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$1.6 -0.0  -1.2%

Last Trade - 23/09/20

Consumer Cyclicals
Mid Cap
Market Cap £371.0m
Enterprise Value £609.9m
Revenue £861.0m
Position in Universe 593rd / 1807

CORRECTED-INTERVIEW-Developers sidelined in Moscow's $50 bln building bonanza

Thu 8th June, 2017 12:14pm
(In May 25 story, corrects cubic metres to square metres in 
paragraph 9) 
    * Moscow aims to resettle 1 mln residents over 15 years 
    * Project to cost in region of $50 bln 
    * House builders will be contractors only - deputy mayor 
    * Developers had looked to scheme for boost 
    By Svetlana Reiter and Katya Golubkova 
    MOSCOW, June 8 (Reuters) - Russian developers who had hoped 
to be able to co-invest in Moscow's planned $50 billion 
programme to resettle almost a million residents will only be 
involved as contractors, the city's deputy mayor told Reuters. 
    Residential property developers, which include firms such as 
PIK  PIKK.MM , LSR  LSRG.MM  and Etalon  ETLNGq.L , have been 
hit hard by Russia's economic downturn, with some struggling to 
sell apartments they have built and burdened with debt. 
    Sales fell by as much as 30 percent in 2015 and although the 
market started to recover last year, Moscow's resettlement plan, 
which aims to move almost a tenth of its population out of 
ageing low-rise apartment buildings known as "khrushchyovki", 
had been seen as a potential lifeline. 
    In previous smaller city programmes, real estate companies 
were able to sell some of the flats in a block in exchange for 
building it and had hoped this approach would be used again. 
    "There will be no developers... Those who have construction 
facilities can take part in a tender and in the event of victory 
will get an order as contractors," Marat Khusnullin said of the 
plan to move people into new homes. 
    Acting as contractors will deliver margins several times 
lower for property firms than if they were developers. 
    Pavel Bryzgalov, director for strategic development at 
Lider, one of Moscow's biggest real estate companies, said his 
firm was interested in acting as a contractor but would want to 
be able to act as co-developer too.  
    "Its important for the development companies to have the 
option to offer part of the flats for the sale," Bryzgalov said. 
    Khusnullin said 15.1 million square metres - or some 350,000 
flats - would be demolished and replaced with 20 million square 
metres of new residential space under the 15 year programme.  
    Thousands of Muscovites protested against the scheme on May 
14, with some living in buildings scheduled for demolition 
saying they do not want to move unless they have guarantees 
about where they will be resettled.*:nL8N1IG0ML 
    Moscow has said it will spend 300 billion roubles ($5.33 
billion) from its own budget during the first three years. The 
estimated cost of the whole project is around 3 trillion roubles 
which should also come from the city's funds, Khusnullin said.   
    He did not comment directly on whether Moscow would need to 
raise debt, but asked if Moscow would seek help from the federal 
budget said: "So far, the city budget allows us to implement 
such a programme." 
    Some developers had hoped they could sell unsold apartments 
to the city as part of the resettlement scheme, but Khusnullin 
said Moscow does not plan to buy any, as the city can offer only 
around a half of what developers would ask for them. 
    "We don't have the cash to buy at such a price," he said. 
 ($1 = 56.2849 roubles) 
 (Additional reporting by Olga Sichkar; editing by Alexander 
Smith and David Evans) 
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