at €30.5bn, its highest since 2007. However, Mattner said that ZIA remains concerned over coalition government proposals to freeze residential rents and to limit any rent rises after property modernisation. “This contributed to a moderate 3% increase in rents last year,” Mattner said. “We are working hard to help our German members by representing them to government, while at the same time we are able to offer international investors a clear picture of the German market.”

ZIA president Andreas Mattner

Two-tower Paris project will connect city with suburbs

MBITIOUS plans to build the first towers in central Paris for 40 years have been unveiled at MIPIM as part of a major long-term project to expand the French capital and link the centre of the city with its suburban districts. The Tours Duo building complex will sit in the Bruneseau area in the east of the city and be made up of two high-rise buildings the likes of which have not been seen in the city of Paris since the construction of Tour Montparnasse in 1972. They will have a total floor space of 106,000 sq m. The towers have been designed by Ateliers Jean Nouvel, which won a competition to deliver the project organised by public development agency Societe d’Etude, de Maitrise d’Ouvrage et d’Amenagement Parisienne (SEMAPA). It will be rolled out by Canadian developer Ivanhoe Cambridge and SEMAPA jointly. The Tours Duo is one part of a masterplan for the city, known as the Grand Paris project, which is exhibiting at MIPIM, where SEMAPA director general Jean-Francois Gueullette unveiled the plans for the towers. Speaking to MIPIM News Gueullette said: “We are aiming to create new areas of Paris on the edge of the city not in the centre; we

SEMAPA director general Jean-Francois Gueullette with Ivanhoe Cambridge Europe executive vice-president Meka Brunel

want to create connections between the centre of Paris and the suburbs. At the moment there is a bit of a no-man’s land. “This will not just be an office development or a business district. This will be a whole new district of Paris.” Construction work is likely to begin on the project in 2016, with a proposed completion date of 2020.

Design wisdom of Bofill brothers SPANISH design house Ricardo Bofill Taller de Arquitectura — led today by the two brothers Ricardo and Pablo — is at MIPIM to investigate “where the markets are going”. “Of course we want to see what the opposition is doing,” CEO Pablo Bofill said. “That’s normal. But we also want to assess the quality of the various markets. To get a feel of where people think design is going. We have our own ideas, which we will always follow, but it’s interesting to see what views other people have.” The design studio was founded by the brothers’ grandfather — also Ricardo — in 1963. “We continue the design philosophy for the studio set out by our grandfather,” the presentgeneration Ricardo said. “That means for us a particular interest in the city, both as individual designs within the city, and how the city works holistically.” Ricardo Bofill added that 50% of humanity lives in cities, “so we need to deepen our

grasp of how it works and how design elements enhance the built environment”. Though the practice has commissions all over the world, from the US to Russia, the design house has a single office, La Fabrica, in a converted cement factory in Barcelona.

Ricardo Bofill (left) and Pablo Bofill

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NEWS

Unity creates stronger offer for Vilnius, Riga and Tallinn

T Taliance’s Guillaume Fiastre: improving the quality of information

TALIANCE OFFERS THE ACTUAL FACTS TALIANCE claims it is changing the way companies work by answering the need for higher quality and timely data for stress testing, analysing and risk assessing the real estate investment industry. “People are still using Excel spreadsheets to manage their portfolios, but the data is poor and not consolidated,” said Guillaume Fiastre, president and CEO of Taliance, adding that his company’s tools vastly improve the quality of information available to companies and their clients. The IT-systems developer and vendor for the real estate and finance industry is exhibiting within the Innovation Forum this week. Its products include GlobalFund, billed as the world’s first global investment-fund modelling solution; FinAsset, a global decision-making and simulation tool; and TDSE, a Taliance-owned data environment.

HREE Baltic cities will come together today in a joint presentation of the collective real estate investment opportunities that exist in Estonia, Lithuania and Latvia. During a meeting at MIPIM 2013, the governments of the Baltic countries’ three capital cities — respectively Vilnius, Riga and Tallinn — decided on a joint initiative. Mayor of Vilnius Arturas Zuokas told MIPIM News that the three cities would like to be more visible on the global stage. “We want to present how close we are,” he said. “Usually, if a foreign company settles in one of our cities, sooner or later they will also establish in the others. We are seen as one region.” The three will jointly present their investment case at an event on the Riga stand today and are considering a joint stand at MIPIM 2015. They have also jointly endorsed property firm Newsec’s 74-page Baltic Property Market Report 2014, which was launched on the three MIPIM stands yesterday. Zuokas said that the market is booming again, especially when compared to the crisis. “My feeling is that we are back to 2007 and we are attracting attention for offices, residential, supermarket and retail development, as well

as hotels. In my opinion, it is a good time to be in Vilnius.” The stand-out project for Vilnius is the proposed multi-functional cultural centre based on a design by internationally acclaimed architect Zaha Hadid. The centre, which will house a major collection of Fluxus art, will exhibit important works from the State Hermitage Museum in St Petersburg, Russia and will be a landmark scheme in the heart of the Lithuanian capital.

Summerside puts the eco into energy

DESIGNS ON BAKU AZERBAIJAN capital Baku has undergone a dramatic transformation in the last few years, according to Steve Morriss, chief executive of London-headquartered architectural services firm AECOM. Morriss said that Baku’s sea front has been cleaned up and is now “a pleasant promenade to rival Cannes”. It hosts a range of development, including the Eurovision building, the Heydar Aliyev centre and the AECOM-designed Golden Crescent, which is now coming out of the ground — or, more accurately, rising from the sea. AECOM opened an office in Baku six years ago, and now employs a staff of about 100 in the city.

Zaha Hadid’s designs for the Vilnius multifunctional cultural centre

Summerside’s Michael Thususka (left) with mayor Basil Stewart

A CANADIAN city mayor and the city’s director of economic development are at MIPIM to focus interest among European investors on a new eco-park being established in the city.

Basil Stewart, mayor of Summerside, and Michael Thususka, the city’s director of economic development, said the economics of the Canadian province of Prince Edward Island in the St Lawrence estuary were transformed by the C$900m (€584m) Confederation Bridge project that opened in 1997. “That gave us a chance in Summerside, which is only 18 miles from the bridge, to diversify our city economy and move it away a little from dependence on farming and fishing,” Thususka said. The city built a wind farm and is channelling the excess energy into Summerside’s new Greenwood Eco-Park. “We wanted to keep all the energy we create within the community,” Stewart added. At MIPIM, Summerside is looking for equity partners and tenants to work with the local authorities and the Electric Utility to bring the project from concept to reality.

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Global Real Estate Representative global transactions

HOOPP Realty Inc.

The Blackstone Group

Aviva

CA$375 million

Value Confidential

£470 million

Acting for HOOPP in a joint venture arrangement with Menkes Development Ltd., including financing for a new landmark office tower in Toronto

Acquisition from Redevco and financing of a portfolio of three shopping centers located in Turkey

Sale of three specialist real estate funds containing office, retail/leisure and development space located in London to British Land

Canada

Turkey

United Kingdom

Immofinanz Group

Tishman Speyer

KeyBank National Association

€412 million

US$490 million

US$3.24 billion

Sale of the Silesia City Center located in Katowice to an international investor consortium led by Allianz

Completion of a first of its kind foreign sponsored fund to invest in real estate in Shanghai

Representing the administrative agent and lead arranger on multiple syndicated secured and unsecured credit facilities to publicly traded REITS

Poland

China

Great Eagle Holdings Limited and Langham Hospitality Group

Hammersmith and Fulham

Starwood Capital Group

£8 billion Project Value

Value Confidential

Acquisition of the five star hotel at 400 Fifth Avenue, Manhattan

Disposition for LBHF as landowners in relation to development at Earls Court alongside Capital & Counties PLC

Acquisition from German open-ended investment fund DEGI of The Park business complex located in Prague

United Kingdom

Czech Republic

US$229 million

For more information about our global real estate group visit us at www.dentons.com © 2014 Dentons.Dentons is an international legal practice providing client services worldwide through its member firms and affiliates. Attorney Advertising. Please see dentons.com for Legal Notices.

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06/03/2014 17:28

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NEWS CRE MOSCOW AWARDS ANNOUNCED TWENTY-five commercial real estate projects — finalists of the 11th CRE Moscow Awards 2014 — have been announced at the traditional Russian Breakfast today. The names of the finalists are available on stand 02-12. The finalists were chosen from all the schemes completed over the previous year in Moscow, and were judged according to international criteria by a panel of 300 experts from the leading Russian and international development, investment, consulting, property management, architectural and engineering companies. The voting process was monitored by CRE Awards independent consultant PwC.

‘CONFIDENCE HIGH’ IN LONDON MAYOR of London Boris Johnson made a keynote speech yesterday, in which he said that there had “not been a time in the modern history of London where confidence had been so high or international money had been rolling in in such torrents”.

Approach partnerships with caution, delegates warned

O-INVESTING in large real estate projects with partners may be necessary but remains an opportunistic strategy and can be difficult, warned Allianz Real Estate CEO Olivier Piani at a session yesterday dedicated to partnering. Speaking as keynote at a MIPIM Innovation Forum conference entitled Insurance Companies, Pension Funds And Sovereign Wealth Funds: Competitors Or Partners?, Piani said that Allianz had a “self-imposed” internal cap of €250m to €300m for any single property investment, beyond which it would seek to co-invest. However, he pointed to the complications of keeping partner expectations and exit strategies aligned across the duration of a co-investment and cautioned that such an approach was more likely to be pragmatic than strategic. “When we partner it might be about the finance or the opportunity. There is a whole range of possible reasons, it tends not to be a pre-thought strategy but a reaction to the markets,” he said. “However, these partnerships can be very difficult to maintain in the

Allianz Real Estate CEO Olivier Piani warned that partnerships are not easy

long term. As time progresses things change and the investment horizon may change too, but not many investors are alike and aligning the strategies is very difficult.” Piani also pointed out that partnering with a fund, for example, means that expectations may not be the same. “If you have a fund then it has a finite life, which makes you look at things differently,” he said. “You have to be very careful when you partner in an investment.”

Zero-energy revolution will happen REAL estate investors and developers must be aware of the move to zero-energy cities and directives, according to Ralph DiNola, executive director of the New Buildings Institute, presenting at the Getting To Zero Today panel in the Innovation Forum at MIPIM yesterday. “If you are investing or developing in real estate you have to take note that in the next 20 years there is a revolution that’s going to happen,” DiNola told attendees.

He was part of a panel presentation and discussion that included Kasper Guldager Jorgensen, director at 3XN Architects; Steven Borncamp, managing director Europe of International Living Future Institute; Massimo Roj, founder and principle of Progetto CMR; and expert Piero Sartore. The debate centred around how zero-net-energy buildings will define the next decade of development and the work that is being done to get there.

MASTERMINDS EUROPE THE MASTERMINDS Europe session at 10.00 will ask: Are Europe’s Large Cities And Their Infrastructure, Which Follow Different Development Paths, Still Attractive To International Investors? Speakers include Gunther H Oettinger, member of the European Commission and Alderman Sir Michael Bear, chairman of the Regeneration Investment Organisation.

Ralph DiNola (left); Kasper Guldager Jorgensen; Steven Borncamp; Massimo Roj; and Piero Sartore, in the Green Room at the Innovation Forum yesterday

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PROJECT PRESENTATION: “URBAN REGENERATION IN TUSCANY”

with Ms Anna Marson, Regional Minister for Urban planning and representatives of Tuscan Municipalities Stand Invest in Tuscany LR 4.16 Lerins Hall - a networking Tuscan cocktail will follow

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07/03/14 10.02

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NEWS OUTLOOK FOR REAL ESTATE STRONG, COWELL SAYS Nicholas Cowell

PROPERTY investment and development company, the Cowell Group, has been involved in the acquisition and sale of £200m (€240 m) of London property over the last 30 years. During its eighth year at MIPIM the group will be presenting a number of opportunities, including a portfolio of five Hilton Hotels — one in London, the rest across the UK — with a price tag in the region of £160-170m. Director Nicholas Cowell believes the outlook for real estate is very strong, although he has slight concerns about values being paid currently for property in the Far East. Nevertheless, with backers’ confidence high and a “substantial” war-chest, the group is on the lookout for interesting investments.

TUSCANY IS RIPE FOR INVESTMENT

Monica Colom

TUSCANY is rich with opportunities for investment to fund restoration, renovation and new build projects, one of the regional government’s representatives attending MIPIM has said. Monica Colom, inward executive manager for the region, has said that a host of schemes and developments are under way in Tuscany which offer interesting projects for investors looking to branch out into the historic region. Today Tuscany’s urban planning minister Anna Marson will address delegates at a special presentation to promote the various projects under way. The presentation, at 15.00, will be followed by a networking event.

Retail on the rise in Turkey as economy fights back

NY PROBLEMS the Turkish economy is facing will be only temporary, according to consultant Cushman & Wakefield’s managing partner for Turkey, Togrul Gonden. “The economic fundamentals in Turkey are right. And we expect to see 3.6% GDP growth in the second half of 2014.” Gonden said that real estate, Turkey’s fastest growing economic sector, is particularly healthy. “Over 250,000 sq m of grade-A office space was leased in last year. But of particular importance is that 50% of the space was for 10,000 sq m or more. So we’re seeing a lot of big deals.” There is new ofﬁce stock coming on to the market all the time,

“but we’re not worried by oversupply”, Gonden said, because the total stock is still low compared with other European centres. “We expect to see a doubling in the amount of ofﬁce stock in the next 40 years.” Retail and particularly provision of shopping centres was an area where Turkey showed some lag behind other European levels. “But we’re catching up fast,” he said. The figures show that Turkey has 126 sq m of shopping centres per 1,000 population. “New centres are opening so fast now we’re forecasting that index will rise to 160 by the end of 2016.” So the signs are positive. But Gonden said it’s not

always easy for outside retailers trying to break in to Turkish retail. “You’ve got to be innovative; you’ve got to be aggressive; you’ve got to be competitive; and you’ve got to come in with an effective strategy. Turkish retailers have all those attributes and more and are well capable of seeing off even big-name international brands who think they’re going to have an easy ride.”

Togrul Gonden, managing partner Cushman & Wakefield Turkey

THE TOKYO stand opened yesterday with a traditional ribbon-cutting ceremony. Pictured are:

Mitsuo Nakamura (left) chairman of Nikken Sekkei; Christophe Chupot, director of Reed MIDEM’s real estate division; Motoi Sasaki, Japan’s vice-minister for Land, Infrastructure and Hokkaido Development; Kiyoshi Kitagawa, director Mori Building Co; Koji Okuyama, senior director for policy planning at Tokyo Metropolitan Government.

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NEWS SUPERCOMPUTER SPARKS INTEREST FOR OSTRAVA POTENTIAL access to Ostrava University’s new supercomputer is among the attractions that are drawing businesses to the city, deputy mayor Martin Stepanek said. Ostrava is at MIPIM to promote an industrial zone where 80 ha remains for development projects, and a 50 ha brownfield site. The city also has a science and technology park that lies 200 metres from the university where the supercomputer is housed. Thursday will be Ostrava Day at MIPIM when the Czech Republic city’s Lord Mayor will visit the stand.

