Skanska set for giant Russian park project

News

Author Unassigned

01 May 2003

The Swedish developer is to build Russia’s largest business park in a $500m joint venture with the city of St Petersburg

Swedish developer Skanska is to build Russia’s biggest business park in partnership with the city of St Petersburg. The $500m joint-venture company, Skanska St Petersburg Development, will start work on the 250,000m2 Nova Park project, in the north-east Krasnogvardeisky district of the country’s second city, later this year.

The park will comprise 56ha of manufacturing and storage facilities plus 8ha to be developed later as a technological park. Noble Gibbons, which works in association with CB Richard Ellis in Russia, is marketing the project internationally. “This is a massive development for Russia – there are no other business parks here of this size,” said Darrell Stanaford, a senior director at Noble Gibbons. Local company S Zinovieff & Co will market the park in Russia.

The park will be forward-funded by investors in phases, with occupiers also being able to take space on a build-to-suit basis, according to the joint venture’s president, Risto Koppeli. “Investors will have to fully commit to facilities before they are built,” Koppeli added. International investors, such as durable goods manufacturers and car manufacturers, will account for around 70% of investment, with local firms making up the balance, according to Stanaford. The park should be completed within four to seven years.

Rents and market prices hard to predict

The market price for industrial park buildings is hard to calculate because there are no comparable projects in Russia. But Koppeli says an average facility could cost from $3m to $8m, depending on infrastructure and utility requirements. Stanaford says the average user will require 5,000m2 to 10,000m2, with room for expansion. Predicting the level of rent that could be achieved is equally difficult. “In Moscow, you would get around $150 per m2 per year, so in St Petersburg we would probably get around 25% less,” said Stanaford. The average lease will be for 10 to 15 years, but tenants will also have an option to take a 49-year lease. Skanska has developed similar parks in Budapest, Hungary and Latvia.

A raft of international investors are poised to enter Russia. US property company Hines is ploughing $100m into Moscow over the next two years, for projects including a 25,000m2 central Moscow office building and an extension of its existing Pobrovsky Hills scheme. Hines is also considering investing in a 15ha business park north west of the Russian capital.

Meanwhile, Spanish construction firm Ferrovial has won a contract to turn Moscow’s 5 Red Square into a retail and office project, doubling the historic building’s 45,000m2 by adding several underground levels. The group does not expect its investment to break even for 15 years, but one Moscow agent called the project “a good way for Ferrovial to buy a prominent position in Russia”.

The Swedish developer is to build Russia’s largest business park in a $500m joint venture with the city of St Petersburg Swedish developer Skanska is to build Russia’s biggest business park in partnership with the city of St Petersburg. The $500m joint-venture company, Skanska St Petersburg Development, will start work on the 250,000m2 Nova Park project, in the north-east Krasnogvardeisky district of the country’s second city, later this year. The park will comprise 56ha of manufacturing and storage facilities plus 8ha to be developed later as a technological park. Noble Gibbons, which works in association with CB Richard Ellis in Russia, is marketing the project internationally. “This is a massive development for Russia – there are no other business parks here of this size,” said Darrell Stanaford, a senior director at Noble Gibbons. Local company S Zinovieff & Co will market the park in Russia. The park will be forward-funded by investors in phases, with occupiers also being able to take space on a build-to-suit basis, according to the joint venture’s president, Risto Koppeli. “Investors will have to fully commit to facilities before they are built,” Koppeli added. International investors, such as durable goods manufacturers and car manufacturers, will account for around 70% of investment, with local firms making up the balance, according to Stanaford. The park should be completed within four to seven years. Rents and market prices hard to predict The market price for industrial park buildings is hard to calculate because there are no comparable projects in Russia. But Koppeli says an average facility could cost from $3m to $8m, depending on infrastructure and utility requirements. Stanaford says the average user will require 5,000m2 to 10,000m2, with room for expansion. Predicting the level of rent that could be achieved is equally difficult. “In Moscow, you would get around $150 per m2 per year, so in St Petersburg we would probably get around 25% less,” said Stanaford. The average lease will be for 10 to 15 years, but tenants will also have an option to take a 49-year lease. Skanska has developed similar parks in Budapest, Hungary and Latvia. A raft of international investors are poised to enter Russia. US property company Hines is ploughing $100m into Moscow over the next two years, for projects including a 25,000m2 central Moscow office building and an extension of its existing Pobrovsky Hills scheme. Hines is also considering investing in a 15ha business park north west of the Russian capital. Meanwhile, Spanish construction firm Ferrovial has won a contract to turn Moscow’s 5 Red Square into a retail and office project, doubling the historic building’s 45,000m2 by adding several underground levels. The group does not expect its investment to break even for 15 years, but one Moscow agent called the project “a good way for Ferrovial to buy a prominent position in Russia”.