Knight Frank has advised the Moscow city government to sell eight of its hotels in a drive to raise standards of accommodation in the capital.
The hotels include the 3,090-bedroom Rossiya, one of the world’s largest – which also supplies hot water to the Kremlin. The others are Budapest (125 rooms); Belgrad (450 rooms); Leningradskaya (345 rooms); Ostankino (340 rooms); Pekin (350 rooms); Volga (230 rooms); and Warsaw (110 rooms) .
Because the Russian parliament, has still not passed laws permitting foreigners to own land, the hotel properties will be sold with 49-year leases. Extensions beyond this period will be negotiable.
Prices are expected to reflect four years’ purchase and all the hotels require significant refurbishment. Moscow has only 12 hotels suitable for Western visitors.
The city government wants to raise capital receipts as well as standards. It will seek commitments to refurbish from investors and will be willing to retain a stake in the properties themselves.
Knight Frank has persuaded the city government to value the hotels as businesses and to accept that it cannot expect the criteria applied to be similar to that in London, Frankfurt or Paris. Historically, land and building value has been determined by geographical zone, size and function.