PRS specialist Fizzy attracts investment from Middle East

Fizzy Living’s Harry Downes (left) and Mark Allnutt (right) with TVH’s Geeta Nanda

Ostrava’s deputy mayor Martin Stepanek (left) with colleagues Adela Koudelova and Vaclav Palicka from the city’s department of economic development

LONDON PROJECTS ARE TAYLOR-MADE

Ingrid Skinner, Taylor Wimpey Central London managing director

AS ONE of the top four house builders in London, with a customer base drawn from around the world, MIPIM is a natural venue for Taylor Wimpey Central London to promote its activities. According to managing director Ingrid Skinner, the company is the bespoke arm of Taylor Wimpey, with an offering that is tailored to the specific requirements of the Central London market. It currently has 12 active mid-range residential schemes in the capital that are being showcased to clients from the UK, Europe, Asia and the Middle East.

HE ABU Dhabi Investment Authority (ADIA) has provided £200m (€240m) of capital to the UK private rented sector (PRS) company Fizzy Living in what is a major show of faith by an international institution in the country’s residential sector. Following the capital commitment from ADIA subsidiary Silver Arrow, Fizzy Living has capital available to increase the speed at which it can grow its portfolio. The company will continue to purchase new buildings from developers and will undertake the development of its own apartment buildings. Fizzy Living, a wholly-owned subsidiary of Thames Valley Housing (TVH), claims to be the ﬁrst com an in the esi ne s eciﬁcally to service the needs of young professionals seeking accommodation in the PRS. “The people out there that are interested in PRS are already active in commercial real estate. From the asset class perspective, for PRS

it is about putting the management platform in place to satisfy the requirements of institutional investors and that’s what we’ve spent the last two years doing,” Fizzy Living managing director Harry Downes said. “Coming to MIPIM is about accelerating our growth, helping us to acquire and to identify sites to build our own properties.” Geeta Nanda, CEO of Thames Valley Housin a e ein one of the ﬁrst to i entif the potential of the PRS, we have always had a very clear vision and focus, which we feel is what has attracted the investment. This will allow us not only to acquire but also to undertake development. It is exactly where we set out to be when we started the business.” Fizzy Living was launched in February 2012 with seed capital of €36m provided by TVH. In January 2013 Fizzy secured a further €48m of debt funding from Macquarie Capital, which subsequently assisted Fizzy in identifying a suitable institutional partner.

THE FIRST official Table Football World Championship kicked off at MIPIM yesterday. Teams will be facing each other throughout this week’s show, in a tournament organised jointly by German property communications firm Rueckerconsult, property magazine Immobilienmanager, advertising agency Runze & Casper and the German Property Federation (ZIA). Matches will take place between 12.30 and 14.00 every day, with up to 16 teams being invited to take part each time.

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NEWS

China’s move from manufacturer to consumer is good news for UK

I CTP’s Remon Vos: Czech Republic developing into a high-skills location

CTP TARGETS €3BN CZECH PORTFOLIO CZECH Republic developer CTP is on schedule to have a property-asset portfolio of €3bn by 2017, according to CEO Remon Vos, who said the country is benefiting from its high-skills reputation and Central European location. Much of CTP’s expansion has come through a 10-year co-operation with the city of Ostrava, where the company has constructed a number of industrial and office buildings and is currently working on the second phase of a major business park, due for completion this year. Tenants will include Italian brakes specialist Brembo and tyres giant Continental. “We have invested around €300m in the city so, as you can see, Ostrava is a very important location for us,” Vos said. “At the same time, our tenants have brought 5,000 jobs to the city, which has developed from a low-cost centre to a high-skills location. The local authority has also invested in infrastructure to connect Ostrava to other key cities, including Katowice in Poland.” Vos said he is at MIPIM to talk to current and prospective tenants and also to meet banks with a view to discussing development finance in the Czech Republic. He added that CTP would have assets of circa €2.5bn by the end of the year.

T’S NOT too much of a problem that China’s growth is currently in decline. Nor is it necessarily a problem that the UK economy is dominated by London and the South East, said economist Jim O’Neill, honorary professor of economics at Manchester University, in a speech on the Manchester stand yesterday. According to O’Neill, China is declining as a manufacturer — hence its current drop in growth rate from the high double-digit levels of recent years — but it is increasing as a consumer. “China is slowing down, but we need to see that the future of China is as a consumer and importer rather than a manufacturer,” he said. He added: “The effect of a China slowdown as a producer is threefold. Firstly, it means more manufacturing is done in the UK; it means more manufacturing is done in places such as Mexico; and it means China is importing more. It’s beginning to look like China will be a net importer of goods by 2027.” ookin c oser to home ei i entiﬁe cities as the main driver of growth round the world. “We no longer see as strongly as we did growth moving from north to south, nor even so much from west to east,” he said. “What we see most strongly is that cities round the world are the drivers of growth. What is driving the economic growth of the world is the movement of people into cities and the growth of those cities.”

Manchester University’s Jim O’Neill: “cities are the drivers of growth”

And looking even closer to home, O’Neill i entiﬁe cities in the that ha e the potential to be drivers of growth. “These cities can look to London as the model. They can follow the areas where London works and do the same. And they can also see what strengths they have that London lacks and build economic strength on those assets too.”

Excellent result for Ghelamco’s Spire DEVELOPER Ghelamco was yesterday presente with its ce ent certiﬁcation for its new Warsaw Spire scheme, which the company is previewing at MIPIM. Ghelamco CEE managing director Jeroen van der Toolen said this was the largest project by

Ghelamco’s Jeroen van der Toolen is presented with BREEAM certification for Warsaw Spire by BREEAM’s Martin Townsend

the com an to ha e achie e certification he amco now has ei ht certifications for its work. “We were the first developer in Poland to et certification an a so the first e e o er ast ear to et office certification an er Too en a e s we as the arsaw ire a s m office scheme an an s m retai roject in various districts of Warsaw, Ghelamco is understood to be working on a potential contract with Polish state railway operator PKP to redevelop the Dworzec Gdanski station The ea which cou e worth n Polish zloty (€0.28bn), would be the biggest public-private partnership in PKP’s history. The project would see the redevelopment of 4.7 ha of land located north of Warsaw’s CBD. Van der Toolen said he could not comment on the PKP deal.

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Institutional real estate ‘back to normal’, Summit hears

NSTITUTIONAL real estate is back in business according to the findings of the MIPIM RE-Invest Summit held yesterday morning at the Carlton Hotel in Cannes. The third Real Estate Institutional Investors Summit, which had more than 45 representatives from more than 30 companies in attendance, saw a change in attitude from attendees according to Erwan Quintin, real estate professor for the Wisconsin School of Business, who is preparing a white paper on the results of the event. “The bottom line is that there is a drastic change in tone and it seems to be back to normal in institutional real estate,” he said. “Investors want to increase their exposure to real estate.” Quintin said that some investors were concerned that core prices were getting high but said that was tempered by the fact that LTVs were nowhere near as high as they were in 2007. “The level of concern about core prices

is nowhere close to pre-crisis levels,” he said. However he warned that core yields are low which is prompting many investors to look beyond core to non-traditional real estate investments such as healthcare and data centres. “Investors emphasise that the shift towards non-traditional real estate has been gradual and is a learning process and say that the expected returns have to justify the extra work involved,” said Quintin. Geographically Quintin said that Western Europe and Southern Europe in particular were getting a lot of attention from investors looking to expand their portfolios. RE-Invest was launched in 2012 as part of the MIPIM calendar of events as a closed door, invitation-only event dedicated to the world’s leading sovereign wealth funds, pension funds, insurance funds and endowments in the real estate industry. The event includes research, an interactive discussion between attendees and then the compilation of the white paper.

AXA Real Estate CEO Pierre Vaquier addresses the RE-Invest Summit

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Richard Lowe editor of IP Real Estate spoke to two delegates at the RE-Invest Summit Tomas Svensson AP1 SWEDISH national pension fund AP1 has been seeking to increase its exposure to international real estate markets in recent years. When the global financial crisis struck in 2008, AP1 already had plans in place but it still had no exposure outside Sweden. When Tomas Svensson left Storebrand Fastigheter in 2011 to take up the role of real estate portfolio manager in 2011, “it was a work in progress”, he said. “Since I joined we have refocused that effort and worked on implementation.” The main rationale for investing outside Sweden is to achieve “higher risk-adjusted returns” for the real estate portfolio, according to Svensson. “We are not looking to be present in every submarket globally, but rather in those markets that we have identified offering a combination of good prospects and a low-to-medium correlation to our home market. We do not think that we need to be invested everywhere to get the best part of the diversification that we are looking for.”

Adam Cibik Employees Retirement System of Texas THE REAL estate programme of the $25bn Employees Retirement System of Texas (ERS) is only four years’ old, but already the pension fund has built up a portfolio worth approximately $2bn in the US and Europe. “ERS as an organisation is quite old — we were founded in the Sixties — but the real estate programme was started in 2010,” said Adam Cibik, portfolio manager for real estate. “We began with core investments in the US. There was a perfect timing with those; we got them right at the bottom of the cycle. And from there we expanded to value-add and opportunistic investments. And then a few years ago we made the programme global and we branched off into Europe.” “Now, of course, all the pension funds want to go to Europe, we’re hearing,” Cibik said. “It’s become the flavour of the year. And so now we are slowly looking at Asia as well as emerging markets and alternative core markets like healthcare and student housing; forestry is an interesting space; maybe self-storage, if it can be accessed.”

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NEWS Turkish government makes plans for next earthquake

3M’s David Cox

3M’S COX GIVES ILLUMINATING PRESENTATION 3M IS previewing a new window film at MIPIM that is to be introduced later this year. It will allow daylight to be redirected deeper into a room or office, reducing the need for perimeter lighting and improving lighting and energy efficiency as a result. David Cox, European business development manager at 3M, is showing off the Daylight Redirecting Film alongside the company’s existing Prestige 70 Exterior Window Film on the 3M stand within the Innovation Forum in the Gare Martime at MIPIM. He is also presenting in the Retrofit Strategy And Smart Buildings: Towards High-Performance Buildings session at 14.00 in the Green Room as part of the Innovation Forum conference programme. “We are presenting our solutions for smarter buildings and the technology for saving energy and redirecting daylight whether in offices or homes or anywhere that has windows,” said Cox. He said the company’s 200 layer Prestige 70 Exterior film reflects infrared out — reducing the heat directed into buildings and the need therefore for air conditioning. He said the system typically delivered a return on investment within two or five years and could be used on modern buildings and on protected buildings, as it is a film applied over existing glass.

HE HOUSING stock in Turkey’s urban environment faces two problems, a conference on urban regeneration heard yesterday. These are the danger of earthquakes; and the large numbers of unsafe, unplanned and unlicensed dwellings. A government-sponsored programme is under way aimed at redressing both issues. Conference moderator Erden Timur CEO of Turkish developer Nef said “Urban regeneration is a key milestone for Turkey’s future, both socially and economically. It is a social initiative since it deals with rebuilding of risky houses estimated to be around 6.5 million in total. “The 1999 earthquake took almost 20,000 lives and left more than 600,000 people homeless. It is also an economic initiative since it deals with Turkey’s fastest growing sector: real estate.” Saruhan Ozel, chief economist at DenizBank, said reports indicate that “ninety-nine per cent of buildings built before the 1999 earthquake are deemed to be at risk if, or rather when, the next

Nef CEO Erden Timur

Saruhan Ozel, chief economist at DenizBank

big earthquake hits Turkey.” Experts can’t say when an earthquake will hit, Ozel said, “Nor do we yet know how big it will be. All we can say if you live in an earthquake zone is that at some point an earthquake will come, and at some point sometime it will be a big one. What Turkey is doing now is building and rebuilding to ensure that the damage is considerably less next time.” Ozel took the audience through

the process by which a group of owners in an un-licensed or atrisk building can, with government grants and financial help, get their building demolished, and rebuilt, “and move back in to a better building”. Senior urban designer David Green from American design house Perkins+Will said that the Turkish model was becoming so successful that it is likely to be the model followed by other countries.

MIPIM will stay in Cannes for the next 10 years REED MIDEM CEO Paul Zilk signed a new deal at MIPIM that will keep Reed MIDEM’s events in Cannes for another 10 years. After shaking hands on the deal with the Mayor of Cannes, Bernard Brochand (left) and Palais des Festivals president David Lisnard, he said: “Cannes is an integral part of our event experience. Reed MIDEM shows have been held in the city since 1965 and I’m delighted to extend this invaluable partnership for another 10 years.”

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NEWS RESOLUTION JOINS WITH ECE TO BUY POLISH CITY MALL A 50:50 joint venture between the ECE European Prime Shopping Centre Fund and Resolution Property has acquired Poznan City Center retail park in Poznan, Poland from Europa Capital and TriGranit for a figure believed to be around €230m. Poznan City Center opened in October 2013 and comprises 58,000 sq m of leasable area, including 230 shops and two food courts on three levels. The centre is 90% leased and retail tenants include Saturn, TK Maxx, H&M, Reserved, Bershka, Pull & Bear and Toys “R” Us. The mall is integrated into the central station, which gives direct access. Peter Todd, partner at Resolution Property, said: “Poznan City Center is a significant addition to our Polish portfolio and the centre presents strong asset management potential and future development opportunities in line with our European strategy.”

NEW SIGNINGS FOR LASALLE’S CENTRE LASALLE Investment Management (LaSalle) has announced several signings at its Tower Ramparts shopping centre in Ipswich, UK. Retailers River Island, Iceland and Poundland have all taken space after agreeing refurbishment deals on their units. LaSalle has transformed two vacant retail spaces on the upper level of the centre, plus both floors of the former Dorothy Perkins store, to provide extended space for River Island, which opened towards the end of last year. Iceland is returning to the centre and is due to begin trading in April 2014, while the new Poundland store will open this month.

Transport is key to London’s future housing, Pidgley says

Berkeley Group chairman Tony Pidgley

URTHER investment in the transport infrastructure of London is central to the city’s future housing supply, Berkeley Group chairman and founder Tony Pidgley declared yesterday. Speaking at a MIPIM panel session, the leading residential developer said that “site after site” in London would benefit from improvements to transport connectivity in the capital and criticised political delays for the shortage of supply.

“If you were to deal with the transport infrastructure in those areas you would see more homes. Why does it take politicians so long to make up their minds about this?” Pidgley’s comments came during the panel session held at the London Pavilion. The session — Residential Development And Investment — was chaired by FTI Consulting managing director for strategic communications Giles Barrie, and took place immediately after mayor of London Boris Johnson officially opened the London Pavilion. Commenting on the challenge of design and densification in London, Pidgley said that consulting with local populations was key to getting new residential development right. “You have to remember that people come first,” he said. “We spend the first three months talking to the community when we develop new housing. If they feel part of the process on design and you build in the things they want they buy into it. People want housing to create jobs and create homes.” He added that London design guides needed updating, which he said was becoming a widely held view among developers and designers in the city. Also speaking on the panel was Deloitte Real Estate head of planning and development Clive Pane, Turley Associates executive director Michael Lowndes and CBRE head of residential Mark Collins.

Sberbank in Cannes to gauge foreign interest in Russia MIPIM is both an opportunity to measure interest in the Russian real estate market — where there has been a number of high-profile new entrants — and to meet with other Russian companies, according to James Corrigan, managing director of Moscow-based Sberbank Corporate Investment Banking (CIB). “Russia has recently attracted foreign investors such as CalPERS and one of our objectives is to get a feel for other foreign investors.” Corrigan said. Sberbank CIB is one of the most dominant players in the Russian finance market and has about 5,000 corporate clients. Its loan portfolio is about 4.8 trillion roubles (€95bn) which represents about 19.6% of Russia’s corporate loan market.

