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Moscow City Project - Development Advisory

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The Challenge

The project is developed in the frame of Moscow International Business Center “Moscow-City”.

Cushman & Wakefield Advisory was approached to assist in the review of the “Russia Tower” project. In its original form, the project supposed be the tallest building in Europe. Initially, the planned GBA was 520,000 sq. m. However, the new Moscow administration has made a decision to decrease the building height two times from 612 m to 200 m and the GBA to 350,000 sq. m (including 110,000 sq. m for underground parking and 240,000 sq. m above ground area)

The goal was to develop and optimize the new concept in order to align it to the market needs and to reduce the risks related to project delivery.

The Solution

During the project the Cushman & Wakefield team conducted a detailed office real estate market analysis of Moscow in whole as well as of MIBC “Moscow-City”. The analysis included tenant demand testing. A professional consultant specified on residential real estate was also involved in the process of concept optimization.

As the result, several preliminary development scenarios were developed and their financial analysis was completed. Finally, the most optimal development concept was proposed to the client.

The Results

The most attractive decision allowing the investor to minimize risks was to divide the project into two functional uses: residential and office space.

Furthermore, based on the characteristics of the local office market demand we suggested splitting the office space into two: one section for lease in order to create a first-class investment product occupied by quality tenants and a separate office tower for sale by smaller units (by floors) to end-users and private investors, which is also in demand on the market.

Such decision allowed the developer to generate some cash flow even during the development stage from office and residential sales in order to decrease the requirement for additional financing.