ELITE REAL ESTATE IN ST. PETERSBURG

29 March 2006

1.  Location. In St. Petersburg, this has traditionally meant the "Golden Triangle" in the very center, Kamenny and Krestovsky Islands and the neighborhood around the Tavrichesky Gardens, (It's perhaps worth noting that since a metro station opened on Krestovsky Island, making it more open to the general public, it's become somewhat less elite ... or, at least, those buildings next to the metro station and amusements park certainly have)

2.  The architecture of the building should be unique (if it's a historic building) or exclusive (if it's been newly built). In the latter case, it's worth investigating the architects that created the designs, which tenders they have taken part in and which projects they have already implemented.

3.  Internal or underground parking. Here you'll have to think twice about an apartment in a building designed by a great designer from the 18th Century that has been designated as an architectural monument - something, somewhere will have to be sacrificed.

4.  The territory should be fenced off and protected. It should also have its own security system.

5.  Where new-build housing is concerned, it's worth asking the developer what materials and technologies have been employed. Usually, developers aren't worried about such questions - they, and not you, are the builders.

6.  A homogenous social contingent of occupants. I first heard the term "homogenous social contingent" used by an acquaintance seven years ago, when he acquired an apartment in a wonderful location, in an astonishingly beautiful building that was packed, at the time, with communal apartments yet to be consolidated. When buying real estate, you should ask yourself who your neighbors are going to be. And it's a question you should put to your real estate agent if you're thinking of buying an apartment in a building with a history. Many real estate agents will have trouble answering that question...

Neighbors are a key component of your future ideal home. In this context it's worth learning from the experience of Moscow, which, traditionally, has been considered to be three or four years ahead of us in terms of its real estate market. There, in the so-called "Golden Mile" (Ostozhenka), buying an apartment in a club-style, newly constructed building (only a few floors high, with between six and 20 apartments and enclosed living space) is almost impossible without a recommendation. Strict "face control" will decide whether you're to be allowed to buy an apartment where each square meter costs $30,000. And if you don't make the grade, no amount of additional cash will help you.

If we analyze the sites being offered in the secondary elite sector in St. Petersburg, we soon see that, despite the huge number on offer, only a few will meet the above-mentioned criteria. The main reason for this is the shortage of sites for construction in the central regions of the city.

This has even led developers to come up with new categories - "elite real estate A" and "elite real estate B" - in a move that is reminiscent of the "sturgeon of first and second order freshness" in "The Master and Margarita."

Category A sites, according to this system of divisions, meet all the above-mentioned criteria, with the key one being location.

As far as elite real estate on the secondary market is concerned, $8,000 per square meter is nothing out of the ordinary. In fact, it's not even expensive by today's standards if the location and the living conditions can genuinely be called elite. For example: on Millionnaya Ulitsa with a view onto the Hermitage and Palace Square; Tverskaya Ulitsa with a view onto the Tavrichesky Gardens; Bolshaya Konyushennaya Ulitsa in a reconstructed building; Kutuzovskaya Embankment with a view onto the Neva River and the Peter and Paul Fortress; the mansions of Krestovsky and Kamenny islands (although, in the case of the latter island, almost nothing is available on the open market). A square meter in an apartment overlooking the Field of Mars or the Fontanka Embankment, on the other hand, costs $12,000. And there is little available in this category. Particularly in the Golden Triangle at the heart of the city. And it should be remembered that the old, renovated houses have no garages and you can only park in guarded courtyards.

The full set of criteria is only met by apartments with excellent views in new buildings or buildings that have been through total constructions. Such apartments are a great rarity, and they are priced accordingly. Thus, a square meter in No. 4 Bolshaya Morskaya Ulitsa costs $16,900 and a parking space will cost you another $70,000.

Prospects

In this context, the Petersburg Renaissance project close to the Tavrichesky Gardens is of particular interest - a "show quarter" which has already been described as Petersburg's answer to London's Chelsea and Paris's 16th Quarter. The concept is genuinely grandiose. On almost 10 hectares of land, the largest complex of elite real estate in the historic center of the city will be constructed. It will be a neighborhood in its own right, comprising residential and office premises, promenades with restaurants and boutiques and its own square, which the project's creators believe will be the dominant motif for the area, matching the square before the Kazan Cathedral in terms of size. At its center will stand a sculpture, although we can only hope that it won't be the latest work of the fame Muscovite monumental-ist... The prices in this "show quarter" will begin at $4,500 per square meter, with a parking space costing an additional $50,000. It's planned that the construction will be carried out in three stages and completed by 2013. In parallel, close to the Smolny Cathedral, SK Petersburg Renaissance will create another new elite complex - "Smolny Quarter" - which will have an exit out onto the Robespierre Embankment. According to the plans, the Orlovsky Tunnel, which passes under the Neva River, will connect it to the Gazprom-City business center.