Sberbank CIB’s James Corrigan

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NEWS CRE CORE TO CORPORATE STRATEGY REAL estate needs to be treated as a more fundamental part of corporate strategy as the global economy improves, a leading figure from the International Monetary Fund (IMF) will tell a panel session today. Speaking ahead of the session, Scott McMillan, IMF division chief of facilities, real estate and capital projects, said: “As we come out of this difficult patch, it’s important that we talk about this now, when there are expansion plans starting to come through.” He added: “Real estate needs to be treated strategically, and we need to find ways to measure its success and analyse data meaningfully. Real estate can be a way of actively encouraging people to come to work for you. It sends a message out about your corporate identity.” The session, Financial Impact Of CRE: How To Influence The C-Suite And Business Strategy, is taking place later this morning, with speakers from AON, Hamilton Corporate Real Estate Advisory and Ocea also on the panel.

Mebe delivers Khimki Plaza development in record time

E BE D evelo p ment has virtually completed its first project, the Mebe One Khimki Plaza office project near Moscow’s Sheremetyevo International Airport, after a mere 14-month construction period. Now, on an adjacent site, the Russian company is preparing to start a $50m (€36m), four-star hotel, for which Mercure Hotels has signed an agreement. Both the hotel and Mebe One Khimki Plaza have been designed by London-based architect John McAslan + Partners. Mebe will locate on the top two floors of the office scheme and marketing will commence on the remainder of the space when the building is totally finished. Mebe deputy general manager, Okan Korates said the company decided to complete the building prior to promoting the space because people had been reluctant to believe that the company could complete the building so quickly. “And anyway, rents will be more stable when the building is fin-

Okan Korates: “Mebe no longer just a construction company”

ished,” he added. The speed of construction was possible because of Mebe’s vertical integration. Mebe Developments, founded three years ago, is part of Mebe Group, established in 1995 as a construction company. The group also manufactures its own steel work and

cladding panels, which Korates said gives greater control over the construction schedule. Mebe is primarily at MIPIM to meet other Russian companies. “We want everybody in the Russian market to realise that we are not just a construction company any more,” Korates added.

STOCKHOLM RECOMMITS TO BREEAM SCHEME

NATO HQ on track for 2016

THE CITY of Stockholm has pledged to increase its use of BREEAM In-Use-certified buildings from 30 in 2013 to 100 in 2015. Stockholm is already the largest municipality user of the scheme in the whole of Europe. Gavin Dunn, director of BREEAM at BRE Global, said: “This represents a major commitment by a leading European city, which we believe will lead to positive benefits in terms of reduced energy use, less use of water and other resources, and better environments for tenants and users of buildings.”

ARCHITECT SOM (Skidmore, Owings & Merrill) says its $1bn (€0.72bn) headquarters development for NATO in Brussels will be completed on time in 2016.

The long-running project includes 180,000 sq m of offices, conferencing and recreational facilities. The design concept weaves different constituencies

SOM’s design for the new NATO headquarters in Brussels

into a distinctive 3D spatial organisation. The resultant structure is intended to be both dynamic and highly functional. The new HQ is said to be “like fingers interlaced in a symbolic clasp of unity and mutual interdependence”. SOM’s design represents the changing mission of the organisation from opposition and prevention to unification and integration. The design provides each member nation with embassy-level security and privacy, while also providing shared space where national representatives can meet as partners in the pursuit of peace.

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NEWS THE STAGE IS SET IN EAST LONDON THIS year’s London Pavilion features a showcase on Old Street and Shoreditch, setting out plans for development and opportunities for regeneration and investment in the district. A panel comprising Peter Murray, chairman of New London Architecture, Steve Johns, director and head of City leasing team at Deloitte Real Estate, Gerald Kaye, development director at Helical Bar, Juliette Morgan, head of property at Tech City Investment Organisation and John Drew, principal of Pringle Brandon Perkins+Will will discuss this area of London at 12.30 on Thursday. Drew will be speaking about The Stage, a key scheme in Hackney, East London by Plough Yard Developments, which was granted planning consent in July 2013 and will transform a disused 1 ha site into a new community with an ancient monument at its heart. The Stage will comprise 385 residential units in a 40-storey residential tower building, including a gym, private cinema and business facilities. Two office buildings totalling 250,000 sq ft (23,255 sq m) will serve the technology media and telecommunications sector and 4,650 sq m of retail space, cafes and restaurants will serve residents and visitors alike. Despite not being required due to high archaeological costs, 40 affordable housing units will be provided off-site, delivered by Family Mosaic. Drew said of the area: “The northern fringe of Shoreditch and Spitalfields was reported to deliver the highest returns in the capital last year at 23%, higher than the West End and City.”

Investment guide highlights positive climate in Portugal

USHMAN & Wakef ield (C &W ) is launching an updated version of its Guide To Property Investment In Portugal in response to improving conditions in the nation’s real estate market. The guide, produced jointly with Portuguese law firm, Uria Menendez Proenca de Carvalho, will be presented to the international real estate community at the Cushman & Wakefield stand at 09.00 on Thursday. The last edition was published in 2010 and according to managing partner, Eric van Leuven, a lot has changed in the last few years. “There have been some significant changes to legislation which have helped improve the investment climate in the country,” he said. Economic indicators are positive and increasing confidence and availability of capital signal that the national real estate market is on its way to recovery, albeit from a low starting place. “It will take some time to recover the ground

C&W’s Eric van Leuven: “things are moving in the right direction”

lost in recent years, but things are moving in the right direction,” van Leuven said. An example of recent change is the long-awaited amendment to lease law which ends guaranteed security of tenure. Under the previous legislation there was little encouragement to maintain and refurbish building stock. Now however, there is considerable local, and some

international, interest in the refurbishment and regeneration of Portuguese real estate. The retail market is also very positive, particularly luxury retail. Meanwhile, the government’s introduction of ‘golden visas’ for overseas residents who invest €500,000 in a property in Portugal has had a positive impact on the real estate sector, including residential.

New urban residential destination in Casablanca ANFA El Beida — a mixed-use urban community on the former airport site in Casablanca — is being promoted to delegates this week by developers Thomas &

Piron and AG Real Estate. Designed by ASSAR Architects, the project includes a series of low- and mid-rise buildings, the tallest reaching 17 storeys. The

Anfa El Beida: reflecting traditional architecture

buildings accommodate 229 residential units and are set in a series of private and communal gardens with a public pedestrian promenade allowing easy access between different quarters. The design of the buildings reflects the traditional architecture of the area with numerous platforms and roofs offering a variety of spaces to be enjoyed by the inhabitants. When completed in 2018 the project will comprise 32,780 sq m of housing and 1,569 sq m of retail areas. The master plan incorporates pedestrian and bicycle routes as well as the existing adjacent tramway line, while an underground garage will provide room for 359 car spaces. Construction will start in early 2015.

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NEWS CANADIAN company Land Specialist is at MIPIM delivering the message to developers: if you’re looking for land, use a specialist. Land Specialist is a real estate agency focused on land transactions, with a team of estate agents formed specifically for the sale and finding of land. The company offers access to a database of landowners and a bank of contacts for companies searching for land, and uses custommade land-search software. Its information system, based on geo-location, allows the positioning of land for sale on maps using its geographical co-ordinates, and Land Specialist has a search engine with several search criteria to help customers find land that precisely corresponds DEV_N1à3_PIM to084_DIE their needs.

GoodPlanet foundation orbits Cannes in search of support

O O D P L A N E T, t he fou nd at ion established by the photographer Yann Arthus-Bertrand, is to develop a 3 ha site in Paris’ Bois de Boulogne as a reference centre to help meet major human and environmental challenges. The foundation is at MIPIM to source funding and financial advice. The new centre, based at the Domaine de Longchamp, will comprise a 3 ha park, a 2,500 sq m castle and two pavilions of 800 sq m and 400 sq m respectively. Spokesman Thomas Sorrentino explained that GoodPlanet’s vision is to create an international space of reference for all those involved in the current major human and environmental challenges. “The Domaine will gath-

VOTE FOR GOLD! VOTE FOR KO -BOGEN!

er the most visionary seminars, experimentations, expositions, projections and conferences of our time,” Sorrentino said. The centre has already attracted attention at a senior level: UN Secretary-General Ban Ki-moon is supporting the project, and

famed chef Alain Ducasse will open an organic restaurant there. The centre will also provide permanent exhibition space for Yann Arthus-Bertrand’s work including his book Earth From Above, the movie Home and its forthcoming sequel Human.

Paris’ Domaine de Longchamp to host GoodPlanet’s new centre

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Open for business Mark Moore previews some of Turkey’s spectacular new developments on display at MIPIM

Shangri-La Hotel

Contents Open for business: Key projects Mint fresh: Infrastruture drives change

I IV

CONSULTANT Proplan project managed the construction of the Shangri-La Hotel in Istanbul. This recently opened hotel is located on the European side of the Bosphorus in the Besiktas district not far from the Dolmabahce Palace. This was the first top-down construction project to be carried out in Istanbul, the company points out, because of the heritage nature of the building — a former tobacco factory — and the extremely tight site, being right on the edge of the water with close neighbouring properties. Proplan was founded in 2005 with the aim of adding expertise and capabilities to Turkish contractors, which are spreading throughout the region and in to Russia. The company has its headquarters in Istanbul with offices in Ankara and Baku, Azerbaijan. Proplan’s expertise ranges through the construc-

tion and engineering spectrum, with considerable experience in airports, subways, dams, infrastructure, railways, tunnels, residential complexes, hotels, industrial facilities, sports complexes, shopping malls, cultural and trade centres, marinas and mixed-use projects.

Istanbul’s new Shangri-La Hotel in Besiktas close to the Dolmebahce Palace

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NEWS Liverpool set to become logistics hub for north

IVERPOOL Superport presents substantial commercial property investment opportunities as it positions itself to become the multi-modal freight and logistics hub for northern UK, according to NAI Global. In a report out this week, the property services network says that there is a good supply of high-quality and readily accessible building sites to meet demand for the next five years. However, an additional 400-500 ha will be needed to meet demand over the next 20 years. NAI Global produced the report, Liverpool City Region Local Enterprise Partnership Superport: An Analysis Of The Supply Of 185_DANA_N1&2_PIM

And Demand For Distribution Space Within The Liverpool City Region, on behalf of the Liverpool City Region Local Enterprise Partnership, which is leader of the Liverpool Superport freight hub programme. “Superport presents significant commercial real estate investment opportunities for companies worldwide, particularly to retailers and manufacturers seeking port locations for logistics and distribution centres,” said NAI Global president Jay Olshonsky. “Currently, 45% of North American trade enters the UK via Liverpool, and the location is ideally positioned to benefit from increased Atlantic activity and the growth of Latin and South American economies.”

Docks Bruxsel gets under way

O N S T RU C T I O N is set to begin on a mixed-use scheme, which the developer says will become a unique part of the Belgian capital Brussels. Ground will be broken at the Docks Bruxsel scheme next April on a 4 ha former industrial site by the side of the canal in the North West of the city. Docks Bruxsel, which is being

developed by Equilis with design by Art & Build Architect, will contain some 40,000 sq m of retail space as well as some leisure and light industrial use buildings. Once completed, in 2016, it will be made up of eight buildings and open-air public spaces. Parts of the scheme will be heated using an innovative technique which channels waste heat from a nearby incinerator.

The Docks Bruxsel project in the Belgian capital

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NEWS DON’T WAIT TO EMBRACE TECH THE REAL estate industry must embrace technology now or lose out, warned Fadi Atallah, managing director of Cisco Services, which is exhibiting at MIPIM’s Innovation Forum. Atallah yesterday presented Cisco’s view of the future and the Internet Of Everything’s (IOE) ability to create smarter cities. But he cautioned that the opportunities offered to cities by the IOE, with its ability to link things, people and processes, meant cities had to build network infrastructures to cope. Cisco is exhibiting in the Innovation Forum for the third time. “We are seeing more people coming to the Forum each year,” Atallah said. Cisco’s Smart+Connected Communities consulting service helps advise on the opportunities offered by the IOE. 149_ALTAREA_N1a3_PIM

Technology has levelled playing field for smaller design houses

ONG-time MIPIM supporter, Earle Arney, CEO of FKA Architecture + Interiors, has seen major changes in the real estate industry since his first attendance at MIPIM in 2007. FKA is a boutique practice, with studios in London, Melbourne and Sydney. Arney said that advances in technology mean that smaller, nimbler firms can now operate successfully around the world. He also observed that there has been a polarisation of professional services organisations in recent years. With a quarter of a century of award-winning experience behind it, FKA focuses on three sectors: workplace, residential and cultural. It works to apply the best of international thinking to

FINALIST

BEST REFURBISHED BUILDING

2014

FKA’s Earle Arney (left) and Simon Jackson: “we work on some of the world’s best projects”

its projects, so they benefit from the experience gained in other regions. “With 150 staff, we are not the world’s biggest practice, but we work on some of the world’s best projects,” Arney said. For example, the company was recently appointed by Brookfield

Office Properties to lead the internal and external design of its C$1bn (€650m) development, Brookfield Place Calgary. On completion, the 2.8 million sq ft (260,000 sq m) development will be the tallest building in the city, comprising two towers of 56 storeys and 43 storeys.

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Hotel-Dieu InterContinental Marseille – Hotel Dieu Nominated at MIPIM Awards – Best Refurbished building g category g y Transforming an 18th century hospital so steeped in history into a superb 5-stars hotel was a real challenge. Everything noteworthy in the former Hotel-Dieu had to be restored, enhanced and preserved to transform it into an InterContinental Hotel ready to host international visitors for the opening of Marseilles, international capital for culture. Altarea Cogedim and AXA Real Estate made it possible respecting the highest international standards: 23,200 sqm were refurbished in a stylish and contemporary design. It has been amongst the first historical building to reach the highest environmental labels making Hotel-Dieu a unique place to stay in the heart of Provence.

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MIPIM 2014 COUNTRY OF HONOUR

Country of Honour Highlights: • Dedicated Brazil Pavillion on level -1 • MIPIM Awards Best Brazilian Project • Targeted networking events to meet the key players

• Conference: Brazil’s expansion: after 2013 economical context changes, what situation? What opportunities? Brazilian leaders respond to the international community

INTELLIGENCE IN ENGINEERING

Contact: Aline Barabinot - +55 (11) 3266 3631 - aline@orbiz.com.br or Sophie Mathieu - +33 1 79 71 9519 - sophie.mathieu@reedmidem.com

mipim

NEWS Istanbul Finance Centre plans to rival London and Frankfurt

NE OF the world’s biggest developments, the 800,000 sq m Istanbul International Finance Centre, is on show this week at MIPIM. It is also one of the world’s greenest projects, according to Emlak Konut. The developer’s focus on sustainability in the effective use of energy, water and building materials has led to the scheme securing LEED certification, the US’ green building code standard. The scheme is in the city’s Anatolian district and includes five main towers and several subsidiary buildings rising from a seven-floor podium, with total floor space of 3.2 million sq m. On completion the centre will house 11,000 workers with room for 205_ACCOR_N2_PIM

The 800,000 sq m Istanbul International Finance Centre, one of the world’s biggest developments

25,000 visitors. As well as offices the mixed-use project will include a congress and culture palace with capacity for 3,000 people, library, hotels, school, mosque, kindergarten, health

Our New Frontiers Can Also Be Yours!

centre, fire station and police station. The intention is for the Istanbul Finance Centre to have the capacity to rival London and Frankfurt as Europe’s financial hubs.

