Real Estate and Home Finance

Franchising Comes to Moscow

With the launch last week of Century 21's operations in Moscow, real estate franchising appears to have arrived in Russia. Real estate agency Miel announced days before the launch that it would license its name and franchising rights to 150 individual agents, and Hirsh has sold rights to over 60 since 2003. Source: Moscow Times (Sept. 26)

Buyers Are Balking at High Mortgage Prices

Demand for mortgages fell in October for the first time in year. Nine of 10 leading mortgage credit banks surveyed by the newspaper Vedomosti said they had seen a decline in mortgage applications. Bankers blame rising real estate prices for the problem. Source: Moscow Times (Oct. 24)

Construction

Inteko To Construct 360,000 Square Meters of Housing

Inteko plans to construct 360,000 square meters of housing next to its Setun- Hills business park in western Moscow. The $500 million projects would be located on 54 hectares on Minskaya Ulitsa, adjacent to the 570,000-square-meter business park, hotel, and entertainment complex. Inteko had profits of $1 billion in 2005. Source: Vedomosti (Oct. 03)

Kazkommertsbank, Woori Bank, And Galmat-Art To Team Up For Housing Project

Kazkommertsbank (KKB), South Korean Woori Bank, and Kazakhstan Construction Company on Tuesday sealed a tertiary agreement on construction of a housing complex with in Almaty. Cost per square meter of housing will not exceed $3,000. Apartments will be fully finished and equipped. The total value of the project is $1 billion. Source: Times of Central Asia (Oct. 05)

Russian Housing Construction Growth Rate Makes 12% In 2006

Approximately 292.1 thousand apartments were built in Russia during January-September 2006. The most active housing construction is taking place in Moscow (13.7% of all housing construction), in the Moscow region (11%), Krasnodar territory (5.8%), Bashkortostan (4.4%), St. Petersburg (3.8%) and in the Rostov region (3.5%). Source: ITAR-TASS (Oct. 19)

Construction materials

Czech Specialists Work Jointly To Build New Cement Plant In Khatlon, Tajikistan

Tajikistan's holding company "Ismoili Somonis- 21st Century" in cooperation with a Czech company will build a new cement plant in the Shahritus district in Khatlon with a production capacity of 2.5 million tons per year. Tajikistan currently has only one cement plant, which is producing about 221,200 tones of cement per year. Total demand for cement in Tajikistan is estimated at over 2 million tones. Source: AP-Blitz (Aug. 03)

Ilim Bratsk DOK Increased Production Of Fiberboard By 6.3%

Ilim Bratsk DOK, located in Irkutsk, produced more than 18.4 million square meters of fiberboard in the last seven months. This figure is 6.3% (or 1.1 million square meters) larger than during the same time in the previous year. In addition, production of plywood rose by 2.3% during this period, from 80.8 thousand cubic meters in 2006 as compared to 66.7 thousand cubic meters during the same period in 2005. Source: Ekonomicheskie Novosti (Aug. 08)

UMMC Is Considers Possibility Of Adding Cement Production Capacity

Although news has yet to be confirmed, Ural Mining and Metallurgical Company is said to be considering developing in-house cement making capacity for company construction projects. Source: Interfax (Oct. 16)

Ply board Output Up 6.8% In First Half Of 2006

According to Lesprom Industry Consulting, Russia’s overall output of ply board in the first half of 2006 is 6.8% higher than what it was during the same period in 2005. According to the consulting firm, production volume between January and August was 1.34 cubic meters. United Panel Group, a major producer of lumber products in Russia, expects overall industry-wide output be around 2.75 million cubic meters by year’s end, almost twice the volume of 2005. Source: Sroimaterialy (Oct. 17)

Company TMM Intends to Become One of the Major Concrete Producers in Kyiv

The financial-industrial group TMM is planning to build a concrete production facility in Vishnevyi, Kyivsaia Oblast’. Word of the new facility comes just after the completion of another such plant in Kyiv, “TMM-Stroikomplekt.” After completion of the project TMM will be the second largest player in the Kyiv concrete market. Source: DS News (Oct. 17)

