Moscow has lost the Park-City

The investor of the project was in the Park City Investment OJSC (created by the PNK GC, Absolute Investment Group and Actaeon LLC, later PNK sold its interest). This construction project was announced back in 2004: after a re-conception of the industrial areas on Taras Shevchenko Embankment and Kutuzovsky Prospect, they were to build a 278,000 sqm of residential and 208,000 sqm of office premises. Investments into the project were estimated at $600 million. In 2005–2006, the pencil factory and brewery were removed from these areas. The developer began to clear the area, and 26,000 sqm of buildings were removed.

"According to the terms of the agreement, construction was to begin after the investor cleared the land on 14A and 12 Kutuzovsky Prospect," informs Moskomstroyinvest. However, the investor limited itself to the demolition of the buildings, and did not obtain initial permit documentation, they added at the department.

Now the Urban Planning and Land Commission considers the project as a threat to the transport situation in the city, as it called for only one entrance. Under the new scheme for development of the territory, the area should have a residential community while preserving the cultural monuments (Badayevsky Brewery), and have a lower volume of construction.

According to Pavel Salnikov, director of development at KR Properties, the project developer could have already spent up to $30-40 million, excluding the cost of buying shares in the project. The only solution in such a situation is to go to court. "The investor had carried out a feasibility study and received approval from the city. Changing the city’s policy - means new circumstances have arisen and it is necessary to negotiate," notes Mr. Salnikov.

Experts at CBRE believed that with the new configuration, this area (taking into account the location of the object) will be of interest to developers specializing in business-class residential construction. However in addition to housing, some multi-functional buildings should remain. In addition, they will need to develop a comprehensive strategy for the district in view of the transport infrastructure, warn the experts.

Changing the project in favor of residential development, according to Mr. Salnikov, means no assets will remain with the developer after completing the project. "Apartments are sold and commercial real estate brings a regular income; this is a tool when working with the banks," said the expert. "Yet if the city is intending on ‘twisting the arms’ of the investor, it is still better to have some project here, then none at all," noted Mr. Salnikov.