BELTRAME IS SELLING VENICE SITE ITALIAN steel manufacturing giant AFV Beltrame is selling a 200,000 sq m site at Port Marghera, Venice, which the company’s sole agent GVA Redilco claims is the only industrial site in the vicinity with direct cargo dock access. Venice is among Europe’s leading ports and GVA Redilco said that it expects the site to attract shipping and freight companies, as well as manufacturing firms. The site has a 350-metre frontage on the deep-sea port and is designated for industrial, production, commercial or office space and could be converted into a commercial port. It is the only dock in the MargheraVenice Port complex with a permit for scrap metal disposal.

Accor, the world’s leading hotel operator and market leader in Europe, is present in 92 countries with more than 3,600 hotels and 460,000 rooms. Accor’s broad portfolio of hotel brands - Sofitel, Pullman, MGallery, Grand Mercure, Novotel, Suite Novotel, Mercure, Adagio, ibis, ibis Styles, ibis budget and hotelF1 - provide an extensive offer from luxury to budget. With nearly 170,000 employees in Accor brand hotels worldwide, the Group offers its clients and partners 45 years of know-how and expertise.

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IMMO BELGIUM

DOSSIERS immo_114_DEF:Layout 1

4/02/14

21:31

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FÉVRIER 2014 – N°114

IMMOBILIER – ARCHITECTURE – DESIGN

L’Essentielle IMMO, le magazine immobilier encarté dans “La Libre Belgique” le quotidien belge national ARCHITECTURE CUYPERS & Q ZOOM BATIBOUW TABLE RONDE NOUVELLES CONSTRUCTIONS

NAMUR - LUXEMBOURG - JEUDI 16 JANVIER 2014 - www.lalibre.be

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LES GRANDES MANŒUVRES ONT DÉBUTÉ À L’APPROCHE DES ÉLECTIONS EUROPÉENNES. LES CANDIDATS POTENTIELS – ICI J.CLAUDE JUNCKER – AUX POSTES CLEFS DE L’UNION PARTENT EN TOURNÉE. International pp.14-16

GUIBBAUD/REPORTERS

MIPIM 2014

ON NE PEUT FORCER UNE PERSONNE DÉMENTE À UTILISER UN DISPOSITIF DE “DÉTECTION D’ERRANCE”, DIT UN AVIS DU COMITÉ DE BIOÉTHIQUE. Belgique pp. 4-5

DANS LE SINAÏ ÉGYPTIEN, DES MIGRANTS CLANDESTINS SONT ENLEVÉS ET SÉQUESTRÉS PAR DES BÉDOUINS. CONTRE RANÇON. REPORTAGE.

Dossier Salon MIPIM n L’EUROPE A NOUVEAU ATTRACTIVE ?

Le “bitcoin”, monnaie virtuelle, s’installe sur Internet. Danger ? pp.26-27 & Édito p.64

n OPERATEURS IMMOBILIERS LA CONNAISSANCE CREE LA CONFIANCE !

Quotidien européen – Belgique 1,50 € – France 2,20 € – Luxembourg 1,50 €

Chaque semaine, 50% de réduction grâce à votre carte Top Deal. JENS KALAENE/DPA/REPORTERS

Samedi 8 mars

n MIPIM CHANGEMENT DE PERSPECTIVES

International pp. 18-19

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Découvrez les produits participants dans nos magasins.

Tél.: 02/744.44.44

131e année – n° 16 ★★

© S.A. IPM 2014. Toute représentation ou reproduction, même partielle, de la présente publication, sous quelque forme que ce soit, est interdite sans autorisation préalable et écrite de l'éditeur ou de ses ayants droit.

Photo : London Tower - Anvers Arch.: CONIX RDBM ARCHITECTS

n Dossier réalisé par IPM Immo Supplément Gratuit de La Libre Belgique

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ARCHITECTURE E T

D E M O C R AT I E

« Aujourd’hui la ville est devenue un territoire d’hommes, d’équipements, d’informations, de relations immatérielles.» A. Branzi

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7/03/14 17:18

NEWS

mipim

Montreal-Mirabel set to Is London Green Belt the take off for second time answer to housing crisis?

HE AMBITIOUS plans in the 1970s for Montreal-Meribel International Airport — then the largest airport footprint in the world at nearly 400 sq km — have faded over the years. After a bright start and the completion of phase one of the runways and terminal building, Montreal-Meribel airport did not fulfil its potential for a variety of reasons and become a famous might-have-been. But there is both strong life and good potential in the site, according to its owner Aeroports de Montreal (ADM), which is on the Montreal stand at MIPIM to tell the resurrection story to potential investors and tenants. The airport is used for cargo planes and freight distribution, and is also the site of plane manufacturer Canadair’s major construction fa187_Goodman_N2_PIM

Invitation to

cility and flight-testing centre for its Bombardier CSeries planes. It is also used for motorsport, with the NASCAR Canadian Tire series and drag-racing events held on its runways and surrounding areas, on what is known as Circuit ICAR. After 1981, about 80% of the ground area was deeded back to its original owners (32,780 ha of 39,660 ha). The remaining 7,000 ha have considerable potential for industrial, manufacturing, commercial business and distribution hubs, ADM says. The airport is now zoned into four development sectors: industrial, cargo, services and the terminal. Industrial is the biggest, with 5 million sq m available for development. Of this the total, the area leased so far has grown from 140,000 sq m in 1990 to 1.25 million sq m in 2012.

meet+exchange

RICHARD Claxton, Green Belt is the chairman of Londononly solution — we based multi-disciplineed to take a balnary building surveyanced view — but ing practice Pellings, the London Green is calling for the govBelt includes 35,000 ernment to relax the ha that lie within the Green Belt around London boroughs London to deal with and a further 65,000 the housing crisis in ha within the M25 the UK capital. [orbital road]. SurePellings, which is on Pellings’ Richard ly some of that land Claxton: “We need to the London Chamber take a balanced view” can be allocated for of Commerce & Indushousing?” try stand in the London Pavilion, Claxton pointed out that the fact is pushing this somewhat contro- that much of the Green Belt is versial message at MIPIM. used for storage or anti-social Claxton said: “According to the purposes means that housing Office for National Statistics, would be a considerable imLondon’s population is forecast provement. “The commonly to grow from eight million to held belief that once a small part over 10 million by 2032, which of the Green Belt goes, it will all means another 800,000 houses. go, does not need to be a realI am not suggesting that the ity,” he added.

The Goodman team, represented by Emmanuel Van der Stichele (GELF Fund Director) and Philippe Van der Beken (Managing Director Goodman Continental Europe), is pleased to invite you to the Logistics Networking Cocktail during the MIPIM fair in Cannes, France. + Wednesday 12 March 2014 + From 5.00 pm to 6.00 pm + Palais des Festivals, Logistics Pavilion (Level -1) A great opportunity to meet and exchange views informally.

Global experts in logistics space www.goodman.com

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28/02/14 14:43

207gauche_IMMO ZEIT_N2_PIM

MEET US AT STAND R32.35

One-of-a-kind! Just like our readers.

IZ-App

Read the IZ one day earlier!

“The Squaire” is also ONE-OF-A-KIND. At 700 metres, it is not merely one of the longest buildings in the world. The direct connection with the ICE train station, to the Frankfurt airport and the highway makes this business location an international transportation hub second to none.

KNOWLEDGE FOR DECISION MAKERS. IMMOBILIEN ZEITUNG. www.iz.de

INTERNATIONAL AND NATIONAL BUSINESS LOCATION – that is our theme. As a leading publication for professionals in the real estate business, we keep you informed with daily online news updates on IZ.de and weekly newspaper reports – we provide you with comprehensive coverage of all the key issues affecting our sector. As an Immobilien Zeitung subscriber, you will receive our daily e-newsletter free of charge as well as 24 hour access to our archive containing over 120,000 articles!

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06.03.14 09:12

VIEWPOINT BY JAN MUCHA

25 YEARS OF MIPIM: ‘Like MIPIM, the media has shaped our industry’ TWENTY-five years in the history of MIPIM also means 25 years of growth and change in the German real estate sector, and in the media that serves it. When MIPIM was established, Germany was still deep in the Stone Age. The German real estate industry hadn’t yet invented itself and taken the shape it has now. And it had hardly any international connections. It was only as capital markets merged, which had an impact on property markets — a phenomenon we partly owe to MIPIM — that Germans also began to need more expert knowledge, and a real estate press to convey such know-how. Only from the early 1990s did the real estate industry in Germany, previously heavily regional and shaped by construction companies, begin to grow into an industry with a focus on the capital market. But from 1989, the Germans started coming to Cannes every March. This is where they first found a forum suitable for international exchange. It is perhaps not surprising that growing international exposure was accompanied by growing professionalism. The EBS in Oestrich-Winkel started to offer real estate study courses in 1990. In parallel, the first industry periodicals went to press. Immobilien Manager launched in 1992, followed by Immobilien Zeitung in 1993. Obviously, expert information is extremely important to a growing industry. Hardly any other industry suffers so much from a lack of information but is so dependent on basing its decisions, often involving high risks and substantial funds, on market and industry insight. In the final analysis, detailed information conveyed by the media and market information available in databases is indispensable. And this is where industry journals come into play. As Germany has undergone much development over the past 25 years, so the media landscape has changed. Even specialist journals cannot bypass the trend towards digitisation — a trend that is here to stay. Naturally, our readers can consume their media via iPad and browse our article archives online. At Immobilien Zeitung, users have access to over 125,000 articles referenced by keywords relating to companies, people, markets and asset classes, which is a great facilitator for in-depth research. While we are certain that printed journals will stay with us for

many years to come, online platforms continue to add value in various respects, most notably Immobilien Zeitung’s online job platform, archives and numerous other useful databases. So just like MIPIM, the media has shaped our industry and contributed to more market transparency and efficiency within the sphere of real estate, facilitating exchange and knowledge transfer.

Jan Mucha, publishing director, Immobilien Zeitung

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258_RM HTL_N2_PIM

Wednesday, 12 March

DAY 2

MIPIM HTL lounge is the platform for hospitality and property professio

nals

to conduct meetin and discuss new

trends,

hotel investments

and

tourism real estate

> LEVEL 3

10:00-11:00 Speed Matching: Hotel groups meet developers & investors in one-to-one targeted meetings

15:30 // Milestone - Premium student housing: a new asset class Speaker: Mrs Sabine Ullrich, CEO, Milestone

11:30-12:30 Highlighting innovation – 5 hot hospitality concepts

15:45 // Expanding Inwards Speakers: Mrs Nathalie Rozencwajg, Director, Rare Architecture Mr Michel da Costa Gonçalves, Director, Rare Architecture

Co-organiser: PKF

14:00-18:00 Project presentations From budget to luxury - city hotels at its best Co-organiser: PKF hotelexperts 14:00 // Welcome Speaker: Mr Andreas Martin, Managing Consultant, PKF hotelexperts 14:15 // Urban revival: hotels at train stations Speaker: Mr Axel Schoenert, Architect, Axel Schoenert Architectes 14:30 // Airport Bucharest: terminal extension - terminal hotel! Speaker: Mr Johannes Bauer, Asset Management CEE, S+B Gruppe 14:45 // Hotel project Motel One Brussels Speaker: Mr Nicolas Capelle, Development Director, Motel One Germany

15:00 // Hospitality brands to boost you projects worldwide Speaker: Mr Antoine Cadier, Director of Development, Choice Hotels Europe 15:15 // Return on Design - Station city Scandic hotel in central Stockholm Speaker: Mr Jack Renteria, Head of International Markets, 3XN Architects

16:00 // Innside by Meliá, Madrid Speaker: Mr John Alarcón, Development Director, Meliá Hotels & Resorts 16:15 // Ameron Hotel Collection Speaker: Mr Edgar Lichter, Vice President Ameron Hotels, Althoff Hotels 16:30 // 25hours hotel Bikini Berlin - Welcome to the jungle Speaker: Mr Florian Kollenz, Development Manager, 25hours Hotel Company 16:45 // Divan goes Abu Dahbi Speaker: Ms Elif Ağaoğlu, Business Development Specialist, Divan group 17:00 // Raffles Warsaw Speaker: Mr Valentin Sadan, Senior Manager, Europe, FRHI Hotels & Resorts 17:15 // Hampton by Hilton Warsaw city centre - «Hotel of the year» Speaker: Mr Johannes Bauer, Asset Management CEE, S+B Gruppe 17:30 // W Verbier Speaker: Mr Martin Coré, Senior Director of Development, Starwood Hotels & Resorts Worldwide 17:45 // Gstaad-Zweisimmen Speaker: Mr Andreas Schiessl, Owner, ABRaymann > Followed by a cocktail

AWARDS MIPIM AWARDS 2013: WINNER PROFILE

Marmara Park boldly goes forth Space-themed Marmara Park took the 2013 prize for best shopping centre. Liz Morrell takes a trip to Istanbul’s new shopping galaxy

YEAR after its win at the 2013

MIPIM Awards last March, ECE’s Marmara Park in Istanbul continues with its out-of-this-world existence. The shopping and experience centre, which is one of the biggest shopping centres in Turkey, opened in October 2012, offering a total of 100,000 sq m of GLA, including an enclosed Bauhas homeimprovement store and a Real hypermarket as anchors. The stores are situated within a galaticthemed design, which features space-related lighting, models of planets and a spaceshipinspired centre to ensure that Marmara Park really does stand out from the crowd. The four-floor scheme, which was the only

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European shopping centre to be nominated in the Best Shopping Centre category at the MIPIM awards last year, includes 250 stores and 40 restaurants and cafes, with a food court that seats 2,000 customers. The mix is further complemented by an 11-screen cinema and 4,000 parking spaces to meet the needs of a retail catchment totalling more than four million people. Tenants within Marmara Park upon opening included a mix of both domestic and global retail brands, with Cinemaximum, C&A, Zara, Bershka, Victoria’s Secret and Pull & Bear representing the international brand side. Marmara Park is located in the western part of Istanbul in Beylikduzu/Esenyurt, one of the fastest growing districts of the Turkish

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capital. The centre was built on the former site of Tatilya, a well-known entertainment park that was previously located there. The population is increasing rapidly in Turkey, which has one of the youngest populations in Western Europe. According to the experts, the younger demographic of customer likes to spend time in the shopping-centre environment — particularly one with longer opening hours and a cinema offering, such as Marmara Park. The development cost more than €220m to build. Although the centre was originally to have opened in 2010, it was delayed by a couple of years and, after a 21-month construction period, opened its doors with a lavish ceremony in October 2012.

mipim

The project, which was touted as Istanbul’s answer to London’s Westfield shopping centre, employs 4,000 people and is jointly owned by real estate fund DWS — part of the Deutsche Bank Group — and ECE/the Otto family. ECE Turkey was founded by the German

ECE group in October 2000. Upon its completion and opening in October 2012, Marmara Park became the 11th Turkish shopping centre operating under ECE management. Last year was a lucky one for ECE. As well as taking best shopping centre honours at MIPIM

for Marmara Park, the group also won the MIPIM Award for Best Future Mega Project for its Milaneo development in Stuttgart. Turkey is deemed one of the most active development markets for shopping-centre growth, with 20 new centres in the pipeline.