Ust’-Ilimskii Wood-Sawing Factory Increased Lumber Output by 6.4%

Ust’-Ilimskii Wood-Sawing Factory, located in Irkutsk, announced that company output for the first nine months of 2006 was 392,700 cubic meters, roughly 6.4% or 23,700 cubic meters more than the same time last year. Source: Ekonomicheskie novosti (Oct. 19)

Trest Yuzhstal’konstrutsiia To Invest RUB 250 Million In A New Factory In Azov

The growth of the construction industry in southern Russia is leading Trest Yuzhstal’konstrutsiia, a company specializing in steel frame construction materials, to increase production. Construction of a new RUB 250 million factory in Azov is to begin in spring 2007. The new factory would increase overall production from 200 to 1,000 tones of steel construction materials a month. Other producers are planning similar moves. Source: Vedomosti (Oct. 26)

Medvedev Says Cement Production In Russia "Disgrace"

Russian First Deputy Prime Minister Dmitry Medvedev, described the situation with cement production in the country as "a disgrace." According to Medvedev, constantly rising prices on cement and other construction materials are a reason for skyrocketing costs of housing construction, which make it unaffordable for most of the population. Source: ITAR-TASS Daily (Oct. 27)

Foreign investment

Germany Heidelberg Cement Buys Controlling Stake In Tula Concrete Factory

Heidelberg Cement, the largest concrete and construction materials producer in Germany, bought a controlling stake in the Gurovo Beton concrete factory in Tula Oblast’. Heidelberg Cement plans to produce 2 million metric tons of cement a year for the Moscow Oblast’, the most lucrative cement market in the country. Source: FK-Novosti (Aug. 17)

Belgian Ahlers To Invest $60-$70 Million In Warehouse Construction In St Petersburg

Ahlers (Belgium) will invest at least $22 million in the construction of two out of six planned storage facilities in the St Petersburg suburb. The company has invested about $18 million in the construction of two warehouses since the project was launched. The total investment in the project is estimated at $60 to $70 million. Source: FK-Novosti (Aug. 31)

London Firm To Invest $1 Billion In Russian Real Estate

British investment company London & Regional Properties (L&RP) intends to invest about $1 billion in commercial real estate in Russia soon. L&RP emerged on the Russian market in March 2006 announcing its plans to invest $300 million in commercial real estate. With this aim in view, L&RP signed a contract with Centrum Group, a Swedish developer, to build five to seven commercial buildings. The first of them is under construction in Kaluga. Now the company is increasing its investment in Russia to $1 billion. Source: FK-Novosti (Oct. 05)

Lafarge To Build Cement Factory In Rostov Oblast’

The administration of Rostov Oblast’ signed an investment agreement with the French cement maker Lafarge on the construction of a cement factory. The deal was estimated at about 150 million euro. Capacity at the plant is planned to be 1.8-2.5 million tones per year. Construction is to be complete in two and a half years. A location for the plant has not been announced. Source: Vedomosti (Oct. 10)

Avielen To Invest Up To $100 Million In St Petersburg Hotel, Business Complex

Russian-Austrian company Avielen AG plans to build two business centers and a hotel in St. Petersburg worth $80-100 million. The complex will be built along the Pulkovskoye highway on 62,000 square meters of land in the so-called Pulkovo-3 business district. Source: Interfax (Oct.14)

Morgan Stanley Enters the Russian Real Estate Market

Morgan Stanley acquired 15% of RGI International Ltd. (formerly Rose Group), a firm specializing in construction of luxury apartments in downtown Moscow. Market participants speculate that stock holdings acquired by Morgan Stanley are valued at no less than $150 million. Source: Vedomosti (Oct. 17)

Revenue Growth Attracts YIT

Finland's largest construction company, YIT, plans to tap Russia's real estate boom. This year, YIT will begin construction on around 3,100 residential units in Russia, compared to about 3,000 units in Finland and only about 1,100 units in the Baltic countries. Source: Moscow Times (Oct. 17)

Saint-Gobain Undergoing Acquisition Negotiations with Yunis Group

Saint-Gobain of France is negotiating the acquisition of the Russia’s largest producers of finishing materials, Yunis Group. Experts estimate the value of the acquisition to be $100-200 million. Saint-Gobain is confident the acquisition of Yunis will strengthen the firm’s position in the Russian market. Currently Yunis has close to 15% of the Russian market for dry finishing materials. Source: FK-Novosti (Oct. 20)

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