The elite real estate B category covers the part of the Admiralty region that leads up to Izmailovsky Prospekt, the bulk of the Petrograd Side and the pre-Revolutionary parts of Vasilievsky Island.

As far as older buildings in the sector are concerned, there is much more on offer here and average prices range from $3,700 to $9,000 per square meter. Here, you're choosing between location and living conditions. An apartment in a new building on the 12th  Line of Vasilievsky Island or Pesochnaya Naberezhnaya, Krestovsky Prospekt or Ulitsa Vosstaniya will be in the range of $5,000 to $8,000 per square meter, depending on the building in question, which floor the apartment is on, the internal planning of the apartment and so on.

As a result of the shortage of sites for building in the central regions of the city, Petersburg developers have begun creating elite complexes on the territories of former industrial zones: in the neighborhood of the Smolnaya, Ushakovskaya and Admirala Lazareva embankments; on the Petrograd Side in the region of Pesochnaya Embankment (Novaya Zvezda from RBI offers prices from $6,000 per square meter and Omega House from UK Best, where all the apartments have already been sold, but some have been put back on the market from $5,000 per square meter: on Petrovsky Island.

The project on Petrovsky Island is worthy of special attention.

Here, we're talking about the Europe Embankment project, which, by 2010, intends to reconstruct an 8.5 hectare territory on the Malaya Neva Embankment, Prospekt Dobrolyubova and the square on the ramp up onto Birzhevoi Bridge. At present, the territory is occupied by the Applied Chemistry RNTs, with the half-kilometer stretch of the embankment running between Birzhevoi and Tuchkov Buyan being closed off for pedestrians and cars alike. The facade looking out onto the Malaya Neva River will be made up of low-level buildings - a result of one of the unwritten laws of architecture and construction on embankments in the center of the city and of its being in the vicinity of an architectural monument, the former Tuchkov Buyan complex. Beyond this first row of buildings comes a second ata height of five to eight stories, which is far more typical for architecture on the Petrograd Side. There are plans to build a hotel at the front of the block looking out onto the square by Birzhevoi Bridge. Closer to Ulitsa Dobrolyubova there will be two A class business centers. A "Dance Palace" - an international theatrical and educational center led by Boris Eifman will be the main cultural emblem of the complex. Underground parking for inhabitants and visitors to the complex will be installed beneath the entire block. In total, about 250,000 square meters of real estate will be constructed here.

Sites relegated to the B category by virtue of their location have to compensate for this drawback through construction or service refinements. Thus, RBI, making good on its claims to be striving for international standards in elite construction, hired the English firm Bovis Lend Lease to manage the construction of its elite site on Pesochnaya Embankment.

YIT-Dom, in turn, invited in the Finnish architectural team at EAGLE GROUP OY to design its new building at 58 Kazanskaya Ulitsa, close to the Mariinsky Theater.

Stroimontazh Corporation beautified its Mont Blanc housing complex with penthouses providing unique and stunning views.

Other housing complexes have used comprehensive ranges of services as their trump cards, "for comfort and harmonious living," to quote the brochure of one such developer.

Thus, the Petersburg Renaissance project by the Yacht Club, which has been titled "House by the Sea," is positioning itself in a manner that is novel for St. Petersburg -here you'll get a full "Wellness Center," with prices ranging from $7,000 to $14,000 per square meter.

The Stella Maris project - the work of Petersburg Real Estate - seeks to stand out from the crowd by being a "club" house. On top of that, it has its own spa complex and, perhaps most importantly, its own embankment with ramp down to the water for small vessels and motorboats. Prices being at $7,000 per square meter.

Summing up, if s worth noting that both the quantity and quality of elite real estate in the city look set to increase, as do its prices. No surprise, then, that many believe that elite real estate is currently one of the most stable investments in Russia.