Marmara Park: Istanbul’s galactic-themed shopping and experience centre

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Hals-Development to present its new project Iskra-Park Today the company Hals-Development will present its new project – Iskra-Park on Leningradsky Prospekt. The company will start implementing this 230,000+ sq m project in the first quarter of 2014. Among speakers Sergey Kalinin, the president of HalsDevelopment; Sergey Choban, managing partner of the SPEECH architectural bureau; and Vladimir Strigin, the vice president of HalsDevelopment. The press conference will take place from 1:00 p.m. to 2:00 p.m. in auditorium I at the Palais des Festivales. The company’s other projects will be presented at stand #17.01 in the Palais des Festivales.

At the entrance of the Palais des Festivales, visitors to the exhibition are greeted by retro Russian cars from the 1950s, next to which they can take photographs for later pick-up at stand #17.01.

mipim

AWARDS MIPIM AWARDS 2013: WINNER PROFILE

The Squaire root of excellence

Best Office and Business Development winner, The Squaire at Frankfurt International Airport, is billed as “a city under one roof”. Graham Parker looks at one of the world’s largest and most innovative office schemes

HE SQUAIRE is more than just a workplace. With a lettable area of 140,000 sq m, it is large enough to have its own dedicated postal code and functions like a small town. Under The Squaire’s five atriums, visitors and workers can take advantage of restaurants, stores, cafes and other service-providers, such as hairdressers and even a concierge service. “This trophy confirms the one-off status of The Squaire not just in Germany, but across Europe,” says Wolfgang Schafers, CEO of IVG Immobilien, which developed the scheme in partnership with Frankfurt airport operator Fraport. “What persuaded the jury, aside from the innovative use concept and the sheer size, was the architecture.” Schafers adds that the streamlined structure has already attained the role of a landmark for Frankfurt airport. And the building, which was designed by the Frankfurt-based architectural firm JSK Architekten, obtained a LEED Gold certificate in 2012. Its green credentials are boosted by the fact that it is located at Europe’s best connected spot. Sited directly above the ICE high-speed train station, The Squaire has direct connecThe Squaire: large enough to have its own postal code

This trophy confirms the one-off status of The Squaire not just in Germany, but across Europe Wolfgang Schafers

tions to one of Germany’s most important motorway junctions and has covered access to terminal one of Frankfurt airport. About 150,000 air travellers, 23,000 rail travellers and 300,000 vehicles pass by every day. The Squaire’s anchor tenants are KPMG in 40,000 sq m and Deutsche Lufthansa in 18,500 sq m. But there is more to The Squaire than just office space. It includes two Hilton Hotels — a 249-room Hilton and a 334-room Hilton Garden Inn — a conference centre and an adjacent car park, offering about 3,125 parking spaces.

The infrastructure is tailored to the needs of the people working at The Squaire and includes restaurants, shops, physicians, fitness offers, a day-care centre and various services ranging from hairdressers to dry-cleaners. Under the tagline ‘New Work City’, The Squaire’s designers and developers set out to create a working environment that nurtures performance, motivation and creativity.

FACTS AND FIGURES Length: Width: Height: Total space: Rentable space, total: Office: Hotels: Retail and restaurants: Atria: Parking spaces: Anchor tenants:

660 metres 65 metres 45 metres (nine levels) 200,000 sq m 145,000 sq m 94,500 sq m 34,500 sq m 5,900 sq m 13,000 sq m 3,125 KPMG, Deutsche Lufthansa AG, Hilton Project team: Owner IVG Immobilien AG (97%), Fraport (3%) Architect: JSK International Architekten und Ingenieure Shell and core construction: Ed Zublin Services and technical equipment: YIT Fit-out: ARGE Innenausbau, Lindner, Czapla Facade: Yuanda Elevators: Thyssen, BLT

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06/03/14 16:14

FEATURE

mipim

COUNT DOWN TO MIPIM UK

London calling MIPIM UK — the biggest-ever UK property exhibition and conference — launches in London on October 15-17, 2014. Six months out, how is the event shaping up? Graham Parker investigates

It is to Reed MIDEM’s credit that they are spreading some fairy dust to the UK

Photo © Jason Hawkes

Liz Peace

London: property capital of the world

OME mid-October, the Olympia exhibition hall will play host to around 3,000 delegates from across the UK and global real estate industry, with more than 100 stands. According to Julien Sausset, MIPIM UK deputy director, confirmed exhibitors and sponsors include Legal & General, Brookfield Multiplex, Oxford Properties, Henderson Global Investors, Capital & Counties Properties and Thor Equities.

To make the event happen, Reed MIDEM has marshalled a powerful coalition of backers led by Estates Gazette and FTI Consulting. MIPIM UK is also supported by HM Government’s UK Trade & Investment, the mayor of London, the British Property Federation (BPF), Westminster Property Association and the Urban Land Institute. So why take the MIPIM brand to London? Sausset says it fills an obvious gap, as the UK is the only mature real

mipim

FEATURE The success of London on the global stage makes the launch of this event incredibly timely

conference streams dedicated to residential, industrial, infrastructure and transport, offices, finance and investment, alternative property assets, retail and design, and future cities. Confirmed speakers include mayor of London Boris Johnson, UK housing minister Kris Hopkins, Land Securities chief executive Robert Noel, British Land chief executive Chris Grigg, Hammerson chief executive David Atkins and Berkeley group chairman Tony Pidgley.

Bill Hughes estate market not to have its own domestic trade show. “The MIPIM UK exhibition will operate in a similar way to other national property exhibitions, with a mainly domestic audience supplemented by international visitors,” he adds. “For example, as a France-focused show, SIMI in Paris operates seamlessly alongside MIPIM in March, which accommodates exhibitors from across the world.” And the timing of the launch could not have been better. The UK real estate markets are in the middle of a strong resurgence, led by London. According to figures from CBRE, Greater London recorded its highest-ever quarterly commercial real estate activity in the fourth quarter of 2013, with more than £9bn (€10.8bn) traded in the three months to December 31. Reflecting this renewed optimism, MIPIM UK bookings are ahead of expectations and it is clear the event will be a showcase for UK towns and cities, such as confirmed exhibitors the City of London Corporation, Leeds City Council, the Scottish Cities Alliance, Thames Valley Towns, Nottingham City Council and London’s Nine Elms. There will be a transactional focus on the exhibition floor, with an emphasis on agreeing deals and securing business leads. So what do the experts say? Bill Hughes, managing director of property at Legal & General, says: “I strongly believe that MIPIM UK will take its place as the event for industry experts, and private and public-sector capital to come together to determine medium- to longterms solutions for the UK’s built environment. The success of London on the global stage, and the intimate relationship between London and other regions of UK, makes the launch of this event incredibly timely.” Liz Peace, chief executive of the BPF, also welcomed the move. “MIPIM in Cannes is undoubtedly the property event for all of us in the UK involved in real estate. So it is to Reed MIDEM’s credit that they are prepared to invest in spreading some of that fairy dust to the UK. I am sure the event they are planning will have a wide appeal.” And Brendan Jarvis, head of real estate at Barclays Bank, adds: “MIPIM UK is a great opportunity to showcase the whole of the UK to investors, and enjoy the unique MIPIM networking opportunities across our industry together.” A strong conference programme is also part of the MIPIM mix. The UK event will be no exception, with

Estates Gazette’s Sam McClary: 1,128 miles to go

GOOD LUCK, SAM! THE CHARITY partner for MIPIM UK is the Duke of Edinburgh’s Award and the primary fundraising event will be the MIPIM UK Challenge. This is an epic undertaking by Estates Gazette’s deputy editor and head of content Sam McClary, who will be covering 1,128 miles — 153 of which she will be running and 975 of which she will be cycling — in the two weeks leading up to MIPIM UK. The MIPIM UK Challenge aims to mirror the success of the Cycle To Cannes event, which sees up to 90 property-industry cyclists riding from London to Cannes for MIPIM every year, raising funds for the London children’s charity Corams, among others. McClary’s adventure will start in Edinburgh and take in Newcastle, Leeds, Manchester, Liverpool, Birmingham, Cardiff, Bristol and Plymouth before she arrives at MIPIM UK at Olympia on the afternoon of the show’s launch on October 15.

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The 25 Restaurant & Beach Bar The newly refurbished Majestic Beach restaurant reopens its doors for MIPIM to become The 25 – Restaurant & Beach Bar, a premium space where registered participants can enjoy breakfasts, lunches and drinks by the beach.

Enjoy our special MIPIM25 menu ! The 25 Restaurant & Beach Bar Se En afro tra nt nc e

LERINS HALL

RIVIERA HALL to ess ll Acc ns Ha Leri

MIPIM AREA ENTRANCE

LA C R O IS

PALAIS DES FESTIVALS

ETTE

OIS

Cr En oise tra tte nc e

Mistral Hall

Protocol Entrance

GARE IME MARIT

Sea Breeze

Registration Entrance

MIPIM AREA

The 25 Restaurant & Beach Bar Marina Hall Se En afro tra nt nc e

Croisette Village

Sunset Hall

RIVIERA to ess ll Acc s Ha in Ler

MIPIM ENTRANCE

LA C ROIS E

Azur Hall 2 TTE

PA D FEST

Azur Hall 1 LA

Opening hours

OIS

MIPIM bookAREA your

Cr En oise tra tte nc e

From Tuesday 11 to Thursday 13 March, 9.00-18.00 & Friday 14 March, 9.00-15.00

LE H

table

Corinne Frison : +33 (0)4 92 98 77 03 cfrison@cannesbarriere.com

Protocol Entrance

Reg En

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ECE is busy building Making innovative real estate a reality. ECE is currently building new major specialpurpose properties at numerous locations. For example, Aquis Plaza in Aachen, Milaneo in Stuttgart, K in Lautern in Kaiserslautern, Holsten-Galerie in NeumĂźnster, Alstercampus in Hamburg, the new Philips Germany headquarters in Hamburg, Siemens Manufacturing in Krefeld, and the new Motel One at Viennaâ&#x20AC;&#x2122;s central railway station. Whatever it takes to turn a site into a successful venture, ECE delivers on time and within budget.

Shopping | Office | Traffic | Industries ECE Projektmanagement G.m.b.H. & Co. KG Heegbarg 30, 22391 Hamburg, Germany Phone: +49 (0)40 60606-0, Fax: +49 (0)40 60606-6230 www.ece.com, info@ece.com

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ESSENTIAL RUSSIA

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CONTENTS Ministerial interviews

Marat Khusnullin, Moscow’s deputy mayor for urban development and construction and regional development minister Igor Slyunyaev

Russian real estate overview

Facts and figures about the markets from St Petersburg to Vladivostock

Moscow overview

Facts and figures about the market in Moscow

Sports and infrastructure

ESSENTIAL RUSSIA

How are the Winter Olympics, the FIFA World Cup and the World Student Games contributing to regeneration?

Retail expansion

Russia has Europe’s most active development market. What schemes are in the pipeline?

Residential renewal

As living standards improve cities right across Russia are under pressure to replace or renovate their aging housing stock

Offices

Moscow’s emerging business districts are proving fertile ground for developers

Logistics

A market that spans 11 timezones with an unforgiving climate presents many challenges to logistics operators

Leisure

New leisure attractions are springing up around Moscow and across the regions.

Hotels

Global brands are still looking to expand in Russia. What new schemes are under way?

ESSENTIAL RUSSIA – March 2014 – MIPIM News Special Report. Director of Publications Paul Zilk Director of Communication Mike Williams EDITORIAL DEPARTMENT Editor in Chief Graham Parker Technical Editor in Chief Herve Traisnel Deputy Technical Editor in Chief Frederic Beauseigneur Graphic Designer Carole Peres Sub Editor Jo Stephens Proof Reader Debbie Lincoln Contributors Chris Bown, Liz Morrell, Doug Morrison, David Sands, Paul Strohm PRODUCTION DEPARTMENT Publishing Director Martin Screpel Publishing Manager Amrane Lamiri Publishing Co-ordinators Nour Ezzedeen, Emilie Lambert Production Assistant, Cannes Office Eric Laurent Printer Riccobono Imprimeurs, Le Muy (France) Reed MIDEM, a joint stock company (SAS), with a capital of €310.000, 662 003 557 R.C.S. NANTERRE, having offices located at 27-33 Quai Alphonse Le Gallo - 92100 BOULOGNE-BILLANCOURT (FRANCE), VAT number FR91 662 003 557. Contents © 2014, Reed MIDEM Market Publications. Publication registered 1st quarter 2014. Printed on 50% recycled paper.

ESSENTIAL RUSSIA • MARCH 2014

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VIEWPOINT BY MARAT KHUSNULLIN

‘Moscow is changing before our eyes’

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ODERN Moscow is the most dynamically developing city in Europe. Indeed, the pace of new construction is so fast that the city is changing before our eyes. The main goal of the Moscow authorities is to build foundations for the economic upturn. To achieve this, the mayor and the government of Moscow have developed new and effective town-planning policies. This is a long-term programme, but it is already bearing fruit. We are focusing on adjusting the imbalance in the city’s provision of transport, housing and office space, adopting an agglomeration format for the city. Most Muscovites live in the suburbs and work in the centre. With the new transport infrastructure programme, we are creating an environment in which business feels able to generate employment in the outer areas of the city. Only Beijing has a higher rate of underground construction than Moscow. In just nine years, we have built 160 km of new lines and 79 stations. We have managed to reduce the cost of the metro development programme by 200bn roubles ($6bn) to 800bn roubles, while speeding up construction by adopting best practice from other countries. For example, technologies applied in Madrid will be introduced in Moscow. Eventually, our aim is that 90% of Muscovites will be within walking distance of a metro station. The second aspect of the development of Moscow’s transport system is the modernisation and extension of its road network. On one hand, the growth in car usage is a sign of growing prosperity. But on the other hand, Moscow’s transport infrastructure is not ready for it. In 2013, some 80 km of new roadway was opened. Even more is expected in 2014 with investment in road construction expected to reach 90bn roubles, including private infrastructure investment.

But we should realise that new roads and metro stations are not an end in themselves. Transport accessibility is an essential requirement for the wider investment prospects of the city. Our strategy is to make Moscow a polycentric city. This is one the reasons for the enlargement of the city’s administrative area by 2.5 times. The new territories will form new focal points of economic upturn. These include a 3 million sq m international financial centre creating 30,000 jobs, logistic centres near airports and technoparks. Similar in scale to the Grand Paris project, this will take 20 years or more, although the first results will be seen in the near future. Meanwhile, significant areas in the old city will be redeveloped. About 20% of historical Moscow now comprises industrial areas that are no longer required in a post-industrial economy. These will be transformed with new housing and infrastructure. A range of investors are already interested in this theme. A landmark project that should be mentioned because it has the potential to become a new symbol of Moscow is the construction of the Zaryadye park in the historical city centre, near the Kremlin. It has no equal. The design contest, which attracted some of the best architectural studios on the planet, was won by Diller Scofidio + Renfro, whose portfolio includes New York’s High Line. The park will be divided into climate zones, with sustainable technology creating artificial environments demonstrating the diversity of Russian nature. The $150-$200m project will attract visitors not only from Moscow, but from across Russia and around the world.

