Alexander Abramov, a co-owner in metals holding Evraz Group, is planning to buy up half of the khrushchyovki in St. Petersburg.
The city will hold an auction Dec. 30 for the rights to build new housing in 22 neighborhoods to replace Khrushchev-era five-story apartment buildings. The starting price for the four lots, with a combined area of about 90 hectares, is 387.7 million rubles ($13 million). The winner will be required to move people out of the dilapidated buildings, while the city will invest some of the money needed to renovate infrastructure.
Governor Valentina Matviyenko said through her press service that Abramov would bid in the auction and that she had personally discussed the matter with him.
Abramov could not be reached for comment. A source close to Abramov said he created a company specially for this project, Renovatsia, which is interested in all four lots. Artur Markaryan, managing partner at Renovatsia, confirmed the company’s interest but declined further comment.
A property official in St. Petersburg City Hall said there was only one serious bidder and that Markaryan was representing his interests. He declined to name the company or its shareholders.
From June 2006 through the end of 2008, Markaryan headed Glavstroi, the development arm of Oleg Deripaska’s Basic Element holding. Under Markaryan’s management, Glavstroi won auctions for two plots in St. Petersburg to build housing as well as a tender for the rights to reconstruct the downtown Apraksin Dvor.
Markaryan will not be participating in the tender for Glavstroi, the City Hall official said.
Reconstructing the 22 neighborhoods will be a killer project for the investor, either just breaking even or losing money, the source said. He added that it was possible that the investor was hoping to stake out a claim for the land and then delay for as long as possible.
Resettling and reconstructing the neighborhoods would require billions of dollars, but because the starting price is so low, it’s possible to take the risk, said Oleg Barkov, general manager of Knight Frank St. Petersburg.
Another real estate consultant also said the project looked risky: The plots are spread across the city, it will be extremely difficult to provide the necessary infrastructure, and the investor will certainly have problems with the resettlement, which could take years.
Abramov is not a newcomer to the development business. In 2007, the company Ferro-Stroi, created by Evraz executives, bought jointly with
BasEl unit Altius Development 90 percent of the agricultural firm Divnomorskoye, which owned 800 hectares of land near Gelendzhik to build a complex with hotels, housing and commercial space. Abramov was a passive investor, a source close to the company said at the time.
The St. Petersburg property fund, which is organizing the tender, was not reached for comment.
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