ESSENTIAL RUSSIA • MARCH 2014

According to Knight Frank’s 2013 Wealth Report, Moscow is ranked sixth for private investment volumes after New York, Hong Kong, London, Los Angeles and Tokyo. And with the current pace of construction, it is set to become one of the most modern, high-tech cities in the world, convenient for living, working and recreation.

Marat Khusnullin, deputy mayor for urban development and construction, Moscow City Government

VIEWPOINT BY IGOR SLYUNYAEV

‘A record $3.8bn of property investment’

IRECT investment into the Russian regions is on the increase. Full-year figures are not yet available but the total amount of foreign investment in the Russian economy from January to September 2013 amounted to $132.385bn, which is 15.7% more than during the same period in 2012. On October 1, 2013, the accumulated foreign capital in the Russian economy stood at $379.3 bn. Currently, the largest investors in the Russian economy are the US, Germany, France and Japan. And the main centre of gravity for foreign capital remains the same — Moscow. Nearly 120 countries have invested in the capital’s economy and, during the first half of 2013, these investments totalled $5.4bn. According to Ernst & Young, over the last five years foreign direct investors have backed 231 projects in Moscow across the fields of high technology, communications, engineering, real estate and other areas, creating around 3,700 new jobs. Another region of the Russian Federation that is attracting investment is St Petersburg. During the first half of 2013, the volume of foreign investment in the economy of our northern capital city amounted to $6bn, including $309.6m of FDI. The Russian construction market is clearly of interest to foreign companies. For example, the Finnish company YIT entered the market in 1961, and is now represented by subsidiaries in Moscow, the Moscow region, St Petersburg, Yekaterinburg, Rostov-on-Don and Kazan. In other sectors, Russia now hosts car-assembly lines for Volkswagen,

BMW, Peugeot, Citroen, Skoda, Renault, Ford and others. For example, Volkswagen invested €770m in the Group Rus plant in the Kaluga region, making it one of the largest foreign investors in the Russian automotive industry. In the first half of 2013, the Russian Federation saw a record $3.8bn of property investment — an increase of 98%. We have already seen investments in Russian shopping centres, but other real estate sectors are also proving attractive. Investment in the office sector totalled $314m, or about 22% of the total, in the second quarter of 2013. And warehouse and industrial property attracted investment of $33.2m in the third quarter. This activity reflects financial and legal structures that are designed to encourage international investment in the Russian regions. This diversified structure of institutions that stimulate the investment process include the government development institutions Vnesheconombank and the Investment

Fund of the Russian Federation. The Investment Fund is focused on the implementation of public-private partnership investment projects supported by the Ministry of Regional Development of the Russian Federation. Over the seven-year life of the fund, state support will amount to $10bn, while the volume of funds contributed by investors is more than $27bn. The fund is already implementing 35 projects, including the construction of a highspeed highway from Moscow to St Petersburg through a concession agreement with the North-West Concession Company and French partners. International financial institutions play a significant role in stimulating foreign investment in the Russian Federation. For example, International Finance Corporation (IFC) has been active in the Federation since 1993 and it has invested in 270 projects worth $10.1bn. With $2.26bn committed, this is IFC’s fourth largest investment in the world. In order to attract investment to the regions, in 2014 the Russian Investment Agency was created, based on the Ministry of Regional Development of the Russian Federation, working under the brand Invest In Russia. Co-founders are the World Association of Investment Promotion Agencies, the National Council for Investment in Climate Development and the Russian regional investment agencies. The new agency will co-ordinate the activities of regional agencies, while acting as a subcontractor for similar foreign agencies, setting up bilateral relations with the international investment community in order to attract investments into Russia and allowing Russian companies to enter foreign markets. Igor Slyunyaev is minister of regional development of the Russian Federation

ESSENTIAL RUSSIA • MARCH 2014

THE BIG PICTURE

The flight to infrastructure Infrastructure is top of the MIPIM agenda for this year’s Russian delegation, who will be testing the appetite among overseas investors for entering into public-private partnerships on large-scale projects. Doug Morrison reports

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S PAVEL Goncharov, executive director of the Russian Guild of Property Managers and Developers, points out, Russia needs to reverse “considerable under-development of infrastructure”, which had been symptomatic of an uncertain economy in years gone by. “Both businesses and the government are unable to develop housing projects and build business and tourist centres with due quality and efficiency because the infrastructure to drive their success cannot handle the load,” he says. “All that said,” Goncharov continues, “opportunities for foreign investors might turn up in the field of transportation hubs, including airports. In many Russian cities, the airports are obsolete and worn-out, while also being beyond modern regulations. Notably, projects of this kind benefit from sound schemes of co-operation between government and investors.” There have been notable successes already, such as St Petersburg’s new airport. Yet right now, most investors would probably associate Russian infrastructure with the recent Winter Olympics in Sochi, where the government spent as much as €41.4bn on the Olympic Park and related facilities. Doubts remain over the long-term benefits.

“The use of the sites left after the Olympics in Sochi is a highly relevant issue,” Goncharov says. “Some sites, such as the main Olympic Village, were initially planned for further use. After the Olympics, it will become a housing block. Prospects for sport sites and hotel infrastructure are more challenging as, normally, Sochi does not need so many of them. Here, we might have a few options: attract more tourists and events, and think of how to tailor the Olympic sites for use in the absence of major sports events.” At the same time, both domestic and overseas property players in Russia are monitoring the political crisis in neighbouring Ukraine and its impact on investor sentiment for the wider region. “Usually, controversial, major, far-reaching developments like those in Ukraine bring negative effects,” Goncharov says. “Despite this backdrop, the economic context cannot be better.” For others, the economic picture is more mixed, at least for Moscow. According to senior property professionals interviewed by PricewaterhouseCoopers and the Urban Land Institute for their joint report, Emerging Trends In Real Estate Europe 2014, the Russian capital is judged to be number four — out of 28

Guild of Property Managers and Developers’ Pavel Goncharov: reversing “under-development of infrastructure”

— in their annual European city rankings for development prospects. However, Moscow lies in 13th position when it comes to the prospects for existing investment assets. Goncharov says the Russian property market is showing “smooth growth”, with investment volumes back to their pre-financial crisis level — although he acknowledges that as much as 75% of transactions are carried out by Russian investors. He concedes, too, that issues around administrative barriers to inward investment “remain relevant”. But Goncharov adds: “Foreign companies that come into Russia and start businesses there are aware that challenges and peculiarities are there for sure, yet returns on investment do cover the existing risks.”

“Foreign companies that come into Russia are aware that challenges and peculiarities are there, yet returns on investment do cover the risks” ESSENTIAL RUSSIA • MARCH 2014

Pavel Goncharov

SPOTLIGHT ON MOSCOW

Russia’s global city Moscow is climbing up the global-city rankings — and is set to rise further, thanks to an ambitious series of projects driven by an innovative new investment strategy. Graham Parker reports

OSCOW is currently ranked 32nd out of 120 in The Economist’s Global City Competitiveness Index based on its economic potential. The Russian capital also comes in ninth (out of 27) in PricewaterhouseCooper’s (PwC) Cities Of Opportunity 2012 ranking based on economic influence. And the city’s status is constantly improving. Annual investments into Moscow are currently running at roughly $35.3bn and growing faster than in Russia as a whole. Meanwhile, Moscow’s share of private investment has surpassed the 70% mark. Over the last few years, the number of projects funded by private investors in Moscow has surged. This is helping to drive an improvement in the urban environment as new approaches to city management and development technologies are implemented. Moscow’s investment strategy, launched by the government in 2013, is a new programme driving development until 2025. It aims to strengthen Moscow’s position as a global city in which it is comfortable to both live and work and, above all, to provide for stable investment growth. Priority sectors are transportation, healthcare, production and education. However, the programme also focuses on the development of new economic sectors, including technology, financial and business services, trade and logistics, tourism and the urban environment.

The development of the transportation infrastructure involves the extension of the metro network, the creation of a drastically different ground transportation system and a new city and suburban rail-transport system. At the same time, the city’s major transit hubs and street network will be upgraded. The construction of 72 stations, 150 km of subway lines, 70 km of new roads, 225 transport interchange hubs and 800,000 parking spaces is planned to be completed by 2020. It is intended that public-private partnerships and the involvement of private capital will contribute to fulfilling these initiatives. In the social sphere, reconstruction is planned for a number of state healthcare facilities and there is support for the development of private healthcare institutions, such as hospitals and care homes. Private investment is also being encouraged for the construction of pre-school institutions and the development of general and higher educational facilities. Private investment will also be sought to help develop science-driven and high-tech production, including such sectors as electronics and micro-electronics, materials development, aerospace, pharmaceuticals, medical-equipment production, telecommunications and information technology, biotech, specialised tech clusters and industrial construction.

ESSENTIAL RUSSIA • MARCH 2014

As for modernising the city’s traditional manufacturing base, this will mostly involve optimising the location of industrial facilities, restructuring inefficient production models, improving safety, upgrading existing facilities and integrating resource-saving technology. Moscow will continue to develop as an international financial centre. Even now, the city is one of the leading players on the world’s investment markets. Much effort has been invested in projects to improve healthcare quality standards and the urban environment, develop the city and business infrastructure and increase the overall level of residents’ financial literacy. The plans that are being actively brought to life include improving the openness and transparency of Moscow’s administrative procedures, refining the competitive landscape, increasing the city’s range of offers for private investors and implementing private-public partnerships.

More information

on starting and managing a business in Moscow, current and future city projects and the capital’s economic environment is available at: www.investmoscow.ru

THE SOCHI LEGAGY

Sporting wins – and losses 10

Staging an event of the size and complexity of the Winter Olympics is very, very expensive. And, as Russia is discovering, the benefits aren’t necessarily to be found on the bottom line. Paul Strohm reports

S THE athletes depart and the furrows in the snow freeze over, Russia will be counting the cost of the Sochi 2014 Winter Olympics, comparing the benefits of staging its firstever winter games and working out whether or not there will be a net gain from its investment. The result of this calculation could have wider significance than just a post-mortem on the Winter Olympics, because the Sochi games were the second in a series of major sporting events hosted by Russia. Last year, Kazan, the capital of Russian federal state Tatarstan, was the venue for the World University Summer Games, or Universiade. In October this year, Sochi will become a Formula 1 motor-racing venue for a weekend when the 16th race of the 2014 Grand Prix season is hosted on the Sochi International Street Circuit, as it will be for seven years running. But the bigger event is to come in mid-2018, when Russia will host the FIFA World Cup. That the cost of Sochi’s recent Winter Olympics overran in terms of the investment required to prepare for athletes, staff, spectators and the resultant boost to tourism has been well publicised. It was said to be

the most expensive Olympics ever, winter or summer. The price tag is thought to be about $51bn (€37bn) and, according to a Bloomberg report, a further $7bn (€5bn) may be necessary over the next three years to maintain venues and infrastructure. The smaller figure is what Vancouver spent on its winter Olympics four years ago. To what extent the cost overruns are attributable to inefficiency or dishonesty remains to be seen. Vladimir Putin has promised a day of reckoning, but he was determined that this would not detract from the event itself. Certainly Russia’s investment has brought tangible long-term gains. For instance, Sochi now has four ski resorts, 14 sports venues with a collective seating capacity of 145,000, 360 km of new roads and 200 kms of new rail track. Included in this is the Adler — Alpika-Service ski-resort road and rail route — the largest piece of infrastructure built for the games. These encompassed two new stations and 77 bridges, including 37 rail bridges and 12 tunnels with a combined length of 29 km. There was also a substantial boost to power production with the construction of three power plants, while the sewage system, port

ESSENTIAL RUSSIA • MARCH 2014

and airport were all overhauled too. Meanwhile, according to the official Sochi legacy report, the games are claimed to have attracted some €4.29bn of additional outside investment not directly related to the games, with a total €800m invested in the region by foreign investors in the same year. Consultant Colliers has already analysed the potential legacy of the Sochi Winter Olympics in a report that looks at some of the specific pros and cons of hosting the event. Among the pros cited is the improvement made to the docks infrastructure as a precursor to delivering the massive amounts of building materials required for construction. Colliers also lists on the credit side other transport improvements and the upgrade to the power and IT infrastructure. Moreover, the Sochi region now has a fine set of winter sports venues and two Olympic villages designed as four-star resort hotels, which will boost future tourism. In addition, Collliers points out, the new media centre, which includes the 45,000 sq m International Broadcast Centre building and 25,000 sq m press centre, could be used as a media hub for the forthcoming FIFA World Cup and Formula 1 Grand Prix seven-year series.

THE SOCHI LEGAGY The games were also good for real estate, the Colliers report says, stimulating further property development and private investment, including numerous shopping malls, apartment buildings and Olympic hotels. “In terms of definable real estate benefits, new infrastructure development will help improve facilities in the city and hinterland for local and regional occupiers. This should contribute to the improvement of Russia’s tourism development, stimulating latent and growing demand beyond the short-term stimulus of the games,” the report continues. On the down side, Colliers identifies ‘cons’ such as the risk that expenditure focused on mega-events like the Olympics deprives other areas, such as health, education and social welfare. Similarly, the focus on elite sports can divert attention from local-level sports. Similarly, new venues are all very well, but older and still useable sporting venues and transport infrastructure can be left behind if no budget remains for their improvement. By the same token, the new facilities and infrastructure may be under-used if the activities for which they were designed are not part of local tradition. Colliers adds that there are also potential complications from private/public partnerships whereby tight deadlines in the construction of venues and infrastructure can create property title issues later. Environmental and ecological damage can result, too. The preparations for Sochi involved using wetlands for some of the Olympic developments, at a cost to greenery and wildlife. And then, of course, there is the legacy of debt. “While hosting the Olympics will raise the stature of a city and its home country, it is clear, based on observations from previous

Moscow’s Luzhniki Stadium will be one of the 2018 World Cup venues

Winter Games and other mega-events, that the host needs to have the framework to support it — and not just logistically but intrinsically, with finance and investment, as well as public and private support, which can take years,” says Colliers International’s regional director of research, Eastern Europe, Damian Harrington. The Sochi Games will have provided some lessons that Russia still has time to apply to its World Cup preparations. There have been economies of scale, with both Kazan and Sochi among the host cities for the 2018 World Cup. But that event will involve 13 host cities and 16 stadiums, 13 of which will be built specifically for the World Cup

at a cost originally projected at $3.82bn (€2.78bn). The wider budget for hosting the event was put at around $10bn (€7.3bn), but this figure has reportedly already doubled. Sochi’s official legacy document identifies a host of intangible benefits, such as cultural advantages and wider economic development, improved accessibility for disabled people, the development of a volunteer movement, environmental improvements and the establishment of Russia as a venue for staging major sports events. The monetary worth of these benefits is hard to quantify, but it may be determined that it is these that make such a high financial outlay worthwhile.

“While hosting the Olympics will raise the stature of a city and its home country, it is clear, based on observations from other mega-events, that the host needs to have the framework to support it” ESSENTIAL RUSSIA • MARCH 2014

Damian Harrington

RETAIL BAROMETER AMMA Development’s Avia Park, due to open in December

Moscow always in fashion Russia has one of the most active retail markets in Europe, with a recordbreaking 21 schemes — including the largest retail development in Europe — due to be completed this year. Liz Morrell reports

ITH more than 30 international retailers moving into Russia last year and another 20 or so announcing their intention to enter the country this year, Russia is undoubtedly the place to be. According to CBRE, 33 new brands, the majority of which were fashion, opened stores in Moscow last year, 24 of them in shopping malls. John Platt, managing consultant for international property and retail at CACI, says this is unsurprising. “Russian consumers are extremely brand conscious,

spending a high proportion of their disposable income on fashion compared to other European countries,” he says. Moscow is inevitably the focal point for expansion and accounts for around a third of the total retail pipeline. “The most affluent 10% of the Russian population, who predominantly reside in Moscow, account for over 30% of annual income,” Platt says. “The secondary cities represent a good opportunity for established retailers, but any new entrant shouldn’t look beyond Moscow.” The fourth quarter of 2013 saw the opening of

ESSENTIAL RUSSIA • MARCH 2014

four new shopping centres, bringing the total volume of quality retail space in Moscow shopping centres to 4.1 million sq m by the end of 2013. This year, a further 900,000 sq m of quality retail space is due to be delivered, with a further 700,000 earmarked for next year. The sheer volume of space is impressive — and the amount to be delivered this year alone breaks all previous records. However, Michael Rogozhin, managing director of retail for CBRE Russia, thinks it unlikely that all the space will come to fruition. “In reality,

RETAIL BAROMETER not all the schemes will be introduced to the market,” he says. “According to our expectations, new delivery in 2014 could amount to 500–600,000 sq m.” There are currently 21 schemes due to be completed this year, according to Rogozhin. However, worsening economic conditions could impact on the pipeline. “GDP growth is down to 2%-2.5% in 2014, compared to 1.5% in 2013, and is very far away from the 6%-8% we had pre-crisis,” says Maxim Karbasnikoff, retail partner at Cushman & Wakefield. He adds that the region’s dependency on oil as well as a lack of trust in the economy is having an impact on both confidence and retailers’ purse strings. But despite the pressures, Karbasnikoff believes opportunities exist. “Russia is still the largest consumer market in Europe and the appetite is still large,” he says. Karbasnikoff reports that developers are working harder than ever to get their schemes right. “There is less demand and more supply, so developers need to focus

KEY NUMBERS New brands opening in Moscow in 2013: 33 Number of brands that opened in shopping malls: 24 Average vacancy rate in modern Moscow malls in 2014: 2.6% Source: CBRE

on the quality of the mix, management and marketing, and be flexible on terms to attract successful retailers,” he says. Of the larger schemes under development, most will be delivered towards the end of the year, which means they could slip into 2015. Only one of the major schemes will be delivered before then. Vegas Crocus City, the second of Crocus Group’s Vegas shopping-centre concepts, was due to have

A replica of the Rockefeller Center will feature in Crocus Group’s Vegas Crocus City

opened in Moscow in February. However, Crocus Group real estate director Olga Antonova admits that the opening date has now slipped to April and blames the delay on the shipping of the scheme’s decorative elements, as well as holdups in shop fitouts by tenants. The 95,000 sq m GLA scheme, which is aimed at the middle-class mass market, is now 90% let, with brands including Inditex Group, Marks & Spencer, Gap and Banana Republic. A third centre is due at the end of next year. Antonova says the point of difference comes from the creation of city destinations within the mall, which help to prolong the stay of the customer. Vegas Crocus City, for example, will feature recreations of Times Square and Rockefeller Center. “Our design and architecture are innovative since we create architectural copies of well-known world destinations inside the mall,” she says. The biggest scheme due in 2014 is AMMA Development’s Avia Park in the northwest of central Moscow, which remains on target for a December opening. At a 231,000 sq m GLA, the four-level shopping and entertainment scheme is the largest retail development in Europe with 110,000 sq m dedicated to anchor tenants and the remaining space split among 500 stores. As of last November, the developers claimed to have 150,000 sq m of space already under contract with retailers including Marks & Spencer, Banana Republic and Gap. Columbus, a shopping and entertainment centre with 140,000 sq m of GLA, is also due to open at the end of 2014. Developed by MIRS, the centre will feature a fashion gallery, a 15-screen multiplex cinema, a family-entertainment centre, an ice rink and restaurants. Late this year will also see the opening of OST Development’s Mozaica shopping centre in Moscow, which as of last November was nearly 60% let. The three-level development, which will include around 200 stores across 68,000 sq m of space, also features a theme park and a food court. The Moscow development will be followed by a second

“Russian consumers are extremely brand conscious, spending a high proportion of their disposable income on fashion” ESSENTIAL RUSSIA • MARCH 2014

John Platt

RETAIL BAROMETER

Mozaica centre in Tula, due to open in 2016. Last year saw Regions Group announce a $1.2bn investment in three new concepts, combining a 150,000 sq m shopping centre with a 70,000 sq m DreamWorks indoor theme park and around 40 attractions. Regions Group claims the first will open in St Petersburg in late 2015, the second in Yekaterinburg in 2016 and the final in Moscow in 2018.

Retail completion in Moscow

Despite the number of schemes in the pipeline, CBRE Russia’s Rogozhin believes there is still room for further growth for those that get their offers and timing right. “Penetration rates indicating the supply of quality retail space in the majority of large Russian cities are in the range of 300–400 sq m per 1,000 inhabitants,” he says. “The existing pipeline for the next two years might increase those figures to 400-500, but even in this situation there will still be room for the new players.” And there is opportunity for existing schemes too, as what is a relatively young market matures. “In several cities with already high competition that are close to saturation stage, landlords are starting thinking about renovation,” Rogozhin adds. “And this trend will get stronger.” Indeed, IKEA Russia announced last year that it was investing more than €400m in refurbishing 12 of its 14 Mega centres, adding extensions of between 50,00080,000 sq m at seven of them. The growth, it seems, looks set to continue. However, CACI’s Platt believes the most successful schemes will be those that emulate the UK. “Those that are likely to succeed will start to follow the model seen in the UK, where centres offer more than just a good choice of retail. Excellent catering and entertainment facilities are becoming the norm,” he says.

100,000

BREAKDOWN OF NEW ENTRANTS BY ORIGIN

sq m 500,000 400,000 300,000

Europe: 60% US: 35% Japan: 5%

200,000

0 20

11 20

10 20

12 20

13 20

Source: CBRE

Retail completion in Russia 000 sq m 2,500 2,000 1,500 1,000 500 0 20

12 20

11 20

10 20

13 20

F 14 20

Retail floorspace per 1,000 inhabitants in Moscow

sq m 400 350 300 250 200 150 100 50 0 20

10 20

11 20

12 20

13 20

F 14 20

Source: Jones Lang LaSalle

“Russia is still the largest consumer market in Europe” Maxim Karbasnikoff ESSENTIAL RUSSIA • MARCH 2014

RESIDENTIAL TRENDS

Russia gets its houses in order

V Lesu, RGI International’s micro-city northwest of Moscow

Russia’s residential sector is shaping up to be one of the most attractive real estate markets in Europe, with Moscow, St Petersburg and the Millioniki cities top of investors’ wish lists. David Sands reports

LOBAL professional services firm Ernst & Young recently completed a survey of 33 companies that are active in the Russian property market. The vast majority of the participants — 88% — view Russia as an attractive or very attractive location in which to invest in real estate this year. In contrast to last year’s results, residential property will be very popular among investors and Ernst & Young’s respondents predict rising or stable prices for housing. Most of the survey’s participants will concentrate on Moscow and its regions, although St Petersburg is also a magnet for 49% of the respondents. Investors with no particular focus favour the large cities, or Millioniki, with a population of over one million people.

According to analysts at US investment bank JPMorgan, housing in Russia is 45% more affordable than it was in 2008, with the Moscow region standing out as the market with the lowest price/income affordability. Moreover, higher construction volumes in Russia’s key cities have helped to contain price growth. State statistics body Rosstat reveals that per capita incomes in Moscow, the Moscow region and St Petersburg grew at a compound rate of 10%-12% between 2008-2013, while average property prices increased only 2%-4% per annum over the same period. For the moment, most homes in Russia are paid for wholly upfront and buyers wait for construction to be completed. But as lending conditions improve — mortgage lending ex-

panded at a 17% in the period 2007 to 2013 — the affordability of housing in the country has improved substantially. JPMorgan’s banking team expects the mortgage loans segment in Russia to grow at 25% from 2012 to 2016, with mortgage penetration increasing from 3.2% of GDP in 2012 to 5.8% of GDP in 2016. Another favourable factor for Russia’s mortgage-growth potential is low household debt by international standards. JPMorgan predicts mortgages will account for 29% of total retail loans by 2016. The Moscow region is Russia’s fastest growing mortgage market, rising 30% in 2012 and another 30% last year.

“Traditionally, prices off-plan are much less than the cost of a completed home, because of the risk of a project not being delivered on time” ESSENTIAL RUSSIA • MARCH 2014

Elena Yurgeneva

RESIDENTIAL TRENDS

Russia has three main types of housing: business, economic and elite. “There is a huge hunger for homes in the economic segment, especially with most housing in the country being over 25 years old and of low quality. Each year, 500,000 sq m of housing in Moscow, for example, becomes obsolete,” says Andrey Nesterenko, chief executive of RGI International. RGI is more active in the more comfortable class of residential and Nesterenko says that, over the last three years, the prices the company charges for homes have risen around 30%. “During December last year, our sales were double those of the same month in 2012, mainly on the back of banks having lowered mortgage rates,” he adds. The company is competing with the Moscow city authorities in providing regular mass housing and is building a satellite city to the northwest of the capital. Micro-city V Lesu, located close to the MKAD ring road, 23 km from the Kremlin and 2.5 km from Mitino metro station, involves the construction of a premium economy-class development on 77 ha, comprising 1.23 million sq m of residential buildings, 642,530 sq m of apartments, and 63,000 sq m of commercial space and parking. To be completed in seven separate stages, the scheme will also feature two schools, three kindergartens and a police station. Phase one of V Lesu is complete and consists of three buildings with 193 apartments. At the end of last year, 62,480 sq m of the first phase had been sold, representing 78% of the total available. Residents will begin moving into apartments in the second half of the year. Phase two of the project comprises 1,501 apartments and 8,373 sq m of commercial space, which will provide residents with local shopping and other commercial facilities, in addition to employment opportunities. Construction work on the first phase-two building began last year and, so far, 281 units have been sold, representing 20% of the total. According to Nesterenko: “People want a

more fresh, nicer environment for their children and we are providing something that’s never been done before. We were just selling traditional shell and core, but now we offer more tailored products, with more variety of colour and texture, for example.” Nesterenko says that RGI is “very positive” about such projects now that the government is bringing in greater sales scrutiny to prevent crooks from selling contracts without completing construction. “This has cleaned up the scene for developers and has opened up the sector to more big developers,” he adds. Moscow’s biggest nascent district is New Moscow, a massive area in the city’s southwest that has been earmarked by the authorities to provided Muscovites with additional low-rise commercial and residential space. Nesterenko says that New Moscow is providing house-builders with big opportunities. He estimates that the residential population is growing here by up to 300,000 a year. “If each person needs an average of 22 sq m, then the district needs an additional 6-7 million sq m of new building each year,” he says.

Elena Yurgeneva, head of residential at Knight Frank Russia and CIS, adds: “Traditionally, prices off-plan are much less than the cost of a completed home, because of the risk of a project not being delivered on time.” In Moscow, the average price per sq m paid in December 2013 was $18,651, which is 3.5% higher than in the same period of 2012, according to Knight Frank. Last year, after seasonal adjustment, price growth resumed in February to May and picked up again in August after a summer lull. Yurgeneva points out that prices for newbuild homes fell in November for the second year in a row, most likely owing to buyers expecting some Christmas-period price reductions as a marketing tool. Demand for prime urban real estate has remained stable throughout the year, with the volume sales of prime property exceeding $1.15bn. Interestingly, Russia is following international trends in that more and more women are entering the sector as buyers. Last year, Knight Frank says, women accounted for 26% of transactions as buyers — a 2% rise on 2012.

THE LEGAL LANDSCAPE LAST year, a new property tax came into being in Russia. Under the new law, property with a cadastral value not exceeding $8.3m will be taxed at 0.1%. This applies to all homes — even those under construction. For residences worth more than this, the tax will vary from 0.5% to 1%. Russia’s Ministry of Regional Development has also amended the urban development code. Under the new rules, developers will be able to begin preparatory work on construction sites prior to obtaining a building permit. This will significantly reduce construction

time, says Knight Frank, which has studied the new regulations. Moscow is also developing new regional standards of urban design, which will establish social infrastructure provision norms for various types of housing. These are likely to be followed across Russia in time. Other new rules include an amendment to the criterion for calculating the fees charged to investors for the right to implement development projects in Moscow. The developers of residential complexes will now pay for the right to deliver the project calculated as 60% of the cadastral value of the land.

“There is a huge hunger for homes in the economic segment, especially with most housing in Russia being over 25 years old and of low quality” ESSENTIAL RUSSIA • MARCH 2014

Andrey Nesterenko

OFFICES

A tenant’s market

As the number of companies opting for out-of-town class-B locations moves from trickle to flood, Moscow’s office market is shifting markedly in favour of tenants, writes David Sands

OSCOW’s office market is in a state of flux. Alongside a major trend that is seeing companies moving to out-of-town locations, tenants are increasingly electing to take less

expensive offices. Opting for class-B space can save them up to 20% in rent. As well as cost-consciousness, tenants are also obliged to look further afield, since some years ago the authorities placed a moratorium on new

development in the city centre. CBRE’s figures show that, last year, 57% of total office take-up fell outside Moscow’s third ring road. Around three quarters of deals were in the class-B sector, while only one quarter

“We are seeing new out-of-town development areas, notably in the northwest and southwest of Moscow” ESSENTIAL RUSSIA • MARCH 2014

Vyacheslav Kholopov

OFFICES

was composed of class-A accommodation. Another trend was towards smaller deals, with 75% of leasing transactions comprising less than 1,000 sq m, in contrast to the much higher proportion of chunky letting taking place before the economic downturn five years ago. “We are now seeing new out-of-town development areas, notably in the northwest and southwest of the capital,” says Newmark Knight Frank’s director of industrial, warehouses and land, Russia and CIS, Vyacheslav Kholopov: “For example, new space being built on the Leningradsky highway out of Moscow commands rents of $450 per sq m a year, while in the city centre rents for class-A space range from $750 to $1,200 for the best offices. Last year, around 20% of all take up was in more distant areas.” Moscow City, the equivalent of Paris La Defense or London’s Docklands, has been under way for a few years, and now provides a stock of almost 600,000 sq m of densely compacted offices on 60 ha. The district, which is located on the third road ring around 4 km west of Red Square, has three metro stations, making it easily accessible. There is also a plan to unite this area with a rail link to the airport. According to Kholopov, a total of 3.5 million sq m more space is planned to be built in Moscow City over the next two years. The average vacancy rate is already 20% — compared with 16% for central Moscow — and Kholopov says the rate could be 30% by the end of this year, when four skyscrapers will be completed. Rents in the district have reached $1,200 per sq m for the upper floors of the top buildings. Another area to the east of Moscow city centre is also being regenerated as former factories are demolished to make way for class-B offices, which is also driving the decentralisation trend. Moscow’s biggest nascent district is New Moscow, a massive area in southwest Moscow that, two years ago, was co-opted by the

city authorities to provide Muscovites with additional low-rise commercial and residential space. The largest development here to date is Comcity, which is being undertaken by PPF Real Estate. An initial phase of 126,000 sq m of commercial space will be completed this year, most of which has been preleased to two telecom and IT companies. In all, Comcity office park will have a gross area of 430,000 sq m and will be built in phases to include class-A offices, a retail gallery, 45 ha of landscaping, and leisure and fitness centres. According to Colliers: “All of a sudden, things are happening in this district, which will be directly linked by metro to central Moscow. PPF is quoting rents for the offices of between $450-500 per sq m and this space will be competing directly in price with development in Moscow City.” Yet more high-tech business space at the Skolkovo Innovation Center is being built in Skolkovo, two km west of the MKAD ring road, to act as a spur to the city’s wish to foster the science and technology industries. The state is providing more than $1.5bn of funding for the complex, plus new rail connections to the centre of Moscow and Vnukovo International Airport. Skolkovo Innovation Center’s main elements consist of a university, a technopark, offices and retail accommodation covering around 400 ha. It will have a permanent population of around 21,000. All this new space in Moscow and surrounding regions means that some downward pressure on rental levels is inevitable. “While rents are $600-$740 per sq m for class-A space, $1,200 for prime and $400-450 for class B at the moment, levels are likely to fall,” says Elena Denisova, director and head of office agency at CBRE: “In the last two years, takeup in Moscow has been stable at around 1.1 million sq m a year, so I am not expecting any rental growth.” Meanwhile, Russia’s commercial property in-

“In the last two years, take-up in Moscow has been stable at around 1.1 million sq m a year” ESSENTIAL RUSSIA • MARCH 2014

vestment market put in a robust performance last year, reporting the fourth biggest sales volume in Europe at almost $8.3bn. And according to real estate data provider Real Capital Analytics, only London saw more bigger single-asset deals than Moscow, with Russian firm O1 Properties paying $1.02bn for the White Square office complex, while Morgan Stanley paid $1.18bn for Moscow’s Metropolis shopping centre. Last summer, pension fund CalPERS became the first US institutional investor to enter the Moscow real estate market. A real estate fund managed by Morgan Stanley Real Estate Investing sold around a 25% stake in Metropolis to a joint venture between CalPERS and US developer Hines. It was a landmark deal and there are hopes that other global institutional investors will follow suit. But investors need to be wary of some economic headwinds. According to Londonbased researcher Capital Economics, over the last 18 months Russia’s GDP growth has slowed from over 4% year on year in mid2012 to 1.2% in the third quarter of last year. Moreover, there is a growing consensus that this slowdown reflects structural problems that may not be short lived. Ed Stansfield, Capital Economics’ head of commercial property research, says: “We expect GDP growth of just 2% in both 2014 and 2015. Russia’s economy ministry, the IMF and the World Bank have also all recently cut their 2014 growth forecasts to 2.5% or less. For context, in the decade prior to the credit crunch, GDP growth averaged 6% to 7% per annum.” Stansfield adds: “The strength of the Russian investment market may suggest that our forecast for unchanged office and retail yields this year and next is too cautious. But the subdued economic outlook, the falls in yields already seen, as well as renewed interest in some peripheral eurozone markets all mean it is too soon to make material further yield convergence with Western European markets our central view.”

Elena Denisova

EXTREME LOGISTICS

The big challenge Russia is about 1.8 times the size of the US and 1.68 times the size of Europe. Meanwhile, its infrastructure is lacking, and its logistics technology and know-how limited. No wonder investors are eyeing the opportunities, writes Paul Strohm

ERVING the logistics needs of Russia is a somewhat different proposition than in just about any other country. With an area of 17.1 million sq km (6.6 million sq miles), Russia is the largest country in the world. Not only is it massive in terms of absolute size, but Russia is also wide. The 9,289 km journey that the Trans-Siberian Railway makes between Moscow in the west of the country and Vladivostock on the Pacific coast spans 11 time zones, along with countless geographic, climatic and cultural extremes. Russia has a low road density of 40 metres of road per sq km. However, its rail network is about 85,000 km in total and comprises the world’s second largest network after the US. Within Russia, rail transport commands 83% of freight transport.

CPD Group’s Kievsky-22 will provide 114,000 sq m of space. The first phase of the Aedas-designed scheme will be completed late this year. Jones Lang LaSalle and Knight Frank are letting agents

According to research undertaken by DHL, the parcels and logistics subsidiary of the German post office, Russia’s biggest challenges are created by its “faulty infrastructure and lack of modern logistics technologies”. DHL says the demand for transport services is expected to grow at an average of 16% per year, although the Russian logistics market is “characterised by a lack of competition, little transparency and limited logistics know-how”. Russia’s population of about 142.5 million makes its average population density considerably less than does Europe’s 733 million people, although 74% of Russia’s populace is urban. Inevitably, much of the demand for logistics buildings tracks population concentrations. The most important logistics nodes in Russia are the capital Moscow and St Petersburg. The latter’s significance as a population

“The warehouse market in the Moscow Region is becoming more and more forward-looking” ESSENTIAL RUSSIA • MARCH 2014

centre is boosted by its role as the port that provides Russia’s principal access to the Baltic Sea. But Russia’s other large cities, in particular the Millioniki — the 11 cities with populations of a million upwards — are in the ascendancy as the country’s economy develops, consumer demand increases and the retail and manufacturing sectors grow. The Millioniki list includes Yekaterinburg, Nizhny Novgorod, Omsk, Samara, Kazan, Chelyabinsk, Rostov-on-Don, Ufa, Volgograd, Perm and Novosibirsk, the eastern-most of the Millioniki cities, which lies 3,335 km from Moscow. Other cities are also calling for logistics space, including Voronezh and Krasnodar, where consultant Colliers has noted significant demand. Demand for logistics space outside Moscow

Maria Lurye

EXTREME LOGISTICS

is greatest in Novosibirsk and St Petersburg, but 2012’s take-up in these two cities — around 100,000 sq m in both — was dwarfed by the more than 1 million sq m gross take-up in Moscow. According to Jones Lang LaSalle (JLL) estimates, that demand reached 1.3 million sq m in 2013, 4% up on the previous year, although the firm is expecting a slight slowing this year with a projected total demand of 1.1 million sq m either leased or sold. Tenants and buyers are taking larger units of space, too. The average size of deals was 18,000 sq m in 2013, compared to 13,000 sq m in 2012 and 11,000 sq m in 2011. But the average figures conceal some spectacular exceptions, such as Swedish retailer IKEA’s lease of 72,000 sq m in Logopark North. A large proportion of the deals done in the fourth quarter of 2013 were for built-to-suit property. German car-maker Volkswagen bought 52,000 sq m in the second phase of PNK-Chekhov. Kimberley-Clark took 21,000 sq m at South Gate Industrial Park. JLL says that 35% of all demand in 2013 was accounted for by the demand for bespoke buildings. “The warehouse market in the Moscow Region is becoming more and more forwardlooking,” says Maria Lurye, JLL’s industrial research analyst for Russia and the CIS. “Developers offer under-construction projects or

built-to-suit projects, because almost all new warehouse space is typically pre-let or sold before completion.” Lurye says that the share of pre-let and presold space reached 90% in 2013, while the proportion of built-to-suit projects amounted to 35%. Given that 37% of the 2014 completions were already contracted by the end of 2013, this trend looks sets to increase. The volume of new space completed in 2013 was at its highest level since 2009, with 855,000 sq m added to the market, bringing the region’s total warehouse stock to 9.65m sq m, according to JLL. In the last quarter of the year, the amount of space completed was 62% — up on the same quarter in the preceding year — reaching 200,000 sq m. The largest project delivered during the quarter was a new 33,000 sq m facility in South Gate, built for sportswear retailer Decathlon. However, 2013 saw the completion of the 168,000 sq m second phase of PNK-Chekhov, the 114,000 sq m PNK-Vnukovo and the 110,000 sq m first phase of Logopark Sever, which were the three largest warehouse completions. JLL says that a further 1.9 million sq m is projected for completion in 2014, twice that of 2013. However, the firm cautions that this is an optimistic figure and thinks that supply is

unlikely to be boosted by much more than 1.6 million sq m by the year-end. Despite the level of completions, the level of demand, especially for built-to-suit space, means that vacancy rates are maintained at a low level and only 130,000 sq m was available at the beginning of the year. “In percentage terms, that is equal to 1.4% of total supply. Taking into account both the growth of future supply and the slight decrease in actual demand, we assume that the vacancy rate will reach 4% by 2014 year-end,” says Petr Zaritskiy, JLL’s national director and head of warehouse and industrial in Russia and the CIS. Although prime rents are a stable $140 (€102) per sq m per year, the large number of preleases has brought the average level down to $130-$135 per sq m per year. Infrastructure work is having an impact here, too. Zaritskiy reports there is now greater differentiation in rents based upon location and visibility. “Warehouses located near MKAD [the ring road that surrounds Moscow] are more expensive, as well as those located near the newly reconstructed highways,” he says. “This trend will intensify in 2014. The large number of projects announced for 2014-2015, particularly in the north of the Moscow region, will lead to increased competition among warehouse projects. Thus, the traditional lack of supply in the north should become more balanced.”

COMING SOON TO MOSCOW… PNK-Chekhov Logistics Park South Gate Industrial Park Synkovo Logistics Park PNK-Northern Sheremetievo Nikolskoe Logistics Park Radumlya Logistics Park Logopark Sever (phase two)

139,000 sq m 162,000 sq m 120,000 sq m 174,000 sq m 106,000 sq m 100,000 sq m 100,000 sq m

Source: Jones Lang LaSalle Moscow’s Metro warehouse

“The large number of projects announced for 2014-2015 will lead to increased competition” ESSENTIAL RUSSIA • MARCH 2014

Petr Zaritskiy

LEISURE DEVELOPMENTS

Here’s where the fun starts Themed entertainment attractions are springing up across Russia, often linked to new retail developments. Graham Parker looks at two of the theme parks on show at MIPIM

CUSHMAN & Wakefield-led consortium has been selected as the winner of the contest organised by the Russia Geographic Society and Moscow Region Government to develop a masterplan and business strategy for Park Russia. The ambitious tourism and cultural project covers over 1,000 ha and is situated 30 km south of Moscow, near Domodedovo airport. The aim is now to fine-tune the plans and start marketing the proposals to attract private investment. The consortium’s winning proposals envisage a 12-year investment period to develop three main zones at the park, as the centrepiece of a wider resort destination. The aim is to serve day visitors, while also attracting large numbers of visitors to stay in the park. The development will have strong green-building credentials and intends to optimise rail access from Moscow and Domodedovo to cope with up to 10 million visitors per year. The multinational development team includes Russian cultural experts NEBA with Gillespies as the design team leader, masterplanner and landscape architect. Buro Happold created the engineering frame-

work, while Feilden Clegg Bradley Studios designed the cultural and commercial heart of the park. Rider Levett Bucknall is cost consultant, with place-making economists Fourth Street providing economic analysis. Project leader Richard Tibbott of Cushman & Wakefield Russia sees the project as “a uniquely Russian leisure park”. It will respond to the Russian consumer’s desire for imaginative leisure and cultural development, he adds, while “creating a major new destination for the rapidly growing Russian visitor economy”. Tibbott also believes Park Russia will be comparable to Singapore’s Gardens by the Bay and, eventually, to the parks at Orlando, Florida Gillespies partner Jim Diggle, who led the design team, adds: “Park Russia has been designed to be delivered flexibly over many years. It will be an unforgettable destination, based on multiple and complementary attractions, offering layers of interest, with fun and learning experiences for all.” At the same time, DreamWorks Animation has signed a joint venture with the Regions

Park Russia, the centrepiece of a proposed resort 30 km south of Moscow

Group to bring a new retail and entertainment concept to Russia. The Russian developer is investing $1.2bn in the format, which combines a 150,000 sq m shopping centre with a 70,000 sq m indoor theme park. Each park will house around 40 attractions based on DreamWorks characters, including Shrek and Puss in Boots. They promise to be the largest yearround indoor theme parks in Europe. Following the signing of an exclusive licensing agreement between Region GC and DreamWorks Animation for Russia earlier this year, the first attraction is scheduled to open in St Petersburg in late 2015, the second in Yekaterinburg in 2016 and the third in Moscow by 2018. The shopping centre will be anchored by a supermarket, a department store and major international brands. It will also feature a 400-room hotel, a food court, a skating rink, a 20-screen cinema and an 11,000-space car park. “Integrating a theme park with a mall gives us a synergy,” says Regions Management vice-president Alik Mutsoev. “For any family, there will be a double reason to visit our mall.”

“Park Russia will be an unforgettable destination, based on multiple and complementary attractions” ESSENTIAL RUSSIA • MARCH 2014

Jim Diggle

THE HOTEL MARKET

Building on the Sochi effect Russia’s hotel market is short on brands and long on potential — a combination that is attracting the interest of several hotel power players. Chris Bown reports Mebe’s new hotel at Khimki Plaza

SIDE from the recent flurry of activity around the Sochi Winter Olympics, the Russian market holds many attractions for hotel operators. A booming middle class in Russia is discovering the joys of travelling further afield for holidays — and there is also a great deal of Russia itself to explore. Currently, the market for incoming tourists is limited. Most visitors to Russia require a visa, restricting ease of entry and putting a damper on international visitor numbers, which are predicted to rise just 5% a year for the next three years. But in a bid to capitalise on Sochi, the Russian authorities may ease visa requirements for tourists. Several hotel brands are staking their claim. Scandinavian group Rezidor has put Russia firmly on the top of its expansion list, and last year saw its hotels in the region deliver 16.3% growth in RevPAR, the sector’s revenue measure. Speaking mid-year as it announced a new Park Inn in Nizhny Tagil, Rezidor’s third hotel in the Urals, president and CEO Wolfgang Neumann said: “Russia/ CIS is a key development market for our

future business development. We are already the region’s leading international hotel operator, and now strengthen our portfolio in Russia to 12,000 rooms in operation and under development.” Not far behind Rezidor is Marriott, which in the last few months has signed its 10th hotel in Moscow. “Russia continues to be a major focus and essential part of our growth plan as we continue to work towards doubling our European portfolio by 40,000 rooms,” says Amy McPherson, president and managing director, Europe, of Marriott International. During 2014, Marriott will open hotels in Novy Arbat, Krasnodar, Novosibirsk, Voronezh and Astana. InterContinental Hotels Group (IHG), meanwhile, is looking to grow its budget Holiday Inn Express brand across Russia. This year will see an opening in Voronezh — the first fruits of a multi-development agreement with local partner VIY Management that aims to deliver 15 Holiday Inn Expresses across Russia by 2019.

IHG’s chief development officer, Europe, Robert Shepherd, says: “Russia is a priority market for IHG in Europe. It is underdeveloped in terms of branded hotel rooms, is one of the most prosperous economies in Europe and is a growing market for business travel, both internationally and between its many large cities.” Shepherd adds that the introduction of the Holiday Inn Express brand is important not only in terms of meeting local midscale demand in Russia, where there is a significant supply gap, but also as part of IHG’s “strategy to capture inbound demand as a brand of choice”. As a group, IHG aims to have 100 hotels open and in the development pipeline across Russia and the CIS by 2020. By mid 2013, its Russia portfolio stood at 13 hotels open. Local developers active in the sector include Mebe Development, which comes to MIPIM as it starts work on a $50m hotel close to Moscow’s Sheremetyevo International Airport. The 232-room, four-star hotel, designed by architect John McAslan, is scheduled to open in early 2016.

“Russia continues to be a major focus and essential part of our growth plan” ESSENTIAL RUSSIA • MARCH 2014

Amy McPherson

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